P4-4B Prepare the closing journal entries. What information in addition to that

ID: 2418703 • Letter: P

Question

P4-4B

Prepare the closing journal entries. What information in addition to that recorded in the general ledger would o y Spa want as part of the company's information system? GiGi opened a little shop called Just Apples as a sole proprietorship to sell her applesauce. GiGi started the business with $25,000 on July 1, 2006. On October 1, 2006, the company borrowed $10,000 from Local Bank at 12 percent. The loan was for one vear. The company purchased $9,000 worth of apples for cash during the fiscal year and had $1,000 worth left over on June 30, 2007. The company also purchased $1,000 worth of jars, lids, and labels for cash. None was left on June 30, 2007.

Explanation / Answer

Income Statement

Sales revenue $29,000

less:Raw materirals used

(9,000 +1,000 - 1,000) 9,000

Gross profit 20,000

Less:Expenses

Interest expense (900)

Rent expense (12,000)

Adverstising fees (1,000) 13,900

Net income 6,100

Statemetn of owner's Equity

Contribution $25,000

Add:Net income 6,100

Ending Balance 31,100

Balance sheet

Cash 35,000 interest paayble 900

Prepaid insurance 6,000 Bank loan 10,000

Inventory 1,000 Owner's Equity 31,100

Assets 42,000 Liabilities & Equity 42,000