Q1PS - Horngren'S Financial And Managerial Accounting

Question

Question: Refer to the Practice Set data provided in Chapters 2 and 3 for Crystal Clear Cleaning.

Requirements

1. Prepare a worksheet (optional) at November 30, 2018. Use the unadjusted trial balance from Chapter 2 and the adjusting entries from Chapter 3.

2. Prepare an income statement and statement of retained earnings for the month ended November 30, 2018. Also prepare a classified balance sheet at November 30, 2018, using the report format. Assume the Notes Payable is long-term. Use the worksheet prepared in Requirement 1 or the adjusted trial balance from Chapter 3.

3. Prepare closing entries at November 30, 2018, and post to the accounts. Open T-accounts for Income Summary and Retained earnings. Determine the ending balance in each account. Denote each closing amount as Clos. and each account balance as Balance.

4. Prepare a post-closing trial balance at November 30, 2018.

 

Step-by-Step Solution

Answer

Answer

Post-Closing Trial Balance: $72,900

Step 1: Worksheet

Crystal Clear Company
Worksheet
November 30, 2018
Account Names	Unadjusted Trial Balance		Adjustments		Adjusted Trial Balance
	Debit	Credit	Debit	credit	Debit
Cash	$ 51,650				$ 51,650
Accounts                Receivables	4,000				4,000
Cleaning Supplies	320			$ 270	50
Prepaid Rent	4,000				4,000
Prepaid Insurance	4,800				4,800
Equipment	5,400				5,400
Truck	3,000				3,000
Accounts Payable		$     1,245				$     1,245
Unearned Revenue		15,000				15,000
Notes Payable		36,000				36,000
Common Stock		18,000				18,000
Dividends	1,400				1,400
Service Revenue		5,100				5,100
Salaries Expense	400				400
Advertising Expense	200				200
Utilities Expense	175				175
Supplies Expense			$ 270		270
Depreciation Expense			150		150
Accumulated Depreciation				150		150
Interest Expense			59		59
Accrued Interest				59		59
Total	$ 75,345	$ 75,345	$ 479	$ 479	$ 75,554	$ 75,554

 

Step 2: Income statement, statement of retained earnings and balance sheet

Income Statement
Canyon Canoe Company
		Amount
Particular
Service Revenue		5,100
Salaries Expense	400
Advertising Expense	200
Utilities Expense	175
Supplies Expense	270
Depreciation Expense	150
Interest Expense	59
Total Expenses		1,254
Net Income		$    3,846

Retained Earnings Statement
Particular	Amount
Beginning Balance	0
Add: Net Income	$ 3,846
Less: Dividends	1,400
Ending Balance	$ 2,446

Balance Sheet
December 31, 2018
Assets		Amount
Current Assets
Cash		$    51,650
Accounts Receivables		4,000
Cleaning Supplies		50
Prepaid Rent		4,000
Prepaid Insurance		4,800
Total Current Assets		$    64,500
Non-current Assets
Equipment	5,400
Truck	3,000
Less: Accumulated Depreciation	150	8,250
Total Non-Current Assets		$     8,250
Total Assets		$   72,750
Liabilities and Shareholder’s equity
Current Liability
Accounts Payable		1,245
Unearned Revenue		15,000
Accrued Interest		59
Total Current Liability		$ 16,304
Non-Current Liability
Notes Payable		36,000
Total Non-Current Liability		36,000
Total Liability		52,304
Shareholders’ Equity
Wilson, Capital		$  18,000
Add: Retained Earnings		2,446
Total Shareholders’ Equity		$     20,446
Total Liabilities and Shareholders’ Equity		$  72,750