Preparing Adjusting Entries, Financial Statements, and Closing Entries Murdock C
ID: 2330460 • Letter: P
Question
Preparing Adjusting Entries, Financial Statements, and Closing Entries Murdock Carpet Cleaners ended its first month of operations on June 30, 2015. Monthly financial statements will be prepared. The unadjusted account balances are as follows. MURDOCK CARPET CLEANERS Unadjusted Trial Balance June 30, 2015 Debit Credit $1,180 450 3,100 Cash 4,440 $ 760 2,000 5,300 4,650 Accounts payable.... $12,710 $12,710 The following information is available. 1. The balance in Prepaid Rent was the amount paid on June 1 for the first four months' rent. 2. Supplies available at June 30 were $820 3. Equipment, purchased June 1, has an estimated life of five years. 4. Unpaid and unrecorded employee wages at June 30 were $210. 5. Utility services used during June were estimated at $300.A bill is expected early in July. 6. Fees earned for services performed but not yet billed on June 30 were $380. The company uses the account Accounts Receivable to reflect amounts due but not yet billed. REQUIRED a. Prepare its adjusting entries at June 30,2015 using the financial statement effects template b. Prepare its adjusting entries at June 30,2015 in journal entry form c. Set up T-accounts, enter the balances above, and post the adjusting entries to them d. Prepare its income statement for June and its balance sheet at June 30,2015. e. Prepare entries to close its temporary accounts in journal entry form and post the closing en- tries to the T-accountsExplanation / Answer
b. In the books of Murdock Carpet Cleaners:
c. Accounts Receivable:
Prepaid Rent:
Supplies:
Accumulated Depreciation : Equipment
Accounts Payable:
Wages Payable:
Service Fees Earned:
Wages Expense:
Supplies Expense:
Rent Expense:
Utilities Expense:
Depreciation Expense:
d. Income Statement
Balance Sheet:
Adjustment # Account Titles Debit Credit June 30, 2015 $ $ 1. Rent Expense ( $ 3,100 / 4) 775 Prepaid Rent 775 2. Supplies Expense $ ( 2,520 - 820) 1,700 Supplies 1,700 3. Depreciation Expense [$ 4,440 / ( 5 x 12) ] 74 Accumulated Depreciation : Equipment 74 4. Wages Expense 210 Wages Payable 210 5. Utilities Expense 300 Accounts Payable 300 6. Accounts Receivable 380 Service Fees Earned 380