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    Accounting Cycle Simulation

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    Mc Clent Cervantes
    The document records transactions for Entity A throughout 20x1. It provides an unadjusted trial balance as of December 31, 20x1 showing cash, accounts receivable, prepaid expenses, equipment, notes payable, owner's capital, owner's drawings, revenue and expenses. Adjustments are made for depreciation, interest, insurance and supplies expenses. The adjusted trial balance, income statement and balance sheet are presented, along with closing entries to zero out temporary accounts and transfer net income to owner's equity.

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    © All Rights Reserved
    Download as XLSX, PDF, TXT or read online from Scribd

    Accounting Cycle Simulation

    Uploaded by

    Mc Clent Cervantes
    134 views15 pages
    The document records transactions for Entity A throughout 20x1. It provides an unadjusted trial balance as of December 31, 20x1 showing cash, accounts receivable, prepaid expenses, equipment, notes payable, owner's capital, owner's drawings, revenue and expenses. Adjustments are made for depreciation, interest, insurance and supplies expenses. The adjusted trial balance, income statement and balance sheet are presented, along with closing entries to zero out temporary accounts and transfer net income to owner's equity.

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    © © All Rights Reserved

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    The document records transactions for Entity A throughout 20x1. It provides an unadjusted trial balance as of December 31, 20x1 showing cash, accounts receivable, prepaid expenses, equipment, notes payable, owner's capital, owner's drawings, revenue and expenses. Adjustments are made for depreciation, interest, insurance and supplies expenses. The adjusted trial balance, income statement and balance sheet are presented, along with closing entries to zero out temporary accounts and transfer net income to owner's equity.

    Copyright:

    © All Rights Reserved
    Download as XLSX, PDF, TXT or read online from Scribd
    Download as xlsx, pdf, or txt
    134 views15 pages

    Accounting Cycle Simulation

    Uploaded by

    Mc Clent Cervantes
    The document records transactions for Entity A throughout 20x1. It provides an unadjusted trial balance as of December 31, 20x1 showing cash, accounts receivable, prepaid expenses, equipment, notes payable, owner's capital, owner's drawings, revenue and expenses. Adjustments are made for depreciation, interest, insurance and supplies expenses. The adjusted trial balance, income statement and balance sheet are presented, along with closing entries to zero out temporary accounts and transfer net income to owner's equity.

    Copyright:

    © All Rights Reserved
    Download as XLSX, PDF, TXT or read online from Scribd
    Download as xlsx, pdf, or txt
    of 15

    Date Account Titles Dr

    Cash 2,000,000

    1 Owner's Capital

    to record the owner’s investment to the business

    Equipment 1,000,000

    2 Cash
    to record the acquisition of equipment for cash

    Cash 500,000
    3 Notes Payable
    to record the bank loan

    Prepaid Insurance 160,000


    4 Cash
    to record the prepayment of insurance

    Cash 2,000,000
    Accounts Receivable 4,000,000
    5
    Service Fee
    to record service fees

    Cash 1,800,000
    6 Accounts Receivable
    to record collection of accounts receivable

    Salaries Expense 1,200,000


    7 Cash
    to record salaries expense
    Utilities Expense 500,000
    8 Cash
    to record utilities expense
    Prepaid Supplies 120,000
    9 Cash
    to record purchase of supplies

    Owner's Drawing 1,400,000


    10 Cash
    to record owner’s drawings
    Cr REPORT
    BS
    2,000,000 BS

    BS
    1,000,000 BS

    BS
    500,000 BS

    BS
    160,000 BS

    BS
    BS
    6,000,000 IS

    BS
    1,800,000 BS

    IS
    1,200,000 BS

    IS
    500,000 BS

    BS
    120,000 BS

    BS
    1,400,000 BS
    I. ASSETS

    CASH Accounts receivable


    1 2,000,000 5 4,000,000
    2 1,000,000 6 1,800,000
    3 500,000
    4 160,000
    5 2,000,000
    6 1,800,000
    7 1,200,000
    8 500,000 BAL 2,200,000
    9 120,000
    10 1,400,000
    BAL 1,920,000

    Prepaid Insurance Prepaid Supplies


    4 160,000 9 120,000

    160,000 120,000

    Equipment
    2 1,000,000

    1,000,000

    II. LIABILITIES
    Notes Payable
    500,000
    BAL 500,000

    III. EQUITY
    Owner's capital Owner's drawings
    2,000,000 1,400,000

    2,000,000 1,400,000

    IV. INCOME

    Service Fees
    6,000,000

    6,000,000

    V. EXPENSE
    Salaries Expense Utilities Expense
    1,200,000 500,000

    1,200,000 500,000
    Entity A
    Unadjusted Trial Balance
    December 31, 20x1

    Accounts Debits Credits


    Cash 1,920,000
    Accounts receivable 2,200,000
    Prepaid insurance 160,000
    Prepaid supplies 120,000
    Equipment 1,000,000
    Notes payable 500,000
    Owner's capital 2,000,000
    Owner's drawings 1,400,000
    Service fees 6,000,000
    Salaries expense 1,200,000
    Utilities expense 500,000
    Totals 8,500,000 8,500,000
    Date Account Titles Dr Cr
    IS Depreciation expense (1M ÷ 10 yrs.) 100,000
    BS (i) Accumulated depreciation 100,000
    to record the depreciation expense for the year

    IS Interest expense (500K x 12% x 6/12) 30,000


    BS (ii) Interest Payable 30,000
    to accrue interest expense

    IS Insurance expense (160K x 3/12) 40,000


    BS (iii) Prepaid insurance 40,000
    to recognize insurance expense

    IS Supplies expense (120K – 40K) 80,000


    BS (iv) Prepaid supplies 80,000
    to recognize supplies expense
    Principal 500,000.00
    Interest rate 12%
    Interest 60,000.00
    Interest from 30,000.00
    11,450,000

    Date Account Titles Dr


    Service Fees 6,000,000
    Salaries Expense
    Utilities Expense
    Depreciation Expense
    Dec. 31, 20x1 Interest Expense
    Insurance Expense
    Supplies Expense
    Income Summary
    to close income and expense accounts to income summary
    Income Summary 4,050,000
    Dec. 31, 20x1 Owner's Equity
    to close the income summary to equity

    Owner's Equity 1,400,000


    Dec. 31, 20x1 Owner's Drawing
    to close the drawings account
    11,450,000

    Cr

    1,200,000
    500,000
    100,000
    30,000
    40,000
    80,000
    4,050,000

    4,050,000

    1,400,000
    Unadjusted TB Adjustments
    Debits Credits Debits
    Cash 1,920,000
    Accounts receivable 2,200,000
    Prepaid insurance 160,000
    Prepaid supplies 120,000
    Equipment 1,000,000
    Notes payable 500,000
    Owner's capital 2,000,000
    Owner's drawings 1,400,000
    Service fees 6,000,000
    Salaries expense 1,200,000
    Utilities expense 500,000
    8,500,000 8,500,000
    Adjustments:
    Depreciation expense 100,000
    Interest expense 30,000
    Insurance expense 40,000
    Supplies expense 80,000
    Accumulated Depreciation
    Interest Payable

    Total 250,000.00
    Income Summary (Profit or Loss)
    Adjustments Adjusted TB Income Statement Balance Sheet
    Credits Debits Credits Debits Credits Debits
    1,920,000 1,920,000
    2,200,000 2,200,000
    40,000 120,000 120,000
    80,000 40,000 40,000
    1,000,000 1,000,000
    500000
    2000000
    1,400,000 1,400,000
    6000000 6000000
    1,200,000 1,200,000
    500,000 500,000

    100,000 100,000
    30,000 30,000
    40,000 40,000
    80,000 80,000
    100,000 100000
    30,000 30000

    250,000.00 8,630,000 8,630,000 1,950,000.00 6,000,000.00 6,680,000


    4,050,000.00
    6,000,000.00 6,000,000.00 6,680,000
    Balance Sheet Closing entries Post closing entries
    Credits Debits Credits Debits Credits
    1,920,000
    2,200,000
    120,000
    40,000
    1,000,000
    500,000.00 500000
    2,000,000.00 2,650,000 4,650,000
    1,400,000 0
    6,000,000.00
    1,200,000
    500,000

    100,000
    30,000
    40,000
    80,000
    100,000.00 100,000.00
    30,000.00 30,000.00

    2,630,000 6,000,000.00 6,000,000.00 5,280,000 5,280,000


    4,050,000.00
    6,680,000
    Entity A
    Balance Sheet
    As of December 31, 20x1

    ASSETS
    Cash ₱1,920,000
    Accounts receivable 2,200,000
    Prepaid insurance 120,000
    Prepaid supplies 40,000
    Equipment 1,000,000
    Accumulated depreciation -100,000
    TOTAL ASSETS ₱5,180,000

    LIABILITIES
    Notes payable 500,000
    Interest payable 30,000
    TOTAL LIABILITIES 530,000

    EQUITY
    Owner's equity 4,650,000
    TOTAL EQUITY 4,650,000

    TOTAL LIABILITIES & EQUITY ₱5,180,000


    Entity A
    Income Statement
    For the month ended December 31, 20x1

    INCOME
    Service Fees ₱6,000,000

    EXPENSES
    Salaries expense 1,200,000
    Utilities expense 500,000
    Depreciation expense 100,000
    Interest expense 30,000
    Insurance expense 40,000
    Supplies expense 80,000
    TOTAL EXPENSES 1,950,000

    PROFIT FOR THE PERIOD ₱4,050,000


    Changes in Owner's Equity
    As of December 31, 20x1

    Owner's Capital 2,000,000


    Owner's Drawing -1,400,000
    Net Income 4,050,000
    Owner's Equity 4,650,000

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