Question

On August 1, 2018, the beginning of its current fiscal year, the following opening account balances, listed in alphabetical order, were reported by Tobique Ltd. Accounts payable $2,500 Interest receivable 20 Accounts receivable 4,740 Note receivable, due October 31, 2018 4,000 Accumulated depreciation—equipment 2,030 Retained earnings 6,040 Cash 5,520 Salaries payable 1,460 Common shares 12,000 Supplies 1,030 Equipment 10,100 Unearned revenue 1,380 During August, the following summary transactions were completed. Aug. 1 Paid $440 cash for advertising in local newspapers. Advertising flyers will be included with newspapers delivered during August and September. (Hint: Use the Prepaid Advertising account.) 3 Paid August rent $380. (Hint: Use the Prepaid Rent account.) 6 Received $3,040 cash from customers in payment of accounts. 10 Paid $2,910 for salaries due employees, of which $1,450 is for August and $1,460 is for July salaries payable. 13 Received $4,100 cash for services performed in August. 15 Purchased additional equipment on account $1,910. 17 Paid creditors $1,910 of accounts payable due. 22 Purchased supplies on account $720. 24 Paid salaries $3,110. 27 Performed services worth $4,400 on account and billed customers. 29 Received $750 from customers for services to be provided in the future. 31 Declared and paid a $550 dividend.

TOBIQUE LTD.
Income Statement
Month Ended August 31,2018
Revenues:
Service Revenue	$9,290
Interest Revenue	$20
Total revenues		$9,310
Expenses:
Depreciation Expense	$203
Rent Expense	$380
Advertising Expense	$220
Supplies expense	$750
Salaries expense	$6,230
Total Expenses		$7,783
Income before income tax		$1,527
Income tax		$290
Net income		$1,237

TOBIQUE LTD. Statement of Changes in Equity Month Ended August 31, 2018
		Common Shares		Retained Earnings		Total Equity
Beginning balance		$12000		$6040		$18040
Net income				1237		1237
Dividend				-550		-550
Ending balance		12000		$6727		$18727

Date

Account Titles and Explanation

Debit

Credit

• Date	account and explanation	Debit	Credit
  Aug 31	Service revenue	9290
  	Interest revenue	20
  	Income summary		9310
  	(To close revenue)
  Aug 31	Income summary	8073
  	Depreciation expense		203
  	Rent expense		380
  	Advertising expense		220
  	Supplies expense		750
  	Salaries expense		6230
  	Income tax expense		290
  	(To close expense)
  Aug 31	Income summary	1237
  	Retained earnings		1237
  	(To close net income)
  Aug 31	Retained earnings	550
  	Dividend		550
  	(To close dividend)

Tobique records adjustments monthly. Adjustment data for the month of August are as follows:

1.		One month’s worth of advertising services have been received.
2.		The August rent has expired.
3.		Accrued salaries payable are $1,670.
4.		Depreciation for the month is $203.
5.		Supplies on hand at August 31 are $1,000.
6.		Services were performed to satisfy $790 of unearned revenue.
7.		One month of interest revenue related to the $4,000 note receivable has accrued. The note was issued on June 30 and is due October 31 and has a 6% annual interest rate. Interest is due at maturity.
8.		Income tax of $290 is estimated to be owed for the month of August.

  

(h) Prepare a post-closing trial balance.

TOBIQUE LTD. Post-closing Trial Balance August 31, 2018
	Debit	Credit

Answer 1

	Post Closing Trial Balance
Account Titles	Debit	Credit
Cash	$              4,110
Accounts Receivable	$              6,100
Supplies	$              1,000
Prepaid Advertising	$                 220
Interest Receivable	$                   40
Notes Receivable	$              4,000
Equipment	$            12,010
Accumulated Depreciation - Equipment		$           2,233
Accounts Payable		$           3,220
Salaries and Wages Payable		$           1,670
Income Tax Payable		$              290
Unearned Revenue		$           1,340
Common Stock		$        12,000
Retained Earnings		$           6,727
Service Revenue
Interest Revenue
Supplies Expense
Salaries and Wages Expense
Depreciation Expense - Equipment
Advertising Expense
Rent Expense
Income Tax Expense
Total	$            27,480	$        27,480