Preparing Adjusting Entries, Trial Balances, Financial Statements, and closing Entries The unadjusted trial balance for Brown Inc. follows Brown Inc. Unadjusted Trial Balance December 31, 2020 Description Debit Credit Cash $6,3205 Accounts receivable 6,000 Prepaid lease expense 19,200 Supplies 11,000 Equipment 20,000 Accumulated depreciation equipment 3,000 Accounts payable 2.000 Note payable 1000 Common stock 20,000 Retained earnings 1,000 Dividends 10.000 Service revenue 50.000 interesteente Sansexperte 13,000 Utility expense 2.000 Miscellaneous expense 3.000 Total 191.000 501,000 Additional information for accounting adjustments 1. Brown was required to pay the entire rental for a one year lease beginning July 1 for $12,200 cash Brown recorded the payment as a debit to Prepaid Lease Expense 2. A year end count revealed $2,000 of supplies still available 3. Annual depreciation expense on the equipment is $1,000 4. Unpaid and unrecorded salaries is $2.000 at year and 5. The note payable calls for annual interest of payable tach September 30. The principal amount of the note is not due for several years Salaries expense Utility expense Miscellaneous expense Total 13,000 2,000 3,000 0 $91,000 $91,000 Additional information for accounting adjustments 1. Brown was required to pay the entire rental for a one-year lease beginning July 1 for $13,200 cash. Brown recorded the pa 2. A year-end count revealed $2,000 of supplies still available. 3. Annual depreciation expense on the equipment is $1,000 4. Unpaid and unrecorded salaries is $2,000 at year-end, 5. The note payable calls for annual interest of 8%, payable each September 30. The principal amount of the note is not due Adjusting Journal Entries Adjusted Trial Balance Financial Statements Closing Journal Entries Cr. a. Record the required adjusting journal entries. General Journal Date Account Name Dec 31, 2020 Lease Expense Prepaid Lease Expense Dec 31, 2020 Supplies Expense Supplies Dec 31, 2020 Depreciation Expense Accumulated Depreciation , Dec 31, 2020 Salaries Expense Salaries Payable Dec 31, 2020 Interest Expense Interest Payable 19,200 x 0 9,000 0 a Dr. 19,200 X 0 9,000 07 1,000 0 2,000 0 160 0 1,000 0 2,000 0 160 . Clos Financial Statements Adjusting Journal Entries Adjusted Trial Balance Credit 0 0 b. Prepare the adjusted trial balance. Brown Custom Publishing Adjusted Trial Balance December 31, 2020 Description Debit 6,320 $ Cash Accounts receivable 6,000 12,600 x Prepaid lease expense Supplies 2,000 Equipment 20,000 Accumulated depreciation-equipment 0 Accounts payable 0 Salaries payable 0 Interest payable 0 Note payable 0 Common stock 0 Retained earnings 0 Dividends 10,000 Service revenue 0 Lease expense 13,200 x Depreciation expense 1,000 Supplies expense 9,000 Interest expense Ox Salaries expense Utility expense 2.000 Miscellaneous expense 3,000 Totals $ 94,160$ 0 0 4,000 2,000 2,000 160 8,000 20,000 8,000 0 50,000 O 07 0 0 0 0 0 94,160 Adjusting Journal Entries Adjusted Trial Balance Financial Statements Closing Journal Entries $ c. Prepare the income statement for 2020 and the balance sheet at year-end 2020, Note: Record expenses in alphabetical order based upon the first letter of the account name. Note: Do not use negative signs with your answers. Brown Custom Publishing Income Statement For the Year Ended December 31, 2020 Revenues Service Revenue 50,000 Total revenues 50,000 Expenses Lease Expense 640 X Prepaid Lease Expense 15,000 x Accumulated Depreciation 13,200 x Miscellaneous Expense 3,000 Interest Expense X 9,000 x Depreciation Expense 1,000 x Utility Expense 2,000 Total Expenses 49,680 X Net Income 99,680 x XS X X X Note: Record liability and stockholders' equity accounts in alphabetical order based upon the first letter of the account na Note: Do not use negative signs with your answers, Brown Custom Publishing Balance Sheet December 31, 2020 Assets Cash $ 6,320 Note: Record liability and stockholders' equity accounts in alphabetical order based upon the first letter of the acco Note: Do not use negative signs with your answers. Brown Custom Publishing Balance Sheet December 31, 2020 Assets Cash $ 6,320 Accounts receivable 6,000 Prepaid Lease Expense 6,000 X Supplies 2,000 Equipment $ 20,000 Less: Accumulated depreciation 4,000 Total assets $ 20,320 x Liabilities Accounts Payable 2,000 Salaries Payable 2,000 x Interest Payable 160 x Note Payable X 8,000 x Total liabilities 12,160 Stockholders' Equity Common Stock 20,000 Retained Earnings 4,160 X Total stockholders' equity 24,160 X Total liabilities and stockholders' equity $ 36,320 x X 0 4 d. Prepare the closing entries, using the Income Summary account to close out revenues and expenses. Note: List multiple debits or credits (when applicable) in alphabetical order according to the first letter of the acco General Journal Date Account Name Dr. Cr. Dec 31, 2020 Service Revenue 50,000 Income Summary 50,000 To close out service revenue. Dec 31, 2020 Income Summary 43,240 0 Salaries Expense 15,000 x Utility Expense 2,000 X Interest Expense 0 640 x Miscellaneous Expense 0 3,000 Lease Expense 0 12,600 X Supplies Expense 0 9,000 Depreciation Expense 0 1,000 X To close out expenses Dec 31, 2020 Income Summary 6,760 Retained Earnings 0 6,760 To close out income summary Dec 31, 2020 Retained Earnings 10,000 Dividends 10,000 To close out dividends. X . a X + X 0 4 0 0