Question

Joe Clark has his own Desktop Publishing business. In may you as the bookkeeper prepared a Trial Balance and then reviewed the accounts.

The following items became apparent upon review of the accounts in the trial balance:

The office supplies on had were counted and a value of $100 was attributed to the remaining items

The prepaid rent was $1,200 for 3 months rent paid on May 1 2020.

The equipment was purchased on January 1 2020 and has a 5 year life.

Salaries earned but not yet paid amount to $350

Services to clients that have been completed but not yet billed total $2,000

Received a telephone bill for $200.

The unearned revenue was for an order paid by a customer for a parts.  $1000 of the order has been shipped to the customer

Prepare the adjusting entries for the Items 1-7 above

Adjusting Entries

Date							Debit	Credit
31-May
31-May
31-May
31-May
31-May
31-May
31-May

Account Title

Trial Balance

Adjustments

Adjusted Trial Balance

Income Summary

Balance Sheet

DR

CR

DR

CR

DR

CR

DR

CR

DR

CR

Cash

6155

Account Receivable

5000

Inventory

750

Office Supplies

600

Prepaid Rent

1200

Equipment

6000

Accumulated Amortization

Salary Payable

Account Payable

3350

Unearned Revenue

1500

Joe Clark, Capital

14950

Joe Clark, Withdrawals

625

Sales

8000

Sales Returns

200

Cost of Goods Sold

5500

Salaries Expense

1300

Advertising Expensee

250

Telephone Expense

220

27800

27800

Amortization expense

Rent Expense

Supplies Expense

Total/Subtotal

Net Income/Loss

Total/Subtotal

Post the adjusting entries to the Worksheet below

Complete the Adjusted Trial Balance on the Worksheet

Complete the Income Summary on the Worksheet

Complete the Balance Sheet on the Worksheet

Prepare in Good Form, a Multi Step Income Statement, A Statement of Equity and a Classified Balance Sheet

Statement of Equity

CLASSIFIED Balance Sheet

Prepare the Closing Entries

Answer 1

Prepare the adjusting entries as follows:

Date	Account Titles	Debit	Credit
May. 31	Supplies Expense	$500
	Supplies [$600-$100]		$500
	(To record supplies expense)
May. 31	Rent Expense	$400
	Prepaid Rent [$1200 × 1/3]		$400
	(To record rent expense)
May. 31	Depreciation expense [($6000/5 years) × 5/12]	$500
	Accumulated depreciation		$500
	(To record depreciation expense)
May. 31	Salaries Expense	$350
	Salaries payable		$350
	(To record salaries expense)
May. 31	Accounts receivable	$2,000
	Sales		$2,000
May. 31	Telephone expense	$200
	Accounts payable		$200
	(To record Telephone expense)
May. 31	Unearned Revenue	$1,000
	Sales		$1,000
	(To record sales)

________________________________________________________________________

Prepare Worksheet as follows:

	Unadjusted Trial Balance	Adjustments	Adjusted Trial Balance	Income Summary	Balance Sheet
	Debit	Credit	Debit	Credit	Debit	Credit	Debit	Credit	Debit	Credit
Cash	$6,155				$6,155				$6,155
Accounts Receivable	$5,000		$2,000		$7,000				$7,000
Inventory	$750				$750				$750
Office Supplies	$600			$500	$100				$100
Prepaid Rent	$1,200			$400	$800				$800
Equipment	$6,000				$6,000				$6,000
Accumulated depreciation/Amortization				$500		$500				$500
Salary payable				$350		$350				$350
Accounts payable		$3,350		$200		$3,550				$3,550
Unearned Revenue		$1,500	$1,000			$500				$500
Joe, Clark, Capital		$14,950				$14,950				$14,950
Joe, Clark, Withdrawals	$625				$625				$625
Sales		$8,000		$2,000		$10,000		$10,000
				$1,000		$1,000		$1,000
Sales returns	$200				$200		$200
Cost of goods sold	$5,500				$5,500		$5,500
Salaries expense	$1,300		$350		$1,650		$1,650
Advertising expense	$250				$250		$250
Telephone expense	$220		$200		$420		$420
Depreciation expense/Amortization			$500		$500		$500
Rent expense			$400		$400		$400
Supplies expense			$500		$500		$500
	$27,800	$27,800	$4,950	$4,950	$30,850	$30,850	$9,420	$11,000	$21,430	$19,850
Net Income/(Loss)							$1,580			$1,580
Total	$27,800	$27,800	$4,950	$4,950	$30,850	$30,850	$11,000	$11,000	$21,430	$21,430

_________________________________________________________________

Prepare financial statement as follows:

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