PB4-6 Completing a Worksheet and Preparing Closing Entries (Chapter Supplement) Marine Pool Service & Repair, a sole proprietorship owned by Robert Horn, has been in operation for several years. Revenues have increased gradually from both the pool cleaning and repair services. The annual financial statements prepared in the past have not conformed to GAAP. The newly employed president decided that a balance sheet, income statement, and statement of owner’s equity should be prepared in conformity with GAAP. The first step was to employ a full-time bookkeeper and engage a local CPA firm. It is now December 31, 2009, the end of the current accounting year. The bookkeeper has developed a trial balance from the ledger. A member of the staff of the CPA firm will advise and assist the bookkeeper in completing the accounting information processing cycle for the first time. The unadjusted trial balance at December 31, 2009, follows.

Examination of the records and related documents provided the following additional information that should be considered for adjusting entries:

a. A physical count of office supplies inventory at December 31, 2009, reflected $70 on hand.

b. On July 1, 2009, a two-year insurance premium was paid amounting to $800; it was debited to Prepaid Insurance.

c. The equipment cost $72,000 when acquired. Annual depreciation expense is $12,000.

d. Unpaid and unrecorded wages earned by employees at December 31, 2009, amounted to $900.

e. The one-year, $20,000 note payable was signed on October 1, 2009. Interest of $600 is owed and will be paid in 2010. No entry has yet been made for the interest.

f. All but $1,000 of the Unearned Cleaning Revenue had been earned by December 31, 2009. g. Gasoline, oil, and fuel purchased for the vehicles and used during the last two weeks of December 2009 amounting to $200 have not been paid for or recorded (this is considered maintenance expense). Required: 1. Create and complete a worksheet. 2. Give the closing entries.

Marine Pool Service & Repair Unadjusted Trial Balance December 31, 2009 Debits Credits Cash Accounts Receivable 27,500 Accumulated Depreciation 24,000 2,080 Accounts Payable 8,000 Supplies 820 Wages Payable 0 Prepaid Insurance 800 Interest Payable 0 Land (for future building site-not in use) 5,000 Unearned Cleaning Revenue 4,000 Equipment 72,000 Note Payable 20,000 Remaining Assets (not detailed) 22,000 R. Horn, Capital 37,800 R. Horn, Drawing 3,000 Repair Revenue 72,000 Wages Expense 60,000 Cleaning Revenue 34,000 Advertising Expense 2,000 Utilities Expense 1,400 Maintenance Expense 3,200 Supplies Expense 0 Insurance Expense 0 Depreciation Expense Interest Expense 0 0 199,800 199,800