Completing the Accounting Cycle

Introduction
In this module:

You will be introduced to:

• The work sheet, a powerful tool which accountants use to streamline the process of preparing
financial statements
• The processes involved in closing the accounts and recording closing entries

You will prepare:

• Closing entries and continue to work with financial statements

Please note: In this module, you will be asked to print documents that are wide. To make sure the entire
document prints, please make sure you print using Landscape mode.

Learning Outcomes
Upon successful completion of Module 4 you will be able to:
1. Complete a Work Sheet which contains all of: unadjusted trial balance, adjustment, adjusted
trial balance, income statement and classified balance sheet columns
2. Prepare a complete set of financial statements (income statement, statement of changes in
owner equity, classified balance sheet) from the Work Sheet
3. Understand the purpose of and prepare Closing Entries for:
• Revenue
• Expenses
• Owner Withdrawals
• Income Summary
4. Prepare a Post-Closing Trial Balance

Pre-Test
Instructions: You’re going to test your accounting knowledge before you begin the module content.

1. A Work Sheet is prepared form the financial statements.

a. True
b. False
2. Preparing a work sheet is an optional, but recommended part, of the accounting cycle.
a. True
b. False
3. A spreadsheet program such as MS Excel streamlines the process of preparing a worksheet.
a. True
b. False
4. The Adjusted Trial Balance combines account balances from the Trial Balance with adjusting
entries.
a. True
 b. False
5. Temporary accounts are accounts that can be added to or deleted from the Chart of Accounts
at any time as needed.
a. True
b. False
6. Closing entries will reduce certain account balances to zero.
a. True
b. False
7. On the Income Statement work sheet, the difference between debits and credits represents
Net Income or Net Loss.
a. True
b. False
8. Closing entries must be completed before the financial statements can be prepared.
a. True
b. False
9. Until the accounting cycle is complete, the owner equity account balance in the General
ledger may not match the amount shown on the Balance Sheet.
a. True
b. False
10. A post-closing trial balance confirms that all transactions for the period have been entered
correctly.
a. True
b. False

Answers:

1. B - False
2. A - True
3. A - True
4. A - True
5. B - False
6. A - True
7. A - True
8. B - False
9. A - True
10. B - False

What is a Work Sheet?

A Work Sheet is a supplementary document or tool that:
• The accountant uses in the process of completing the financial statements
• Shows the unadjusted trial balance, adjusting entries, adjusted trial balance, income statement
amounts and balance sheet amounts on one page.
Completing the work sheet is an optional process that can assist the accountant with the process of
moving from an unadjusted trial balance through adjusting entries to an adjusted trial balance and on to
a complete set of timely and accurate financial statements

Depending on the number and complexity of adjusting entries this can be a confusing process where
errors can easily occur. The work sheet simplifies the processes, and prevents errors by collecting all
relevant information in one document.

The worksheet does not replace formal financial statements. It does provide an organized approach for
preparing these documents

Mary Smith's Work Sheet

Remember the lawyer, Mary Smith, from previous units? Look at the work sheet for her accounting
records. You may find it in the resource tab at the top right corner.

As you review the work sheet...

You will see that there is no section for the Statement of Changes in Owner Equity. That's because the
accounts within that statement (Owner Equity and Draw) will be included in the balance sheet columns.

See if you can find the recording of the following adjustments on Mary's work sheet:

1. One month's worth of prepaid insurance in the amount of $200 was used during January
2. The count of supplies at the end of January indicated there was a value of $450 worth of
supplies remaining
3. Employee salary earned but unpaid at the end of January is $700
4. Interest on the bank loan incurred but unpaid at the end of January $150
5. Unearned revenue in the amount of $1,000 was earned during January
6. Amortization on office equipment for the month of January is $850

Mary Smith's Work Sheet

Mary Smith Unadjusted Adjustments Adjusted Trial Income Balance Sheet
Work Sheet Trial Balance Balance Statement

31-Jan-01 DR CR DR CR DR CR DR CR DR CR
Cash 3000 3000 3000
A/R 1500 1500 1500
Supplies 600 150 450 450
Prepaid 2400 200 2200 2200
Insurance
Office 8000 8000 8000
Equipment
Accum 850 850 1700 1700
Amort.
A/P 1200 1200 1200
 31-Jan-01 DR CR DR CR DR CR DR CR DR CR
Salary 700 700 700
Payable
Bank Loan 400 4000 4000
Payable
Interest 150 150 150
Payable
Unearned 1700 1000 700 700
Fees
[Link]- 5650 5650 5650
Capital
[Link]- 300 300 300
Draw
Fees Earned 3000 1000 4000 4000
Salary 500 700 1200 1200
Expense
Supply 100 150 250 250
Expense
Insurance 200 200 200
Expense
Interest 150 150 150
Expense
Amort. 850 850 850
Expense
Subtotal 16400 16400 3050 3050 18100 18100 2650 4000 15450 14100
Net Income 1350 1350
Total 4000 4000 15450 15450

About Spreadsheet Programs

Spreadsheet programs such as MS Excel are powerful and essentials tools for accountants. Although you
could use paper and calculator to create your work sheet manually, the spreadsheet program will save
repetitive and time-consuming re-calculations.

It is easy to:

• input formulas that will do the calculations for you

• carry amounts forward to other columns.

Let us look at the formula version of Mary Smith’s work sheet.

Mary Smith Unadjusted Adjustments Adjusted Trial Income Balance Sheet

Work Sheet Trial Balance Balance Statement
 A B C D E F G H I J K
31-Jan- DR CR DR CR DR CR DR CR DR CR
01
5 Cash 3000 =B5+D5 =F5
6 A/R 1500 =B6+D6 =F6
7 Supplies 600 150 =B7-E7 =F7
8 Prepaid 2400 200 =D8-E8 =F8
Insuranc
e
9 Office 8000 =B9+D9 =F8
Equipme
nt
10 Accum 850 850 =C10+E1 =G10
Amort. 0
11 A/P 1200 =C11+E1 =G11
1
12 Salary 700 =C12+E1 =G12
Payable 2
13 Bank 400 =C13+E1 =G13
Loan 3
Payable
14 Interest 150 =C14+E1 =G14
Payable 4
15 Unearne 1700 1000 =C15- =G15
d Fees D15
16 [Link]- 5650 =C16- =G16
Capital D16
17 [Link]- 300 =B17+D17-E17 =F17
Draw
18 Fees 3000 1000 =C18+E1 =G18
Earned 8
19 Salary 500 700 =B19=D19 =F19
Expense
20 Supply 100 150 =B20+D20 =F20
Expense
21 Insuranc 200 =B21+D21 =F21
e
Expense
22 Interest 150 =B22+D22 =F22
Expense
23 Amort. 850 =B23+D23 =F23
Expense
24 Subtotal =SUM =SU =SUM =SUM =SUM (F5:F23) =SUM =SUM =SUM =SUM =SUM
(B5:B2) M (D5:D2) (E5:E2) (G5;G23) (H5:H23) (I5:I23) (J5:J23) (K:K23)
(C5:
C23)
 A B C D E F G H I J K
31-Jan- DR CR DR CR DR CR DR CR DR CR
01
25 Net =SUM =H25
Income (I24-
H24)
26 Total =SUM =SUM =SUM =SUM
(H24:H2 (I24:I2 (J24:J5) (K24:K
5) 5) 5)

Completing the Worksheet

You must complete five steps when completing a worksheet. Let’s step back and look at how Mary
Smith’s work sheet was constructed.

1. Enter the Unadjusted Trial Balance

From the general ledger enter the account names along with their respective balances (either debit or
credit). The total of the unadjusted trial balance debit and credit columns must balance.

2. Enter the Adjustments

Adjustments form part of the period's activity and must therefore be reflected in the financial
statements. Adjustments should be reflected in the appropriate debit or credit adjustment column. The
total of the adjustment debit and credit columns must balance. Remember that adjustments entered
into this column also need to be journalized and posted to the general ledger.

3. Enter the Adjusted Trial Balance

Adjustments are either added to, or subtracted from, the respective balance in the unadjusted trial
balance section. Show the adjusted account balance in appropriate debit or credit column of the
Adjusted Trial Balance section.

Example:

• The unadjusted trial balance column shows Supplies with a debit balance of $600, and the
adjustment column shows a credit adjustment to Supplies of $150. The adjusted trial balance
column should show Supplies with a debit balance of $450.
• The unadjusted trial balance column shows Fees Earned with a credit balance of $3000, and the
adjustment column shows a credit adjustment to Fees Earned of $1000. The adjusted trial
balance column should show Fees Earned with a credit balance of $4000.
 If there are no adjustments the balance in the adjusted trial balance column will be the same as
the unadjusted trial balance.

4. Enter in the income Statement

From the adjusted trial balance columns, transfer all income statement related accounts (revenue and
expense). Make sure to transfer the balances into the appropriate debit (expense) or credit (revenue)
columns. At this point, we do not expect the debit and credit columns to balance.

The difference between total debits and credits represents either income or a loss. Add the difference
below the sub-total in the appropriate column (debit=income, credit=loss).

Now the total of the income statement debit and credit columns must balance.

Income: Credits (revenue) exceed debits (expenses).

Loss: Debits (expenses) exceed credits (revenue).
5. Enter the Balance Sheet

From the adjusted trial balance columns, transfer all balance sheet related accounts (asset, liability,
owner equity, and draw). Make sure to transfer the balances into the appropriate debit (asset and draw)
or credit ((contra asset such as accumulated amortization, liability, and owner equity) columns. We have
not yet transferred the income or loss to the equity account (more about this later in the module) so, at
this point, we do not expect the debit and credit column to balance.

Note:
• Accumulated amortization is treated as a contra asset account and appears beneath its
related capital asset account. Its account balance appears in the credit column.
• The difference between the total debits and credits will be equal to the income or loss.
Check your Understanding
Instructions: Using a spreadsheet program, or paper and calculator, construct a worksheet for
Louie's Landscaping.
• Download or print the file named "Louie's Landscaping Data", from the resource tab which is
located on the top right corner.
• Complete and use your worksheet for this exercise.
• You should be able to answer all the questions correctly if your worksheet is accurate.

1. From the adjusted Trial Balance, what is the amount for Accounts Receivable?
2. On the financial statements, what is the account balance for unearned Revenue?
3. On which statement did you find the amount in question 2?
4. What amount should be transferred from the Income Statement to the Statement of Owner’s
Equity?
5. On the work sheet, what name is given to the amount in question 4?

Answers:
1. 2 500 Debit
2. 6 000 Credit
3. Balance Sheet
4. 17 400
5. Net Income

Classified Balance Sheet

The main purpose of the financial statements is to provide useful information for users to make
reasonable decisions. To be more useful, the accounts will be classified into meaningful subgroups. The
Balance Sheet classifications for assets and liabilities are as follows:
Current Assets
Will be used up within one year:

• Cash, Petty Cash, Accounts Receivable

• Pre-paids, Temporary Investments
• Supplies, Inventory

Long-Term Investments

Longer than one year:

• Investment in Shares and Bonds

Capital Assets

• Also known as Property Plant and Equipment. Long-lived tangible assets used in the business:
• Vehicles, Boats, Buildings, Equipment
• Library, Machinery (less Accumulated Amortization for each)
• Land

Intangible Assets

Long-lived assets that do not have physical substance:

• Patents, Copyrights, Franchises

Current Liabilities

Must be paid within one year or less:

• Accounts Payable, Salaries Payable, Unearned Revenue

• Short Term Notes Payable
• Current portion of Long-term debt

Long-Term Liabilities

Longer than one year:

• Long-term Debt Mortgages

Check your Understanding
• Capital Assets
• Current Liabilities
• Long Term Investments
• Long Term Liabilities
• Current Assets
• Intangible Assets

Write in the previously listed classifications with the following terms.

1. Supplies Accounts Payable

2. Building Prepaid Insurance
3. Note Payable (due in 5 years)
4. Goodwill
5. Unearned Revenue
6. Accounts Receivable
7. Accumulated Amortization-Bldg
8. Patents
9. Land Held for Resale
10. Note Receivable (due in 3 years)
Answers:

1. Supplies - Current Assets

2. Accounts Payable - Current Liabilities
3. Building - Capital Assets
4. Prepaid Insurance - Current Assets
5. Note Payable (due in 5 years) - Long Term Liabilities
6. Goodwill - intangible Assets
7. Unearned Revenue - Current Liabilities
8. Accounts Receivable - Current Assets
9. Accumulated Amortization-Bldg - Capital Assets
10. Patents - Intangible Assets
11. Land held for resale - Long Term Investments
12. Note Receivable (due in 3 years) - Long Term Investments

Using the Classified Balance Sheet

Now that you understand how to classify the items, you will use the information to make some
decisions. Ratio analysis is a tool which helps with decisions such as:
• Granting a Loan
• Extending credit

Whether or not a company is solvent (solvency- the ability of a company to pay its total liabilities and
survive over a long period of time

We will introduce you to two liquidity ratios. Liquidity- The ability of a company to pay its current debt
(due within the next year) and to meet any unexpected cash needs.

Liquidity Ratios
Working Capital

Current Assets – Current Liabilities= Working Capital

When current assets are more than current liabilities at the balance sheet date, the company will likely
be able to pay its liabilities.

Current Ratio

Current Assets/ Current Liabilities= Current Ratio

As a general rule a higher current ratio indicates better liquidity. The current ratio is considered more
useful especially when comparing two companies in the same industry.

Liquidity Ratios Examples

George's Electronics reported current assets of $165,211 and $190,548 at August 31, 2008 and 2007
respectively. It reported current liabilities of $136,742 and $72,410 at August 31, 2008 and 2007.
Calculate George's working capital and current ratio for 2008 and 2007. Was George’s liquidity stronger
or weaker in 2008 than it was in 2007?

Answers:

2008

Working Capital

= Current Assets - Current Liabilities

=165, 211 - 136, 742

=28, 469

Current Ratio

=Current Assets / Current Liabilities

=165, 211 / 136,742

=1.2 to 1

2007

Working Capital

=190,548 -72,410

=118,138

Current Ratio

=190,548 / 72, 410

=2.6 to 1

Decision: George’s liquidity was weaker in 2008. Working capital decreased and the current ratio
decreased from 2.6 to 1.2

Check your Understanding

On December 31, 2008 George's Electronics had $1,000,000 of current assets and $900,000 of current
liabilities. On the same day Z-Tekko had $200,000 of current assets and $100,000 of current liabilities.

Calculate the working capital and current ratio for both companies and compare the results. Which
liquidity measure is more relevant?

Answers:

Georges Electronics

Working Capital = Current Assets - Current Liabilities = 1,000,000 - 900,000 = 100,000

Current Ratio =Current Assets/Current Liabilities = 1,000,000/900,000 = 1.11 to 1

Z-Tekko

Working Capital = 200,000 - 100,000 = 100,000

Current Ratio = 200,000 /100,000 = 2 to 1

Decision: The working capital is the same for both companies, but Z- Tekko’s current ratio is stronger.
The current ratio is more relevant.

The Closing Process

Once the financial statements have been prepared, the next step is to close the books for that
accounting period. In most businesses, the accounting records are closed at the end of the fiscal year.

1. Economic Event: Analyze Transactions

2. Record: Enter in General Journal, prepare Adjusting Entries and Correcting Entries
3. Summarize :Post to General Ledger & post Adjusting Entries & Correcting Entries
4. Prepare Financial Reports: Prepare Trial Balance, Worksheet, and Adjusted Trial Balance &
Financial Statements

This is the final phase of the accounting cycle. When the closing process is complete, the
records will be ready to accept transaction data for the next accounting period.

Let's look at the difference between temporary (income statement) and permanent (balance sheet)
accounts.

Types of Accounts
Temporary Accounts: Temporary accounts accumulate information related to the current period only.

Examples:

• All income statement accounts (e.g revenue and expenses)

• Owner withdrawals (which relates to the owner equity account)

These accounts are closed at the end of each period so they may begin re-accumulating information for
the next period.

Closed: Their balance is transferred to the owner equity account.

Permanent Accounts: Permanent accounts are those which relate to the current and future periods.

Examples: all balance sheet accounts are those which relate to the current and future periods.

These accounts are not closed at the end of each period as they relate to both the current and future
periods. The ending balance of the current period becomes the opening balance for the next period.
Check your Understanding
With the following terms decide if they would be considered Temporary Accounts or Permanent
Accounts:

Accounts Receivable, Accrued Interest Expense, Accrued Interest Payable, Accumulated Amortization,
Salary Expense, Sales Revenue, Supplies, Utility Expense, Amortization Expense, Fees Earned, Unearned
Revenue, Prepaid Insurance Expense, Owner Equity

Answer:

Temporary Accounts:

• Salary Expense
• Utility Expense
• Sales Revenue
• Fees Earned
• Amortization Expense
• Accrued Interest Expense

Permanent Accounts:

• Accounts Receivable
• Prepaid Insurance Expense
• Supplies
• Unearned Revenue
• Accumulated Amortization
• Accrued Interest Payable
• Owner Equity

Closing the Books

As you have seen in previous units, the income statement links to the balance sheet through the owner
equity account. To complete the link in the general ledger, the temporary account balances on the
income statement must be transferred to the balance sheet's owner equity account. This is called
Closing the Books. We will add entries to the general journal and post them to the general ledger, so
that the account balances in the general ledger will match the financial statements.

What are Closing Entries?

Entries in the general journal which transfer the temporary income statement account balances to the
owner equity account.

These entries close out ("zero") the temporary income statement accounts. Once the closing journal
entries are posted, the account balance for owner equity in the general ledger will agree with that
account balance on the balance sheet.
In summary, this process recognizes in the general ledger the effect of net income or loss on the owner's
capital account, as shown on the Statement of Changes in Owner Equity, and on the balance sheet. This
completes the link between the income statement and balance sheet.

What are Closing Entries?

Closing entries result in:
• Zero balances in all temporary accounts
• An adjustment to the owner equity account which reflects its true balance after all related
transactions (investment, income, loss and draw) are processed

The purpose of closing entries is to adjust our opening owner equity balance for:
• Revenue
• Expenses
• Draws

Closing Entries
Let’s compare Mary Smith's existing general ledger to her financial statements to identify the closing
entries needed. You'll see that, although the closing owner equity balance on the Statement of Changes
in Owner Equity and Balance Sheet are the same, this balance does not currently agree with the general
ledger.

Note: Please refer to the file "Mary Smith's General Ledger" in the resource tab.

Closing Entries
Closing Entries

Closing Entries
We will prepare four closing entries for Mary Smith:

1. Close revenue to income summary. (Income Summary- We use the income summary account (a
temporary account) to prepare compound entries which streamline the closing process.)
 2. Close expenses to income summary.
3. Close income summary to owner equity.
4. Close draw to owner equity.

To Recap the Closing Entries

Case Study #1
Instructions: Try this case study to practice journalizing the closing entries from the completed
worksheet:
• Print "Louie's Landscaping Worksheet", from the resource menu to complete the activity.
• Use the adjusted Trial Balance columns of the worksheet as your reference to create the closing
journal entries
• Fill in the account name, and write the amount in the appropriate column beside it

Note: For the following exercise, the order of accounts need to be entered in the same order as the
"Louie's Landscaping Worksheet" document. However, order does not matter when preparing closing
journal entries.

Case Study #1
ANSWERS to CASE STUDY #1

CLOSING ENTRIES
 Account Entries Debit Credit
1. Revenue 32 000
Income Summary 32 000

2. Account Titles and Explanations Debit Credit

Income Summary 14 600
Salary Expense 6 300
Utility Expense 3 600
Repair Expense 500
Supply Expense 550
Insurance Expense 300
Rent Expense 1 500
Amort. Ex.-Furniture 600
Amort. Ex.- Building 450
Interest Expense 800

3. Account Titles and Explanations Debit Credit

Income Summary 17 400
Owner Equity 17 400
4. Owner Equity 6 000
Draw 6 000

Posting Closing Entries

The post-closing trial balance is the last step in the accounting cycle. The post-closing cycle trial balance
lists all permanent (balance sheet) accounts.
 Temporary accounts= 0

Owner Equity agrees with the financial statements

Posting Closing Entries: Exercise

Instructions

Practice posting the closing entries to the appropriate accounts in the general ledger:
• Write in the following "dollar" amounts from the closing entries in the general journal into the
appropriate columns and accounts in the general ledger using the closing entries
Answers to Post Closing Entries Exercise

Post-Closing Trial Balance

The post-closing trial balance is the last step in the accounting cycle. The post-closing trial balance lists
all permanent (balance sheet) accounts.

Its objective is to ensure that the total of the debits and credits of all permanent (balance
sheet) accounts are equal. Since the temporary (income statement) accounts and the draw
account have been zeroed, they are not needed on the post-closing trial balance.
Post-Closing Trial Balance: Exercise
Instructions: Practice what you've learned in this unit by completing the adjusted trial balance columns
of the worksheet below.
• Print "Louie's Landscaping General Ledger", from the resource tab to complete the activity

POST CLOSING BALANCE

Debit Credit
1. Cash
2. Accounts Receivable
3. Supplies
4. Prepaid Insurance
5. Prepaid Rent
6. Furniture And
Equipment
7. Buildings
8. Accumulated
Amortization-Furniture
9. Accumulated
Amortization-Buildings
10. Accounts Payable
11. Interest Payable
12. Salary Payable
13. Utility Payable
 Debit Credit
14. Unearned Revenue
15. Mortgage Payable
16. Owner Equity
TOTAL

Check your Understanding

POST CLOSING BALANCE

Debit Credit
1. Cash 1 500
2. Accounts Receivable 2 500
3. Supplies 150
4. Prepaid Insurance 900
5. Prepaid Rent 500
6. Furniture And 24 000
Equipment
7. Buildings 50 000
8. Accumulated 600
Amortization-Furniture
9. Accumulated 450
Amortization-Buildings
10. Accounts Payable 1 000
11. Interest Payable 800
12. Salary Payable 300
13. Utility Payable 600
14. Unearned Revenue 6 000
15. Mortgage Payable 40 000
16. Owner Equity 29 800
TOTAL 79 550 79 550

1. The work sheet is prepared at the beginning of each period:

a. True
b. False
2. Entering the adjusted trial balance column is the last step in completing the Work Sheet:
a. True
b. False
3. Adjusting entries entered in the adjustment column of the Work Sheet must be journalized and
posted to the general ledger prior to the completion of the next period:
a. True
b. False
4. The debit and credit totals of the income statement and balance sheet columns will only balance
after the income or loss is added to the appropriate debit or credit column:
a. True
b. False
5. Closing entries are prepared at the end of the period:
a. True
b. False
6. Closing entries close out the permanent balance sheet accounts to the owner equity account:
a. True
b. False
7. After closing entries have been posted to the general ledger the owner equity account balance in
the general ledger will agree to the owner equity balance appearing on the balance sheet:
a. True
b. False
8. The balance in the income summary account before closing it to the owner equity account will
equal the income or loss for the period:
a. True
b. False
9. Owner withdrawals are closed to the income summary account:
a. True
b. False
10. The post-closing trial balance will include both sheet and income statement accounts:
a. True
b. False

Answers:

1. B - False
2. B - False
3. A - True
4. A - True
5. A - True
6. B - False
7. A - True
8. A - True
9. B - False
10. B - False

Case Study #2
Instructions: Practice what you’ve learned in this unit by completing the adjusted trial balance columns
of the worksheet.

Enter the correct account balance in the appropriate debit or credit column.

Unadjusted Trial Balance Adjustments Adjusted Trial Balance

Sally’s Travel DR CR DR CR DR CR
Service
Worksheet
July 31, 2013
Cash 21 700
Account 3 000
Receivable
Office 400 250
Supplies
Prepaid 2 400 200
Insurance
Expense
Prepaid Rent 6 000 2 000
Expense
Prepaid 1 000
Advertising
Expense
Office 12 000
Furniture
Accum, 0 100
Amort.
Furniture
Computer 5 000
Equipment
[Link]. 0 200
Computer
Accounts 3 000
Payable
Bank Loan 0 117
Interest
Payable
Note Payable 11 000
Note Payable 0 92
Interest
Payable
Bank Loan 20 000
Payable
Salary 0 150
Payable
Owner’s 10 000
Equity
Draw 2 000
Revenue 12 000
Insurance 0 200
Expense
Rent Expense 0 2 000
Office Supply 0 250
Expense
 Sally’s Travel DR CR DR CR DR CR
Service
Worksheet
July 31, 2013
Advertising 1 200
Expense
Amort. 0 100
Furniture
Expense
Amort. 0 200
Computer
Expense
Bank Loan 0 117
Interest
Expense
Note Payable 0 92
Interest
Expense
Salary 1 000 150
Expense
Utility 300
Expense

Answers to the Case Study:

Unadjusted Trial Balance Adjustments Adjusted Trial Balance

Sally’s Travel DR CR DR CR DR CR
Service
Worksheet July
31, 2013
Cash 21 700 21 700
Account 3 000 3 000
Receivable
Office Supplies 400 250 150
Prepaid 2 400 200 2 200
Insurance
Expense
Prepaid Rent 6 000 2 000 4 000
Expense
Prepaid 1 000 1 000
Advertising
Expense
Office Furniture 12 000 12 000
Accum, Amort. 0 100 100
Furniture
Computer 5 000 5 000
Equipment
Sally’s Travel DR CR DR CR DR CR
Service
Worksheet July
31, 2013
[Link]. 0 200 200
Computer
Accounts 3 000 3 000
Payable
Bank Loan 0 117 117
Interest Payable
Note Payable 11 000 11 000
Note Payable 0 92 92
Interest Payable
Bank Loan 20 000 20 000
Payable
Salary Payable 0 150 150
Owner’s Equity 10 000 10 000
Draw 2 000 2 000
Revenue 12 000 12 000
Insurance 0 200 200
Expense
Rent Expense 0 2 000 2000
Office Supply 0 250 250
Expense
Advertising 1 200 1 200
Expense
Amort. 0 100 100
Furniture
Expense
Amort. 0 200 200
Computer
Expense
Bank Loan 0 117 117
Interest
Expense
Note Payable 0 92 92
Interest
Expense
Salary Expense 1 000 150 1 150
Utility Expense 300 300
TOTAL 56 000 56 000 3 109 3 109 56 659 56 659

You have completed Completing the Accounting Cycle

Remember to check the timeline before you proceed to the next module to ensure you have completed
any assignments as required. Check with your instructor if you have any questions.