1. Lecture 13 Task Force Image Gallery clip art included in this electronic presentation is used with the permission of NVTech Inc.

2. Overview Chapter 4 Property, Plant and Equipment Effect of Omitting Adjustment Summary of Basic Adjustments Preparation of Income Statement Column Preparation of Balance Sheet Column Closing Entries After Closing Trial Balance

3. Adjusted Trial Balance Adjustments Trial Balance Account Title Dr. Cr. Dr. Cr. Dr. Cr. Cash Accounts receivable Supplies Equipment Accum. depreciation Accounts payable Salary payable Unearned revenue Capital Withdrawals Revenue Salary expense Supplies expense Depreciation expense Totals 12,100 1,350 250 15,500 1,000 12,000 42,200 7,500 1,200 1,100 1,500 7,200 23,700 42,200 The Accounting Work Sheet

4. aThe company has earned revenue of Rs. 1,700 which will be collected next month. bInventory of supplies at month end totaled 150. cDepreciation for the period was calculated as Rs.200.

5. Adjusted Trial Balance Adjustments Trial Balance Account Title Dr. Cr. Dr. Cr. Dr. Cr. Cash Accounts receivable Supplies Equipment Accum. depreciation Accounts payable Salary payable Unearned revenue Capital Withdrawals Revenue Salary expense Supplies expense Depreciation expense Totals 12,100 1,350 250 15,500 1,000 12,000 42,200 7,500 1,200 1,100 1,500 7,200 23,700 42,200 a) 1,700 b) 100 c) 200 2,000 b) 100 c) 200 a) 1,700 2,000 12,100 3,050 150 15,500 1,000 12,000 100 200 44,100 7,700 1,200 1,100 1,500 7,200 25,400 44,100 The Accounting Work Sheet

6. Adjusted Income Balance Trial Balance Statement Sheet Account Title Dr. Cr. Dr. Cr. Dr. Cr. Cash Accounts receivable Supplies Equipment Accum. depreciation Accounts payable Salary payable Unearned revenue Capital Withdrawals Revenue Salary expense Supplies expense Depreciation expense Totals 7,700 1,200 1,100 1,500 7,200 25,400 44,100 12,100 3,050 150 15,500 1,000 12,000 100 200 44,100 12,100 3,050 150 15,500 1,000 31,800 7,700 1,200 1,100 1,500 7,200 18,700 The Accounting Work Sheet

7. Adjusted Income Balance Trial Balance Statement Sheet Account Title Dr. Cr. Dr. Cr. Dr. Cr. Cash Accounts receivable Supplies Equipment Accum. depreciation Accounts payable Salary payable Unearned revenue Capital Withdrawals Revenue Salary expense Supplies expense Depreciation expense Totals 7,700 1,200 1,100 1,500 7,200 25,400 44,100 12,100 3,050 150 15,500 1,000 12,000 100 200 44,100 12,100 3,050 150 15,500 1,000 31,800 7,700 1,200 1,100 1,500 7,200 18,700 12,000 100 200 12,300 25,400 The Accounting Work Sheet

8. Adjusted Income Balance Trial Balance Statement Sheet Account Title Dr. Cr. Dr. Cr. Dr. Cr. Cash Accounts receivable Supplies Equipment Accum. depreciation Accounts payable Salary payable Unearned revenue Capital Withdrawals Revenue Salary expense Supplies expense Depreciation expense Totals Net income 7,700 1,200 1,100 1,500 7,200 25,400 44,100 12,100 3,050 150 15,500 1,000 12,000 100 200 44,100 12,100 3,050 150 15,500 1,000 31,800 7,700 1,200 1,100 1,500 7,200 18,700 13,100 31,800 12,000 100 200 12,300 13,100 25,400 The Accounting Work Sheet

9. Close the revenue, expense, and withdrawal accounts.

10. Closing the Accounts Closing the accounts is the end of period process that prepares the accounts for recording transactions during the next period.

11. Closing Entries Revenues increase Owner’s Equity. Expenses and Withdrawals decrease Owner’s Equity. Closing the Accounts

12. Revenues and Expense accounts are closed to Income Summary. Income Summary is closed to Capital. Withdrawals are closed to Capital. In a corporation, Dividends are closed to Retained Earnings.

13. Income Summary A credit balance represents net income. A debit balance represents net loss. Closing the Accounts

14. Revenue Income Summary 12,000 7,500 9,000 Salary Exp 3,300 28,500 1,500 1,800 4,450 28,500 Rent Exp 800 Supplies Exp 350 24,050 (Close Revenue Account) (Close Expense Accounts) (Close Income Summary) Withdrawals 2,500 Capital Account (Close Withdrawals Account) Closing the Accounts

15. Postclosing Trial Balance The accounting cycle ends with the postclosing trial balance. The postclosing trial balance is dated as of the end of the period for which the statements have been prepared.

16. Permanent Accounts What accounts never close? –Assets –Liabilities –Owner’s equity Balances of permanent accounts carry over to the next period.

17. Classify assets and liabilities as current or long-term.

18. Classification of Assets Current Assets Property Plant and Equipment

19. Current Assets Cash Accounts Receivable Bills Receivable All Prepaid Expenses Rent Receivable Supplies Inventory Investment

20. Property, Plant and Equipment Land Building Office Equipment Patent Copy Rights Long Term Investments Machinery Vehicles Furniture

21. Classify Liabilities

22. Short Term Liabilities Accounts Payable Bills Payable Short term loans Tax Payable Interest Payable Salary payable Wages payable

23. Long Term liabilities Long term loans Debentures Bonds Mortgage

24. Questions to Solve Stadium Parking was organized on 1 July to operate a parking lot near new sports arena. The following transactions occurred during July prior to the company beginning its regular business operations July 1. Imran opened a bank account in the name of the business with a deposit of Rs. 45000 cash. July 2. purchased land to be used as the parking lot for a total price of Rs. 140000. A cash down payment of Rs. 28000 was made and not payable was issued for the balance. July 5. purchased a small portable building for Rs. 4000 cash. Purchase price include installation charges. July 12. purchased office equipment on credit from Suzuki company for Rs. 3000. July 28. Paid Rs. 2000 of the amount owed to Suzuki company.

25. Instructions Prepare Journal Entries for the month of July Post to ledger accounts. Prepare Trial Balance.

26. The End