The Accounting Cycle: Steps 6 & 7 Professor Eric Carstensen MiraCosta College http://www.miracosta.edu/instruction/accounting/index.html

Adjusted Trial Balance   Account Debit Credit cash 38,500 A/R 3,900 prepaid insurance 4,400 supplies 700 equipment 14,200 accumulated deprec - equip 100 A/P 5,600 wages payable 2,000 interest payable 50 unearned revenue 5,700 notes payable 10,000 common stock 35,000 retained earnings - dividends 1,000 revenue 12,400 rent expense 3,000 wages expense 4,000 insurance expense 400 supplies expense 600 depreciation expense - equip interest expense total 70,850

Final Financial Statements 1. Income Statement 2. Statement of Retained Earnings Revenues $ 12,400 Beginning Balance $ - Rent Expense 3,000 Net Income 4,250 Wages Expense 4,000 Dividends (1,000) Supplies Expense 600 Increase (Decrease) 3,250 Insurance Expense 400 Ending Balance $ 3,250 Interest Expense 50 Deprec Expense - Equip 100 Total Expenses 8,150 $ 4,250 3. Balance Sheet Assets Liabilities Cash $ 38,500 Accounts Payable $ 5,600 Accounts Receivable 3,900 Wages Payable 2,000 Supplies 700 Interest Payable Prepaid Insurance 4,400 Unearned Revenue 5,700 Total Current Assets $ 47,500 Total Current Liabilities $ 13,350 Notes Payable 10,000 Computer Equipment 14,200 Total Liabilities 23,350 Accum Deprec - Equipment (100) Owners' Equity Total Plant Assets 14,100 Common Stock 35,000 Retained Earnings Total Owners' Equity 38,250 Total Assets $ 61,600 Total Liabilities & Equity

Steps 6 & 7 - Concluded Now that the financials are done, the next step in the Accounting Cycle is to close the books, as the process is commonly referred to. In Step 8, we will prepare closing entries and post them to the proper ledgers. In Step 9, we’ll prepare the last of three trial balances that will get us ready for the cycle to start all over again.