Journal Entry To Post Closing Trial Balance
Journal Entry To Post Closing Trial Balance
Journal Entry To Post Closing Trial Balance
Analyzing transactions and recording them as journal entries is the first step in the accounting cycle. It begins at the start
of an accounting period and continues during the whole period. Transaction analysis is a process which determines
whether a particular business event has an economic effect on the assets, liabilities or equity of the business.
On January 1, 2010 Company A invested $100,000. During the first month of its operations, the company engaged in
following transactions:
Date Transaction
Jan 2 An amount of $36,000 was paid as advance rent for three months.
Jan 3 Paid $60,000 cash on the purchase of equipment costing $80,000. The remaining amount was recognized as a
one year note payable with interest rate of 9%.
Jan 4 Purchased office supplies costing $17,600 on account.
Jan 13 Provided services to its customers and received $28,500 in cash.
Jan 13 Paid the accounts payable on the office supplies purchased on January 4.
Jan 14 Paid wages to its employees for first two weeks of January, aggregating $19,100.
Jan 18 Provided $54,100 worth of services to its customers. They paid $32,900 and promised to pay the remaining
amount.
Jan 23 Received $15,300 from customers for the services provided on January 18.
Jan 26 Purchased office supplies costing $9,200 on account.
Jan 28 Paid wages to its employees for the third and fourth week of January: $19,100.
Jan 31 Paid $5,000 for part time employee.
Jan 31 Received electricity bill of $2,470.
Jan 31 Received telephone bill of $1,494.
Jan 31 Miscellaneous expenses paid during the month totaled $3,470
The following table shows the journal entries for the above events.
Date Account Debit Credit
Jan 1 Cash 100,000
Company A, Capital 100,000
Jan 2 Prepaid Rent 36,000
Cash 36,000
Jan 3 Equipment 80,000
Cash 60,000
Notes Payable 20,000
Jan 4 Office Supplies 17,600
Accounts Payable 17,600
Jan 13 Cash 28,500
Service Revenue 28,500
Jan 13 Accounts Payable 17,600
Cash 17,600
Jan 14 Wages Expense 19,100
Cash 19,100
Jan 18 Cash 32,900
Accounts Receivable 21,200
Service Revenue 54,100
Jan 23 Cash 15,300
Accounts Receivable 15,300
Jan 26 Office Supplies 9,200
Accounts Payable 9,200
Jan 28 Wages Expense 19,100
Cash 19,100
Jan 31 Wages Expense 5,000
Cash 5,000
Jan 31 Electricity Expense 2,470
Utilities Payable 2,470
Jan 31 Telephone Expense 1,494
Utilities Payable 1,494
Jan 31 Miscellaneous Expense 3,470
Cash 3,470
The ledger accounts shown below are derived from the journal entries of Company A. (ASSET ACCOUNTS)
Liability Accounts
Equity Accounts
Company A, Capital
$100,000
$100,000
Service Revenue
$28,500
54,100
$82,600
$19,100 $3,470
19,100
5,000
$43,200 $3,470
$2,470 $1,494
$2,470 $1,494
Following is the unadjusted trial balance prepared from the ledger accounts of Company A.
Company A
Unadjusted Trial Balance
January 31, 2010
Debit Credit
Cash $16,430
Accounts Receivable 5,900
Office Supplies 26,800
Prepaid Rent 36,000
Equipment 80,000
Accounts Payable $13,164
Notes Payable 20,000
Common Stock 100,000
Service Revenue 82,600
Wages Expense 43,200
Miscellaneous Expense 3,470
Electricity Expense 2,470
Telephone Expense 1,494
Total $215,764 $215,764
Debit Credit
Cash $16,430
Accounts Receivable 5,900
Office Supplies 4,320
Prepaid Rent 24,000
Equipment 80,000
Accumulated Depreciation 1,100
Accounts Payable $13,164
Notes Payable 20,000
Interest Payable 150
Common Stock 100,000
Service Revenue 82,600
Wages Expense 43,200
Miscellaneous Expense 3,470
Electricity Expense 2,470
Telephone Expense 1,494
Supplies Expense 22,480
Rent Expense 12,000
Depreciation Expense 1,100
Interest Expense 150
Total $217,014 $217,014
Company A
Income Statement
For the month ended January 31, 2010
Company A
Statement of changes in Owners Equity
For the month ended January 31, 2010
ASSETS
Current Assets
Cash $ 16,430
Accounts Receivable 5,900
Office Supplies 4,320
Prepaid Rent 24,000
Liabilities
Equity 96 236
CLOSING ENTRIES