Accounting in Business: Financial Statement Preparation & Analysis

This assignment demonstrates the accounting cycle for Paul Services, covering the period ended June 30, 2016. It includes journal entries for adjustments such as accrued interest, supplies used, prepaid insurance amortization, and depreciation expenses for various assets. A worksheet is prepared after these adjustments, followed by the creation of an income statement, which calculates a net profit of $71,062. The assignment also details the journalizing of closing entries and presents a statement of changes in equity, showing a closing balance of $117,302. Finally, a balance sheet is constructed, displaying assets, liabilities, and equity, with total liabilities and equity balancing at $319,102.

Running head: ACCOUNTING IN BUSINESS
Accounting in business
Name of the student
Name of the university
Student ID
Author note

1ACCOUNTING IN BUSINESS
Table of Contents
Step 2 – Journal entries for adjustments....................................................................................2
Step 3 – worksheet after adjustment..........................................................................................3
Step 4 – Income statement.........................................................................................................4
Step 5 – Journalising closing entries..........................................................................................4
Step 6 – Changes in equity and Balance sheet...........................................................................5

2ACCOUNTING IN BUSINESS
Step 2 – Journal entries for adjustments
Journal Entries in the books of Paul services
For the period ended on 30th June, 2016
Date Particulars
Ref
.
Amount
(Dr.)
Amount
(Cr.)
30-
Jun-16 Interest Expense 201 12,800
Interest Payable 201 12,800
(To record interest accrued on mortgage)
30-
Jun-16 Supplies Expense 201 960
Supplies 115 960
(To record supplies used during the period)
30-
Jun-16 Insurance Expense 201 2,048
Prepaid Insurance 120 2,048
(To record prepaid amortisation)
30-
Jun-16 Depreciation Expense - Furniture ((32000-2000)/5) 201 6,000
Acc. Depreciation. - Furniture 137 6,000
(To record depreciation expense for the period)
30-
Jun-16
Depreciation Expense - Office Equipment
((64000-4000)/5) 201 12,000
Acc. Depreciation - Office Equipment 141 12,000
(To record depreciation expense for the period)
30-
Jun-16
Depreciation Expense - Store Equipment ((96000-
6000)/10) 201 9,000
Acc. Depreciation - Store Equipment 146 9,000
(To record depreciation expense for the period)
30-
Jun-16
Depreciation Expense - Automobile ((128000-
8000)/10) 201 12,000
Acc. Depreciation - Automobile 171 12,000
(To record depreciation expense for the period)
30-
Jun-16 Unearned revenue 201 8,000

3ACCOUNTING IN BUSINESS
Revenue 201 8,000
(To record unearned revenue earned)
Step 3 – worksheet after adjustment
Account Name Unadjusted Adjusting entries Adjusted
Debit Credit Debit Credit Debit Credit
Cash at Bank 27,950 - - 27,950
Accounts Receivable 9,320 - - 9,320
Supplies 1,280 - 960 320
Prepaid Insurance 2,560 - 2,048 512
Office Furniture 32,000 - - 32,000
Acc. Depreciation. - Furniture 0 - 6,000 6,000
Office Equipment 64,000 - - 64,000
Acc. Depreciation - Equipment 0 - 12,000 12,000
Store Equipment 96,000 - - 96,000
Acc. Depreciation - Equipment 0 - 9,000 9,000
Automobile 1,28,000 - - 1,28,000
Acc. Depreciation - Automobile 0 - 12,000 12,000
Accounts Payable 18,640 - - 18,640
Interest Payable 27,960 - 12,800 40,760
Unearned revenue 16,000 8,000 - 8,000
Loan Payable 6,400 - - 6,400
Mortgage Payable 1,28,000 - - 1,28,000
Paul's Capital 46,368 - - 46,368
Paul's Drawings 128 - - 128
Revenue 1,28,000 - 8,000 1,36,000
Advertising Expense 600 - - 600
Automobile Expense 5,775 - - 5,775
Depreciation Expense - Furniture 0 6,000 - 6,000
Depreciation Expense - Equipment 0 12,000 - 12,000
Depreciation Expense - Store
Equipment 0 9,000 - 9,000
Depreciation Expense -
Automobile 0 12,000 - 12,000
Insurance Expense 500 2,048 - 2,548
Maintenance Expense 2,100 - - 2,100
Miscellaneous Expense 1,155 - - 1,155
Rent Expense 0 - - 0
Supplies Expense 0 960 - 960
Utilities Expense 0 - - 0
Interest Expense 0 12,800 - 12,800

4ACCOUNTING IN BUSINESS
3,71,368 3,71,368 62,808 62,808 4,23,168 4,23,168
Step 4 – Income statement
Income Statement of Paul Services
For the Period on 30.06.2016
Particulars Amount ($)
Income:
Revenue 1,36,000
Expenses:
Advertising Expense 600
Automobile Expense 5,775
Depreciation Expense - Furniture 6,000
Depreciation Expense - Equipment 12,000
Depreciation Expense - Store Equipment 9,000
Depreciation Expense - Automobile 12,000
Insurance Expense 2,548
Maintenance Expense 2,100
Miscellaneous Expense 1,155
Rent Expense 0
Supplies Expense 960
Utilities Expense 0
Interest Expense 12,800
Total expenses 64,938
Net Profit 71,062
Step 5 – Journalising closing entries
Date Particulars Ref.
Amount
(Dr.)
Amount
(Cr.)
30-Jun-16 Revenue 201 1,36,000
Advertising Expense 201 600
Automobile Expense 201 5,775
Depreciation Expense - Furniture 201 8,000
Depreciation Expense - Equipment 201 18,000
Depreciation Expense - Store
Equipment 201 14,000
Depreciation Expense - Automobile 201 18,000

5ACCOUNTING IN BUSINESS
Insurance Expense 201 4,524
Maintenance Expense 201 6,300
Miscellaneous Expense 201 1,155
Rent Expense 201 0
Supplies Expense 201 1,417
Utilities Expense 201 0
Interest Expense 201 18,920
Retained earnings (b.f.) 71,062
(To record closing entry)
Step 6 – Changes in equity and Balance sheet
Statement of Changes in Equity of Paul services
For the year ended 30th June, 2016
Particulars Capital Retained Earnings Total
Opening
balance 46,368.00 - 46,368.00
Drawings -128.00 -128.00
Profit for the
year 71,062.00 71,062.00
Closing
Balance 46,240.00 71,062.00 1,17,302.00
Balance sheet of Paul Services
For the Period on 30.06.2016
Assets
Current assets
Cash at bank 27,950
Account receivables 9,320
Supplies 320
Prepaid insurance 512
Total current assets 38,102
Non-Current assets
Office furniture 32,000
Less: Accumulated Depreciation 6,000 26,000
Office Equipment 64,000
Less: Accumulated Depreciation 12,000 52,000
Store Equipment 96,000
Less: Accumulated Depreciation 9,000 87,000

6ACCOUNTING IN BUSINESS
Automobile 1,28,000
Less: Accumulated Depreciation 12,000 1,16,000
Total non-current assets 2,81,000
Total Assets 3,19,102
Liabilities
Current liabilities
Accounts Payable 18,640
Interest Payable 40,760
Unearned revenue 8,000
Loan Payable 6,400
Total current assets 73,800
Non-current liabilities
Mortgage payable 1,28,000
Total non-current liabilities 1,28,000
Total Liabilities 2,01,800
Equity
Paul's capital 1,17,302
Total liabilities and equity 3,19,102