Brandon s Cabinet Shop Adjusting Entries and Closing Entries for the Quarter Ended June 30 and the Final Evaluation Page 1
Adjusting Entries for the Period Using a copy of the June 30 Trial Balance (printed after the bank reconciliation entries), and the information and financial data shown below, record the adjusting entries for Brandon s Cabinet Shop. Be sure to click on the Adjusting JE button on the tool bar. Adjusting entries must NOT be entered using the Daily entries procedure. Any corrections to adjusting entries must also be entered using the Adjusting entries option. Adjusting entries will not require documentation entries, such as check numbers or vendor or customer numbers. Be sure to round all calculations to the nearest cent. All entries must be recorded as of June 30, the end of the quarter. Insurance and depreciation expense are recorded quarterly. A. The expired insurance for the quarter is 15% of the Prepaid Insurance account balance. B. The ending store supplies inventory is 20% of the Store Supplies Expense account balance. C. The ending shop supplies inventory is 20% of the Shop Supplies Expense account balance. D. Rent expense is 30% of the Prepaid Rent account balance. E. A total of $400.00 worth of media advertising, paid for and correctly charged to the Advertising Expense account, will be received/used in the first two weeks of July. F. Depreciation of store fixtures totals $3,200.00 for the quarter. G. Depreciation of shop equipment is $450.00 for the quarter. H. The company vehicles are depreciated on a per-mile basis of 22.5 cents per mile. Total mileage for the quarter on all of the vehicles was 5,250 miles. I. A $1,500.00, 6%, 60-day note receivable that was received on May 31. Accrue the interest for the month of June. Use the 360-day banker s year to calculate the interest. J. Eighty percent (80%) of the Unearned Revenue account has been earned. The Unearned Revenue account is used to record customer advance payments of cabinet installations. K. A $13,000.00 Note Payable was issued on May 31. Accrue interest for the month of June. Use the 360-day banker s year to calculate the interest at 5.4% rounded to the nearest hundredth. Page 2
When all of the adjusting entries have been correctly entered: 1. Print the Adjusted Trial Balance for June 30 2. Print a Schedule of Accounts Receivable 3. Print a Schedule of Accounts Payable 4. Print the Adjusting Entries from the General Journal 5. Print the After Adjustments Check Figures If your Trial Balance matches the After Adjustments Check Figures, do the following: Move the pointer to Journal/Ledgers/Statements and select Financial Statements. 1. Print the Income Statement 2. Print the Retained Earnings Statement 3. Print the Balance Sheet Move the pointer to Check Figures and select Financial Statement Check Figures 1. Print the Key Balances for the Income Statement 2. Print the Key Balances for the Balance Sheet. Do not continue if any of the key balances do not match the balances of your financial statements. Find the errors and correct them. Error Correction After Closing the Books If, after closing the books, you discover an error or wish to print a corrected copy of any of the financial statements, move the pointer to Support, then click on Restore to Adjusted Balances. To update the trial balance, from the Journal/Ledger/Statements option select General Ledger and the reinstated Adjusted Trial Balance will reappear on the monitor screen. This procedure will reopen your books for any required adjustment corrections. If the errors occurred prior to the adjusting entries, you must see your instructor/professor for assistance. Page 3
Make the required correction entries using the Adjusting JE data entry mode. Print the required corrected documents, close the books, and print a new Post-Closing Trial Balance. When finished, return to the Home page for PKLSoftware.com and exit the program. Record the Closing Entries Before closing the books for Brandon s Cabinet Shop, be sure that you have printed all of the documents listed in instructions above. The financial statements cannot be printed after the closing entries have been recorded. 1. Move the pointer to the Data Entry, select the Closing JE button on the Menu Bar and click. The temporary accounts will be closed and balance of the Retained Earnings account will be updated for the total of net income or loss minus the amount of the dividends paid. 2. From the Journal/Ledgers/Statements option, move the pointer to General Ledger and click. Print a copy of the Post-Closing Trial Balance. 3. From the Journal/Ledgers/Statements option, move the pointer to General Journal, select Closing Entries and print the Closing Entries. Exit the Brandon s Cabinet Shop accounting program. Using all of your printed documents, carefully complete the Final Evaluation at the end of this module. After completing the Final Evaluation in this manual, log in to Brandon s Cabinet Shop, move the pointer to Final Project Evaluation and complete the on-line version of the evaluation. The evaluation and several of the end-of-the-quarter documents may be collected by your instructor. Buttons on Heading of Final Evaluation: Recall Save Score Display Email Print Recall: Retrieves answers previously entered Save: Stores the current answers Score: Grade the recorded answers Display: View and print the examination if the maximum attempts have been made. Email: Send a copy of the examination to your Instructor/Professor Print: Print a hard copy of the examination and answers. Note: You cannot score the evaluation until you Save your answers. Make sure your browser is set to allow pop-ups. Page 4
FINAL EVALUATION BRANDON S CABINET SHOP NAME CLASS DAY AND TIME DATE 1. From the closing entries, what is the amount of the first credit to the Income Summary account? 2. From the closing entries, what is the amount of the first credit to the Retained Earnings account? 3. Identify by account number the customer with the largest outstanding balance. 4. What was the June 17 balance of the Bright-Way Cabinets account payable? 5. What was the amount of the payment to San Juan Lumber (26600) on June 30? 6. What was the number of the vendor invoice that was paid in full on June 6? 7. What is the correct ending balance of the Manageable Space customer account (11450)? 8. What was the correct balance of the Cash account at the close of the business day on June 25? 9. What was the largest correct balance in the Cash account during the month of June? 10. What was the largest correct balance in the Merchandise Inventory account during the month of June? 11. Before closing what was the balance of the Interest Earned account? 12. Before closing what was the ending balance of the Bank Service Charges account? 13. What are the Net Sales for the quarter? Page 5
14. What is the Gross Profit From Sales and Installation Revenue for the quarter? 15. What are the Total Selling Expenses for the quarter? 16. What is the total amount of depreciation expense recognized this quarter? 17. What are the Total Operating Expenses for the quarter? 18. What is the Income from Operations for the quarter? 19. What is the Net Income for the quarter? 20. If Sales Returns and Allowances were reduced to zero, what would be the total for Gross Profit From Sales and Installation Revenue? 21. Is the Total Cost of Goods Sold greater than 73.25% of Net Sales? (Round all percent calculations to the nearest hundredth.) 22. Last quarter Total Selling Expenses were 10.85% of Net Sales. Does this quarter show an improvement over the last quarter? 23. How much has stockholder equity increased during the quarter ended June 30? $ 24. What is the book value of the Shop Equipment $ 25. Does Brandon s Cabinet Shop have enough cash to meets its current liabilities? 26. Are Total Current Assets greater than 70.69% percent of Total Assets? Page 6
27. Current ratio = Current Assets/Current Liabilities. Is the current ratio less than 9.87 (round to 2 decimal places)? 28. Which is usually the last account listed on a corporation s Post- Closing Trial Balance? A. Cash B. Common Stock C. Dividends D. Income Summary E. Retained Earnings 29. After closing, what is the balance of the Income Summary account? A. The total of all revenue accounts B. The total of all asset accounts C. The total of all expense accounts D. The same as the balance of retained earnings E. None of the above 30. What is the balance of the Retained Earnings account after closing? $ Page 7