Question

3.2 Problem you will be responsible for completing the accounting cycle from adjusting entries to post-closing trial balance. Below is the unadjusted trial balance for Walton Anvils as of December 31, 2016, and the data for the adjustments. There is also an Excel Template for this problem that you may download and use (or you may use your own). Walton Anvils Unadjusted Trial Balance December 31, 2016 Balance Account Title Debt Credit Cash $ 16,900.00 Accounts Receivable 17,500 Prepaid Rent 2,500 Office Supplies 1,900 Equipment 23,000 Accumulated Depreciation - Equipment $ 7,000.00 Accounts Payable 6,200.00 Salaries Payable Unearned Revenue 5,600.00 Common Stock 28,000.00 Retained Earnings 1,600.00 Dividends 4,500 Service Revenue 20,800.00 Salaries Expense 2,900 Rent Expense Depreciation Expense - Equipment Supplies Expense Total $ 69,200.00 $ 69,200.00 Adjustment Data a. Unearned revenue still unearned at December 31, 2016 $1,800 b. Prepaid rent still in force at December 31, 2016 $2,300 c. Office supplies used $1,400 d. Depreciation $380 e. Accrued Salaries Expense at December 31, 2016 $210 Requirements Open T-accounts using the balances in the unadjusted trial balance. Complete the worksheet for the year ended December 31, 2016. Prepare the adjusting entries and post to the T-accounts. Prepare the adjusted trial balance. Prepare the income statement, the statement of retained earnings, and the classified balance sheet in report form. Prepare the closing entries and post to the T-accounts. Prepare a post-closing trial balance. Calculate the current ratio for the company

Answer 1

T accounts

cash
	16900
	16900		16900
accounts receivable
	17500
	17500		17500
prepaid rent
	2500
	2500		2500
office supplies
	1900
	1900		1900
equipment
	23000
	23000		23000
accumulated dep. On equiment
			7000
	7000		7000
account payable
			6200
	6200		6200
unearned revenue
			5600
	5600		5600
common stock
			28000
	28000		28000
retained earnings
			1600
	1600		1600
dividends
	4500
	4500		4500
service revenue
			20800
	20800		20800
salaries expense
	2900
	2900		2900
rent expense
	200
	200		200
depreciation expense
	380
	380		380
supplies expense
	1400
	1400		1400

adjusting entries
unearned revenue (5600-1800)	3800
to service revenue		3800
unearned revenue still unearned at 1800
rent expense(2500-2300)	200
to prepaid expense		200
being prepaid rent @dec31 2300
supplies expense	1400
to supplies		1400
being office supplies used
depreciation expense	380
to accumulated dep. Equipment		380
depriciation expense provided
salaries expense	210
to salaries payable		210
accrued salaries expense

unearned revenue
to service revenue	3800	opening bal.	5600
to closing bal	1800
	5600		5600
service revenue
		opening bal.	20800
to closing balance	24600	by unearned revenue	3800
			24600

rent expense
	200
	200		200
prepaid rent
to opening bal.	2500	by rent expense	200
		by closing bal,	2300
	2500		2500

supplies expense
	1400
	1400		1400
office supplies
to opening bal.	1900	by supplies exp.	1400
		by closing bal	500
	500		500

depreciation expense
	380
	380		380
accumulated dep. On equipment
		by opening bal,	7000
	7380	by dep	380
	7380		7380

salaries payable
			210
	210		210
salaries expense
	2900
	210		3110
	3110		3110

Walton Anvils
adjusted trial balance
Dec-31
particulars	debit	credit
cash	16900
account receivables	17500
prepaid rent	2300
office supplies	500
equipment	23000
accumulated dep		7380
accounts payable		6200
salaries payable		210
unearned revenue.		1800
common stock		28000
retained earnings		1600
dividends	4500
service revenue		24600
salaries expense	3110
rent expense	200
depreciation expense	380
supplies expense	1400
	69790	69790

Waltons anvil i
income statement
for the year ended dec 31
income
service revenue		24600
less expenses
salaries	3110
rent	200
depreciation	380
supplies	1400
total expense	5090	5090
net income		19510

statement of retained earnings
beg. Balance		1600
net income		19510
dividends		4500
ending balance		16610

balance sheet
assets
current assets
cash		16900
accounts receivable		17500
prepaid rent		2300
office supplies		500
toTal		37200
equipment	23000
less: accumulated dep.	7380	15620
		52820
total assets
liabilities and stockholders equity
current liability
accounts payable		6200
salaries payable		210
unearned revenue		1800
total		8210
stockholders equity
common stock		28000
retained earnings		16610
total		44610
total liability and stockholders equity		52820

closing entries
service revenue	24600
to income statement		24600
income statement	5090
to salaries		3110
to rent		200
to supplies		1400
to dep.		380
income statement	19510
to retained earnings		19510
retained earnings	4500
to dividends		4500

post-closing trial balance
cash	16900
accounts receivable	17500
prepaid rent	2300
office supplies	500
equipment	23000
accumulated dep.		7380
accounts payable		6200
salaries payable		210
unearned revenue		1800
common stock		28000
retained earnings		16610
	60200	60200

current ratio =	current assets/current liabilities
	37200/8210
	4.53106

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