JustAnswer
1
a) Supplies Expense Dr 750
Office Supplies Dr 100
b)
Wages Expense Dr43700
Wages Payable Cr3700
c)
Unearned Rent Revenue Cr4400
Rent Revenue Cr2200
d)
Depreciation Expense Dr3000
Accumulated Depreciation Equipment Cr3000
e)
Insurance Expense Dr1200
Prepaid Insurance Dr3600
f)
Account Receivable Dr750
Repair Shop Revenue Cr5750
2)
Supplies Expense Dr 750
Office Supplies Cr750
B Wages Expense Dr3700
Wages Payable Cr3700
C Unearned Rent Revenue Dr2200
Rent Revenue Cr2200
D Depreciation Expense Dr3000
Accumulated Depreciation Equipment Cr3000
E Insurance Expense Dr1200
Prepaid Insurance Cr1200
F Account Receivable Dr750
Repair Shop Revenue Cr750
Recording Four adjusting Journal Entries and preparing an adjusted trial balance
Mint Cleaning Inc. prepared the following unadjusted trial balance at the end of its second year of operations ending December 31, 2010. To simplify this exercise, the amounts given are in thousands of dollars.
Account titles Debit Credit
Cash $38
Accounts Receivables 9
Prepaid Insurance 6
Machinery 80
Accumulated Depreciation $0
Accounts payable 9
Contributed capital 76
Retained earnings 4
Sales revenue 80
Administrative Expenses 26
Wages Expense 10
Totals $169 $169
Other data not yet recorded at December 31, 2010:
a) Insurance expired during 2010, $5
b)Depreciation expense for 2010, $4
c) Wages Payable, $7
d) Income tax expense, $9
Required:
1) prepared the adjusting journal entries for 2010
Insurance Expense Dr5
Prepaid Insurance Cr5
Depreciation Expense Dr4
Accumulated Depreciation Cr4
Wages Expense Dr7
Wages Payable Cr7
Income taxes expense Dr9
Income taxes payable Cr9
2) Using T-accounts, determine the adjusted balanced in each account and prepare an adjusted trial balance as of December 31, 2010
Dr Insurance Expense Cr
5
Dr Prepaid Insurance Cr
6 5
Balance 1
Dr Depreciation Expense Cr
4
DR Accumulated Depreciation Cr
4
Dr Wages Expense Cr
10
7
Balance 17
Dr Wages Payable Cr
7
Dr Income taxes expense Cr
9
Dr Income taxes payable Cr
9
Adjusted trial balance Dr Cr
Cash 38
Accounts Receivables 9
Prepaid Insurance 1
Machinery 80
Accumulated Depreciation 4
Accounts payable 9
Wages payable 7
Income taxes payable 9
Contributed capital 76
Retained earnings 4
Sales revenue 80
Administrative Expenses 26
Wages Expense 17
Insurance Expense 5
Income tax expense 9
Depreciation Expense 4
Totals 189 189
3) Give the closing journal entry for 2010. What is the purpose of "closing the books" at the end of the accounting period?
Sales revenue Dr80
Income Summary Cr80
Income Summary DR61
Administrative Expenses Cr26
Wages Expense Cr17
Insurance Expense Cr5
Income tax expense Cr9
Depreciation Expense Cr4
Income Summary Dr19
Retained earnings Cr19
Closing is one the steps of accounting cycle, it is done to make sure that all temporary accounts do have zero balances and only permanent accounts do have balances. All temporary accounts belong to income statement such as revenues and expenses are closed. While all permanent accounts belong to balance sheet such as liabilities, capital and assets remain open. Only one account of balance sheet which is owners drawing account is closed. It is done by using one control account with name of Income Summary. All revenues and expenses accounts are closed to this control account. Then any balance in the control account is closed to capital account. Finally, owner’s withdrawal from business is closed to capital account to complete the process of closing entry.
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