Let's break this down step by step based on the information in your image. --- ## Step 1: **Prepare Adjusting Journal Entries (December 31)** We are given these additional data for adjustments: - a. Insurance expired during the year, $7 - b. Depreciation expense for the year, $6 - c. Salaries and wages payable, $9 - d. Income tax expense, $11 ### **Adjusting Entries:** 1. **Insurance Expense:** - Debit Insurance Expense $7 - Credit Prepaid Insurance $7 2. **Depreciation Expense:** - Debit Depreciation Expense $6 - Credit Accumulated Depreciation $6 3. **Salaries and Wages Payable:** - Debit Salaries and Wages Expense $9 - Credit Salaries and Wages Payable $9 4. **Income Tax Expense:** - Debit Income Tax Expense $11 - Credit Income Tax Payable $11 --- ## Step 2: **Prepare the Closing Entry (September 30, 2021)** **Revenue and Expense accounts must be closed to Retained Earnings:** - **Close Revenues:** - Debit Sales Revenue $95 - Credit Retained Earnings $95 - **Close Expenses:** - Debit Retained Earnings $57 (sum of all expenses: Insurance $8 + Salaries $17 + Supplies $3 + Income Tax $29) - Credit Insurance Expense $8 - Credit Salaries and Wages Expense $17 - Credit Supplies Expense $3 - Credit Income Tax Expense $29 --- ## Step 3: **Prepare a Post-Closing Trial Balance** Include only permanent accounts (assets, liabilities, equity): | Account Titles | Debit | Credit | |-----------------------------|-------|--------| | Cash | 45 | | | Accounts Receivable | 16 | | | Prepaid Insurance | 1 | | (8-7) | Equipment | 94 | | | Accumulated Depreciation | | 6 | | Accounts Payable | | 16 | | Salaries and Wages Payable | | 9 | | Income Tax Payable | | 11 | | Common Stock | | 100 | | Retained Earnings | | XX | (To be calculated) **Note:** Supplies Expense is $3, so Supplies would need to be adjusted if it was counted as an asset (not shown). --- ## Step 4: **Prepare an Adjusted Trial Balance** Let's make the adjustments: ### **Original Unadjusted Balances:** - Prepaid Insurance: 8 → 8 - 7 = **1** - Accumulated Depreciation: 0 → 0 + 6 = **6** - Salaries and Wages Payable: 0 → 0 + 9 = **9** - Income Tax Payable: 0 → 0 + 11 = **11** ### **Updated Balances:** | Account Titles | Debit | Credit | |-----------------------------|-------|--------| | Cash | 45 | | | Accounts Receivable | 16 | | | Prepaid Insurance | 1 | | | Equipment | 94 | | | Accumulated Depreciation | | 6 | | Accounts Payable | | 16 | | Salaries and Wages Payable | | 9 | | Income Tax Payable | | 11 | | Common Stock | | 100 | | Retained Earnings | | XX | (To be calculated) | Sales Revenue | | 95 | | Insurance Expense | 7 | | | Salaries and Wages Expense | 26 | | (17+9) | Supplies Expense | 3 | | | Income Tax Expense | 11 | | --- ### **Calculate Retained Earnings:** **Beginning Retained Earnings:** $12 (from unadjusted trial balance) **Net Income Calculation:** - Revenues: $95 - Expenses: $7 (Insurance) + $26 (Salaries) + $3 (Supplies) + $6 (Depreciation) + $11 (Income Tax) = $53 - Net Income: $95 - $53 = $42 **Ending Retained Earnings:** $12 + $42 = **$54** --- ## **Final Answers** ### **Adjusting Entries:** See Step 1 above. ### **Closing Entry:** See Step 2 above. ### **Post-Closing Trial Balance:** | Account Titles | Debit | Credit | |-----------------------------|-------|--------| | Cash | 45 | | | Accounts Receivable | 16 | | | Prepaid Insurance | 1 | | | Equipment | 94 | | | Accumulated Depreciation | | 6 | | Accounts Payable | | 16 | | Salaries and Wages Payable | | 9 | | Income Tax Payable | | 11 | | Common Stock | | 100 | | Retained Earnings | | 54 | --- ### **Adjusted Trial Balance:** Same as above, but before closing entries, including all revenue and expense accounts. --- ### **Retained Earnings Calculation:** - Ending Retained Earnings is **$54,000** (in thousands). --- If you need the full formatted trial balances or journal entries, let me know!