Answered step by step
Verified Expert Solution
Question
1 Approved Answer
The unadjusted trial balance for Brown Inc. follows. Brown Inc. Unadjusted Trial Balance December 31, 2020 Description Debit Credit Cash $ 6,320 $ Accounts receivable
The unadjusted trial balance for Brown Inc. follows. Brown Inc. Unadjusted Trial Balance December 31, 2020 Description Debit Credit Cash $ 6,320 $ 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 8,000 Common stock Retained earnings 8,000 Dividends 10,000 Service revenue 50,000 Interest expense 480 Salarles expense 13,000 Utility expense 2,000 Miscellaneous expense 3,000 0 Total $91,000 $91,000 20,000 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 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-end. 5. The note payable calls for annual interest of 8%, payable each September 30. The principal amount of the note is not due for several years. Adjusting Journal Entries Adjusted Trial Balance Financial Statements Closing Journal Entries Dr. Cr. 9,600 x 0 9,600 x X 9,000 a. Record the required adjusting journal entries. General Journal Date Account Name Dec 31, 2020 Lease Expense Prepaid Lease Expense Dec 31, 2020 Supplies Cash Dec 31, 2020 Depreciation Expense Accumulated Depreciation Dec 31, 2020 Salarles Expense Salarles Payable Dec 31, 2020 Interest Expense Interest Payable X 0 9,000 1,000 0 1,000 0 2,000 2,000 0 160 0 160 Credit 0 0 0 b. Prepare the adjusted trial balance. Brown Custom Publishing Adjusted Trial Balance December 31, 2020 Description Debit Cash $ 6,320 $ Accounts receivable 6,000 Prepaid lease expense 9,600 X Supplies 2,000 Equipment 20,000 Accumulated depreciation-equipment 0 Accounts payable Salarles payable Interest payable 0 Note payable 0 Common stock Retained earnings 0 Dividends 10,000 Service revenue Lease expense 9,600 X Depreciation expense 1,000 Supplies expense 9,000 Interest expense 640 Salarles expense 15,000 Utility expense 2,000 Miscellaneous expense 3,000 Totals $ 0X $ 0 0 4,000 2,000 2,000 160 8,000 20,000 8,000 0 50,000 07 0 0 0 0 0 0X 50,000 50,000 Brown Custom Publishing Income Statement For the Year Ended December 31, 2020 Revenues Service Revenue $ Total revenues Expenses Lease Expense e X$ 9,600 x Depreciation Expense X 1,000 x Supplies 9,000 x Interest Expense 640 X Salaries Expense 15,000 Utility Expense X 2,000 X Miscellaneous Expense 3,000 X Total Expenses Net Income $ 40,240 x 9,760 X Note: Record liability and stockholders' equity accounts in alphabetical order based upon the first letter of the account name. 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 9,600 X Supplies 2,000 Equipment $ 20,000 Less: Accumulated depreciation 4,000 16,000 Total assets 39,920 X Liabilities Accounts Payable 2,000 Salarles 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 7,760 x Total stockholders' equity 27,760 x Total liabilities and stockholders' equity 39,920 X $ XXS $ 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 account name. Dr. Cr. 50,000 07 50,000 40,240 x 0 0 x 0 07 General Journal Date Account Name Dec 31, 2020 Service Revenue Income Summary To close out service revenue. Dec 31, 2020 Income Summary Lease Expense x Depreciation Expense Supplies Interest Expense Salaries Expense Utility Expense Miscellaneous Expense To close out expenses. Dec 31, 2020 Income Summary Retained Earnings To close out Income summary Dec 31, 2020 Retained Earnings Dividends To close out dividends. 0 9,600 x 1,000 x 9,000 x 640 X 15,000 2,000 x 3,000 x X 0 0 9,760 X 0 9,760 x 10,000 0 10,000
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started