Preparation of Financial Statements for Paul Services

The provided content is a financial statement of Paul Services for the year ended May 31, 2016, which includes an income statement, balance sheet, and statement of changes in equity. The income statement shows net profit of $32,862. The balance sheet presents assets totaling $636,287, liabilities totaling $273,845, and equity of $109,182. The statement of changes in equity shows the opening capital of $148,320, drawings of ($72,000), and a profit for the year of $32,862, resulting in a closing capital of $76,320. The closing entries were then passed to close down the books of accounts.

ACCOUNTING WORKSHEET 1
ACCOUNTING
WORKSHEET

ACCOUNTING WORKSHEET 2
Contents
Introduction:...............................................................................................................................3
Detailed analysis:.......................................................................................................................3
References..................................................................................................................................9

ACCOUNTING WORKSHEET 3
Introduction:
The assignment is about the creation of a worksheet. It has the general ledger accounts titles
in the first column and is followed by the debit and the credit amounts under the head of
unadjusted trial balance and the same are then exposed to various adjustments that are
undertaken at the end of period such as the reporting or the recording of the depreciation
amount. After then the adjustments are undertaken into account and the effects of these
adjustments are brought into the trial balance which is then termed as the Adjusted Trial
Balance. This Adjusted Trial Balance is then used for the purposes of preparing the financial
statements.
Detailed analysis:
The worksheet generally has a general ledger account which contains the titles of the
accounts. There would be one debit and one credit. And this would be for each one of the
following headings:
1. Trial Balance which contains in the adjusted balance for each account which is as
follows:
Paul services Trial Balance As At 31 May 2016
Account No Account Name Debit Credit

ACCOUNTING WORKSHEET 4
101 Cash at Bank $1,40,790
105 Accounts Receivable $46,930
115 Supplies $2,410
120 Prepaid Insurance $4,820
135 Office Furniture $60,300
137
Acc. Depreciation. -
Furniture $12,000
140 Office Equipment $1,20,600
141
Acc. Depreciation -
Equipment $24,000
145 Store Equipment $1,80,900
146 Acc. Deprciation - Equipment $18,000
170 Automobile $2,41,200
171
Acc. Depreciation -
Automobile $24,000
201 Accounts Payable $93,860
202 Interest Payable $1,40,790
207 Unearned revenue $30,150
210 Loan Payable $12,060
215 Mortgage Payable $2,41,200
301 Paul's Capital $1,48,320
305 Paul's Drawings $72,000
401 Revenue $2,41,000
601 Advertising Expense $2,800
605 Automobile Expense $5,775

ACCOUNTING WORKSHEET 5
615
Depreciation Expense -
Furniture $12,000
620
Depreciation Expense -
Equipment $24,000
625
Depreciation Expense - Store
Equipment $18,000
640
Depreciation Expense -
Automobile $24,000
650 Insurance Expense $2,300
665 Maintenance Expense $9,800
670 Miscellaneous Expense $1,155
675 Rent Expense $2,400
680 Supplies Expense $4,800
685 Utilities Expense $3,600
690 Interest Expense $4,800
$9,85,380 $9,85,380
The total amount of the debit and the credit must always be equal since only then the Trial
Balance would be considered to be complete. The above totals are equal to $9, 85,380
(Alison, 2017).
2. The next step is the journalising of the adjustments. These adjustments contains in the
adjustment entries. In the question given, the following are the adjustments given:
 Interest accrued but not paid to the tune of $24120

ACCOUNTING WORKSHEET 6
 Ending supplies remains in hand at $602.50.
Now the above are the adjustments that have to be made. This is mainly done by recording
the journal entry. There would be a debit and a corresponding credit. The following are the
journal entries for the stated adjustments:
Paul Services
Journal Entries
For the period ended on 31 May, 2016
Date Particulars
Ref
.
Amount
(Dr.) Amount (Cr.)
31-May-
16 Interest Expense 690 24,120
Interest Payable 202 24,120
(To record interest accrued on mortgage)
31-May-
16 Supplies Expense 680 1,808
Supplies 115 1,808
(To record supplies used during the period)
31-May-
16 Insurance Expense 650 3,856
Prepaid Insurance 120 3,856

ACCOUNTING WORKSHEET 7
(To record prepaid amortisation)
31-May-
16 Depreciation Expense - Furniture ((60300-300)/5) 615 12,000
Acc. Depreciation. - Furniture 137 12,000
(To record depreciation expense for the period)
31-May-
16
Depreciation Expense - Equipment ((120600-
600)/5) 620 24,000
Acc. Depreciation - Equipment 141 24,000
(To record depreciation expense for the period)
31-May-
16
Depreciation Expense - Store Equipment ((180900-
900)/10) 625 18,000
Acc. Depreciation - Equipment 146 18,000
(To record depreciation expense for the period)
31-May-
16
Depreciation Expense - Automobile ((241200-
1200)/10) 640 24,000
Acc. Depreciation - Automobile 171 24,000
(To record depreciation expense for the period)
31-May-
16 Unearned revenue 207 15,075
Revenue 401 15,075

ACCOUNTING WORKSHEET 8
(To record unearned revenue earned)
3. Then the above adjusted entries are brought into the unadjusted trial balance from
which the adjusted trial balance is prepared.
The following is the worksheet after taking into account the adjustments as have been listed
above:
Unadjusted
Adjusting
entries Adjusted
Accoun
t No Account Name Debit
Credi
t Debit
Credi
t Debit Credit
101 Cash at Bank 140,790 - - 140,790
105 Accounts Receivable 46,930 - - 46,930
115 Supplies 2,410 - 1,808 603
120 Prepaid Insurance 4,820 - 3,856 964
135 Office Furniture 60,300 - - 60,300
137
Acc. Depreciation. -
Furniture 12,000 - 12,000 24,000
140 Office Equipment 120,600 - - 120,600
141
Acc. Depreciation -
Equipment 24,000 - 24,000 48,000
145 Store Equipment 180,900 - - 180,900

ACCOUNTING WORKSHEET 9
146
Acc. Depreciation -
Equipment 18,000 - 18,000 36,000
170 Automobile 241,200 - - 241,200
171
Acc. Depreciation -
Automobile 24,000 - 24,000 48,000
201 Accounts Payable 93,860 - - 93,860
202 Interest Payable
140,79
0 - 24,120 164,910
207 Unearned revenue 30,150 15,075 - 15,075
210 Loan Payable 12,060 - - 12,060
215 Mortgage Payable
241,20
0 - - 241,200
301 Paul's Capital
148,32
0 - - 148,320
305 Paul's Drawings 72,000 - - 72,000
401 Revenue
241,00
0 - 15,075 256,075
601 Advertising Expense 2,800 - - 2,800
605 Automobile Expense 5,775 - - 5,775
615
Depreciation Expense -
Furniture 12,000 12,000 - 24,000
620
Depreciation Expense -
Equipment 24,000 24,000 - 48,000
625
Depreciation Expense -
Store Equipment 18,000 18,000 - 36,000

ACCOUNTING WORKSHEET 10
640
Depreciation Expense -
Automobile 24,000 24,000 - 48,000
650 Insurance Expense 2,300 3,856 - 6,156
665 Maintenance Expense 9,800 - - 9,800
670 Miscellaneous Expense 1,155 - - 1,155
675 Rent Expense 2,400 - - 2,400
680 Supplies Expense 4,800 1,808 - 6,608
685 Utilities Expense 3,600 - - 3,600
690 Interest Expense 4,800 24,120 - 28,920
985,380
985,38
0
122,85
9
122,85
9
1,087,50
0
1,087,50
0
4. After the Adjusted Trail Balance has been prepared, the income statement is prepared.
The income statement contains the revenue, expense, gains and the losses. The
following is the income statement:
Paul Services
Income Statement
For the Period on 31.05.2016
Particulars Amount ($)
Income:
Revenue 256,075 256,075

ACCOUNTING WORKSHEET 11
Expenses:
Advertising Expense 2,800
Automobile Expense 5,775
Depreciation Expense - Furniture 24,000
Depreciation Expense - Equipment 48,000
Depreciation Expense - Store Equipment 36,000
Depreciation Expense - Automobile 48,000
Insurance Expense 6,156
Maintenance Expense 9,800
Miscellaneous Expense 1,155
Rent Expense 2,400
Supplies Expense 6,608
Utilities Expense 3,600
Interest Expense 28,920 223,214
Net Profit 32,862
5. After the income statement has been prepared, the statement of retained earnings is
prepared. The following is the statement of retained earnings:
STATEMENT OF CHANGES IN EQUITY
Paul Services
Statement of Changes in Equity
For the year ended 31 May, 2016

ACCOUNTING WORKSHEET 12
Particulars Capital
Retained
Earnings
Total
Opening balance 148,320 - 148,320
Drawings (72,000)
Profit for the year 32,862
Closing Balance 76,320 32,862 148,320
6. After the income statement has been prepared, then the statement of financial position
or the balance sheet is prepared:
Paul Services
Balance Sheet
As on 31 May, 2016
Particulars Amount ($)
(I) Assets
Non-Current Assets
Office Furniture 60,300
Less: Acc. Depreciation. - Furniture (24,000) 36,300
Office Equipment 120,600
Less: Acc. Depreciation - Equipment (48,000) 72,600