The adjusted trial balance of Manchester Advertising Services, at December 31, 2

Question

The adjusted trial balance of Manchester Advertising Services, at December 31, 2018, follows. This is the first year of operations. EEB (Click the icon to view the adjusted trial balance.) Read the requirements Data Table Manchester Advertising Services Adjusted Trial Balance December 31, 2018 Balance Account Title Debit Requirement 6. Prepare a post-closing trial balance at December 31, 2018. Review the ending balances of the T-accounts that you prepared above. S 14,000 Accounts Receivable 7,200 Office Supplies Manchester Advertising Services Post-Closing Trial Balance December 31, 2018 35,000 48,000 S 22,000 Balance 19,000 Account Title Debit 9,000 5,000 Accounts Payable Salaries Payable Unearned Revenue Notes Payable (long-term) Common Stock 2,500 6,000 88,800 21,000 Service Revenue Salaries Expense Supplies Expense 2,800 16,000 1,300 6,000 4,500 4,500 Depreciation Expense-Furniture Advertising Expense S 176,800 S 176,800

Explanation / Answer

Temporary accounts - Temporary accounts are those accounts that are closed at the end of the accounting period. Further, these accounts begins each accounting year with a zero balance. Temporary accounts includes all Income statement accounts (expenses, revenues, gains, losses)

Permanent accounts - Permanent accounts are those accounts which do not close at the end of the accounting period. All Balance sheet accounts are permanent accounts.

Closing Entries - Closing entries are journal entries made at the end of the accounting period to transfer the balances of temporary accounts to permanent accounts.

After closing of all temporary accounts (income statement accounts) by passing and posting closing journal entries, only permanent accounts still remain open.

Post-closing trail balance - The trail balance prepared post preparation of financial statements is called Post closing trail balance. In simple words, a trail balance prepared after the preparation of financial statements is called Post closing trail balance and it includes only permanent accounts (Balance sheet items) since all temporary accounts were closed by transfering the balances of temporary accounts to the permanent accounts.

Note 1 - Calculation of Ending retained earning balance as on Dec. 31, 2017

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Manchestar Advertising Services Post Closing Trail Balance December 31, 2018 Balance Account Title Debit Credit Cash $14,000 Accounts Receivable $7,200 Office Supplies $300 Land $35,000 Building $48,000 Accumulated depreciation - Building $22,000 Furniture $19,000 Accumulated depreciation - Furniture $9,000 Accounts Payable $5,000 Salaries Payable $700 Unearned Revenue $2,500 Notes Payable - Long term $6,000 Common stock $68,800 Retained earnings (Ending balance as on Dec. 31, 2018] [Note 1] $9,500 Total 123,500 $123,500

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