Completing the Accounting Cycle

1. A physical count reveals only $500 of supplies on hand
2. $100 of the unearned revenue is still unearned at month-end
3. Accrued salaries are $210.

Instructions

Solution

Instruction

Solution

Instruction

Solution

Instructions

1. Prepare the adjusting entries
2. Assuming the adjusted trial balance amount for each account is normal. Indicate the financial statement column to which each balance should be extended.

Solution

Instructions

1. Fill the missing amounts
2. Prepare the adjusting entries that were made

Solution

Instruction

1. journalize the closing entries using page J15.
2. Post to Owner's Capital and No. 350 Income Summary accounts. (Use the three-column form.)
3. Prepare a post-closing trial balance at July 31.

Solution

Instruction

1. Prepare the closing entries that were made.
2. Post the closing entries to Income Summary.

Solution

1. A payment of Salaries and Wages Expense of $700 was debited to Equipment and credited to Cash, both for $700.
2. A collection of $1,000 from a client on account was debited to Cash $100 and credited to Service Revenue $100.
3. The purchase of equipment on account for $760 was debited to Equipment $670 and credited to Accounts Payable $670.

Instructions

1. Correct the errors by reversing the incorrect entry and preparing the correct entry.
2. Correct the errors without reversing the incorrect entry.

Solution

1. A payment on account of $750 to a creditor was debited to Accounts Payable $570 and credited to Cash $570.
2. The purchase of supplies on account for $560 was debited to Equipment $56 and credited to Accounts Payable $56.
3. A $500 withdrawal of cash for N. Patel's personal use was debited to Salaries and Wages Expense $500 and credited to Cash $500.

Instructions

Solution

Instructions

1. Prepare a classified balance sheet; assume that $20,000 of the note payable will be paid in 2020.
2. Comment on the liquidity of the company.

Solution