Epicenter Laundry
Unadjusted Trial Balance
June 30, 2014
Debit
Balances
Credit
Balances
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,000
Laundry Supplies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21,500
Prepaid Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,600
Laundry Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 232,600
Accumulated Depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 125,400
Accounts Payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,800
Sophie Perez, Capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 105,600
Sophie Perez, Drawing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,000
Laundry Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 232,200
Wages Expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 125,200
Rent Expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40,000
Utilities Expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19,700
Miscellaneous Expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,400
475,000 475,000
The data needed to determine year-end adjustments are as follows:
a. Laundry supplies on hand at June 30 are $3,600.
b. Insurance premiums expired during the year are $5,700.
c. Depreciation of laundry equipment during the year is $6,500.
d. Wages accrued but not paid at June 30 are $1,100.
Instructions
1. For each account listed in the unadjusted trial balance, enter the balance in a T account. Identify the balance as “June 30 Bal.” In addition, add T accounts for Wages Payable, Depreciation Expense, Laundry Supplies Expense, Insurance Expense, and Income Summary.
2. (Optional.) Enter the unadjusted trial balance on an end-of-period spreadsheet (work sheet) and complete the spreadsheet. Add the accounts listed in part (1) as needed.
3. Journalize and post the adjusting entries. Identify the adjustments by “Adj.” and the new balances as “Adj. Bal.”
4. Prepare an adjusted trial balance.
5. Prepare an income statement, a statement of owner’s equity (no additional investments were made during the year), and a balance sheet.
6. Journalize and post the closing entries. Identify the closing entries by “Clos.”
7. Prepare a post-closing trial balance.
Answer:
1., 3., and 6.
Cash
June 30 Bal. 11,000
Laundry Supplies
June 30 Bal. 21,500 June 30 Adj.
30 Adj. Bal. 3,600
Prepaid Insurance
June 30 Bal. 9,600 June 30 Adj.
30 Adj. Bal. 3,900
Laundry Equipment
June 30 Bal. 232,600
17,900
5,700
Accumulated Depreciation
June 30 Bal. 125,400
30 Adj. 6,500
30 Adj. Bal. 131,900
Accounts Payable
June 30 Bal. 11,800
Wages Payable
June 30 Adj. 1,100
Sophie Perez, Capital
June 30 Clos. 10,000 June 30 Bal. 105,600
30 Clos. 10,700
30 Bal. 106,300
Sophie Perez, Drawing
June 30 Bal. 10,000 June 30 Clos. 10,000
June 30 Adj. 5,700 June 30 Clos.
June 30 Bal. 5,400 June 30 Clos.
Income Summary
June 30 Clos. 221,500 June 30 Clos. 232,200
Clos. 10,700
Laundry Revenue
232,200
Wages Expense
June 30 Bal. 125,200 June 30 Clos.
30 Adj. 1,100
30 Adj. Bal. 126,300
Rent Expense
June 30 Bal. 40,000 June 30 Clos.
Utilities Expense
126,300
40,000
19,700
Laundry Supplies Expense
Depreciation Expense
Insurance Expense
Miscellaneous Expense
17,900
6,500
5,700
5,400
2. Optional (Appendix)
EPICENTER LAUNDRY
End-of-Period Spreadsheet (Work Sheet)
For the Year Ended June 30, 2014
Account Title
Unadjusted
Trial Balance Adjustments
Adjusted
Trial Balance
Income
Statement
Balance
Sheet
Debit Credit Debit Credit Debit Credit Debit Credit Debit Credit
Cash 11,000 11,000 11,000
Laundry Supplies 21,500 (a) 17,900 3,600 3,600
Prepaid Insurance 9,600 (b) 5,700 3,900 3,900
Laundry Equipment 232,600 232,600 232,600
Accum. Depreciation 125,400 (c) 6,500 131,900 131,900
Accounts Payable 11,800 11,800 11,800
Wages Payable (d) 1,100 1,100 1,100
Sophie Perez, Capital 105,600 105,600 105,600
Sophie Perez, Drawing 10,000 10,000 10,000
Laundry Revenue 232,200 232,200 232,200
Wages Expense 125,200 (d) 1,100 126,300 126,300
Rent Expense 40,000 40,000 40,000
Utilities Expense 19,700 19,700 19,700
Laundry Supplies Exp. (a) 17,900 17,900 17,900
Depreciation Expense (c) 6,500 6,500 6,500
Insurance Expense (b) 5,700 5,700 5,700
Miscellaneous Expense 5,400 5,400 5,400
475,000 475,000 31,200 31,200 482,600 482,600 221,500 232,200 261,100 250,400
Net Income 10,700 10,700
232,200 232,200 261,100 261,100
3.
Adjusting Entries
2014
June 30 Laundry Supplies Expense 17,900
Laundry Supplies 17,900
Supplies used ($21,500 – $3,600).
30 Insurance Expense 5,700
Prepaid Insurance 5,700
Insurance expired.
30 Depreciation Expense 6,500
Accumulated Depreciation 6,500
Equipment depreciation.
30 Wages Expense 1,100
Wages Payable 1,100
Accrued wages.
4. EPICENTER LAUNDRY
Adjusted Trial Balance
June 30, 2014
Debit
Balances
Credit
Balances
Cash 11,000
Laundry Supplies 3,600
Prepaid Insurance 3,900
Laundry Equipment 232,600
Accumulated Depreciation 131,900
Accounts Payable 11,800
Wages Payable 1,100
Sophie Perez, Capital 105,600
Sophie Perez, Drawing 10,000
Laundry Revenue 232,200
Wages Expense 126,300
Rent Expense 40,000
Utilities Expense 19,700
Laundry Supplies Expense 17,900
Depreciation Expense 6,500
Insurance Expense 5,700
Miscellaneous Expense 5,400
482,600 482,600
5. EPICENTER LAUNDRY
Income Statement
For the Year Ended June 30, 2014
Laundry revenue $232,200
Expenses:
Wages expense $126,300
Rent expense 40,000
Utilities expense 19,700
Laundry supplies expense 17,900
Depreciation expense 6,500
Insurance expense 5,700
Miscellaneous expense 5,400
Total expenses 221,500
Net income $ 10,700
EPICENTER LAUNDRY
Statement of Owner’s Equity
For the Year Ended June 30, 2014
Sophie Perez, capital, July 1, 2013 $105,600
Net income for the year $10,700
Less withdrawals 10,000
Increase in owner’s equity 700
Sophie Perez, capital, June 30, 2014 $106,300
EPICENTER LAUNDRY
Balance Sheet
June 30, 2014
Assets Liabilities
Current assets: Current liabilities:
Cash $ 11,000 Accounts payable $11,800
Laundry supplies 3,600 Wages payable 1,100
Prepaid insurance 3,900 Total liabilities $ 12,900
Total current assets $ 18,500
Property, plant, and equipment:
Laundry equipment $232,600
Less accum. depreciation 131,900 Owner’s Equity
Total property, plant, and Sophie Perez, capital 106,300
equipment 100,700 Total liabilities and owner’s
Total assets $119,200 equity $119,200
6.
Closing Entries
2014
June 30 Laundry Revenue 232,200
Income Summary 232,200
30 Income Summary 221,500
Wages Expense 126,300
Rent Expense 40,000
Utilities Expense 19,700
Laundry Supplies Expense 17,900
Depreciation Expense 6,500
Insurance Expense 5,700
Miscellaneous Expense 5,400
30 Income Summary 10,700
Sophie Perez, Capital 10,700
30 Sophie Perez Capital 10,000
Sophie Perez, Drawing 10,000
7.
EPICENTER LAUNDRY
Post-Closing Trial Balance
June 30, 2014
Debit
Balances
Credit
Balances
Cash 11,000
Laundry Supplies 3,600
Prepaid Insurance 3,900
Laundry Equipment 232,600
Accumulated Depreciation 131,900
Accounts Payable 11,800
Wages Payable 1,100
Sophie Perez, Capital 106,300
251,100 251,100