Question

Problem 4-5A Preparing trial balances, closing entries, and financial statements LO C3, P2, P3

The adjusted trial balance of Karise Repairs on December 31, 2017, follows.

KARISE REPAIRS Adjusted Trial Balance December 31, 2017
No.	Account Title	Debit				Credit
101	Cash	$	45,000
124	Office supplies		1,900
128	Prepaid insurance		2,800
167	Equipment		59,000
168	Accumulated depreciation—Equipment					$	5,900
201	Accounts payable						12,000
210	Wages payable						700
301	C. Karise, Capital						33,000
302	C. Karise, Withdrawals		16,000
401	Repair fees earned						139,300
612	Depreciation expense—Equipment		5,900
623	Wages expense		35,000
637	Insurance expense		1,400
640	Rent expense		15,000
650	Office supplies expense		4,400
690	Utilities expense		4,500
	Totals	$	190,900			$	190,900

Assume there are no owner investments in 2017.
  
Required:
1a. Prepare an income statement for the year 2017.
1b. Prepare a statement of owner's equity for the year 2017.
1c. Prepare a classified balance sheet at December 31, 2017.
2. Complete the work sheet using the adjusted trial balance in the first two columns of a six-column table. Use columns three and four for closing entry information and the last two columns for a post-closing trial balance.
3. Using information from the work sheet in Requirement 2, prepare the appropriate closing entries.

Answer 1

1a.	INCOME SUMMARY
	Revenue:
	Repair fees earned		1,39,300
	Operating expenses:
	Depreciation expense—Equipment	5,900
	Wages expense	35,000
	Insurance expense	1,400
	Rent expense	15,000
	Office supplies expense	4,400
	Utilities expense	4,500	66,200
	Net operating income		73,100
1b.	STATEMENT OF OWNERS' EQUITY
	C.Kraise, Capital, December 31, 2016		33000
	Add: Net income		73,100
			106100
	Less: Withdrawals		16,000
	C.Kraise, Capital, December 31, 2017		90,100
1c.	BALANCE SHEET
	ASSETS
	Current assets:
	Cash	45,000
	Office supplies	1,900
	Prepaid insurance	2,800		`
	Total current assets		49,700
	Equipment	59,000			`
	Accumulated depreciation—Equipment	5,900	53,100
	TOTAL ASSETS		1,02,800
	TOTAL LIABILITIES AND EQUIY
	Current liabilities:				`
	Accounts payable	12,000
	Wages payable	700
	Total current liabilities		12,700
	C. Karise, Capital		90,100
	TOTAL LIABILITIES AND EQUIY		1,02,800
						`
2)
Adjusted Trial Balance
December 31, 2017
		Adjusted Trial Balance		Closing entry information		Post closing Trial Balance
No.	Account Title	Debit	Credit	Debit	Credit	Debit	Credit
101	Cash	45,000				45,000
124	Office supplies	1,900				1,900
128	Prepaid insurance	2,800				2,800
167	Equipment	59,000				59,000
168	Accumulated depreciation—Equipment		5,900				5,900
201	Accounts payable		12,000				12,000
210	Wages payable		700				700
301	C. Karise, Capital		33,000	16,000			90,100
302	C. Karise, Withdrawals	16,000			16,000
401	Repair fees earned		1,39,300	1,39,300	73,100
612	Depreciation expense—Equipment	5,900			5,900
623	Wages expense	35,000			35,000
637	Insurance expense	1,400			1,400
640	Rent expense	15,000			15,000
650	Office supplies expense	4,400			4,400
690	Utilities expense	4,500			4,500
	Income summary			66,200	1,39,300
				73,100
	Totals	1,90,900	1,90,900	2,94,600	294600	1,08,700	108700
3)	CLOSING ENTRIES:
	Repair fees earned	1,39,300
	Income summary		1,39,300
	Income summary		66,200
	Depreciation expense—Equipment	5,900
	Wages expense	35,000
	Insurance expense	1,400
	Rent expense	15,000
	Office supplies expense	4,400
	Utilities expense	4,500
	Income summary	73,100
	C. Kraise, Capital		73,100
	C. Kraise, capital	16,000