Worked example of final accounts compilation for Service Business

complete the closing journal, multi-step income statement, and the balance sheet

C. ACCOUNTS UNADJUSTED T/B ADJUSTMENTS ADJUSTED T/R CLOSING ENTRIES INCOME SUMMARY POST CLOSING T/B INCOME STATEMENT BALANCES Dr. Fees earned $ 290.000 Cash S 105.XIO S 105,000 $ 105,000 $ 105.000 Bonds interest $ 7.200 Accounts receivable S 21,800 $ 21.800 $21.800 $ 21.500 Total revenue s 297,200 Supplies $ 18.500S 19.500 $14.000 $ 4,500 $ 4.500 Less expenses: Prepaid insurance S 9 ,000 S 9.000 $ 6,000 S 3.000 IS 3,000 Depreciation - Equip $ 3,675 Prepaid rent $ 6,0,00 S 6.000 $ 6,000 $ Depreciation MV $ 16,200 Treasury Bonds holdings S 1200X00 $ 120.000 S 120.000 $ 120.000 Notes interest payable S 2.100 Office equipment S 65.000 S 65.000 $ 65,000 $ 65,000 Insurance $ 6,000 Acc. Depe'n. Equipment S 35,600 $ 35,600 S 3.675 $ 39,275 $ 19.275 Salaries $ 80,540 Motor vehicles S $1,000 $81.000 $ 81.000 S 81.000 Supplies 14.000 Accumulated depreciation - MV $ 27,650 $ 27,650 $16.200 $ 47,850 $ 43.850 Maintenance S 23,100 Accounts payable s 28,600 $ 28,000 $ 28,600 S 28.600 Telephone internet $ 18,000 Note payable S 105,000 S 105.000 $ 105,000 s 105.000 Utilities S 9200 Note interest payable s . s s 2.100 $ 2.100 IS 2.100 IRent | $ 36,000 Salaries payable s $ $ 5,040 $ 5,040 $ 5.040 Total expewe S208,815 $1208.815) Lineamed fees $ 21,000 S 21,000 $15,000 s 6,000 $ 6,000 Net income $ 89,385 R. Beasley - Capital S 107,050 $ 107,050 $ 107,050 $107.050 R. Beasley - Withdrawal S 25.000 S 25.000 $ 25,000 $ 25.000 OWNERS' EQUITY Fees earned $ 225,000 $ 275,000 $15.000 $ 290.000 $ 290.000 $ 290,000 Beginning balance $ 107,050 Depreciation expense - Equip s S . $ 3,675 $ 3.675 $ 3,675 $ 3,675 Add: Net profit S$8.385 Depreciation expense MV S . $16.200 $ 16,200 $ 16,200 $ 16,200 Less: Withdrawals $125.000) S 63.385 Interest expense notes payable S S . $ 2.100 $ 2.100 $ 2.100 S 2.100 Ending balance $ 170,435 Insurance expense $ 6,000 $ 6.000 $ 6,000S 6,0,00 Salaries expense s 75.500S 75.500 $ 5,040 $ 80.540 $ 80.540 S 80.540 Supplies expense s $ 14,000 $14.000 $ 14.000 $ 14.000 BALANCE SHEET Maintenance expense s 21.100 S 23.100 $ 23,100 $ 23,100 $ 23,100 ASSETS Telephone/internet expense $ 18,000S 18.000 $ 18,000 $ 18,000 $ 18,000 CURRENT: Utilities expense s 9.200 S 9.200 $ 9.200 $ 9.200 9 .200 Cash $105,000 Rent expense $ 30.000 S 30.000 $ 6,000 $36.000 $ 36.000 $ 36.000 Accounts receivable S 21.800 Treasury bonds interest earned $ 7.200 S 7,200 S 7,200 $ 7.200 Supplies $ 4,500 Ney Income $ 607.100 $ 88,385 $ 88,385 Prepaid insurance $ 3,000 Total L S 607.100 S 607.100 S 634.115 8 614.115 S 297,200 S 297,200 S 297,200 $ 425,300 $ 425,300 Prepaid rent Toral currenlasser s 114.300 P. Beasley opened a Secretarial Service business in January 1, 2015. The above are the business records balances for year ended 12/31/2018. Using CLOSING JOURNAL the work sheet format, prepare the closing entries, income summary and post-closing trial balance, together with the Balance Sheet as at 12/31/2018 Fees earned $ 290,000 INVESTMENT: Notes to the accounts Treasury bonds interest earned $ 7,200 Treasury Bonds Holdings $ 120,000 1. An analysis of the insurance policies shows that $3,000 of coverage has not been used at the year end. Income summary $ 347,200 2. A physical count shows that supplies costing S4,500 are available at year end 2018 Income summary 208,815 FIXED ASSETS: 3. Annual depreciation on equipment is 12.5% of book value and, for motor vehicle, 20% of cost. Depreciation expense - Equip S 3.675 Joffice equipment $ 65,000 4. The four employees of the business are paid weekly. As of the year end, three days salaries have accrued at the rate of S420 per day cach. Depreciation expense MV $ 16,200 Acc. Depe'n - Equipment $(39,275) 5. The balance in the Prepaid Rent account represents rent for November and December, 2018 Interest expense - notes payable $ 2.100 $ 25.725 6. $15,000 of the unearned fees was earned between October and December, 2018 Insurance expense $ 6.000 Motor vehicles S$1.000 7 The company signed a note payable with its bank on 9/01/2018, for $105,000) at 6%, due in 180 days. Salaries expense $ 80,540 Ace. depreciation - MV $ 143,850) ADJUSTMENT JOURNALI Supplies expense IS 14.000 $ 37.750 NOTES Accounts Dr. C L $ 23.100 Total fixed assets IS 62.875 Insurance expense s 6,0X10 Telephone/internet expense $ 18,000 Total assets $ 317.175 Prepaid insurance IS 6.000 Utilities expense S 9.200 Supplies expense s 14,000 Rent expense 16,000 LIABILITIES Supplies $ 14,000 CURRENT: Depen. Exp. - Equip $ 3,675 Income summary $ 88,385 Accounts payable S 28.600 Acc. Depe', Equip $ 3,675 Owners equity s 88.385 Note payable SIOS.000 Depen. Exp. - MV $ 16,200 Note interest payable $ 2,100 Acc. Depe'.-MV 16,200 Owners equity $ 25,000 Salaries payable $ 5,040 Salaries exp S 5.040 Withdrawals S 25.000 Uncamedi Uneamed fees $ 6,000 Salaries payable S 5.040 Toral current liabilities $ 146.740 Uneamed fees $ 15,000 LONG TERM: Fees earned Total liabilities $ 146.740 Note interest expense $ 2,100 Note interest payable $ 2,100 FINANCED BY Rent expense $ 6,000 Owners equity $ 170.435 Prepaid rent $ 6,000 C. ACCOUNTS UNADJUSTED T/B ADJUSTMENTS ADJUSTED T/R CLOSING ENTRIES INCOME SUMMARY POST CLOSING T/B INCOME STATEMENT BALANCES Dr. Fees earned $ 290.000 Cash S 105.XIO S 105,000 $ 105,000 $ 105.000 Bonds interest $ 7.200 Accounts receivable S 21,800 $ 21.800 $21.800 $ 21.500 Total revenue s 297,200 Supplies $ 18.500S 19.500 $14.000 $ 4,500 $ 4.500 Less expenses: Prepaid insurance S 9 ,000 S 9.000 $ 6,000 S 3.000 IS 3,000 Depreciation - Equip $ 3,675 Prepaid rent $ 6,0,00 S 6.000 $ 6,000 $ Depreciation MV $ 16,200 Treasury Bonds holdings S 1200X00 $ 120.000 S 120.000 $ 120.000 Notes interest payable S 2.100 Office equipment S 65.000 S 65.000 $ 65,000 $ 65,000 Insurance $ 6,000 Acc. Depe'n. Equipment S 35,600 $ 35,600 S 3.675 $ 39,275 $ 19.275 Salaries $ 80,540 Motor vehicles S $1,000 $81.000 $ 81.000 S 81.000 Supplies 14.000 Accumulated depreciation - MV $ 27,650 $ 27,650 $16.200 $ 47,850 $ 43.850 Maintenance S 23,100 Accounts payable s 28,600 $ 28,000 $ 28,600 S 28.600 Telephone internet $ 18,000 Note payable S 105,000 S 105.000 $ 105,000 s 105.000 Utilities S 9200 Note interest payable s . s s 2.100 $ 2.100 IS 2.100 IRent | $ 36,000 Salaries payable s $ $ 5,040 $ 5,040 $ 5.040 Total expewe S208,815 $1208.815) Lineamed fees $ 21,000 S 21,000 $15,000 s 6,000 $ 6,000 Net income $ 89,385 R. Beasley - Capital S 107,050 $ 107,050 $ 107,050 $107.050 R. Beasley - Withdrawal S 25.000 S 25.000 $ 25,000 $ 25.000 OWNERS' EQUITY Fees earned $ 225,000 $ 275,000 $15.000 $ 290.000 $ 290.000 $ 290,000 Beginning balance $ 107,050 Depreciation expense - Equip s S . $ 3,675 $ 3.675 $ 3,675 $ 3,675 Add: Net profit S$8.385 Depreciation expense MV S . $16.200 $ 16,200 $ 16,200 $ 16,200 Less: Withdrawals $125.000) S 63.385 Interest expense notes payable S S . $ 2.100 $ 2.100 $ 2.100 S 2.100 Ending balance $ 170,435 Insurance expense $ 6,000 $ 6.000 $ 6,000S 6,0,00 Salaries expense s 75.500S 75.500 $ 5,040 $ 80.540 $ 80.540 S 80.540 Supplies expense s $ 14,000 $14.000 $ 14.000 $ 14.000 BALANCE SHEET Maintenance expense s 21.100 S 23.100 $ 23,100 $ 23,100 $ 23,100 ASSETS Telephone/internet expense $ 18,000S 18.000 $ 18,000 $ 18,000 $ 18,000 CURRENT: Utilities expense s 9.200 S 9.200 $ 9.200 $ 9.200 9 .200 Cash $105,000 Rent expense $ 30.000 S 30.000 $ 6,000 $36.000 $ 36.000 $ 36.000 Accounts receivable S 21.800 Treasury bonds interest earned $ 7.200 S 7,200 S 7,200 $ 7.200 Supplies $ 4,500 Ney Income $ 607.100 $ 88,385 $ 88,385 Prepaid insurance $ 3,000 Total L S 607.100 S 607.100 S 634.115 8 614.115 S 297,200 S 297,200 S 297,200 $ 425,300 $ 425,300 Prepaid rent Toral currenlasser s 114.300 P. Beasley opened a Secretarial Service business in January 1, 2015. The above are the business records balances for year ended 12/31/2018. Using CLOSING JOURNAL the work sheet format, prepare the closing entries, income summary and post-closing trial balance, together with the Balance Sheet as at 12/31/2018 Fees earned $ 290,000 INVESTMENT: Notes to the accounts Treasury bonds interest earned $ 7,200 Treasury Bonds Holdings $ 120,000 1. An analysis of the insurance policies shows that $3,000 of coverage has not been used at the year end. Income summary $ 347,200 2. A physical count shows that supplies costing S4,500 are available at year end 2018 Income summary 208,815 FIXED ASSETS: 3. Annual depreciation on equipment is 12.5% of book value and, for motor vehicle, 20% of cost. Depreciation expense - Equip S 3.675 Joffice equipment $ 65,000 4. The four employees of the business are paid weekly. As of the year end, three days salaries have accrued at the rate of S420 per day cach. Depreciation expense MV $ 16,200 Acc. Depe'n - Equipment $(39,275) 5. The balance in the Prepaid Rent account represents rent for November and December, 2018 Interest expense - notes payable $ 2.100 $ 25.725 6. $15,000 of the unearned fees was earned between October and December, 2018 Insurance expense $ 6.000 Motor vehicles S$1.000 7 The company signed a note payable with its bank on 9/01/2018, for $105,000) at 6%, due in 180 days. Salaries expense $ 80,540 Ace. depreciation - MV $ 143,850) ADJUSTMENT JOURNALI Supplies expense IS 14.000 $ 37.750 NOTES Accounts Dr. C L $ 23.100 Total fixed assets IS 62.875 Insurance expense s 6,0X10 Telephone/internet expense $ 18,000 Total assets $ 317.175 Prepaid insurance IS 6.000 Utilities expense S 9.200 Supplies expense s 14,000 Rent expense 16,000 LIABILITIES Supplies $ 14,000 CURRENT: Depen. Exp. - Equip $ 3,675 Income summary $ 88,385 Accounts payable S 28.600 Acc. Depe', Equip $ 3,675 Owners equity s 88.385 Note payable SIOS.000 Depen. Exp. - MV $ 16,200 Note interest payable $ 2,100 Acc. Depe'.-MV 16,200 Owners equity $ 25,000 Salaries payable $ 5,040 Salaries exp S 5.040 Withdrawals S 25.000 Uncamedi Uneamed fees $ 6,000 Salaries payable S 5.040 Toral current liabilities $ 146.740 Uneamed fees $ 15,000 LONG TERM: Fees earned Total liabilities $ 146.740 Note interest expense $ 2,100 Note interest payable $ 2,100 FINANCED BY Rent expense $ 6,000 Owners equity $ 170.435 Prepaid rent $ 6,000