Chapter 4: Q1CP (page 243)

This problem continues the Canyon Canoe Company situation from Chapter 3.
Requirements
1. Complete the worksheet at December 31, 2018 (optional). Use the unadjusted trial balance from Chapter 2 and the adjusting entries from Chapter 3.
2. Prepare an income statement for the two months ended December 31, 2018. Use the worksheet prepared in Requirement 1 or the adjusted trial balance from Chapter 3.
3. Prepare a statement of retained earnings for the two months ended December 31, 2018.
4. Prepare a classified balance sheet (report form) at December 31, 2018. Assume the note payable is long-term.
5. Journalize and post the closing entries at December 31, 2018. Open T-accounts for Income Summary and Retained earnings. Determine the ending balance for each account. Denote each closing amount as Clos.and each account balance as Balance.
6. Prepare a post-closing trial balance at December 31, 2018.

Expert verified

Post Closing Trial Balance Total: $153,890

Step by step solution

Galaxy Theater Production Company
Worksheet
December 31, 2018

Account Names	Unadjusted Trial Balance		Adjustments		Adjusted Trial Balance
Account Names	Debit	Credit	Debit	Credit	Debit	Credit
Cash	$ 12,125				$ 12,125
Accounts Receivables	5,750		$ 1,850		7,600
Office Supplies	1.250			$ 1,085	165
Prepaid Rent	3.000			1,000	2,000
Land	85.000				85,000
Building	35,000				35,000
Accumulated Depreciation – Building				500		$ 500
Canoes	12.000				12,000
Accumulated Depreciation – Canoes				350		350
Accounts Payable		3.050				3,050
Utilities Payable		295				295
Telephone Payable		325				325
Unearned Revenue		750	400			350
Notes Payable		7.200				7,200
Wilson, Capital		136.000				136,000
Wilson, withdrawals	450				450
Canoe Rental Revenue		12.400		1,850		14,250
Rent Expense	1.200		1,000		2,200
Wages Expense	3.300				3,300
Utilities Expense	445				445
Telephone Expense	500				500
Service Revenue				400		400
Salary Expense			1,250		1,250
Outstanding Salary				1,250		1,250
Depreciation Expense – Building			500		500
Depreciation Expense – Canoes			350		350
Interest Expense			50		50
Accrued Interest				50		50
Supplies Expense			1,085		1,085
Total	$ 160,020	$ 160,020	$ 6,485	$ 6,485	$164,020	$ 164,020

Income Statement
Canyon Canoe Company
		Amount
Particular

Canoe Rental Revenue		$ 14,250
Service Revenue		400
Total Revenue		14,650
Rent Expense	$ 2,200
Wages Expense	3,300
Utilities Expense	445
Telephone Expense	500
Salary Expense	1,250
Depreciation Expense – Building	500
Depreciation Expense – Canoes	350
Interest Expense	50
Supplies Expense	1,085
Total Expenses		9,680
Net Income		$ 4,970

Retained Earnings Statement
Particular	Amount

Beginning Balance	0
Add: Net Income	$ 4,970
Less: Withdrawals	450
Ending Balance	$ 4,520

Balance Sheet
December 31, 2018
Assets		Amount

Current Assets
Cash		$ 12,125
Accounts Receivables		7,600
Office Supplies		165
Prepaid Rent		2,000
Total Current Assets		$ 21,890

Non-current Assets
Land		85,000
Building	$ 35,000
Accumulated Depreciation – Building	500	34,500
Canoes	12,000
Accumulated Depreciation – Canoes	350	11,650
Total Non-Current Assets		$ 1,31,150
Total Assets		$ 153,040

Liabilities and Shareholder’s equity

Current Liability
Accounts Payable		3.050
Utilities Payable		295
Telephone Payable		325
Unearned Revenue		350
Outstanding Salary		1,250
Accrued Interest		50
Total Current Liability		$ 5,720

Non-Current Liability
Notes Payable		7,200
Total Non-Current Liability		7,200
Total Liability		12,920

Shareholders’ Equity
Wilson, Capital		$ 136,000
Add: Retained Earnings		4,520
Total Shareholders’ Equity		$ 140,520
Total Liabilities and Shareholders’ Equity		$ 153,040

Date	Particular	Debit	Credit
2018
Dec 31	Total Revenue	$ 14,650
	Income Summary		$ 14,650
	Being revenue account closed

Dec 31	Income Summary	9,680
	Rent Expense		2,200
	Wages Expense		3,300
	Utilities Expense		445
	Telephone Expense		500
	Salary Expense		1,250
	Depreciation Expense – Building		500
	Depreciation Expense – Canoes		350
W	Interest Expense		50
	Supplies Expense		1,085
	Being all expenses closed to the income summary

Dec 31	Income Summary	4,970
	Retained Earnings		4,970
	Being net income closed to retained earnings

CANYON CANOE COMPANY
Post Closing Trial Balance
December 31, 2018
Account Title	Debit ($)	Credit ($)

Cash	$ 12,125
Accounts Receivables	7,600
Office Supplies	165
Prepaid Rent	2,000
Land	85,000
Building	35,000
Accumulated Depreciation – Building		$ 500
Canoes	12,000
Accumulated Depreciation – Canoes		350
Accounts Payable		3,050
Utilities Payable		295
Telephone Payable		325
Unearned Revenue		350
Notes Payable		7,200
Wilson, Capital		136,000
Outstanding Salary		1,250
Accrued Interest		50
Retained earnings		4,520
Total	$153,890	$153,890

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