Question

Calculator Dana Bowen Company is completing its first year of operations on April 30. Reconstruct the entries for the year ended April 30 from the T accounts below. Record them, assigning labels to each transaction, as follows: Cash Supplies Prepaid Insurance Accounts Receivable 1,250 3851 870 6,500 900 1,940 540 725 400 420 1,940 2,500 50 350 930 Equipment Accounts Payable Wages Payable Accumulated Depreciation 2,500 970

Answer 1

Solution

Dane Bowen Company

1a. Journal Entries

	Dane Bowen
	Journal Entries
	Account Titles	Debit	Credit
Owner Investment	Cash	$6,500
	Dane Bowen, Capital		$6,500
Equipment Contributed	Equipment	$2,500
	Dane Bowen, Capital		$2,500
Rent	Rent Expense	$400
	Cash		$400
Cash Revenue	Cash	$900
	Fees Earned		$900
Revenue on Account	Accounts Receivable	$1,250
	Fees Earned		$1,250
Supplies	Supplies	$870
	Accounts Payable		$870
Wages	Wages Expense	$420
	Cash		$420
Insurance	Prepaid Insurance	$1,940
	Cash		$1,940
Cash Revenue	Cash	$2,500
	Fees Earned		$2,500
Miscellaneous	Miscellaneous Expense	$50
	Cash		$50
Cash Revenue	Cash	$930
	Unearned Revenue		$930
Owner Withdrawal	Dane Bowen, Drawing	$350
	Cash		$350

1b. Adjusting Entries:

	Account Titles	Debit	Credit
Supplies	Supplies Expense	$540
	Supplies		$540
Accrued Revenue	Accounts Receivable	$385
	Fees Earned		$385
Insurance	Insurance Expense	$725
	Prepaid Insurance		$725
Depreciation	Depreciation Expense – Equipment	$130
	Accumulated depreciation		$130
Wages	Wages Expense	$225
	Wages Payable		$225
Earned Revenue	Unearned Revenue	$590
	Fees Earned		$590

2a. Income Statement

Dane Bowen Company
Income Statement
For the Year Ended April 30
Revenue		$5,625
Expenses:
Wages Expense	$645
Rent Expense	$400
Supplies Expense	$540
Insurance Expense	$725
Depreciation Expense	$130
Miscellaneous Expense	$50
total expenses		$2,490
Net Operating Income		$3,135

2b. Statement of owner’s equity:

Dane Bowen Company
Statement of Owner's Equity
As of April 30
Dane Bowen, Capital		$9,000
Dane Bowen, Withdrawal	($350)
Net Operating Income	$3,135
		$2,785
Dane Bowen Capital (ending balance)		$11,785

2c. Balance Sheet

Dane Bowen Company
Balance Sheet
As of April 30
Assets
Current Assets
Cash	$7,670
Accounts Receivable	$1,635
Prepaid Insurance	$1,215
Supplies	$330
Total		$10,850
Property, Plant and Equipment
Equipment	$2,370
Property, Plant and Equipment		$2,370
Total Assets		$13,220
Liabilities
Current Liabilities
Accounts Payable	$870
Wages Payable	$225
Unearned Revenue	$340
Total current liabilities		$1,435
Owner's Capital		$11,785
Total Liabilities		$13,220

3a. Closing Entries:

Account Titles	Debit	Credit
Revenue	$5,625
Income Summary		$5,625
Wages Expense	$645
Rent Expense	$400
Supplies Expense	$540
Insurance Expense	$725
Depreciation Expense	$130
Miscellaneous Expense	$50
Income Summary		$2,490
Net Operating Income	$3,135
Income Summary		$3,135

4a. Post-Closing Trial Balance

Post Closing Trial Balance
As of April 30
Account Titles	Debit	Credit
Cash	$7,670
Accounts Receivable	$1,635
Prepaid Insurance	$1,215
Supplies	$330
Equipment	$2,370
Accounts Payable		$870
Wages Payable		$225
Unearned Revenue		$340
Dane Bowen, Capital		$11,785
Total	$13,220	$13,220