QUESTION
Preparing Adjusting Entries in a Worksheet
Following is the unadjusted trial balance of Skylar Gaming, Inc. at the end of its first year of operations, December 31, 20×7:
Account Name | DR. | CR. |
Cash | $71,550 | |
Accounts Receivable | $25,200 | |
Supplies | $550 | |
Prepaid Insurance | $12,000 | |
Equipment | $31,750 | |
Accumulated Depreciation-Equipment | $4,050 | |
Accounts Payable | $6,700 | |
Salaries Payable | $0 | |
Unearned Revenue | $2,200 | |
Common Stock | $45,700 | |
Retained Earnings | $23,850 | |
Dividends | $3,500 | |
Revenue | $80,750 | |
Depreciation Expense-Equipment | $2,000 | |
Salaries Expense | $4,750 | |
Insurance Expense | $3,100 | |
Rent Expense | $4,200 | |
Supplies Expense | $2,500 | |
Utilities Expense | $2,150 | |
$163,250 | $163,250 |
The following additional information is available:
- Skylar Gaming, Inc. needs to accrue $2,000 in salaries that will not be paid until next month.
- Skylar Gaming, Inc. has earned $2,000 of the services that were paid for in advance as included in the unearned revenue account.
- At the end of the period, Skylar Gaming, Inc. has provided services in the amount of $500 to another customer (John Gartner). However, Skylar has not billed them yet since they only issue bills at the beginning of each month.
- Skylar Gaming, Inc. needs to record the annual $1,025 of depreciation on the equipment.
- One month of the 12-month insurance policy in prepaid insurance has been used up, and a journal entry is needed to reflect this.
- At the end of the period, $125 in supplies are remaining.
Required:
- Prepare all necessary adjusting entries at December 31, 20×7 Descriptions are not needed.
- Using the below linked template prepare an adjusted trial balance at December 31, 20×7.
- Using a worksheet template, prepare an income statement, statement of retained earnings, and a balance sheet.
- Prepare closing entries including descriptions.
ANSWER
ACT300 Principles of Accounting | ||||||||||
Module 3: Critical Thinking Template | ||||||||||
Skylar Gaming, Inc. Work Sheet For Month Ended December 31, 201X | ||||||||||
Account (1) | Unadjusted Trial balance | Adjusting entries (2) | Adjusted trial balance (3) | Income statement (4) | Balance sheet & Statement of Retained Earnings | |||||
Debit | Credit | Debit | Credit | Debit | Credit | Debit | Credit | Debit | Credit | |
CASH | 71,550 | 425 | 71,975 | 71,975 | ||||||
ACCOUNTS RECEIVABLE | 25,200 | 500 | 2,000 | 23,700 | 23,700 | |||||
SUPPLIES | 550 | 425 | 125 | 125 | ||||||
PREPAID INSURANCE | 12,000 | 1,000.0 | 11,000 | 11,000 | ||||||
EQUIPMENT | 31,750 | 31,750 | 31,750 | |||||||
ACCUMULATED DEPRECIATION-EQUIPMENT | 4,050 | 1,025 | 5,075 | 5,075 | ||||||
ACCOUNTS PAYABLE | 6,700 | 6,700 | 6,700 | |||||||
SALARIES PAYABLE | 0 | 2,000 | 2,000 | 2,000 | ||||||
UNEARNED REVENUE | 2,200 | 2,000 | 200 | 200 | ||||||
COMMON STOCK | 45,700 | 45,700 | 45,700 | |||||||
RETAINED EARNINGS | 23,850 | 23,850 | 23,850 | |||||||
DIVIDENDS | 3,500 | 3,500 | 3,500 | |||||||
REVENUE | 80,750 | 500 | 81,250 | 81,250 | ||||||
DEPRECIATION EXP – EQUIPMENT | 2,000 | 1,025 | 3,025 | 3,025 | ||||||
SALARIES EXPENSE | 4,750 | 2,000 | 6,750 | 6,750 | ||||||
INSURANCE EXPENSE | 3,100 | 1,000 | 4,100 | 4,100 | ||||||
RENT EXPENSE | 4,200 | 4,200 | 4,200 | |||||||
SUPPLIES EXPENSE | 2,500 | 2,500 | 2,500 | |||||||
UTILITIES EXPENSE | 2,150 | 2,150 | 2,150 | |||||||
Totals | 163,250 | 163,250 | 164,775 | 164,775 | 26,225 | 81,450 | 138,550 | 83,325 | ||
Net income | 55,225 | 55,225 | ||||||||
Totals | 81,450 | 81,450 | 138,550 | 138,550 | ||||||
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