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Sariah's Clip Shop, O'Malley Repair Shop

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5. The Capital, Withdrawals, Income Summary accounts for Sariah's Clip Shop are shown in the T account form below. The closing entries have been recorded for the year ended Dec. 31, 20x4. Prepare a statement of owner's equity for Sariah's Clip Shop.

Sariah Abdul, Capital

12/31/x4 $4,500 12/31/x3 $13,000
12/31/x4 9,500
Balance 18,000
Income Summary

12/31/x4 21,500 12/31/x4 31,000
12/31/x4 9,500
Balance -------

Sariah Abdul, Withdrawals

4/1/x4 $1,500 12/31/x4 $4,500
7/1/x4 1,500
10/1/x4 1,500

6. In the partial worksheet that follows, the Trial Balance and Income Statement columns have been completed. All amounts shown are in dollars. a) Show the adjustments that have been made in journal form. b) Prepare a balance Statement.
Account name Trial Balance Income Statement
Debit Credit Debit Credit
Cash 14
Acc. Receivable 24
Supplies 22
Prepaid insurance 16
Building 50
Accum. Depreciation, building 16
Account payable 8
Unearned revenues 4
T.L., Capital 64
Revenues 88 92
Wages Expense 54 60
Balance 180 180

Insurance Expense 8
Supplies Expense 16
Depreciation Expense, Building 4

Net income 88 92
4
92 92
7. The items that appear below are the adjustments columns of a worksheet dated June 30,20xx.
1) Prepare the adjusting entries in journal form.
2) Where required, prepare appropriate reversing entries in journal form

Account Name Adjustments
Debit credit
Prepaid insurance (a) 240
Office supplies (b) 630
Accumulated Depreciation, office supplies (c) 1,400
Accumulated Depreciation, store equipment (d) 2,200
Office salaries expense (e) 240
Store salaries expense (e) 480
Insurance expense (a) 240
Office supplies Expense (b) 630
Depreciation expense, office equipment (c) 1,400
Depreciation expense, store equipment (d) 2,200
Salaries payable (e) 720

$ 5,190 $5, 190

8. The items that follow are from the Income Statement columns of the worksheet for O'Malley Repair Shop for the year ended December 31, 20xx. Prepare entries in journal form to close the revenue, expense, Income Summary, and Withdrawals accounts. O'Malley withdrew $5,000 during the year.

Account Name Income Statement
Debit Credit

Repair Revenue $ 25,620
Wages Expense $ 8,110
Rent Expense 1,200
Supplies Expense 4,260
Insurance Expense 915
Depreciation Expense, Repair Equipment 1,345

$ 15,830 $ 25, 620
Net Income 9,790
25,620 25, 620

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5. The Capital, Withdrawals, Income Summary accounts for Sariah's Clip Shop are shown in the T account form below. The closing entries have been recorded for the year ended Dec. 31, 20x4. Prepare a statement of owner's equity for Sariah's Clip Shop.

Sariah Abdul, Capital

12/31/x4 $4,500 12/31/x3 $13,000
12/31/x4 9,500
Balance 18,000
Income Summary

12/31/x4 21,500 12/31/x4 31,000
12/31/x4 9,500
Balance -------

Sariah Abdul, Withdrawals

4/1/x4 $1,500 12/31/x4 $4,500
7/1/x4 1,500
10/1/x4 1,500

When closing entries, the balance of income summary will be transferred to Sariah Abdul, Capital. Therefore, the credit side of the income summary account will include the total revenue for the period while the debit side of the account will include the total expenses. The account balance will be the income or loss of the business for the period. For Sariah's Clip Shop, the credit side is greater than the debit side, therefore, the difference is the income for the period.

For withdrawals, we can close to Sariah Abdul, Capital by crediting withdrawals account and debiting capital account.

To prepare a statement of owners' equity, we can put the details into the statement as shown below.

Sariah's Clip Shop
Statement of Owner's Equity
For the Year Ending December 31, 20x4

Capital at January 1, 20x4 $13,000
Add: Income for the year 20x4 $9,500
Deduct: Withdrawals ($4,500)
Capital at December 31, 20x4 $18,000

6. In the partial worksheet that follows, the Trial Balance and Income Statement columns have been completed. All amounts shown are in dollars. a) Show the adjustments that have been made in journal form. b) Prepare a balance Statement.
Account name Trial Balance Income Statement
Debit Credit Debit Credit
Cash 14
Acc. Receivable 24
Supplies 22
Prepaid insurance 16
Building 50
Accum. Depreciation, building 16
Account payable ...

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