Closing Entries

Trial_balance_.xlsx

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Trial Balance - Current Year

Smith Manufacturing, Inc.
Trial Balance
December 31, 20XX
	DR	CR
Cash	362,750
Accounts receivable	320,750
Allowance for uncollectible accounts		15,000
Prepaid insurance	10,000
Inventory	30,000
Land	50,000
Building	150,000
Accumulated depreciation-building		7,500
Equipment	500,000
Accumulated depreciation-equipment		50,000
Accounts payable		105,000
Note payable (due in 10 months, 5%)		125,000
Salaries payable
Interest payable
Note payable (due in 5 years, 3%)		500,000
Common Stock (3,000 shares outstanding)		300,000
Retained earnings		171,000
Sales revenue		850,000
Cost of goods sold	550,000
Salaries expense	150,000
Insurance expense
Depreciation expense
Interest expense
Bad debt expense
Totals	2,123,500	2,123,500

Trial Balnce - Prior Year

Smith Manufacturing, Inc.
Post-Closing Trial Balance
December 31, 20XX
	DR	CR
Cash	15,000
Accounts receivable	225,750
Allowance for uncollectible accounts		20,000
Prepaid insurance	5,000
Inventory	80,000
Land	50,000
Building	150,000
Accumulated depreciation-building		7,500
Equipment	500,000
Accumulated depreciation-equipment		50,000
Accounts payable		55,000
Note payable		50,000
Salaries payable		5,000
Interest payable		17,250
Note payable (due in 5 years, 3%)		350,000
Common Stock (3,000 shares outstanding)		300,000
Retained earnings		171,000
Sales revenue
Cost of goods sold
Salaries expense
Insurance expense
Depreciation expense
Interest expense
Bad debt expense
Totals	1,025,750	1,025,750

Answer

Adjusting Entries
Bad Debt Expense	DR	8,500
Allowance for Uncollectible Accounts	CR		8,500
(850,000 x 1%)
Insurance Expense	DR	2,000
Prepaid Insurance	CR		2,000
(10,000-8,000)
Inventory	DR	10,000
Cost of Goods Sold	CR		10,000
(40,000-30,000)
Depreciation Expense	DR	57,500
Accumulated Depreciation-Building	CR		7,500
Accumulated Depreciation-Equip.	CR		50,000
Building (150,000/20)
Equipment (500,000/10)
Interest Expense	DR	21,250
Interest Payable	CR		21,250
(125,000 x 5%) + (500,000 + 3%)
Salary Expense	DR	2,000
Salary Payable	CR		2,000
	Unadjusted Balance		Adjusted Entries		Closing Balance
Trial Balance	DR	CR	DR	CR	DR	CR
Cash	362,750				362,750
Accounts Receivable	320,750				320,750
Allowance for Uncollectible Accounts		15,000		8,500		23,500
Prepaid Insurance	10,000			2,000	8,000
Inventory	30,000		10,000		40,000
Land	50,000				50,000
Building	150,000				150,000
Accumulated depreciation-building		7,500		7,500		15,000
Equipment	500,000				500,000
Accumulated depreciation-equipment		50,000		50,000		100,000
Accounts payable		105,000				105,000
Note payable (due in 10 months, 5%)		125,000				125,000
Salaries payable				2,000		2,000
Interest payable				21,250		21,250
Note payable (due in 5 years, 3%)		500,000				500,000
Common Stock (3,000 shares)		300,000				300,000
Retained earnings		171,000				171,000
Sales revenue		850,000				850,000
Cost of goods sold	550,000			10,000	540,000
Salaries expense	150,000		2,000		152,000
Insurance expense			2,000		2,000
Depreciation expense			57,500		57,500
Interest expense			21,250		21,250
Bad debt expense			8,500		8,500
	2,123,500	2,123,500	101,250	101,250	2,212,750	2,212,750
Smith Manufacturing, Inc.
Post-Closing Trial Balance
December 31, 20XX
	DR	CR
Cash	362,750
Accounts receivable	320,750
Allowance for uncollectible accounts		23,500
Prepaid insurance	8,000
Inventory	40,000
Land	50,000
Building	150,000
Equipment	500,000
Accumulated depreciation-building		15,000
Accumulated depreciation-equipment		100,000
Accounts payable		105,000
Note payable (due in 10 months, 5%)		125,000
Salaries payable		2,000
Interest payable		21,250
Note payable (due in 5 years, 3%)		500,000
Common Stock (3,000 shares outstanding)		300,000
Retained earnings		239,750
Totals	1,431,500	1,431,500
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