Paul Services: Comprehensive Financial Statements and Journal Entries

This assignment presents a comprehensive financial analysis of Paul Services, showcasing the company's accounting processes and financial performance for the period ending May 31, 2016. It begins with detailed journal entries for various adjustment transactions, including interest expense, supplies used, insurance expense, and depreciation across multiple asset categories. An accounting worksheet is then provided, illustrating the unadjusted and adjusted trial balances, facilitating a clear understanding of the impact of the adjustments on the financial figures. The assignment continues with the preparation of key financial statements: an income statement, a statement of changes in equity, and a balance sheet. The income statement reveals a net profit, while the balance sheet presents the company's assets, liabilities, and equity. Closing entries are also included, ensuring that all temporary accounts are closed and the financial data is ready for the next accounting period. This assignment provides valuable insights into the entire accounting cycle, from initial transactions to the final financial statements.

JOURNALISE THE ADJUSTMENT TRANSACTIONS
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
(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. Deprciation - 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
(To record unearned revenue earned)

ACCOUNTING WORKSHEET
Unadjusted Adjusting entries Adjusted
Account
No Account Name Debit Credit Debit Credit 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
146 Acc. Deprciation - 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 140,790 - 24,120 164,910
207 Unearned revenue 30,150 15,075 - 15,075
210 Loan Payable 12,060 - - 12,060
215 Mortgage Payable 241,200 - - 241,200
301 Paul's Capital 148,320 - - 148,320
305 Paul's Drawings 72,000 - - 72,000
401 Revenue 241,000 - 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
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
985,380 985,380
122,85
9 122,859 1,087,500
1,087,50
0

INCOME STATEMENT
Paul Services
Income Statement
For the Period on 31.05.2016
Particulars Amount ($)
Income:
Revenue 256,075 256,075
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

CLOSING ENTRIES
Date Particulars Ref. Amount (Dr.) Amount (Cr.)
31-May-16 Revenue 401 256,075
Advertising Expense 601 2,800
Automobile Expense 605 5,775
Depreciation Expense - Furniture 615 24,000
Depreciation Expense - Equipment 620 48,000
Depreciation Expense - Store Equipment 625 36,000
Depreciation Expense - Automobile 640 48,000
Insurance Expense 650 6,156
Maintenance Expense 665 9,800
Miscellaneous Expense 670 1,155
Rent Expense 675 2,400
Supplies Expense 680 6,608
Utilities Expense 685 3,600
Interest Expense 690 28,920
Retained earnings (b.f.) 32,862
(To record closing entry)

STATEMENT OF CHANGES IN EQUITY
Paul Services
Statement of Changes in Equity
For the year ended 31 May, 2016
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

BALANCE SHEET
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
Store Equipment 180,900
Less: Acc. Depreciation - Equipment (36,000) 144,900
Automobile 241,200
Less: Acc. Depreciation - Automobile (48,000) 193,200
Current Assets
Cash at Bank 140,790
Accounts Receivable 46,930
Supplies 603
Prepaid Insurance 964 189,287
Total Assets 636,287
(II) Liabilities
Non-Current Liabilities
Loan Payable 12,060
Mortgage Payable 241,200 253,260
Current Liabilities
Accounts Payable 93,860
Interest Payable 164,910
Unearned revenue 15,075 273,845
Equity
Paul's Capital 148,320
Less: Paul's Drawings (72,000)
Profit for the period 32,862 109,182
Total Liabilities and Equities 636,287