Financial Statements and Closing Entries

Last Chance Company offers legal consulting advice to prison inmates. Last Chance Company prepared the end-of-period spreadsheet that follows at June 30, 2019, the end of the fiscal year:

	Last Chance Company
	End-of-Period Spreadsheet
	For the Year Ended June 30, 2019
	Unadjusted						Adjusted
	Trial Balance		Adjustments				Trial Balance
Account Title	Dr.	Cr.		Dr.		Cr.	Dr.	Cr.
Cash	5,100						5,100
Accounts Receivable	22,750		(a)	3,750			26,500
Prepaid Insurance	3,600				(b)	1,300	2,300
Supplies	2,025				(c)	1,500	525
Land	80,000						80,000
Building	340,000						340,000
Accum. Depr.Building		190,000			(d)	3,000		193,000
Equipment	140,000						140,000
Accum. Depr.Equipment		54,450			(e)	4,550		59,000
Accounts Payable		9,750						9,750
Salaries & Wages Payable					(f)	1,900		1,900
Unearned Rent		4,500	(g)	3,000				1,500
Tami Garrigan, Capital		361,300						361,300
Tami Garrigan, Drawing	20,000						20,000
Fees Earned		280,000			(a)	3,750		283,750
Rent Revenue					(g)	3,000		3,000
Salaries & Wages Expense	145,100		(f)	1,900			147,000
Advertising Expense	86,800						86,800
Utilities Expense	30,000						30,000
Travel Expense	18,750						18,750
Depr. Exp.Equipment			(e)	4,550			4,550
Depr. Exp.Building			(d)	3,000			3,000
Supplies Expense			(c)	1,500			1,500
Insurance Expense			(b)	1,300			1,300
Misc. Expense	5,875						5,875
	900,000	900,000		19,000		19,000	913,200	913,200

Required:

1. Prepare an income statement for the year ended June 30.

Last Chance Company
Income Statement
For the Year Ended June 30, 2019
Revenues:
Fees earned	$
Rent revenue
Total revenues		$
Expenses:
Salaries and wages expense	$
Advertising expense
Utilities expense
Travel expense
Depreciation expense-equipment
Depreciation expense-building
Supplies expense
Insurance expense
Miscellaneous expense
Total expenses
Net loss		$

Feedback

The income statement is prepared directly from the information that would be transferred to the income statement columns of the worksheet. Expenses are typically listed in order of size and miscellaneous expense is listed last, regardless of its amount.

2. Prepare a statement of owner's equity for the year ended June 30. No additional investments were made during the year.

Last Chance Company
Statement of Owner's Equity
For the Year Ended June 30, 2019
Tami Garrigan, capital, July 1, 2018		$
Net loss for the year	$
Withdrawals
Decrease in owner's equity
Tami Garrigan, capital, June 30, 2019		$

Feedback

The statement of owner's equity shows changes in the owner's capital account such that: Ending Capital = Beginning Capital + Investments Net Income (Loss) - Withdrawals.

3. Prepare a balance sheet as of June 30.

Last Chance Company
Balance Sheet
June 30, 2019
Assets
Current assets:
Cash		$
Accounts receivable
Prepaid insurance
Supplies
Total current assets			$
Property, plant, and equipment:
Land		$
Building	$
Less accumulated depreciation-building
Equipment	$
Less accumulated depreciation-equipment
Total property, plant, and equipment
Total assets			$
Liabilities
Current liabilities:
Accounts payable		$
Salaries and wages payable
Unearned rent
Total liabilities			$
Owner's Equity
Tami Garrigan, capital
Total liabilities and owner's equity			$

Feedback

The balance sheet includes all accounts that would be transferred to the balance sheet columns of the worksheet, except for the capital and drawing balances. The ending capital in the balance sheet must be the same amount as that calculated in the statement of owner's equity. Make sure that the accounting equation remains in balance for this financial statement.

4. On the basis of the end-of-period spreadsheet, journalize the closing entries. For a compound transaction, if a box does not require an entry, leave it blank.

June. 30	Fees Earned
	Rent Revenue
	Tami Garrigan, Capital
	Salaries and Wages Expense
	Advertising Expense
	Utilities Expense
	Travel Expense
	Depreciation Expense-Equipment
	Depreciation Expense-Building
	Supplies Expense
	Insurance Expense
	Miscellaneous Expense
June. 30	Tami Garrigan, Capital
	Tami Garrigan, Drawing

Feedback

In preparing closing entries, recall that (1) Difference in revenue and expense account balances are transferred to the owners capital account; and (2) The balance of the owners drawing account is transferred to the owners capital account.

5. Prepare a post-closing trial balance. If a box does not require an entry, leave it blank.

Last Chance Company
Post-Closing Trial Balance
June 30, 2019
	Debit Balances	Credit Balances
Cash
Accounts Receivable
Prepaid Insurance
Supplies
Land
Building
Accumulated depreciation-Building
Equipment
Accumulated depreciation-Equipment
Accounts Payable
Salaries and Wages Payable
UnEarned Rent
Tami Garrigan, Capital