GL0401 - Based on... LO C3, P2, P3 The Sweet Homes Company began operations on December 1, 2019. The unadjusted trial balance of the Sweet Homes Company as of December 31, 2019 is found on the trial balance tab. The following Information is required to prepare the necessary adjusting entries for the Sweet Homes Company found in chapter 3. 1) The balance in Prepaid Insurance represents a 24-month policy that went into effect on December 1, 2019. Review the unadjusted balance in Prepaid insurance, and prepare the necessary adjusting entry. If any. 2) Based on a physical count, supplies on hand total $4,200. Review the unadjusted balance in Supplies, and prepare the necessary adjusting entry, if any. 3) The equipment is expected to have a 4-year useful life, and be worth about $11,000 at the end of four years. Review the unadjusted balance in Accumulated depreciation, and prepare the necessary adjusting entry, if any. 4 On December 26, the client paid a $7,200 60-day fee in advance, covering December 27 to February 24. Review the unadjusted balance in Unearned Consulting Revenue, and prepare the necessary adjusting entry. If any. 5) Sweet Homes's sole employee earns $130 per day for a five-day workweek beginning on Monday and ending on Friday. The employee was last paid on Friday, December 26. Review the unadjusted balance in Salarles payable, and prepare the necessary adjusting entry, if any. 6) In the second week of December, Sweet Homes agreed to provide 30 days of consulting services to a local fitness club for a fixed fee of $6.060. The terms of the initial agreement call for Sweet Homes to provide services from December 12, 2019, through January 10, 2020, or 30 days of service. The club agrees to pay Sweet Homes $6,060 on January 10, 2020, when the service period is complete. Review the unadjusted balance in Consulting revenue, and prepare the necessary adjusting entry. If any. Prepare the required adjusting and closing entries for the Sweet Homes Company. Requirement General Journal General Ledger Trial Balance Income Statement St Owner Equity Balance Sheet Work Sheet For transactions 1-6, review the unadjusted balance and prepare the adjusting entry necessary to correctly report the revenue earned or the expense incurred. After adjusting the accounts, review the financial statements for accuracy. Then, prepare the required closing entries. View transaction lat Journal entry worksheet 2 3 4 5 6 7 8 9 10 > The balance in Prepaid insurance represents a 24-month policy that went into effect on December 1, 2019. Review the unadjusted balance in Prepaid insurance, and prepare the necessary adjusting entry, if any. Note: Enter debits before credits Account Title Debit Credit Date Dec 31 Requirement Trial Balance Journal Thebe Statement Balance Sheet Work Sheet Ledger Uwe Equity You may view either the unadjusted, adjusted, or post-closing trial balance by choosing from the dropdown box below. Your choice will determine the reported values on the financial statement tabs. Post-closing Sweet Homes Trial Balance December 31, 2019 Account Title Credit Cash $ Debit 21,045 1,616 8.900 27.800 350 12,200 300 8.600 40,000 Accounts receivable Supplies Prepaid insurance Equipment Accumulated depreciation - Equipment Accounts payable Salaries payable Uneamed consulting revenue M. Sweet, Capital M. Sweet Withdrawals Consulting revenue Rental revenue Depreciation expense Salaries expense Insurance expense Rent expense Supplies expense Utilities expense Total 1,100 2.222 300 350 2.600 300 1.950 1.400 395 71,878 5 $ 5 9,840 Journal entry worksheet KOO O O O O O 10 > Prepare the journal entry necessary to close the revenue account(s). Note: Enter debits before credits Debit Credit Date Dec 31 Account Title Consulting revenue Rental revenue income summary Record entry Clear entry View general Journal Juuriai nury WURSTEEL Record the entry to close the expense account(s). Note: Enter debits before credits Account Title Debit Credit Date Dec 31 Record entry Clear entry View general Journal Journal entry worksheet Record the entry to close income summary. Note: Enter debits before credits Date Account Title Debit Credit Record entry Clear entry View general Journal Record the entry to close the owner's withdrawals account. Note: Enter debits before credits Account Title Debit Credit Date Dec 31 Record entry Clear entry View general Journal Requirement Journal Trial Balance Balance Sheet Work Sheet Ledger Statement Equity Revenues and expenses are temporary equity accounts. They represent the change in equity attributable to the operation of the business during the current period. These temporary equity amounts are closed at the end of each account period. Post-closing Sweet Homes Income Statement For Month Ended December 31, 2019 Revenues: Expenses: 0 Net income There are four subsets of equity: Investments by the owner, withdrawals by the owner, revenues and expenses. These four subsets are compiled in the owner's capital account at the end of the period during the closing entry process. The ending capital balance is transferred to the equity section of the balance sheet. Sweet Homes Statement of Owner's Equity For Month Ended December 31, 2019 M. Sweet, Capital, December 31, 2019 3 4 0.000 (Income Statement Balance Sheet > The balance sheet is the accounting equation: Assets = Liabilities + Equity. Each asset and liability account is reported separately on the balance sheet. The detail of equity is not found on the balance sheet; only the ending capital balance appears on the balance sheet. The detail of equity is reported on the income statement and statement of owner's equity... Post-closing Sweet Homes Balance Sheet December 31, 2019 Assets Current assets $ 0 ol Total current assets: Plant assets Equipment, net Liabilities Equity One of the benefits of a work sheet is that it links accounts and adjustments to their impacts in financial statements. Complete the work sheet below for the Sweet Homes Company. Post-closing Sweet Homes Company Work Sheet For the Year Ended December 31, 2019 Adjustments Adjusted Trial Balance Dr. Cr. Dr. Cr. 21,045 Income Statement Unadjusted Trial Trial Balance Dr. Cr. 21.045 0 St. of Owner's Equity & Balance Sheet Dr. Cr. Account Dr. Cr. Cash 5.000 5.000 7200 7 200 27,800 27.800 Accounts receivable Supplies Prepaid insurance Equipment Accumulated depreciation Accounts payable Salaries payable nearned consulting revenue Sweet, Capital 1. Sweet, Withdrawals Consulting revenue 12.200 12 200 7.2007 40,000 7 200 40.000 1.100 1.100 7.600 7,6001 300 3001 2.210 1,950 1.050 Rental revenue Depreciation expense Salaries expense insurance expense Rent expense Supplies expense Utilities expense Totals Wet income Totals 67,300 6 7,300 87,300 67,3000 0 0 0000