Problem 4-5A Preparing trial balances, closing entries, and financial statements

Question

Problem 4-5A Preparing trial balances, closing entries, and financial statements LO C3, P2, P3

The adjusted trial balance of Karise Repairs on December 31, 2017, follows.

Assume there are no owner investments in 2017.
  
Required:
1a. Prepare an income statement for the year 2017.
1b. Prepare a statement of owner's equity for the year 2017.
1c. Prepare a classified balance sheet at December 31, 2017.
2. Complete the work sheet using the adjusted trial balance in the first two columns of a six-column table. Use columns three and four for closing entry information and the last two columns for a post-closing trial balance.
3. Using information from the work sheet in Requirement 2, prepare the appropriate closing entries.

KARISE REPAIRS
Adjusted Trial Balance
December 31, 2017 No. Account Title Debit Credit 101 Cash $ 45,000 124 Office supplies 1,900 128 Prepaid insurance 2,800 167 Equipment 59,000 168 Accumulated depreciation—Equipment $ 5,900 201 Accounts payable 12,000 210 Wages payable 700 301 C. Karise, Capital 33,000 302 C. Karise, Withdrawals 16,000 401 Repair fees earned 139,300 612 Depreciation expense—Equipment 5,900 623 Wages expense 35,000 637 Insurance expense 1,400 640 Rent expense 15,000 650 Office supplies expense 4,400 690 Utilities expense 4,500 Totals $ 190,900 $ 190,900

Explanation / Answer

1a. INCOME SUMMARY Revenue: Repair fees earned 1,39,300 Operating expenses: Depreciation expense—Equipment 5,900 Wages expense 35,000 Insurance expense 1,400 Rent expense 15,000 Office supplies expense 4,400 Utilities expense 4,500 66,200 Net operating income 73,100 1b. STATEMENT OF OWNERS' EQUITY C.Kraise, Capital, December 31, 2016 33000 Add: Net income 73,100 106100 Less: Withdrawals 16,000 C.Kraise, Capital, December 31, 2017 90,100 1c. BALANCE SHEET ASSETS Current assets: Cash 45,000 Office supplies 1,900 Prepaid insurance 2,800 ` Total current assets 49,700 Equipment 59,000 ` Accumulated depreciation—Equipment 5,900 53,100 TOTAL ASSETS 1,02,800 TOTAL LIABILITIES AND EQUIY Current liabilities: ` Accounts payable 12,000 Wages payable 700 Total current liabilities 12,700 C. Karise, Capital 90,100 TOTAL LIABILITIES AND EQUIY 1,02,800 ` 2) Adjusted Trial Balance December 31, 2017 Adjusted Trial Balance Closing entry information Post closing Trial Balance No. Account Title Debit Credit Debit Credit Debit Credit 101 Cash 45,000 45,000 124 Office supplies 1,900 1,900 128 Prepaid insurance 2,800 2,800 167 Equipment 59,000 59,000 168 Accumulated depreciation—Equipment 5,900 5,900 201 Accounts payable 12,000 12,000 210 Wages payable 700 700 301 C. Karise, Capital 33,000 16,000 90,100 302 C. Karise, Withdrawals 16,000 16,000 401 Repair fees earned 1,39,300 1,39,300 73,100 612 Depreciation expense—Equipment 5,900 5,900 623 Wages expense 35,000 35,000 637 Insurance expense 1,400 1,400 640 Rent expense 15,000 15,000 650 Office supplies expense 4,400 4,400 690 Utilities expense 4,500 4,500 Income summary 66,200 1,39,300 73,100 Totals 1,90,900 1,90,900 2,94,600 294600 1,08,700 108700 3) CLOSING ENTRIES: Repair fees earned 1,39,300 Income summary 1,39,300 Income summary 66,200 Depreciation expense—Equipment 5,900 Wages expense 35,000 Insurance expense 1,400 Rent expense 15,000 Office supplies expense 4,400 Utilities expense 4,500 Income summary 73,100 C. Kraise, Capital 73,100 C. Kraise, capital 16,000

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