Question

The unadjusted trial balance of La Mesa Laundry at August 31, 2016, the end of the fiscal year, follows:

La Mesa Laundry

UNADJUSTED TRIAL BALANCE

August 31, 2016

	ACCOUNT TITLE	DEBIT	CREDIT
1	Cash	3,800.00
2	Laundry Supplies	9,000.00
3	Prepaid Insurance	6,000.00
4	Laundry Equipment	180,800.00
5	Accumulated Depreciation		49,200.00
6	Accounts Payable		7,800.00
7	Bobbi Downey, Capital		95,000.00
8	Bobbi Downey, Drawing	2,400.00
9	Laundry Revenue		248,000.00
10	Wages Expense	135,800.00
11	Rent Expense	43,200.00
12	Utilities Expense	16,000.00
13	Miscellaneous Expense	3,000.00
14	Totals	400,000.00	400,000.00

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

•	Wages accrued but not paid at August 31 are $2,200.
•	Depreciation of equipment during the year is $8,150.
•	Laundry supplies on hand at August 31 are $2,000.
•	Insurance premiums expired during the year are $5,300.

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 August 31. 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.	Prepare a post-closing trial balance. * Be sure to read the instructions for each financial statement carefully.

Chart of Accounts

CHART OF ACCOUNTS
La Mesa 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 Bobbi Downey, Capital 32 Bobbi Downey, Drawing 33 Income Summary	REVENUE 41 Laundry Revenue EXPENSES 51 Wages Expense 52 Rent Expense 53 Utilities Expense 54 Depreciation Expense 55 Laundry Supplies Expense 56 Insurance Expense 59 Miscellaneous Expense

Labels and Amount Descriptions

Labels
Current assets
Current liabilities
Expenses
Property, plant, and equipment
Revenues
August 31, 2016
For the Year Ended August 31, 2016
Amount Descriptions
Add withdrawals
Bobbi Downey, capital, August 31, 2016
Bobbi Downey, capital, September 1, 2015
Decrease in owner’s equity
Increase in owner’s equity
Less withdrawals
Net income
Net loss
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)

Bobbi Downey, Capital (Acct. 31)

Bobbi Downey, Drawing (Acct. 32)

Income Summary (Acct. 33)

Laundry Revenue (Acct. 41)

Wages Expense (Acct. 51)

Rent Expense (Acct. 52)

Utilities Expense (Acct. 53)

Depreciation Expense (Acct. 54)

Laundry Supplies Expense (Acct. 55)

Insurance Expense (Acct. 56)

Miscellaneous Expense (Acct. 59)

Work Sheet

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.

Journal

3.a	Journalize the adjusting entries on page 10 of the journal. Adjusting entries are recorded on August 31.
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

JOURNAL

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

Adjusted Trial Balance

4. Prepare an adjusted trial balance.

La Mesa Laundry

ADJUSTED TRIAL BALANCE

August 31, 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	Bobbi Downey, Capital
9	Bobbi Downey, Drawing
10	Laundry Revenue
11	Wages Expense
12	Rent Expense
13	Utilities Expense
14	Depreciation Expense
15	Laundry Supplies Expense
16	Insurance Expense
17	Miscellaneous Expense
18	Totals

Income Statement

5. Prepare an income statement for the year ended August 31, 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.

La Mesa 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 August 31, 2016. Be sure to complete the statement heading. 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. Use the list of Labels and Amount Descriptions for the correct wording of text items.

La Mesa Laundry

Statement of Owner’s Equity

1
2
3
4
5

Balance Sheet

5. Prepare a balance sheet as of August 31, 2016. Be sure to complete the statement heading. Fixed assets must be entered in order according to account number. 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.

La Mesa 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.

La Mesa Laundry

POST-CLOSING TRIAL BALANCE

August 31, 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	Bobbi Downey, Capital
9	Totals

Answer 1