Question

The unadjusted trial balance of Epicenter Laundry at June 30, 2016, the end of the fiscal year, follows:

Epicenter Laundry

UNADJUSTED TRIAL BALANCE

June 30, 2016

	ACCOUNT TITLE	DEBIT	CREDIT
1	Cash	11,000.00
2	Laundry Supplies	21,500.00
3	Prepaid Insurance	9,600.00
4	Laundry Equipment	232,600.00
5	Accumulated Depreciation		125,400.00
6	Accounts Payable		11,800.00
7	Sophie Perez, Capital		105,600.00
8	Sophie Perez, Drawing	10,000.00
9	Laundry Revenue		232,200.00
10	Wages Expense	125,200.00
11	Rent Expense	40,000.00
12	Utilities Expense	19,700.00
13	Miscellaneous Expense	5,400.00
14	Totals	475,000.00	475,000.00

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

•	Laundry supplies on hand at June 30 are $3,600.
•	Insurance premiums expired during the year are $5,700.
•	Depreciation of laundry equipment during the year is $6,500.
•	Wages accrued but not paid at June 30 are $1,100.

Required:

1.	For each account listed in the unadjusted trial balance, enter the balance in a T account. Identify the balance as “Bal.”
2.	(Optional) On your own paper or spreadsheet, enter the unadjusted trial balance on an end-of-period work sheet and complete the work sheet.
3.	a. Journalize the adjusting entries on page 10 of the journal. Adjusting entries are recorded on June 30. b. Post the adjusting entries. In the T accounts, identify the adjustments by “Adj.” and the new balances as “Adj. Bal.” (Be sure to add a posting reference to the journal.)
4.	Prepare an adjusted trial balance.
5.	Prepare an income statement, a statement of owner’s equity, and a balance sheet.*
6.	a. Journalize the closing entries on page 11 of the journal. b. Post the closing entries. In the T accounts, identify the closing entries by “Clos.” (Be sure to add a posting reference to the journal.)
7.	7. Prepare a post-closing trial balance. *Be sure to read the instructions for each financial statement carefully.

Chart of Accounts

CHART OF ACCOUNTS
Epicenter Laundry
General Ledger
ASSETS 11 Cash 13 Laundry Supplies 14 Prepaid Insurance 16 Laundry Equipment 17 Accumulated Depreciation LIABILITIES 21 Accounts Payable 22 Wages Payable EQUITY 31 Sophie Perez, Capital 32 Sophie Perez, Drawing 33 Income Summary	REVENUE 41 Laundry Revenue EXPENSES 51 Wages Expense 52 Rent Expense 53 Utilities Expense 54 Laundry Supplies Expense 55 Depreciation Expense 56 Insurance Expense 59 Miscellaneous Expense

Labels and Amount Descriptions

Labels
Current assets
Current liabilities
Expenses
For the Year Ended June 30, 2016
June 30, 2016
Property, plant, and equipment
Revenues
Amount Descriptions
Add withdrawals
Decrease in owner’s equity
Increase in owner’s equity
Less withdrawals
Net income
Net loss
Sophie Perez, capital, June 30, 2016
Sophie Perez, capital, July 1, 2015
Total assets
Total current assets
Total expenses
Total liabilities
Total liabilities and owner’s equity
Total property, plant, and equipment

T Accounts

1.	For each account listed in the unadjusted trial balance, enter the balance in the appropriate T account. Identify the balance as “Bal.”
3.b.	Post the adjusting entries. Identify the adjustments by “Adj.” and the new balances as “Adj. Bal.”
6.b.	Post the closing entries. In the T accounts, identify the closing entries by “Clos.” (Be sure to add a posting reference to the journal.)

Cash (Acct. 11)

Laundry Supplies (Acct. 13)

Prepaid Insurance (Acct. 14)

Laundry Equipment (Acct. 16)

Accumulated Depreciation (Acct. 17)

Accounts Payable (Acct. 21)

Wages Payable (Acct. 22)

Sophie Perez, Capital (Acct. 31)

Sophie Perez, Drawing (Acct. 32)

Income Summary (Acct. 33)

Laundry Revenue (Acct. 41)

Wages Expense (Acct. 51)

Rent Expense (Acct. 52)

Utilities Expense (Acct. 53)

Laundry Supplies Expense (Acct. 54)

Depreciation Expense (Acct. 55)

Insurance Expense (Acct. 56)

Miscellaneous Expense (Acct. 59)

Work Sheet

(Optional) On your own paper or spreadsheet, enter the unadjusted trial balance on an end-of-period work sheet and complete the work sheet.

Journal

3.a.	Journalize the adjusting entries on page 10 of the journal. Adjusting entries are recorded on June 30.
6.a.	Journalize the closing entries on page 11 of the journal. (Note: Complete the adjusted trial balance, the income statement, the statement of owner’s equity, and the balance sheet BEFORE completing part 6. a.)

PAGE 10PAGE 11

GENERAL JOURNAL

	DATE	ACCOUNT TITLE	POST. REF.	DEBIT	CREDIT
1		Adjusting Entries
2
3
4
5
6
7
8
9

Adjusted Trial Balance

4. Prepare an adjusted trial balance.

Epicenter Laundry

ADJUSTED TRIAL BALANCE

June 30, 2016

	ACCOUNT TITLE	DEBIT	CREDIT
1	Cash
2	Laundry Supplies
3	Prepaid Insurance
4	Laundry Equipment
5	Accumulated Depreciation
6	Accounts Payable
7	Wages Payable
8	Sophie Perez, Capital
9	Sophie Perez, Drawing
10	Laundry Revenue
11	Wages Expense
12	Rent Expense
13	Utilities Expense
14	Laundry Supplies Expense
15	Depreciation Expense
16	Insurance Expense
17	Miscellaneous Expense
18	Totals

Income Statement

5. Prepare an income statement for the year ended June 30, 2016. If a net loss has been incurred, enter that amount as a negative number using a minus sign. Be sure to complete the statement heading. Use the list of Labels and Amount Descriptions for the correct wording of text items other than account names. You will not need to enter colons (:) on the income statement.

Epicenter Laundry

Income Statement

1
2
3
4
5
6
7
8
9
10
11

Statement of Owner’s Equity

5. Prepare a statement of owner’s equity for the year ended June 30, 2016. No additional investments were made during the year. If a net loss has been incurred or there has been a decrease in owner’s equity, enter that amount as a negative number using a minus sign. Be sure to complete the statement heading. Use the list of Labels and Amount Descriptions for the correct wording of text items.

Epicenter Laundry

Statement of Owner’s Equity

1
2
3
4
5

Balance Sheet

5. Prepare a balance sheet as of June 30, 2016. Fixed assets must be entered in order according to account number. Be sure to complete the statement heading. Use the list of Labels and Amount Descriptions for the correct wording of text items other than account names. You will not need to enter colons (:) or the word "Less" on the balance sheet; they will automatically insert where necessary.

Epicenter Laundry

Balance Sheet

1	Assets
2
3
4
5
6
7
8
9
10
11
12	Liabilities
13
14
15
16
17	Owner’s equity
18
19

Post-closing Trial Balance

7. Prepare a post-closing trial balance.

Epicenter Laundry

POST-CLOSING TRIAL BALANCE

June 30, 2016

	ACCOUNT TITLE	DEBIT	CREDIT
1	Cash
2	Laundry Supplies
3	Prepaid Insurance
4	Laundry Equipment
5	Accumulated Depreciation
6	Accounts Payable
7	Wages Payable
8	Sophie Perez, Capital
9	Totals

Answer 1

T-accounts are as prepared below:

Cash
Particulars	Amount	Particulars	Amount
Opening Balance	11,000
	11,000		0
Closing Balance	11,000
laundry supplies
Particulars	Amount	Particulars	Amount
Opening Balance	21,500
	21,500		0
Closing Balance	21,500
Prepaid Insurance
Particulars	Amount	Particulars	Amount
Opening Balance	9,600
	9,600		0
Closing Balance	9,600
Laundry Equipment
Particulars	Amount	Particulars	Amount
Opening Balance	232,600
	232,600		0
Closing Balance	232,600
Sophie Periz Drawing
Particulars	Amount	Particulars	Amount
Opening Balance	10,000
	10,000		0
Closing Balance	10,000
Wages Expense
Particulars	Amount	Particulars	Amount
Opening Balance	125,200
	125,200		0
Closing Balance	125,200
Rent Expense
Particulars	Amount	Particulars	Amount
Opening Balance	40,000
	40,000		0
Closing Balance	40,000
Utilities Expense
Particulars	Amount	Particulars	Amount
Opening Balance	19,700
	19,700		0
Closing Balance	19,700
Miscellaneous Expense
Particulars	Amount	Particulars	Amount
Opening Balance	5,400
	5,400		0
Closing Balance	5,400
Accumulated depreciation
Particulars	Amount	Particulars	Amount
		Opening Balance	125,400
			125,400
		Closing Balance	125,400
Accounts Payable
Particulars	Amount	Particulars	Amount
		Opening Balance	11,800
			11,800
		Closing Balance	11,800
Sophie Periz Capital
Particulars	Amount	Particulars	Amount
		Opening Balance	105,600
			105,600
		Closing Balance	105,600
laundry Revenue
Particulars	Amount	Particulars	Amount
		Opening Balance	232,,200
			0
		Closing Balance	0

Adjusting entries:

Date	Particulars	L.F	Amount ($)	Amount ($)
1	Supplies expense		17,900
	Laundry supplies			17,900
	(for supplies expensed)
2	Insurance Expense		5,700
	Prepaid Insurance			5,700
	(For insurance expired)
3	Depreciation-equipment		6,500
	Accumulated depreciation			6,500
	(For equipment depreciated)
4	Wages Expense		1,100
	wages payable			1,100
	(for wages accrued)

3. Adjusted T accounts

Cash
Particulars	Amount	Particulars	Amount
Opening Balance	11,000
	11,000		0
Closing Balance	11,000
laundry supplies
Particulars	Amount	Particulars	Amount
Opening Balance	21,500	Jun-30	17,900
	21,500		17,900
Closing Balance	3,600
Prepaid Insurance
Particulars	Amount	Particulars	Amount
Opening Balance	9,600	Jun-30	5,700
	9,600		5,700
Closing Balance	3,900
Laundry Equipment
Particulars	Amount	Particulars	Amount
Opening Balance	232,600
	232,600		0
Closing Balance	232,600
Sophie Periz Drawing
Particulars	Amount	Particulars	Amount
Opening Balance	10,000
	10,000		0
Closing Balance	10,000
Wages Expense
Particulars	Amount	Particulars	Amount
Opening Balance	125,200
Jun-30	1,100
	126,300		0
Closing Balance	126,300
Rent Expense
Particulars	Amount	Particulars	Amount
Opening Balance	40,000
	40,000		0
Closing Balance	40,000
Utilities Expense
Particulars	Amount	Particulars	Amount
Opening Balance	19,700
	19,700		0
Closing Balance	19,700
Miscellaneous Expense
Particulars	Amount	Particulars	Amount
Opening Balance	5,400
	5,400		0
Closing Balance	5,400
Accumulated depreciation
Particulars	Amount	Particulars	Amount
		Opening Balance	125,400
		Jun-30	6,500
			131,900
		Closing Balance	131,900
Accounts Payable
Particulars	Amount	Particulars	Amount
		Opening Balance	11,800
			11,800
		Closing Balance	11,800
Sophie Periz Capital
Particulars	Amount	Particulars	Amount
		Opening Balance	105,600
			105,600
		Closing Balance	105,600
laundry Revenue
Particulars	Amount	Particulars	Amount
		Opening Balance	232,200
			232,200
		Closing Balance	232,200
Supplies Expense
Particulars	Amount	Particulars	Amount
Jun-30	17,900
	17,900		0
Closing Balance	17,900
Wages payable
Particulars	Amount	Particulars	Amount
		Jun-30	1,100
			1,100
		Closing Balance	1,100
Depreciation Expense
Particulars	Amount	Particulars	Amount
Jun-30	6,500
	6,500		0
Closing Balance	6,500
Insurance Expense
Particulars	Amount	Particulars	Amount
Jun-30	5,700
	5,700		0
Closing Balance	5,700

4. Trial balance

Epicentre Laundry
Adjusted Trial Balance
June 30, 2016
	Debit Balances	Credit balances
Cash	11,000
laundry supplies	3,600
Prepaid Insurance	3,900
Laundry Equipment	232,600
Accumulated depreciation		131,900
Accounts Payable		11,800
Wages payable		1,100
Sophie Periz Capital		105,600
Sophie Periz Drawing
Income tax payable	10,000
laundry Revenue		232,200
Wages Expense	126,300
Rent Expense	40,000
Utilities Expense	19,700
Miscellaneous Expense	5,400
Supplies Expense	17,900
Depreciation Expense	6,500
Insurance Expense	5,700
Total	482,600	482,600