Business Accounting Report: Trial Balance, Adjustments, and Financials

This comprehensive business accounting report analyzes the financial data of Paul Services, starting with the initial trial balance and progressing through adjusting journal entries, a 10-column worksheet, and the creation of an income statement. The report details the purpose of a trial balance, the importance of adjustment journal entries, and the rationale behind their recording. It also explains the purpose of an adjusted trial balance and differentiates between adjusted journal entries and closing entries. The report culminates in the creation of a statement of equity and a balance sheet, providing a full picture of the company's financial position. References from accounting textbooks and journals are included to support the analysis. The report covers key accounting concepts such as trial balance, adjusting entries, financial statements, and closing entries, providing a detailed analysis of the financial data.

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Business Accounting

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Step 1: Trial Balance achieved after entering the student id
Accounts Title Trial balance
Debit Credit
Cash at Bank $ 149,890.00
Accounts Receivable $ 49,960.00
Supplies $ 2,500.00
Prepaid Insurance $ 5,000.00
Office Furniture $ 62,500.00
Acc. Depreciation. - Furniture $ -
Office Equipment $ 125,000.00
Acc. Depreciation - Equipment $ -
Store Equipment $ 187,500.00
Acc. Depreciation - Equipment $ -
Automobile $ 250,000.00
Acc. Depreciation - Automobile $ -
Accounts Payable $ 99,920.00
Interest Payable $ 149,880.00
Unearned revenue $ 31,250.00
Loan Payable $ 12,500.00
Mortgage Payable $ 250,000.00
Paul's Capital $ 61,980.00
Paul's Drawings $ 250.00
Revenue $ 250,000.00
Advertising Expense $ 3,000.00
Automobile Expense $ 5,775.00
Depreciation Expense - Furniture $ -
Depreciation Expense - Equipment $ -

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Depreciation Expense - Store Equipment $ -
Depreciation Expense - Automobile $ -
Insurance Expense $ 2,500.00
Maintenance Expense $ 10,500.00
Miscellaneous Expense $ 1,155.00
Supplies Expense $ -
Interest Expense $ -
$ 855,530.00 $ 855,530.00
(Brigham and Michael, 2013)

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Step 2: Journal Entries of all adjustments
Adjusting Entries in the books of Paul Services
at the year end,2016
Dat
e Account Tiles Debit Credit
Amount in $
30-
Jun Interest Expenses
$
25,000.00
30-
Jun Interest Payable
$
25,000.00
(Interest accrued but not paid on mortgage)
30-
Jun Supplies Expenses
$
1,875.00
Supplies
$
1,875.00
(Being supplies used during the year)
30-
Jun Insurance Expenses
$
4,000.00
Prepaid Insurance
$
4,000.00
(being prepaid insurance amount adjusted )
30-
Jun Depreciation Expenses-Furniture
$
12,000.00
Acc. Depreciation. - Furniture
$
12,000.00
(Being depreciation charged on office furniture)
30-
Jun Depreciation Expenses-Office equipment
$
24,000.00
Acc. Depreciation - Equipment
$
24,000.00
(Being depreciation charged on office Equipment)
30-
Jun Depreciation Expenses-Store equipment
$
18,000.00
Acc. Depreciation - store Equipment
$
18,000.00
(Being depreciation charged on Store Equipment)
30- Depreciation Expenses-Automobile $

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Jun 25,000.00
Acc. Depreciation - Automobile
$
25,000.00
(Being depreciation charged on Automobile)
30-
Jun Unearned Revenue
$
15,625.00
Revenue
$
15,625.00
(Being portion of unearned revenue transferred to
revenue)
(Saguinsin, 2013)

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Step 3: Posting of adjusting entries in worksheet
10 Column Worksheet
Accounts Title Trial balance Adjustment Adjusted Trial
Balance Income Statement Balance sheet
Debit Credit Debit Credit Debit Credit Debit Credit Debit Credit
Cash at Bank
$
149,890
$
149,890
$
149,890
Accounts
Receivable
$
49,960
$
49,960
$
49,960
Supplies
$
2,500
$
1,875
$
625
$
625
Prepaid
Insurance
$
5,000
$
4,000
$
1,000
$
1,000
Office Furniture
$
62,500
$
62,500
$
62,500
Acc.
Depreciation. -
Furniture
$
-
$
12,000
$
12,000
$
12,000
Office
Equipment
$
125,000
$
125,000
$
125,000
Acc.
Depreciation -
Equipment
$
-
$
24,000
$
24,000
$
24,000
Store Equipment
$
187,500
$
187,500
$
187,500
Acc.
Depreciation -
Equipment
$
-
$
18,000
$
18,000
$
18,000
Automobile
$
250,000
$
250,000
$
250,000
Acc. $ $ $ $

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Depreciation -
Automobile - 25,000 25,000 25,000
Accounts
Payable
$
99,920
$
99,920
$
99,920
Interest Payable
$
149,880
$
25,000
$
174,880
$
174,880
Unearned
revenue
$
31,250
$
15,625
$
15,625
$
15,625
Loan Payable
$
12,500
$
12,500
$
12,500
Mortgage
Payable
$
250,000
$
250,000
$
250,000
Paul's Capital
$
61,980
$
61,980
$
61,980
Paul's Drawings
$
250
$
250
$
250
Revenue
$
250,000
$
15,625
$
265,625
$
265,625
Advertising
Expense
$
3,000
$
3,000
$
3,000
Automobile
Expense
$
5,775
$
5,775
$
5,775
Depreciation
Expense -
Furniture
$
-
$
12,000
$
12,000
$
12,000
Depreciation
Expense -
Equipment
$
-
$
24,000
$
24,000
$
24,000
Depreciation
Expense - Store
Equipment
$
-
$
18,000
$
18,000
$
18,000
Depreciation
Expense -
$
-
$
25,000
$
25,000
$
25,000

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Automobile
Insurance
Expense
$
2,500
$
4,000
$
6,500
$
6,500
Maintenance
Expense
$
10,500
$
10,500
$
10,500
Miscellaneous
Expense
$
1,155
$
1,155
$
1,155
Supplies
Expense
$
-
$
1,875
$
1,875
$
1,875
Interest Expense
$
-
$
25,000
$
25,000
$
25,000
$
855,530
$
855,530
$
125,500
$
125,500
$
959,530
$
959,530
$
132,805
$
265,625
$
826,725
$
693,905
Profit for the
year
$
132,820
$
132,820
$
826,725
$
826,725
(Brigham and Michael, 2013)

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Step 4: Income Statement through of worksheet
Profit and loss Statement of Paul Services
for the year ending on Jun, 2016
Particulars Amount Amount
Revenue
$
265,625.00
Less: Expenses
Advertising Expense
$
3,000.00
Automobile Expense
$
5,775.00
Depreciation Expense - Furniture
$
12,000.00
Depreciation Expense - Equipment
$
24,000.00
Depreciation Expense - Store
Equipment
$
18,000.00
Depreciation Expense - Automobile
$
25,000.00
Insurance Expense
$
6,500.00
Maintenance Expense
$
10,500.00
Miscellaneous Expense
$
1,155.00
Supplies Expense
$
1,875.00
Interest Expense
$
25,000.00
Total Expenses
$
132,805.00
Profit Before Tax
$
132,820.00
Tax
$
-
Profit After Tax
$
132,820.00
(Epstein, 2011)

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Step 5: Closing Entries
Closing Entries in the books of Paul Services
at the year end,2016
Date Account Tiles Debit Credit
Amount in $
30-
Jun Revenue $ 265,625.00
Income Summary $ 265,625.00
(To Close Temporary Account of credit balance)
30-
Jun Income Summary $ 132,805.00
Advertising Expense $ 3,000.00
Automobile Expense $ 5,775.00
Depreciation Expense - Furniture $ 12,000.00
Depreciation Expense - Equipment $ 24,000.00
Depreciation Expense - Store Equipment $ 18,000.00
Depreciation Expense - Automobile $ 25,000.00
Insurance Expense $ 6,500.00
Maintenance Expense $ 10,500.00
Miscellaneous Expense $ 1,155.00
Supplies Expense $ 1,875.00
Interest Expense $ 25,000.00
(To Close Temporary Account of debit balance)
30-
Jun Income Summary $ 132,820.00
Retained Earnings $ 132,820.00
(To Close income summary as net profit balance)
(Davies and Crawford, 2011)

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Step 6: Change in Equity and Balance Sheet from using the balance sheet
Statement of Equity of Paul Services
as on Jun, 2016
Particulars Amount Amount
Common Stock
Opening Capital $ 61,980.00
Add: Any
addition
$
-
Less:
Withdrawal
$
250.00 $ 250.00
Closing Capital $ 61,730.00
Retained Earnings
Opening Balance $ -
Add: Profit $ 132,820.00
Less: Dividend $ -
Closing Balance $ 132,820.00
Balance Sheet of Paul Services
as on Jun, 2016
Particulars Amount Amount
Assets
Current Assets
Cash at Bank $ 149,890.00
Accounts Receivable $ 49,960.00
Supplies
$
625.00
Prepaid Insurance $ 1,000.00
Total Current Assets $ 201,475.00
Non Current Assets
Office Furniture $ 62,500.00
Acc. Depreciation. - Furniture $ (12,000.00)
Office Equipment $ 125,000.00
Acc. Depreciation - Equipment $ (24,000.00)
Store Equipment $ 187,500.00
Acc. Depreciation - Equipment $ (18,000.00)
Automobile $ 250,000.00
Acc. Depreciation - Automobile $ (25,000.00)
Total Non Current Assets $ 546,000.00

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Total Assets $ 747,475.00
Liabilities and Equity
Current Liabilities
Accounts Payable $ 99,920.00
Interest Payable $ 174,880.00
Unearned revenue $ 15,625.00
Loan Payable $ 12,500.00
Total Current Liabilities $ 302,925.00
Non Current Liabilities
Mortgage Payable $ 250,000.00
Equity
Capital $ 61,980.00
Less: Drawing
$
(250.00)
Add: Retained Earnings $ 132,820.00
Total Equity $ 194,550.00
Total Liabilities and Equity $ 747,475.00
(Damodaran, 2011)