The Trial Balance section of the worksheet for Fashion World for the period ended December 31, 20X1, appears below. Adjustments data are also given.

ADJUSTMENTS
a. Supplies used, $7,200
b. Expired insurance, $4,800
c. Depreciation expense for machinery, $2,400

INSTRUCTIONS
1. Complete the worksheet.
2. Prepare an income statement.
3. Prepare a statement of owner’s equity.

4. Prepare a balance sheet.
5. Journalize the adjusting entries in the general journal, page 3.
6. Journalize the closing entries in the general journal, page 4.
7. Prepare a postclosing trial balance.
Analyze: 

If the adjusting entry for expired insurance had been recorded in error as a credit to Insurance Expense and a debit to Prepaid Insurance for $2,400, what reported net income would have resulted?

Transcribed Image Text:

1 2 3 Supplies 10 11 Cash Accounts Receivable 4 5 Machinery 6 Accumulated Depreciation-Machinery Prepaid Insurance 7 Accounts Payable 8 Angela Cruz, Capital 9 Angela Cruz, Drawing 16 17 18 12 Insurance Expense Salaries Expense 19 ACCOUNT NAME Fees Income Supplies Expense 13 14 Depreciation Expense-Machinery 15 Utilities Expense Totals Fashion World Worksheet Month Ended December 31, 20X1 TRIAL BALANCE DEBIT 81 600 00 18 000 00 14 400 00 2160000 168 000 00 1200000 2220000 336000 341 160 00 CREDIT 27 000 00 149 160 00 165 0 0 0 00 34116000 (a) (b) (c) DEBIT ADJUSTMENTS 720000 480000 240000 1440000 (a) GO (b) (C) CREDIT 720000 480000 240000 1440000