Actbas1 Lesson 10 - Completing the Accounting Cycle (1)

4525 2040 1600 985 100 50 455 9755 7205 internet

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Unformatted text preview: sets 21,750 Total assets $29,595 Internet Solutions Statement of Financial Position December 31, 20x1 LIABILITIES Current liabilities: Accounts payable Salaries payable Unearned rent Total liabilities $ 1,390 OWNER’S EQUITY Chris Chee, capital, November 1, 20x1 Investment on November 1, 20x1 Net profit for November and December Less Drawings Chris Chee, capital, December 31, 20x1 $28,205 Total liabilities and owner’s equity $29,595 $ 900 250 240 $ 0 $25,000 7,205 $32,205 4,000 The Closing Process Fees Earned Salaries Expense Balance Cr Dr Rent Expense Bal. 4,525 Balance Dr Bal. 1,600 Profit and Loss Summary Balance Dr Cr Bal. 16,840 Balance Dr Bal. Balance Dr Bal. 50 Cr Rent Revenue Cr Depreciation Expense Cr 120 Cr Utilities Expense Chris Chee, Capital Balance Dr Cr Balance Dr Bal. 985 Cr Supplies Expense Balance Dr Bal. 2,040 15,000 Bal. Cr Insurance Expense Balance Dr Bal. 100 Cr Miscellaneous Expense Balance Dr Bal. 455 Balance Dr Cr Chris Chee, Drawing Balance Dr Cr Bal. 4,000 Note: The balances Note: shown are adjusted balances before closing. The following sequence demonstrates the closing process. The Closing Process Close Revenues Close Dr Profit and Loss Summary Balance Cr Dr Cr 16,960 16,960 Dr Fees Earned 16,840 Dr Rent Revenue 120 16,960 16,960 Cr P&L Summary 16,960 Total Revenues 0 Fees Earned Dr Cr Dr Rent Revenue Balance Cr Dr 16,840 16,840 0 Cr Dr Balance Cr 120 120 0 The Closing Process Profit and Loss Summary Balance Dr Cr Dr Cr Total Revenues 16,960 16,960 16,96 16,96 0 9,755 Total Expenses Salaries Expense Dr Cr Balance Dr 4,525 4,525 0 Cr Close Expenses Close Dr P&L Summary 9,755 Cr Salaries Expense Cr Rent Expense 1,600 Cr Depreciation Exp 50 Cr Utilities Exp Cr Supplies Exp Cr Insurance Exp 100 Cr Misc. Exp 4,525 985 2,040 455 The Closing Process The Profit and Loss Summary Balance Dr Cr Dr Cr 9,755 7,205 7,205 16,96 16,96 0 16,960 16,960 7,205 7,205 Chris Chee, capital Balance Dr Cr Dr 0 Cr 25,000 7,205 7,205 32,205 Close Profit and Loss Close Summary Summary Dr P&L Summary 7,205 Cr Chris Chee, Capital 7,205 The Closing Process The Chris Chee, Drawing Balance Dr Cr Dr Close Drawing Close Cr 4,000 4,000 0 Chris Chee, capital Balance Dr Cr Dr Cr 25,000 7,205 7,205 4,000 4,000 32,205 Drawing 28,205 Dr Chris Chee, Capital Cr Chris Chee, Drawing 4,000 4,000 The Closing Process Salaries Expense 0 Fees Earned Profit and Loss Summary Rent Expense 0 0 Rent Revenue 0 0 Depreciation Expense 0 Utilities Expense 0 Supplies Expense Chris Chee, capital Balance Dr Cr Dr 25,000 0 Insurance Expense 0 Miscellaneous Expense 0 Cr 7,205 7,205 4,000 32,205 Drawing 28,205 4,000 Chris Chee, Drawing 0 All P&L accounts now have zero balances and are ready for the next accounting period. Internet Solutions Post-Closing Trial Balance December 31, 20x1 Assets 11 12 14 15 17 18 19 21 22 23 31 Cash Accounts Receivable Supplies Prepaid Insurance Land Office Equipment Accum. Depreciation Accounts Payable Salaries Payable Unearned Rent Chr...
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