Question

The adjusted trial balance for DVD Concepts at December 31, 2017, as follows:

DVD CONCEPTS

Adjusted Trial Balance

Year Ended December 31, 2017

                                                                   

Accounts                                                                           Debit                                                                                                                                                Credit                                                                       

Cash                                                 $    8,000

Accounts Receivable                             16,000

Supplies                                                  6,000

Prepaid Insurance                                   8,000

Computer Equipment                          210,000

Accum. Depreciation—Computer Equipment                                                                                                                                  $ 25,000

Accounts Payable                                                                                                                                     20,000

Note Payable                                                                                                                                     71,000

Salaries Payable                                                                                                                                       3,000

J. Yan, Capital                                                                                                                                   109,000

J. Yan, Withdrawals                              12,000

DVD Rental Revenue                                                                                                                                   133,000

Advertising Expense                             26,000

Depreciation Expense                           12,000

Rent Expense                                       19,000

Salaries Expense                                  38,000

Supplies Expense                                                                                                                                       6,000                                                                                                                                               

     Totals     $361,000                                      $361,000

Additional Information:

1. The owner J. Yan invested $5,000 during the year.
2. The note payable requires a payment of principle in May 2018 in the amount of $11,000.
   

   (a)    Prepare a Statement of Owner’s Equity for the Year ended December 31, 2017.

   (b)    Prepare a classified balance sheet for DVD Concepts at December 31, 2017.

   (c)    Journalize the closing entries at December 31, 2017.

Answer 1

a.

Statement of Owners Equity
Month Ended December 31, 2017
J. Yan, Capital, beginning		104,000
Add: Net income	32,000
Add: Additional investment	5,000
Less: J. Yan drawings	-12,000
		25,000
J. Yan, Capital, ending		$129,000

b.

Balance Sheet
For the Month Ended December 31, 2017
Assets		Amount
Current Assets:
Cash	8,000
Accounts receivable	16,000
Supplies	6,000
Prepaid insurance	8,000
Total Current Assets		38,000
Plant,Assets :
Computer Equipment	210,000
Less:Accumulated Depreciation- equipment	-25,000
Total plant asset		185,000
Total Assets		223,000
Liabilities and Owners Equity
Current Liabilities:
Accounts payable	20,000
Salaries payable	3,000
Notes payable	11,000
Total Current liabilities		34,000
Long term Liabilities:
Notes payable	60,000
Total Long term Liabilities		60,000
Owners Equity:
J. Yan, Capital, ending	129,000
Total stockholders equity		129,000
Total Liabilities & Owners Equity		223,000

c.

Income Statement
Revenues:
Rental revenue	133,000
Total revenue	133,000
Expenses:
Advertising expense	-26,000
Depreciation expense	-12,000
Rent expense	-19,000
Salaries expense	-38,000
Supplies expense	-6,000
Total expenses	-101,000
Net Income	$32,000

Date	General Journal	Debit	Credit
Dec-31	Rental revenue	$133,000
	Income Summary		$133,000
	( To close revenues)
Dec-31	Income Summary	$101,000
	Advertising expense		$26,000
	Depreciation expense		$12,000
	Rent expense		$19,000
	Salaries expense		$38,000
	Supplies expense		$6,000
	( To close expense accounts)
Dec-31	Income Summary	$32,000
	J. Yan, Capital		$32,000
	( To close net income)
Dec-31	J. Yan, Capital	$12,000
	J. Yan, Withdrawals		$12,000
	( To transfer drawings)