Answer:
To prepare the post-closing trial balance, we need to start with the balances after all closing entries have been made. The closing entries are made to transfer temporary account balances (revenues, expenses, dividends) to the retained earnings account. After these closing entries, only permanent accounts (assets, liabilities, and equity) will have balances.
Let's summarize the account balances after considering all the transactions and adjusting journal entries:
Assets:
Cash: $12 (Borrowed on March 1, no other transactions affecting cash)
Land: $9 (Purchased on March 2)
Software: $5 (Purchased on July 4, with $10 initial cost and $5 amortization)
Supplies: $8 (Purchased on October 5, $18 initial cost, and $10 counted on December 31)
Accounts Receivable: $0 (Collected all accounts receivable on December 10)
Liabilities:
Accounts Payable: $0 (Paid on November 6)
Notes Payable: $12 (Borrowed on March 1, with $1 interest to accrue)
Equity:
Common Stock: $23 (Issued on April 3)
Retained Earnings: $40 (This is calculated as follows: $160 in revenues - $85 in salaries and wages expense - $8 in income tax for the year)
Now, let's calculate the total equity by adding Common Stock and Retained Earnings:
$23 (Common Stock) + $40 (Retained Earnings) = $63
So, the post-closing trial balance is as follows:
Assets:
Cash: $12
Land: $9
Software: $5
Supplies: $8
Accounts Receivable: $0
Liabilities:
Accounts Payable: $0
Notes Payable: $12
Equity:
Common Stock: $23
Retained Earnings: $40
Total Assets: $34
Total Liabilities and Equity: $34