E4-16 Recording Four Adjusting Entries, Completing a Trial Balance, Preparing Financial Statements, and Recording Closing Entries LO4-1, 4-2, 4.4 Cayuga Ltd. prepared the following trial balance at the end of its first year of operations ended December 31. To simplify the case, the amounts given are in thousands of dollars. Other data not yet recorded at December 31 are as follows: Unadjusted Account Titles Debit Credit Cash $ 51 Accounts receivable 22 Prepaid insurance 9 Machinery (20-year life, no residual value) 140 Accumulated depreciation $ 14 Accounts payable 22 Wages payable Income taxes payable Contributed capital (7,000 shares) 119 Retained earnings (deficit) Revenues (not detailed) 119 Expenses (not detailed) 45 Totals $274 $274 7 a. Insurance expired during the year, $7. b. Depreciation expense for the year, $7. c. Wages payable, $9. d. Income tax expense, $22. Required: 1. Prepare the adjusting entries for the year. (Enter your answers in thousands of dollars. If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) View transaction list Journal entry worksheet 1 2 3 4 Record Insurance expired. Note: Enter debits before credits. Transaction General Journal Debit Credit a. Record entry Clear entry View general journal Required: 1. Prepare the adjusting entries for the year. (Enter your answers in thousands of dollars. If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) View transaction list Journal entry worksheet Record depreciation expense. Note: Enter debits before credits. Transaction General Journal Debit Credit Record entry Clear entry View general journal Required: 1. Prepare the adjusting entries for the year. (Enter your answers in thousands of dollars. If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) View transaction list Journal entry worksheet 1 2 3 4 Record adjusting entry for wages. Note: Enter debits before credits. Transaction General Journal Debit Credit C Record entry Clear entry View general journal Required: 1. Prepare the adjusting entries for the year. (Enter your answers in thousands of dollars. If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) View transaction list Journal entry worksheet 1 2 3 4 Record income tax expense. Note: Enter debits before credits Transaction General Journal Debit Credit d. Record entry Clear entry View general journal 2. Show the effects of the adjusting entries on net earnings and cash. (Enter your answers in thousands of dollars. Select "None" if there is no effect.) Effect on Cash Transaction Effect on Net Earnings a Decrease by b. Increase by G. None by d by 3. Complete the trial balance adjustments and adjusted columns. (For revenues and expenses enter the total amount of adjustments in the adjustment column. Enter your answers in thousands of dollars.) CAYUGA LTD. Trial Balance As at December 31 (in thousands of dollars) Unadjusted Adjustments Debit Credit Debit Credit $ 51 22 9 140 $ 14 22 Adjusted Debit Credit Account Titles Cash Accounts receivable Prepaid Insurance Machinery Accumulated depreciation Accounts payable Wages payable Income taxes payable Contributed capital Retained earnings (deficit) Revenues (not detailed) Expenses (not detailed) Totals 119 7 119 45 $ 274 $ 274 0 0 $ 0 $ 0 4-a. Using the adjusted balances, prepare a statement of earnings. (Enter your answers in thousands of dollars. Round "Earnings per share" to 2 decimal places.) CAYUGA LTD. Statement of Earnings For the Year Ended December 31 (In thousands of dollars, except for Earnings per Share) Cash Earnings before income tax Expenses Income tax expense Net earings Earings por share 4-6. Using the adjusted balances, prepare a statement of changes in equity. (Enter your answers in thousands of dollars. Negative answers should be indicated by minus sign.) CAYUGA LTD. Statement of Retained Earnings For the Year Ended December 31 (in thousands of dollars) Balance, January 1 Netcomings Dividends declared Balance, December 31 $ 0 4-c. Using the adjusted balances, prepare a statement of financial position. (Enter your answers in thousands of dollars. Amounts to be deducted should be indicated with a minus sign.) CAYUGA LTD. Statement of Financial Position As at December 31 (In thousands of dollars) Assets 0 $ 0 Total assets Liabilities 0 Total liabilities Shareholders' Equity 0 $ 0 Total liabilities and shareholders' equity 6. Using the adjusted balances, prepare the closing entries for the year. (Enter your answers in thousands of dollars. If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) View transaction list Journal entry worksheet 3 1 2 Record entry to transfer revenues to income summary Note: Enter debits before credits. Transaction General Journal Debit Credit Record entry Clear entry View general journal