4.10: Key terms*

Accounting cycle Series of steps performed during the accounting period to analyze, record, classify, summarize, and report useful financial information for the purpose of preparing financial statements. The steps include analyzing transactions, journalizing transactions, posting journal entries, taking a trial balance and completing the work sheet, preparing financial statements, journalizing and posting adjusting entries, journalizing and posting closing entries, and taking a post-closing trial balance.

Accounting system A set of records and the procedures and equipment used to perform accounting functions.

Accounts payable Amounts owed to suppliers for goods or services purchased on credit.

Accounts receivable Amounts due from customers for services performed or merchandise sold on credit.

Accumulated amortization A contra account to intangible assets.

Accumulated depreciation A contra account to depreciable assets such as buildings, machinery, and equipment.

Bonds payable Written promises to pay a definite sum at a certain date as evidenced by formal printed certificates that are sometimes secured by liens on property, such as mortgages.

Buildings Structures used to carry on the business.

Cash Includes deposits in banks available for current operations at the balance sheet date plus cash on hand consisting of currency, undeposited checks, drafts, and money orders.

Cash equivalents Highly liquid, short-term investments acquired with temporarily idle cash.

Classified balance sheet Subdivides the three major balance sheet categories (assets, liabilities, and stockholders' equity) to provide more information for users of financial statements. Assets may be divided into current assets; long-term investments; property, plant, and equipment; and intangible assets. Liabilities may be divided into current liabilities and long-term liabilities.

Closing process The act of transferring the balances in the revenue and expense accounts to a clearing account called Income Summary and then to the Retained Earnings account. The balance in the Dividends account is also transferred to the Retained Earnings account.

Construction in progress Represents the partially completed stores or other buildings that a company plans to occupy when completed.

Copyright Grants the owner the exclusive privilege of publication of written material for a specific time.

Current assets Cash and other assets that a business can convert into cash or use up in one year or one operating cycle, whichever is longer.

Current liabilities Debts due within one year or one operating cycle, whichever is longer. The payment of current liabilities normally requires the use of current assets.

Current ratio Calculated by dividing current assets by current liabilities.

Dividends payable Amounts declared payable to stockholders and that represent a distribution of income.

Goodwill An intangible value attached to a business, evidenced by the ability to earn larger net income per dollar of investment than that earned by competitors in the same industry.

Income Summary account A clearing account used only at the end of an accounting period to summarize revenues and expenses for the period.

Income taxes payable Are the taxes payable to the state and federal governments by a corporation based on its income.

Intangible assets Noncurrent, nonmonetary, nonphysical assets of a business.

Interest payable Interest that has accumulated on debts, such as notes or bonds. This accrued interest has not been paid at the balance sheet date because it is not due until later.

Interest receivable Arises when interest has been earned but not collected at the balance sheet date.

Land Ground the company uses for business operations. Land could include ground on which the company locates its business buildings and that used for outside storage space or a parking lot.

Leasehold improvements Are any physical alterations made by the lessee to the leased property when these benefits are expected to last beyond the current accounting period.

Leaseholds Rights to use rented properties.

Long-term assets Assets that are on hand or used by a business for a relatively long time. Examples include long-term investments; property, plant, and equipment; and intangible assets.

Long-term investment Usually securities of another company held with the intention of (1) obtaining control of another company, (2) securing a permanent source of income for the investor, or (3) establishing friendly business relations.

Long-term liabilities Debts such as a mortgage payable and bonds payable that are not due for more than one year.

Marketable securities Temporary investments that a company makes to earn a return on idle cash.

Merchandise inventory Goods held for sale.

Note An unconditional written promise to pay to another party the amount owed either when demanded or at a certain date.

Notes payable Unconditional written promises by a company to pay a specific sum of money at a certain future date.

Office equipment Includes computers, copiers, FAX machines, and phone answering machines.

Office furniture Includes file cabinets, desks, chairs, and shelves.

Operating cycle The time it takes to start with cash, buy necessary items to produce revenues (such as materials, supplies, labor, and/or inventories), sell services or goods, and receive cash by collecting the resulting receivables.

Paid-in capital Shows the capital paid into the company as the owners' investment.

Patent A right granted by the federal government authorizing the owner of an invention to manufacture a product or to use a process for a specific time.

Post-closing trial balance A trial balance taken after the closing entries have been posted.

Prepaid expenses Assets awaiting assignment to expense. Items such as rent, insurance, and supplies that have been paid for but from which all of the benefits have not yet been realized (or consumed). Prepaid expenses are classified as current assets.

Property, plant, and equipment Assets with useful lives of more than one year that a company acquired for use in a business rather than for resale; also called plant assets or fixed assets.

Retained earnings Shows the cumulative income of the company less the amounts distributed to the owners in the form of dividends.

Salaries payable Amounts owed to employees for services rendered.

Sales taxes payable Are taxes a company has collected from customers but has not remitted to the taxing authority, usually the state.

Stockholders' equity Shows the owners' interest (equity) in the business.

Taxes withheld from employees Items such as federal income taxes, state income taxes, and social security taxes withheld from employees' paychecks.

Unclassified balance sheet A balance sheet showing only three major categories: assets, liabilities, and stockholders' equity.

Unearned revenues (revenues received in advance) Result when payment is received for goods or services before revenue has been earned.

Work sheet A columnar sheet of paper on which accountants have summarized information needed to make the adjusting and closing entries and to prepare the financial statements.

*Some of these terms have been defined in earlier chapters but are included here for your convenience.

Self-test

True-false

Indicate whether each of the following statements is true or false.

At the end of the accounting period, three trial balances are prepared.

The amounts in the Adjustments columns are always added to the amounts in the Trial Balance columns to determine the amounts in the Adjusted Trial Balance columns.

If a net loss occurs, it appears in the Income Statement credit column and Statement of Retained Earnings debit column.

After the closing process is complete, no balance can exist in any revenue, expense, Dividends, or Income Summary account.

The post-closing trial balance may contain revenue and expense accounts.

All accounting systems currently in use are computerized.

Multiple-choice

Select the best answer for each of the following questions.

Which of the following accounts is least likely to be adjusted on the work sheet?

a. Supplies on Hand.

b. Land.

c. Prepaid Rent.

d. Unearned Delivery Fees.

If the Balance Sheet columns do not balance, the error is most likely to exist in the:

a. General journal.

b. General ledger.

c. Last six columns of the work sheet.

d. First six columns of the work sheet.

Net income for a period appears in all but which one of the following?

a. Income Statement debit column of the work sheet.

b. Statement of Retained Earnings credit column of the work sheet.

c. Statement of retained earnings.

d. Balance sheet.

Which of the following statements is false regarding the closing process?

a. The Dividends account is closed to Income Summary.

b. The closing of expense accounts results in a debit to Income Summary.

c. The closing of revenues results in a credit to Income Summary.

d. The Income Summary account is closed to the Retained Earnings account.

Which of the following statements is true regarding the classified balance sheet?

a. Current assets include cash, accounts receivable, and equipment.

b. Plant, property, and equipment is one category of long-term assets.

c. Current liabilities include accounts payable, salaries payable, and notes receivable.

d. Stockholders' equity is subdivided into current and long-term categories.

Now turn to “Answers to self-test” at the end of the chapter to check your answers.

Questions

➢     At which stage of the accounting cycle is a work sheet usually prepared?

➢     Why are the financial statements prepared before the adjusting and closing entries are journalized and posted?

➢     Describe the purposes for which the work sheet is prepared.

➢     You have taken over a set of accounting books for a small business as a part-time job. At the end of the first accounting period, you have partially completed the work sheet by entering the proper ledger accounts and balances in the Trial Balance columns. You turn to the manager and ask, "Where is the list of additional information I can use in entering the adjusting entries?" The manager indicates there is no such list. (In all the text problems you have done, you have always been given this information.) How would you obtain the information for this real-life situation? What are the consequences of not making all of the required adjustments at the end of the accounting period?

➢     How are the amounts in the Adjusted Trial Balance columns of a work sheet determined?

➢     The work sheet for Bridges Company shows net income of USD 40,000. The following four adjustments were ignored:

➢     Subscriptions Fees earned, USD 1,200.

➢     Depreciation of equipment, USD 4,000.

➢     Depreciation of building, USD 10,000.

➢     Salaries accrued, USD 3,000. What is the correct net income?

➢     After the Adjusted Trial Balance columns of a work sheet have been totaled, which account balances are extended to the Income Statement columns, which account balances are extended to the Statement of Retained Earnings columns, and which account balances are extended to the Balance Sheet columns?

➢     How is the statement of retained earnings prepared?

➢     What is the purpose of closing entries? What accounts are not affected by closing entries?

➢     A company has net income of USD 50,000 for the year. In which columns of the work sheet would net income appear?

➢     Is it possible to prepare monthly financial statements without journalizing and posting adjusting and closing entries? How?

➢     What is the purpose of a post-closing trial balance?

➢     Describe some of the ways in which the manual accounting system has evolved.

➢     When did computerized accounting systems come into use?

➢     Define an accounting system.

➢     How is a classified balance sheet different than an unclassified balance sheet?

➢     Real world question Refer to "A broader perspective: Skills for the long haul" to answer the following true-false questions:

➢     The same skills are needed at each level in a CPA firm.

➢     The two most important traits at the staff accountant level are a positive attitude and the ability to learn quickly while adapting to unfamiliar situations.

➢     The senior accountant needs management skills in addition to technical skills.

➢     Partners become increasingly involved in technical matters and have less and less interaction with people.

➢     Real world question Referring to the Annual report appendix in your text, identify the classifications (or categories) of assets used by The Limited in its balance sheet.

➢     Real world question Referring to the Annual report appendix in your text, identify the classifications (or categories) of liabilities used by The Limited in its balance sheet.

Exercises

Exercise A List the steps in the accounting cycle. Would the system still work if any of the steps were performed out of order?

Exercise B Three of the major column headings on a work sheet are Trial Balance, Income Statement, and Balance Sheet. Determine under which major column headings each of the following items would appear and whether it would be a debit or credit. (For example, Cash would appear on the debit side of the Trial Balance and Balance Sheet columns.)

Exercise C Assume a beginning balance in Retained Earnings of USD 84,000 and net income for the year of USD 36,000. Illustrate how these would appear in the Statement of Retained Earnings columns and Balance Sheet columns in the work sheet.

Exercise D In the previous exercise, if there was a debit balance of USD 216,000 in the Retained Earnings account as of the beginning of the year and a net loss of USD 192,000 for the year, show how these would be treated in the work sheet.

Exercise E Damon Davis was preparing the work sheet for Drano Plumbing Company. He calculated the net income to be USD 50,000. When he totaled the Balance Sheet columns, the column totals were debit, USD 400,000; and credit, USD 300,000. What was the probable cause of this difference? If this was not the cause, what should he do to find the error?

Exercise F The Trial Balance of the Printer Repair Company at 2010 December 31, contains the following account balances listed in alphabetical order to increase your skill in sorting amounts to the proper work sheet columns.

Printer Repair Company

Using these account balances and the following additional information, prepare a work sheet for Printer Repair Company. Arrange the accounts in their approximate usual order.

• Supplies on hand at 2010 December 31, have a cost of USD 2,400.

• The balance in the Prepaid Insurance account represents the cost of a two-year insurance policy covering the period from 2010 January 1, through 2011 December 31.

• The estimated lives of depreciable assets are buildings, 40 years, and equipment, 20 years. No salvage values are anticipated.

Exercise G Texban Corporation had a 2010 January 1, balance in its Retained Earnings account of USD 90,000. For the year 2010, net income was USD 50,000 and dividends declared and paid were USD 24,000. Prepare a statement of retained earnings for the year ended 2010 December 31.

Exercise H Rubino Company reported net income of USD 100,000 for the current year. Examination of the work sheet and supporting data indicates that the following items were ignored:

• Accrued salaries were USD 6,000 at December 31.

• Depreciation on equipment acquired on July 1 amounted to USD 4,000.

Based on this information, (a) what adjusting journal entries should have been made at December 31, and (b) what is the correct net income?

Exercise I Refer to the work sheet prepared in the Printer Repair Company exercise. Prepare the adjusting and closing journal entries.

Exercise J The Income Statement column totals on a work sheet prepared at 2010 December 31, are debit, USD 500,000; and credit, USD 900,000. In T-account format, show how the postings to the Income Summary account would appear as a result of the closing process. Identify what each posting represents.

Exercise K After adjustment, these selected account balances of Cold Stream Campground are:

In T-account format, show how journal entries to close the books for the period would be posted. (You do not need to show the closing journal entries.) Enter these balances in the accounts before doing so. Key the postings from the first closing entry with the number (1), the second with the number (2), and so on.

Exercise L The following account balances appeared in the Income Statement columns of the work sheet entries prepared for Liu Company for the year ended 2010 December 31:

Prepare the closing journal entries.

Exercise M Which of the following accounts are likely to appear in the post-closing trial balance for the Blake Company?

• Accounts Receivable

• Cash

• Service Revenue

• Buildings

• Salaries Expense

• Capital Stock

• Dividends

• Accounts Payable

• Income Summary

• Unearned Subscription Fees

Exercise N Using the legend at the right, determine the category (number) into which you would place each of these items.

Exercise O The following data are from the 2001 annual report of The Procter & Gamble Company and its subsidiaries. This company markets a broad range of laundry, cleaning, paper, beauty care, health care, food, and beverage products in more than 140 countries around the world. Leading brands include Ariel, Crest, Pampers, Pantene, Crisco, Vicks, and Max Factor. The dollar amounts are in millions.

Calculate the current rations for the two years. Comment on whether the trend is favorable or unfavorable.

Problems

Problem A The following adjusted trial balance is for Jasper Appliance Repair Company:

Prepare the closing journal entries at the end of the fiscal year, 2010 June 30.

Problem B The adjusted trial balance for Denver Architects , Inc., follows:

a. Prepare an income statement.

b. Prepare a statement of retained earnings.

c. Prepare a classified balance sheet.

d. Prepare the closing journal entries.

e. Show the post-closing trial balance assuming you had posted the closing entries to the general ledger.

Problem C The following trial balance and additional data are for Sure Sale Reality Company

The prepaid rent is for the period 2010 July 1, to 2011 June 30.

The equipment has an expected life of 10 years with no salvage value.

Accrued salaries are USD 11,520.

Travel expenses accrued but unreimbursed to sales staff at December 31 were USD 17,280

a. Prepare a 12-column work sheet for the year ended 2010 December 31. You need not include account numbers or explanations of adjustments.

b. Prepare adjusting journal entries.

c. Prepare closing journal entries.

Problem D The following trial balance and additional data are for South Sea Tours, Inc.:

The company consistently followed the policy of initially debiting all prepaid items to asset accounts.

The buildings have an expected life of 50 years with no salvage value.

The office equipment has an expected life of 10 years with no salvage value.

Accrued interest on notes receivable is USD 450.

Accrued interest on the notes payable is USD 1,000.

Accrued salaries are USD 2,100.

Expired prepaid insurance is USD 3,750.

Expired prepaid advertising is USD 16,500.

a. Prepare a 12-column work sheet for the year ended 2010 December 31. You need not include account numbers. Briefly explain the entries in the Adjustments columns at the bottom of the work sheet, as was done in Exhibit 20.

b. Prepare the required closing entries.

Problem E The following trial balance and additional data are for Florida Time-Share Property Management Company:

Insurance expense for the year, USD 3,840.

Rent expense for the year, USD 19,200.

Depreciation expense: office equipment, USD 2,880; and automobiles, USD 12,800.

Salaries earned but unpaid at December 31, USD 26,640.

Supplies on hand at December 31, USD 1,000.

The unearned management fees were received and recorded on 2010 November 1. The advance payment covered six months' management of an apartment building.

a. Prepare a 12-column work sheet for the year ended 2010 December 31. You need not include account numbers or explanations of adjustments.

b. Prepare an income statement.

c. Prepare a statement of retained earnings.

d. Prepare a classified balance sheet.

e. Prepare adjusting and closing entries.

Alternate problems

Alternate problem A The following adjusted trial balance is for Dream Home Realty Company:

Prepare the closing journal entries at the end of the fiscal year, 2010 June 30.

Alternate problem B The adjusted trial balance for Penrod Insurance Consultants, Inc., follows:

Penrod Insurance Consultants, Inc.

Adjusted Trial Balance

2010 December 31

a. Prepare an income statement for the year ended 2010 December 31.

b. Prepare a statement of retained earnings.

c. Prepare a classified balance sheet.

d. Prepare the closing journal entries.

e. Show the post-closing trial balance assuming you had posted the closing entries to the general ledger.

Alternate problem C The following trial balance and additional data are for Ramon Data Processing Company:

The prepaid rent is for the period 2010 January 1, to 2011 December 31.

The equipment is expected to last 10 years with no salvage value.

The prepaid insurance was for the period 2010 April 1, to 2011 March 31.

Accrued commissions payable total USD 3,000 at December 31.

a. Prepare a 12-column work sheet for the year ended 2010 December 31. You need not include account numbers or explanations of adjustments.

b. Prepare the adjusting journal entries.

c. Prepare the closing journal entries.

Alternate problem D The following trial balance and additional data are for Best-Friend Pet Hospital, Inc.

The company consistently followed the policy of initially debiting all prepaid items to asset accounts.

Prepaid fire insurance is USD 600 as of the end of the year.

Supplies on hand are USD 638 as of the end of the year.

Prepaid rent is USD 2,625 as of the end of the year.

The equipment is expected to last 10 years with no salvage value.

Accrued salaries are USD 2,625.

a. Prepare a 12-column work sheet for the year ended 2010 December 31. You need not include account numbers. Briefly explain the entries in the Adjustments columns at the bottom of the work sheet, as was done in Exhibit 20.

b. Prepare the 2010 December 31, closing entries.

Alternate problem E The following trial balance and additional data are for Roswell Interior Decorators, Inc.:

Supplies on hand at 2010 December 31, are USD 1,000.

Rent expense for 2010 is USD 10,000.

Advertising expense for 2010 is USD 2,304.

Insurance expense for 2010 is USD 2,400.

Depreciation expense is office equipment, USD 912, and office furniture, USD 3,000.

Accrued interest on notes payable is USD 150.

Accrued salaries are USD 4,200.

a. Prepare a 12-column work sheet for the year ended 2010 December 31. You need not include account numbers or explanations of adjustments.

b. Prepare an income statement.

c. Prepare a statement of retained earnings.

d. Prepare a classified balance sheet.

e. Prepare adjusting and closing entries.

Beyond the numbers—Critical thinking

Business decision case A Heather and Dan Holt met while both were employed in the interior trim and upholstery department of an auto manufacturer. After their marriage, they decided to earn some extra income by doing small jobs involving canvas, vinyl, and upholstered products. Their work was considered excellent, and at the urging of their customers, they decided to go into business for themselves, operating out of the basement of the house they owned. To do this, they invested USD 120,000 cash in their business. They spent USD 10,500 for a sewing machine (expected life, 10 years) and USD 12,000 for other miscellaneous tools and equipment (expected life, 5 years). They undertook only custom work, with the customers purchasing the required materials, to avoid stocking any inventory other than supplies. Generally, they required an advance deposit on all jobs.

The business seemed successful from the start, as the Holts received orders from many customers. But they felt something was wrong. They worked hard and charged competitive prices. Yet there seemed to be barely enough cash available from the business to cover immediate personal needs. Summarized, the checkbook of the business for 2010, their second year of operations, showed:

Considering how much they worked, the Holts were concerned that the cash balance decreased by USD 25,600 even though they only received dividends of USD 40,000. Their combined income from the auto manufacturer had been USD 45,000. They were seriously considering giving up their business and going back to work for the auto manufacturer. They turned to you for advice. You discovered the following:

Of the supplies purchased in 2010, USD 24,000 were used on jobs billed to customers in 2010; no supplies were used for any other work.

Work completed in 2010 and billed to customers for which cash had not yet been received by year-end amounted to USD 40,000.

Prepare a written report for the Holts, responding to their belief that their business is not sufficiently profitable. (Hint: Prepare an income statement for 2010 and include it in your report.)

Annual report analysis B Using the Annual report appendix, calculate the current ratios for the two years shown for The Limited, Inc. Write a summary of the results of your calculations. Also, look at some of the other data provided by the company in preparing your comments. For instance, look at the net income for the last three years.

Broader perspective – Writing experience C Read the "A broader perspective: Skills for the long haul". Write a description of a career in public accounting broader perspective at each level within the firm. Discuss the skills needed and how you could develop these skills.

Group project D In teams of two or three students, interview a management accountant. Management accountants may have the title of chief financial officer (CFO), controller, or some other accounting title within a company. Seek information on the advantages and disadvantages of working as a management accountant. Also inquire about the nature of the work and any training programs offered by the company. As a team, write a memorandum to the instructor summarizing the results of the interview. The heading of the memorandum should contain the date, to whom it is written, from whom, and the subject matter.

Group project E With a small group of students, obtain an annual report of a company in which you have some interest. You may obtain the annual report from your instructor, the library, the Internet, or the company. Describe the nature of each item on the classified balance sheet. You may have to do library research on some of the items. Also, calculate the current ratio for the most recent two years and comment. Write a report to your instructor summarizing the results of the project.

Group project F With a small group of students and using library sources, write a paper comparing the features of three different accounting software packages (such as Peachtree Complete, Quikbooks Pro, DacEasy, MYOB Business Essentials, NetSuite Small Businee and Cougar Mountain ). Give the strengths and weaknesses of each. Cite sources for the information and treat direct quotes properly.

Using the Internet—A view of the real world

Visit the following Internet site:

http://www.merck.com

Pursue choices you are offered on the screen under Investor Relations until you locate the most recent consolidated balance sheet. In a short report to your instructor, describe how you got to the balance sheet and identify the major headings used in the balance sheet. For instance, the first such heading is Assets. Also, calculate the current ratio.

Visit the following Internet site:

http://www.kodak.com

Type in "Annual report" in the search box to locate the most recent annual report and then find the consolidated  statement of financial position. Identify the major headings within the balance sheet and calculate the current ratio for the most recent year. Write a memo to your instructor summarizing your findings.

Answers to self-test

True-false

True. The three trial balances are the unadjusted trial balance, the adjusted trial balance, and the post-closing trial balance. The first two trial balances appear on the work sheet.

False. If a debit-balance account (such as Prepaid Rent) is credited in the adjustment, the amount in the Adjustments columns is deducted from the amount in the Trial Balance columns to determine the amount for that item in the Adjusted Trial Balance columns.

True. The net loss appears in the Income Statement credit column to balance the Income Statement columns. Then the loss appears in the Statement of Retained Earnings debit column because it reduces Retained Earnings.

True. All of these accounts are closed, or reduced to zero balances, as a result of the closing process.

False. All revenue and expense accounts have zero balances after closing.

False. Some manual accounting systems are still in use.

Multiple-choice

b. The other accounts are very likely to be adjusted. The Land account would be adjusted only if an error has been made involving that account.

c. The Adjusted Trial Balance columns should balance before items are spread to the Income Statement, Statement of Retained Earnings, and Balance Sheet columns. Therefore, if the Balance Sheet columns do not balance, the error is likely to exist in the last six columns of the work sheet.

d. The net income for the period does not appear in the balance sheet. It does appear in all of the other places listed.

a. The Dividends account is closed to the Retained Earnings account rather than to the Income Summary account.

b. Plant, property, and equipment is one of the long-term asset categories. Response (a) should not include equipment. Response (c) should not include notes receivable. Stockholders' equity is not subdivided into current and long-term categories.

Comprehensive review problem

Lopez Delivery Service Company has the following chart of accounts:

The post-closing trial balance as of 2010 May 31, was as follows:

The transactions for June 2010 were as follows:

June 1 Performed delivery services for customers on account, USD 60,000.

3 Paid dividends, USD 10,000.

4 Purchased a USD 20,000 truck on account.

7 Collected USD 22,000 of the accounts receivable.

8 Paid USD 16,000 of the accounts payable.

11 Purchased USD 4,000 of supplies on account. The asset account for supplies was debited.

17 Performed delivery services for cash, USD 32,000.

20 Paid the utilities bills for June, USD 1,200.

23 Paid miscellaneous expenses for June, USD 600.

28 Paid salaries of USD 28,000 for June.

• Depreciation expense on the buildings for June is USD 800.

• Depreciation expense on the trucks for June is USD 400.

• Accrued salaries at June 30 are USD 4,000.

• A physical count showed USD 12,000 of supplies on hand on June 30.

• The prepaid insurance balance of USD 4,800 applies to a two-year period beginning 2010 June 1.

• The prepaid rent of USD 12,000 applies to a one-year period beginning 2010 June 1.

• Performed USD 12,000 of delivery services for customers as of June 30 that will not be billed to those customers until July.

a. Open three-column ledger accounts for the accounts listed in the chart of accounts.

b. Enter the 2010 May 31, account balances in the accounts.

c. Journalize the transactions for June 2010.

d. Post the June journal entries and include cross-references (assume all journal entries appear on page 10 of the journal).

e. Prepare a 12-column work sheet as of 2010 June 30.

f. Prepare an income statement, a statement of retained earnings, and a classified balance sheet.

g. Prepare and post the adjusting entries (assume they appear on page 11 of the general journal).

h. Prepare and post the closing entries (assume they appear on page 12 of the general journal).

i. Prepare a post-closing trial balance.