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Chapter 3: 10Q (page 127)

What differences are there between the trial balance before closing and the trial balance after closing with respect to the following accounts?

a) Accounts payable

b) Expense accounts

c) Revenue accounts

d) Retained Earnings account

e) Cash

Short Answer

Expert verified
  1. There will not be any effectonaccounts payable.
  2. Balances remain available in these accounts before closing, and after closing,the balances become zero.
  3. Balances are present in these accounts before closing, but after closing, the balances become zero.
  4. Balances remain in the account before closing,andafter closing, the balances get increased or decreased.
  5. There will not be any effect oncash.

Step by step solution

01

Meaning of trial balance

The trial balance is the sum total of all the general ledger balances included in the business ledger. In the trial balance,the debit and credit sides will always be equal. Moreover, all the balances of the ledger are posted either on the debit or credit side of the statement.

02

Accounts payable

There will be no variation in the trial balance before closing and as well as after closing in relation to accounts payable.

03

Expense accounts

Before the closing of the trial balance, the balances are present in the expense accounts. However, after the closing of trial balance, the balances become nil.

04

Revenue accounts

Before the closing of the trial balance, the balances are present in the revenue accounts. However, after the closing of trial balance, the balances are not available in these accounts.

05

Retained earnings account

Before the closing of the trial balance, the balances exist in the expense accounts irrespective of the net income or dividends or net loss for a particular period. The balance increases or decreases due to the amount of net income or loss, respectively, and decreases by the dividend stated.

06

Cash

There will be no variation before and after the closing of trial balance in relation to the cash account.

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Most popular questions from this chapter

The trial balance of Bellemy Fashion Center contained the following accounts at November 30, the end of the company鈥檚 fiscal year.

BELLEMY FASHION CENTER

TRIAL BALANCE

NOVEMBER 30, 2017

Debit

Credit

Cash

\( 28,700

Accounts Receivable

33,700

Inventory

45,000

Supplies

5,500

Equipment

133,000

Accumulated Depreciation鈥擡quipment

\) 24,000

Notes Payable

51,000

Accounts Payable

48,500

Common Stock

90,000

Retained Earnings

8,000

Sales Revenue

757,200

Sales Returns and Allowances

4,200

Cost of Goods Sold

495,400

Salaries and Wages Expense

140,000

Advertising Expense

26,400

Utilities Expenses

14,000

Maintenance and Repairs Expense

12,100

Delivery Expense

16,700

Rent Expense

24,000

\(978,700

\)978,700

Adjustment data:

1. Supplies on hand total \(1,500.

2. Depreciation is \)15,000 on the equipment.

3. Interest of \(11,000 is accrued on notes payable at November 30.

Other data:

1. Salaries expense is 70% selling and 30% administrative.

2. Rent expense and utilities expenses are 80% selling and 20% administrative.

3. Notes payable worth \)30,000 are due for payment next year.

4. Maintenance and repairs expense is 100% administrative.

Instructions

(a) Journalize the adjusting entries.

(b) Prepare an adjusted trial balance.

(c) Prepare a multiple-step income statement and retained earnings statement for the year and a classified balance sheet as of November 30, 2017.

(d) Journalize the closing entries.

(e) Prepare a post-closing trial balance.

The following trial balance of Watteau Co. does not balance:

WATTEAU CO.

TRIAL BALANCE

JUNE 30, 2017

Debit \(

Credit \)

Cash

\(2,870

Accounts receivable

\)3,231

Supplies

800

Equipment

3,800

Account payable

2,666

Unearned service revenue

1,200

Common stock

6,000

Retained earnings

3,000

Service revenue

2,380

Salaries and wages expenses

3,400

Office expenses

940

\(13,371

\)16,916

Each of the listed accounts should have a normal balance per the general ledger. An examination of the ledger and journal reveals the following errors.

  1. Cash received from the customer on account was debited for \(570, and accounts receivable was credited for the same amount. The actual collection was for \)750.
  2. The purchase of a computer printer on account for \(500 was recorded as a debit to Supplies for \)500 and a credit to Accounts Payable for \(500.
  3. Services were performed on account for a client for \)890. Accounts receivable was debited for \(890 and service revenue was credited for \)89.
  4. A payment of \(65 for telephone charges was recorded as a debit to Office Expense for \)65 and a debit to Cash for \(65.
  5. When the unearned service revenue account was reviewed, it was found that service revenue amounting to \)325 was performed prior to June 30 (related to unearned service revenue).
  6. A debit posting to salaries and wages expenses of \(670 was omitted.
  7. A payment on account for \)206 was credited to cash for \(206 and credit to account payable for \)260.
  8. A dividend of \(575 was debited to salaries and wages expenses for \)575 and credit to cash for $575.

Instruction

Prepare a correct trial balance. (Note: It may be necessary to add one or more accounts to the trial balance.)

EXCEL (Adjusting Entries) The ledger of Duggan Rental Agency on March 31 of the current year includes the following selected accounts before adjusting entries have been prepared.

Debit Credit

Prepaid Insurance \(3,600

Supplies \)2,800

Equipment \(25,000

Accumulated Depreciation- Equipment \)8,400

Notes Payable \(20,000

Unearned Rent Revenue \)9,300

Rent Revenue \(60,000

Interest Expenses -0-

Salaries and Wages Expenses \)14,000

An analysis of accounts shows the following.

  1. The equipment depreciates \(250 per month.

  2. One-third of the unearned rent was recognized as revenue during the quarter.

  3. Interest of \)500 is accrued on the notes payable.

  4. Supplies on hand total \(850

  5. Insurance expires at the rate of \)300 per month.

Instructions

Prepare the adjusting entries at March 31, assuming that adjusting entries are made quarterly. Additional accounts are Depreciation Expenses, Insurance Expenses, Interest Payable, and Supplies expenses. (Omit Explanations)

What are adjusting entries and why are they necessary?

E3-15 (L06) (Missing Amounts) Presented below is financial information for two different companies.

Alatorre Company Eduardo Company
Sales revenue \(90,000 (d)
Sales returns and allowances (a) \)5,000
Net sales 81,000 95,000
Cost of goods sold 56,000 (e)
Gross profit (b) 38,000
Operating expenses 15,000 23,000
Net income (c) 15,000

Instructions

Compute the missing amounts.
See all solutions

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