Closing Entries Using t Accounts and preparation of Financial Statements

p2. Carlton Tennis Club’s adjusted trial balance at the end of its fiscal year follows.

 

 

Carlton tennis Club Adjusted trial Balance June 30, 2014

 

Cash	26,200	Â
Prepaid Advertising	9,600
Supplies	1,200
Land	100,000
Building	645,200
Accumulated Depreciation—Building	Â	Â	260,000
Equipment	156,000	Â	Â
Accumulated Depreciation—Equipment	Â	Â	50,400
Accounts Payable	Â	Â	73,000
Wages Payable	Â	Â	9,000
Property Taxes Payable	Â	Â	22,500
Unearned Revenue—Locker Fees	Â	Â	3,000
J. Kojas, Capital	Â	Â	471,150
J. Kojas, Withdrawals	54,000	Â	Â
Revenue from Court Fees	Â	Â	678,100
Revenue from Locker Fees	Â	Â	9,600
Wages Expense	351,000	Â	Â
Maintenance Expense	51,600	Â	Â
Advertising Expense	39,750	Â	Â
Utilities Expense	64,800	Â	Â
Supplies Expense	6,000	Â	Â
Depreciation Expense—Building	30,000	Â	Â
Depreciation Expense—Equipment	12,000	Â	Â
Property Taxes Expense	22,500	Â	Â
Miscellaneous Expense	6,900	Â	Â
Â	1,576,750	Â	1,576,750

 

 

rEQUIrED

1.    Prepare T accounts and enter the balances for J. Kojas, Capital; J. Kojas, Withdraw- als; Income Summary, and all revenue and expense accounts.

2.    Enter the four required closing entries in the T accounts, labeling the components a (credit balances), b (debit balances), c (Income Summary), and d (withdrawals), as appropriate.

3.    Prepare an income statement, a statement of owner’s equity, and a balance sheet for Carlton Tennis Club.

4.    ConCept ▶ Explain why it is necessary to make closing entries at the end of an accounting period.