Discuss the post closing entries to the accounts

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Reference no: EM131519926

Question: Refer to P3-4A. Required:

Complete the following steps:

1. Enter the unadjusted balances from the trial balance into T-accounts.

2. Post the adjusting entries prepared in P3-4A to the accounts.

3. Prepare an adjusted trial balance.

4. Prepare an income statement and a statement of shareholders' equity for the year ended December 31, 2012, and a classified balance sheet as of December 31, 2012. Assume that no common stock is issued during the year.

5. Record closing entries.

6. Post closing entries to the accounts.

7. Prepare a post-closing trial balance.

P3-4A: Crimson Tide Music Academy offers lessons in playing a wide range of musical instruments. The unadjusted trial balance as of December 31, 2012, appears below. December 31 is the company's fiscal year-end.

Information necessary to prepare the year-end adjusting entries appears below.

a. Depreciation of equipment for the year is $5,000.

b. Accrued salaries at year-end should be $1,600.

c. Crimson Tide borrows $15,000 on September 1, 2012. The principal is due to be repaid in four years. Interest is payable each August 31 at an annual rate of 10%.

d. Unused supplies at year-end total $600. Crimson Tide debits Supplies at the time supplies are purchased.

e. Crimson Tide opens a second studio by purchasing one year of rent in advance on April 1, 2012, for $6,000 ($500 per month) debiting Prepaid Rent.

f. Unpaid utilities for December total $100.

Required: Record the necessary adjusting entries on December 31, 2012.

Reference no: EM131519926

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