Overview

Students will analyze and record transactions, perform closing entries, and construct financial statements (income statement and balance sheet).

Case Study

On November 30, 2019, the general ledger accounts of the Wyatt Consulting Corporation had the following balances:

Cash	$124,000
Accounts Receivable	$167,000
Office Supplies Inventory	$37,000
Prepaid Insurance	$62,000
Office Equipment	$480,000
Wages Payable	$93,000
Accounts Payable	$26,000
Common Stock	$100,000
Retained Earnings	$509,400
Service Revenue	$715,000
Rent Revenue	$39,000
Interest Revenue	$2,100
Rent Expense	$132,000
Delivery Expense	$5,700
Advertising Expense	$16,200
Office Supplies Expense	$56,000
Office Utilities Expense	$21,600
Wages Expense	$383,000

Closing the Books Tasks

A) Record the opening account balances in "T" accounts. Key November 30th balances with a check mark ().

B) The transactions for the month of December are listed below. Record these transactions directly in the "T" accounts. Label each transaction, as you record it, by listing the number identifying the transaction at the left of each debit and the right of each credit.

1. Cash was collected on accounts receivable, $96,000
2. Office supplies were purchased on account, $27,000
3. An account payable was settled by giving a note payable, $15,500
4. Wages previously accrued were paid in the amount of $76,000
5. The rent was paid for the months of December and January, totaling $24,000
6. Delivery expenses paid in cash, $1,600
7. The month's advertising bill was received (but not paid), $1,100
8. Rent revenue for December was received from a sub-tenant, $3,000
9. A dividend was declared and paid on December 30 in the amount of $40,000
10. A past due account was collected, $800, plus interest of $17
11. Insurance remaining unexpired at the end of December, $18,000
12. A summary of transactions for the month: service sales on account, $68,000; cash sales, $41,000; cash received on accounts receivable, $103,000
13. Wages accrued since last payday, $34,000
14. Gas and electricity bills for the office for December were received but not paid, $4,500
15. Supplies inventory as of December 31 was $9,000
16. The office equipment was purchased on January 1, 2019. It was expected to last 8 years and have no residual value. Depreciation is recorded for the year 2019.
17. Taxes for the current year totaling $28,000 will be paid on March 15th of the following year.

C) Close all temporary accounts. Key closing entries with letters C1, C2, C3, etc.

D) Prepare a balance sheet as of December 31, 2019, and an income statement for the year 2019.