Recessive Interiors
Unadjusted Trial Balance
January 31, 2014
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 Jeanne McQuay, Capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 126,400
32 Jeanne McQuay, Drawing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 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 data needed to determine year-end adjustments are as follows:
a. Supplies on hand at January 31 are $2,850.
b. Insurance premiums expired during the year are $3,150.
c. Depreciation of equipment during the year is $5,250.
d. Depreciation of trucks during the year is $4,000.
e. Wages accrued but not paid at January 31 are $900.
Instructions
1. For each account listed in the unadjusted trial balance, enter the balance in the appropriate Balance column of a four-column account and place a check mark (✓) in the Posting Reference column.
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 (3) as needed.
3. Journalize and post the adjusting entries, inserting balances in the accounts affected. Record the adjusting entries on Page 26 of the journal. The following additional accounts from Recessive Interiors’ chart of accounts should be used: Wages Payable, 22; Depreciation Expense—Equipment, 54; Supplies Expense, 55; Depreciation Expense— Trucks, 56; Insurance Expense, 57.
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. Record the closing entries on Page 27 of the journal. (Income Summary is account #33 in the chart of accounts.) Indicate closed accounts by inserting a line in both Balance columns opposite the closing entry.
7. Prepare a post-closing trial balance.
Answer:
1., 3., and 6.
Account: Cash Account No. 11
Date Item
Post.
Ref. Debit Credit
Balance
Debit Credit
2014
Jan. 31 Balance √ 13,100
Account: Supplies Account No. 13
Date Item
Post.
Ref. Debit Credit
Balance
Debit Credit
2014
Jan. 31 Balance √ 8,000
31 Adjusting 26 5,150 2,850
Account: Prepaid Insurance Account No. 14
Date Item
Post.
Ref. Debit Credit
Balance
Debit Credit
2014
Jan. 31 Balance √ 7,500
31 Adjusting 26 3,150 4,350
Account: Equipment Account No. 16
Date Item
Post.
Ref. Debit Credit
Balance
Debit Credit
2014
Jan. 31 Balance √ 113,000
Account: Accumulated Depreciation—Equipment Account No. 17
Date Item
Post.
Ref. Debit Credit
Balance
Debit Credit
2014
Jan. 31 Balance √ 12,000
31 Adjusting 26 5,250 17,250
Account: Trucks Account No. 18
Date Item
Post.
Ref. Debit Credit
Balance
Debit Credit
2014
Jan. 31 Balance √ 90,000
Account: Accumulated Depreciation—Trucks Account No. 19
Date Item
Post.
Ref. Debit Credit
Balance
Debit Credit
2014
Jan. 31 Balance √ 27,100
31 Adjusting 26 4,000 31,100
Account: Accounts Payable Account No. 21
Date Item
Post.
Ref. Debit Credit
Balance
Debit Credit
2014
Jan. 31 Balance √ 4,500
Account: Wages Payable Account No. 22
Date Item
Post.
Ref. Debit Credit
Balance
Debit Credit
2014
Jan. 31 Adjusting 26 900 900
Account: Jeanne McQuay, Capital Account No. 31
Date Item
Post.
Ref. Debit Credit
Balance
Debit Credit
2014
Jan. 31 Balance √ 126,400
31 Closing 27 46,150 172,550
31 Closing 27 3,000 169,550
Account: Jeanne McQuay, Drawing Account No. 32
Date Item
Post.
Ref. Debit Credit
Balance
Debit Credit
2014
Jan. 31 Balance √ 3,000
31 Closing 27 3,000 — —
Account: Income Summary Account No. 33
Date Item
Post.
Ref. Debit Credit
Balance
Debit Credit
2014
Jan. 31 Closing 27 155,000 155,000
31 Closing 27 108,850 46,150
31 Closing 27 46,150 — —
Account: Service Revenue Account No. 41
Date Item
Post.
Ref. Debit Credit
Balance
Debit Credit
2014
Jan. 31 Balance √ 155,000
31 Closing 27 155,000 — —
Account: Wages Expense Account No. 51
Date Item
Post.
Ref. Debit Credit
Balance
Debit Credit
2014
Jan. 31 Balance √ 72,000
31 Adjusting 26 900 72,900
31 Closing 27 72,900 — —
Account: Rent Expense Account No. 52
Date Item
Post.
Ref. Debit Credit
Balance
Debit Credit
2014
Jan. 31 Balance √ 7,600
31 Closing 27 7,600 — —
Account: Truck Expense Account No. 53
Date Item
Post.
Ref. Debit Credit
Balance
Debit Credit
2014
Jan. 31 Balance √ 5,350
31 Closing 27 5,350 — —
Account: Depreciation Expense—Equipment Account No. 54
Date Item
Post.
Ref. Debit Credit
Balance
Debit Credit
2014
Jan. 31 Adjusting 26 5,250 5,250
31 Closing 27 5,250 — —
Account: Supplies Expense Account No. 55
Date Item
Post.
Ref. Debit Credit
Balance
Debit Credit
2014
Jan. 31 Adjusting 26 5,150 5,150
31 Closing 27 5,150 — —
Account: Depreciation Expense—Trucks Account No. 56
Date Item
Post.
Ref. Debit Credit
Balance
Debit Credit
2014
Jan. 31 Adjusting 26 4,000 4,000
31 Closing 27 4,000 — —
Account: Insurance Expense Account No. 57
Date Item
Post.
Ref. Debit Credit
Balance
Debit Credit
2014
Jan. 31 Adjusting 26 3,150 3,150
31 Closing 27 3,150 — —
Account: Miscellaneous Expense Account No. 59
Date Item
Post.
Ref. Debit Credit
Balance
Debit Credit
2014
Jan. 31 Balance √ 5,450
31 Closing 27 5,450 — —
2. Optional (Appendix)
RECESSIVE INTERIORS
End-of-Period Spreadsheet (Work Sheet)
For the Year Ended January 31, 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 13,100 13,100 13,100
Supplies 8,000 (a) 5,150 2,850 2,850
Prepaid Insurance 7,500 (b) 3,150 4,350 4,350
Equipment 113,000 113,000 113,000
Accum. Depr.—Equipment 12,000 (c) 5,250 17,250 17,250
Trucks 90,000 90,000 90,000
Accum. Depr.—Trucks 27,100 (d) 4,000 31,100 31,100
Accounts Payable 4,500 4,500 4,500
Wages Payable (e) 900 900 900
Jeanne McQuay, Capital 126,400 126,400 126,400
Jeanne McQuay, Drawing 3,000 3,000 3,000
Service Revenue 155,000 155,000 155,000
Wages Expense 72,000 (e) 900 72,900 72,900
Rent Expense 7,600 7,600 7,600
Truck Expense 5,350 5,350 5,350
Depr. Exp.—Equipment (c) 5,250 5,250 5,250
Supplies Expense (a) 5,150 5,150 5,150
Depr. Exp.—Trucks (d) 4,000 4,000 4,000
Insurance Expense (b) 3,150 3,150 3,150
Miscellaneous Expense 5,450 5,450 5,450
325,000 325,000 18,450 18,450 335,150 335,150 108,850 155,000 226,300 180,150
Net income 46,150 46,150
155,000 155,000 226,300 226,300
3. JOURNAL Page 26
Date
Post.
Ref. Debit Credit
2014 Adjusting Entries
Jan. 31 Supplies Expense 55 5,150
Supplies 13 5,150
Supplies used ($8,000 – $2,850).
31 Insurance Expense 57 3,150
Prepaid Insurance 14 3,150
Insurance expired.
31 Depreciation Expense—Equipment 54 5,250
Accumulated Depr.—Equipment 17 5,250
Equipment depreciation.
31 Depreciation Expense—Trucks 56 4,000
Accumulated Depr.—Trucks 19 4,000
Truck depreciation.
31 Wages Expense 51 900
Wages Payable 22 900
Accrued wages.
RECESSIVE INTERIORS
Adjusted Trial Balance
January 31, 2014
Debit
Balances
Credit
Balances
Cash 13,100
Supplies 2,850
Prepaid Insurance 4,350
Equipment 113,000
Accumulated Depreciation—Equipment 17,250
Trucks 90,000
Accumulated Depreciation—Trucks 31,100
Accounts Payable 4,500
Wages Payable 900
Jeanne McQuay, Capital 126,400
Jeanne McQuay, Drawing 3,000
Service Revenue 155,000
Wages Expense 72,900
Rent Expense 7,600
Truck Expense 5,350
Depreciation Expense—Equipment 5,250
Supplies Expense 5,150
Depreciation Expense—Trucks 4,000
Insurance Expense 3,150
Miscellaneous Expense 5,450
335,150 335,150
5. RECESSIVE INTERIORS
Income Statement
For the Year Ended January 31, 2014
Service revenue $155,000
Expenses:
Wages expense $72,900
Rent expense 7,600
Truck expense 5,350
Depreciation expense—equipment 5,250
Supplies expense 5,150
Depreciation expense—trucks 4,000
Insurance expense 3,150
Miscellaneous expense 5,450
Total expenses 108,850
Net income $ 46,150
RECESSIVE INTERIORS
Statement of Owner’s Equity
For the Year Ended January 31, 2014
Jeanne McQuay, capital, February 1, 2013 $126,400
Net income for the year $46,150
Less withdrawals 3,000
Increase in owner’s equity 43,150
Jeanne McQuay, capital, January 31, 2014 $169,550
RECESSIVE INTERIORS
Balance Sheet
January 31, 2014
Assets Liabilities
Current assets: Current liabilities:
Cash $13,100 Accounts payable $4,500
Supplies 2,850 Wages payable 900
Prepaid insurance 4,350 Total liabilities $ 5,400
Total current assets $ 20,300
Property, plant, and equipment:
Equipment $113,000 Owner’s Equity
Less accum. depreciation 17,250 $95,750 Jeanne McQuay, capital 169,550
Trucks $ 90,000
Less accum. depreciation 31,100 58,900
Total property, plant, and
equipment 154,650 Total liabilities and owner’s
Total assets $174,950 equity $174,950
6. JOURNAL Page 27
Date
Post.
Ref. Debit Credit
2014 Closing Entries
Jan. 31 Service Revenue 41 155,000
Income Summary 33 155,000
31 Income Summary 33 108,850
Wages Expense 51 72,900
Rent Expense 52 7,600
Truck Expense 53 5,350
Depreciation Expense—Equipment 54 5,250
Supplies Expense 55 5,150
Depreciation Expense—Trucks 56 4,000
Insurance Expense 57 3,150
Miscellaneous Expense 59 5,450
31 Income Summary 33 46,150
Jeanne McQuay, Capital 31 46,150
31 Jeanne McQuay, Capital 31 3,000
Jeanne McQuay, Drawing 32 3,000
RECESSIVE INTERIORS
Post-Closing Trial Balance
January 31, 2014
Debit
Balances
Credit
Balances
Cash 13,100
Supplies 2,850
Prepaid Insurance 4,350
Equipment 113,000
Accumulated Depreciation—Equipment 17,250
Trucks 90,000
Accumulated Depreciation—Trucks 31,100
Accounts Payable 4,500
Wages Payable 900
Jeanne McQuay, Capital 169,550
223,300 223,300