Single Sheet Printers, Inc. Gary Smith is starting a high-end single sheet printing business. December is his first month of business (and the end of his year). Single Sheet uses a perpetual inventory system. The unadjusted trial balance for Single Sheet at December 31 follows. Single Sheet Printers Unadjusted Trial Balance December 31 Cash 313,000 Accounts receivable Supplies inventory Inventory Prepaid insurance Prepaid rent Equipment 25,000 3,000 20,000 12,000 6,000 200,000 Accounts payable Employee withholding Customer deposits 52,500 6,000 10,000 Loan payable 500,000 Common stock 1,000 Additional paid-in capital 9,000 Printing revenue 60,000 Cost of goods sold 27,000 Utilities expense 2,500 Salary expense 30,000 Totals 638,500 638,500 The following information is provided about certain accounts. 1 On December 3, Single Sheet paid rent in advance for the months of December through May in the amount of $6,000. 2 A physical count of supplies inventory on hand on December 31 amounted to $1,200. 3 On December 5, Single Sheet paid $12,000 for insurance covering the 6 month period beginning December 1. 4 A printing press costing $200,000 was placed in service on December 1. Salvage value is estimated to be $20,000 with a useful life of 10 years. Single Sheet uses the straight line method of depreciation. 5 The $500,000 loan from First Bank provides for interest at 5% payable the 5th day of each month. Interest expense through December 5th was properly recorded and paid. The banker's convention of 360 days is used to compute interest (to the nearest whole dollar). 6 Single Sheet pays its employees on Fridays for work completed the previous week. Friday was the last day of the year. The last working day for the year was Wednesday; Thursday and Friday were considered paid holidays. Because of the holiday Single Sheet paid its employees on that Wednesday (rather than Friday). Employee gross salaries are $10,000 per week. Prepare any required adjusting journal entries below. Dr Cr Then post those journal entries to the T accounts. Opening balances from the unadjusted trial balance have been posted. When you are finished posting, rule the accounts. Cash Accounts Receivable Supplies Inventory 313,000 25,000 3,000 Inventory Prepaid Insurance Prepaid Rent 20,000 12,000 6,000 Equipment 200,000 Accounts Payable 52,500 Employee WH 6,000 Customer Deposits 10,000 Loan Payable Common Stock 500,000 1,000 Additional Paid-in Capital 9,000 Printing Revenue 60,000 Cost of Goods Sold 27,000 Utilities Expense 2,500 Salary Expense 30,000 Cash Accounts receivable Supplies inventory Inventory Prepaid insurance Prepaid rent Equipment Accounts payable Employee withholding Customer deposits Loan payable Common stock Additional paid in capital Printing revenue Cost of goods sold Utilities expense Salary expense Single Sheet Printers Adjusted Trial Balance December 31 Dr Cr If you are in balance then move on to preparing the financial statements. Begin with the income statement, single step, then the statement of retained earnings and finally the balance sheet. Use the workpapers that follow. Single Sheet Printers Income Statement For the year ended December 31 Single Sheet Printers Statement of Retained Earnings For the year ended December 31 Single Sheet Printers Balance Sheet December 31 You are not quite finished. With the financial statements complete, it's time to prepare the closing journal entries. In this case, close all revenue accounts to income summary and then close all expense accounts to income summary. Finally, close income summary to retained earnings. Use the workpaper below to prepare Single Sheet Printers Closing journal entries December 31 Dr Cr The last steps to be completed are to rule the accounts and take a post-closing trial balance. Prepare your trial on the workpaper that follows. If you balance, you are finished with this exercise. Well done! Cash Accounts receivable Supplies inventory Inventory Prepaid insurance Prepaid rent Equipment Accounts payable Employee withholding Customer deposits Loan payable Common stock Additional paid in capital Single Sheet Printers Post-closing Trial Balance December 31