To close the accounting cycle for Joe Smith's business, complete the following:
Journalize and post the adjusting entries for Joe's business. Make the following adjusting entries: (Note: you may need to create additional ledger accounts)
Adjustment for expired insurance
Adjustment for office supplies used (note: a physical inventory of supplies on Nov 30 showed $35 worth of supplies)
Adjustment for depreciation on the tools, reference materials, and truck used for the business. To keep things simple, Joe will use the straight-line depreciation method. The tools and reference materials are expected to have a useful life of 10 years. The tools are expected to have a salvage value of $50 at the end of 10 years. The reference materials are not expected to have a salvage value. The truck is expected to last 5 years and to have a salvage value of $2,500. (note: use individual depreciation accounts for each type of asset – 3 different accounts)
Adjustment for accrued interest on the truck loan. The annual interest rate on the loan is 6%.
Journalize and post the closing entries.
Prepare a post-closing trial balance.
Prepare the financial statements (income statement, statement of owner's equity, and balance sheet) for the first three months
Note: I have the first part of this assignment saved on my excel files I am just not understanding this part of it.
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