1-How to prepare closing journal entries (omit explanations)

2-How to post the closing entries to ledger accounts.

3-How to prepare Trial Balance after closing as of July 31, 2018.

Baker City Well Drilling, Inc.

6/1 Issued Common Stock for cash in the amount of $100,000.

6/2 Purchased a small building to be used as a shop. The price

was $80,000: $16,000 paid with cash, the remaining balance was

a 5 year Note Payable in the amount of $64,000. The purchase

price of $80,000 was allocated to land in the amount of $20,000

and the remaining amount of $60,000 to the shop building. Loan

payments are made quarterly, the first payment is due on 9/2.

6/3 A Super Heavy Duty Ford Truck was purchased with special "No

Money Down" and "No Interest" through Ford Credit Corporation.

Purchase price was $45,000 and the first payment is due on 8/3.

6/4 Well Drilling Equipment was purchased for $20,000 cash.

6/4 Prepaid a 12 month insurance policy. The policy was effective

as of June 1 st and cost $2,400.

6/5 Well Drilling Supplies were purchased on a 30 day credit account

in the amount of $3,750.

6/6 Advertised in the weekly Baker City Farm News. Total cost was

$1,500 with payment due by July 10 th .

6/7 Hired an employee at $3,000 per month.

6/9 A drilling bid of $9,500 was accepted by their first customer for

a job to start on 6/12, the contract was signed on 6/9.

6/19 Bid a second job for $14,800 and received a $4,800 cash payment

in advance (job to start on 6/25) contract was signed 6/19.

Continued on the next page.

Baker City Well Drilling, Inc.

6/21 Completed the well drilling job started on 6/12 and billed the

customer the contract price of $9,500.

6/28 Paid the advertising bill of $1,500 from Baker City Farm News.

7/1 Paid employee's wages for June. Note: since it was for a short

Month (6/8 - 6/30) total paid was prorated in the amount of

$2,250.

7/3 Paid the account payable related to supplies purchased on 6/5.

7/6 Completed the well drilling job started on 6/25 and billed

customer for the remaining balance due.

7/12 Bid a third job for a contract price of $15,750 and started the

job immediately.

7/16 While working on the third job, a repair to equipment was

required, the cost of the repair was $210 and was paid in cash.

7/18 Received a partial payment from the first job completed and

billed last month on 6/21; partial payment received was $5,000.

7/27 Completed the third job that was started on 7/12. Billed the

customer for the contract price.

Information for adjusting entries covering the two

months ended July 31 st is provided on the next page.

Baker City Well Drilling, Inc.

Adjusting Entry Information

7/31 A count of drilling supplies on hand indicated unused supplies

still on hand totaled $1,580.

7/31 Employee wages of $3,000 for the month of July are scheduled

to be paid on August 2nd.

7/31 Depreciation expense on the building for "2" months amounts

to $1,000.

Depreciation expense on drilling equipment for "2" months

amounts to $400.

Depreciation expense on the truck for "2" months amounts

to $600.

7/31 Interest expense has accrued on the note payable for the shop

building and land in the amount of $740.

Financing the Ford Super Heavy Duty Truck was a zero interest

financing offer, therefore, no interest has accrued.

7/31 "2" months of the prepaid insurance policy has now expired.