Question

Ledger Accounts, Adjusting Entries, Financial Statements, and Closing Entries; End-of-Period Spreadsheet.

The unadjusted trial balance of Recessive Interiors at January 31, 2018, the end of the year, follows:

Recessive Interiors Unadjusted Trial Balance January 31, 2018
		Debit Balances		Credit Balances
11	Cash	13,100
13	Supplies	8,000
14	Prepaid Insurance	7,500
16	Equipment	113,000
17	Accumulated Depreciation—Equipment			12,000
18	Trucks	90,000
19	Accumulated Depreciation—Trucks			27,100
21	Accounts Payable			4,500
31	Common Stock			30,000
32	Retained Earnings			96,400
33	Dividends	3,000
41	Service Revenue			155,000
51	Wages Expense	72,000
52	Rent Expense	7,600
53	Truck Expense	5,350
59	Miscellaneous Expense	5,450
		325,000		325,000

The following additional accounts from Recessive Interiors' chart of accounts should be used: Wages Payable, 22; Income Summary, 34; Depreciation Expense-Equipment, 54; Supplies Expense, 55; Depreciation Expense-Trucks, 56; Insurance Expense, 57.

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

Supplies on hand at January 31 are $2,850.

Insurance premiums expired during the year are $3,150.

Depreciation of equipment during the year is $5,250.

Depreciation of trucks during the year is $4,000.

Wages accrued but not paid at January 31 are $900.

1.  Journalize the adjusting entries of the journal. Then post to the appropriate accounts in the general ledger in the attached spreadsheet, inserting balances in the accounts affected.

2. Prepare an income statement.

3. Prepare a retained earnings statement.

4.  Prepare a balance sheet.

5. Prepare a post-closing trial balance. List the accounts in order by type: Assets, Liabilities, Capital, Dividends, Revenue and Expenses. If an amount box does not require an entry, leave it blank.

Answer 1

1. Adjusting entries are as prepared below:

Date	Particulars	L.F	Amount ($)	Amount ($)
Jan-31	Supplies Exp (8,000-2,850)		5,150
	Supplies			5,150
	(For supplies used)
Jan-31	Insurance Expense		3,150
	Prepaid Insurance			3,150
	(For one month prepaid amortized)
Jan-31	Depreciation-Equipment		5,250
	Acc dep-Equipment			5,250
	(for depreciation recorded)
Jan-31	Depreciation- Trucks		4,000
	Acc dep- Trucks			4,000
	(for depreciation recorded)
Jan-31	Wages exp		900
	Wages payable			900
	(for accrued salaries)

T-accounts are as prepared below:

Cash
Particulars	Amount	Particulars	Amount
Opening Balance	13,100
	13,100		0
Closing balance	13,100
Supplies
Particulars	Amount	Particulars	Amount
Opening Balance	8,000	Jan-31	5,150
	8,000		5,150
Closing balance	2,850
Prepaid insurance
Particulars	Amount	Particulars	Amount
Opening Balance	7,500	Jan-31	3,150
	7,500		3,150
Closing balance	4,350
Wages payable
Particulars	Amount	Particulars	Amount
		Opening Balance	0
		Jan-31	900
		Closing balance	900
Trucks
Particulars	Amount	Particulars	Amount
Opening Balance	90,000
Closing balance	90,000
Equipment
Particulars	Amount	Particulars	Amount
Opening Balance	113,000
Closing balance	113,000
Accounts payable
Particulars	Amount	Particulars	Amount
		Opening Balance	4,500
		Closing balance	4,500
Dividends
Particulars	Amount	Particulars	Amount
Opening Balance	3,000
	3,000		0
Closing balance	3,000
Retained Earnings
Particulars	Amount	Particulars	Amount
		Opening Balance	96,400
			96,400
		Closing balance	96,400
Common Stock
Particulars	Amount	Particulars	Amount
		Opening Balance	30,000
			30,000
		Closing balance	30,000
Service Revenue
Particulars	Amount	Particulars	Amount
		Opening Balance	155,000
		Closing balance	155,000
Wages Expense
Particulars	Amount	Particulars	Amount
Opening Balance	72,000
Jan-31	900
Closing balance	72,900
Rent Expense
Particulars	Amount	Particulars	Amount
Opening Balance	7,600
Closing balance	7,600
Truck Exp
Particulars	Amount	Particulars	Amount
Opening Balance	5,350
Closing balance	5,350
Miscellaneous expense
Particulars	Amount	Particulars	Amount
Opening Balance	5,450
Closing balance	5,450
Supplies exp
Particulars	Amount	Particulars	Amount
Opening Balance	0
Jan-31	5,150
Closing balance	5,150
Depreciation -Trucks
Particulars	Amount	Particulars	Amount
Opening Balance	0
Jan-31	4,000
Closing balance	4,000
Depreciation -equipment
Particulars	Amount	Particulars	Amount
Opening Balance	0
Jan-31	5,250
Closing balance	5,250
Accumulated dep- Trucks
Particulars	Amount	Particulars	Amount
		Opening Balance	27,100
		Jan-31	4,000
		Closing balance	31,100
Accumulated dep-Equipment
Particulars	Amount	Particulars	Amount
		Opening Balance	12,000
		Jan-31	5,250
		Closing balance	17,250
Insurance expense
Particulars	Amount	Particulars	Amount
Opening Balance	0
Jan-31	3,150
Closing balance	3,150

2. Income Statement

Recessive Interiors
Income Statement
For the Month Ended January 31, 2018
Particulars	Amount ($)	Amount ($)
Service Revenue		155,000
Less: Expenses
Wages Expense	72,900
Rent Expense	7,600
Truck Exp	5,350
Miscellaneous expense	5,450
Supplies exp	5,150
Depreciation -Trucks	4000
Depreciation -equipment	5,250
Insurance expense	3150
Total expenses		108,850
Net income		46,150

3. Retained earning statement

Recessive Interiors
Retained Earning Statement
For the Month Ended January 31, 2018
Particulars	Amount ($)	Amount ($)
Retained Earnings, jan 1		96,400
Add:
Net income	46,150
Less:
Dividends	3,000
Retained earnings , December 31		139,550

4. Balance sheet

Recessive Interiors
Budgeted Balance Sheet
As at January 31, 2018
Particulars	Amount ($)	Amount ($)
ASSETS
Current Assets:
Cash	13,100
Supplies	2,850
Prepaid Insurance	4,350
Total Current Assets		20,300
Equipment	113,000
Accumulated dep	-17,250
Trucks	90,000
Amortization	-31,100	154,650
Total Assets		174,950
LIABILITIES AND STOCKHOLDERS EQUITY
Liabilities :
Current Liabilities
Accounts Payable	4,500
Wages payable	900
Total Current Liabilities		5,400
Total Stockholders' Equity
Common Stock	30,000
Retained Earnings	139,550
Total Stockholders' Equity		169,550
Total Liabilities and stockholders’ equity		174,950

5. Post-closing trial balance

Recessive Interiors
Post Closing Trial balance
As of January 31' 2018
Particulars	Debit Balances	Credit Balances
Cash	13,100
Supplies	2,850
Prepaid insurance	4,350
Trucks	90,000
Accumlated dep-Building		31100
Equipment	113,000
Accumulated dep-Equipment		17250
Accounts payable		4500
Wages payable		900
Common Stock		30000
Retained Earnings		139,550
Total	223,300	223,300