Chapter 6
The Accounting Cycle: Statements and Closing Entries
159
Review Exercise
Catherine Gordon is running her own proprietary business called CG Accounting. CG
Accounting provides bookkeeping services to small and mid-sized companies.The company
was introduced in the review exercises from chapter 4 and 5. Before you begin this exercise,
familiarize yourself with the review exercise in chapter 5 because this is a continuation.
Journal entries for the month have already been completed, as have the adjustments at month
end.The adjusted trial balance is presented below.
CG Accounting
Trial Balance
June 30, 2016
Account Titles
DR
CR
Cash
$5,550
Accounts Receivable
5,500
Prepaid Insurance
1,100
Equipment
6,000
Accumulated Depreciation
$100
Accounts Payable
2,750
Interest Payable
25
Unearned Revenue
450
Bank Loan
3,050
Gordon, Capital
9,400
Gordon, Drawings
1,000
Service Revenue
4,950
Advertising Expense
450
Depreciation Expense
100
Insurance Expense
100
Interest Expense
25
Rent Expense
900
Total
$20,725 $20,725
The balance of owner’s equity as at May 31, 2016 was $6,400. Also recall from the chapter 4
review exercise that during June the owner contributed $3,000 cash to the business and withdrew
$1,000 cash for personal use. Assume that $800 of the bank loan must be paid by June 30, 2017.
CG Accounting uses the following accounts and accounting numbers in its accounting records.
