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Magazine Chapter 4: Q26E (page 228)
Houston Veterinary Hospital completed the following worksheet as of December 31, 2018.
Requirements
1. Complete the worksheet for Houston Veterinary Hospital.
2. Prepare the closing entries.
3. Prepare a post-closing trial balance.
Short Answer
(1) Worksheet is mentioned in Step 1.
(2) Closing entries are mentioned in Step 2.
(3) Post-closing trial balance is mentioned in Step 3.
Step by step solution
Worksheet
(1) Worksheet is shown as follows:
Closing entries
(2) Closing entries are as follows:
Date | Accounts and Explanation | Debit | Credit |
Dec. 31 | Service Revenue | $37,700 | |
Income Summary | $37,700 | ||
To close revenue. | |||
Dec. 31 | Income Summary | $49,850 | |
Salaries Expense | $13,075 | ||
Rent Expense | $23,600 | ||
Depreciation Expense鈥擡quipment | $1,900 | ||
Supplies Expense | $275 | ||
Utilities Expense | $11,000 | ||
To close expenses. | |||
Dec. 31 | Retained Earnings | $12,150 | |
Income Summary | $12,150 | ||
To close Income Summary | |||
Dec. 31 | Retained Earnings | $28,000 | |
Dividends | $28,000 | ||
To close Dividends |
Post-closing trial balance
(3) Post-closing trial balance is shown as follows:
HOUSTON VETERINARY HOSPITAL | ||
Post-Closing Trial Balance | ||
December 31, 2018 | ||
Balance | ||
Account Title | Debit | Credit |
Cash | $31,200 | |
Accounts Receivable | 10,100 | |
Office Supplies | 1,225 | |
Prepaid Rent | 5,400 | |
Equipment | 27,000 | |
Accumulated Depreciation鈥擡quipment | 1,900 | |
Accounts Payable | 3,400 | |
Utilities Payable | 310 | |
Salaries Payable | 1,075 | |
Unearned Revenue | 11,700 | |
Common Stock | 41,000 | |
Retained Earnings | 15,540 | |
Total | $74,925 | $74,925 |
Calculation of ending balance of retained earnings
Ending balance of retained earnings is calculated as follows:
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