Adjusting journal entries-preparing adjusted trial balance

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Reference no: EM131248312

Recording four adjusting journal entries and preparing an adjusted trial balance: Mint Cleaning Inc. prepared the following unadjusted trial balance at the end of its second year of operations ending December 31, 2013. To simplify, the amounts are in thousands of dollars. Account Titles: Cash- Debit- $38 Credit--. Accounts Receivable- Debit- $9 Credit--. Prepaid Insurance- Debit- $6 Credit--. Equipment- Debit- $80 Credit--. Accumulated Depreciation- Debit-- Credit- 0. Accounts Payable- Debit-- Credit- 9. Contributed Capital -- Credit- $76. Retained Earnings- Debit-- Credit- $4. Sales Revenue- Debit-- Credit- $80. Administrative Expenses- Debit-$26 Credit--. Wages Expense- Debit- $10 Credit--. Totals- Debit- $169 Credit-$169. Other data not yet recorded at December 31, 2013: a. Insurance expired during 2013, $5. b. Depreciation expense for 2013, $4. c. Wages payable, $7. d. Income tax expense, $9. 1. Prepare the adjusting journal entries for 2013. 2. Using T-accounts determine the adjusted balances in each account and prepare an adjusted trial balance as of December 31, 2013. 3. By what amount would net income have been understated or overstated had the adjusting journal entries not been recorded? Using the above adjusted balances prepare an income statement, statement of retained earnings, and balance sheet for 2013. Using the above adjusted balances, give the closing journal entry for 2013. What is the purpose of closing the books at the end of the accounting period?

Reference no: EM131248312

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