Week 2

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Prepare the income statement, the statement of owner’s equity, and the classified balance sheet in report form. Assume that there were no contributions made by the owner during the year.

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Prepare the closing entries, and post to the accounts.

Prepare a post-closing trial balance.

Calculate the current ratio for the company.

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P4-32A Completing the accounting cycle from journal entries to post-closing trial balance with an optional worksheet

Learning Objectives 1, 2, 3, 4, 5

6. Ending Capital $68,395

On December 1, Bob Wonder began an auto repair shop, Wonder’s Quality Automotive. The following transactions occurred during December:

The business uses the following accounts: Cash; Accounts Receivable; Office Supplies; Prepaid Insurance; Equipment; Accumulated Depreciation—Equipment; Land; Accounts Payable; Utilities Payable; Interest Payable; Unearned Revenue; Notes Payable; Wonder, Capital; Wonder, Withdrawals; Income Summary; Service Revenue; Salaries Expense; Rent Expense; Utilities Expense; Advertising Expense; Supplies Expense; Insurance Expense; Interest Expense; and Depreciation Expense—Equipment.

Adjustment data:

a. Office Supplies used during the month, $900. b. Depreciation for the month, $150. c. One month insurance has expired. d. Accrued Interest Expense, $75.

Requirements

1. Prepare the journal entries, and post to the T-accounts. 2. Prepare an unadjusted trial balance. 3. Complete the worksheet for the month ended December 31, 2016. (optional) 4. Prepare the adjusting entries, and post to the T-accounts. 5. Prepare an adjusted trial balance.

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