Question

Cooke Company has a fiscal year ending on September 30. Selected data from the September 30 worksheet are presented below.

COOKE COMPANY Worksheet For The Month Ended September 30, 2017
	Trial Balance		Adjusted Trial Balance
Account Titles	Dr.	Cr.	Dr.	Cr.
Cash	37,400		37,400
Supplies	18,600		4,200
Prepaid Insurance	31,900		3,900
Land	80,000		80,000
Equipment	120,000		120,000
Accumulated Depreciation—Equipment		36,200		42,000
Accounts Payable		14,600		14,600
Unearned Service Revenue		2,700		700
Mortgage Payable		50,000		50,000
Common Stock		107,700		107,700
Retained Earnings, Sept. 1, 2017		2,000		2,000
Dividends	14,000		14,000
Service Revenue		278,500		280,500
Salaries and Wages Expense	109,000		109,000
Maintenance and Repairs Expense	30,500		30,500
Advertising Expense	9,400		9,400
Utilities Expenses	16,900		16,900
Property Tax Expense	18,000		21,000
Interest Expense	6,000		12,000
Totals	491,700	491,700
Insurance Expense			28,000
Supplies Expense			14,400
Interest Payable				6,000
Depreciation Expense			5,800
Property Taxes Payable				3,000
Totals			506,500	506,500

Instructions

(a) Prepare a complete worksheet.

(b) Prepare a classified balance sheet. (Note: $10,000 of the mortgage payable is due for payment in the next fiscal year.)

(c) Journalize the adjusting entries using the worksheet as a basis.

d) Journalize the closing entries using the worksheet as a basis.

(e) Prepare a post-closing trial balance.

Short answer

a) The worksheet is prepared in Step 2.

b) The Balance sheet total $203,500.

c) Adjusting entries are recorded in Step 4.

d) Closing entries are recorded in Step 5.

e) Trial balance total is $245,500.

Step-by-step solution

Meaning of journal entries

A journal entry is a record of financial transactions kept in the books of accounts of an organization. There are debit and credit columnadditionsfor each transaction.

(a) Preparing a complete worksheet

COOKE COMPANY Worksheet For The Month Ended September 30, 2017
	Trial Balance	Adjustment	Adjusted Trial Balance	Income Statement	Balance Sheet
Account Titles	Dr.	Cr.	Dr.	Cr.	Dr.	Cr.	Dr.	Cr.	Dr.	Cr.
Cash	37,400				37,400				37,400
Supplies	18,600			(b) 14,400	4,200				4,200
Prepaid Insurance	31,900			(a) 28,000	3,900				3,900
Land	80,000				80,000				80,000
Equipment	120,000				120,000				120,000
Accumulated Depreciation—Equipment		36,200		(c) 5,800		42,000				42,000
Accounts Payable		14,600				14,600				14,600
Unearned Service Revenue		2,700	(d) 2,000			700				700
Mortgage Payable		50,000				50,000				50,000
Common Stock		107,700				107,700				107,700
Retained Earnings, Sept. 1, 2017		2,000				2,000				2,0000
Dividends	14,000				14,000				14,000
Service Revenue		278,500		(d) 2,000		280,500		280,500
Salaries and Wages Expense	109,000				109,000		109,000
Maintenance and Repairs Expense	30,500				30,500		30,500
Advertising Expense	9,400				9,400		9,400
Utility Expenses	16,900				16,900		16,900
Property Tax Expense	18,000		(e) 3,000		21,000		21,00
Interest Expense	6,000		(f) 6,000		12,000		12,000
Totals	491,700	491,700
Insurance Expense			(a) 28,000		28,000		28,000
Supplies Expense			(b) 14,400		14,400		14,400
Interest Payable				(f) 6,000		6,000				6,000
Depreciation Expense			(c) 5,800		5,800		5,800
Property Taxes Payable				(e) 3,000		3,000				3,000
Totals			59,200	59,200	506,500	506,500	247,000	280,500	259,500	226,000
Net Income							33,500			33,500
Totals							280,500	280,500	259,500	259,500

Key: (a) Expired Insurance ($31,900 - $3,900);

(b) Supplies Used ($18,600 - $4,200);

(c) Depreciation Expensed ($42,000 - $36,200);

(d) Service Revenue Recognized ($2,700 - $700);

(e) Accrued Property ($21,000 - $18,000);

(f) Taxes Accrued ($0 - $6,000)

(b) Preparing classified balance sheet

COOKE COMPANY Balance Sheet September 30, 2020
Assets
Current assets
Cash $37,400
Supplies 4,200
Prepaid insurance 3,900
Total current assets	$45,500
Property, plant, and equipment
Land $80,000
Equipment $120,000
Less: Accumulated 42,00078,000 depreciation-equipment	$158,000
	$203,500

Liabilities and Stockholders’ equity
Current liabilities
Account payable $14,600
Current maturity of long-term debt 10,000
Interest payable 6,000
Property taxes payable 3,000
Unearned service revenue 700
Total current liabilities	$34,300
Long term liabilities
Mortgage payable	40,000
Total liabilities	74,300
Stockholder’s equity
Common stock 107,700
Retained earnings 21,500	129,200
Total liabilities and stockholders’ equity	$203,500

(c) Preparing journal entries

Date	Particulars	Debit ($)	Credit ($)
Sep. 30	Insurance expense	28,000
	Prepaid expense		28,000
30	Supplies expense	14,400
	Supplies		14,400
30	Depreciation expense	5,800
	Accumulated depreciation- equipment		5,800
30	Unearned service revenue	2,000
	Service revenue		2,000
30	Property tax expense	3,000
	Property tax payable		3,000
30	Interest expense	6,000
	Interest payable		6,000

(d) Preparing journal entries

Date	Particulars	Debit ($)	Credit ($)
Sep. 30	Service revenue	280,500
	Income Summary		280,500
30	Income Summary	247,000
	Salaries and wages expense		109,000
	Maintenance and repairs expense		30,500
	Insurance expense		28,000
	Property tax expense		21,000
	Supplies expense		14,400
	Utility expense		16,900
	Interest expense		12,000
	Advertising expense		9,400
	Depreciation expense		5,800
30	Income Summary	33,500
	Retained earnings		33,500
30	Retained earnings	14,000
	Dividends		14,000

(e) Preparing Trial Balance

COOKE COMPANY Post-Closing Trial Balance September 30, 2020
	Debit	Credit
Cash	$37,400
Supplies	4,200
Prepaid insurance	3,900
Land	80,000
Equipment	120,000
Accumulated depreciation-Equipment		$42,000
Accounts payable		14,600
Unearned Service Revenue		700
Interest payable		6,000
Property tax payable		3,000
Mortgage payable		50,000
Common stock		107,700
Retained earnings		21,500
	$245,500	$245,500