1. Journal Entries and Posting to Ledger:
Assuming you have a set of transactions for December, you need to make journal entries for each transaction and post them to the ledger.
Example:
Dec 1: Received $5,000 cash as an investment from the owner.
Journal Entry:
Debit Cash $5,000
Credit Owner's Equity $5,000
Post to the Cash and Owner's Equity accounts in the ledger.
Continue making journal entries for each transaction.
2-a. Adjusting Entries:
Adjusting entries are made at the end of the accounting period to ensure that the accounts reflect accurate and up-to-date information.
Example:
Dec 31: Record accrued interest expense of $500.
Journal Entry:
Debit Interest Expense $500
Credit Interest Payable $500
2-b. Post Adjusting Entries:
Post the adjusting entries to the ledger accounts.
3. Adjusted Trial Balance:
Prepare an adjusted trial balance by listing all the accounts and their balances after considering the adjusting entries.
4. Income Statement:
Prepare an income statement summarizing revenues and expenses for the three months ended December 31, 2021.
Example:
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Income Statement
For the Three Months Ended December 31, 2021
Revenue $X
Expenses
- Operating Expenses $Y
- Interest Expense $Z
Net Income $X - $Y - $Z
5. Statement of Retained Earnings:
Prepare a statement of retained earnings to show changes in retained earnings during the three months.
6. Classified Balance Sheet:
Prepare a classified balance sheet categorizing assets, liabilities, and equity.
7. Closing Entries:
Closing entries are made to transfer the temporary account balances to the permanent accounts.
Example:
Close revenue accounts:
Debit Revenues
Credit Income Summary
Close expense accounts:
Debit Income Summary
Credit Expenses
8. Post-Closing Trial Balance:
Prepare a post-closing trial balance by listing all accounts and their balances after closing entries.
Ensure that total debits equal total credits.
Remember to replace placeholders (X, Y, Z) with actual amounts from your transactions. Adjust the examples according to the specific details of your business transactions.