The Trial Balance section of the worksheet for Contemporary Fashions for the period ended December 31, 2019, appears below. Adjustments data are also given. ADJUSTMENTS

1. Supplies used, $3,600
2. Expired insurance, $2,400
3. Depreciation expense for machinery, $1,200

Required:

1. Complete the worksheet.
2. Prepare an income statement.
3. Prepare a statement of owners equity.
4. Prepare a balance sheet. (Be sure to list the accounts in order of their liquidity.)
5. Journalize the adjusting entries in the general journal.
6. Journalize the closing entries in the general journal.
7. Prepare a postclosing trial balance.

Analyze: If the adjusting entry for expired insurance had been recorded in error as a credit to Insurance Expense and a debit to Prepaid Insurance for $2,400, what reported net income would have resulted?

CONTEMPORARY FASHIONS
Worksheet
Month Ended December 31, 2019
Account Name	Trial Balance		Adjustments		Adjusted Trial Balance		Income Statement		Balance Sheet
	Debit	Credit	Debit	Credit	Debit	Credit	Debit	Credit	Debit	Credit
Cash	$40,800
Accounts Receivable	9,000
Supplies	7,200			3,600
Prepaid Insurance	10,800			2,400
Machinery	84,000
Accumulated DepreciationMachinery				1,200
Accounts Payable		13,500
Helen Kennedy, Capital		74,580
Helen Kennedy, Drawing	6,000
Fees Income		82,500
Supplies Expense			3,600
Insurance Expense			2,400
Salaries Expense	11,100
Depreciation ExpenseMachinery			1,200
Utilities Expense	1,680
Totals	$170,580	$170,580	$7,200	$7,200	$0	$0	$0	$0	$0	$0
Net income
							$0	$0	$0	$0

Req 5 & 6. Prepare a general journal.

• 1. Record the adjusting entry for supplies.

• 2. Record the adjusting entry for insurance.

• 3. Record the adjusting entry for depreciation.

• 4. Record the closing entry for revenue.

• 5. Record the closing entry for expenses.

• 6. Record the closing entry for the balance of income summary.

• 7. Record the closing entry for the drawing account.