PR 4-1B Financial statements and closing entries

Last Chance Company offers legal consulting advice to prison inmates. Last Chance Company prepared the end-of-period spreadsheet shown at the top of the following page at June 30, 2019, the end of the fiscal year.

Instructions
1. Prepare an income statement for the year ended June 30.

2. Prepare a statement of owner’s equity for the year ended June 30. No additional investments were made during the year.

3. Prepare a balance sheet as of June 30.

4. On the basis of the end-of-period spreadsheet, journalize the closing entries.

5. Prepare a post-closing trial balance.

A B C D E F G 1 2 3 4 5 6 7 8 9 101 2 3 4 5 6 7 8 9
201 2 3 4 5 6 7 8 9 30
Last Chance Company End-of-Period Spreadsheet For the Year Ended June 30, 2019 Unadjusted Adjustments Trial Balance Trial Balance Account Title Dr. Cr. Dr. Cr. Dr. Cr. Adjusted 5,100 22,750 3,600 2,025 80,000 340,000 140,000 20,000 145,100 86,800 30,000 18,750 5,875 900,000 190,000 54,450 9,750 4,500 361,300 280,000 900,000 (a) 3,750 (g) 3,000 ( f )  1,900 (e) 4,550 (d) 3,000 (c) 1,500 (b) 1,300 19,000 (b) 1,300 (c) 1,500 (d) 3,000 (e) 4,550 (f)   1,900 (a) 3,750 (g) 3,000  19,000 5,100 26,500 2,300 525 80,000 340,000 140,000 20,000 147,000 86,800 30,000 18,750 4,550 3,000 1,500 1,300 5,875 913,200 193,000 59,000 9,750 1,900 1,500 361,300 283,750 3,000 913,200














Answer:

1.
Revenues:
Fees earned$283,750
Rent revenue3,000
Total revenues$286,750
Expenses:
Salaries and wages expense $147,000
Advertising expense86,800
Utilities expense30,000
Travel expense18,750
Depreciation expense—equipment 4,550
Depreciation expense—building 3,000
Supplies expense1,500
Insurance expense1,300
Miscellaneous expense5,875
Total expenses298,775
Net loss$ (12,025)
2.
Tami Garrigan, capital, July 1, 2018$361,300
Net loss for the year$(12,025)
Withdrawals(20,000)
Decrease in owner’s equity(32,025)
Tami Garrigan, capital, June 30, 2019$329,275

3.
Current assets:
Cash$ 5,100
Accounts receivable26,500
Prepaid insurance2,300
Supplies525
Total current assets$ 34,425
Property, plant, and equipment:
Land$ 80,000
Building$340,000
Less accumulated depreciation 193,000 147,000
Equipment$140,000
Less accumulated depreciation 59,000 81,000
Total property, plant, and equipment308,000
Total assets$342,425
Current liabilities:
Accounts payable$ 9,750
Salaries and wages payable1,900
Unearned rent1,500
Total liabilities$ 13,150
Tami Garrigan, capital329,275
Total liabilities and owner’s equity$342,425

4.  2019
 June 30 Fees Earned283,750
Rent Revenue3,000
Tami Garrigan, Capital(12,025)
Salaries and Wages Expense147,000
Advertising Expense86,800
Utilities Expense30,000
Travel Expense18,750
Depreciation Expense—Equipment 4,550
Depreciation Expense—Building 3,000
Supplies Expense1,500
Insurance Expense1,300
Miscellaneous Expense5,875
30 Tami Garrigan, Capital 20,000
Tami Garrigan, Drawing20,000
5.
Debit Credit
Balances Balances
Cash5,100
Accounts Receivable26,500
Prepaid Insurance2,300
Supplies525
Land80,000
Building340,000
Accumulated Depreciation—Building193,000
Equipment140,000
Accumulated Depreciation—Equipment59,000
Accounts Payable9,750
Salaries and Wages Payable1,900
Unearned Rent1,500
Tami Garrigan, Capital329,275

594,425 594,425