Chapter 4, Problem P4.32APGA

Completing the accounting cycle from journal entries to post-closing trial balance with an optional worksheet

On December 1, Bob Wonder began an auto repair shop, Wonders Quality \ unmodve. The following transactions occurred during December:

Dec. 1 Wonder contributed 555,000 cash to the business in exchange for capita 1 Purchased $9,000 of equipment paying cash.

1 Paid $1,000 for a four-month insurance policy starting on December I 9 Paid $16,000 cash to purchase land to be used in operations.

10 Purchased office supplies on account, $2,900.

19 Borrowed $30,000 from the bank for business use. Wonder signed a note payable to the bank in the name of the business. The note is due in five years.

22 Paid $ 1,200 for advertising expenses.

26 Paid $500 on account.

28 The business received a bill for utilities to be paid in January, $230.

31 Revenues earned during the month included $20,500 cash and $3,300 on account.

31 Paid employees' salaries $3,1 CO and building rent $1,000. Record as a compound entry.

31 The business received $1,050 for auto screening services to be performed next month.

31 Wonder withdrew cash of $3,500.

The business uses the following accounts: Cash; Accounts Receivable; Office Supplies; Prepaid Insurance; Equipment; Accumulated Depreciation-Equipment; Land;

Accounts Payable; Utilities Payable; Interest Payable; Unearned Revenue; Notes Payable; Wonder, Capital; Wonder, Withdrawals; Income Summary; Service Revenue; Salaries Expense; Rent Expense; Utilities Expense; Advertising Expense; Supplies Expense; Insurance Expense; Interest Expense; and Depreciation Expense-Equipment. Adjustment data:

1. Office Supplies used during the month, $900.
2. Depreciation for the month, $150.
3. One month insurance has expired.
4. Accrued Interest Expense, $75.

Requirements

1. Prepare the journal entries, and post to the T-accounts.
2. Prepare an unadjusted trial balance.
3. Complete the worksheet for the month ended December 31.2016. (optional)
4. repare the adjusting entries, and post to the T-accounts.
5. Prepare an adjusted trial balance.

•nitv iiul the classihedre the income statement, the statement ol owners cq . • ⁶' balance sheet in repot, form. Prepare the closing entries, and post to the I accounts. Prepare a post-closing trial balance.