Chapter 6, Problem 4PA

2.

To determine

Prepare the worksheet of the Company HPGS.

Explanation of Solution

Worksheet of the Company HPGS is as follows:

Table (1)

3.

To determine

Journalize the adjusting entries.

Explanation of Solution

Journalizing:

Journalizing refers to that process in which the transactions of an organization are recorded in a sequence. Based on the recorded entries, the accounts are posted to the relevant ledger accounts.

Adjusting entries of Company HPGS are as follows:

Record supplies expense:

General Journal				Page 3
Date	Account Title and Explanation	Post Ref.	Debit ($)	Credit ($)
December 31, 2019	Supplies expense		4,200
	Supplies			4,200
	(To record supplies used)

Table (2)

• Supplies expense in an expense account and it is increased by $4,200. Therefore, debit supplies expense account with $4,200.
• Supplies are asset account and it is decreased by $4,200. Therefore, credit supplies account with $4,200.

Record advertising expense:

General Journal				Page 3
Date	Account Title and Explanation	Post Ref.	Debit ($)	Credit ($)
December 31, 2019	Advertising expense		3,800
	Prepaid Advertising			3,800
	(To record supplies used)

Table (3)

• Advertising expense is an expense account and it is increased by $3,800. Therefore, debit Advertising expense account with $3,800.
• Prepaid Advertising is asset account and it is decreased by $3,800. Therefore, credit Prepaid Advertising account with $3,800.

Record depreciation expense-equipment:

General Journal				Page 3
Date	Account Title and Explanation	Post Ref.	Debit ($)	Credit ($)
December 31, 2019	Depreciation expense		1,160
	Accumulated depreciation			1,160
	(To record depreciation expense)

Table (4)

• Depreciation expense in an expense account and it is increased by $1,160. Therefore, debit depreciation expense account with $1,160.
• Accumulated depreciation-equipment is an asset account and it is decreased by $1,160. Therefore, credit accumulated depreciation-equipment with $1,160.

4.

To determine

Journalize the closing entries.

Explanation of Solution

General Journal				Page 4
Date	Account Title and Explanation	Post Ref.	Debit ($)	Credit ($)
December 31, 2019	Fees income		53,200
	Income summary			53,200
	(To transfer fees income amount)

Table (5)

• The account of fees income account gets closed by $53,200. Therefore, debit fees income account with $53,200.
• The amount of fees income transferred to income summary, the account of income summary increases by $53,200. Therefore, credit income summary account with $53,200.

General Journal				Page 4
Date	Account Title and Explanation	Post Ref.	Debit ($)	Credit ($)
December 31, 2019	Income summary		22,360
	Depreciation expense			1,160
	Salaries expense			11,600
	Advertising expense			3,800
	Utilities expense			1,600
	Supplies expense			4,200
	(To transfer the amount of income summary)

Table (6)

• The amount of income summary is decreases by $22,360. Therefore, debit the account of income summary with $22,360.
• Depreciation expense is an expense account and it is decreased by $1,160. Therefore, credit depreciation expense with $1,160.
• Salaries expense is an expense account and it is decreased by $11,600. Therefore, credit salaries expense with $11,600.
• Advertising expense is an expense account and it is decreased by $3,800. Therefore, credit advertising expense with $3,800.
• Utilities expense is an expense account and it is decreased by $1,600. Therefore, credit utilities expense account with $1,600.
• Supplies expense is an expense account and it is decreased by $4,200. Therefore, credit the supplies expense account with $4,200.

General Journal				Page 4
Date	Account Title and Explanation	Post Ref.	Debit ($)	Credit ($)
December 31, 2019	Income summary $\left(\$53,200-\$22,360\right)$		30,840
	SJ Capital			30,840
	(To transfer the amount of income summary)

Table (7)

• The amount of income summary is decreases by $30,840. Therefore, debit the account of income summary with $30,840.
• The capital account increases by $30,840. Therefore, credit the SJ capital with $30,840.

General Journal				Page 4
Date	Account Title and Explanation	Post Ref.	Debit ($)	Credit ($)
December 31, 2019	SJ Capital		6,000
	SJ Drawings			6,000
	(To transfer the amount of capital account)

Table (8)

• The amount of drawings adjusted from the capital account, the amount of capital account decreases by $6,000. Therefore, debit the account of SJ Capitalwith $6,000.
• The account of drawings increases by $6,000. Therefore, credit the account ofSJ Drawings with $6,000.

1, 3 and 4.

To determine

Prepare the ledger accounts to record the balances as of December 31, 2019 and post adjusting and closing entries.

Explanation of Solution

Prepare the ledger accounts to record the balances as of December 31, 2019 and post adjusting and closing entries.

Supplies account:

Supplies Account
Date	Particular	Debit ($)	Credit ($)	Balance ($)
December 31, 2019	Balance	12,000		12,000 (debit)
	Adjusting		4,200	7,800(debit)

Table (9)

Prepaid Advertising Account:

Prepaid Advertising Account
Date	Particular	Debit ($)	Credit ($)	Balance ($)
December 31, 2019	Balance	8,000		8,000 (debit)
	Adjusting		3,800	4,200 (debit)

Table (10)

Accumulated depreciation account:

Accumulated Depreciation Account
Date	Particular	Debit ($)	Credit ($)	Balance ($)
December 31, 2019	Adjusting		1,160	1,160 (credit)

Table (11)

SJ Capital account:

SJ Capital Account
Date	Particular	Debit ($)	Credit ($)	Balance ($)
December 31, 2019	Balance			91,000 (credit)
	Closing		30,840	121,840 (credit)
	Closing	6,000		115,840 (credit)

Table (12)

SJ Drawings account:

SJ Drawings Account
Date	Particular	Debit ($)	Credit ($)	Balance ($)
December 31, 2019	Balance			6,000 (debit)
	Closing		6,000	-

Table (13)

Income Summary Account:

Income Summary Account
Date	Particular	Debit ($)	Credit ($)	Balance ($)
December 31, 2019	Closing			53,200 (credit)
	Closing	22,360		30,840 (credit)
	Closing	30,840		-

Table (14)

Fees Income Account:

Fees Income Account
Date	Particular	Debit ($)	Credit ($)	Balance ($)
December 31, 2019	Balance			53,200 (credit)
	closing	53,200		-

Table (15)

Salaries Expense Account:

Salaries Expense Account
Date	Particular	Debit ($)	Credit ($)	Balance ($)
December 31,2019	Balance			11,600 (debit)
	Closing		11,600	-

Table (16)

Utilities Expense Account:

Utilities Expense Account
Date	Particular	Debit ($)	Credit ($)	Balance ($)
December 31,2019	Balance			1,600 (debit)
	Closing		1,600	-

Table (17)

Supplies expense:

Supplies expense
Date	Particular	Debit ($)	Credit ($)	Balance ($)
December 31,2019	Adjusting	4,200		4,200 (debit)
	closing		4,200	-

Table (18)

Depreciation Expense Account:

Depreciation Expense Account
Date	Particular	Debit ($)	Credit ($)	Balance ($)
December 31,2019	Adjusting	1,160		1,160 (debit)
	Closing		1,160	-

Table (19)

Advertising Expense Account:

Depreciation Expense Account
Date	Particular	Debit ($)	Credit ($)	Balance ($)
December 31,2019	Adjusting	3,800		3,800 (debit)
	Closing		3,800	-

Table (20)

5.

To determine

Prepare a post-closing trial balance.

Explanation of Solution

Trial balance of Company HPGS is given below:

Company HPGS Post- closing Trial Balance December 31, 2019
Account Title	Debit ($)	Credit ($)
Cash	64,100
Accounts Receivable	10,900
Supplies	7,800
Prepaid Advertisement	4,200
Equipment	42,000
Accumulated Depreciation		1,160
Accounts Payable		12,000
SJ, Capital		115,480
Total	129,000	129,000

Table (21)