Question

In-Class Case #4 Chapter 4 the following is an unadjusted trial balance before any adjustments have been made) for Garcia, Inc. at December 31 of the current year: Debit Credit 42,000 11,600 900 800 19,000 9,200 8,300 3,000 Account Titles Cash Accounts Receivable Supplies Prepaid Insurance Service Vehicles Accumulated Depreciation Other Assets Accounts Payable Wages Payable Income Taxes Payable Note Payable (3 years) Common Stock (5,000 shares outstanding) Additional Paid-in-Capital Retained Earnings Service Revenue Remaining Expenses Income Tax Expense Totals 17,000 400 19,000 6,000 61,360 33,360 115,960 115,960 Additional information not yet recorded: a) The supplies count at year-end reflected $300 remaining supplies on hand (unused). b) Insurance expired during the year: $800. c) Depreciation expense for the year: $3,700. d) Wages earned by employees not yet paid at year-end: $640. e) Income tax expense incurred but unpaid at year-end: $5,540. Required 1. Record the adjusting entries listed above, post to general ledger accounts, and prepare an adjusted trial balance. 2. Compare your balances with those on the given income statement, retained earnings statement, and balance sheet for December 31. 3. Record closing entries for the year, post to general ledger accounts, and prepare a post-closing trial balance.

Answer 1

Garcia Inc. Adjusting Enteries Trans. Particulars a. Supplies Expense a/c To Supplies (Supplies expensed) Dr. Debit in $ Credit in $ 600 600 Dr. 800 Insurance Expense a/c To Prepaid Insurance (Insurance expensed) 800 C. Depreciation a/c Dr. 3700 To Accumulated Depreciation (Being depreciation charged to asset) 3700 d. Dr. 640 Wages Expense a/c To Wages Payable (Wages accrued) 640 e. 5540 Income Tax Expense a/c Dr. To Income Taxes Payable (Income Tax accrued) 5540 Closing Enteries Date Particulars Dec-31 Income Summary a/c Dr. To Remaining Expenses To Supplies Expense To Insurance Expense To Depreciation To Wages Expense To Income Tax Expense (Expense accounts closed) Debit in $ Credit in $ 44640 33360 600 800 3700 640 5540 61360 Dec-31 Service Revenue a/c Dr. To Income Summary (Revenue accounts closed) 61360 Dr. 16720 Dec-31 Income Summary a/c To Retained Earnings (Profits transferred) 16720

Worksheet For the period ending December 31 300 Particulars Cash Accounts Receivable Supplies Prepaid Insurance Service Vehicles Accumulated Depreciation Other Assets Accounts Payable Wages Payable Income Taxes Payable Note Payable ( 3 years) Common Stock (5000 shares outstanding) Additional Paid in Capital Retained Earnings Service Revenue Remaining Expenses Supplies Expense Insurance Expense Depreciation Wages Expense Income Tax Expense Totals Unadjusted Adjustments Adjusted Post Closing Debit in $ Credit in $ Debit in $ Credit in $ Debit in $ Credit in $ Debit in $ Credit in $ 42000 42000 42000 11600 11600 11600 900 600 300 800 800 19000 19000 19000 9200 3700 12900 12900 8300 8300 8300 3000 3000 3000 640 640 640 5540 5540 5540 17000 17000 17000 400 400 400 19000 19000 19000 6000 6000 22720 61360 61360 33360 33360 600 600 800 800 3700 3700 640 640 5540 5540 115960 115960 11280 1 1280 125840 125840 81200 81200

Statement of Income For the period ending December 31 Service Revenue 61360 Less: Remaining Expenses 33360 Supplies Expense 600 Insurance Expense 800 Depreciation 3700 Wages Expense 640 39100 22260 Income Tax Expense -5540 Net Income 16720 Statement of Retained Earnings For the period ending December 31 Beginning Balance 6000 Net Income 16720 22720

Balance sheet As at December 31 Assets Current Assets Cash Accounts Receivable Supplies Amounts in $ Amounts in $ Liabilities Amounts in $ Amounts in $ Current Liabilities 42000 Accounts Payable 3000 11600 Wages Payable 640 300 53900 Income Taxes Payable 5540 9180 17000 Non Current Assets Service Vehicles Accumulated Depreci Other Assets 19000 - 12900 Non Current Liabilities Note Payable ( 3 years) 6100 8300 Shareholders Equity Common Stock Additional Paid in Capit Retained Earnings 68300 Total Liabilities & Equity 19000 400 22720 42120 68300 Total Assets