Ironside Security Services
End-of-Period Spreadsheet
For the Year Ended April 30, 2014
Adjusted
Trial Balance
Account Title Dr. Cr.
Cash
Accounts Receivable
Supplies
Prepaid Insurance
Building
Accumulated Depreciation—Building
Accounts Payable
Salaries Payable
Unearned Rent
Don Chadwell, Capital
Don Chadwell, Drawing
Service Fees
Rent Revenue
Salaries Expense
Rent Expense
Supplies Expense
Depreciation Expense—Building
Utilities Expense
Repairs Expense
Insurance Expense
Miscellaneous Expense
480,000
25,000
18,000
37,200
7,500
4,800
240,500
10,000
55,200
6,000
1,500
3,000
179,300
336,000
62,500
12,000
6,000
4,400
3,200
2,800
5,100
750,000 750,000
A
Instructions
1. Prepare an income statement, a statement of owner’s equity (no additional investments were made during the year), and a balance sheet.
2. Journalize the entries that were required to close the accounts at April 30.
3. If Don Chadwell, Capital has instead decreased $47,500 after the closing entries were posted, and the withdrawals remained the same, what would have been the amount of net income or net loss?
Answer:
1. IRONSIDE SECURITY SERVICES
Income Statement
For the Year Ended April 30, 2014
Revenues:
Service fees $480,000
Rent revenue 25,000
Total revenues $505,000
Expenses:
Salaries expense $336,000
Rent expense 62,500
Supplies expense 12,000
Depreciation expense—building 6,000
Utilities expense 4,400
Repairs expense 3,200
Insurance expense 2,800
Miscellaneous expense 5,100
Total expenses 432,000
Net income $ 73,000
IRONSIDE SECURITY SERVICES
Statement of Owner’s Equity
For the Year Ended April 30, 2014
Don Chadwell, capital, May 1, 2013 $179,300
Net income for the year $73,000
Less withdrawals 10,000
Increase in owner’s equity 63,000
Don Chadwell, capital, April 30, 2014 $242,300
IRONSIDE SECURITY SERVICES
Balance Sheet
April 30, 2014
Assets Liabilities
Current assets: Current liabilities:
Cash $18,000 Accounts payable $6,000
Accounts receivable 37,200 Salaries payable 1,500
Supplies 7,500 Unearned rent 3,000
Prepaid insurance 4,800 Total liabilities $ 10,500
Total current assets $ 67,500
Property, plant, and equipment:
Building $240,500 Owner’s Equity
Less accum. depreciation 55,200 Don Chadwell, capital 242,300
Total property, plant, and
building 185,300 Total liabilities and owner’s
Total assets $252,800 equity $252,800
2. 2014 Closing Entries
Apr. 30 Service Fees 480,000
Rent Revenue 25,000
Income Summary 505,000
30 Income Summary 432,000
Salaries Expense 336,000
Rent Expense 62,500
Supplies Expense 12,000
Depreciation Expense—Building 6,000
Utilities Expense 4,400
Repairs Expense 3,200
Insurance Expense 2,800
Miscellaneous Expense 5,100
30 Income Summary 73,000
Don Chadwell, Capital 73,000
30 Don Chadwell, Capital 10,000
Don Chadwell, Drawing 10,000
3. $37,500 ($47,500 – $10,000) net loss. The $47,500 decrease is caused by the
$10,000 withdrawals and a $37,500 net loss.