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Q23E

Expert-verified
Horngren'S Financial And Managerial Accounting
Found in: Page 302

Short Answer

The adjusted trial balance of Quality Office Systems at March 31, 2018, follows:

Requirements

1. Journalize the required closing entries at March 31, 2018.

2. Set up T-accounts for Income Summary; Retained Earnings; and Dividends. Post the closing entries to the T-accounts, and calculate their ending balances.

3. How much was Quality Office’s net income or net loss?

The net income of the Quality Office was$83,750.

See the step by step solution

Step by Step Solution

Step 1: Meaning of Trial Balance

In accounting, trial balance refers to a tabular formatted report that contains the balances of all the ledger accounts of both aspects, i.e., debit and credit. A trial balance facilitates the business entities to draft their annual financial statements.

Step 2: Preparation of closing entries

Date

Accounts and Explanation

Debit ($)

Credit ($)

2018

Mar 31

Sales revenue

235,700

Income summary

235,700

(To close the revenue account)

Mar 31

Income summary

151,950

Cost of goods sold

107,550

Selling expense

27,400

Administrative expense

14,200

Interest expense

2,800

(To close the expense accounts)

Mar 31

Income summary (235700-151950)

83,750

Retained earnings

83,750

(To close the income summary account)

Mar 31

Retained earnings

41,500

Dividends

41,500

(To adjust the dividends)

Step 3: Preparation of T-accounts

Income Summary

Date

Particulars

Amount ($)

Date

Particulars

Amount ($)

2018

2018

Mar 31

Expenses

151,950

Mar 31

Sales revenue

235,700

Retained earnings

83,750

Mar 31

Ending balance

0

Retained Earnings

Date

Particulars

Amount ($)

Date

Particulars

Amount ($)

2018

2018

Mar 31

Dividends

41,500

Mar 31

Opening balance

4,950

Mar 31

Income summary

83,750

Mar 31

Ending balance

47,200

Dividends

Date

Particulars

Amount ($)

Date

Particulars

Amount ($)

2018

2018

Mar 31

Opening balance

41,500

Mar 31

Retained earnings

41,500

Mar 31

Ending balance

0

Step 4: Computation of net income or net loss

Most popular questions for Business-studies Textbooks

Journalize the following transactions that occurred in November 2018 for Julie’s Fun World. No explanations are needed. Identify each accounts payable and accounts receivable with the vendor or customer name. Julie’s Fun World estimates sales returns at the end of each month.

Nov. 4 Purchased merchandise inventory on account from Vera Company, $5,000. Terms 3/10, n/EOM, FOB shipping point.

6 Paid freight bill of $100 on November 4 purchase

8 Returned half the inventory purchased on November 4 from Vera Company.

10 Sold merchandise inventory for cash, $1,100. Cost of goods, $400. FOB destination.

11 Sold merchandise inventory to Geary Corporation, $11,100, on account, terms of 2/10, n/EOM. Cost of goods, $6,105. FOB shipping point.

12 Paid freight bill of $20 on November 10 sale.

13 Sold merchandise inventory to Caldwell Company, $9,500, on account, terms of n/45. Cost of goods, $5,225. FOB shipping point.

14 Paid the amount owed on account from November 4, less return and discount.

17 Received defective inventory as a sales return from the November 13 sale, $500. Cost of goods, $275.

18 Purchased inventory of $3,600 on account from Rainman Corporation. Payment terms were 2/10, n/30, FOB destination.

20 Received cash from Geary Corporation, less discount.

26 Paid amount owed on account from November 18, less discount.

28 Received cash from Caldwell Company, less return.

29 Purchased inventory from Sandra Corporation for cash, $12,300, FOB shipping point. Freight in paid to shipping company, $170.

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