Reference no: EM13884637

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.