Question

PA4-1 Preparing a Trial Balance, Closing Journal Entry, and Post-Closing Trial Balance [LO 4-3, LO 4-5]

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Starbooks Corporation provides an online bookstore for electronic books. The following is a simplified list of accounts and amounts reported in its accounting records. The accounts have normal debit or credit balances. Assume the year ended on September 30, 2018.

Accounts Payable	$	600
Accounts Receivable		300
Accumulated Depreciation		900
Cash		300
Common Stock		200
Deferred Revenue		200
Depreciation Expense		300
Equipment		3,200
Income Tax Expense		300
Interest Revenue		100
Notes Payable (long-term)		200
Notes Payable (short-term)		500
Prepaid Rent		100
Rent Expense		400
Retained Earnings		1,500
Salaries and Wages Expense		2,200
Service Revenue		6,200
Supplies		500
Supplies Expense		200
Travel Expense		2,600

PA4-1 Part 1

Required:

1. 1-a. Prepare an adjusted trial balance at September 30, 2018.

       

1. 1-b. Is the Retained Earnings balance of $1,500 the amount that would be reported on the balance sheet as of September 30, 2018?

• Yes

• No

Answer 1

1-a

Retained earnings = 1500 + 100 + 6200 - 300 - 300 - 400 - 2200 - 200 - 2600 = 1800

	Debit	Credit
Account payable		600
Account receivable	300
Accumulated depreciation		900
Cash	300
Common stock		200
Deferred revenue		200
Equipment	3200
Notes payable (long term)		200
Notes payable (short term)		500
Prepaid rent	100
Retained earnings		1800
Supplies	500
Total	4400	4400

1-b

Balance in retained earnings is 1800

No