Entry Number Account

Proprietor invested $65.000 in the business as owner and taken $100.000

1 loan from a bank with 15% interest a year
2 The rent for September paid in cash
3 New merchandise received on credit from supplier
4 Furniture and Fixtures with 10-year life purchased in cash
5 Advertising company paid in cash
6 Wages paid in cash
7 Office supplies received and paid in cash to office supplies company
8 Bills received and paid from electric company
Amount Cr.

$ 16,500
$ 1,485
$ 137,500
$ 15,500
$ 1,320
$ 935
$ 1,100
$ 275
 Amount
Entry No Account
Dr. Cr.
1 Cash $ 165,000
Bank Loan Payable (15%) $ 100,000
Proprietor's Capital $ 65,000
2 Rent Expenses (September) $ 1,485
Cash $ 1,485
3 Merchandise Inventory $ 137,500
Account Payable $ 137,500
4 Furniture and Fixtures (10-year life) $ 15,500
Cash $ 15,500
5 Advertising Expense $ 1,320
Cash $ 1,320
6 Wages Expense $ 935
Cash $ 935
7 Office Supplies Expense $ 1,100
Cash $ 1,100
8 Utilities Expense $ 275
Cash 275
T account

CASH Proprietor's capital

1 $ 165,000 2 $ 1,485 1 $ 65,000
4 $ 15,500
5 $ 1,320 Rent expenses (sept)
6 $ 935 2 $ 1,485
7 $ 1,100
8 $ 275 Account payable
$ 165,000 $ 20,615 3 $ 137,500
$ 144,385
Advertising expense
Bank Loan Payable 5 $ 1,320
1 $ 100,000
Office supplies expense
Merchandise Inventory 7 $ 1,100
3 $ 137,500
Utilities expenses
Furniture and Fixtures (10yrs life) 8 $ 275
4 $ 15,500
 Amount
Entry No Account
Dr. Cr.
1 Cash $ 165,000
Bank Loan Payable (15%) $ 100,000
Proprietor's Capital $ 65,000
2 Rent Expenses (September) $ 1,485
Cash $ 1,485
3 Merchandise Inventory $ 137,500
Account Payable $ 137,500
4 Furniture and Fixtures (10-year life) $ 15,500
Cash $ 15,500
5 Advertising Expense $ 1,320
Cash $ 1,320
6 Wages Expense $ 935
Cash $ 935
7 Office Supplies Expense $ 1,100
Cash $ 1,100
8 Utilities Expense $ 275
Cash 275
9 Cash $ 38,000
Sales $ 38,000
10 Account Receivable $ 14,850
Sales $ 14,850
11 Cash $ 3,614
Account Receivable $ 3,614
12 Merchandise Inventory $ 96,195
Cash $ 96,195
13 Merchandise Inventory $ 49,940
Account Payable $ 49,940
14 Cost of Sales $ 38,140
Merchandise Inventory $ 38,140
15 Wage Expense $ 688
Cash $ 688
16 Wage Expense $ 440
Accrued wages $ 440
17 Prepaid Rent $ 1,485
Cash $ 1,485
18 Prepaid Insurance $ 2,310
Cash $ 2,310
19 Utility Expenses $ 226
Accrued Utiltity $ 226
20 Merchandise Inventory $ 1,760
Cash $ 660
Account payable $ 1,100
T account

CASH Proprietor's capital

1 $ 165,000 2 $ 1,485 1 $ 65,000
9 $ 38,000 4 $ 15,500
11 $ 3,614 5 $ 1,320 Rent expenses (sept)
6 $ 935 2 $ 1,485
7 $ 1,100
8 $ 275 Bank Loan Payable
12 $ 96,195 1 $ 100,000
15 $ 688
17 $ 1,485 Advertising expense
18 $ 2,310 5 $ 1,320
20 $ 660
$ 206,614 $ 121,953 Office supplies expense
$ 84,661 7 $ 1,100

Merchandise Inventory Utilities expenses

3 $ 137,500 8 $ 275
12 $ 96,195 14 $ 38,140 19 $ 226
13 $ 49,940 $ 501
20 $ 1,760 Account payable
$ 285,395 3 $ 137,500
$ 247,255 13 $ 49,940
20 $ 1,100
Sales $ 188,540
9 $ 38,000
10 $ 14,850 Cost of Sales
$ 52,850 14 $ 38,140

Account Receivable Furniture and Fixtures (10-year life)

10 $ 14,850 11 $ 3,614 4 $ 15,500
$ 11,236
Accrued wages
Wages Expense 16 $ 440
6 $ 935
15 $ 688 Prepaid Rent
16 $ 440 17 $ 1,485
$ 2,063
Prepaid Insurance
Accrued Utiltity 18 $ 2,310
20 $ 226
Trial Balance
Debit Credit
Cash $ 84,661
Bank Loan Payable $ 100,000
Merchandise Inventory $ 247,255
Furniture and Fixtures (10yrs life) $ 15,500
Wage expenses $ 2,063
Proprietor's capital $ 65,000
Rent expenses (sept) $ 1,485
Account payable $ 188,540
Advertising expenses' $ 1,320
Office supplies expense $ 1,100
Utilities expenses $ 501
Sales $ 52,850
Account Receivable $ 11,236
Cost of Sales $ 38,140
Accrued Wages $ 440
Prepaid Rent $ 1,485
Prepaid Insurance $ 2,310
Accrued Utiltity $ 226
$ 407,056 $ 407,056
Adjusting
Entry No Account Amount
Dr. Cr.
21 Interest Expense $ 1,250.0
Accrued Interest Expense $ 1,250.0
22 Depreciation Expense $ 129.2
Accumulated Depreciation $ 129.2
23 Insurance Expense $ 192.5
Prepaid Insurance $ 192.5
$ 1,571.7 $ 1,571.7
Ledger (T account)
Interest Expense Depreciation Expense
21 $ 1,250 22 $ 129.2

Accrued Interest Expense Accumulated Depreciation

21 $ 1,250 22 $ 129.2

Insurance Expense Prepaid Insurance

23 $ 192.5 23 $ 192.5
Closing Entries
INCOME SUMMARY
(B) $ 38,140 (A) $ 52,850
(C) $ 2,063
(D) $ 1,320
(E) $ 1,100
(F) $ 501
(G) $ 1,485
(H) $ 129
(I) $ 1,250
(J) $ 193
$ 46,181 $ 52,850
Earning Before Tax $ 6,669
20% $ 1,334
Earning After Tax $ 5,335

INCOME TAX LIABILITIES

(K) $ 1,334

RETAINED EARNINGS
Balance $ -
To Balance $ 5,335 (L) $ 5,335
Balance $ 5,335

WHY? The closing process reduces the balance of nominal (temporary) accounts to zero in order
 Posting Closing Entries
(A) Sales Wage Expense
(B) Cost of sales $ 2,063 (C) $ 2,063
(C) Wage Expense
(D) Advertising Expense Advertising Expense
(E) Office Supply Expense $ 1,320 (D) $ 1,320
(F) Utility Expense
(G) Rent Expense Office Supply Expense
(H) Depreciation Expense $ 1,100 (E) $ 1,100
(I) Interest Expense
(J) Insurance Expense Utility Expense
(K) Tax $ 501 (F) $ 501
(L) Earnings
Rent Expense
$ 1,485 (G) $ 1,485

Depreciation Expense
$ 129 (H) $ 129

Interest Expense
$ 1,250 (I) $ 1,250

Interest Expense
$ 193 (J) $ 193

orary) accounts to zero in order to prepare the accounts for the next period's transactions.
 Income Summary Sales Revenue
$ 46,181 (A) $ 52,850 (A) $ 52,850
$ 6,669

Retained Earning
$ - $ 6,669
BALANCE SHEET
Assets
Current Assets:
Cash $ 84,661
Account receivable $ 11,236
Merchandise Inventory $ 247,255
Prepaid Insurance $ 2,118
Prepaid Rent $ 1,485
Total current assets $ 346,755
Fixed Assets:
Furniture and Fixtures (10yrs life $ 15,500
Less accumulated depreciation $ 129.2
Total fixed assets: $ 15,371
Total assets $ 362,125
Liabilities
Current Liabilities:
Accrued Wage $ 440
Accrued Utility $ 226
Accrued Interest $ 1,250
Income tax liability $ 1,334
Account payable $ 188,540
Total current liabilites $ 191,790
Long term liabilities :
Bank Loan $ 100,000
Total Liabilities $ 291,790
Stockholder's equity
Owner's capital $ 65,000
Retain earnings $ 5,335
Total stockholder's equity $ 70,335
Total liabilites and stockholder's equity $ 362,125
INCOME STATEMENT
Sales Revenue $ 52,850
Cost of Sales $ 38,140
Gross Margin $ 14,710
Operating Expenses
Wage Expense $ 2,063
Advertising Expense $ 1,320
Office Supply Expense $ 1,100
Utility Expense $ 501
Rent Expense $ 1,485
Depreciation Expense $ 129
Interest Expense $ 1,250
Insurance Expense $ 193 $ 8,041
Income before income tax $ 6,669
Income tax expense 20% $ 1,334
Net Income $ 5,335