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Post-Closing Trial Balance: Prepare the Post-Closing Trial Balance tab of the company accounting workbook in preparation for the next accounting period.

Write a summary of what the financial statements indicate about the companys financial health and performance.

1. Purpose: What kind of information would these financial statements provide to various aspects of the business?
2. Analysis: What is the companys cash position, its net income as a percentage of sales, and its current liabilities to current assets position?

1. The following events occurred in October:

October 1: The business owner used $25,000 from their personal savings account to buy common stock in their company.

October 1: Purchased $8,500 worth of baking supplies from vendor, on account.

October 3: The company borrowed $10,000 in cash, in exchange for a two-year, 6% note payable. Interest and the principal are repayable at maturity.

October 7: Entered into a lease agreement for bakery space. The agreement is for one year. The rent is $1,500 per month; the last months rent payment of $1,500 is required at the time of the lease agreement. The payment was made in cash. Lease period is effective October 1 of this year through September 30 of the next.

October 10: Paid $375 to the county for a business license.

October 11: Purchased a cash register for $250 (deemed to be not material enough to qualify as depreciable equipment).

October 13: The owner has baking equipment, including an oven and mixer, which they have been using for their home-based business and will now start using in the bakery. You estimate that the equipment is currently worth $5,000, and you transfer the equipment into the business in exchange for additional common stock. The equipment has a five-year useful life.

October 13: Paid $200 for business cards and flyers to use for advertising.

October 14: Paid $300 for office supplies.

October 15: Hired a part-time helper to be paid $12 per hour. One pay period is the first of the month through the fifteenth, and the other is the sixteenth through the end of the month. Paydays are the twentieth for the first pay period and the fifth of the following month for the second pay period. (No entry required on this datefor informational purposes only.)

October 30: Received telephone bill for October in amount of $75. Payment is due on November 10.

October 31: Paid $1,200 for a 12-month insurance policy. Policy effective dates are November 1 through October 31.

October 31: Accrued wages earned for employee for period of October 16 through October 31. (See Wage Calculation Data table at the end of this document.)

October 31: Total October bakery sales were $15,000 ($5,000 of these sales on accounts receivable).

2. The following events occurred in November:

November 5:Paid employee for period ending October 31.

November 8: Received payments from customers toward accounts receivable in amount of $3,800.

November 10: Paid October telephone bill.

November 15: Purchased additional baking supplies in amount of $5,000 from vendor, on account.

November 15: Accrued wages earned for employee from period of November 1 through November 15. (See Wage Calculation Data table at the end of this document.)

November 15: Paid rent on bakery space.

November 18: Received payments from customers toward accounts receivable in amount of $1,000.

November 20: Paid $8,500 toward baking supplies vendor payable.

November 20: Paid employee for period ending November 15.

November 22: Purchased $300 in office supplies.

November 30: Received telephone bill for November in amount of $75. Payment is due on December 10.

November 30: Accrued wages earned for employee for period of November 16 through November 30. (See Wage Calculation Data table at the end of this document.)

November 30: November bakery sales total was $20,000 ($7,500 of this total on accounts receivable).

3. Many customers have been asking for more allergy-friendly products, so in December the bakery started carrying a line of gluten-free products on a trial basis. The information below relates to the purchase and sales of the new products.

Use the perpetual inventory method with the FIFO valuation method. Please see the Inventory Valuation tab in your workbook for purchase and sales information.

The following events occurred in December:

December 1: Paid dividends to self in amount of $10,000.

December 5: Paid employee for period ending November 30.

December 7: Purchased merchandise for resale. See the Inventory Valuation tab for details.

December 8: Received payments from customers toward accounts receivable in amount of $4,000.

December 10: Paid November telephone bill.

December 11: Purchased baking supplies in amount of $7,000 from vendor on account.

December 13: Paid on supplies vendor account in amount of $5,000.

December 15: Accrued employee wages for period of December 1 through December 15.

December 15: Paid rent on bakery space $1,500.

December 15: Recorded merchandise sales transaction. See the Inventory Valuation tab for details.

December 15: Recorded impact of sales transaction on COGS and the inventory asset. See the Inventory Valuation tab for details.

December 20: Paid employee for period ending December 15.

December 20: Purchased merchandise inventory for resale to customers. See the Inventory Valuation tab for details.

December 24: Recorded sales of merchandise to customers. See the Inventory Valuation tab for details.

December 24: Recorded impact of sales transaction on COGS and the inventory asset. See the Inventory Valuation tab for details.

December 30: Purchased merchandise inventory for resale to customers. See the Inventory Valuation tab for details.

December 31: Accrued employee wages for period of December 16 through December 31.

December 31: Total December bakery sales were $25,000 ($6,000 of these sales on accounts receivable).

4. On December 31, the following adjustments must be made:

• Depreciation of baking equipment transferred to company on October 13. Assume half month of depreciation in October using the straight-line method.
• Accrue interest for note payable. Assume a full month of interest for October. (6% annual interest on $10,000 loan)
• Record insurance used for the year.
• Actual baking supplies on hand as of December 31 are $1,100.
• Office supplies on hand as of December 31 are $50.

Wage Calculation Data

Month	Hours	Rate	Pay
31-Oct	10	12	120
15-Nov	40	12	480
30-Nov	35	12	420
15-Dec	38	12	456
31-Dec	40	12	480

Ending Inventory No. of Date Items 7-Dec Purchases No. of Unit Price Total Price Items 10 $ 6.00 $ 60.00 Sales No. of Unit Price Total Price Items Unit Price Total Price 10 $ 6.00 $ 60.00 Date 7-Dec Merchandise Inventory (10 x $6) Cash Purchased inventory 15-Dec 8 $ 6.00 $ 48.00 2 $ 6.00 $ 12.00 20-Dec 20 $ 6.10 $ 122.00 2 $ $ 6.00 $ 12.00 20 $ 6.10 6.10 $ 122.00 22 $ 134.00 15-Dec Cash (8 x $8.50) Merchandise Sales Revenue Record sale of inventory 24-Dec 2 $ 6.00 $ 12.00 16 $ 6.10 $ 97.60 18 $ 109.60 4 $ 6.10 $ 24.40 15-Dec Cost of Goods Sold (8 X $6) Merchandise Inventory Recorded the cost of goods sold 30-Dec 25 $ 6.05 $ 151.25 4 $ 6.10 $ 24.40 25 $ 6.05 6.05 $ 151.25 29 $ 175.65 20-Dec Merchandise Inventory (20 x $6.10 ) Cash Net Inventor y 55 $ 333.25 26 $ 157.60 29 $ 175.65 24-Dec Cash (18 x 8.50) Merchandise Sales Revenue Record sale of inventory 24-Dec Cost of Goods Sold (2 x $6)+(16 x $6.10 Merchandise Inventory Recorded the cost of goods sold 30-Dec Merchandise Inventory (25 x $6.05) Cash 4 5 Unadjusted trial balance Debit Credit 51,436.75 20,500.00 175.65 1,500.00 1,200.00 5,000.00 Adjusting entries Adjusted trial balance Debit Credit Debit Credit 51,436.75 19,400.00 1,100.00 175.65 1,500.00 200.00 1,000.00 5,000.00 208.33 208.33 600.00 550.00 50.00 9,700.00 9,700.00 10,000.00 150.00 5 Account 6 Cash 7 Baking Supplies 8 Merchandise Inventory 9 Prepaid Rent 10 Prepaid Insurance 11 Baking Equipment 12 Accumulated Depreciation 13 Office Supplies 14 Accounts Receivable 15 Notes Payable 16 Interest Payable 17 Accounts Payable 18 Wages Payable 19 Common Stock 20 Dividends 21 Bakery Sales 22 Merchandise Sales 23 Baking Supplies Expense 24 Rent Expense 25 Interest Expense 26 Insurance Expense 27 Depreciation Expense 28 Misc. Expense 29 Office Supplies Expense 30 Business License Expense 31 Advertising Expense 32 Wages Expense 33 Telephone Expense 34 COGS 7,000.00 480.00 30,000.00 10,000.00 150.00 7,000.00 480.00 30,000.00 10,000.00 10,000.00 60,000.00 221.00 60,000.00 221.00 19,400.00 4,500.00 150.00 200.00 208.33 19,400.00 4,500.00 150.00 200.00 208.33 250.00 250.00 550.00 375.00 200.00 550.00 375.00 200.00 1,956.00 150.00 1,956.00 150.00 157.60 157.60 35 36 Total: 107,701.00 107,701.00 20,508.33 20,508.33 108,059.33 108,059.33 2 A Company Adjusting Journal Entries 20XX 3 4 Credit Date Accounts 31-Dec Depreciation Expense Accumulated Depreciation Debit 208.33 5 7 208.33 3 200.00 31-Dec Insurance Expense Prepaid Insurance 200.00 150.00 31-Dec Interest Expense Interest Payable 150.00 4 19,400.00 31-Dec Baking Supplies Expense Baking Supplies 6 19,400.00 om in oo O Om 7 550.00 31-Dec Office Supplies Expense Office Supplies 9 550.00 20,508.33 20,508.33 A Company Income Statement For Qtr. Ending 12/31/20XX Revenues Bakery Sales Merchandise Sales Total Revenues Cost of Goods Sold Gross Profit 60,000.00 221.00 60,221.00 157.60 60,063.40 Operating Expenses: Baking Supplies Expense Rent Expense 5 Interest Expense 5 Insurance Expense Depreciation Expense Misc. Expense Office Supplies Expense Business License Expense Advertising Expense Wages Expense Telephone Expense 19,400.00 4,500.00 150.00 200.00 208.33 250.00 550.00 375.00 200.00 1,956.00 150.00 5 B Total Operating Expenses: 27,939.33 Net Income 32,124.07 A Company Statement of Stockholder's Equity For Qtr. Ending 12/31/20xx Common Stock Retained Earnings Total Beginning Balances, September 30 Issued Common Stock 30,000.00 30,000.00 Net Income 32,124.07 32,124.07 Dividends (10,000.00) (10,000.00) Ending Balances, December 31: 30,000.00 22,124.07 52,124.07 0 e A Company Balance Sheet As of December 31, 20XX 150.00 . 5 Assets Current Assets: - Cash Baking Supplies Merchandise Inventory 0 Prepaid Rent 1 Prepaid Insurance 2 Office Supplies 3 Accounts Receivable 4 Total Current Assets Liabilities and Owners' Equity Current Liabilities: Interest Payable Accounts Payable Wages Payable Total Current Liabilities 7,000.00 480.00 7,630.00 51,436.75 1,100.00 175.65 1,500.00 1,000.00 50.00 9,700.00 64,962.40 Long Term Liabilities: Notes Payable Total Long Term Liabilities: 10,000.00 10,000.00 5 Total Liabilities: 17,630.00 6 7 8 9 0 1 Non-Current Assets: 2 Baking Equipment 3 Accumulated Depreciation 4 Baking Equipment (Net) 5 6 Total Assets: Shareholder's Equity: Common Stock COGS 30,000.00 22124.07 5,000.00 (208.33) 4,791.67 Total Equity 52,124.07 69,754.07 Total Liabilities & Equity 69,754.07 7 8 9 3 Credit - Debit 60,000.00 221.00 60,221.00 28,096.93 3 A Company Closing Entries Qtr ending 12/31/20xx 5 5 Date Accounts 31-Dec Bakery Sales 3 Merchandise Sales Retained Earnings 0 1 31-Dec Retained Earnings 2 Baking Supplies Expense Rent Expense Wages Expense 5 Office Supplies Expense 6 Business License Expense 7 Office Expense 8 Depreciation Expense Insurance Expense 0 Advertising Expense 1 Interest Expense 2 Telephone Expense 3 COGS 4 5 31-Dec Retained Earnings 6 Dividends 4 19,400.00 4,500.00 1,956.00 550.00 375.00 250.00 208.33 9 200.00 200.00 150.00 150.00 157.60 32,124.07 10,000.00 7 8 1 2 A Company Post-Closing Trial Balance Qtr. Ending 12/31/20xx 3 4 Unadjusted Trial Balance Debit Credit 5 5 Account 6 Cash 7 Baking Supplies 8 Merchandise Inventory 9 Prepaid Rent 10 Prepaid Insurance 11 Baking Equipment 12 Accumulated Depreciation 13 Office Supplies 14 Accounts Receivable 15 Accounts Payable 16 Wages Payable 17 Interest Payable 18 Notes Payable 19 Common Stock 20 Retained Earnings 21 22 Total 23

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