Completing the Accounting Cycle for a Merchandising Corporation
Completing the Accounting Cycle
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Transcript of Completing the Accounting Cycle
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Completing Completing the the
Accounting Accounting CycleCycle
2
1. Describe the flow of accounting information from the unadjusted trial balance into the adjusted trial balance and financial statements.
2. Prepare financial statements from adjusted account balances.
3. Prepare closing entries.
After studying this chapter, you should be able to:
3
4. Describe the accounting cycle.5. Illustrate the accounting cycle for one
period.6. Explain what is meant by the fiscal
year and the natural business year.
After studying this chapter, you should be able to:
3
4
Describe the flow of accounting information from the
unadjusted trial balance into the adjusted trial balance and
financial statements.
Objective 1Objective 1Objective 1Objective 1
4-1
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A B C D E F G H I J K
Account TittleDr. Cr. Dr. Cr. Dr. Cr. Dr. Cr. Dr. Cr.
1 Cash 2,065 2,065 2,0652 Accounts Receivable 2,220 (d) 500 2,720 2,7203 Supplies 2,000 (a) 1,240 760 7604 Prepaid Insurance 2,400 (b) 200 2,200 2,2005 Land 20,000 20,000 20,0006 Office Equipment 1,800 1,800 1,8007 Account Payable 900 900 9008 Unearned Rent 360 (c) 120 240 2409 Cinta Cita, Capital 25,000 25,000 25,000
10 Cinta Cita, Drawing 4,000 4,000 4,00011 Fees Earned 16,340 (d)500 16,840 16,84012 Wages Expense 4,275 (e) 250 4,525 4,52513 Rent Expense 1,600 1,600 1,60014 Utilities Expense 985 985 98515 Supplies Expense 800 (a) 1,240 2,040 2,04016 Misscellaneous Expense 455 455 45517 42,600 42,60018 Insurance Expense (b) 200 200 20019 Rent Revenue (c)120 120 12020 Wages Payable (e) 250 250 25021 Depreciation Expense (f) 50 50 5022 Accumulated Depreciation (f) 50 50 5023 2,360 2,360 43,400 43,400 9,855 16,960 33,545 26,440
24 Net income 7,105 7,10525 16,960 16,960 33,545 33,545
Income Statement Balance Sheet
SolusiNetEnd-of-Period Spreadsheet (Worksheet)
For the Two Months Ended December 31, 2007Undajusted Trial
Balance AdjustmentsAdjusted Trial
Balance
4-1
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Spreadsheet (Work Sheet)Spreadsheet (Work Sheet)
Trial Balance
Accounts Dr Cr Dr Cr Dr Cr
Adjustments Adjusted TB
Accounts are listed in the Trial Balance column using the ending balance found in the general ledger. 6
4-1
77
Adjustments are entered here. Two possibilities:
1. Deferrals – Existing balances are changed.2. Accruals – New information is entered.
Trial Balance
Accounts Dr Cr Dr Cr Dr Cr
Adjustments Adjusted TB
Spreadsheet (Work Sheet)Spreadsheet (Work Sheet)
4-1
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Spreadsheet (Work Sheet)Spreadsheet (Work Sheet)
Adjustments are combined with the trial balance. Account balances are now adjusted.
Trial Balance
Accounts Dr Cr Dr Cr Dr Cr
Adjustments Adjusted TB
4-1
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Revenue and expense balances in the Adjusted Trial Balance column are extended
to the Income Statement column.
Adjusted TB
Accounts Dr Cr Dr Cr Dr Cr
Income State. Balance Sheet
Spreadsheet (Work Sheet)Spreadsheet (Work Sheet)
4-1
1010
Asset, liability, owner’s equity, and drawing balances in the Adjusted
Trial Balance column are extended to the Balance Sheet column.
Adjusted TB
Accounts Dr Cr Dr Cr Dr Cr
Income State. Balance Sheet
Spreadsheet (Work Sheet)Spreadsheet (Work Sheet)
4-1
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Example Exercise 4-1
The balances for the accounts listed below appear in the Adjusted Trial Balance columns of the end-of-period spreadsheet (work sheet). Indicate whether each balance should be extended to (a) an Income Statement column or (b) a Balance Sheet column.
11
1. Ambar Dewi, Drawing2. Utilities Expense3. Accumulated Depreciation
—Equipment4. Unearned Rent
5. Fees Earned6. Accounts Payable7. Rent Revenue8. Supplies
4-1
12For Practice: PE 4-1A, PE 4-1B 12
Follow My Example 4-1
1. Balance Sheet column2. Income Statement column3. Balance Sheet column4. Balance Sheet column5. Income Statement column6. Balance Sheet column7. Income Statement column8. Balance Sheet column
4-1
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Prepare financial statements from adjusted
account balances.
Objective 2Objective 2Objective 2Objective 2
4-2
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Fees earned Rp16 840 000Rent revenue 120 000
Total revenues Rp16 960 000Expenses:
Wages expense Rp4 525 000Suppliea expense 2 040 000Rent expense 1 600 000Utilities expense 985 000Insurance expense 200 000Depreciation expense 50 000Misscellaneous expense 455 000
Total expenses 9 855 000Net income Rp7 105 000
SolusiNetIncome Statement
For the Two Months Ended December 31, 2007
Cinta Cita, capital, November 1, 2007 Rp 0Investments on November 1, 2007 Rp25 000 000Net Income for November and December 7 105 000
RP32 105 000Less withdrawals 4 000 000Increase in owner's equity 28 105 000Cinta cita, capital, December 31, 2007 Rp28 105 000
SolusiNetStatement of Owner's Equity
For the Two Months Ended December 31, 2007
To balance sheet
4-2
15
Assets LiabilitiesCurrent assets; Current Liabilities
Cash Rp2 065 000 Accounts payable Rp 900 000Accounts Receivable 2 720 000 Wages payable 250 000Supplies 760 000 Unearned rent 240 000Prepaid Insurance 2 200 000 Total liabilities Rp1 390 000
Total current assets Rp7 745 000Property, Plant and equipment
Land Rp20 000 000Office equipment Rp1,800,000
Less accum. depr. 50,000 1 750 000 owner's equityTotal property, plant Cinta Cita, capital Rp28 105 000
and equipment 21 750 000 Total liabilities andTotal assets Rp29 495 000 owner's equity Rp29 495 000
SolusiNetBalance Sheet
December 31, 2007
From statement of owner’ equity
4-2
16
Example Exercise 4-2
In the Balance Sheet columns of the end-of-period spreadsheet (work sheet) for Dahsyat Consulting Co. for the current year, the Debit column total is Rp678,450,000 and the Credit column total is Rp599,750,000 before the amount of net income or net loss has been included. In preparing the income statement from the end-of-period spreadsheet (work sheet), what is the amount of net income or net loss?
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4-2
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Follow My Example 4-2
A net income of Rp78,700,000 (Rp678,450,000 – Rp599,750,000) would be reported. When the Debit column of the Balance Sheet columns is more than the Credit column, net income is reported. If the Credit column exceeds the Debit column, a net loss is reported.
For Practice: PE 4-2A, PE 4-2B 17
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Example Exercise 4-3
Zaka Gading owns and operates Gading Employment Services. On January 1, 2007, Zaka Gading, Capital had a balance of Rp186,000,000. During the year, Zaka invested an additional Rp40,000,000 and withdrew Rp25,000,000. For the year ended December 31, 2007, Gading Employment Services reported a net income of Rp18,750,000. Prepare a statement of owner’s equity for the year ended December 31, 2007.
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Follow My Example 4-3
GADING EMPLOYMENT SERVICESSTATEMENT OF OWNER’S EQUITYFor the Year Ended December 31, 2007
For Practice: PE 4-3A, PE 4-3B 19
Zaka Gading, capital, January 1, 2007 Rp186,000,000Additional investment during 2007 40,000,000 Total Rp226,000,000Withdrawals Rp 25,000,000Less net income 18,750,000Decrease in owner’s equity 6,250,000Zaka Gading, capital, December 31, 2007 Rp219,750,000
4-2
20
A classified balance sheet is a balance sheet that was expanded by adding subsections for current
assets; property, plant, and equipment; and current liabilities.
4-2
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Cash and other assets that are expected to be converted into cash, sold or used
up usually within a year or less, through the normal operations of the business are called current assets.
Cash Accounts Receivable Supplies
4-2
22
Notes receivable are written promises by the customer to pay the amount of the note and possibly interest at an
agreed rate.
4-2
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Property, plant, and equipment (also called fixed assets) include assets that depreciate
over a period of time. Land is an exception as it is not subject to depreciation.
Equipment Machinery Buildings Land
4-2
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Liabilities that will be due within a short time (usually one year or less) and that are to be paid out of current assets are called current liabilities.
Accounts payable Wages payable Interest payable Unearned fees
4-2
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Liabilities not due for a long time (usually more than one
year) are long-term liabilities.
Notes payableMortgage payableBond payable
4-2
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Owner’s equity is the owner’s right to the assets of the business.
Owner’s equity is added to the total liabilities, and the total must
be equal to the total assets.
4-2
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Example Exercise 4-4
The following accounts appear in the adjusted trial balance of Mata Hati Consulting. Indicate whether each account would be reported in the (a) current asset; (b) property, plant, and equipment; (c) current liability, (d) long-term liability; or (e) owner’s equity section of the December 31, 2007 balance sheet of Hindsight Consulting.
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4-2
1. Jaka Cahyadi, Capital 5. Cash2. Notes Receivable (due 6. Unearned Rent
in 6 months) months)3. Notes Payable (due in 7. Accumulated
Depr.—2009) Equipment
4. Land 8. Accounts Payable
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1. Owner’s equity 5. Current asset2. Current asset 6. Current liability3. Long-term liability 7. Property, plant, and
equipment4. Property, plant, and equip. 8. Current liability
Follow My Example 4-4
For Practice: PE 4-4A, PE 4-4B 28
4-2
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Prepare closing entries.
Objective 3Objective 3Objective 3Objective 3
4-3
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Accounts that are relatively permanent from year to year are called real accounts. Accounts that report amounts for only one
period are called temporary accounts or nominal accounts.
4-3
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To report amounts for only one period, temporary accounts should have zero
balances at the beginning of the period. At the end of the period the
revenue and expense account balances are transferred to Income Summary.
4-3
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The balance of Income Summary is then transferred to the owner’s capital account. The balance of the owner’s drawing account is also transferred to
the owner’s capital account. The entries that transfer these balances are
called closing entries.
4-3
3333
4-3
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Debit each revenue account for the amount of its balance, and credit Income Summary for the total revenue.
Fees Earned
Bal. 16,840
Rent Revenue
Bal. 120
Income Summary 16,840
120
16,960
4-3
(In Rp000)
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Wages Expense
Rent Expense
Depreciation Expense
Utilities Expense
Supplies Expense
Insurance Expense
Bal. 200
Miscellaneous Expense
Bal. 455
Income Summary
Debit Income Summary for the total expenses
and credit each expense account for its balance.
16,9609,855
Bal. 4,525
Bal. 1,600
Bal. 50
Bal. 985
Bal. 2,040
455
200
2,040
985
50
1,600
4,525
35
4-3
(In Rp000)
36
Cinta Cita, Capital
Bal. 25,000
Cinta Cita, Drawing
Bal. 4,000
Income Summary
16,9609,8557,105
7,105
Debit Income Summary for the
amount of its balance (in this case, the net
income) and credit the capital account.
4-3
36(In Rp000)
37
CintaCita, Capital
Bal. 25,0007,105
Cinta Cita, Drawing
Bal. 4,000 4,000
4,000
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Debit the capital account for the balance of the
drawing account, and credit drawing
for the same amount.
4-3
38
Post.Ref.
Closing EntriesDec.2007 31 Fees Earned 41 16 840 000
Rent Revenue 42 120 000Income Summary 33 16 960 000
31 Income Summary 33 9 855 000Wages Expense 51 4 525 000Rent Expense 52 1 600 000Depreciation Expense 53 50 000Utilities Expense 54 985 000Supplies Expense 55 2 040 000Insurance Expense 56 200 000Miscellaneous Expense 59 455 000
31 Income Summary 33 7 105 000Cinta Cita, Capital 31 7 105 000
31 Cinta Cita, Capital 31 4 000 000Cinta Cita, Drawing 32 4 000 000
JOURNAL Page 6
Date Description Debit Credit
Step 1Step 1
Step 2Step 2
Step 3Step 3
Step 4Step 4
4-3Closing Entries for SolusiNet
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After the closing entries are posted, all of the
temporary accounts have zero balances.
4-3
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Example Exercise 4-4
The following accounts appear in the adjusted trial balance of Hindsight Consulting. Indicate whether each account would be reported in the (a) current asset; (b) property, plant, and equipment; (c) current liability, (d) long-term liability; or (e) owner’s equity section of the December 31, 2007, balance sheet of Hindsight Consulting.
Example Exercise 4-5
After the accounts have been adjusted at July 31, the end of the fiscal year, the following balances are taken from the ledger of Ungu Violet Services
Anisa Putri, Capital Rp615,850,000Anisa Putri, Drawing 25,000,000Fees Earned 380,450,000Wages Expense 250,000,000Rent Expense 65,000,000Supplies Expense 18,250,000Miscellaneous Expense 6,200,000
Journalize the four entries required to close the accounts.40
4-3
41
July 31 Fees Earned 380,450,000Income Summary 380,450,000
31 Income Summary 339,450,000Wages Expense 250,000,000Rent Expense 65,000,000Supplies Expense 18,250,000Miscellaneous Expense 6,200,000
31 Income Summary 41,000,000Anisa Putri, Capital 41,000,000
31 Terry Lambert, Capital 25,000,000Anisa Putri, Drawing 25,000,000
Follow My Example 4-5
For Practice: PE 4-5A, PE 4-5B
41
4-3
4242
4-3Exhibit 7 Post-Closing Trial Balance
SolusiNetPost-Closing Trial Balance
December 31, 2007Cash 2 065 000Accounts Receivable 2 720 000Supplies 760 000Prepaid Insurance 2 200 000Land 20 000 000Office Equipment 1 800 000Accumulated Depreciation 50 000Accounts Payable 900 000Wages Payable 250 000Unearned Rent 240 000Cinta Cita, Capital 28 105 000
29 545 000 29 545 000
43
Describe the accounting cycle.
Objective 4Objective 4Objective 4Objective 4
4-4
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The accounting process that begins with analyzing and journalizing
transactions and ends with preparing the accounting records for the next period’s transactions is called the
accounting cycle. There are ten steps in the accounting cycle.
4-4
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2. Transactions are posted to the ledger.
3. An unadjusted trial balance is prepared.
4. Adjustment data are assembled and analyzed.
5. An optional end-of-period spreadsheet (work sheet) is prepared.
1. Transactions are analyzed and recorded in the journal.
The Accounting Cycle 4-4
Continued
46
7. An adjusted trial balance is prepared.
8. Financial statements are prepared.
9. Closing entries are journalized and posted to the ledger.
10. A post-closing trial balance is prepared.
6. Adjusting entries are journalized and posted to the ledger.
4-4
4721
Example Exercise 4-4
The following accounts appear in the adjusted trial balance of Hindsight Consulting. Indicate whether each account would be reported in the (a) current asset; (b) property, plant, and equipment; (c) current liability, (d) long-term liability; or (e) owner’s equity section of the December 31, 2007, balance sheet of Hindsight Consulting.
Example Exercise 4-6
From the following list of steps in the accounting cycle, identify what two steps are missing.
47
a. Transactions are analyzed and recorded in the journal.b. Transactions are posted to the ledger.c. Adjustment data are assembled and analyzed.d. An optional end-of-period spreadsheet (work sheet) is
prepared.e. Adjusting entries are journalized and posted to the
ledger.f. Financial statements are prepared.g. Closing entries are journalized and posted to the
ledger.h. A post-closing trial balance is prepared.
4-4
48
The following two steps are missing: (1) the preparation of an unadjusted trial balance and (2) the preparation of the adjusted trial balance. The unadjusted trial balance should be prepared after step (b). The adjusted trial balance should be prepared after step (e).
Follow My Example 4-6
For Practice: PE 4-6A, PE 4-6B48
4-4
49
Objective 5Objective 5Objective 5Objective 5
4-5
Illustrate the accounting cycle for one period.
Refer to the textbook for this extended illustration.
50
Explain what is meant by the fiscal year and the natural business year.
Objective 6Objective 6Objective 6Objective 6
4-6
51
The annual accounting period adopted by a business is known as its fiscal
year. When a business adopts a fiscal year that ends when business activities
have reached the lowest point in its annual operation, such a fiscal year is
also called the natural year.
4-6
5252
4-6
The financial history of a business may be shown by a series of balance sheets and income statements, as displayed below.
Financial History of a Business
53
AppendixAppendixAppendixAppendix
End-of-Period Spreadsheet (Work Sheet)
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The end-of-period spreadsheet (work sheet) shown in the following slides does not have the usual spreadsheet headings due to space constraints.
55
Cash 2,065Accounts Receivable 2,220Supplies 2,000Prepaid Insurance 2,400Land 20,000Office Equipment 1,800Accounts Payable 900Unearned Rent 360Cinta Cita, Capital 25,000Cinta Cita, Drawing 4,000Fees Earned 16,340Wages Expense 4,275Rent Expense 1,600Utilities Expense 985Supplies Expense 800Miscellaneous Expense 455
42,600 42,600
Account Title Debit Credit Debit Credit Debit Credit123456789
10111213141516171819202122
The The unadjusted unadjusted
trial balance trial balance is checked is checked
for equality.for equality.
The The unadjusted unadjusted
trial balance trial balance is checked is checked
for equality.for equality.
55
Unadjusted Adjusted Trial Balance Adjustments Trial Balance
(In Rp000)
56
Cash 2,065Accounts Receivable 2,220Supplies 2,000Prepaid Insurance 2,400Land 20,000Office Equipment 1,800Accounts Payable 900Unearned Rent 360Cinta Cita, Capital 25,000Cinta Cita, Drawing 4,000Fees Earned 16,340Wages Expense 4,275Rent Expense 1,600Utilities Expense 985Supplies Expense 800Miscellaneous Expense 455
42,600 42,600
Account Title Debit Credit Debit Credit Debit Credit123456789
10111213141516171819202122
(a) 1,240
(a) 1,240
Cost of Cost of supplies on supplies on hand at end hand at end of period is of period is Rp760,000.Rp760,000.
Cost of Cost of supplies on supplies on hand at end hand at end of period is of period is Rp760,000.Rp760,000.
56
Unadjusted Adjusted Trial Balance Adjustments Trial Balance
(In Rp000)
57
Cash 2,065Accounts Receivable 2,220Supplies 2,000 (a) 1,240Prepaid Insurance 2,400Land 20,000Office Equipment 1,800Accounts Payable 900Unearned Rent 360Cinta Cita, Capital 25,000Cinta Cita, Drawing 4,000Fees Earned 16,340Wages Expense 4,275Rent Expense 1,600Utilities Expense 985Supplies Expense 800 (a) 1,240Miscellaneous Expense 455
42,600 42,600
Account Title Debit Credit Debit Credit Debit Credit123456789
10111213141516171819202122
Insurance Expense (b) 200
Accounts are added as needed.
(b) 200
The The insurance insurance
expense for expense for December is December is Rp200,000 Rp200,000
(Rp2,400,00(Rp2,400,000/12)0/12)
The The insurance insurance
expense for expense for December is December is Rp200,000 Rp200,000
(Rp2,400,00(Rp2,400,000/12)0/12)
57
Unadjusted Adjusted Trial Balance Adjustments Trial Balance
(In Rp000)
58
Cash 2,065Accounts Receivable 2,220Supplies 2,000 (a) 1,240Prepaid Insurance 2,400 (b) 200Land 20,000Office Equipment 1,800Accounts Payable 900Unearned Rent 360Cinta Cita, Capital 25,000Cinta Cita, Drawing 4,000Fees Earned 16,340Wages Expense 4,275Rent Expense 1,600Utilities Expense 985Supplies Expense 800 (a) 1,240Miscellaneous Expense 455
42,600 42,600
Account Title Debit Credit Debit Credit Debit Credit123456789
10111213141516171819202122
Insurance Expense (b) 200
(c) 120
Rent Revenue (c) 120
Rent revenue Rent revenue earned earned during during
December December was was
Rp120,000.Rp120,000.
Rent revenue Rent revenue earned earned during during
December December was was
Rp120,000.Rp120,000.
58
Unadjusted Adjusted Trial Balance Adjustments Trial Balance
(In Rp000)
59
Cash 2,065Accounts Receivable 2,220Supplies 2,000 (a) 1,240Prepaid Insurance 2,400 (b) 200Land 20,000Office Equipment 1,800Accounts Payable 900Unearned Rent 360 (c) 120Cinta Cita, Capital 25,000Cinta Cita, Drawing 4,000Fees Earned 16,340Wages Expense 4,275Rent Expense 1,600Utilities Expense 985Supplies Expense 800 (a) 1,240Miscellaneous Expense 455
42,600 42,600
Account Title Debit Credit Debit Credit Debit Credit123456789
10111213141516171819202122
Insurance Expense (b) 200 Rent Revenue (c) 120 Wages Payable (d) 250
(d) 250
Wages Wages accrued but accrued but not paid at not paid at the end of the end of December December
totaled totaled Rp250,000.Rp250,000.
Wages Wages accrued but accrued but not paid at not paid at the end of the end of December December
totaled totaled Rp250,000.Rp250,000.
59
Unadjusted Adjusted Trial Balance Adjustments Trial Balance
(In Rp000)
60
Cash 2,065Accounts Receivable 2,220Supplies 2,000 (a) 1,240Prepaid Insurance 2,400 (b) 200Land 20,000Office Equipment 1,800Accounts Payable 900Unearned Rent 360 (c) 120Cinta Cita, Capital 25,000Cinta Cita, Drawing 4,000Fees Earned 16,340Wages Expense 4,275 (d) 250Rent Expense 1,600Utilities Expense 985Supplies Expense 800 (a) 1,240Miscellaneous Expense 455
42,600 42,600
Account Title Debit Credit Debit Credit Debit Credit123456789
10111213141516171819202122
Insurance Expense (b) 200 Rent Revenue (c) 120 Wages Payable (d) 250
(e) 500
(e) 500
Fees accrued Fees accrued at the end of at the end of December December
but not but not recorded recorded
total total Rp500,000.Rp500,000.
Fees accrued Fees accrued at the end of at the end of December December
but not but not recorded recorded
total total Rp500,000.Rp500,000.
60
Unadjusted Adjusted Trial Balance Adjustments Trial Balance
(In Rp000)
61
Cash 2,065Accounts Receivable 2,220 (e) 500Supplies 2,000 (a) 1,240Prepaid Insurance 2,400 (b) 200Land 20,000Office Equipment 1,800Accounts Payable 900Unearned Rent 360 (c) 120Cinta Cita, Capital 25,000Cinta Cita, Drawing 4,000Fees Earned 16,340 (e) 500Wages Expense 4,275 (d) 250Rent Expense 1,600Utilities Expense 985Supplies Expense 800 (a) 1,240Miscellaneous Expense 455
42,600 42,600
Account Title Debit Credit Debit Credit Debit Credit123456789
10111213141516171819202122
Insurance Expense (b) 200 Rent Revenue (c) 120 Wages Payable (d) 250Depreciation Expense (f) 50Accum. Depreciation (f) 50
Depreciation Depreciation of office of office
equipment is equipment is Rp50,000 for Rp50,000 for December.December.
Depreciation Depreciation of office of office
equipment is equipment is Rp50,000 for Rp50,000 for December.December.
Unadjusted Adjusted Trial Balance Adjustments Trial Balance
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(In Rp000)
62
Cash 2,065Accounts Receivable 2,220 (e) 500Supplies 2,000 (a) 1,240Prepaid Insurance 2,400 (b) 200Land 20,000Office Equipment 1,800Accounts Payable 900Unearned Rent 360 (c) 120Cinta Cita, Capital 25,000Cinta Cita, Drawing 4,000Fees Earned 16,340 (e) 500Wages Expense 4,275 (d) 250Rent Expense 1,600Utilities Expense 985Supplies Expense 800 (a) 1,240Miscellaneous Expense 455
42,600 42,600
Account Title Debit Credit Debit Credit Debit Credit
Unadjusted Adjusted Trial Balance Adjustments Trial Balance
123456789
10111213141516171819202122
Insurance Expense (b) 200 Rent Revenue (c) 120 Wages Payable (d) 250 Depreciation Expense (f) 50 Accum. Depreciation (f) 50
To make To make more more space, space, let’s let’s
remove remove the the
heading.heading.
To make To make more more space, space, let’s let’s
remove remove the the
heading.heading.
62
(In Rp000)
63
Cash 2,065Accounts Receivable 2,220 (e) 500Supplies 2,000 (a) 1,240Prepaid Insurance 2,400 (b) 200Land 20,000Office Equipment 1,800Accounts Payable 900Unearned Rent 360 (c) 120Cinta Cita, Capital 25,000Cinta Cita, Drawing 4,000Fees Earned 16,340 (e) 500Wages Expense 4,275 (d) 250Rent Expense 1,600Utilities Expense 985Supplies Expense 800 (a) 1,240Miscellaneous Expense 455
42,600 42,600
Account Title Debit Credit Debit Credit Debit Credit123456789
10111213141516171819202122232425
Insurance Expense (b) 200 Rent Revenue (c) 120 Wages Payable (d) 250 Depreciation Expense (f) 50 Accum. Depreciation (f) 50
2,360 2,360Summed Summed
and and ruledruled
Summed Summed and and
ruledruled
63
Unadjusted Adjusted Trial Balance Adjustments Trial Balance
(In Rp000)
64
The next step is to add or subtract the adjustments from (to) the
amounts found in the Unadjusted Trial Balance columns and enter the results in the Adjusted Trial
Balance columns.
65
Cash 2,065Accounts Receivable 2,220 (e) 500Supplies 2,000 (a) 1,240Prepaid Insurance 2,400 (b) 200Land 20,000Office Equipment 1,800Accounts Payable 900Unearned Rent 360 (c) 120Cinta Cita, Capital 25,000Cinta Cita, Drawing 4,000Fees Earned 16,340 (e) 500Wages Expense 4,275 (d) 250Rent Expense 1,600Utilities Expense 985Supplies Expense 800 (a) 1,240Miscellaneous Expense 455
42,600 42,600
Account Title Debit Credit Debit Credit Debit Credit123456789
10111213141516171819202122232425
Insurance Expense (b) 200 Rent Revenue (c) 120 Wages Payable (d) 250 Depreciation Expense (f) 50 Accum. Depreciation (f) 50
2,360 2,360
65
Unadjusted Adjusted Trial Balance Adjustments Trial Balance
(In Rp000)
66
Cash 2,065 2,065Accounts Receivable 2,220 (e) 500 2,720Supplies 2,000 (a) 1,240 760Prepaid Insurance 2,400 (b) 200 2,200Land 20,000 20,000Office Equipment 1,800 1,800Accounts Payable 900 900Unearned Rent 360 (c) 120 240Cinta Cita, Capital 25,000 25,000Cinta Cita, Drawing 4,000 4,000Fees Earned 16,340 (e) 500 16,840Wages Expense 4,275 (d) 250 4,525Rent Expense 1,600 1,600Utilities Expense 985 985Supplies Expense 800 (a) 1,240 2,040Miscellaneous Expense 455 455
42,600 42,600
Account Title Debit Credit Debit Credit Debit Credit123456789
10111213141516171819202122232425
Insurance Expense (b) 200 200 Rent Revenue (c) 120 120 Wages Payable (d) 250 250 Depreciation Expense (f) 50 50 Accum. Depreciation (f) 50 50
2,360 2,360 43,400 43,400
66
Unadjusted Adjusted Trial Balance Adjustments Trial Balance
(In Rp000)
67
Because of space constraints, the Unadjusted
Trial Balance and the Adjustments columns will
not be shown in the following slides.
68
Cash 2,065Accounts Receivable 2,720Supplies 760Prepaid Insurance 2,200Land 20,000Office Equipment 1,800Accounts Payable 900Unearned Rent 240Cinta Cita, Capital 25,000Cinta Cita, Drawing 4,000Fees Earned 16,840Wages Expense 4,525Rent Expense 1,600Utilities Expense 985Supplies Expense 2,040Miscellaneous Expense 455
Account Title Debit Credit Debit Credit Debit Credit
Adjusted Trial Balance Income Statement Balance Sheet
123456789
10111213141516171819202122232425
Insurance Expense 200 Rent Revenue 120 Wages Payable 250 Depreciation Expense 50 Accum. Depreciation 50
43,400 43,40068
(In Rp000)
69
The next step is to extend amounts in the Adjusted Trial Balance columns to the Income Statement and Balance
Sheet columns.
70
Cash 2,065Accounts Receivable 2,720Supplies 760Prepaid Insurance 2,200Land 20,000Office Equipment 1,800Accounts Payable 900Unearned Rent 240Cinta Cita, Capital 25,000Cinta Cita, Drawing 4,000Fees Earned 16,840Wages Expense 4,525Rent Expense 1,600Utilities Expense 985Supplies Expense 2,040Miscellaneous Expense 455
Account Title Debit Credit Debit Credit Debit Credit
Adjusted Trial Balance Income Statement Balance Sheet
123456789
10111213141516171819202122232425
Insurance Expense 200 Rent Revenue 120 Wages Payable 250 Depreciation Expense 50 Accum. Depreciation 50
43,400 43,40070
(In Rp000)
71
Cash 2,065 2,065Accounts Receivable 2,720 2,720Supplies 760 760Prepaid Insurance 2,200 2,200Land 20,000 20,000Office Equipment 1,800 1,800Accounts Payable 900 900Unearned Rent 240 240Cinta Cita, Capital 25,000 25,000Cinta Cita, Drawing 4,000 4,000Fees Earned 16,840 16,840Wages Expense 4,525 4,525Rent Expense 1,600 1,600Utilities Expense 985 985Supplies Expense 2,040 2,040Miscellaneous Expense 455 455
Account Title Debit Credit Debit Credit Debit Credit
Adjusted Trial Balance Income Statement Balance Sheet
123456789
10111213141516171819202122232425
Insurance Expense 200 200 Rent Revenue 120 120 Wages Payable 250 250 Depreciation Expense 50 50 Accum. Depreciation 50 50
43,400 43,40071
(In Rp000)
72
The Income Statement and Balance Sheet
columns are totaled.
73
Cash 2,065 2,065Accounts Receivable 2,720 2,720Supplies 760 760Prepaid Insurance 2,200 2,200Land 20,000 20,000Office Equipment 1,800 1,800Accounts Payable 900 900Unearned Rent 240 240Cinta Cita, Capital 25,000 25,000Cinta Cita, Drawing 4,000 4,000Fees Earned 16,840 16,840Wages Expense 4,525 4,525Rent Expense 1,600 1,600Utilities Expense 985 985Supplies Expense 2,040 2,040Miscellaneous Expense 455 455
Account Title Debit Credit Debit Credit Debit Credit
Adjusted Trial Balance Income Statement Balance Sheet
123456789
10111213141516171819202122232425
Insurance Expense 200 200 Rent Revenue 120 120 Wages Payable 250 250 Depreciation Expense 50 50 Accum. Depreciation 50 50
43,400 43,40073
(In Rp000)
74
Cash 2,065 2,065Accounts Receivable 2,720 2,720Supplies 760 760Prepaid Insurance 2,200 2,200Land 20,000 20,000Office Equipment 1,800 1,800Accounts Payable 900 900Unearned Rent 240 240Cinta Cita, Capital 25,000 25,000Cinta Cita, Drawing 4,000 4,000Fees Earned 16,840 16,840Wages Expense 4,525 4,525Rent Expense 1,600 1,600Utilities Expense 985 985Supplies Expense 2,040 2,040Miscellaneous Expense 455 455
Account Title Debit Credit Debit Credit Debit Credit
Adjusted Trial Balance Income Statement Balance Sheet
123456789
10111213141516171819202122232425
Insurance Expense 200 200 Rent Revenue 120 120 Wages Payable 250 250 Depreciation Expense 50 50 Accum. Depreciation 50 50
43,400 43,400 9,855 16,960 33,545 26,440
74
(In Rp000)
75
The net income or net loss is determined. Then
the Income Statement and Balance Sheet
columns are totaled and double-ruled.
76
Cash 2,065 2,065Accounts Receivable 2,720 2,720Supplies 760 760Prepaid Insurance 2,200 2,200Land 20,000 20,000Office Equipment 1,800 1,800Accounts Payable 900 900Unearned Rent 240 240Cinta Cita, Capital 25,000 25,000Cinta Cita, Drawing 4,000 4,000Fees Earned 16,840 16,840Wages Expense 4,525 4,525Rent Expense 1,600 1,600Utilities Expense 985 985Supplies Expense 2,040 2,040Miscellaneous Expense 455 455
Account Title Debit Credit Debit Credit Debit Credit
Adjusted Trial Balance Income Statement Balance Sheet
123456789
10111213141516171819202122232425
Insurance Expense 200 200 Rent Revenue 120 120 Wages Payable 250 250 Depreciation Expense 50 50 Accum. Depreciation 50 50
43,400 43,400 9,855 16,960 33,545 26,440
76
(In Rp000)
77
Cash 2,065 2,065Accounts Receivable 2,720 2,720Supplies 760 760Prepaid Insurance 2,200 2,200Land 20,000 20,000Office Equipment 1,800 1,800Accounts Payable 900 900Unearned Rent 240 240Cinta Cita, Capital 25,000 25,000Cinta Cita, Drawing 4,000 4,000Fees Earned 16,840 16,840Wages Expense 4,525 4,525Rent Expense 1,600 1,600Utilities Expense 985 985Supplies Expense 2,040 2,040Miscellaneous Expense 455 455
Account Title Debit Credit Debit Credit Debit Credit
Adjusted Trial Balance Income Statement Balance Sheet
123456789
10111213141516171819202122232425
Insurance Expense 200 200 Rent Revenue 120 120 Wages Payable 250 250 Depreciation Expense 50 50 Accum. Depreciation 50 50
43,400 43,400 9,855 16,960 33,545 26,440
77
Net income 7,105 7,10516,960 16,960 33,545 33,545
(In Rp000)
7878
9,855 16,960 33,545 26,4407,105 7,105
16,960 16,960 33,545 33,545
Income Statement Balance Sheet
Net IncomeNet IncomeNet Net
IncomeIncome
The difference between the Income Statement column totals is the net income (or net loss) for the period.
(In Rp000)