Adjustments and Closing Process--Basic Entries
Selected Ledger Accounts Used by Goldstone

question 53

Essay

Adjustments and closing process--basic entries
Selected ledger accounts used by Goldstone Advertising, Inc., are listed along with identifying numbers. Following this list of account numbers and titles is a series of transactions. For each transaction, you are to indicate the proper accounts to be debited and credited.
$$\begin{array} { | l | l | l | l | l | l | } \hline 1 & \text { Cash } & 22 & \text { Accounts Payable } & 41 & \text { Fees Earned } \\\hline 2 . & \text { Accounts Receivable } & 23 & \text { Income Taxes Payable } & 51 & \text { Salaries Expense } \\\hline 3 & \text { Office Supplies } & 24 & \text { Unearned Fees } & 52 & \text { Office Supplies Expense } \\\hline 4 & \text { Unexpired Insurance } & 30 & \text { Capital Stock } & 53 & \text { Rent Expense } \\\hline 5 & \text { Office Equipment } & 31 & \text { Retained Earnings } & 54 & \text { Insurance Expense } \\\hline 6 & \text { Accumulated Depr. } & 32 & \text { Dividends } & 55 & \text { Depreciation Expense: } \\\hline & \text { Office Equip } & 35 & \text { Income Summary } & & \text { Office Equip. } \\\hline 21 & \text { Dividends Payable } & & & 56 & \text { Income Taxes Expense } \\\hline & & & & & \\\hline\end{array}$$ $$\begin{array} { | l | l | l | l | } \hline & & \text { Account(s) } & \text { Account(s) } \\\hline & \text { Transactions } & \text { Debited } & \text { Credited } \\\hline & \begin{array} { l } \text { Example: Paid rent on building for the } \\\text { current period. }\end{array} & 53 & 1 \\\hline \text { a) } & \begin{array} { l } \text { Received an advance payment from a } \\\text { client for services to be rendered over } \\\text { next six months. }\end{array} & & \\\hline \text { b) } & \text { Paid salaries of employees. } & & \\\hline \text { c) } & \begin{array} { l } \text { Bought a three-year insurance policy } \\\text { and paid in full. }\end{array} & & \\\hline \text { d) } & \begin{array} { l } \text { Performed services for a client; received } \\\text { part of fee in cash, remainder to be } \\\text { collected in 30 days. }\end{array} & & \\\hline \text { e) } & \begin{array} { l } \text { Purchased office equipment; paid in } \\\text { cash, balance payable in } 60 \text { days. }\end{array} & & \\\hline \text { f) } & \begin{array} { l } \text { Purchased a large quantity of office } \\\text { supplies on credit. }\end{array} & & \\\hline \text { g) } & \begin{array} { l } \text { Declared a dividend to be paid in } 45 \\\text { days. }\end{array} & & \\\hline \text { h) } & \begin{array} { l } \text { Made an adjusting entry for the portion } \\\text { of the insurance premium which had } \\\text { expired. }\end{array} & & \\\hline \text { i) } & \begin{array} { l } \text { Made an adjusting entry to record } \\\text { depreciation for the period. }\end{array} & & \\\hline \text { j) } & \begin{array} { l } \text { Made an adjusting entry for office } \\\text { supplies used during the period. }\end{array} & & \\\hline \text { k) } & \begin{array} { l } \text { Made an adjusting entry to recognize } \\\text { that a portion of the fee received in } \\\text { advance (transaction a) had now been } \\\text { earned. }\end{array} & & \\\hline \text { 1) } & \begin{array} { l } \text { Paid the dividend declared in transaction } \\\text { g. }\end{array} & & \\\hline \text { m) } & \begin{array} { l } \text { Made an adjusting entry to accrue } \\\text { income taxes at the end of an } \\\text { unprofitable period. }\end{array} & & \\\hline \text { n) } & \begin{array} { l } \text { Closed the Income Summary account at } \\\text { the end of an unprofitable period. }\end{array} & & \\\hline \text { o) } & \begin{array} { l } \text { Closed the Dividends account at the end } \\\text { of the period. }\end{array} & & \\\hline\end{array}$$

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