Question

Prepare an adjusted trial balance. If an amount

Ledger Accounts, Adjusting Entries, Financial Statements, and Closing Entries; Optional Spreadsheet.

The unadjusted trial balance of Recessive Interiors at January 31, 2019, the end of the year, follows:

Recessive Interiors Unadjusted Trial Balance January 31, 2019
		Debit Balances		Credit Balances
11	Cash	13,100
13	Supplies	8,000
14	Prepaid Insurance	7,500
16	Equipment	113,000
17	Accumulated Depreciation—Equipment			12,000
18	Trucks	90,000
19	Accumulated Depreciation—Trucks			27,100
21	Accounts Payable			4,500
31	Jeanne McQuay, Capital			126,400
32	Jeanne McQuay, Drawing	3,000
41	Service Revenue			155,000
51	Wages Expense	72,000
52	Rent Expense	7,600
53	Truck Expense	5,350
59	Miscellaneous Expense	5,450
		325,000		325,000

The following additional accounts from Recessive Interiors' chart of accounts should be used: Wages Payable, 22; Depreciation Expense-Equipment, 54; Supplies Expense, 55; Depreciation Expense-Trucks, 56; Insurance Expense, 57.

The data needed to determine year-end adjustments are as follows:

Supplies on hand at January 31 are $2,850.

Insurance premiums expired during the year are $3,150.

Depreciation of equipment during the year is $5,250.

Depreciation of trucks during the year is $4,000.

Wages accrued but not paid at January 31 are $900.

Use the attached spreadsheet to complete parts 2, 3, and 6. Click on the Spreadsheet icon above to open and save the Excel file to your computer. Your input into the spreadsheet will not be included in your grade in CengageNOW on this problem.

Required:

1. For each account listed in the trial balance, notice that the balance has been entered in the appropriate general ledger account balance column of the spreadsheet. Posting to the general ledger will take place in step 3 and step 6.

2. (Optional) In the attached spreadsheet, notice that the unadjusted trial balance amounts have been entered. Enter the adjusting entries and complete the worksheet.

3. Journalize the adjusting entries on page 26 of the journal. Then post to the appropriate accounts in the general ledger in the attached spreadsheet, inserting balances in the accounts affected.

Journal				PAGE 26
Date	Account	Post. Ref.	Debit	Credit
a.
b.
c.
d.
e.

4. Prepare an adjusted trial balance. If an amount box does not require an entry, leave it blank.

Recessive Interiors Adjusted Trial Balance January 31, 2019
	Debit Balances	Credit Balances
Totals

5. Prepare an income statement.

Recessive Interiors Income Statement For the Year Ended January 31, 2019
		$
Expenses:
	$
Total expenses
		$

Prepare a Statement of Owner's Equity (no additional investments were made during the year.)

Recessive Interiors Statement of Owner's Equity For the Year Ended January 31, 2019
		$
	$
		$

Prepare a balance sheet.

Recessive Interiors Balance Sheet January 31, 2019
Assets				Liabilities
Current assets:				Current liabilities:
		$			$
				Total liabilities		$
Total current assets			$
Property, plant and equipment:				Owner's Equity
	$
		$
	$
Total property, plant and equipment
Total assets			$	Total liabilities and owner's equity		$

6. Journalize the closing entries on page 27 of the journal. Then post to the general ledger in the attached spreadsheet. For a compound transaction, if an amount box does not require an entry, leave it blank.

Journal				PAGE 27
Date	Account	Post. Ref.	Debit	Credit
Close expenses, revenues &income/loss
Close drawing

7. Prepare a post-closing trial balance. If an amount box does not require an entry, leave it blank.

Recessive Interiors Post-Closing Trial Balance January 31, 2019
	Debit Balances	Credit Balances
Totals

Answer 1

• Amounts are in “$”
• Adjusting Journal Entries

Journal				PAGE 26
Date	Account	Post. Ref.	Debit	Credit
a.	Supplies expense		5150
	Supplies			5150
b.	Insurance expense		3150
	Prepaid Insurance			3150
c.	Depreciation expense-Equipment		5250
	Accumulated Depreciation—Equipment			5250
d.	Depreciation expense-Trucks		4000
	Accumulated Depreciation—Trucks			4000
e.	Wages Expense		900
	Wages payable			900

• Adjusted Trial Balance

	Debit ($)	Credit ($)
Cash	13100	0
Supplies	2850	0
Prepaid Insurance	4350	0
Equipment	113000	0
Accumulated Depreciation—Equipment	0	17250
Trucks	90000	0
Accumulated Depreciation—Trucks	0	31100
Accounts Payable	0	4500
Jeanne McQuay, Capital	0	126400
Jeanne McQuay, Drawing	3000	0
Service Revenue	0	155000
Wages Expense	72900	0
Rent Expense	7600	0
Truck Expense	5350	0
Miscellaneous Expense	5450	0
Supplies expense	5150	0
Insurance expense	3150	0
Depreciation expense-Equipment	5250	0
Depreciation expense-Trucks	4000	0
Wages payable	0	900
Totals	335150	335150

• Income Statement

Recessive Interiors
Income Statement
For the Year Ended January 31, 2019
Service Revenue		155000
Expenses:
Wages Expense	72900
Rent Expense	7600
Truck Expense	5350
Miscellaneous Expense	5450
Supplies expense	5150
Insurance expense	3150
Depreciation expense-Equipment	5250
Depreciation expense-Trucks	4000
Total expenses		108850
Net Income		$46150

• Statement of Owners’ Equity

Recessive Interiors
Statement of Owner's Equity
For the Year Ended January 31, 2019
Opening Balance		126400
Add:Net Income	46150
Less: Drawings	3000	43150
Closing Balance		$169550

• Balance Sheet

Recessive Interiors
Balance Sheet
January 31, 2019
Assets				Liabilities
Current assets:				Current liabilities:
Cash		13100		Accounts Payable	4500
Supplies		2850		Wages payable	900
Prepaid Insurance		4350		Total liabilities		5400
Total current assets			20300
Property, plant and equipment:				Owner's Equity		169550
Equipment	113000
Accumulated Depreciation—Equipment	-17250	95750
Trucks	90000
Accumulated Depreciation—Trucks	-31100	58900
Total property, plant and equipment			154650
Total assets			174950	Total liabilities and owner's equity		174950

• Closing entries

Journal				PAGE 27
Date	Account	Post. Ref.	Debit ($)	Credit ($)
Revenues	Service Revenue		155000
	Income Summary			155000
Expenses	Income Summary		104850
	Wages Expense			72900
	Rent Expense			7600
	Truck Expense			5350
	Miscellaneous Expense			5450
	Supplies expense			5150
	Insurance expense			3150
	Depreciation expense-Equipment			5250
Net Income	Income Summary		46150
	Jeanne McQuay, Capital			46150
Drawings	Jeanne McQuay, Capital		3000
	Jeanne McQuay, Drawing			3000

• Post closing Trial Balance

Post-Closing Trial Balance
January 31, 2019
	Debit Balances	Credit Balances
Cash	13100	0
Supplies	2850	0
Prepaid Insurance	4350	0
Equipment	113000	0
Accumulated Depreciation—Equipment	0	17250
Trucks	90000	0
Accumulated Depreciation—Trucks	0	31100
Accounts Payable	0	4500
Jeanne McQuay, Capital	0	169550
Wages payable	0	900
Totals	$223300	$223300