Homework Chapter 1

P1.2
a. Tabular
Date Assets = Liabilities + Equity Total
July 31 Cash 5,000 + AR AP 4,200 Share capital 4,000 + RE 4,800 13,000
1,500 + Supplies
500 + Equipment
6,000
August Analyze: Cash + 1,200 and AR - 1,200
1 Cash 6,200 + AR AP 4,200 Share capital 4,000 + RE 4,800 13,000
300 + Supplies 500
+ Equipment 6,000
2 Analyze: Cash - 2,800 and AP - 2,800
Cash 3,400 + AR AP 1,400 Share capital 4,000 + RE 4,800 10,200
300 + Supplies 500
+ Equipment 6,000
3 Analyze: Service Revenue +7,500 and cash +4,000 and AR +3,500
Cash 7,400 + AR AP 1,400 Share capital 4,000 + RE 4,800 + 17,700
3,800 + Supplies Service Revenue 7,500
500 + Equipment
6,000
4 Analyze: Equipment +2,000 and Cash -400 and AP +1,600
Cash 7,000 + AR AP 3,000 Share capital 4,000 + RE 4,800 + 19,300
3,800 + Supplies Service Revenue 7,500
500 + Equipment
8,000
5 Analyze: Cash – 4,100, SW expense +2,800, Rent expense +900, and Advertising
expense +400
Cash 2,900 + AR AP 3,000 Share capital 4,000 + RE 4,800 + 15,200
3,800 + Supplies Service Revenue 7,500 – SW expense
500 + Equipment 2,800 – Rent expense 900 –
8,000 Advertising expense 400
6 Analyze: Dividends + 700 and Cash -700
Cash 2,200 + AR AP 3,000 Share capital 4,000 + RE 4,800 + 14,500
3,800 + Supplies Service Revenue 7,500 – SW expense
500 + Equipment 2,800 – Rent expense 900 –
8,000 Advertising expense 400 – Dividends
700
7 Analyze: Note payable +2,000 and Cash +2,000
Cash 4,200 + AR AP 3,000 + Share capital 4,000 + RE 4,800 + 16,500
3,800 + Supplies Note payable Service Revenue 7,500 – SW expense
500 + Equipment 2,000 2,800 – Rent expense 900 –
8,000 Advertising expense 400 – Dividends
700
8 Analyze: Utilities expense + 270 and Account payable +270
Cash 4,200 + AR AP 3,270 + Share capital 4,000 + RE 4,800 + 16,500
3,800 + Supplies Note payable Service Revenue 7,500 – SW expense
500 + Equipment 2,000 2,800 – Rent expense 900 –
 8,000 Advertising expense 400 – Dividends
700 – Utilities expense 270

b. Prepare an income statement for August, a retained earnings statement for August, and a
statement of financial position at August 31.
Income statement
Ai Fang Co
For August, 2020
Monetary unit: ¥ 000
Revenues
Service revenue
7,500
Total revenue 7,500
Less: Expenses
SW expense 2,800
Rent expense 900
Advertising expense 400
Utilities expense 270
Total expenses 4,370
Net income 3,130

Retained earnings statement

Ai Fang Co
For August, 2020
Monetary unit: ¥ 000
Retained earnings, August 1 4,800
Add: Net income 3,130
Less: Dividends 700
Retained earnings, August 31 7,230

Statement of financial position

Ai Fang Co
On August 31, 2020
Monetary unit: ¥ 000
Assets
Cash 4,200
AR 3,800
Supplies 500
Equipment 8,000
Total assets 16,500
Equity and Liabilities
Equity
Share capital 4,000
Retained earnings 7,230
Total Equity 11,230
Liabilities
AP 3,270
Note payable 2,000
Total liabilities 5,270
Total equity and liabilties 16,500
P1.3
a) Prepare an income statement and a retained earnings statement for the month of May and a
statement of financial position at May 31.

Income statement
Park Flying School Ltd.

for the month of May,2020

Monetary unit: W 000

Revenues

Service revenue 6,800

Total revenues 6,800

Less Expenses

Maintenance and repair exp 400

Rent exp 1,000

Advertising exp 500

Gasoline exp 2,500

Utilities exp 400

Total expenses 4,800

Net income 2,000

RE statement
Park Flying School Ltd.

for the month of May,2020

Monetary unit: W 000

RE, May 1 0

Add: Net income of May 2,000

Less: Dividends 480

RE, May 31 1,520

Balance sheet
Park Flying School Ltd.

On May 31, 2020

 Monetary unit: W 000

Assets

Cash 4,500

Account receivable 7,420

Equipment 64,000

Total assets 75,920

Equity and Liabilities

Equity

Share capital 45,000

Retained earnings 1,520

Total Equity 46,520

Liabilities

Note payable 28,000

Account payable 1,400

Total liabilties 29,400

Total E and L 75,920

b) Additional information

(1) 900 worth of services were performed and billed but not collected at May 31

Analyze: Account receivable +900 and Service revenue +900

(2) 1,500 of gasoline expense was incurred but not paid

Analyze: Account payable +1,500 and Gasoline expense +1,500

Income statement
Park Flying School Ltd.

for the month of May,2020

Monetary unit: W 000

Revenues

Service revenue (+900) 7,700

Total revenues 7,700

Less Expenses

Maintenance and repair exp 400

Rent exp 1,000

Advertising exp 500

Gasoline exp (+1,500) 4,000

Utilities exp 400

Total expenses 6,300

Net income 1,400

RE statement
Park Flying School Ltd.

for the month of May,2020

Monetary unit: W 000

RE, May 1 0

Add: Net income of May 1,400

Less: Dividends 480

RE, May 31 920

P1.4
a. Matt Stiner started a delivery service, Stiner Deliveries Ltd., on June 1, 2020. The
following transactions occurred during the month of June.

Date Equation: Assets = Liabilities + Equity Total

1 Analyze: Cash + 10,00 and Share capital +10,000
Record:
Dr Cash 10,000
Cr Share capital 10,000
Cash 10,000 0 Share capital 10,000 10,000
2 Analyze: Equipment 14,000 and Cash -2,000 and Note payable +12,000
Record:
Dr Equipment 14,000
Cr Cash 2,000
Cr Note payaable 12,000
Cash 8,000 + Note payable Share capital 10,000 22,000
Equipment 14,000 12,000
3 Analyze: Cash – 500 and Rent expense + 500
Record:
Dr Rent expense 500
Cr Cash 500
 Cash 7,500 + Note payable Share capital 10,000 – Rent 21,500
Equipment 14,000 12,000 expense 500
5 Analyze: Service revenue +4,800 and Account receivable +4,800
Record:
Dr Account receivable 4,800
Cr Service Revenue 4,800
Cash 7,500 + Note payable Share capital 10,000 – Rent 26,300
Equipment 14,000 + 12,000 expense 500+ Service revenue
Account receivable 4,800
4,800
9 Analyze: Cash -300 and Dividends +300
Record:
Dr Dividends 300
Cr Cash 300
Cash 7,200 + Note payable Share capital 10,000 – Rent 26,000
Equipment 14,000 + 12,000 expense 500+ Service revenue
Account receivable 4,800 – Dividends 300
4,800
12 Analyze: Supplies +150 and Account payable +150
Record:
Dr Supplies 150
Cr Account payable 150
Cash 7,200 + Note payable Share capital 10,000 – Rent 26,150
Equipment 14,000 + 12,000 + expense 500+ Service revenue
Account receivable Account 4,800 – Dividends 300
4,800 + Supplies 150 payable 150
15 Analyze: Cash + 1,250 and Account receivable -1,250
Record:
Dr Cash 1,250
Cr Account receivable 1,250
Cash 8,450 + Note payable Share capital 10,000 – Rent 26,150
Equipment 14,000 + 12,000 + expense 500 + Service revenue
Account receivable Account 4,800 – Dividends 300
3,550 + Supplies 150 payable 150
17 Analyze: Gasoline expense +100 and Account payable +100
Record:
Dr Gasoline expense 100
Cr Account payable 100
Cash 8,450 + Note payable Share capital 10,000 – Rent 26,150
Equipment 14,000 + 12,000 + expense 500+ Service revenue
Account receivable Account 4,800 – Dividends 300 - Gasoline
3,550 + Supplies 150 payable 250 expense 100
20 Analyze: Cash +1,500 and Service revenue +1,500
Record:
Dr Cash 1,500
Cr Service Revenue 1,500
Cash 9,950 + Note payable Share capital 10,000 – Rent 27,650
Equipment 14,000 + 12,000 + expense 500+ Service revenue
 Account receivable Account 6,300 – Dividends 300 - Gasoline
3,550 + Supplies 150 payable 250 expense 100
23 Analyze: Cash -500 and Note payable -500
Record:
Dr Note payable 500
Cr Cash 500
Cash 9,450 + Note payable Share capital 10,000 – Rent 27,150
Equipment 14,000 + 11,500 + expense 500+ Service revenue
Account receivable Account 6,300 – Dividends 300 - Gasoline
3,550 + Supplies 150 payable 250 expense 100
26 Analyze: Utilities expense +250 and Cash – 250
Record:
Dr Utilities exp 250
Cr Cash 250
Cash 9,200 + Note payable Share capital 10,000 – Rent 26,900
Equipment 14,000 + 11,500 + expense 500+ Service revenue
Account receivable Account 6,300 – Dividends 300 - Gasoline
3,550 + Supplies 150 payable 250 expense 100 -Utilities expense 250
29 Analyze: Account payable -100 and Cash -100
Record:
Dr Account payable 100
Cr Cash 100
Cash 9,100 + Note payable Share capital 10,000 – Rent 26,800
Equipment 14,000 + 11,500 + expense 500+ Service revenue
Account receivable Account 6,300 – Dividends 300 - Gasoline
3,550 + Supplies 150 payable 150 expense 100 -Utilities expense 250
30 Analyze: Salaries and wages expense +1,000 and Cash – 1,000
Record:
Dr Salaries and wages expense 1,000
Cr Cash 1,000
Cash 8,100 + Note payable Share capital 10,000 – Rent 25,800
Equipment 14,000 + 11,500 + expense 500+ Service revenue
Account receivable Account 6,300 – Dividends 300 - Gasoline
3,550 + Supplies 150 payable 150 expense 100 -Utilities expense 250
-Salaries and wages expense 1,000

b. Prepare an income statement for the month of June.

Income statement
Stiner Deliveries Ltd.

for the month of June, 2020

Monetary unit: £

Revenues

Service revenue 6,300

Total revenues 6,300

Less Expenses

Salaries and wages repair exp 1,000

Rent exp 500

Gasoline exp 100

Utilities exp 250

Total expenses 1,850

Net income 4,450

Note: in case of Net loss = Negative number = (000)

c. Prepare a statement of financial position at June 30, 2020.

Statement of financial position

Stiner Deliveries Ltd.

On June 30, 2020

Monetary unit: £

Assets

Cash 8,100

Account receivable 3,550

Equipment 14,000

Supplies 150

Total assets 25,800

Equity and Liabilities

Equity

Share capital 10,000

Retained earnings (= 0 + 4,450 - 300) 4,150

Total Equity 14,150

Liabilities

Note payable 11,500

Account payable 150

Total liabilities 11,650

 Total E and L 25,800

P1.5
Equity change in year = additional investment – dividend + revenues – expense
Equity at the year beginning + Equity change in year = Equity at the year ending
Equity at the year beginning + additional investment – dividend + revenues – expense = Equity
at the year ending

a. Determine the missing amounts.

Crosby
a = equity = Assets – liabilities = 900,000-650,000=250,000
b = assets = liabilities + equity = 550,000+400,000 = 950,000
c = additional investment = Equity at the year ending + dividend - revenues + expense - Equity
at the year beginning = 400,000 + 100,000 – 3,500,000 + 3,300,000 – 250,000 = 50,000
Stills
d = liabilities = Assets – equity = 1,100,000 – 500,000 = 600,000
e = equity = Assets – liabilities = 1,370,000 – 750,000 = 620,000
f = dividends = Equity at the year beginning + additional investment + revenues – expense -
Equity at the year ending = 500,000 + 150,000 + 4,200,000 - 3,850,000 - 620,000 = 380,000
Nash
g = assets = liabilities + equity = 750,000 + 450,000 = 1,200,000
h = liabilities = Assets – equity = 2,000,000 – 1,300,000 = 700,000
i = Total revenues = Equity at the year ending - Equity at the year beginning - additional
investment + dividend + expense - = 1,300,000 - 450,000 - 100,000 + 140,000 + 3,420,000 =
4,310,000
Young
J = liabilities = Assets – equity = 1,500,000 – 1,000,000 = 500,000
K = assets = liabilities + equity = 800,000 +1,400,000 = 2,200,000
L = total expenses = Equity at the year beginning + additional investment – dividend + revenues
- Equity at the year ending = 1,000,000 + 150,000 - 100,000 +5,000,000 – 1,400,000 = 4,650,000

b. Prepare the retained earnings statement for Stills Company. Assume beginning
retained earnings was HK$200,000.

Retained earnings statement

Stills Company
For the year ended Dec 31, 2020
Monetary unit: HK$

RE, Jan 1 2020 200,000

Add: Net income of 2020 (=revenues – expenses) 350,000
Less: dividends 380,000
RE, Dec 31 2020 170,000

c. Write a memorandum explaining the sequence for preparing financial statements and the
interrelationship of the retained earnings statement to the income statement and statement
of financial position.
Key point:
The sequence for preparing financial statements is income statement, retained earnings
statement, and statement of financial position.
The interrelationship:
 net income/loss from the income statement is reported in the retained earnings statement
 ending retained earnings reported in the retained earnings statement is the amount
reported for retained earnings on the statement of financial position.

Homework Chapter 1
P1.2
a. Tabular
Date Assets = Liabilities + Equity Total
July 31 Cash 5,000 + AR AP 4,200 Share capital 4,000 + RE 4,800 13,000
1,500 + Supplies
500 + Equipment
6,000
August Analyze: Cash + 1,200 and AR - 1,200
1 Cash 6,200 + AR AP 4,200 Share capital 4,000 + RE 4,800 13,000
300 + Supplies 500
+ Equipment 6,000
2 Analyze: Cash - 2,800 and AP - 2,800
Cash 3,400 + AR AP 1,400 Share capital 4,000 + RE 4,800 10,200
300 + Supplies 500
+ Equipment 6,000
3 Analyze: Service Revenue +7,500 and cash +4,000 and AR +3,500
Cash 7,400 + AR AP 1,400 Share capital 4,000 + RE 4,800 + 17,700
3,800 + Supplies Service Revenue 7,500
500 + Equipment
6,000
4 Analyze: Equipment +2,000 and Cash -400 and AP +1,600
Cash 7,000 + AR AP 3,000 Share capital 4,000 + RE 4,800 + 19,300
3,800 + Supplies Service Revenue 7,500
500 + Equipment
8,000
5 Analyze: Cash – 4,100, SW expense +2,800, Rent expense +900, and Advertising
expense +400
Cash 2,900 + AR AP 3,000 Share capital 4,000 + RE 4,800 + 15,200
3,800 + Supplies Service Revenue 7,500 – SW expense
500 + Equipment 2,800 – Rent expense 900 –
8,000 Advertising expense 400
6 Analyze: Dividends + 700 and Cash -700
Cash 2,200 + AR AP 3,000 Share capital 4,000 + RE 4,800 + 14,500
3,800 + Supplies Service Revenue 7,500 – SW expense
500 + Equipment 2,800 – Rent expense 900 –
8,000 Advertising expense 400 – Dividends
700
7 Analyze: Note payable +2,000 and Cash +2,000
 Cash 4,200 + AR AP 3,000 + Share capital 4,000 + RE 4,800 + 16,500
3,800 + Supplies Note payable Service Revenue 7,500 – SW expense
500 + Equipment 2,000 2,800 – Rent expense 900 –
8,000 Advertising expense 400 – Dividends
700
8 Analyze: Utilities expense + 270 and Account payable +270
Cash 4,200 + AR AP 3,270 + Share capital 4,000 + RE 4,800 + 16,500
3,800 + Supplies Note payable Service Revenue 7,500 – SW expense
500 + Equipment 2,000 2,800 – Rent expense 900 –
8,000 Advertising expense 400 – Dividends
700 – Utilities expense 270

b. Prepare an income statement for August, a retained earnings statement for August, and a
statement of financial position at August 31.
Income statement
Ai Fang Co
For August, 2020
Monetary unit: ¥ 000
Revenues
Service revenue
7,500
Total revenue 7,500
Less: Expenses
SW expense 2,800
Rent expense 900
Advertising expense 400
Utilities expense 270
Total expenses 4,370
Net income 3,130

Retained earnings statement

Ai Fang Co
For August, 2020
Monetary unit: ¥ 000
Retained earnings, August 1 4,800
Add: Net income 3,130
Less: Dividends 700
Retained earnings, August 31 7,230

Statement of financial position

Ai Fang Co
On August 31, 2020
Monetary unit: ¥ 000
Assets
Cash 4,200
AR 3,800
Supplies 500
Equipment 8,000
Total assets 16,500
 Equity and Liabilities
Equity
Share capital 4,000
Retained earnings 7,230
Total Equity 11,230
Liabilities
AP 3,270
Note payable 2,000
Total liabilities 5,270
Total equity and liabilties 16,500

P1.3
a) Prepare an income statement and a retained earnings statement for the month of May and a
statement of financial position at May 31.

Income statement
Park Flying School Ltd.

for the month of May,2020

Monetary unit: W 000

Revenues

Service revenue 6,800

Total revenues 6,800

Less Expenses

Maintenance and repair exp 400

Rent exp 1,000

Advertising exp 500

Gasoline exp 2,500

Utilities exp 400

Total expenses 4,800

Net income 2,000

RE statement
Park Flying School Ltd.

for the month of May,2020

Monetary unit: W 000

RE, May 1 0
Add: Net income of May 2,000

Less: Dividends 480

RE, May 31 1,520

Balance sheet
Park Flying School Ltd.

On May 31, 2020

Monetary unit: W 000

Assets

Cash 4,500

Account receivable 7,420

Equipment 64,000

Total assets 75,920

Equity and Liabilities

Equity

Share capital 45,000

Retained earnings 1,520

Total Equity 46,520

Liabilities

Note payable 28,000

Account payable 1,400

Total liabilties 29,400

Total E and L 75,920

b) Additional information

(1) 900 worth of services were performed and billed but not collected at May 31

Analyze: Account receivable +900 and Service revenue +900

(2) 1,500 of gasoline expense was incurred but not paid

Analyze: Account payable +1,500 and Gasoline expense +1,500

Income statement
Park Flying School Ltd.
 for the month of May,2020

Monetary unit: W 000

Revenues

Service revenue (+900) 7,700

Total revenues 7,700

Less Expenses

Maintenance and repair exp 400

Rent exp 1,000

Advertising exp 500

Gasoline exp (+1,500) 4,000

Utilities exp 400

Total expenses 6,300

Net income 1,400

RE statement
Park Flying School Ltd.

for the month of May,2020

Monetary unit: W 000

RE, May 1 0

Add: Net income of May 1,400

Less: Dividends 480

RE, May 31 920

P1.4
a. Matt Stiner started a delivery service, Stiner Deliveries Ltd., on June 1, 2020. The
following transactions occurred during the month of June.

Date Equation: Assets = Liabilities + Equity Total

1 Analyze: Cash + 10,00 and Share capital +10,000
Record:
Dr Cash 10,000
Cr Share capital 10,000
Cash 10,000 0 Share capital 10,000 10,000
2 Analyze: Equipment 14,000 and Cash -2,000 and Note payable +12,000
Record:
 Dr Equipment 14,000
Cr Cash 2,000
Cr Note payaable 12,000
Cash 8,000 + Note payable Share capital 10,000 22,000
Equipment 14,000 12,000
3 Analyze: Cash – 500 and Rent expense + 500
Record:
Dr Rent expense 500
Cr Cash 500
Cash 7,500 + Note payable Share capital 10,000 – Rent 21,500
Equipment 14,000 12,000 expense 500
5 Analyze: Service revenue +4,800 and Account receivable +4,800
Record:
Dr Account receivable 4,800
Cr Service Revenue 4,800
Cash 7,500 + Note payable Share capital 10,000 – Rent 26,300
Equipment 14,000 + 12,000 expense 500+ Service revenue
Account receivable 4,800
4,800
9 Analyze: Cash -300 and Dividends +300
Record:
Dr Dividends 300
Cr Cash 300
Cash 7,200 + Note payable Share capital 10,000 – Rent 26,000
Equipment 14,000 + 12,000 expense 500+ Service revenue
Account receivable 4,800 – Dividends 300
4,800
12 Analyze: Supplies +150 and Account payable +150
Record:
Dr Supplies 150
Cr Account payable 150
Cash 7,200 + Note payable Share capital 10,000 – Rent 26,150
Equipment 14,000 + 12,000 + expense 500+ Service revenue
Account receivable Account 4,800 – Dividends 300
4,800 + Supplies 150 payable 150
15 Analyze: Cash + 1,250 and Account receivable -1,250
Record:
Dr Cash 1,250
Cr Account receivable 1,250
Cash 8,450 + Note payable Share capital 10,000 – Rent 26,150
Equipment 14,000 + 12,000 + expense 500 + Service revenue
Account receivable Account 4,800 – Dividends 300
3,550 + Supplies 150 payable 150
17 Analyze: Gasoline expense +100 and Account payable +100
Record:
Dr Gasoline expense 100
Cr Account payable 100
Cash 8,450 + Note payable Share capital 10,000 – Rent 26,150
 Equipment 14,000 + 12,000 + expense 500+ Service revenue
Account receivable Account 4,800 – Dividends 300 - Gasoline
3,550 + Supplies 150 payable 250 expense 100
20 Analyze: Cash +1,500 and Service revenue +1,500
Record:
Dr Cash 1,500
Cr Service Revenue 1,500
Cash 9,950 + Note payable Share capital 10,000 – Rent 27,650
Equipment 14,000 + 12,000 + expense 500+ Service revenue
Account receivable Account 6,300 – Dividends 300 - Gasoline
3,550 + Supplies 150 payable 250 expense 100
23 Analyze: Cash -500 and Note payable -500
Record:
Dr Note payable 500
Cr Cash 500
Cash 9,450 + Note payable Share capital 10,000 – Rent 27,150
Equipment 14,000 + 11,500 + expense 500+ Service revenue
Account receivable Account 6,300 – Dividends 300 - Gasoline
3,550 + Supplies 150 payable 250 expense 100
26 Analyze: Utilities expense +250 and Cash – 250
Record:
Dr Utilities exp 250
Cr Cash 250
Cash 9,200 + Note payable Share capital 10,000 – Rent 26,900
Equipment 14,000 + 11,500 + expense 500+ Service revenue
Account receivable Account 6,300 – Dividends 300 - Gasoline
3,550 + Supplies 150 payable 250 expense 100 -Utilities expense 250
29 Analyze: Account payable -100 and Cash -100
Record:
Dr Account payable 100
Cr Cash 100
Cash 9,100 + Note payable Share capital 10,000 – Rent 26,800
Equipment 14,000 + 11,500 + expense 500+ Service revenue
Account receivable Account 6,300 – Dividends 300 - Gasoline
3,550 + Supplies 150 payable 150 expense 100 -Utilities expense 250
30 Analyze: Salaries and wages expense +1,000 and Cash – 1,000
Record:
Dr Salaries and wages expense 1,000
Cr Cash 1,000
Cash 8,100 + Note payable Share capital 10,000 – Rent 25,800
Equipment 14,000 + 11,500 + expense 500+ Service revenue
Account receivable Account 6,300 – Dividends 300 - Gasoline
3,550 + Supplies 150 payable 150 expense 100 -Utilities expense 250
-Salaries and wages expense 1,000

b. Prepare an income statement for the month of June.

Income statement
Stiner Deliveries Ltd.
 for the month of June, 2020

Monetary unit: £

Revenues

Service revenue 6,300

Total revenues 6,300

Less Expenses

Salaries and wages repair exp 1,000

Rent exp 500

Gasoline exp 100

Utilities exp 250

Total expenses 1,850

Net income 4,450

Note: in case of Net loss = Negative number = (000)

c. Prepare a statement of financial position at June 30, 2020.

Statement of financial position

Stiner Deliveries Ltd.

On June 30, 2020

Monetary unit: £

Assets

Cash 8,100

Account receivable 3,550

Equipment 14,000

Supplies 150

Total assets 25,800

Equity and Liabilities

Equity

Share capital 10,000

Retained earnings (= 0 + 4,450 - 300) 4,150

 Total Equity 14,150

Liabilities

Note payable 11,500

Account payable 150

Total liabilities 11,650

Total E and L 25,800

P1.5
Equity change in year = additional investment – dividend + revenues – expense
Equity at the year beginning + Equity change in year = Equity at the year ending
Equity at the year beginning + additional investment – dividend + revenues – expense = Equity
at the year ending

a. Determine the missing amounts.

Crosby
a = equity = Assets – liabilities = 900,000-650,000=250,000
b = assets = liabilities + equity = 550,000+400,000 = 950,000
c = additional investment = Equity at the year ending + dividend - revenues + expense - Equity
at the year beginning = 400,000 + 100,000 – 3,500,000 + 3,300,000 – 250,000 = 50,000
Stills
d = liabilities = Assets – equity = 1,100,000 – 500,000 = 600,000
e = equity = Assets – liabilities = 1,370,000 – 750,000 = 620,000
f = dividends = Equity at the year beginning + additional investment + revenues – expense -
Equity at the year ending = 500,000 + 150,000 + 4,200,000 - 3,850,000 - 620,000 = 380,000
Nash
g = assets = liabilities + equity = 750,000 + 450,000 = 1,200,000
h = liabilities = Assets – equity = 2,000,000 – 1,300,000 = 700,000
i = Total revenues = Equity at the year ending - Equity at the year beginning - additional
investment + dividend + expense - = 1,300,000 - 450,000 - 100,000 + 140,000 + 3,420,000 =
4,310,000
Young
J = liabilities = Assets – equity = 1,500,000 – 1,000,000 = 500,000
K = assets = liabilities + equity = 800,000 +1,400,000 = 2,200,000
L = total expenses = Equity at the year beginning + additional investment – dividend + revenues
- Equity at the year ending = 1,000,000 + 150,000 - 100,000 +5,000,000 – 1,400,000 = 4,650,000

b. Prepare the retained earnings statement for Stills Company. Assume beginning
retained earnings was HK$200,000.

Retained earnings statement

Stills Company
For the year ended Dec 31, 2020
Monetary unit: HK$
 RE, Jan 1 2020 200,000
Add: Net income of 2020 (=revenues – expenses) 350,000
Less: dividends 380,000
RE, Dec 31 2020 170,000

c. Write a memorandum explaining the sequence for preparing financial statements and the
interrelationship of the retained earnings statement to the income statement and statement
of financial position.
Key point:
The sequence for preparing financial statements is income statement, retained earnings
statement, and statement of financial position.
The interrelationship:
 net income/loss from the income statement is reported in the retained earnings statement
 ending retained earnings reported in the retained earnings statement is the amount
reported for retained earnings on the statement of financial position.
 Homework Chapter 2
P2.2
a. Journal entry
April 1 Invested €20,000 cash in her business in exchange for ordinary shares.
Dr Cash 20,000
Cr Share capital 20,000
April 1 Hired a secretary-receptionist at a salary of €700 per week payable monthly. -> Not a
transaction
April 2 Paid office rent for the month €1,100.
Dr Rent expense 1,100
Cr Cash 1,100
April 3 Purchased dental supplies on account from Dazzle Company €4,000.
Dr Supplies 4,000
Cr Accounts payable 4,000
April 10 Performed dental services and billed insurance companies €5,100.
Dr Accounts receivable 5,100
Cr Ser. Revenue 5,100
April 11 Received €1,000 cash advance from Leah Mataruka for an implant.
Dr Cash 1,000
Cr Unearned Ser. Revenue (liability) 1,000
April 20 Received €2,100 cash for services performed from Michael Santos.
Dr Cash 2,100
Cr Service Revenue 2,100
April 30 Paid secretary-receptionist for the month €2,800.
Dr SW expense 2,800
Cr Cash 2,800
April 30 Paid €2,400 to Dazzle for accounts payable due.
Dr Accounts payable 2,400
Cr Cash 2,400

b. Post to the ledger accounts

Dr Cash Cr Dr Share capital Cr
OB: 0 OB: 0
20,000 (1) 1,100 (2) 20,000 (1)
1,000 (11) 2,800
2,100 (20) (30)
2,400
(30)
CB: 16,800 CB: 20,000

Supplies AP
OB: 0 OB: 0
4,000 (3) 2,400 (30) 4,000 (3)
CB: CB: 1,600
4,000

Rent expense Ser. Revenue

1,100 (2) 5,100 (10)
2,100 (20)
Total: 1,100 Total: 7,200
 Account receivable Unearned Ser. Revenue
OB: 0 OB: 0
5,100 1,000 (11)
(10)
CB: 5,100 CB: 1,000

SW expense
2,800 (30)
Total: 2,800

*** Note: chapter 4 Revenue, expense, dividend accounts do not have opening/closing Balance
(zero balance) because balance of these accounts at the end of accounting period are transferred
to Retained earnings account.

(Opening RE + Revenue – Expense) – Dividend = Closing RE

c. Prepare a trial balance on April 30, 2020.

Trial balance
Emily stansbury dentist
April 30, 2020
Monetary unit: Euro
Accounts Debit Credit
Cash 16,800
Account receivable 5,100

Supplies 4,000
Rent expense 1,100
SW expense 2,800
Account payable 1,600
Unearned Ser. 1,000
Revenue

Share capital 20,000

Ser. Revenue 7,200
Total 29,800 29,800

P2.3
a. Prepare journal entries to record each of the events listed.

Transactions on May 1:

1. Rahul Shah invested 40,000 cash in the company in exchange for ordinary shares.
Dr Cash 40,000
Cr Share capital 40,000

2. Hired two employees to work in the warehouse. They will each be paid a salary of 3,050
per month. -> not a transaction -> no entry

3. Signed a 2-year rental agreement on a warehouse; paid 24,000 cash in advance for the
first year.
Dr Prepaid rent (assets) 24,000

Cr Cash 24,000

Rent expense of a month = 24,000/12

Prepaid expense is asset account. Common: prepaid rent, prepaid insurance…

4. Purchased furniture and equipment costing 30,000. A cash payment of 10,000 was
made immediately; the remainder will be paid in 6 months.

Dr Equipment 30,000

Cr Cash 10,000

Cr Account payable 20,000

5. Paid 1,800 cash for a one-year insurance policy on the furniture and equipment.

Dr Prepaid insurance (assets) 1,800

Cr Cash 1,800

Insurance expense of a month = 1,800/12

Transactions during the remainder of the month:

6. Purchased basic office supplies for 420 cash.

Dr Supplies 420

Cr Cash 420

7. Purchased more office supplies for 1,500 on account.

Dr Supplies 1,500

Cr Account payable 1,500

8. Total revenues earned were 20,000; of which 8,000 cash and 12,000 on account.

Dr Cash 8,000

Dr Account receivable 12,000

Cr Service revenue 20,000

9. Paid 400 to suppliers for accounts payable due.

Dr Account payable 400

Cr Cash 400

10. Received 3,000 from customers in payment of accounts receivable.

Dr Cash 3,000
 Cr Account receivable 3,000

11. Received utility bills in the amount of 380, to be paid next month.

Dr Utilities expense 380

Cr Account payable 380

12. Paid the monthly salaries of the two employees, totaling 6,100.

Dr Salaries and wages expense 6,100

Cr Cash 6,100

b. Post the journal entries to T-accounts.

Cas Share capital

h
OB: 0 OB: 0
40,000 (1) 24,000 (3) 40,000 (1)
8,000 (8) 10,000 (4)
3,000 (10) 1,800 (5)
420 (6)
400 (9)
6,100 (12)
CB: 8,280 CB: 40,000

Supplies AP
OB: 0 OB: 0
420 (6) 400 20,000 (4)
1,500 (7) (9) 1,500 (7)
380 (11)
CB: 1,920 CB: 21,480

Equipment Service revenue

OB: 0 20,000 (8)

30,000 (4)

CB: Total: 20,000

30,000

Prepaid SW
rent expense

OB: 0 6,100 (12)

24,000 (3)

CB: 24,000 Total: 6,100

 Prepaid insurance Utilities expense

OB: 0 380 (11)

1,800 (5)

CB: Total:
1,800 380

Accounts
receivable

OB: 0

12,000 (8) 3,000 (10)

CB: 9,000

lOMoARcPSD|5814602

c. Prepare a trial balance as of May 31, 2020.

Trial balance
Kochi service
May 31, 2020
Monetary unit:
Accounts Debit Credit
Cash 8,280
Account 9,000
receivable

Supplies 1,920
Prepaid Rent 24,000
Prepaid insurance 1,800
Equipment 30,000
SW expense 6,100
Utilities expense 380
Account payable 21,480
Common stock 40,000
Ser. Revenue 20,000
Total 81,480 81,480

P2.4
Correct error entry
1. Cash received from a customer in payment of its account was debited for $580, and
Accounts Receivable was credited for the same amount. The actual collection was for
$850.

Incorrect entry:
Dr Cash 580
 Cr Account Receivable 580

Correct entry should be:

Dr Cash 850
Cr Account Receivable 850

Correcting entry: (Correcting entry + Incorrect entry = Correct entry)

Dr Cash 270
Cr Account Receivable 270

2. The purchase of a computer on account for $710 was recorded as a debit to Supplies for
$710 and a credit to Accounts Payable for $710.

Incorrect entry:
Dr Supplies 710
Cr Account payable 710

Correct entry should be:

Dr Equipment 710
Cr Account payable 710

Correcting entry: (Correcting entry + Incorrect entry = Correct entry)

Dr Equipment 710
Cr Supplies 710

3. Services were performed on account for a client for $980. Accounts Receivable was
debited for $980, and Service Revenue was credited for $98.

Incorrect entry:
Dr Account receivable 980
Cr Service revenue 98

Correct entry should be:

Dr Account receivable 980
Cr Service revenue 980

Correcting entry: (Correcting entry + Incorrect entry = Correct entry)

Cr Service Revenue 882

4. A debit posting to Salaries and Wages Expense of $700 was omitted.

Incorrect entry: omit

Correct entry should be:

Correcting entry: (Correcting entry + Incorrect entry = Correct entry)

Dr Salaries and wages expense 700

 5. A payment of a balance due for $306 was credited to Cash for $306 and credited to
Accounts Payable for $360.

Incorrect entry:
Cr Cash 306
Cr Account payable 360

Correct entry should be:

Dr Account payable 306
Cr Cash 306

Correcting entry: (Correcting entry + Incorrect entry = Correct entry)

Erase incorrect entry: Dr Account payable 360
Additional: Dr Account payable 306

 Dr Account payable 306+360 = 666

6. A dividend of $600 cash was debited to Salaries and Wages Expense for $600 and
credited to Cash for $600.

Incorrect entry:
Dr SW expense 600
Cr Cash 600

Correct entry should be:

Dr Dividends 600
Cr Cash 600

Correcting entry: (Correcting entry + Incorrect entry = Correct entry)

Dr Dividends 600
Cr SW expense 600

Accounts Incorrect trial Correct trial

balance balance
Dr Cr Dr Cr
Cash (Dr 3,340 + 270) 3,340 3,610
Account receivable (2,812 – 270) 2,812 2,542
Supplies (1,200 – 710) 1,200 490
Equipment (2,600 +710) 2,600 3,310
Account payable (3,666 – 666) 3,666 3,000
Unearned Ser. Revenue (Cr 1,100) 1,100 1,100
Share capital 8,000 8,000
Dividends (800 +600) 800 1,400
Ser. Revenue (2,480 + 882) 2,480 3,362
Salaries and wages expense (3,200 +700 - 3,200 3,300
600)
Utilities expense 810 810
Total 12,522 17,486 15,462 15,462
 Homework chapter 3
P3.2

a. Adjusting entries. Accounting period is 1 month

1. Prepaid insurance is a 1-year policy starting May 1, 2020.

Dr Insurance expense 2,400/12=200

Cr Prepaid Insurance 200

2. A count of supplies shows €750 of unused supplies on May 31.

Supplies

OB: 2,080
1,330
CB: 750

Dr Supplies expense 1,330

Cr Supplies 1,330

3. Annual depreciation is €3,600 on the buildings and €1,500 on equipment.

Dr Depreciation expense 425

Cr Accumulated depreciation – Equipment 1,500/12 = 125
Cr Accumulated depreciation – Building 3,600/12 = 300

4. The mortgage interest rate is 6%. (The mortgage was taken out on May 1.)
Face value= 40,000
Monthly interest = (40,000 x 6%)/12 = 200

Dr Interest expense 200

Cr Interest payable 200

5. Two-thirds of the unearned rent revenue is recognized as Rent revenue.

Unearned rent
revenue
OB: 3,300

2,200
CB: 1,100

Dr Unearned rent revenue 2,200

Cr Rent revenue 2,200
 6. Salaries of €750 are accrued and unpaid at May 31.

Dr SW expense 750
Cr SW payable 750

b) Post to ledger: of all accounts involve in adjusting entries

Insurance exp Prepaid insurance

200 (1) OB: 2,400 200 (1)
Total: 200 CB: 2,200

Supplies expense Accu Dep Equip

1,330 (2) OB: 0
125 (3)
Total: 1,330 CB: 125

Deprec exp Accu Dep Buil

425 (3) OB: 0
300 (3)
Total: 425 CB: 300

Interest exp Interest

payable
200 (4) OB: 0
200 (4)
Total: CB: 200
200

Rent revenue SW exp

10,300 3,300
2,200 (5) 750 (6)
Total: 12,500 Total: 4,050

SW payable
OB: 0
750 (6)
CB:
750

Lazy River Resort

Adjusted trial balance
May 31
Monetary unit: E
Accounts Debit Credit
Cash 3,400
Supplies 750
Prepaid insurance 2,200
Land 12,000
 Building 60,000
Equipment 14,000
Accu Dep –Equipment 125
Accu Dep – Building 300
Account payable 4,700
Unearned rent revenue 1,100
SW payable 750
Interest payable 200
Mortgage payable 40,000
Share capital 41,380
Rent revenue 12,500
Depreciation exp 425
Interest exp 200
SW exp 4,050
Advertising exp 600
Utilities exp 900
Insurance exp 200
Supplies exp 1,330
Dividends 1,000
Total 101,055 101,055

Lazy River Resort

Income statement
For a month ended May 31
Monetary unit: E
Revenues

Rent revenue 12,500

Total 12,500
revenue

Less: expenses
Depreciation exp 425
Interest exp 200
SW exp 4,050
Advertising exp 600
Utilities exp 900
Insurance exp 200
Supplies exp 1,330
Total expenses 7,705

Net Income 4,795

Lazy River Resort

RE statement
For a month ended May 31
Monetary unit: E
RE, May 1 0
Add Net income of May 4,795
Less: dividends 1,000
RE, May 31 3,795
 Lazy River Resort
Balance sheet
May 31
Monetary unit: E
Assets Equity and Liabilities
Cash 3,400 Equity
Supplies 750 Share Capital 41,380
Prepaid insurance 2,200 RE 3,795
Land 12,000 Total Equity 45,175
Building 60,000 Liabilities
Less: Accu Dep – 300 Account payable 4,700
Building
Equipment 14,000 Unearned rent revenue 1,100
Less: Accu Dep – Equip 125 SW payable 750
Interest payable 200
Mortgage payable 40,000
Total liabilities 46,750
Total assets 91,925 Total Equity and Liabilities 91,925

P3.3
Accounting period is 1 quarter
a. Journalize the annual adjusting entries that were made.
Accounts Unadjusted Adjusted Change
Dr Cr Dr Cr
AR 10,400 11,500 In 1,100
Supplies 1,500 650 De 850
Prepaid Rent 2,200 500 De 1,700
Accu Dep- Equip 0 700 In 700
SW payable 0 725 In 725
Interest payable 0 100 In 100
Unearned rent 1,900 450 De 1,450
revenue
Ser Revenue 16,00 17,100 In 1,100
0
Rent revenue 1,410 2,860 In 1,450
SW exp 8,000 8,725 In 725
Rent exp 1,900 3,600 In 1,700
Depreciation exp 0 700 In 700
Supplies exp 0 850 In 850
Interest exp 0 100 In 100

1. Dr Supplies exp 850

Cr Supplies 850
2. Dr Rent exp 1,700
Cr Prepaid rent 1,700
3. Dr Depreciation exp 700
Cr Accumulated Depreciation –Equipment 700
4. Dr Interest exp 100
Cr Interest payable 100
 5. Dr Unearned rent revenue 1,450
Cr Rent revenue 1,450
6. Dr Account receivable 1,100
Cr Service revenue 1,100
7. Dr SW expense 725
Cr SW payable 725

(b) Prepare an income statement and a retained earnings statement for 3 months ended Sept 30
and a statement of financial position at Sept 30.
 Use information in “Adjusted column”
Income statement
Company: Alena
for the quarter ended Sept 30, 2020

Monetary unit: $
Revenues
Service revenue 17,100
Rent revenue 2,860
Total revenues 19,960
Less: expenses
SW expense 8,725
Interest exp 100
Depreciation exp 700
Supplies exp 850
Rent exp 3,600
Utilities exp 1,510
Total expenses 15,485
Net Income 4,475

Retained earnings statement

Company: Alena
for the quarter ended Sept 30, 2020

Monetary unit: $
RE, July 1 0
Add: Net Income of the quarter 4,475
Less: Dividends 1,600
RE, Sept 30 2,875

Statement of financial position (Balance sheet)

Company: Alena
On Sept 30, 2020

Monetary unit: $
Assets
Equipment 18,000
Less: Accumulated Depreciation-Equipment 700
Prepaid rent 500
Supplies 650
AR 11,500
Cash 8,700
Total assets 38,650
 Equity and Liabilities
Equity
Share capital 22,000
Retained earnings 2,875
Total Equity 22,875
Liabilities
Note payable 10,000
Account payable 2,500
Unearned rent revenue 450
SW payable 725
Interest payable 100
Total liabilities 13,775
Total Equity and Liabilties 38,650

c) If the note bears interest at 12%, how many months has it been outstanding?

Interest of 12% per year equals a monthly rate of 1%; monthly interest is $100 ($10,000 X
1%). Since total interest expense is $100, the note has been outstanding one month.

P3.6*
a. Adjusting entries
Accounting period is semi-annual (6 months)
1. The €3,700 balance in Supplies Expense represents supplies purchased in January.
Dr Supplies expense 3,700
Cr Cash or Account payable 3,700

At June 30, €1,300 of supplies are on hand. -> CB of supplies is 1,300

 Supplies have been used is 3,700 – 1,300 = 2,400 is supplies expense

Supplies Supplies
exp

OB (Jan 1): 0 3,700 (jan 1)

1,300 1,300

CB: 1,300 Total: 2,400

Adjusting entries:

Dr Supplies 1,300

Cr Supplies Expense 1,300

2. The note payable was issued on February 1. It is a 6%, 6-month note.

Dr Interest Expense(€20,000 x 6% x 5/12) 500

Cr Interest Payable 500
3. The balance in Insurance Expense is the premium on a one-year policy, dated April 1,
2020.

When purchase insurance

Dr Insurance expense 2,700

Cr Cash/AP 2,700

Insurance expense month = 2,700/12 = 225

Insurance expense 3 months = 675

Insurance premium leftover is 2,700 – 675 = 2,025 cover for the next 9 months -> closing
balance of prepaid insurance account

Prepaid insurance Insurance

expense

OB: 0 2,700

2,025 2,025

CB: 2,025 Total: 675

Adjusting entries:

Dr Prepaid Insurance 2,025

Cr Insurance exp 2,025

4. Service revenues are credited to revenue when received cash.

Dr Cash 58,100

Cr Service revenue 58,100

At June 30, services revenue of €1,300 are unearned. -> closing balance of unearned
revenue account

Unearned revenue Service revenues

OB: 0 58,100

1,300 1,300

CB: 1,300 Total: 56,800

Adjusting entries:

Dr Service revenue 1,300

Cr Unearned revenue 1,300

5. Revenue for services performed but unrecorded at June 30 totals €2,000.

Dr Account receivable 2,000

Cr Service revenue 2,000

6. Depreciation is €2,250 per year.

Dr Depreciation exp 2,250

Cr Accumulated Depreciation-Equipment 2,250

b. Prepare adjusted trial balance

Total debit = total credit = 112,725
c. Financial statements
Net income = 19,000
Retained earnings at the end = 19,000
Total assets = 71,800
 Homework Chapter 4
P4.1
c) Adjusting entries:
1. A physical count reveals only ¥480 of roofing supplies on hand.
Debit Supplies Expense 1,520
Credit Supplies 1,520
Supplie
s
Bal: 2,000
1,520 (expense)
CB: 480

2. Depreciation for March is ¥250.

Debit Depreciation Expense 250
Credit Accumulated Depreciaion - Equipment 250

3. Unearned revenue amounted to ¥260 at March 31.

Debit Unearned Service Revenue 290
Credit Service Revenue 290
Unearned Service Revenue
Bal: 550
290 (service revenue)
CB: 260

4. Accrued salaries are ¥700.

Debit S&W Expense 700
Credit S&W Payable 700

d) Closing entries:
1. Close revenue to income summary
Debit Service Revenue 6,590
Credit Income summary 6,590
Service revenue
Trial Bal: 6,300
6,590 290
Total: 0

2. Close all expenses to income summary

Debit Income Summary 4,170
Credit Salaries and Wages expense 2,000
Credit Miscellaneous expense 400
Credit Supplies Expense 1,520
Credit Depreciation Expense 250
SW expense Miscellaneous expense
Bal: Bal: 400 400
1,300
700 2,00
0
Total: 0 Bal: 0
 Supplies expense Depreciation Expense
Bal: 0 Bal: 0
1,520 1,520 250 250
Total: 0 Total: 0

3. Close net income/ net loss to retained earnings

Debit Income Sumary 2,420 (=6,590 – 4,170)
Credit Retained Earnings 2,420
4. Close Dividends to retained earnings
Debit Retained Earnings 1,100
Credit Dividends 1,100

b) Financial statements
Note: Liabilities: list note payable, follow by account payable. The other accounts are listed
by magnitude.

P4.4
Adjusting entries
Dr Insurance expense 1,500
Cr Prepaid Insurance 1,500
Dr Depreciation expense 6,600
Cr Accumulated Depreciation – Building 3,000
Cr Accumulated Depreciation – Equipment 3,600
Dr Unearned Rent revenue 5,000
Cr Rent revenue 5,000
Dr Interest exp 10,000
Cr Interest payable 10,000
Closing entries
Debit Service Revenue 90,700
Debit Rent Revenue 34,000
Credit Income summary 124,700
Debit Income Summary 99,600
Credit Salaries and Wages expense 42,000
Credit Advertising expense 20,500
Credit Utilities expense 19,000
 Credit Interest Expense 10,000
Credit Depreciation Expense 6,600
Credit Insurance expense 1,500
Debit Income Sumary 25,100
Credit Retained Earnings 25,100
Debit Retained Earnings 22,000
Credit Dividends 22,000
Post-closing trial balance: only permanent accounts (balance sheet accounts: assets, equity,
liabilities)
Retained
earnings
Bal: 14,000
22,000 25,100
CB: 17,100

P4.5
a. Journal entry
July 1 Shareholders invested €20,000 cash in the business in exchange for ordinary shares

Dr Cash 20,000

Cr Share capital 20,000

July 1 Purchased used truck for €12,000, paying €4,000 cash and the balance on account

Dr Equipment 12,000

Cr Cash 4,000

Cr Account payable 8,000

July 3 Purchased cleaning supplies for €2,100 on account

Dr Supplies 2,100

Cr Account payable 2,100

July 5 Paid €1,800 cash on a 1-year insurance policy effective July 1.

Dr Prepaid Insurance 1,800

Cr Cash 1,800

July 12 Billed customers €4,500 for cleaning services.

Dr Account receivable 4,500

Cr Service revenue 4,500

July 18 Paid €1,500 cash on amount owed on truck and €1,400 on amount owed on cleaning
supplies.

Dr Account payable 2,900

Cr Cash 2,900

July 20 Paid €2,800 cash for employee salaries.

Dr SW expense 2,800

Cr Cash 2,800

July 21 Collected €3,400 cash from customers billed on July 12.

Dr Cash 3,400

Cr Account receivable 3,400

July 25 Billed customers €6,000 for cleaning services.

Dr Account receivable 6,000

Cr Service revenue 6,000

July 31 Paid €350 for the monthly gasoline bill for the truck.

Dr Gasoline exp 350

Cr Cash 350

July 31 Declared and paid a €5,600 cash dividend.

Dr Dividends 5,600

Cr Cash 5,600

Post to ledger
Cas Share capital
 h
OB: 0 OB: 0
20,000 (1) 4,000 (1) 20,000 (1)
3,400 (21) 1,800 (5)
2,900 (18)
2,800 (20)
350 (31)
5,600 (31)
CB: 5,950 CB: 20,000

Equipment Account payable

OB: 0 CB: 0
12,000 2,900 8,000 (1)
(18) 2,100 (3)
CB: CB: 7,200
12,000

Supplies Service revenue

OB: 0 4,500 (12)
6,000 ( 25)
2,100 (3)
CB: Total: 10,500
2,100

Prepaid insurance SW exp

OB: 0 2,800 (20)
1,800 (5)
CB: Total:
1,800 2,800

Account receivable Gasoline

exp
OB: 0 350 (31)
4,500 3,400 (21)
(12)
6,000
(25)
CB: 7,100 Total: 350

Dividend
s
5,600 (31)
Total: 5,600

b. Trial balance
Trial balance
Anya cleaning service
On July 31,2020
Monetary unit:Euro
 Accounts Dr Cr
Cash 5,950
Equipment 12,000
Supplies 2,100
Prepaid insurance 1,800
Account 7,100
receivable
Account payable 7,200
Share capital 20,000
Service revenue 10,500
SW exp 2,800
Gasoline exp 350
Dividends 5,600
Total 37,700 37,700

c and e, Adjusting entries

1. Unbilled and uncollected revenue for services performed at July 31 were €2,700.
Dr Account receivable 2,700
Cr Service revenue 2,700
2. Depreciation on equipment for the month was €500.
Dr Depreciation exp 500
Cr Accumulated Depre – Equip 500
3. One-twelfth of the insurance expired.
Dr Insurance exp 150
Cr Prepaid insurance 150
4. An inventory count shows €600 of cleaning supplies on hand at July 31.
Dr Supplies exp 1,500
Cr Supplies 1,500

Supplies

Bal: 2,100

1,500 expense

CB: 600

5. Accrued but unpaid employee salaries were €1,000.

Dr SW exp 1,000
Cr SW payable 1,000

Post adjusting entries

Account receivable Service revenue
OB: 7,100 4,500 (12)
6,000 ( 25)
2,700 2,700
CB: 9,800 Total: 13,200

Depre Accu Dep –Equip

 exp
500 OB: 0
500
Total: 500 CB: 500

Insurance exp Prepaid insurance

150 OB: 1,800
150
Total: 150 CB: 1,650

Supplies exp Supplies

1,500 OB: 2,100
1,500
Total: 1,500 CB: 600

SW exp SW
payable
2,800 OB: 0
1,000 1,000
Total: CB: 1,000
3,800

d.Financial statements
f. Closing entries
Debit Service Revenue 13,200
Credit Income summary 13,200
Debit Income Summary 6,900
Credit Salaries and Wages expense 3,800
Credit Supplies expense 1,500
Credit Gasoline Expense 350
Credit Depreciation Expense 500
Credit Insurance expense 150
Debit Income Sumary 6,900
Credit Retained Earnings 6,900
Debit Retained Earnings 5,600
Credit Dividends 5,600

Retained earnings
OB: 0
5,60 6,900
0
CB: 1,300

g. Post- closing trial balance