This is the <span class="il">quiz</span> <span class="il">13</span> instructions.

• Previous month’s financial statements:
  • Income Statement for April—Refer to this to prepare the income statement for May.
  • Statement of Owner’s Equity for April—Refer to this to prepare the statement of Owner’s Equity for May.
  • Balance Sheet for April—Refer to this to prepare the balance sheet for May.
• General Journal—Four pieces of 2-column ledger paper are included for the general journal.
• Chart of Accounts—This is a list of all the ledger accounts for Bright Ideas Light Center.
• General Ledger—There is a page for each of the accounts listed in the Chart of
• Accounts. Some of the accounts will have balances from the previous month.
• Accounts Receivable Subsidiary Ledger—There are two accounts receivable accounts.
• Accounts Payable Subsidiary Ledger—There are three accounts payable accounts.
• Worksheet—Two 10-column ledgers are included for completing the worksheet.

The instructions for this <span class="il">Quiz</span> take you step-by-step through the accounting cycle. Check off each step as you go. Remember that this is an open-book <span class="il">Quiz</span>; refer to your lesson materials as necessary. You may use a pen or pencil to make the journal and ledger entries and to prepare the worksheet. Be sure that all of your numbers are easy to read. Corrections should be neat and clean. Each incorrect and format error will result in a point lost. Once you have completed all of the steps in the <span class="il">Quiz</span>, upload the entire packet for grading. Checklist of Procedures for <span class="il">Quiz</span> <span class="il">13</span> Use this list of procedures as your step-by-step guide for completing <span class="il">Quiz</span> <span class="il">13</span>. Check off each step as you go. 1. Using the general journal, record each of the 21 transactions listed on the transaction list. Number the first page in your general journal as page #14. Pages 1-<span class="il">13</span> have already been used previously. Remember that each transaction will be entered twice—once as a debit and once as a credit. 2. Post all of the entries in the general journal to the general ledger accounts. Remember that when you post the Accounts Receivable and the Accounts Payable entries, you will also need to post those entries to the individual accounts in the subsidiary ledgers. 3. Prepare a 10-column worksheet. Refer to the worksheet instructions and the sample worksheet in the previous lesson. Following is a list of the adjustments that will need to be made in columns 3 and 4:

• Since this is a merchandising business, the inventory must be accounted for. Do this by making a $9,000 credit entry for inventory (column 4) and a $9,000 debit entry at the bottom of the worksheet under the title “Income Summary.” Use the letter (a) to label this pair of adjustments.
• Now make an adjustment for the current amount of inventory. Do this by making a debit entry of $8,000 for inventory in column 3 (on the same line as the $9,000 credit entry you just made). Make a credit entry for $8,000 under “Income Summary” at the bottom of the worksheet on the same line as the $9,000 debit entry. Label this pair of adjustments (b).
• Make an adjustment to prepaid insurance for the expired insurance in the amount of $100. This will be a credit entry. Complete this adjustment by making a debit entry for $100 in the account titled “Insurance Expense.” Label this pair of entries (c).
• Inventory of office supplies shows $251 worth of supplies are left. Subtract the $251 from the balance in the office supplies account to figure the amount of the adjustment you need to make. Once you get the adjustment amount, make a credit entry for office supplies and a debit entry for the same amount at the bottom of the worksheet in the account titled “Office Supply Expense.” Label this pair of entries (d).
• Accumulative depreciation is figured at $200 for the building, and $20 for the equipment. Make a credit entry for each amount in column 4—$200 for Accumulated Depreciation—Building and $20 for Accumulated Depreciation—Equipment. Alice only has one expense account for depreciation, so make a debit entry for the total amount ($220) at the bottom of the worksheet under “Depreciation Expense.” Label all three of these entries (e).

Hint: When you total columns 5 and 6 for the adjusted trial balance, the figures should equal $135,374. 4. Prepare an income statement. Use the worksheet to obtain the necessary figures (columns 7 and 8) and refer to April’s income statement as a guide for setting up the income statement. 5. Prepare a statement of owner’s equity. Use the net income amount from the income statement prepared in step 4. The drawing account amount is found in column 9. Use the previous month’s statement of owner’s equity as a guide for setting up this statement. 6. Prepare a balance sheet. Use the equity amount from the newly prepared statement of owner’s equity and columns 9 and 10 of the worksheet for the other figures you need. Use the previous month’s balance sheet as a guide for setting up this balance sheet. 7. Record the adjustments from columns 3 and 4 in the general journal. Remember to write “Adjusting Entries” in the item column before you begin making these entries. 8. Post the adjustments to the general ledger. Write “Adjusting Entry” in the item column for each entry. 9. Record the closing entries in the general journal. Remember to write “Closing Entries” in the item column before making those entries. Close the sales account and purchase returns allowances account by making the appropriate entries in the general journal. (Use columns 7 and 8 on the worksheet to obtain your figures.) Because these two accounts both have credit balances, it’s easier to close them out together. When you make the journal entries, make a debit entry for each of them separately and then make one credit entry in the total amount to the income summary account. 10. Post the closing entries for the sales and purchase returns allowance accounts as well as the credit to Income Summary to the general ledger. Write “Closing Entry” in the item column. 11. Close the purchases account, the sales returns and allowances account, and the expense accounts. Once again, these all carry debit balances, so it is easier to close them out together. Start by making an entry to Income Summary. You will fill in the debit amount after making the credit entries. Make credit entries in the general journal for each of the amounts separately; then fill in one debit entry to the Income Summary account for the total amount. 12. Post the closing entries for the purchases, sales returns and allowances and the expense accounts to the general ledger as well as the debit to Income Summary. <span class="il">13</span>. Close the income summary. Find the Income Summary account balance; determine whether it is a credit or a debit balance and then make an opposite entry in the general journal. Then make the appropriate entry into the Owner’s Equity account. 14. Post the entries made in step <span class="il">13</span> to the general ledger. 15. Close the drawing account. Take the amount of the drawing account and make a debit entry in the general journal to the Owner’s Equity account. Make an offsetting credit entry in the same amount to the Drawing account. 16. Post the entries made in step 15 to the general ledger. 17. Prepare a post-closing trial balance from the remaining open accounts. The totals of the debit and credit columns on this trial balance should match. 18. Assemble your packet in the following order:

• journal
• general ledger
• subsidiary ledger
• financial statements
• 10-column worksheet
• post-closing trial balance