142 Accounting Principles

CHAPTER: FOUR
COMPLETING THE ACCOUNTING CYCLE

CHAPTER AT A GLANCE:

 Define worksheet
 Steps in preparing a worksheet
 Purpose/objectives/uses of worksheet
 Importance of worksheet
 Accounting cycle
 Parts of work sheet
 Reversing entries and need for reversing entries
 Closing entries sand different types of closing entries
 Process of closing the books of accounts
 Post-closing trial balance and its purpose
 Glossary
 Worksheet and closing entries: problems and solutions
 Completing the Accounting Cycle 143

4.1: Worksheet
A worksheet is a multiple-column form used in the adjustment process and in preparing financial
statements. The worksheet is a working tool. It is not a permanent accounting record; it is neither a
journal nor a part of the general ledger. The worksheet is merely a device used in preparing adjusting
entries and the financial statements.
Therefore, it may vary in format and is often prepared using pencil so that errors can be easily
corrected. The accountants work out the details at the end of the accounting period and get a detail
preview of the financial statement using the worksheet. In small business organization where the
number of accounts is comparatively less, worksheet is not needed. Worksheet is indispensable for
those big business organizations where the volume of accounts is large. In the present day world it has
become the practice of preparing worksheet in the big organizations before preparation of financial
statements.
A typical worksheet consists of a column on the left showing main account titles and 10 more
columns of debits and credits showing trial balance, adjustments, adjusted trial, balance, income
statement and balance sheet.

4.2: Steps in preparing a worksheet

 Step-1: Prepare a trail balance on the worksheet
The first step in preparing a worksheet is to enter all ledger accounts with balance in the account titles
column and then enter debit and credit amounts from the ledger in the trial balance columns.
 Step-2: Enter the adjustments in the adjustments columns
The second steps when using a worksheet, enter all adjustments in the adjustments columns. In
entering the adjustments, use applicable trial balance accounts, if additional accounts are needed,
insert them on the lines immediately below the trial balance totals. A different letter identifies the
debit and credit for each adjusting entry. The term used to describe this process is keying. Companies
do not journalize the adjustments until after they complete the worksheet and prepare the financial
statements.
 Step 3: Complete the adjusted trial balance columns
The amounts entered in this column are found by adding or subtracting any debit or credit in the
adjustment entries with column to or from the unadjusted trial balances. It is the combination of the
trial balance column and the adjustment column. After the adjustments, the adjusted balance of each
account is computed and entered into the adjusted trial balance column.
 Step 4: Complete the income statement columns
An income statement summarizes the revenue and expenses for an accounting period. Therefore, all
revenue and expenses accounts in the adjusted trial balance columns are extended to the income
statement column, since revenue carries the credit balance, the revenues are entered into the credit and
expenses carries the debit balance, and they are extended to the debit side. Thus the extension of the
adjusted trial balance to the income statement column, the following rules have to be followed:
A credit remains as credit a debit remains as debit.
 Step 5: Complete the balance sheet columns
Assets, liabilities, owner's equity and drawings are extended to the balance sheet columns from the
144 Accounting Principles

adjusted trial balance column. The debit balance of each asset account is extended to the balance sheet
to the debit column and credit balance to the credit column. Thus, the above rules apply.
A credit remains as credit a debit remains as debit.
 Step 6: Total the income statement and balance sheet columns and determine the
amount of net income or net loss and balance the statement column .
The final step is necessary to compute the net income or net loss. For this purpose, the debit and credit
columns of the income statement are totaled. The difference between the debit and credit shows the
net income or net loss. If the total of debit is greater than credit, expenses do exceed revenues and the
result is net loss for the period. Instead, if the credit exceeds debit, the result is net profit of the period.
Net income or net loss is written in the account title column. The amount of net income could be
entered into the income statement, debit column and in balance sheet credit column. If net loss occurs,
the opposite rule will apply. The net loss amount will be placed in the credit side of the income
statement and debit side of the balance sheet column.

4.3: Purpose/Objectives/uses of worksheet

An accounting worksheet is a tool that businesses use to balance and close out their books at the end
of a period. Purposes of worksheet from different angles are described below:
1. Creating chart of accounts: Chart of accounts is a starting point for setting up book keeping
and accounting system of any type of business. It tells which accounts are to be included in
general ledger and mechanism to be followed. Depending on the nature of account, each
account is assigned a number. An accounting worksheet begins by listing each account and
the balance each account has.
2. Adjusting entries: One of the main purposes of an accounting worksheet is to record
adjusting entries. They are generally made at the end of the accounting period. Adjusting
entries are made for accruals and deferrals to match revenue and expenses.
3. Trial balance: The purpose of preparing trial balance can be efficiently accomplished by
using worksheet. After adjusting entries are made, each and every account that is affected is
updated and the balances are transferred to trial balance accordingly. A trial balance is a list
and total of all the debit and credit accounts of a business for a given period.
4. Closing entries: The closing entry is used to transfer data from the temporary accounts to the
permanent balance sheet or income statement. The purpose of the closing entry is to bring the
temporary journal account balances to zero for the next accounting period, which aids in
keeping the accounts reconciled. Accounting books are closed at the end of each accounting
year. Thus, worksheet aids greatly in closing process as well.
5. Financial statements: Preparing financial statements requires an adjusted trial balance to
translate into financial reports, such as, income statement and balance sheets. This involves
transferring the balances to the appropriate balance sheet and income statement columns. In
doing so, a worksheet can be of immense help and assistance to the accountants.
Worksheets are not required but they provide a convenient way to organize the process of creating the
adjusted trial balance and the preliminary financial statements.
4.4: Importance of worksheet
 Completing the Accounting Cycle 145

A work sheet is important for adjustment process and making financial statements. The following
points may be stated for the importance of a work sheet.
 Rectifying the ending balance of ledger accounts.
 Adjusting the trial balance.
 Finding the errors of posting.
 Roughly preparing the financial statements.
 Updating the financial statements.
 Monitoring the financial statements at a glance.
 Accumulating the financial statement on a single sheet.

4.5: Parts of work sheet

Parts of a work sheet:
A 10-column work sheet has the following parts:
1. Initial trail balance
2. Adjustments
3. Adjusted Trial Balance
4. Income statement
5. Balance sheet
4.6: Reversing entries and need for reversing entries
Reversing Entry: Reversing entry is an entry made at the beginning of the next accounting period
that is the exact opposite of the adjusting entry made in the previous period.
Needs of reversing entry: Though the reversing entry is an optional accounting task, it is often uses
in the following cases:
 To simplify the adjusting process
 To reverse the adjusting entries.
 To reverse accrued expense accounts.
 To reverse accrued revenue accounts.
 To update the adjusting items.
To sum up, reversing entry is the opposite of adjusting entry in case of accrued revenue and expenses.
4.7: Accounting cycle
The accounting cycle is the name given to the collective process of recording and processing
the accounting events of a company. The series of steps begin when a transaction occurs and end with
its inclusion in the financial statements.
The required steps in the accounting cycle are:
1. Analyze business transactions
2. Journalize the transactions
3. Post to ledger accounts
4. Prepare a trial balance
5. Journalize and post adjusting entries
6. Prepare an adjusted trial balance
146 Accounting Principles

7. Prepare financial statements

8. Journalize and post closing entries
9. Prepare a post-closing trial balance
10. Reversing entries

1. Identification of
Transactions

10.Reversing entries 2. Journalizing

9.Post closing trial 3. Posting to the

balance ledger account

8.Closing entries 4. Preparation of

Trial balance

7.Preparation of 5. Adjusting entries

financial statement

6.Adjusting trial
balance
Work sheet
(Optional)

4.8: Closing entries and different types of closing entries

Closing entries made at the end of an accounting period to transfer the balances of temporary
accounts to a permanent owner’s equity account, owner’s capital are called closing entries. Closing
entries are given to close the temporary accounts. After closing the temporary accounts, the account
balance remains zero.
Four different types of entries do companies make in closing the books:

The four closing entries are listed below:

 Completing the Accounting Cycle 147

1. To close revenue accounts: -

Revenue Dr
Income Summary Cr

2. To close expenses accounts:

Income Summary Dr
…………expense Cr
3. a. To transfer net income to owner's capital account
Income Summary Dr.
To, Owner’s Capital Cr.
b. To transfer net loss to owner’s capital account.
Owner’s capital Dr.
Income summery Cr.
4. To close owner’s capital
Owner’s Capital Dr.
To, Owner’s Drawing Cr.
4.9: Process of closing the books of accounts
The process of closing the books of accounts are sequentially given below:
 Journalizing closing entries.
 Posting the closing journal entries.
 Ruling and balancing all ledger accounts.
 Income summary is used to close expense and revenue.
 Income summary is closed to owners’ capital.
 Owner’s drawing is closed to owners' capital.
4.10: Post-closing trial balance and its purpose
Post-Closing Trial Balance: A post-closing trial balance is a trial balance taken after the closing
entries have been posted. The post-closing trial balance lists permanent accounts and their balances
after journalizing and posting of closing entries. Since all temporary accounts will have zero balances,
the post-closing trial balance will contain only permanent-balance sheet-accounts.
The accounting period closes when the accountant records all financial entries in the general ledger
and the financial statements are prepared. The balances contained in the post-closing trial balance
represent the beginning balances for the following period. These accounts only include balance sheet
accounts. Temporary accounts do not carry a balance at the end of the period and do not appear on the
post-closing trial balance.
Purposes of post closing trial balance:
 Prove that no mistakes were made.
 Prove the equality of the balance sheet account balances that are carried -forward into the
next accounting period.
 Prove the equality of the income statement account balances that are carried forward into the
148 Accounting Principles

next accounting period.

 List all the balance sheet accounts in alphabetical order for easy reference.

GLOSSARY
 Classified balance sheet: A balance sheet that contains standard classifications or sections.
 Closing entries: Entries made at the end of an accounting period to transfer the balances of
temporary accounts to a permanent owner's equity account, Owner's Capital.
 Correcting entries: Entries to correct errors made in recording transactions.
 Current assets: Assets: that a company expects to convert to cash or use up within one year.
 Current liabilities: Obligations that a company expects to pay within the coming year or its
operating cycle, whichever is longer.
 Income Summary: A temporary account used in closing revenue and expense accounts.
 Intangible assets: Noncurrent assets that do not have physical substance. .
 Liquidity: The ability of a company to pay obligations expected to be due within the next
year.
 Long-term investments: Generally, (1) investments in stocks and bonds of other companies
that companies normally hold for many years, and (2) long-term assets, such as land and
buildings, not currently being used in operations.
 Long-term liabilities: Obligations that a company expects to pay after one year.
 Operating cycle: The average time that it takes to purchase inventory, sell it on account, and
then collect cash from customers.
 Permanent (real) accounts: Accounts that relate to one or more future accounting periods.
Consist of all balance sheet accounts. Balances are carried forward to the next accounting
period.
 Post-dosing trial balance: A list of permanent accounts and their balances after a company
has journalized and posted closing entries.
 Property, plant, and equipment: Assets with relatively long useful lives and currently being
used in operations.
 Reversing entry: An entry, made at the beginning of the next accounting period that is the
exact opposite of the adjusting entry made in the previous period.
 Stockholders' equity: The ownership claim of share holders on total assets. It is to a
corporation what owner's equity is to a proprietorship.
 Temporary (nominal) accounts: Accounts that relay only to a given accounting period.
Consist of all income statement accounts and owner's drawings account. Temporary accounts
are closed at end of the accounting, period.
 Worksheet: A multiple-column form that may be used in making adjusting entries and in
preparing financial statements.
(Ref: Accounting Principles, Weygandt, Kimmel, Kieso , Twelfth Edition)
 Completing the Accounting Cycle 149

Tips for Doing Math

Accounting cycle includes the following five accounting treatments:

1. Adjusting journal for worksheet.
2. Completing the worksheet
3. Preparing financial statements from the worksheet
4. Closing journal entries
5. Post closing trial balance

A standard worksheet has the following 10-column

a. Trial balance columns (Dr. & Cr.)

b. Adjustments columns (Dr. & Cr.) .
c. Adjusted trial balance columns (Dr. & Cr.)
d. Income statement columns (Dr. & Cr.)
e. Balance sheet columns (Dr. & Cr.)
Closing journal entries are four types
a. To close revenue accounts against income summary
b. To close expense accounts against income summary
c. To close income summary account against capital account
d. To close drawing account against capital account
Post closing trial balance includes only three types of accounts
a. Asset accounts
b. Liability accounts
c. Owner's capital account

Properties of worksheet
a. Worksheet is not an account. .
b. It just a rough sheet to check the accuracy of accounts.
c. Worksheet is prepared to help for the preparation of financial statements.
150 Accounting Principles

Problem -1 (Ref: Accounting Principles, Kieso , Page: 145, Practice problem)

At the end of its first month of operations, Pampered Pet Services has the following unadjusted trail
balance.

Pampered Pet Services

August 31, 2017
Trial Balance

Debit Credit
Cash 5,400
Account receivable 2,800
Supplies 1,300
Prepaid insurance 2,400
Equipment 60,000
Notes payable 40,000
Accounts payable 2,400
Owner’s capital 30,000
Owner’s drawing 1,000
Service revenue 4,900
Salaries and wages expense 3,200
Utilities expense 800
Advertising expense 400
77,300 77,300

Other data:
1. Insurance expires at the rate of $200 per month.
2. $1,000 of supplies is on hand at August 31.
3. Monthly depreciation on the equipment is $900.
4. Interest of $500 on the notes payable has accrued during August.
Instructions
(a) Prepare a worksheet.
(b) Prepare a classified balance sheet assuming $35,000 of the notes payable are long term.
(c) Journalize the closing entries.

Solution: (a) Pampered Pet Service

Adjusting Entries
 Completing the Accounting Cycle 151

Date Account Titles and Explanation Ref. Debit Credit

($) ($)
Aug. 31 Insurance Expense 200
Prepaid Insurance 200
31 Supplies Expenses (1,300 – 1,000) 300
Supplies 300
31 Depreciation Expenses 900
Accumulated Depreciation 900
31 Interest Expenses 500
Interest Payable 500
Pampered Pet Services
Worksheet
For the month ended August 31, 2017
Accounts Titles Trial balance Adjustments Adjusted Trial Income Balance sheet
Balance Statement
Dr. Cr. Dr. Cr. Dr. Cr. Dr. Cr. Dr. Cr.
Cash 5400 5400 5400
Accounts Receivable 2800 2800 2800
Supplies 1300 300 1000 1000
Prepaid insurance 2400 200 2200 2200
Equipment 60000 60000 60000
Notes payable 40000 40000 40000
Accounts payable 2400 2400 2400
Owner’s capital 30000 30000 30000
Owner’s drawing 1000 1000 1000
Service revenue 4900 4900 4900
Salaries and wages 3200 3200 3200
expense
Utilities expenses 800 800 800
Advertising Expense 400 400 400
Trail balance total 77300 77300
Insurance exp. 200 200 200
Supplies expense 300 300 300
Depreciation exp. 900 900 900
Accumulated dep.- 900 900 900
equip
Interest expense 500 500 500
Interest payable 500 500 500
Net loss 1400 1400
Work sheet totals 1900 1900 78700 78700 6300 6300 73800 73800
152 Accounting Principles

Solution: (b)
Pampered Pet Service
Balance Sheet
As at August 31, 2017
Accounts Titles Amount Amount
Assets
Current Assets :
Cash 5,100
Account receivable 2,800
Supplies 1,000
Prepaid insurance 2,200
Total current assets 11,400
Long – term assets :
Equipment 60,000
Less : Accumulated Dep. –Equipment (900)
Total long-term assets 59,100
Total assets 70,500
Liabilities
Current liabilities :
Notes payable (40000 – 350000) 5,000
Account payable 2,400
Interest payable 500
Total current liabilities 7,900
Long -term liabilities
Notes payable 35,000
Total long-term liabilities 35,000
Total liabilities 42,900
Owner’s equity :
Owner’s equity (30000 – 1000 – 1400 )
27,600
Total owner’s equity 27,600
Total liabilities and owner’s equity 70,500

Solution: (c)

Pampered Pet Service

Closing Entries
No. Date Account Titles and Explanation Ref. Debit Credit
1. Aug. 31 Service revenue 4,900
Income summary 4,900
(To close revenue accounts )
2. 31 Income summary 6,300
Salaries and wages expenses 3,200
Dep. Expense 900
Utilities expense 800
 Completing the Accounting Cycle 153

Interest expense 500

Advertising expense 400
Supplies expense 300
Insurance expense 200
(To close expense accounts )
3. 31 Owner’s capital 1,400
Income summary
(To close net loss to capital account) 1,400
4. 31 Owner’s capital
Owner’s drawing 1,000
(To close drawing to capital accounts ) 1,000

Problem -2 (Ref: Accounting Principles, Kieso , Page: 153, P4-1A)

The Trial balance columns of the work sheet for Warren Roofing at March 31, 2017 are as follows

WARREN ROOFING
Worksheet
For the month ended March 31, 2017
Trial balance
Account Titles Dr. Cr.
Cash 4,500
Account receivable 3,200
Supplies 2,000
Equipment 11,000
Accumulated dep. – Equipment 1,250
Account payable 2,500
Unearned Service Revenue 550
Owner’s capital 12,900
Owner’s drawing 1,100
Service revenue 6,300
Salaries and wages expenses 1,300
Miscellaneous expenses 400
23,500 23,500
Other data:
1. A physical count reveals only $480 of roofing supplies of hand.
2. Depreciation for March is $250.
3. Unearned revenue amounted to $260 at March 31.
4. Accrued salaries are $700.
Instructions:
(a) Enter the trial balance on a worksheet and complete the worksheet.
(b) Prepare an income statement and owner’s equity statement for the month of March and
154 Accounting Principles

a classified balance sheet at March 31. Warren made an additional investment in the business
of $10000 in March.
(c) Journalize the adjusting entries from the adjustment columns of the worksheet.
(d) Journalize the closing entries from the financial statement columns of the worksheet.

Solution: (a)
Warren Roofing
Work Sheet
For the month of ended March 31, 2017
Trial balance Adjustment Adjusted T/B Income Balance sheet
statement
Account Titles Dr. Cr. Dr. Cr. Dr. Cr. Dr. Cr. Dr. Cr.
Cash 4500 4500 4500
Accounts 3200 3200 3200
Receivable
Supplies 2000 1520 480 480
Equipment 11000 11000 11000
Accumulated 1250 250 1500 1500
dep-Equip
Accounts 2500 2500 2500
payable
Unearned 550 290 260 260
service rev.
Owner’s capital 12900 12900 12900
Owner’s 1100 1100 1100
drawing
Service Rev. 6300 290 6590 6590
Salaries and 1300 700 2000 2000
wages expense
Miscellaneous 400 400 400
Expenses
Trail balance 23500 23500
total
Supplies Exp. 1520 1520 1520
Depreciation 250 250 250
expense
Salaries and 700 700 700
wages Payable
Net Income 2420 2420
Worksheet Totals 2760 2760 24450 24450 6590 6590 20280 20280

Solution: (b)
 Completing the Accounting Cycle 155

Pampered Pet Services

Income Statements
For the month ended March 31, 2017
Particulars Amount ($) Amount ($)
Operating revenues :
Service revenue 6,590
Less :Operating expenses
Salaries and wages expense 2,000
Miscellaneous expense 400
Supplies expense 1,520
Depreciation expense 250
Total expenses (4,170)
Net income 2,420
Pampered Pet Services
Owner’s Equity Statement
For the month ended March 31, 2017
Particulars Amount ($) Amount ($)
Beginning capital 12,900
Add : Additional investment 10,000
Add : Net income 2,420
25,320
Less : Owner’s drawing (1,100)
Ending capital 24,220

Pampered Pet Services

Balance Sheet
As at March 31, 2017
Particulars Amount Amount
Assets
Current Assets :
Cash (4500 + 10000) 14,500
Account receivable 3,200
Supplies 480
Total current assets 18,180
Long – term assets :
Equipment 11,000
Less : Accumulated dep. –Equipment (1,500) 9,500
Total long-term assets
27,680
Total assets
Liabilities and Owner’s Equity
Current liabilities : 2,500
Account payable
156 Accounting Principles

Unearned service revenue 260

Salaries & wages payable 700
Total current liabilities 3,460
Long -term liabilities
Total long-term liabilities
Total liabilities 3,460
Owner’s equity : 24,220
Ending capital
Total owner’s equity 24,220
Total liabilities and owner’s equity 27,680
Solution: (c)
Warren Roofing
Adjusting Entries
Date Account Title and Explanations Ref. Debit Credit
Mar. 31 Supplies Expense (2000-480) 1,520
Supplies 1,520
31 Depreciation Expense 250
Accumulated Depreciation 250
31 Unearned Service Revenue (550-260) 290
Service Revenue 290
31 Salaries and Wages Expense 700
Salaries and Wages Payable 700
Solution: (d)
Pampered Pet Services
Closing Entries
Date Accounts Titles and Explanation Ref. Debit Credit
Mar. 31 Service revenue 6,590
Income summary 6,590
(To close revenue accounts )
31 Income summary 4,170
Salaries and wages expenses 2,000
Miscellaneous expense 400
Dep. expense 1,520
Supplies expense 250
(To close expense accounts )
31 Income summary 2,420
Owner’s capital 2,420
(To close net loss to capital account)
31 Owner’s capital 1,100
Owner’s drawing 1,100
(To close drawing to capital accounts )
 Completing the Accounting Cycle 157

Problem -3 (Ref: Accounting Principles, Kieso , Page: 154, P4-2A)

The adjusted trial balance columns of the worksheet for Thao Company, owned by D. Thao are as
follows:
THAO COMPANY
Worksheet
For the year ended December 31, 2017
Account Account titles Adjusted Trial
Balance
No. Dr. Cr.

101 Cash 5,300

112 Account receivable 10,800
126 Supplies 1,500
130 Prepaid insurance 2,000
157 Equipment 27,000
158 Accumulated dep. – Equipment 5,600
200 Notes payable 15,000
201 Account payable 6,100
212 Salaries and wages payable 2,400
230 Interest payable 600
301 Owner’s capital 13,000
306 Owner’s drawing 7,000
400 Service revenue 61,000
610 Advertising expenses 8,400
631 Supplies expenses 4,000
711 Depreciation expense 5,600
722 Insurance expense 3,500
726 Salaries and wages expense 28,000
905 Interest expense 600
Total 1,03,700 1,03,700
126

Instructions:
(a) Complete the worksheet by extending the balances to the financial statement columns.
(b) Prepare an income statement, owner’s equity statement and a classified balance sheet. (Note:
$5000 of the notes payable become due in 2018) Thao did not make any additional investment in
the business during the year.
(c) Prepare the closing entries.
(d) Post the closing entries. Use the three columns from of account. Income summary is No. 350
(e) Prepare a post closing trial balance.
158 Accounting Principles

Solution: (a) Thao Company

Work sheet
For the year ended December 31, 2017
Adjusted trial balance Income statement Balance sheet
Account title Dr. Cr. Dr. Cr. Dr. Cr.
Cash 5,300 5,300
Account receivable 10,800 10,800
Supplies 1,500 1,500
Prepaid insurance 2,000 2,000
Equipment 27,000 27,000
Accumulated dep-Equip 5,600 5,600
Notes payable 15,000 15,000
Accounts payable 6,100 6,100
Salaries and wages payable 2,400 2,400
Interest payable 600 600
Owner’s capital 13,000 13,000
Owner’s drawing 7,000 7,000
Service revenue 61,000 61000
Advertising expenses 8,400 8,400
Supplies expense 4,000 4,000
Depreciation expense 5,600 5,600
Insurance expense 3,500 3,500
Salaries and wages exp. 28,000 28,000
Interest expense 600 600
Net income 10,900 10,900
Worksheet total 1,03,700 1,03,700 61,000 61,000 53,600 53,600
Solution: (b) Thao Company
Income Statement
For the year ended December 31, 2017
Particulars Amount ($) Amount ($)
Operating revenues :
Service revenue 61,000
Less :Operating expenses
Advertising expense 8,400
Salaries and wages expense 28,000
Insurance expense 3,500
Interest expense 600
Supplies expense 4,000
Depreciation expense 5,600
Total expenses (50,100)
Net income 10,900
 Completing the Accounting Cycle 159

Thao Company
Owner’s Equity Statement
For the year ended December 31, 2017
Particulars Amount ($) Amount ($)
Beginning capital 13,000
Add : Net income 10,900
23,900
Less : Owner’s drawing (7000)
Ending capital 16,900

Thao Company
Balance sheet
As at December 31, 2017
Particulars Amount ($) Amount ($)
Assets
Current Assets :
Cash 5,300
Account receivable 10,800
Supplies 1,500
Prepaid insurance 2,000
Total current assets 19,600
Long – term assets :
Equipment 27,000
Less : Accumulated dep. –Equipment (5,600)
Total long-term assets 21,400
Total assets 41,000
Liabilities and Owner’s Equity
Current liabilities :
Notes payable 5,000
Accounts payable 6,100
Interest payable 600
Salaries and wages payable 2,400
Total current liabilities 14,100
Long -term liabilities
Notes payable 10,000
Total long-term liabilities 10,000
Total liabilities 24,100
Owner’s equity :
Ending capital
16,900
Total owner’s equity 16,900
Total liabilities and owner’s equity 41,000
160 Accounting Principles

Solution: (b)
Thao Company
Closing Entries
Date Account titles and Explanation Ref. Debit ($) Credit ($)
Aug. 31 Service revenue 61,000
Income summary 61,000
(To close revenue accounts )
31 Income summary 50,100
Salaries and wages expenses 28,000
Dep. expense 5,600
Interest expense 600
Advertising expense 8,400
Supplies expense 4,000
Insurance expense 3,500
(To close expense accounts )
31 Income summary 10,900
Owner’s capital 10,900
(To close net income to capital account)
Owner’s capital
31 Owner’s drawing 7,000
(To close drawing to capital accounts ) 7,000

Solution: (e)
Thao Company
Post Closing Trial Balance
Account Titles Debit ($) Credit ($)
Cash 5,300
Account receivable 10,800
Supplies 1,500
Prepaid insurance 2,000
Equipment 27,000
Accumulated dep. – Equipment 5,600
Notes payable 15,000
Account payable 6,100
Salaries and wages payable 2,400
Interest payable 600
Ending capital 16,900
Total 46,600 46,600
 Completing the Accounting Cycle 161

Problem -4: (Ref: Accounting Principles, Kieso , Page: 154, P4-3A)

The completed financial statement columns of the worksheet for Bray Company are shown below.

Bray Company
Worksheet
For the year ended December 31, 2017
Account Income Balance Sheet
No. Statement
Accounts Title Dr. Cr. Dr. Cr.
101 Cash 8,800
112 Account receivable 10,800
130 Prepaid insurance 2,800
157 Equipment 24,000
158 Accumulated dep. – Equipment 4,200
201 Account payable 9,000
212 Salaries and wages payable 2,400
301 Owner’s capital 19,500
306 Owner’s drawing 11,000
400 Service revenue 60,000
622 Maintenance and repair expenses 1,700
711 Depreciation expense 2,800
722 Insurance expense 1,800
726 Salaries and wages expenses 30,000
732 Utilities expenses 1,400
Totals 37,700 60,000 57,400 35,100
Net income 22,300 22,300
60,000 60,000 57,400 57,400

Instructions
(a) Prepare an income statement, an owner’s equity statement and a classified balance sheet.
(b) Prepare the closing entries. L. Bray did not make any additional investments during the year.
(c) Post the closing entries and underline and balance the accounts. Use T accounts. Income
summary is account No. 350.
(d) Prepare a post closing trial balance.
162 Accounting Principles

Solution: (a) Bray Company

Income Statement
For the year ended December 31, 2017
Particulars Amount ($) Amount ($)
Operating revenues :
Service revenue 60,000
Less :Operating expenses
Maintenance and repair expense 1,700
Depreciation expense 2,800
Insurance expense 1,800
Salaries and wages expense 30,000
Utilities expense 1,400

Total expenses (37,700)

Net income 22,300
Bray Company
Owner’s Equity Statement
As at December 31, 2017
Particulars Amount ($) Amount ($)
Beginning capital 19500
Add : Net income 22300
41800
Less : Owner’s drawing (11000)
Ending capital 30,800
Bray Company
Balance sheet
As at December 31, 2017
Particulars Amount Amount
Assets
Current Assets :
Cash 8,800
Account receivable 10,800
Prepaid insurance 2,800
Total current assets 22,400
Long – term assets :
Equipment 24,000
Less : Accumulated dep. –Equipment (42,00)

Total long-term assets 19,800

Total assets 42,200
Liabilities and owner’s equity
 Completing the Accounting Cycle 163

Current liabilities :
Account payable 9,000
Salaries and wages payable 2,400
Total current liabilities 11,400
Long -term liabilities ----
Total long-term liabilities 11,400
Total liabilities
Owner’s equity :
Ending capital 30,800 30,800
Total owner’s equity 42,200
Total liabilities and owner’s equity
(b) Bray Company
Closing Entries
Date Accounts Titles and Explanation Ref. Debit Credit
Dec. 31 Service revenue 60,000
Income summary 60,000
(To close revenue accounts )
31 Income summary 37,700
Salaries and wages expenses 30,000
Maintenance and repairs expense 1,700
Dep. Expense 2,800
Utilities expense 1,400
Insurance expense 1,800
(To close expense accounts )
Owner’s capital 22,300
31 Income summary 22,300
(To close net loss to capital account)
Owner’s capital 11,000
31 Owner’s drawing
(To close drawing to capital accounts ) 11,000
d) Bray Company
Post Closing Trail Balance
December 31, 2017
Accounts Titles Debit Credit
Cash 8,800
Account receivable 10,800
Prepaid insurance 2,800
Equipment 24,000
Accumulated dep. – Equipment 4,200
Account payable 9,000
Salaries and wages payable 2,400
Ending capital 30,800
164 Accounting Principles

Problem -5: (Ref: Accounting Principles, Kieso , Page: 155, P4-4A)

Vang management services began business on January 1, 2017 with a capital investment of $120000.
The company manages condominiums of owner (Service Revenue) and rent space in its own office
building (Rent Revenue). The trial balance and adjusted trial balance columns of the worksheet at the
end of the first year as follows:
Total 46,400 46,400
Vang Management Service
Worksheet
For the year ended December 31, 2017
Trial Balance Adjusted Trial Balance
Account titles Dr. Cr. Dr. Cr.
Cash 13,800 13,800
Account receivable 28,300 28,300
Prepaid insurance 3,600 2,400
Land 67,000 67,000
Building 1,27,000 1,27,000
Equipment 59,000 59,000
Account payable 12,500 12,500
Unearned rent revenue 6,000 1,500
Mortgage payable 1,20,000 1,20,000
Owner’s capital 1,44,000 1,44,000
Owner’s drawing 22000 22,000
Service revenue 90,700 90,700
Rent revenue 29,000 33,500
Salaries and wages expenses 42,000 42,000
Advertising expense 20,500 20,500
Utilities expenses 19,000 19,000
Totals 4,02,200 4,02,200
Insurance expense 1,200
Depreciation expense 6,600
Accumulated Dep.-Building 3,000
Accumulated Dep.-Equipment 3,600
Interest expense 10,000
Interest payable 10000
Total 4,18,800 4,18,800
Instructions:
(a) Prepare a complete worksheet
(b) Prepare a classified balance sheet. (Note: $ 30,000 of the mortgage of notes payable is due for
payment next year)
(c) Journalize the adjusting entries.
(d) Journalize the closing entries.
(e) Prepare a post-closing trial balance
 Completing the Accounting Cycle 165

Solution (c)
Vang Management Services
Adjusting Entries
Date Account title and Explanation Ref. Debit Credit
($) ($)
Dec. 31 Insurance Expense(3600 – 2400) 1,200
Prepaid Insurance 1,200
31 Unearned Rent Revenue(6000 – 1500) 4,500
Rent Revenue 4,500
31 Depreciation Expenses 6,600
Accumulated Depreciation-Building 3,000
Accumulated Depreciation-Equip. 3,600
31 Interest Expenses 10,000
Interest Payable 10,000
(a)
Vang Management Services
Work sheet
For the year ended December 31, 2017
Adjusted Income Statement Balance Sheet
Trial Balance
Account Titles Dr. Cr. Dr. Cr. Dr. Cr.
Cash 13,800 13,800
Account receivable 28,300 28,300
Prepaid insurance 2,400 2,400
Land 67,000 67,000
Building 1,27,000 1,27,000
Equipment 59,000 59,000
Accounts payable 12,500 12,500
Unearned rent revenue 1,500 1,500
Mortgage payable 1,20,000 1,20,000
Owner’s capital 1,44,000 1,44,000
Owner’s drawing 22,000 22000
Service revenue 90,700 90,700
Rent revenue 33,500 33,500
Salaries and wages 42,000 42,000
expense
Advertising expenses 20,500 20,500
Utilities expense 19,000 19,000
Insurance expense 1,200 1,200
Depreciation expense 6,600 6,600
166 Accounting Principles

Accumulated Dep.- 3,000 3,000

Building
Accumulated Dep.- 3,600 3,600
Equipment
Interest expense 10,000 10,000
Interest payable 10,000 10,000
Net income 24,900 24,900
Work sheet totals 4,18,800 4,18,800 1,24,200 1,24200 319500 319500

(b)
Vang Management Services
Balance Sheet
December 31, 2017
Accounts Title Amount Amount
Assets
Current Assets :
Cash 13,800
Account receivable 28,300
Prepaid insurance 2,400
Total current assets 44,500
Long – term assets : 67,000
Land
Building 1,270
Less: Accumulated Dep.- Building (3000) 1,24,000
Equipment 59,000
Less : Accumulated Dep. –Equipment (3,600) 55,400
Total long-term assets 2,46,400
Total assets 2,90,900
Liabilities and Owner’s Equity
Current liabilities : 12,500
Account payable 1,500
Unearned rent revenue 30,000
Mortgage payable 10,000
Interest payable 54,000
Total current liabilities
Long -term liabilities 90,000
Mortgage payable (1,20,000 – 30,000) 90,000
Total long-term liabilities 1,44,000
Total liabilities
Owner’s equity :
1,46,900
Owner’s equity(1,44,000-22,000+24,900)
Total owner’s equity 1,46,900
Total liabilities and owner’s equity 2,90,900
 Completing the Accounting Cycle 167

(d)
Vang Management Services
Closing Entries
Date Accounts title and Explanation Ref. Debit Credit
Dec. 31 Service revenue 90,700
Rent revenue 33,500
Income summary 1,24,200
31 (To close revenue accounts )
Income summary 99,300
Salaries and wages expenses 42,000
Advertising expense 20,500
Dep. expense 6,600
Utilities expense 19,000
Insurance expense 1,200
Interest expense 10,000
(To close expense accounts )
31 Income summary 24,900
Owner’s capital 24,900
(To close net loss to capital account)
31 Owner’s capital 22,000
Owner’s drawing 22,000
(To close drawing to capital accounts )
(e)
Vang Management Services
Post-Closing Trial Balance
Account Titles Dr. Cr.
Cash 13,800
Account receivable 28,300
Prepaid insurance 2,400
Land 67,000
Building 1,27,000
Equipment 59,000
Account payable 12,500
Unearned rent revenue 1,500
Mortgage payable 1,20,000
Ending capital 1,46,900
Accumulated dep. – Equipment 3,000
Accumulated dep –building 3,600
Interest payable 10,000
Total 2,97,500 2,97,500
168 Accounting Principles

Problem -6 (Ref: Accounting Principles, Kieso , Page: 157, P4-A)

Casey Hartwig CPA, was retained by Global Cable to prepare financial statement for April 2017.
Hartwig accumulated all the ledger balances per Global record and found the following.

Global Cable
Trial Balance April 30, 2017
Accounts Titles Debit Credit
Cash 4,100
Account receivable 3,200
Supplies 800
Equipment 10,600
Accumulated dep.-Equip 1,350
Accounts payable 2,100
Salaries and wages payable 700
Unearned service revenue 890
Owner’s capital 12,900
Service revenue 5,450
Salaries and wages expense 3,300
Advertising expense 600
Miscellaneous expense 290
Depreciation expense 500
23,390 23,390

Global Cable reviewed the record and found the following errors.
1. Cash received from a customer on account was recorded $950 instead of $590.
2. A payment of $75 for advertising expense was entered as a debit to miscellaneous expense
$75 and a credit to cash $75.
3. The first salary payment this month was for $1900, which included $700 of salaries payable
on March31. The payment was recorded as a debit to salaries and wages expense $1900 and a
credit to cash $1900. (No reversing entries were made on April 1).
4. The purchase on account of a printer costing $310 was recorded as a debit to supplies and a
credit to Accounts payable for $310.
5. A cash payment of repair expense on equipment for $96 was recorded as a debit to equipment
$69 and a credit to cash $69.
Instructions:
(a) Prepare an analysis of each error showing (1) the incorrect entry, (2) the correct entry, and (3)
the correcting entry. Items 4 and 5 occurred on April 30, 2017.
(b) Prepare a correct trial balance.
 Completing the Accounting Cycle 169

Solution: a)
Global Cable
Correcting Entries
For the month, 2017
Sl. No. Account Title and Explanations Ref. Debit Credit
1 Accounts receivable 360
Cash 360
2 Advertising expenses 75
Miscellaneous expense 75
3 Salaries and wages payable 700
Salaries and wages expenses 700
4 Equipment 310
Supplies 310
5 Repair expenses 96
Equipment 69
Cash 27

Global cable
Trial balance
April 30, 2017
Account titles Ref. Debit Credit
($) ($).
Cash (4100 – 360 – 27) 3,713
Account receivable (3200 + 360) 3,560
Supplies (800 – 310) 490
Equipment (10600 + 310 – 69) 10,841
Account payable 2,100
Accumulated depreciation 1,350
Salaries and wages payable (700 – 700) 0
Owner’s capital 12,900
Unearned service revenue 890
Service revenue 5,450
Miscellaneous expense (290 – 75) 215
Depreciation expense 500
Advertising expense (600 + 75) 675
Salaries and wages expense (3300 – 700) 2,600
Repair expense 96
Total 22,690 22,690
170 Accounting Principles

Problem -7 (Ref: NU BBA Professional-2004)

The following information available with a trial balance of Panna Fashion House:

Panna Fashion House

Trial balance
December 31, 2017
Accounts Titles Debit (Taka) Credit (Taka)
Cash 20,000
Account receivable 60,000
Merchandise inventory 2,50,000
Supplies 70,000
Prepaid insurance 22,000
Buildings 80,000
Equipment 78,000
Accumulated dep.-Equipment 8,000
Accounts payable 47,500
Panna’s capital 5,00,000
Panna’s drawing 30,000
Sales 2,90,000
Sales return and allowance 15,000
Purchase 1,45,000
Purchase discount 14,500
Salaries expense 33,000
Repair expense 9,000
Gas and oil expense 16,000
Miscellaneous expense 20,000
Freight in 12,000
8,60,000 8,60,000

Adjustment information:
(i) By a physical investigation it is found that supplies were Tk.30,000 at the end of
the period.
(ii) Merchandise inventory was Tk. 2,40,000 at the end of the period
(iii) Panna withdraw merchandise of Tk. 15,500 for personal use.
(iv) Expired insurance during the year Tk. 10,000.
(v) Unpaid salaries were Tk. 5,000.
Required: Prepare a ten column worksheet.

Solution: Working
 Completing the Accounting Cycle 171

Panna Fashion House

Adjusting Entries
No. Date Account Title and Explanations Ref. Debit Credit
1. Dec. Supplies expense (70,000 – 30,000) 40,000
31 Supplies 40,000
2. 31 Cost of goods sold (2,50,000 – 2,40,000) 10,000
Merchandise inventory 10,000
3. 31 Drawing 15,500
Merchandise inventory 15,500
4. 31 Insurance expense 10,000
Prepaid insurance 10,000
5. 31 Depreciation expense 7,000
Accumulated depreciation 7,000
6. 31 Salaries Expense 5,000
Salaries Payable 5,000

Panna Fashion House

Worksheet
For the year ended December 31, 2017
Trial balance Adjustment Adjusted T/B Income Statement Balance Sheet

Account Title Dr. Cr. Dr. Cr. Dr. Cr. Dr. Cr. Dr. Cr.
Cash 20000 20000 20000
Accounts 60000 60000 60000
Receivable
Merchandise 250000 25500 224500 245000
inventory
Supplies 70000 40000 30000 30000
Prepaid 22000 10000 12000 12000
insurance
Building 80000 80000 80000
Equipment 78000 78000 78000
Accumulated 8000 7000 15000 15000
dep.-equip
Accounts 47500 47500 47500
payable
Panna’s capital 500000 500000 500000
Panna’s 30000 15500 45500 45500
drawing
Sales 290000 290000 290000
Sales return 15000 15000 15000
and allowance
Purchase 145500 145000 14500
Purchase 14500 14500 14500
discount
Salaries 33000 5000 38000 38000
172 Accounting Principles

expense
Repair expense 9000 9000 9000
Gas and oil 16000 16000 16000
expense
Miscellaneous 20000 20000 20000
expense
Freight in 12000 12000 12000
Trial balance 860000 860000
total
Supplies exp. 40000 40000 40000
Cost of goods 10000 10000 10000
sold
Insurance exp. 10000 10000 10000
Depreciation 7000 7000 7000
expense
Salaries 5000 5000 5000
payable
Net loss 17500 17500
Work sheet 87500 87500 872000 872000 322000 322000 567500 567500
Total

Problem -9: (Ref: NU BBA Professional-2005)

ABC Electric Contracting Company has the following trial balance as of August 31, 2005
ABC Electronic Contracting Company
Trial Balance
August 31, 2017
Debit Credit
Cash 10,800
Account receivable 5,600
Prepaid Insurance 4,800
Store Supplies 2,600
Equipment 1,20,000
Accounts payable 4,800
Note payable 70,000
Capital 60,000
Drawing 2,000
Service revenue 19,800
Salaries expense 6,400
Utilities expense 1,600
Advertising expenses 800
1,54,600 1,54,600
Other data:
(i) Insurance expires at the rate of Tk. 400
(ii) There are Tk. 2000 supplies on hand at August 31.
(iii) Monthly depreciation on the equipment Tk. 1800.
(iv) Interest of Tk. 1000 on the notes payable has accrued during August.
 Completing the Accounting Cycle 173

(v) Salaries accrued but not paid Tk. 600.

Required: Enter the trial balance on work sheet and complete the worksheet.
Solution:
ABC Electronic Contracting Company
Adjusting Entries
Date Account Titles and Explanations Ref. Debit Credit
Aug. Insurance expense 400
31 Prepaid insurance 400
31 Store Supplies Expense 600
Store Supplies 600
31 Depreciation Expense 1800
Accumulated Depreciation 1800
31 Interest expense 1000
Interest payable 1000
31 Salaries Expense 600
Salaries Payable 600
ABC Electronic Contracting Company
Work sheet
For the month ended August 31, 2017
Trial balance Adjustment Adjusted T/B Income Balance Sheet
Statement
Account Titles Dr. Cr. Dr. Cr. Dr. Cr. Dr. Cr. Dr. Cr.
Cash 10800 10800 10800
Account 5600 5600 5600
receivable
Prepaid insurance 4800 400 4400 4400
Store Supplies 2600 600 2000 2000
Equipment 120000 120000 120000
Accounts payable 4800 4800 4800
Notes payable 70000 70000 70000
Capital 60000 60000 60000
Drawing 2000 2000 2000
Service revenue 19800 19800 19800
Salaries expense 6400 600 7000 7000
Utilities expense 1600 1600 1600
Advertising 800 800 800
expense
Trail balance total 154600 154600
Insurance 400 400 400
expense
Store Supplies 600 600 600
exp.
Depreciation 1800 1800 1800
expense
Accumulated 1800 1800 1800
174 Accounting Principles

dep.-equip.
Interest expense 1000 1000 1000
Interest payable 1000 1000 1000
Salaries payable 600 600 600
Net income 6600 6600
Work sheet totals 4400 4400 158000 158000 19800 19800 144800 144800

Problem -10: (Ref: NU BBA Professional-2005)

Radison company started his own consulting firm. Radison Company. On June 1, 2005. The Trial
balance at June 30 is as follows:-

Radison Company
Trial Balance
June 30, 2005
Accounts Title Debit Credit
(Taka) (Taka)
Cash 7,150
Accounts receivable 6,000
Prepaid insurance 3,000
Supplies 2,000
Office equipment 15,000
Accounts payable 4,500
Unearned service revenue 4,000
Radison, capital 21,750
Service revenue 7,900
Salaries expenses 4,000
Rent expenses 1,000
38,150 38, 150

Other data:-
1. Supplies on hand at June 30, are Tk. 1, 100
2. A utility bill for Tk. 300 has not been recorded and will not be paid until next month.
3. The insurance policy is for a year.
4. Tk. 2,500 of unearned service revenue has been earned at the end of the month
5. Salaries of Tk. 1, 500 are accrued.
6. The office equipment has a 5 years life no salvage value. It is being depreciation at Tk. 250
per month for 60months
7. Invoices responding Tk. 2, 000 of services performed during the month have not been
recorded as of June 30.
Required:-
a. Prepared the adjusting entries for the month of June.
b. Prepared an adjusted trial balance at June 30,2005

Solution:
 Completing the Accounting Cycle 175

Radison Company
Adjusting Entries
June 30th,2005
Date Explanation Ref. Debit Credit
2005 Supplies exp. (2000-1100) 900
June 30 Supplies 900
(To record supplies expense)
30 Utilities exp. 300
Utilities payable 300
(To record utilities expense)
30 Insurance exp. (3000/12) 250
Prepaid insurance 250
(To record unearned service revenue earned) 2,500
30 Unearned Service Revenue
Service Revenue 2,500
(To record unearned service revenue earned) 1,500
30 Salaries exp.
Salaries payable 1,500
(To record unpaid salaries expense) 250
30 Depreciation Exp.-Office Equipment
Accumulated dep.-office equipment 250
(To record depreciation exp. On office equipment) 2,000
30 Accounts Receivable
Service revenue 2,000
(To record service revenue on account)

Radison Company
Adjusted Trial Balance
June 30, 2005
Serial Accounts Title Ref Debit Credit
No. (Tk.) (Tk.)
1 Cash 7,150
2 Accounts Receivable 8,000
3 Prepaid insurance 2,750
4 Supplies (2000-900) 1,100
5 Office Equipment 15,000
6 Accumulated dep.-off. equipment 250
7 Accounts payable 4,500
8 Utilities payable 300
9 Salaries payable 1,500
10 Unearned service revenue (4000-2500) 1,500
11 Radison`s Capital 21,750
12 Service revenue (7900+2500) 12,400
176 Accounting Principles

13 Salaries exp. (4000+1500) 5,500

14 Rent expenses 1,000
15 Depreciation expenses -office Equipment 250
16 Insurance expenses 250
17 Utilities expenses 300
18 Supplies expenses 900
Total 42,200 42,200

Ans: Adjusted Trial Balance Total 42,200.

Problem -11 (Ref: NU BBA Professional-2006)

The following trial balance and additional data are for Shohag Paribahan Pvt. Ltd.

Shohag Paribahan Pvt. Ltd.

Trial balance
December 31, 2017
Accounts Title Debit (Taka) Credit (Taka)
Land 1,00,000
Building 1,60,000
Accumulated dep.- Building 40,000
Office equipment 80,000
Accumulated dep.-office equipment 16,000
Cash 1,10,000
Account receivable 1,50,000
Insurance expense 6,000
Prepaid advertising 20,000
Notes receivable 14,000
Salaries expense 1,26,000
Traveling expense 1,10,000
Interest income 1,000
Interest expense 3,000
Account payable 60,000
Notes payable 75,000
Capital 3,37,000
Service revenue 3,55,000
Supplies 5,000
8,84,000 8,84,000

Additional data:
i. A supply on hand at the end of accounting period is Tk. 3,000.
ii. Interest expense paid in advance is Tk.1,000.
iii. Accrued interest income is Tk. 2,000.
 Completing the Accounting Cycle 177

iv. Insurance expense paid for 15 months starting from January 01, 2006.
v. Expired prepaid advertising is Tk.18,000.
vi. The building has an expected life of 40 years with no salvage value.
vii. The office equipment has an expected life of 10 years with no salvage value.
You are required to prepare a 10-column work sheet for the year ended December 31, 2006.

Solution:
Shohag Paribahan Pvt. Ltd
Adjusting Entries
Date Account Titles and Explanation Ref. Debit Credit
(Taka ) (Taka)
Aug. Supplies expense (5000-3000) 3,000
31 Supplies 3,000
(To record supplies expense)
31 Prepaid interest 1,500
Interest expense 1,500
(To record prepaid interest)
31 Interest receivable 1,800
Interest income 1,800
(To record accrued interest income)
31 Prepaid insurance 1,400
Insurance expense 1,400
(To record prepaid insurance)
31 Advertising expense 16,000
Prepaid advertising 16,000
(To record prepaid advertising expired
31 Depreciation expense- Building (160000/40) 5,000
Accumulated depreciation – Building 5,000
(To record depreciation expense)
31 Depreciation expense- Equipment (800000/10) 9,000
Accumulated depreciation – Equipment 9,000
(To record depreciation expense)

Shohag Paribahan Pvt. Ltd

Worksheet
For the Year Ended December 31, 2006
Trial balance Adjustment Adjusted T/B Income statement Balance sheet

Account Titles Dr. Cr. Dr. Cr. Dr. Cr. Dr. Cr. Dr. Cr.
Land 100000 100000 100000
Building 160000 160000 160000
Accumulated 40000 4000 44000 44000
178 Accounting Principles

dep.- Building
Office 80000 80000 24000 80000
equipment
Accumulated 16000 8000 24000
dep.-Office
equip.
Cash 110000 110000 110000
Accounts 150000 150000 150000
receivable
Insurance 6000 1200 4800 4800
expense
Prepaid 20000 18000 2000 2000
advertising
Notes receivable 14000 14000 14000
Salaries expense 126000 126000 126000
Traveling 110000 110000 110000
expense
Interest income 1000 2000 3000 3000
Interest expense 3000 1000 2000 2000
Accounts 60000 60000 60000
payable
Notes payable 75000 75000 75000
Capital 337000 337000 337000
Service revenue 355000 355000 355000
Supplies 5000 2000 3000 3000
Trial balance 884000 884000
total
Supplies 2000 2000 2000
Expense
Prepaid Interest 1000 1000 1000
Interest 2000 2000 2000
receivable
Prepaid 1200 1200 1200
Insurance
Advertising 18000 18000 18000
expense
Dep exp- 4000 4000 4000
Building
Dep exp- Off 8000 8000 8000
Equipment
Net Income 83200 83200
Worksheet Total 36200 36200 898000 898000 358000 358000 623200 623200
 Completing the Accounting Cycle 179

Problem -12 (Ref: NU BBA Professional-2007)

The following particulars are extracted from the books of Diamond traders relating to the year ended
December 31, 2006.
Diamond Traders
Accounts Title Debit (Tk.) Credit (Tk.)
Cash 22,500
Prepaid advertising 8,000
Prepaid rent 12,000
Land 50,000
Building 60,000
Accumulated dep.- Building 12,000
Equipment 12,000
Accumulated dep.- equipment 2,000
Notes payable 20,000
Accounts payable 13,000
Capital 80,000
Drawings 10,000
Service revenue 73,000
Salaries expense 20,000
Prepaid insurance 2,000
Office Supplies 1,000
Electricity expense 500
Office expense 1,500
Interest expense on notes payable 500
2,00,000 2,00,000
Adjustments:
i. 30 months note payable issued at the rate of interest 7.5% per year.
ii. Accrued office expenses Tk. 800.
iii. Prepaid insurance has been expired at Tk.100 per month.
iv. Unearned service revenue tk. 2,000 include in service revenue.
v. Prepaid rent paid on January 1, 2006 for 24 month period.
vi. Prepaid advertising paid on March 31, 2006 for 12 months period.
vii. Depreciation on equipment Tk. 1000 and on building Tk.5000.
Required: Prepare a 10-column work sheet.
Solution: Working Diamond Traders
Adjusting Entries
For the year ended December 31, 2006
No. Date Account Title and Explanations Ref. Debit Credit
1. Dec. Interest expense 1,500
31 Interest payable 1,500
180 Accounting Principles

2. 31 Office expense 800

Accounts payable 800
3. 31 Insurance expense 1,200
Prepaid insurance 1,200
4. 31 Service revenues 2,000
Unearned service revenue 2,000
5. 31 Rent expenses 6,000
Prepaid rent 6,000
6. 31 Advertising expenses 6,000
Prepaid advertising 6,000
7. 31 Depreciation expense-equipment 1,000
Depreciation expense-building 5,000
Accumulated depreciation-Equipment 1,000
Accumulated depreciation-Building 5,000
Solution:
Diamond Traders
Worksheet
For the year ended December 31, 2006
Trial Balance Adjustment Adjusted Income Balance Sheet
Trail Balance Statement
Account title Dr. Cr. Dr. Cr. Dr. Cr. Dr. Cr. Dr. Cr.
Cash 22500 22500 22500
Prepaid 8000 6000 2000 2000
advertising
Prepaid rent 12000 6000 6000 6000
Land 50000 50000 50000
Building 60000 60000 60000
Accumulated dep.- 12000 5000 17000 17000
building
Equipment 12000 12000 12000
Accumulated dep.- 2000 1000 3000 3000
equip.
Notes payable 20000 20000 20000
Accounts payable 13000 800 13800 13800
Capital 80000 80000 80000
Drawing 10000 10000 10000
Service revenue 73000 2000 71000 71000
Salaries expense 20000 20000 20000
Prepaid insurance 2000 1200 800 800
Office supplies 1000 1000 1000
Electricity expense 500 500 500
Office expense 1500 800 2300 2300
Interest expense 500 1500 2000 2000
on N/P
Trail balance total 200000 200000
Insurance payable 1500 1500
Insurance expense 1200 1200 1200
Unearned service 2000 2000 2000
revenue
 Completing the Accounting Cycle 181

Rent expenses 6000 6000 6000

Advertising 6000 6000 6000
expense
Depreciation 1000 1000 1000
expense-
equipment
Depreciation 5000 5000 5000
expense-building
Net income 27000 27000
Work sheet totals 23500 23500 208300 208300 71000 71000 164300 164300

Problem -13: (Ref: NU BBA Professional-2008)

by considering the following unadjusted trial balance and adjustments, prepare a 10- column
worksheet for Singer Bangladesh ltd.
Singer Bangladesh Limited
Unadjusted Trail balance
December 31, 2007
Debit Credit
(Taka) (Taka)
Cash 40,000
Office Supplies 8,900
Prepaid rent 6,200
Building 2,50,000
Accumulated dep.- Building 25,250
Accounts payable 5,800
Long- term notes payable 24,000
Owner’s Capital 1,96,650
Drawings of owner 30,000
Sales revenue 1,56,000
Wages expense 45,860
Rent expense 2,640
Insurance expense 13,200
Property tax expense 4,600
Utilities expense 11,800
Salaries expense 32,000
Other revenues 40,000
Account receivable 5,500
Unearned revenue 13,000
Advertising expense 10,000
4,60,700 4,60,700
182 Accounting Principles

Adjustment:
(i) An inventory count shows Tk.4,500 of office supplies on hand at the end of the year.
(ii) Rent expenses for the year were Tk.5,000.
(iii) Estimated depreciation on building for the year was Tk..10,000.
(iv) Accrued wages for the year was tk. 8000.
(v) Uncollected and unbilled service revenue for the year was Tk. 20,000.
(vi) The interest at 12% on long-term notes payable was due for 7 months.
Solution:
Singer Bangladesh ltd.
Adjusting Entries
Date Account Title and Explanations Ref. Debit Credit
(Taka) (Taka)
Dec. Office supplies expense (8900-4500) 4,400
31 Office supplies 4,400
31 Rent expenses (5000-2640) 2,360
Prepaid rent 2,360
31 Depreciation expense-building 10,000
Accumulated depreciation-building 10,000
31 Wages expense 8,000
Wages payable 8,000
31 Account receivable 20,000
Service revenue 20,000
31 Interest expense (2400x12%x7/12) 1,680
Interest payable 1,680

Singer Bangladesh ltd.

Work sheet
For the year ended December 31, 2017
Trial balance Adjustment Adjusted T/B Income statement Balance sheet

Account title Dr. Cr. Dr. Cr. Dr. Cr. Dr. Cr. Dr. Cr.
Cash 40000 40000 40000
Office supplies 8900 4400 4500 4500
Prepaid rent 6200 2360 3840 3840
Building 250000 250000 250000
Accumulated 25250 10000 35250 35250
dep.-building
Accounts payable 5800 5800 5800
Long-term Notes 24000 24000 24000
payable
Owner’s Capital 196650 196650 196650
Drawings of 30000 30000 30000
owner
Sales revenue 156000 156000 156000
Wages expenses 45860 8000 53860 53860
Rent expenses 2640 2360 5000 5000
 Completing the Accounting Cycle 183

Insurance 13200 13200 13200

expense
Property tax 4600 4600 4600
expense
Utilities expenses 11800 11800 11800
Salaries expenses 32000 32000 32000
Other revenues 40000 40000 40000
Account 5500 20000 25500 25500
receivable
Unearned 13000 13000 13000
revenue
Advertising 10000 10000 10000
expense
Trail balance total 460700 460700
Office supplies 4400 4400 4400
expense
Depreciation 10000 10000 10000
exp.-Building
Wages payable 8000 8000 8000
Service revenue 20000 20000 20000
Interest expense 1680 1680 1680
Interest payable 1680 1680 1680
Net income 69460 69460
Work sheet totals 36200 36200 500380 500380 216000 216000 353840 353840

Problem -14 (Ref: NU BBA Professional-2009)

Mr. Sanaf started his own consulting firm, Sanaf consulting on May1, 2008. The trial balance at may
31, 2008 is as follows:
Sanaf Consulting
Trial balance
May31, 2008
Accounts Title Debit (Taka) Credit (Taka)
Cash 6500
Account receivable 4000
Prepaid insurance 3600
Supplies 1500
Office furniture 12000
Accounts payable 3500
Unearned service revenue 3000
Sanaf’s Capital 19100
Service revenue 6000
Salaries expense 3000
Rent expense 1000
31600 31600

In addition to those accounts listed on the trial balance, the chart of accounts for Sanaf Consulting
184 Accounting Principles

also contains the following accounts: Accumulated depreciation-Office furniture, Travel expense
payable, Salaries payable, Depreciation expense-Office furniture, Insurance expense, Travel expense
and Supplies expense.

Other Information:
(i) Tk.700 of supplies has been used during the month.
(ii) The office furniture has a 10-year life with no salvage value.
(iii) Travel expense incurred but not paid on May 31, 2008, Tk.300.
(iv) The insurance policy is for 2 years.
(v) Tk. 500 of the balance of unearned service revenue account remains unearned at the end of
the month.
(vi) May 31 is Tuesday, employees are paid on Friday. Sanaf Consulting has 3 employees, who
are paid Tk. 250 for a 5-day workweek.
(vii) Invoice representing Tk.1,500 of services provided during the month have not been recorded
as at May 31,2008.
Required: Prepare a 10-column worksheet.

Solution: Working
Sanaf Consulting
Adjusting Entries
No. Date Account Titles and Explanation Ref. Debit Credit
(Taka) (Taka)
1. May. 31 Supplies expense 700
Supplies 700
2. 31 Depreciation expense-office furniture 100
Accumulated depreciation-office furniture 100
3. 31 Travel expense 300
Travel expense payable 300
4. 31 Insurance expense 150
Prepaid insurance 150
5. 31 Unearned service revenue 2500
Service revenue 2500
6. 31 Salaries expense 300
Salaries payable 300
7. 31 Account receivable 1500
Service revenue 1500
 Completing the Accounting Cycle 185

Sanaf Consulting
Worksheet
For the month ended May 31, 2008
Trial balance Adjustment Adjusted Income Balance Sheet
Trail Balance Statement
Account Titles Dr. Cr. Dr. Cr. Dr. Cr. Dr. Cr. Dr. Cr.
Cash 6500 6500 6500
Account receivable 4000 1500 5500 5500
Prepaid Insurance 3600 150 3450 3450
Supplies 1500 700 800 800
Office furniture 12000 12000 12000
Accounts payable 3500 3500 3500
Unearned service 3000 2500 500 500
revenue
Sanaf’s Capital 19100 19100 19100
Service revenue 6000 4000 10000 10000 30000
Salaries expenses 3000 300 3300 3300
Rent expenses 1000 1000 1000
Trail balance total 31600 31600
Supplies expense 700 700 700
Depreciation exp. 100 100 100
Accumulate dep.- 100 100 100
Office Furniture
Travel expense 300 300 300
Travel expense payable 300 300 300
Insurance expense 150 150 150
Salaries payable 300 300 300
Net income 4450 4450
Work sheet totals 5550 5550 33800 33800 10000 10000 28250 28250

Problem -15: (Ref: NU BBA Professional-2012)

The unadjusted trial balance of Methi Services were as follows:
Methi Services
Trial balance
31 December, 2017
Account Title Debit Credit
(Taka) (Taka)
Cash 43,350
Notes receivable 51,700
Supplies 2,800
Prepaid insurance 8,950
Equipment 1,37,050
Accumulated dep.-equipment 7,400
Building 2,69,500
Accumulated dep.-building 1,72,800
Land 93,500
186 Accounting Principles

Accounts payable 73,650

Unearned service revenue 44,000
Notes payable 93,500
Methi’s Capital 1,71,450
Drawing 19,000
Service revenue 84,850
Salaries expense 10,850
Utilities expense 5,650
Advertising expense 5,300
647650 647650

Adjusting data:
1. Unearned services revenue has been earned Tk.22000.
2. Accrued interest revenue tk.850.
3. Supplies on hand Tk. 2050.
4. Accrued salary Tk. 3000.
5. Insurance expired Tk. 1950.
6. Depreciation expense: equipment tk. 2400, building Tk. 2300.
7. Accrued interest Tk. 100.
8. Accrued advertising expenses Tk. 300.
Required: Prepare a 10-column worksheet.
Solution:
Working
Methi Services
Adjusting Entries
Date Account Title and Explanations Ref. Debit Credit
(Taka) (Taka)
Dec. Unearned service revenue 22,000
31 Service revenue 22,000
(To record service revenue)
31 Interest receivable 850
Interest revenue 850
(To record interest revenue)
31 Supplies expense (2800-2050) 750
Supplies 750
(To record supplies expense)
31 Salaries expense 3,000
Salaries payable 3,000
(To record accrued salaries expense)
31 Insurance expense 1950
Prepaid insurance 1950
(To record Prepaid Insurance expired)
Depreciation exp.-Equipment 2400
Depreciation exp. –Building 2300
 Completing the Accounting Cycle 187

Allowance for depreciation –Equipment 2400

Allowance for depreciation – Building 2300
(To record dep. Exp. on equipment and building)
31 Interest expense 1100
Interest payable 1100
(To record accrued Interest Expense)
31 Advertising expense 300
Accounts payable 300
(To record accrued advertising Expense)

Methi Services
Worksheet
For the year ended December 31, 2011
Trial Balance Adjustment Adjusted T/B Income Statement Balance Sheet

Account title Dr. Cr. Dr. Cr. Dr. Cr. Dr. Cr. Dr. Cr.
Cash 43350 43500 43500
Notes receivable 51700 51700 51700
Supplies 2800 750 2050 2050
Prepaid 8950 1950 7000 7000
insurance
Equipment 137050 137050 137050
Accumulated 7400 2400 9800 9800
dep.-equipment
Building 269500 269500 269500
Accumulated 172800 2300 175100 175100
dep.-building
Land 93500 93500
Accounts 73650 300 73950 73950
payable
Unearned 44000 22000 22000 22000
service revenue
Notes payable 93500 93500 93500
Methi’s capital 171450 171450 171450
Drawing 19000 19000 19000
Service revenue 84850 22000 106850 106850
Salaries expense 10850 3000 13850 13850
Utilities expense 5650 5650 5650
Advertising 5300 300 5600 5600
expense
Total trial 647650 647650
balance
Interest 850 850 850
receivable
Interest revenue 850 850 850
Supplies 750 750 750
expenses
Salaries payable 3000 3000 3000
188 Accounting Principles

Insurance 1950 1950 1950

expense
Dep. exp.- 2400 2400 2400
equipment
Dep. exp.- 2300 2300 2300
building
Interest expense 1100 1100 1100
Interest payable 1100 1100 1100
Net income 74100 74100
Work sheet 34650 34650 657600 657600 107700 107700 624000 624000
totals

Problem -16: (Ref: NU BBA Professional-2015)

The adjusted trial balance for Newton service agency for the year ended December, 2014 are given
below:

Newton Service Agency

Trial balance
December 31, 2014
Debit (Taka) Credit (Taka)
Cash 11,250
Account receivable 14,320
Prepaid insurance 2,400
Supplies 1,200
Furniture 6,000
Accumulated depreciation-Furniture 750
Building 50,000
Accumulated depreciation-Building 12,000
Land 3,500
Accounts payable 4,500
Unearned service revenue 6,000
Newton’s Capital 83,370
Newton’s drawings 25,000
Service revenue 60,000
Salaries expense 20,000
Utilities expense 15,000
Suspense account 17,950
1,66,620 1,66,620

Adjustment:
1. Unearned service revenue has been earned Tk.2400.
2. Accrued service revenue Tk. 1200.
3. Supplies used Tk. 500.
 Completing the Accounting Cycle 189

4. Accrued salary Tk. 1200.

5. Insurance expense Tk.1500.
6. Depreciation expense: Furniture Tk. 750, Building Tk. 1200.
Required: Prepare a 10-cloumn worksheet.
Solution:
Newton Service Agency
Adjusting Entries
Date Account Title and Explanations Ref. Debit Credit
Dec. Unearned Service Revenue 2,400
31 Service Revenue 2,400

31 Account Receivable 1,200

Service Revenue 1,200
31 Supplies Expense 500
Supplies 500
31 Salaries Expense 1,200
Salaries payable 1,200
31 Insurance Expense 1,500
Prepaid Insurance 1,500
31 Depreciation Exp.-Furniture 750
Depreciation Exp. –Building 1,200
Allowance for Depreciation –Furniture 750
Allowance for Depreciation – Building 1,200

Newton Service Agency

Worksheet
For the year ended December 31, 2014
Trial balance Adjustment Adjusted T/B Income Balance sheet
statement
Account Title Dr. Cr. Dr. Cr. Dr. Cr. Dr. Cr. Dr. Cr.
Cash 11250 11250 11250
Account receivable 14320 1200 15520 15520
Prepaid insurance 2400 1500 900 900
Supplies 1200 500 700 700
Furniture 6000 6000 6000
Accumulated dep.- 750 750 1500 1500
Furniture
Building 50000 50000 50000
Accumulated dep.- 12000 1200 13200 13200
Building
Land 3500 3500 3500
Accounts payable 4500 4500 4500
Unearned service 6000 2400 3600 3600
revenue
190 Accounting Principles

Newton’s Capital 83370 83370 83370

Newton’s drawings 25000 25000 25000
Service revenue 60000 3600 63600 63600
Salaries expense 20000 1200 21200 21200
Utilities expense 15000 15000 15000
Suspense account 17950 17950 17950
Trial balance total 166620 166620
Supplies expense 500 500 500
Salaries payable 1200 1200 1200
Insurance expense 1500 1500 1500
Dep. Exp.-furniture 750 750 750
Dep. Exp.-building 1200 1200 1200
Net income
Work sheet totals 5550 5550 170970 170970 63600 63600 130820 130820

Questions

1. Define worksheet. Describe steps in preparing a worksheet.

2. What is accounting cycle? Mention the various phases of accounting cycle.
3. Describe different purposes of worksheet.
4. “A work sheet is a permanent accounting record and its use is required in the
accounting cycle”-Do you agree? Why or why not? Explain.
5. Why work sheet is prepared? Is it mandatory in accounting?
6. Is work sheet a part of accounting cycle? Explain the purposes of work sheet.
7. What are the entries an organization needs to prepare for closing its books of
accounts at the end of each accounting period?
8. What is a closing entry? Discuss in brief the closing process of temporary accounts.
9. What is post-closing trial balance? Explain its purpose.
10. What is reversing entries? Why is a needed reversing entry?
 Completing the Accounting Cycle 191

Exercise -01:
The following balances are extracted from the ledger of Alamin Plastic as at December 31, 2010.
Alamin Plastic
The Trial Balance
31 December, 2010
Account titles Tk. Tk.
Capital 1,40,000
Sales 3,00,000
Purchase return 5,000
Accounts payable 28,000
Notes payable 15,000
Purchase 2,00,000
Sales return 2,000
Accounts receivable 50,000
Furniture 60,000
Office equipment 80,000
Cash 30,000
Beginning inventory 40,000
Insurance expenses 5,000
Office supplies 4,000
Rent expenses 6,000
Salaries expenses 8,000
Drawing 20,000
Advertisement 6,000
Delivery expenses 7,000
Freight in 10,000
10% Mortgage loan 60,000
5% Investment 20,000
5,48,000 5,48,000
Other data
1. Inventory at closing Tk. 40,000.
2. Unexpired insurance Tk. 1,000.
3. Accrued salaries Tk. 1,500.
4. Depreciation to be provided, 5% on furniture and 10% on office equipment.
5. Office supplies in hand, Tk. 500.
6. The inventory at the end includes goods worth Tk. 1,000 for which is neither received nor
accounted for.
7. Goods costing Tk. 500 were taken by the owner for personal use no record was maintained in
the books of accounts.
Required:
a) A 10 column worksheet.
b) Adjusting entries.
192 Accounting Principles

Exercise -02:
At the end of its first month of operations, BIBT Trading Company has the following unadjusted
trial balance:
BIBT Trading Company
Trail Balance
August 31, 2013
Account Title Debit Credit
(Taka) (Taka)
Cash 5,400
Notes receivable 2,800
Supplies 1,300
Prepaid insurance 2,400
Equipment 60,000
Notes payable 40,000
Accounts payable 2,400
Owner’s Capital 30,000
Owner’s Drawing 1,000
Service revenue 4,900
Salaries and wages expense 3,200
Utilities expense 800
Advertising expense 400
77,300 77,300
Other data:
1. Insurance expires at the rate of Tk. 200 per month.
2. Tk. 1000 of supplies is on hand at August 31.
3. Monthly depreciation on the equipment is Tk. 900
4. Interest of Tk. 500 on the notes payable has accrued during August.
Instructions:
(a) Prepare a worksheet.
(b) Prepare a classified balance sheet assuming Tk. 35000 of the notes payable are long-term.
(c) Journalize the closing entries.

Exercise 3 \
Mr. Ali Noor started his own consulting firm, Ali Noor Company, on June 1, 2016. The trial balance
at June 30 is as follows:
Ali Noor Company
Trial Balance
June 30, 2016
Particulars Debit Credit
(Taka) (Taka)
Cash 17,150
Accounts Receivable 6,000
Prepaid Insurance 3,000
 Completing the Accounting Cycle 193

Supplies 3,000
Office Equipment 15,000
Accounts Payable 14,500
Unearned Service Revenue 4,000
Radison - Capital 21,850
Service Revenue 8,900
Salaries Expense 4,000
Rent Expense 1,100
Total = 49,250 49,250

Other data:
i. Supplies on hand at June 30 are Tk. 1,800.
ii. A utility bill for Tk. 500 has not been recorded and will not be paid until next month.
iii. The insurance policy is for a year.
iv. Tk. 2,500 of unearned service revenue has been earned at the end of the month.
v. Salaries of Tk. 1,500 are accrued.
vi. The office equipment has a 5-year life with no salvage value. It is being depreciation at Tk.
500 per month for 30 months.
vii. Invoices representing Tk. 1,800 of service preformed during the month have not been
recorded as of June 30.
Required:
a) Prepare the adjusting entries for the month of June,
b) Prepare 10 column worksheet
Exercise 4
Dhaka Professionals Company started its business on January 1, 2017. At the end of the first 6 months
of operations the trial balance containing the following accounts:

Debit balance Tk. Credit balance Tk.

Cash 29,500 Notes payable 30,000
Accounts receivable 14,000 Accounts payable 9,000
Equipment 45,000 Capital 22,000
Insurance expense 1,800 Graphic revenue 64,100
Salaries expense 40,000 Consulting revenue 17,000
Supplies expense 5,700
Advertising expense 1,900
Rent expense 1,500
Utilities expense 2,700
1,42,100 1,42,100

Analysis reveals the following additional data:

i. The Tk. 5,700 balance in supplies expense represent supplies purchased in January. At the
194 Accounting Principles

June 30 Tk. 1,300 of supplies was on hand.

ii. The notes payable was issued on March 1. It is a 12%, 6 months notes.
iii. The balance in insurance expense is the premium on a 2 year policy dated June 1.
iv. Consulting fees are credited to revenue when received. At June 30 consulting fees of Tk.
5,100 are unearned.
v. Graphic revenue earned but unrecorded at June 30 Tk. 4,000.
vi. Depreciation is Tk. 6,000 per year.
Required:
(a) Journalize the adjusting entries at June 30, 2017.
(b) Prepare a work sheet.
Problem-5
Md. Kamal Hossain started her own consulting firm, Kamal Consulting, on May 1, 2016. The trial
balance at May 31 is as follows.
Kamal Consulting
Trial Balance
May 31, 2016
Accounts Details Debit Credit
($) ($)
Cash 14,500
Accounts Receivable 16,000
Supplies 11,900
Prepaid Insurance 3,600
Equipment 1,11,400
Accounts Payable 1,14,500
Unearned Service Revenue 22,000
Owner’s Capital 18,700
Service Revenue 19,500
Salaries and Wages Expense 16,400
Rent Expense 900
34,700 34,700

Other Data:
1. $1,900 of supplies has been used during the month.
2. Utilities expense $1250 incurred but not paid on May 31, 2016.
3. The insurance policy is for 2 years.
4. $4,400 of the balance in the unearned service revenue account remains unearned at the end of
the month.
5. May 31 is a Thursday, and employees are paid on Friday. Kamal Consulting has three
employees, who are paid $920 each for a 5-day work week.
6. Equipment is being depreciated at $2,290 per month.
7. Invoices representing $1,700 of services performed during the month have not been recorded
as of May 31.
 Completing the Accounting Cycle 195

Instructions
1. Prepare the adjusting entries for the month of May
2. Prepare a work sheet May 31, 2016.