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1
4
Completing the Accounting Cycle
2
After studying this chapter, you should be able to:
Completing the Accounting Cycle
1 Describe the flow of accounting information from the unadjusted trial balance into the adjusted trial balance and financial statements.
2 Prepare financial statements from adjusted account balances.
3 Prepare closing entries.
4-2
After studying this chapter, you should be able to:4 Describe the accounting cycle.
31-34-34-3
Completing the Accounting Cycle (continued)
5 Illustrate the accounting cycle for one period.
6 Explain what is meant by the fiscal year and the natural business year.
41-44-4
1
4-4
Describe the flow of accounting information from the unadjusted trial balance into the adjusted trial balance and financial statements.
51-54-5
1End-of-Period Spreadsheet (Work Sheet)Exhibit 1
61-64-6
Spreadsheet (Work Sheet)Spreadsheet (Work Sheet)
Trial Balance
Accounts Dr Cr Dr Cr Dr Cr
Adjustments Adjusted TB
Accounts are listed in the Trial Balance column using the ending balance found in the general ledger.
Flow of Accounting Information
1
71-74-7
Flow of Accounting Information
Spreadsheet (Work Sheet)Spreadsheet (Work Sheet)
Trial Balance
Accounts Dr Cr Dr Cr Dr Cr
Adjustments Adjusted TB
Adjustments are entered here. Two possibilities:
1. Deferrals – Existing balances are changed.2. Accruals – New information is entered.
1
81-84-8
Adjustments are combined with the trial balance. Account
balances are now adjusted.
Trial Balance
Accounts Dr Cr Dr Cr Dr Cr
Adjustments Adjusted TB
Spreadsheet (Work Sheet)Spreadsheet (Work Sheet)
Flow of Accounting Information
1
91-94-9
Revenue and expense balances in the Adjusted Trial Balance column are extended
to the Income Statement column.
Adjusted TB
Accounts Dr Cr Dr Cr Dr Cr
Income State. Balance Sheet
Spreadsheet (Work Sheet)Spreadsheet (Work Sheet)
Flow of Accounting Information
1
101-104-10
Asset, liability, owner’s equity, and drawing balances in the Adjusted
Trial Balance column are extended to the Balance Sheet column.
Adjusted TB
Accounts Dr Cr Dr Cr Dr Cr
Income State. Balance Sheet
Spreadsheet (Work Sheet)Spreadsheet (Work Sheet)
Flow of Accounting Information
1
111-114-11
The balances for the accounts listed below appear in the Adjusted Trial Balance columns of the end-of-period spreadsheet (work sheet). Indicate whether each balance should be extended to (a) an Income Statement column or (b) a Balance Sheet column.
1. Amber Bablock, Drawing2. Utilities Expense3. Accumulated
Depreciation—Equipment4. Unearned Rent
5. Fees Earned6. Accounts Payable7. Rent Revenue8. Supplies
4-11
Example Exercise 4-11
Flow of Accounts into Financial Statements
121-124-12
1. Balance Sheet column2. Income Statement column3. Balance Sheet column4. Balance Sheet column5. Income Statement column6. Balance Sheet column7. Income Statement column8. Balance Sheet column
1Example Exercise 4-1 (continued)
4-12
For Practice: PE 4-1A, PE 4-1B
Follow My Example 4-1
131-134-13
Prepare financial statements from adjusted account balances.
2
4-13
141-144-14
The income statement is prepared directly from the Income Statement or Adjusted Trial Balance columns of the spreadsheet (work sheet).
2
151-154-15
to statement of owner’s equity
2
Financial Statements Prepared from Work SheetExhibit 2
161-164-16
In the Balance Sheet columns of the end-of-period spreadsheet (work sheet) for Dimple Consulting Co. for the current year, the Debit column total is $678,450, and the Credit column total is $599,750 before the amount of net income or net loss has been included. In preparing the income statement from the end-of-period spreadsheet (work sheet), what is the amount of net income or net loss?
4-16
Example Exercise 4-22
Determining the Net Income from End-of-Period Spreadsheet
171-174-17
2Example Exercise 4-2 (continued)
A net income of $78,700 ($678,450 – $599,750) would be reported. When the Debit column of the Balance Sheet columns is more than the Credit column, net income is reported. If the Credit column exceeds the Debit column, a net loss is reported.
4-17
For Practice: PE 4-2A, PE 4-2B
Follow My Example 4-2
181-184-18
The first item presented on the statement of owner’s equity is the balance of the owner’s capital account at the beginning of the period.
2
191-194-19
from the income statement
to the balance sheet
2Financial Statements Prepared from Work Sheet (continued)
Exhibit 2
201-204-20
Zack Gaddis owns and operates Gaddis Employment Services. On January 1, 2009, Zack Gaddis, Capital had a balance of $186,000. During the year, Zack invested an additional $40,000 and withdrew $25,000. For the year ended December 31, 2007, Gaddis Employment Services reported a net income of $18,750. Prepare a statement of owner’s equity for the year ended December 31, 2009.
Example Exercise 4-32
4-20
Statement of Owner’s Equity
211-214-21
2Example Exercise 4-3 (continued)
Zack Gaddis, capital, January 1, 2009 $186,000Additional investment during 2009 40,000 Total $226,000Withdrawals $ 25,000Less net income 18,750Decrease in owner’s equity 6,250Zack Gaddis, capital, December 31, 2009 $219,750
4-21
For Practice: PE 4-3A, PE 4-3B
GADDIS EMPLOYMENT SERVICESSTATEMENT OF OWNER’S EQUITY
For the Year Ended December 31, 2009
Follow My Example 4-3
221-224-22
The balance sheet is prepared directly from the Balance Sheet or Adjusted Trial Balance columns of the spreadsheet (or worksheet).
2
231-234-23
A classified balance sheet is a balance sheet that was expanded by adding subsections for current assets; property, plant, and equipment; and current liabilities.
2
241-244-24
Cash and other assets that are expected to be converted into cash, sold or used up usually within a year or less, through the normal operations of the business, are called current assets.• Cash
• Accounts Receivable
• Supplies
2
251-254-25
Notes receivable are written promises by the customer to pay the amount of the note and possibly interest at an agreed rate.
2
261-264-26
Property, plant, and equipment (also called fixed assets) include assets that depreciate over a period of time. Land is an exception as it is not subject to depreciation.• Equipment
• Machinery
• Buildings
• Land
2
271-274-27
Liabilities that will be due within a short time (usually one year or less) and that are to be paid out of current assets are called current liabilities.• Accounts payable
• Wages payable
• Interest payable
• Unearned fees
2
281-284-28
Liabilities not due for a long time (usually more than one year) are long-term liabilities. • Notes payable
• Mortgage payable
• Bond payable
2
291-294-29
Owner’s equity is the owner’s right to the assets of the business. Owner’s equity is added to the total liabilities, and the total must be equal to the total assets.
2
301-304-30
from the statement of owner’s equity
2Financial Statements Prepared from Work Sheet (continued)Exhibit 2
311-314-31
The following accounts appear in the adjusted trial balance of Hindsight Consulting. Indicate whether each account would be reported in the (a) current asset; (b) property, plant, and equipment; (c) current liability, (d) long-term liability; or (e) owner’s equity section of the December 31, 2009 balance sheet of Hindsight Consulting.
1. Jason Corbin, Capital 5. Cash2. Notes Receivable (due 6. Unearned Rent
in 6 months) 7. Accumulated Depr.—
3. Notes Payable (due in Equipment2011) 8. Accounts Payable
4. Land
Example Exercise 4-42
4-31
Classified Balance Sheet
321-324-32
2Example Exercise 4-4 (continued)
Follow My Example 4-4
1. Stockholders’ equity2. Current asset3. Long-term liability4. Property, plant, and
equipment
5. Current asset6. Current liability7. Property, plant, and
equipment
8. Current liability
4-32
For Practice: PE 4-4A, PE 4-4B
Follow My Example 4-4
331-334-33
Prepare closing entries.
3
4-334-33
341-344-34
Accounts that are relatively permanent from year to year are called real accounts. Accounts that report amounts for only one period are called temporary accounts or nominal accounts.
3
Closing Entries
351-354-35
To report amounts for only one period, temporary accounts should have zero balances at the beginning of the period. At the end of the period the revenue and expense account balances are transferred to Income Summary.
3
Closing Entries
361-364-36
The balance of Income Summary is then transferred to the owner’s capital account. The balance of the owner’s drawing account is also transferred to the owner’s capital account. The entries that transfer these balances are called closing entries.
3
Closing Entries
371-374-37
3
The Closing ProcessExhibit 3
381-384-38
Debit each revenue account for the amount of its balance, and credit Income Summary for the total revenue.
Fees Earned
Bal. 16,840
Rent Revenue
Bal. 120
Income Summary 16,840
120
16,960
3
Flowchart of Closing Entries for NetSolutions Exhibit 4
391-394-39
Wages Expense
Rent Expense
Depreciation Expense
Utilities Expense
Supplies Expense
Insurance Expense
Bal. 200
Miscellaneous Expense
Bal. 455
Income Summary
Debit Income Summary for the total expenses and
credit each expense account for its balance.
16,960
Bal. 4,525
Bal. 1,600
Bal. 50
Bal. 985
Bal. 2,040
9,855
455
200
2,040
985
50
1,600
4,525
3Flowchart of Closing Entries for NetSolutions (continued)Exhibit 4
401-404-40
Chris Clark, Capital
Bal. 25,000
Chris Clark, Drawing
Bal. 4,000
Income Summary
16,9609,8557,105
7,105
Debit Income Summary for the
amount of its balance (in this case, the net
income) and credit the capital account.
3Flowchart of Closing Entries for NetSolutions (continued)
Exhibit 4
411-414-41
Chris Clark, Capital
Bal. 25,0007,105
Chris Clark, Drawing
Bal. 4,000 4,000
4,000 Debit the capital account for the balance
of the drawing account, and credit
drawing for the same amount.
3
Flowchart of Closing Entries for NetSolutions (continued)
Exhibit 4
421-424-42
3
Flowchart of Closing Entries for NetSolutions (summary)
Exhibit 4
431-434-43
3
Closing Entries for NetSolutions
Step 2
Step 3
Step 1
Step 4
Exhibit 5
441-444-44
After the closing entries are posted, all of the temporary accounts have zero balances.
3
451-454-45
3Ledger for NetSolutionsExhibit 6
461-464-46
Ledger for NetSolutions (continued)
3Exhibit 6
471-474-47
3
Ledger for NetSolutions (continued)Exhibit 6
481-484-48
3
Ledger for NetSolutions (continued)Exhibit 6
491-494-49
After the accounts have been adjusted at July 31, the end of the fiscal year, the following balances are taken from the ledger of Cabriolet Services Co.
Terry Lambert, Capital
$615,850Terry Lambert, Drawing
25,000Fees Earned
380,450Wages Expense
250,000Rent Expense
65,000Supplies Expense
18,250Miscellaneous Expense
6,200
Journalize the four entries required to close the accounts.
Example Exercise 4-53
Closing Entries
4-49
501-504-50
3Example Exercise 4-5 (continued)
July 31 Fees Earned…………………………….. 380,450Income Summary…………………. 380,450
31 Income Summary……………………… 339,450Wages Expense…………………… 250,000Rent Expense……………………… 65,000Supplies Expense………………… 18,250Miscellaneous Expense…………. 6,200
31 Income Summary………………………. 41,000Terry Lambert, Capital…………… 41,000
31 Terry Lambert, Capital………………… 25,000Terry Lambert, Drawing………….. 25,000
4-50
For Practice: PE 4-5A, PE 4-5B
Follow My Example 4-5
511-514-51
A post-closing trial balance is prepared after the closing entries have been posted. The purpose of the PCTB is to verify that the ledger is in balance at the beginning of the next period.
3
521-524-52
3
Post-Closing Trial BalanceExhibit 7
531-534-53
Describe the accounting cycle.
4
4-53
541-544-54
The accounting process that begins with analyzing and journalizing transactions and ends with preparing the accounting records for the next period’s transactions is called the accounting cycle. There are ten steps in the accounting cycle.
4
551-554-55
2. Transactions are posted to the ledger.
3. An unadjusted trial balance is prepared.
4. Adjustment data are assembled and analyzed.
5. An optional end-of-period spreadsheet (work sheet) is prepared.
1. Transactions are analyzed and recorded in the journal.
(continued)
Accounting Cycle
4
561-564-56
7. An adjusted trial balance is prepared.
8. Financial statements are prepared.
9. Closing entries are journalized and posted to the ledger.
10. A post-closing trial balance is prepared.
6. Adjusting entries are journalized and posted to the ledger.
Accounting Cycle (continued)
4
571-574-57
From the following list of steps in the accounting cycle, identify what two steps are missing.
a. Transactions are analyzed and recorded in the journal.b. Transactions are posted to the ledger.c. Adjustment data are assembled and analyzed.d. An optional end-of-period spreadsheet (work sheet) is
prepared.e. Adjusting entries are journalized and posted to the
ledger.f. Financial statements are prepared.g. Closing entries are journalized and posted to the ledger.h. A post-closing trial balance is prepared.
Example Exercise 4-64
4-57
Accounting Cycle
581-584-58
The following two steps are missing: (1) the preparation of an unadjusted trial balance and (2) the preparation of the adjusted trial balance. The unadjusted trial balance should be prepared after step (b). The adjusted trial balance should be prepared after step (e).
4Example Exercise 4-6 (continued)
4-58
For Practice: PE 4-6A, PE 4-6B
Follow My Example 4-6
591-594-59
5
Illustrate the accounting cycle for one period.
4-59
601-604-60
5
Journal entries for April, Kelly Consulting
Exhibit 9
611-614-61
5
Journal entries for April, Kelly Consulting (continued)
Exhibit 9
621-624-62
5Unadjusted Trial Balance, Kelly ConsultingExhibit 10
631-634-63
5
End-of-Period Spreadsheet (Work Sheet)Exhibit 11
4-63
641-644-64
5
Adjusting Entries, Kelly Consulting
Exhibit 12
651-654-65
5Adjusted Trial Balance, Kelly ConsultingExhibit 13
661-664-66
5
Financial Statements, Kelly ConsultingExhibit 14
671-674-67
5
Financial Statements, Kelly Consulting (continued)
Exhibit 14
681-684-68
Financial Statements, Kelly Consulting (continued)
Exhibit 14
5
691-694-69
5
Closing Entries, Kelly ConsultingExhibit 15
701-704-70
5
Post-Closing Trial Balance, Kelly ConsultingExhibit 16
711-714-71
5
Ledger, Kelly ConsultingExhibit 17
721-724-72
5
Ledger, Kelly Consulting (continued)Exhibit 17
731-734-73
5
Ledger, Kelly Consulting (continued)Exhibit 17
741-744-74
5
Ledger, Kelly Consulting (continued)Exhibit 17
751-754-75
6
Explain what is meant by the fiscal year and the natural business year.
4-75
761-764-76
The annual accounting period adopted by a business is known as its fiscal year. When a business adopts a fiscal year that ends when business activities have reached the lowest point in its annual operation, such a fiscal year is also called the natural year.
6
771-774-77
Financial History of a Business
6
781-784-78
Appendix 1: End-of-Period Spreadsheet (Work Sheet)
4-78
791-794-79
Account Title Debit Credit Debit Credit Debit Credit
123456789
10111213141516171819202122232425
The The unadjusted unadjusted trial balance trial balance is checked is checked
for equalityfor equality..
Trial Balance Adjustments Trial Balance
Adjusted
Cash 2,065Accounts Receivable 2,220Supplies 2,000Prepaid Insurance 2,400Land 20,000Office Equipment 1,800Accumulated Depr.Accounts Payable 900Wages PayableUnearned Rent 360Chris Clark, Capital 25,000Chris Clark, Drawing 4,000Fees Earned 16,340Rent RevenueWages Expense 4,275Rent Expense 1,600Depreciation ExpenseUtilities Expense 985Supplies Expense 800Insurance ExpenseMiscellaneous Exp. 455
42,600 42,600
4-79
801-804-80
Account Title Debit Credit Debit Credit Debit Credit
123456789
10111213141516171819202122232425
Trial Balance Adjustments Trial Balance
Adjusted
4-80
Supplies Supplies needs needs adjusting adjusting
Cash 2,065Accounts Receivable 2,220Supplies 2,000Prepaid Insurance 2,400Land 20,000Office Equipment 1,800Accumulated Depr.Accounts Payable 900Wages PayableUnearned Rent 360Chris Clark, Capital 25,000Chris Clark, Drawing 4,000Fees Earned 16,340Rent RevenueWages Expense 4,275Rent Expense 1,600Depreciation ExpenseUtilities Expense 985Supplies Expense 800Insurance ExpenseMiscellaneous Exp. 455
42,600 42,600
811-814-81
Account Title Debit Credit Debit Credit Debit Credit
123456789
10111213141516171819202122232425
(a) 1,240
(a) 1,240
Trial Balance Adjustments Trial Balance
Adjusted
4-81
Cash 2,065Accounts Receivable 2,220Supplies 2,000Prepaid Insurance 2,400Land 20,000Office Equipment 1,800Accumulated Depr.Accounts Payable 900Wages PayableUnearned Rent 360Chris Clark, Capital 25,000Chris Clark, Drawing 4,000Fees Earned 16,340Rent RevenueWages Expense 4,275Rent Expense 1,600Depreciation ExpenseUtilities Expense 985Supplies Expense 800Insurance ExpenseMiscellaneous Exp. 455
42,600 42,600
(a) Cost of supplies on hand at December 31 is $760.
821-824-82
Account Title Debit Credit Debit Credit Debit Credit
123456789
10111213141516171819202122232425
(b) 200
(b) 200
Trial Balance Adjustments Trial Balance
Adjusted
4-82
(a) 1,240
Cash 2,065Accounts Receivable 2,220Supplies 2,000Prepaid Insurance 2,400Land 20,000Office Equipment 1,800Accumulated Depr.Accounts Payable 900Wages PayableUnearned Rent 360Chris Clark, Capital 25,000Chris Clark, Drawing 4,000Fees Earned 16,340Rent RevenueWages Expense 4,275Rent Expense 1,600Depreciation ExpenseUtilities Expense 985Supplies Expense 800Insurance ExpenseMiscellaneous Exp. 455
42,600 42,600
(a) 1,240
(b) The insurance expense for December is $200 ($2,400 ÷ 12).
831-834-83
Account Title Debit Credit Debit Credit Debit Credit
123456789
10111213141516171819202122232425
(c) 120
(c) 120
Trial Balance Adjustments Trial Balance
Adjusted
4-83
(b) 200(a) 1,240
(b) 200
Cash 2,065Accounts Receivable 2,220Supplies 2,000Prepaid Insurance 2,400Land 20,000Office Equipment 1,800Accumulated Depr.Accounts Payable 900Wages PayableUnearned Rent 360Chris Clark, Capital 25,000Chris Clark, Drawing 4,000Fees Earned 16,340Rent RevenueWages Expense 4,275Rent Expense 1,600Depreciation ExpenseUtilities Expense 985Supplies Expense 800Insurance ExpenseMiscellaneous Exp. 455
42,600 42,600
(a) 1,240
(c) Rent revenue earned during December was $120.
841-844-84
Account Title Debit Credit Debit Credit Debit Credit
123456789
10111213141516171819202122232425
Trial Balance Adjustments Trial Balance
Adjusted
4-84
(b) 200(a) 1,240
(b) 200
(c) 120
(c) 120
(d) 500
(d) 500
Cash 2,065Accounts Receivable 2,220Supplies 2,000Prepaid Insurance 2,400Land 20,000Office Equipment 1,800Accumulated Depr.Accounts Payable 900Wages PayableUnearned Rent 360Chris Clark, Capital 25,000Chris Clark, Drawing 4,000Fees Earned 16,340Rent RevenueWages Expense 4,275Rent Expense 1,600Depreciation ExpenseUtilities Expense 985Supplies Expense 800Insurance ExpenseMiscellaneous Exp. 455
42,600 42,600
(a) 1,240
(d) Fees accrued at the end of December, but not recorded, totaled $500.
851-854-85
Account Title Debit Credit Debit Credit Debit Credit
123456789
10111213141516171819202122232425
(e) 250
Trial Balance Adjustments Trial Balance
Adjusted
4-85
(b) 200(a) 1,240
(d) 500
(b) 200
(c) 120
(c) 120
Cash 2,065Accounts Receivable 2,220Supplies 2,000Prepaid Insurance 2,400Land 20,000Office Equipment 1,800Accumulated Depr.Accounts Payable 900Wages PayableUnearned Rent 360Chris Clark, Capital 25,000Chris Clark, Drawing 4,000Fees Earned 16,340Rent RevenueWages Expense 4,275Rent Expense 1,600Depreciation ExpenseUtilities Expense 985Supplies Expense 800Insurance ExpenseMiscellaneous Exp. 455
42,600 42,600
(d) 500
(e) 250
(a) 1,240
((e) Wages accrued but not paid at the end of December totaled $250.
861-864-86
Account Title Debit Credit Debit Credit Debit Credit
123456789
10111213141516171819202122232425
Trial Balance Adjustments Trial Balance
Adjusted
4-86
(b) 200(a) 1,240
(d) 500
(c) 120
(c) 120(d) 500
(f) 50
(f) 50
(b) 200
Cash 2,065Accounts Receivable 2,220Supplies 2,000Prepaid Insurance 2,400Land 20,000Office Equipment 1,800Accumulated Depr.Accounts Payable 900Wages PayableUnearned Rent 360Chris Clark, Capital 25,000Chris Clark, Drawing 4,000Fees Earned 16,340Rent RevenueWages Expense 4,275Rent Expense 1,600Depreciation ExpenseUtilities Expense 985Supplies Expense 800Insurance ExpenseMiscellaneous Exp. 455
42,600 42,600
(e) 250
(a) 1,240
(e) 250
(f) Depreciation of office equipment is $50 for December.
871-874-87
Account Title Debit Credit Debit Credit Debit Credit
123456789
10111213141516171819202122232425
2,360 2,360
Trial Balance Adjustments Trial Balance
Adjusted
4-87
(b) 200(a) 1,240
(d) 500
(c) 120
(c) 120
(f) 50
(b) 200(a) 1,240
(e) 250
(e) 250
(d) 500
Cash 2,065Accounts Receivable 2,220Supplies 2,000Prepaid Insurance 2,400Land 20,000Office Equipment 1,800Accumulated Depr.Accounts Payable 900Wages PayableUnearned Rent 360Chris Clark, Capital 25,000Chris Clark, Drawing 4,000Fees Earned 16,340Rent RevenueWages Expense 4,275Rent Expense 1,600Depreciation ExpenseUtilities Expense 985Supplies Expense 800Insurance ExpenseMiscellaneous Exp. 455
42,600 42,600 Summed and ruled
(f) 50
881-884-88
The next step is to add or subtract the adjustments from (to) the amounts found in the Unadjusted Trial Balance columns and enter the results in the Adjusted Trial Balance columns.
891-894-89
Account Title Debit Credit Debit Credit Debit Credit
Trial Balance Adjustments Trial Balance
123456789
10111213141516171819202122232425
Adjusted
4-892,360 2,360
(b) 200(a) 1,240
(d) 500
(c) 120
(c) 120(d) 500
(f) 50
(b) 200(a) 1,240
(e) 250
Cash 2,065 2,065Accounts Receivable 2,220 2,720Supplies 2,000 760Prepaid Insurance 2,400 2,200Land 20,000 20,000Office Equipment 1,800 1,800Accumulated Depr. 50Accounts Payable 900 900Wages Payable 250Unearned Rent 360 240Chris Clark, Capital 25,000 25,000Chris Clark, Drawing 4,000 4,000Fees Earned 16,340 16,840Rent Revenue 120Wages Expense 4,275 4,525Rent Expense 1,600 1,600Depreciation Expense 50Utilities Expense 985 985Supplies Expense 800 2,040Insurance Expense 200Miscellaneous Exp. 455 455
42,600 42,600 43,400 43,400
(f) 50
901-904-90
Because of space constraints, the Unadjusted Trial Balance and the Adjustments columns will not be shown in the following slides.
911-914-91
The next step is to extend amounts in the Adjusted Trial Balance columns to the Income Statement and Balance Sheet columns.
921-924-92
Account Title Debit Credit Debit Credit Debit Credit
Trial Balance Income Statement Balance Sheet
123456789
10111213141516171819202122232425
Adjusted
4-92
Cash 2,065 2,065Accounts Receivable 2,220 2,720Supplies 2,000 760Prepaid Insurance 2,400 2,200Land 20,000 20,000Office Equipment 1,800 1,800Accumulated Depr. 50Accounts Payable 900 900Wages Payable 250Unearned Rent 360 240Chris Clark, Capital 25,000 25,000Chris Clark, Drawing 4,000 4,000Fees Earned 16,340 16,840Rent Revenue 120Wages Expense 4,275 4,525Rent Expense 1,600 1,600Depreciation Expense 50 50Utilities Expense 985 985Supplies Expense 800 2,040Insurance Expense 200Miscellaneous Exp. 455 455
42,600 42,600
931-934-93
Account Title Debit Credit Debit Credit Debit Credit
Trial Balance Income Statement Balance Sheet
123456789
10111213141516171819202122232425
Adjusted
The four columns are summed.
4-93
Cash 2,065 2,065Accounts Receivable 2,220 2,720Supplies 2,000 760Prepaid Insurance 2,400 2,200Land 20,000 20,000Office Equipment 1,800 1,800Accumulated Depr. 50Accounts Payable 900 900Wages Payable 250Unearned Rent 360 240Chris Clark, Capital 25,000 25,000Chris Clark, Drawing 4,000 4,000Fees Earned 16,340 16,840Rent Revenue 120Wages Expense 4,275 4,525Rent Expense 1,600 1,600Depreciation Expense 50 50Utilities Expense 985 985Supplies Expense 800 2,040Insurance Expense 200Miscellaneous Exp. 455 455
42,600 42,600 9,855 16,960 33,545 26,440
941-944-94
9,855 16,960 33,545 26,4407,105 7,105
16,960 16,960 33,545 33,545
Income Statement Balance Sheet
Net IncomeNet Income
The difference between the Income Statement columns totals is the net income (or net loss) for the period.
951-954-95
Account Title Debit Credit Debit Credit Debit Credit
Trial Balance Income Statement Balance Sheet
123456789
10111213141516171819202122232425
Adjusted
Cash 2,065 2,065Accounts Receivable 2,220 2,720Supplies 2,000 760Prepaid Insurance 2,400 2,200Land 20,000 20,000Office Equipment 1,800 1,800Accumulated Depr. 50Accounts Payable 900 900Wages Payable 250Unearned Rent 360 240Chris Clark, Capital 25,000 25,000Chris Clark, Drawing 4,000 4,000Fees Earned 16,340 16,840Rent Revenue 120Wages Expense 4,275 4,525Rent Expense 1,600 1,600Depreciation Expense 50 50Utilities Expense 985 985Supplies Expense 800 2,040Insurance Expense 200Miscellaneous Exp. 455 455
42,600 42,600 9,855 16,960 33,545 26,440Net income 7,105 7,105
16,960 16,960 33,545 33,5454-95
961-964-96