Chapter 5, Problem 1ACRPA

This problem is designed to enable you to apply the knowledge you have acquired in the preceding chapters. In accounting, the ultimate test is being able to handle data in real-life situations. This problem will give you valuable experience.

CHART OF ACCOUNTS

You are to record transactions in a two-column general journal. Assume that the fiscal period is one month. You will then be able to complete all of the steps in the accounting cycle.

When you are analyzing the transactions, think them through by visualizing the T accounts or by writing them down on scratch paper. For unfamiliar types of transactions, specific instructions for recording them are included. However, reason them out for yourself as well. Check off each transaction as it is recorded.

Required

1. 1. Journalize the transactions. (Start on page 1 of the general journal if using Excel or Working Papers.)
2. 2. Post the transactions to the ledger accounts. (Skip this step if using CLGL.)
3. 3. Prepare a trial balance. (If using a work sheet, use the first two columns.)
4. 4. Data for the adjustments are as follows:
   1. a. Insurance expired during the month, $1,020.
   2. b. Depreciation of building for the month, $480.
   3. c. Depreciation of pool/slide facility for the month, $675.
   4. d. Depreciation of pool furniture for the month, $220.
   5. e. Wages accrued at July 31, $920.

Your instructor may want you to use a work sheet for these adjustments.

1. 5. Journalize adjusting entries.
2. 6. Post adjusting entries to the ledger accounts. (Skip this step if using CLGL.)
3. 7. Prepare an adjusted trial balance.
4. 8. Prepare the income statement.
5. 9. Prepare the statement of owner’s equity.
6. 10. Prepare the balance sheet.
7. 11. Journalize closing entries.
8. 12. Post closing entries to the ledger accounts. (Skip this step if using CLGL.)
9. 13. Prepare a post-closing trial balance.

Check Figure

Trial balance total, $601,941; net income, $16,293; post-closing trial balance total, $569,614

To determine

Prepare journal entries for the given transactions for Company BO.

Explanation of Solution

Journal entry: Journal entry is a set of economic events which can be measured in monetary terms. These are recorded chronologically and systematically.

Debit and credit rules:

• Debit an increase in asset account, increase in expense account, decrease in liability account, and decrease in stockholders’ equity accounts.
• Credit decrease in asset account, increase in revenue account, increase in liability account, and increase in stockholders’ equity accounts.

Prepare journal entries for the given transactions for Company BO.

Table (1)

Table (2)

Table (3)

Table (4)

To determine

Post the journalized transactions in the ledger accounts of the general ledger.

Explanation of Solution

Ledger: Ledger is a book in which the accounts are summarized and grouped from the transactions recorded in the journal.

Post the journalized transactions in the ledger accounts of the general ledger.

ACCOUNT     Cash                                                                      ACCOUNT NO. 111
Date		Item	Post. Ref.	Debit ($)	Credit ($)	Balance
						Debit ($)	Credit ($)
July	1		1	135,000		135,000
	2		1		120,000	15,000
	2		1		12,240	2,760
	2		1		500	2,260
	3		1	250		2,510
	6		1		1,600	910
	6		2		128	782
	7		2	12,086		12,868
	14		2	10,445		23,313
	15		2		9,460	13,853
	16		2		1,150	12,703
	16		2		2,500	10,203
	18		3		328	9,875
	21		3	10,330		20,205
	21		3		600	19,605
	25		3		292	19,313
	29		3		8,227	11,086
	31		3	11,870		22,956
	31		3		360	22,596
	31		3		684	21,912
	31		4		3,890	18,022
	31		4		942	17,080
	31		4		100	16,980
	31		4		3,200	13,780

Table (2)

ACCOUNT    Accounts Receivable                                            ACCOUNT NO. 112
Date		Item	Post. Ref.	Debit ($)	Credit ($)	Balance
						Debit ($)	Credit ($)
July	7		4	234		234

Table (3)

ACCOUNT    Prepaid Insurance                                                ACCOUNT NO. 114
Date		Item	Post. Ref.	Debit ($)	Credit ($)	Balance
						Debit ($)	Credit ($)
July	2		1	12,240		12,240

Table (4)

ACCOUNT    Land                                                               ACCOUNT NO. 121
Date		Item	Post. Ref.	Debit ($)	Credit ($)	Balance
						Debit ($)	Credit ($)
July	2		1	292,000		292,000

Table (5)

ACCOUNT    Building                                                           ACCOUNT NO. 122
Date		Item	Post. Ref.	Debit ($)	Credit ($)	Balance
						Debit ($)	Credit ($)
July	2		1	96,200		96,200

Table (6)

ACCOUNT    Pool/Slide Facility                                           ACCOUNT NO. 124
Date		Item	Post. Ref.	Debit ($)	Credit ($)	Balance
						Debit ($)	Credit ($)
July	2		1	148,800		148,800
	2		1	1,225		150,025
	31		4	480		150,505

Table (7)

ACCOUNT    Pool Furniture                                                  ACCOUNT NO. 126
Date		Item	Post. Ref.	Debit ($)	Credit ($)	Balance
						Debit ($)	Credit ($)
July	2		1	148,800		148,800
	2		1	1,225		150,025
	31		4	480		150,505

Table (8)

ACCOUNT    Accounts Payable                                             ACCOUNT NO. 221
Date		Item	Post. Ref.	Debit ($)	Credit ($)	Balance
						Debit ($)	Credit ($)
July	2		1		725		725
	5		1		1,320		2,045
	9		2		646		2,691
	16		2	1,150			1,541
	17		2		2,100		3,641
	21		3	600			3,041
	23		3	225			2,816
	31		3	360			2,456
	31		4		380		2,836

Table (9)

ACCOUNT    Mortgage Payable                                              ACCOUNT NO. 223
Date		Item	Post. Ref.	Debit ($)	Credit ($)	Balance
						Debit ($)	Credit ($)
July	2		1		420,800		420,800
	31		4	1,910			418,890

Table (10)

ACCOUNT    LJ, Capital                                                         ACCOUNT NO. 311
Date		Item	Post. Ref.	Debit ($)	Credit ($)	Balance
						Debit ($)	Credit ($)
July	1		1		135,000		135,000

Table (11)

ACCOUNT    LJ, Drawing                                                      ACCOUNT NO. 312
Date		Item	Post. Ref.	Debit ($)	Credit ($)	Balance
						Debit ($)	Credit ($)
July	16		2	2,500		2,500
	31		4	3,200		5,700

Table (12)

ACCOUNT    Income from Services                                        ACCOUNT NO. 411
Date		Item	Post. Ref.	Debit ($)	Credit ($)	Balance
						Debit ($)	Credit ($)
July	7		2		12,086		12,086
	14		2		10,445		22,531
	21		3		10,330		32,861
	31		3		11,870		44,731

Table (13)

ACCOUNT    Concessions Income                                          ACCOUNT NO. 412
Date		Item	Post. Ref.	Debit ($)	Credit ($)	Balance
						Debit ($)	Credit ($)
July	3		2		250		250
	31		2		234		484

Table (14)

ACCOUNT    Pool Maintenance Expense                                ACCOUNT NO. 511
Date		Item	Post. Ref.	Debit ($)	Credit ($)	Balance
						Debit ($)	Credit ($)
July	6		1	1,600		1,600
	9		2	646		2,246

Table (15)

ACCOUNT    Wages Expense                                                 ACCOUNT NO. 512
Date		Item	Post. Ref.	Debit ($)	Credit ($)	Balance
						Debit ($)	Credit ($)
July	15		2	9,460		9,460
	29		3	8,227		17,687

Table (16)

ACCOUNT    Advertising Expense                                         ACCOUNT NO. 513
Date		Item	Post. Ref.	Debit ($)	Credit ($)	Balance
						Debit ($)	Credit ($)
July	5		2	1,320		1,320

Table (17)

ACCOUNT    Utilities Expense                                               ACCOUNT NO. 514
Date		Item	Post. Ref.	Debit ($)	Credit ($)	Balance
						Debit ($)	Credit ($)
July	25		3	292		292
	31		3	684		976
	31		4	942		1,918

Table (18)

ACCOUNT    Interest Expense                                                ACCOUNT NO. 515
Date		Item	Post. Ref.	Debit ($)	Credit ($)	Balance
						Debit ($)	Credit ($)
July	31		4	1,980		1,980

Table (19)

ACCOUNT    Miscellaneous Expense                                     ACCOUNT NO. 522
Date		Item	Post. Ref.	Debit ($)	Credit ($)	Balance
						Debit ($)	Credit ($)
July	6		2	128		128
	18		3	328		456

Table (20)

To determine

Prepare trial balance on the work sheet, from the account balances in Part (2).

Explanation of Solution

Worksheet: Worksheet is an accounting tool that help accountants to record adjustments and up-date balances required to prepare financial statements. Worksheet is a central place where trial balance, adjustments, adjusted trial balance, income statement, and balance sheet are presented.

Trial balance: Trial balance is a summary of all the asset, liability, and equity accounts and their balances.

Prepare trial balance on the work sheet, from the account balances in Part (2).

Figure – (1)

To determine

Indicate the given adjustments on the worksheet for Company BO for the month ended July 31, 20--.

Explanation of Solution

Worksheet: Worksheet is an accounting tool that help accountants to record adjustments and up-date balances required to prepare financial statements. Worksheet is a central place where trial balance, adjustments, adjusted trial balance, income statement, and balance sheet are presented.

Indicate the given adjustments on the worksheet for Company BO for the month ended July 31, 20--.

Figure-(2)

To determine

Prepare adjusting journal entries for Company BO.

Explanation of Solution

Adjusting entries: Adjusting entries are those entries which are recorded at the end of the year, to update the income statement accounts (revenue and expenses) and balance sheet accounts (assets, liabilities, and owners’ or stockholders’ equity) to maintain the records according to accrual basis principle and matching concept.

Prepare adjusting journal entries for Company BO.

Adjusting entry (a) for the prepaid insurance:

Date		Account Titles and Explanation		Post Ref.	Debit ($)	Credit ($)
July	31	Insurance Expense		517	1,020
			Prepaid Insurance	114		1,020
		(Record part of prepaid insurance expired)

Table (21)

Description:

• Insurance Expense is an expense account. Since expenses decrease equity, equity value is decreased, and a decrease in equity is debited.
• Prepaid Insurance is an asset account. Since amount of insurance is expired, asset account decreased, and a decrease in asset is credited.

Adjusting entry (b) for the depreciation expense for building:

Date		Account Titles and Explanation		Post Ref.	Debit ($)	Credit ($)
July	31	Depreciation Expense, Building		518	480
			Accumulated Depreciation, Building	123		480
		(Record depreciation expense)

Table (22)

Description:

• Depreciation Expense, Building is an expense account. Since expenses decrease equity, equity value is decreased, and a decrease in equity is debited.
• Accumulated Depreciation, Building is a contra-asset account, and contra-asset accounts would have a normal credit balance, hence, the account is credited.

Adjusting entry (c) for the depreciation expense for pool/slide facility:

Date		Account Titles and Explanation		Post Ref.	Debit ($)	Credit ($)
July	31	Depreciation Expense, Pool/Slide Facility		519	675
			Accumulated Depreciation, Pool/Slide Facility	125		675
		(Record depreciation expense)

Table (23)

Description:

• Depreciation Expense, Pool/Slide Facility is an expense account. Since expenses decrease equity, equity value is decreased, and a decrease in equity is debited.
• Accumulated Depreciation, Pool/Slide Facility is a contra-asset account, and contra-asset accounts would have a normal credit balance, hence, the account is credited.

Adjusting entry (d) for the depreciation expense for pool/slide facility:

Date		Account Titles and Explanation		Post Ref.	Debit ($)	Credit ($)
July	31	Depreciation Expense, Pool Furniture		520	220
			Accumulated Depreciation, Pool Furniture	127		220
		(Record depreciation expense)

Table (24)

Description:

• Depreciation Expense, Pool Furniture is an expense account. Since expenses decrease equity, equity value is decreased, and a decrease in equity is debited.
• Accumulated Depreciation, Pool Furniture is a contra-asset account, and contra-asset accounts would have a normal credit balance, hence, the account is credited.

Adjusting entry (e) for the wages expense:

Date		Account Titles and Explanation		Post Ref.	Debit ($)	Credit ($)
July	31	Wages Expense		512	920
			Wages Payable	222		920
		(Record accrued wages expenses)

Table (25)

Description:

• Wages Expense is an expense account. Since expenses decrease equity, equity value is decreased, and a decrease in equity is debited.
• Wages Payable is a liability account. Since amount of payables has increased, liability decreased, and an increase in liability is credited.

To determine

Post the adjusting entries journalized in Part (5) in the ledger accounts of general ledger.

Explanation of Solution

Post the adjusting entries journalized in Part (5) in the ledger accounts of general ledger.

ACCOUNT    Prepaid Insurance                                                       ACCOUNT NO. 114
Date		Item	Post. Ref.	Debit ($)	Credit ($)	Balance
						Debit ($)	Credit ($)
July	2		1	12,240		12,240
	31	Adjusting			1,020	11,220

Table (26)

ACCOUNT    Accumulated Depreciation, Building                           ACCOUNT NO. 123
Date		Item	Post. Ref.	Debit ($)	Credit ($)	Balance
						Debit ($)	Credit ($)
July	31	Adjusting			480		480

Table (27)

ACCOUNT    Accumulated Depreciation, Pool/Slide Facility            ACCOUNT NO. 125
Date		Item	Post. Ref.	Debit ($)	Credit ($)	Balance
						Debit ($)	Credit ($)
July	31	Adjusting			675		675

Table (28)

ACCOUNT    Accumulated Depreciation, Pool Furniture                  ACCOUNT NO. 127
Date		Item	Post. Ref.	Debit ($)	Credit ($)	Balance
						Debit ($)	Credit ($)
July	31	Adjusting			220		220

Table (29)

ACCOUNT    Wages Payable                                                             ACCOUNT NO. 222
Date		Item	Post. Ref.	Debit ($)	Credit ($)	Balance
						Debit ($)	Credit ($)
July	31	Adjusting			920		920

Table (30)

ACCOUNT    Wages Expense                                                 ACCOUNT NO. 512
Date		Item	Post. Ref.	Debit ($)	Credit ($)	Balance
						Debit ($)	Credit ($)
July	15		2	9,460		9,460
	29		3	8,227		17,687
	31	Adjusting		920		18,607

Table (31)

ACCOUNT    Insurance Expense                                             ACCOUNT NO. 517
Date		Item	Post. Ref.	Debit ($)	Credit ($)	Balance
						Debit ($)	Credit ($)
July	31	Adjusting	2	1,020		1,020

Table (32)

ACCOUNT    Depreciation Expense, Building                                   ACCOUNT NO. 518
Date		Item	Post. Ref.	Debit ($)	Credit ($)	Balance
						Debit ($)	Credit ($)
July	31	Adjusting		480		480

Table (33)

ACCOUNT    Depreciation Expense, Pool/Slide Facility                   ACCOUNT NO. 519
Date		Item	Post. Ref.	Debit ($)	Credit ($)	Balance
						Debit ($)	Credit ($)
July	31	Adjusting		675		675

Table (34)

ACCOUNT    Depreciation Expense, Pool Furniture                          ACCOUNT NO. 520
Date		Item	Post. Ref.	Debit ($)	Credit ($)	Balance
						Debit ($)	Credit ($)
July	31	Adjusting		220		220

Table (35)

To determine

Prepare an adjusted trial balance for Company BO as at July 31, 20--, based on the account balances derived in Parts (2) and (6).

Explanation of Solution

Adjusted trial balance: The trial balance which reflects the adjusting entries and incorporates the effect of all adjustments in the ledger accounts, is referred to as adjusted trial balance.

Prepare an adjusted trial balance for Company BO as at July 31, 20--, based on the account balances derived in Parts (2) and (6).

Figure - (3)

To determine

Prepare an income statement of Company BO for the month ended July 31, based on the account balances derived in Parts (2) and (6).

Explanation of Solution

Income statement: The financial statement which reports revenues and expenses from business operations, and the result of those operations as net income or net loss for a particular time period is referred to as income statement.

Prepare an income statement of Company BO for the month ended July 31.

Figure - (4)

To determine

Prepare a statement of owners’ equity of Company BO, based on the account balances derived in Parts (2) and (6), and net income computed in Part (8).

Explanation of Solution

Statement of owners’ equity: This statement reports the beginning owner’s equity and all the changes which led to ending owners’ equity. Additional capital, net income from income statement is added to, and drawings are deducted from beginning owner’s equity to arrive at the end result, ending owner’s equity.

Prepare a statement of owners’ equity for Company BO for the month ended July 31.

Company BO
Statement of Owners’ Equity
For the Month Ended July 31, 20--
LJ, Capital, July 1, 20--		$0
Investments during July	$135,000
Net income for July	16,293
	151,293
Less: Withdrawals for July	5,700
Increase in capital		145,593
LJ, Capital, July 31, 20--		$145,593

Table (36)

To determine

Prepare a balance sheet for Company BO, based on the account balances derived in Parts (2) and (6), and capital of the owner from the statement of owners’ equity prepared in Part (9).

Explanation of Solution

Balance sheet: This financial statement reports a company’s resources (assets) and claims of creditors (liabilities) and owners (owners’ equity) over those resources. The resources of the company are assets which include money contributed by owners and creditors. Hence, the main elements of the balance sheet are assets, liabilities, and owners’ equity.

Prepare the balance sheet for Company BO as at July 31, 20--.

Table (37)

To determine

Prepare closing entries numbering the entries 1 through 4.

Explanation of Solution

Closing entries: The journal entries prepared to close the temporary accounts to capital account are referred to as closing entries. The revenue, expense, and drawing accounts are referred to as temporary accounts because the information and figures in these accounts is held temporarily and consequently transferred to permanent account at the end of accounting year.

Steps in closing procedure:

1. 1. Close the revenue accounts to Income Summary account.
2. 2. Close the expense accounts to Income Summary account.
3. 3. Close the Income Summary account and transfer the net income or net loss balance to the Capital account.
4. 4. Close the Drawing account to Capital account.

Prepare closing entries numbering the entries 1 through 4.

Entry 1:

Date		Account Titles and Explanations		Post. Ref.	Debit ($)	Credit ($)
July	31	Income from Services		411	44,731
		Concessions Income		412	484
			Income Summary	313		45,215
		(Record closing of revenue to Income Summary account)

Table (38)

Description:

• Income from Services and Concessions Income are revenue accounts. Revenue account has a normal credit balance. Since revenue is closed to Income Summary account, the account is debited.
• Income Summary is a clearing account which closes revenue, expense, drawings, and net of revenues and expenses to capital accounts. The account is credited to hold the transferred balance from revenue account.

Entry 2:

Date		Account Titles and Explanations		Post. Ref.	Debit ($)	Credit ($)
July	31	Income Summary			28,922
			Pool Maintenance Expense			2,246
			Wages Expense			18,607
			Advertising Expense			1,320
			Utilities Expense			1,918
			Interest Expense			1,980
			Insurance Expense			1,020
			Depreciation Expense, Building			480
			Depreciation Expense, Pool/Slide Facility			675
			Depreciation Expense, Pool Furniture			220
			Miscellaneous Expense			456
		(Record closing of expenses to Income Summary account)

Table (39)

Description:

• Income Summary is a clearing account which closes revenue, expense, drawings, and net of revenues and expenses to capital accounts. The account is debited to hold the transferred balance from expense accounts.
• All expense accounts have a normal debit balance. Since expenses are closed to Income Summary account, the accounts are credited.

Entry 3:

Date		Account Titles and Explanations		Post. Ref.	Debit ($)	Credit ($)
July	31	Income Summary			16,293
			LJ, Capital			16,293
		(Record closing of net income to capital account)

Table (40)

Description:

• Income Summary is a clearing account which closes revenue, expense, drawings, and net of revenues and expenses to capital accounts. Since net income is closed, the account is reversed, hence, the Income Summary account is debited.
• LJ, Capital is a capital account. Since net income is transferred to the account, the value increased, and an increase in capital is credited.

Entry 4:

Date		Account Titles and Explanations		Post. Ref.	Debit ($)	Credit ($)
July	31	LJ, Capital			5,700
			LJ, Drawing			5,700
		(Record closing of drawing to capital account)

Table (41)

Description:

• LJ, Capital is a capital account. Since drawings is transferred to the account, the value decreased, and a decrease in capital is debited.
• LJ, Drawing is a capital account. Since drawings is transferred, the account is credited to reverse the previously debited effect.

To determine

Post the closing entries to ledger accounts.

Explanation of Solution

Post the closing entries to ledger accounts.

ACCOUNT    LJ, Capital                                                         ACCOUNT NO. 311
Date		Item	Post. Ref.	Debit ($)	Credit ($)	Balance
						Debit ($)	Credit ($)
July	1		1		135,000		135,000
	31	Closing			16,293		151,293
	31	Closing		5,700			145,593

Table (42)

ACCOUNT    LJ, Drawing                                                      ACCOUNT NO. 312
Date		Item	Post. Ref.	Debit ($)	Credit ($)	Balance
						Debit ($)	Credit ($)
July	16		2	2,500		2,500
	31		4	3,200		5,700
	31	Closing			5,700	0

Table (43)

ACCOUNT    Income from Services                                        ACCOUNT NO. 411
Date		Item	Post. Ref.	Debit ($)	Credit ($)	Balance
						Debit ($)	Credit ($)
July	7		2		12,086		12,086
	14		2		10,445		22,531
	21		3		10,330		32,861
	31		3		11,870		44,731
	31	Closing		44,731			0

Table (44)

ACCOUNT    Concessions Income                                          ACCOUNT NO. 412
Date		Item	Post. Ref.	Debit ($)	Credit ($)	Balance
						Debit ($)	Credit ($)
July	3		2		250		250
	31		2		234		484
	31	Closing		484			0

Table (45)

ACCOUNT    Pool Maintenance Expense                                ACCOUNT NO. 511
Date		Item	Post. Ref.	Debit ($)	Credit ($)	Balance
						Debit ($)	Credit ($)
July	6		1	1,600		1,600
	9		2	646		2,246
	31	Closing			2,246	0

Table (46)

ACCOUNT    Wages Expense                                                 ACCOUNT NO. 512
Date		Item	Post. Ref.	Debit ($)	Credit ($)	Balance
						Debit ($)	Credit ($)
July	15		2	9,460		9,460
	29		3	8,227		17,687
	31	Closing			17,687	0

Table (47)

ACCOUNT    Advertising Expense                                         ACCOUNT NO. 513
Date		Item	Post. Ref.	Debit ($)	Credit ($)	Balance
						Debit ($)	Credit ($)
July	5		2	1,320		1,320
	31	Closing			1,320	0

Table (48)

ACCOUNT    Utilities Expense                                               ACCOUNT NO. 514
Date		Item	Post. Ref.	Debit ($)	Credit ($)	Balance
						Debit ($)	Credit ($)
July	25		3	292		292
	31		3	684		976
	31		4	942		1,918
	31	Closing			1,918	0

Table (49)

ACCOUNT    Interest Expense                                                ACCOUNT NO. 515
Date		Item	Post. Ref.	Debit ($)	Credit ($)	Balance
						Debit ($)	Credit ($)
July	31		4	1,980		1,980
	31	Closing			1,980	0

Table (50)

ACCOUNT    Miscellaneous Expense                                     ACCOUNT NO. 522
Date		Item	Post. Ref.	Debit ($)	Credit ($)	Balance
						Debit ($)	Credit ($)
July	6		2	128		128
	18		3	328		456
	31	Closing			456	0

Table (51)

ACCOUNT    Wages Expense                                                 ACCOUNT NO. 512
Date		Item	Post. Ref.	Debit ($)	Credit ($)	Balance
						Debit ($)	Credit ($)
July	15		2	9,460		9,460
	29		3	8,227		17,687
	31	Adjusting		920		18,607
	31	Closing			18,607	0

Table (52)

ACCOUNT    Insurance Expense                                             ACCOUNT NO. 517
Date		Item	Post. Ref.	Debit ($)	Credit ($)	Balance
						Debit ($)	Credit ($)
July	31	Adjusting	2	1,020		1,020
	31	Closing			1,020	0

Table (53)

ACCOUNT    Depreciation Expense, Building                                   ACCOUNT NO. 518
Date		Item	Post. Ref.	Debit ($)	Credit ($)	Balance
						Debit ($)	Credit ($)
July	31	Adjusting		480		480
	31	Closing			480	0

Table (54)

ACCOUNT    Depreciation Expense, Pool/Slide Facility                   ACCOUNT NO. 519
Date		Item	Post. Ref.	Debit ($)	Credit ($)	Balance
						Debit ($)	Credit ($)
July	31	Adjusting		675		675
	31	Closing			675	0

Table (55)

ACCOUNT    Depreciation Expense, Pool Furniture                          ACCOUNT NO. 520
Date		Item	Post. Ref.	Debit ($)	Credit ($)	Balance
						Debit ($)	Credit ($)
July	31	Adjusting		220		220
	31	Closing			220	0

Table (56)

ACCOUNT    Income Summary                                                         ACCOUNT NO. 313
Date		Item	Post. Ref.	Debit ($)	Credit ($)	Balance
						Debit ($)	Credit ($)
July	31	Closing			45,215		45,215
	31	Closing		28,922			16,293
	31	Closing		16,293			0

Table (57)

To determine

Prepare a post-closing trial balance for Company BO as at July 31, 20--.

Explanation of Solution

Post-closing trial balance: Post-closing trial balance is a summary of all the asset, liability, and capital accounts and their balances, after the closing entries are prepared. So, post-closing trial balance reports the balances of permanent accounts only.

Prepare a post-closing trial balance for Company BO as at July 31, 20--.

Company BO
Post-Closing Trial Balance
July 31, 20--
Account Names	Debit ($)	Credit ($)
Cash	$13,780
Accounts Receivables	234
Prepaid Insurance	11,220
Land	292,000
Building	96,200
Accumulated Depreciation, Equipment		$480
Pool/Slide Facility	150,505
Accumulated Depreciation, Pool/Slide Facility		675
Pool Furniture	5,675
Accumulated Depreciation, Pool Furniture		220
Accounts Payable		2,836
Wages Payable		920
Mortgage Payable		418,890
LJ, Capital		145,593
	$569,614	$569,614

Table (58)