Answer :
1) To prepare the adjusting journal entries, we need to consider the following:
The inventory count at the end of the month shows that $300 of supplies are still on hand. This means that we need to recognize the cost of these supplies as an expense in the current period.
Journal entry:
Debit Supplies Expense 300
Credit Supplies 300
2) Insurance of $200 ($2,400 / 12) expires each month. This means that we need to recognize the cost of the insurance as an expense in the current period.
Journal entry:
Debit Insurance Expense 200
Credit Prepaid Insurance 200
3) The truck has a useful life of 5 years (60 months) and has a salvage value of $2,500. This means that we need to recognize a portion of the cost of the truck as an expense in the current period using the straight-line method of depreciation.
Journal entry:
Debit Depreciation Expense 50
Credit Accumulated Depreciation 50
4) Completed cleaning services for customers for a total of $3,000, but have not yet sent out the invoices. This means that we need to recognize the revenue from these services in the current period.
Journal entry:
Debit Accounts Receivable 3,000
Credit Service Revenue 3,000
Account Debit Credit
Cash X
Accounts Receivable 3,000
Supplies Expense 300
Prepaid Insurance 200
Equipment (truck) X
Accumulated Depreciation (truck) 50
Service Revenue 3,000
Insurance Expense 200
Depreciation Expense 50
Total 3,800 3,800
To prepare the income statement, we can use the following format:
Income Statement
For the period ending January 31, 2022
Revenue:
Service Revenue 3,000
Expenses:
Supplies Expense 300
Insurance Expense 200
Depreciation Expense 50
Total Expenses 550
Net Income 2,450
To prepare the statement of retained earnings, we can use the following format:
Statement of Retained Earnings
For the period ending January 31, 2022
Retained earnings, January 1, 2022 X
Net income 2,450
Dividends X
Retained earnings, January 31, 2022 X
A journal entry is a record of a financial transaction that is recorded in a company's general ledger or accounting journal. Journal entries in business are used to reflect the financial activity of a company, including transactions such as sales, purchases, and payments. They help to provide a clear and accurate record of the financial activity of a company and are used to create financial statements such as the balance sheet and income statement.
The missing part in the question is shown below.
At the end of January, Park Cleaners, Inc (PCI) analyzed the following transactions for which journal entries have not yet been prepared.
1 An inventory count at the close of business on January 31 reveals that $300 of supplies are still on hand.
2 Insurance of $200 ($2,400 / 12) expires each month.
3 The truck has a useful life of 5 years (60 months) and has a salvage value of $2,500.
4 Completed cleaning services for customers for a total of $3,000, but have not yet sent out the invoices.
For the above transactions, Prepare the Adjusting Journal Entries, Post to the General Ledger (t-accounts), and Prepare an Adjusted Trial Balance.
5.Prepare the Income Statement, Statement of Retained Earnings, and the Balance Sheet.
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