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Option #1: Preparing Adjusting Entries in a Worksheet Following is the unadjusted trial balance of Baltimore...

Option #1: Preparing Adjusting Entries in a Worksheet

Following is the unadjusted trial balance of Baltimore Rentals Corporation at the end of its first year of operations, December 31, 20X5:

Account Debit Credit
Cash 3,300
Accounts receivable 4,000
Supplies 500
Truck 8,000
Acc. dep. – truck 0
Accounts payable 5,000
Unearned rent revenue 2,400
Income taxes payable 0
Capital Stock 7,000
Dividends 1,000
Rent earned 16,000
Commissions expense 1,000
Depreciation expense-truck 0
Supplies expense 0
Salaries expense 7,000
Telephone expense 0
Income tax expense 0
Rent expense 5,600
30,400 30,400

The following additional information is available:

A physical count indicates that $300 of supplies is still on hand at December 31.

The truck was purchased on July 1; it has an estimated useful life of 4 years.

One day of salaries for December 31 is unpaid; the unpaid amount of $200 will be included in the first Friday payment in January.

The balance in the Unearned Rent Revenue account represents six months’ rental of warehouse space, effective October 1.

A $100 bill for December telephone charges has not yet been recorded.

Income taxes expense for the year is $300. This amount will be paid in the next fiscal year.

Required:

Prepare all necessary adjusting entries at December 31, 20x5.

Prepare an adjusted trial balance at December 31, 20x5.

Prepare an income statement, statement of retained earnings, and a balance sheet.

Prepare and record closing entries including descriptions.

ACT300 Principles of Accounting I
Module 3: Critical Thinking Template Option #1
Closing Entries
Closing Entries
Date Account Titles and Explanation Debit Credit
Dec. 31
Date Account Titles and Explanation Debit Credit
Dec. 31
Date Account Titles and Explanation Debit Credit
Dec. 31
Date Account Titles and Explanation Debit Credit
Dec. 31
ACT300 Principles of Accounting I
Module 3: Critical Thinking Template Option #1
Worksheet
BALTIMORE RENTALS CORP                                                                    Work Sheet                                                                                                                        For Month Ended December 31, 201X
Account   Unadjusted                                   Trial balance Adjusting entries (1) Adjusted trial balance (2) Income statement (3) Statement of Retained Earnings (3) Balance Sheet (3)
Debit Credit Debit Credit Debit Credit Debit Credit Debit Credit Debit Credit
Cash 3,300
Accounts receivable 4,000
Supplies 500
Truck 8,000
Acc. Dep. - Truck 0
Accounts payable 5,000
Unearned rent revenue 2,400
Income taxes payable 0
Capital Stock 7,000
Dividends 1,000
Rent earned 16,000
Commissions expense 1,000
Depreciation expense-truck 0
Supplies expense 0
Salaries expense 7,000
Telephone expense 0
Income tax expense 0
Rent expense 5,600
Totals 30,400 30,400 0 0 0 0 0 0
Net income 0 0
Totals 0 0 0 0
Business   Accounting   
0 0
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Homework Answers

Answer #1
  • All working forms part of the answer
  • Requirement 1: Adjusting Journal Entries

Date

Accounts title

Debit

Credit

Working

31-Dec

Supplies expense

$                              200.00

[$500 - $300]

Supplies expense

$                         200.00

31-Dec

Depreciation expense - Truck

$                          1,000.00

[$8000/4 years x (6months/12months)]

Accumulated Depreciation - Truck

$                     1,000.00

31-Dec

Salaries expense

$                              200.00

Salaries payable

$                         200.00

31-Dec

Unearned Rent Revenue

$                          1,200.00

[$2400 for 6 months, for 3 months = $2400x3/6]

Rent earned

$                     1,200.00

31-Dec

Telephone expense

$                              100.00

Expense payable

$                         100.00

31-Dec

Income Tax expense

$                              300.00

Income Tax payable

$                         300.00

  • Requirement 2: Completion of worksheet

Account  

Unadjusted                                   Trial balance

Adjusting entries (1)

Adjusted trial balance (2)

Income statement (3)

Statement of Retained Earnings (3)

Balance Sheet (3)

Debit

Credit

Debit

Credit

Debit

Credit

Debit

Credit

Debit

Credit

Debit

Credit

Cash

$                          3,300.00

$                            3,300.00

$                3,300.00

Accounts receivable

$                          4,000.00

$                            4,000.00

$                4,000.00

Supplies

$                              500.00

$                               200.00

$                                300.00

$                    300.00

Truck

$                          8,000.00

$                            8,000.00

$                8,000.00

Acc. Dep. - Truck

$                                  -  

$                            1,000.00

$                          1,000.00

$              (1,000.00)

Accounts payable

$                     5,000.00

$                          5,000.00

$                                                                 5,000.00

Salaries payable

$                               200.00

$                              200.00

$                                                                     200.00

Expense payable

$                               100.00

$                              100.00

$                                                                     100.00

Unearned rent revenue

$                     2,400.00

$                     1,200.00

$                          1,200.00

$                                                                 1,200.00

Income taxes payable

$                                  -  

$                               300.00

$                              300.00

$                                                                     300.00

Capital Stock

$                     7,000.00

$                          7,000.00

$                                                                 7,000.00

Dividends

$                          1,000.00

$                            1,000.00

$                                                100.00

$                1,000.00

Rent earned

$                   16,000.00

$                            1,200.00

$                        17,200.00

$                  17,200.00

$                           17,200.00

$                                                               17,200.00

Commissions expense

$                          1,000.00

$                            1,000.00

$                           1,000.00

$                                            1,000.00

$                1,000.00

Depreciation expense-truck

$                                       -  

$                     1,000.00

$                            1,000.00

$                           1,000.00

$                                            1,000.00

$                1,000.00

Supplies expense

$                                       -  

$                         200.00

$                                200.00

$                             200.00

$                                                200.00

$                    200.00

Salaries expense

$                          7,000.00

$                         200.00

$                            7,200.00

$                           7,200.00

$                                            7,200.00

$                7,200.00

Telephone expense

$                                       -  

$                         100.00

$                                100.00

$                              100.00

$                                                100.00

$                    100.00

Income tax expense

$                                       -  

$                         300.00

$                                300.00

$                              300.00

$                                                300.00

$                    300.00

Rent expense

$                          5,600.00

$                            5,600.00

$                           5,600.00

$                                            5,600.00

$                5,600.00

Totals

$                        30,400.00

$                   30,400.00

$                     3,000.00

$                            3,000.00

$                          32,000.00

$                        32,000.00

$                        15,400.00

$                  17,200.00

$                                          15,500.00

$                           17,200.00

$              31,000.00

$                                                               31,000.00

Net income

$                    1,800.00

$                             1,700.00

$                                                                              -  

  • Requirement: Closing Entries

Date

Accounts title

Debit

Credit

31-Dec

Rent expense

$                        17,200.00

Income Summary

$                   17,200.00

(to close revenue account)

31-Dec

Income Summary

$                        15,400.00

Commissions expense

$                     1,000.00

Depreciation expense-truck

$                     1,000.00

Supplies expense

$                         200.00

Salaries expense

$                     7,200.00

Telephone expense

$                         100.00

Income tax expense

$                         300.00

Rent expense

$                     5,600.00

(to close expense account)

31-Dec

Income Summary

$                          1,800.00

Retained Earnings

$                     1,800.00

(to close income summary)

31-Dec

Retained Earnings

$                          1,000.00

Dividends

$                     1,000.00

(to close dividends)

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