b. (cont’d)
Asset
s
$ 42
,
835
3
,
500
110
,
,
,
,
,
,
,
,
,
,
,
Balance Shee
t
Cash
Office su
pp
lies
PROBLEM 5.5
A
SILVER LINING, INC. (continued)
Accounts receivabl
e
SILVER LINING, INC.
December 31, 201
5
,
c.
Dec. 31 64
,
000
Income Summar
y
64
,
000
31 51
,
545
Office Su
pp
l
y
Ex
p
ense 700
De
p
reciation Ex
p
ense: Office E
q
ui
p
ment 9
,
000
Rent Ex
p
ense 3
,
825
,
,
31 12
,
455
Retained Earnin
g
s12
,
455
31 1
,
000
,
Income Summar
y
To transfer net income earned in 2015 to the
Retained Earnin
g
s
$12,455
)
.
(
4
)
Consultin
g
Services Revenu
e
To close revenue earned.
(
2
)
Retained Earnin
g
s account
(
$64,000 – $51,545 =
Income Summar
y
(
3
)
PROBLEM 5.5
A
SILVER LINING, INC.
December 31, 201
5
(1)
General Journal
SILVER LINING, INC. (continued)
,
d.
42
,
835$ 3
,
500 110 900 180
54
,
000 36
,
000$ 1
,
400 9
,
000 2
,
350 1
,
,
,
,
Income taxes
p
a
y
able
Notes
p
a
y
able
(
Due 3/1/16
)
Accounts
p
a
y
abl
e
PROBLEM 5.5
A
SILVER LINING, INC. (continued)
Pre
p
aid rent
SILVER LINING, INC.
December 31, 201
5
Accounts receivabl
e
Office su
pp
lies
Unex
p
ired insurance
After-Closing Trial Balanc
e
Cash
Accumulated de
p
reciation: office e
q
ui
p
ment
Office e
q
ui
p
ment
f.
3
,
825
$
$
$
Less: Total rent ex
p
ense October throu
g
h
PROBLEM 5.5
A
SILVER LINING, INC. (concluded)
Rent ex
p
ense incurred in 2015
,
$
a.
Dec. 31 5
,
000
Su
pp
lies 5
,
000
31 1
,
250
Pre
p
aid Studio Rent 1
,
250
31 800
Accumulated De
p
reciation: Studio E
q
ui
p
ment 800
,
(
)
31 750
Salaries Pa
y
able 750
31 2
,
000
Income Taxes Pa
y
abl
e
2
,
000
PROBLEM 5.6
A
BRUSHSTROKE ART STUDIO, INC
.
December 31, 201
5
(1)
General Journal
BRUSHSTROKE ART STUDIO, INC.
70 Minutes, Strong
Su
pp
l
y
Ex
p
ense
To record su
pp
lies used in December.
Studio Rent Ex
p
ense
To record income taxes ex
p
ense accrued in
(
2
)
To record portion of prepaid rent expired in December.
(
3
)
De
p
reciation Ex
p
ense: Studio E
q
ui
p
ment
(
7
)
December.
December.
(
8
)
Income Taxes Ex
p
ense
To record salar
y
ex
p
ense accrued at the end o
f
Salar
y
Ex
p
ense
,
(
)
(
)
p
a. (cont’d)
Computations for each of the adjusting journal entries:
1. $6,000 (supplies per trial balance) – $1,000 (at 12/31) = $5,000 used in December.
2. $2,500 (prepaid rent per trial balance)/2 months remaining at 11/30/15 = $1,250 per month.
BRUSHSTROKE ART STUDIO, INC. (continued
)
The company’s adjusted trial balance dated December 31, 2015, appears on the following page.
PROBLEM 5.6
A
a. (cont’d.)
22
,
380$ 71
,
940 1
,
000 1
,
250
96
,
000 52
,
800$ 6
,
420 750
24
,
000 720
5
,
000 7
,
000
50
,
000 20
,
,
,
,
,
,
,
,
PROBLEM 5.6
A
BRUSHSTROKE ART STUDIO, INC. (continued
)
Cash
Su
pp
lies
Client fees receivabl
e
BRUSHSTROKE ART STUDIO, INC. (continued
)
December 31, 201
5
Adjusted Trial Balanc
e
Income taxes
p
a
y
able
Salaries
p
a
y
able
Unearned client fees
Ca
ital stock
Pre
p
aid studio rent
Accumulated de
p
reciation: studio e
q
ui
p
ment
Interest
p
a
y
able
Accounts
p
a
y
abl
e
Studio e
q
ui
p
ment
Notes
p
a
y
able
b.
86
,
000$
9
,
000$
18
,
000 12
,
500 3
,
,
,
,
,
20,000$
PROBLEM 5.6
A
BRUSHSTROKE ART STUDIO, INC. (continued
)
Revenues:
BRUSHSTROKE ART STUDIO, INC
.
For the Year Ended December 31, 201
5
Income Statement
Client fees earned
Ex
p
enses:
Salar
y
ex
p
ens
e
Studio rent ex
p
ense
Su
pp
l
y
ex
p
ense
For the Year Ended December 31, 2015
Retained earnings (1/1/15)
BRUSHSTROKE ART STUDIO, INC.
Statement of Retained Earnings
b. (cont’d)
Asset
s
$ 22
,
380
71
,
940
1
,
000
1
,
250
$ 96
,
000
52
,
800 43
,
200
$ 139
,
770
$ 6
,
420
750
24
,
000
,
,
,
p
,
,
,
Notes
p
a
y
able
PROBLEM 5.6
A
BRUSHSTROKE ART STUDIO, INC. (continued
)
Client fees receivabl
e
Su
pp
lies
BRUSHSTROKE ART STUDIO, INC
.
December 31, 201
5
Balance Shee
t
Cash
Pre
p
aid studio rent
Studio e
q
ui
p
ment
Salaries
p
a
y
able
Less: Accumulated Depreciation: studio equipment
Total assets
Liabilities
Accounts
p
a
y
abl
e
,
p
c.
Dec. 31 86
,
000
Income Summar
y
86
,
000
,
,
Client Fees Earned
To close Client Fees Earned.
PROBLEM 5.6
A
BRUSHSTROKE ART STUDI
O
December 31, 201
5
(1)
BRUSHSTROKE ART STUDIO, INC. (continued
)
General Journal
,
d.
22
,
380$ 71
,
940 1
,
000 1
,
250
96
,
000 52
,
800$ 6
,
420 750
,
,
p
,
PROBLEM 5.6
A
BRUSHSTROKE ART STUDIO, INC. (concluded
)
Pre
p
aid studio rent
Studio e
q
ui
p
ment
BRUSHSTROKE ART STUDIO, INC. (concluded
)
December 31, 201
5
After-Closing Trial Balanc
e
Cash
Salaries
p
a
y
able
Client fees receivabl
e
Accounts
p
a
y
abl
e
Less: Accumulated de
p
reciation: studio e
q
ui
p
.
Su
pp
lies
p