Preparation of a Work Sheet, Financial Statements, and Adjusting, Closing, and reversing Entries
Julio Theater Company's trial balance at the end of its current fiscal year follows.
2, June 30, 2014, net income: $197,244
Julio theater Company trial Balance June 30, 2014
|
Cash
|
63,600
|
|
Accounts Receivable
|
37,088
|
|
|
Prepaid Insurance
|
39,200
|
|
|
Office Supplies
|
1,560
|
|
|
Cleaning Supplies
|
7,180
|
|
|
Land
|
40,000
|
|
|
Building
|
800,000
|
|
|
Accumulated Depreciation-Building
|
|
78,800
|
|
Theater Furnishings
|
740,000
|
|
|
Accumulated Depreciation-Theater Furnishings
|
|
130,000
|
|
Office Equipment
|
63,200
|
|
|
Accumulated Depreciation-Office Equipment
|
|
31,120
|
|
Accounts Payable
|
|
91,012 |
|
Gift Books Liability
|
|
83,800 |
|
Mortgage Payable
|
|
600,000
|
|
P. Julio, Capital
|
|
625,296
|
|
P. Julio, Withdrawals
|
120,000
|
|
|
Ticket Sales Revenue
|
|
822,800 |
|
Theater Rental Revenue
|
|
90,400 |
|
Usher Wages Expense
|
314,000
|
|
|
Office Wages Expense
|
48,000
|
|
|
Utilities Expense
|
225,400
|
|
|
Interest Expense
|
54,000
|
|
|
|
2,553,228
|
2,553,228
|
Required:
1. Enter Julio Theater's trial balance amounts in the Trial Balance columns of a work sheet and complete the work sheet using the following information:
a. Expired insurance, $34,800.
b. Inventory of unused office supplies, $488.
c. Inventory of unused cleaning supplies, $936.
d. Estimated depreciation on the building, $28,000.
e. Estimated depreciation on the theater furnishings, $72,000.
f. Estimated depreciation on the office equipment, $6,320.
g. The company credits all gift books sold during the year to the Gift Books Liability account. A gift book is a booklet of ticket coupons that is purchased in advance as a gift. The recipient redeems the coupons at some point in the future. On June 30 it was estimated that $75,600 worth of the gift books had been redeemed.
h. Accrued but unpaid usher wages at the end of the accounting period, $1,720.
2. Prepare an income statement, a statement of owner's equity, and a balance sheet. Assume no additional investments by the owner, P. Julio.
3. Prepare adjusting, closing, and, when necessary, reversing entries from the work sheet.
4. Business Application- Can the work sheet be used as a substitute for the finan- cial statements? Explain your answer.