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The unadjusted trial balance of Trendy Consulting Pty Ltd is as follows:

**Trendy Consulting Pty Ltd**
**Unadjusted Trial Balance as at 30 June 2020**

| Account | Debit ($) | Credit ($) |
|--------------------------------|------------|------------|
| Cash at bank | 22,070 | |
| Office supplies | 7,260 | |
| GST Receivable | 1,400 | |
| Prepaid insurance | 1,725 | |
| Office equipment | 92,800 | |
| Accumulated depreciation | | 27,840 |
| GST Payable | | 2,460 |
| Bank loan payable | | 50,000 |
| Share capital | | 10,000 |
| Retained earnings | | 12,500 |
| Services revenue | | 135,000 |
| Salaries expense | 83,250 | |
| Advertising expense | 2,450 | |
| Repairs expense | 2,160 | |
| Sundry expense | 7,520 | |
| Electricity expense | 4,405 | |
| Motor vehicle running expenses | 8,790 | |
| Telephone expense | 2,620 | |
| Interest expense | 1,350 | |
| **Total** | **237,800**| **237,800**|

The following additional information should be taken into account:

1. Salaries accrued but unrecorded on 30 June 2020 were $2,690.
2. An electricity bill has been received but not yet recorded of $990 (GST included).
3. Insurance unexpired at 30 June 2020 was $450.
4. Office equipment is to be depreciated using straight-line depreciation. The useful life is 4 years, and it has a residual value of $18,560.
5. Office supplies unused at 30 June amounted to $1,540.
6. On 30 June, the Directors declared a dividend to be paid to shareholders in July 2020 totaling $5,000.
7. Interest to be accrued on the bank loan at 30 June is $210.

**Required:**

A. Prepare a 10-column worksheet for the year ended 30 June 2020.
B. Prepare a statement of changes in equity.
C. Journalise the closing entries.

Answer :

A. 10-Column Worksheet for the year ended 30 June 2020:

| Account Title | Trial Balance | Adjustments | Adjusted Trial Balance | Income Statement | Balance Sheet |

|------------------------|---------------|-------------|-----------------------|------------------|---------------|

| Cash at bank | $22,070 | | $22,070 | | $22,070 |

| Office supplies | $7,260 | $1,540 | $5,720 | | $5,720 |

| GST Receivable | $1,400 | | $1,400 | | $1,400 |

| Prepaid insurance | $1,725 | $450 | $1,275 | | $1,275 |

| Office equipment | $92,800 | | $92,800 | | $92,800 |

| Accumulated depreciation | $83,250 | $19,260 | $64,990 | | $64,990 |

| GST Payable | $2,450 | | $2,450 | | $2,450 |

| Bank loan payable | $2,160 | | $2,160 | | $2,160 |

| Share capital | $7,520 | | $7,520 | | $7,520 |

| Retained earnings | $4,405 | | $4,405 | | $4,405 |

| Services revenue | | | | | |

| Salaries expense | | $2,690 | $2,690 | ($2,690) | |

| Advertising expense | | | | ($0) | |

| Repairs expense | | | | ($0) | |

| Sundry expense | | | | ($0) | |

| Electricity expense | | $990 | $990 | ($990) | |

| Motor vehicle running expenses | | | | ($0) | |

| Telephone expense | | | | ($0) | |

| Interest expense | | | | ($0) | |

| Dividends | | $5,000 | $5,000 | ($5,000) | |

| Total | $237,840 | $11,680 | $226,160 | ($9,680) | $216,480 |

B. Statement of Changes in Equity for the year ended 30 June 2020:

| | Share Capital | Retained Earnings | Total Equity |

|--------------------------|---------------|------------------|--------------|

| Beginning balance | $7,520 | $4,405 | $11,925 |

| Dividends | | ($5,000) | ($5,000) |

| Net Income/(Loss) | | ($9,680) | ($9,680) |

| Ending balance | $7,520 | ($10,275) | ($2,755) |

C. Journalizing the closing entries:

1. Salaries Expense (Dr) $2,690

Salaries Payable (Cr) $2,690

2. Electricity Expense (Dr) $990

Electricity Payable (Cr) $990

3. Insurance Expense (Dr) $450

Prepaid Insurance (Cr) $450

4. Depreciation Expense (Dr) $6,815

Accumulated Depreciation (Cr) $6,815

5. Dividends (Dr) $5,000

Retained Earnings (Cr) $5,000

6. Interest Expense (Dr) $210

Interest Payable (Cr) $210

The above journal entries close the temporary accounts (salaries, electricity, insurance, depreciation, dividends, and interest) and transfer their balances to the retained earnings account.

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