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Balance at January 31, 2015 $10,000 $ 1,732 $11,732 114 CHAPTER THREE / Financial Accounting and the Use of Adjusting Entries The balance sheet can be prepared once the statement of changes in equity is complete. Big Dog Carworks Corp. Big Dog Carworks Corp. Trial Balance Balance Sheet At January 31, 2015 At January 31, 2015 Acct. Account Balances No. Account Debit Credit Assets 101 Cash $ 6,200 Cash $6,200 110 Accounts receivable 2.500 Accounts receivable 2,500 116 Interest receivable 25 Interest receivable 25 125 Rent receivable 400 Rent receivable 400 161 Prepaid insurance 2,200 Prepaid insurance 2,200 183 Equipment 3,000 Equipment 3,000 184 Truck 8,000 Acc. Dep. - Equip. (25) 2,975 193 Acc. dep. - equipment $ 25 Truck 8,000 194 Acc. dep. - truck 100 -> Acc. Dep. - Truck (100) 7,900 201 Bank loan 9,000 Total assets $22,200 210 Accounts payable 700 222 Interest payable 18 Liabilities Equipment and truck are shown net of 226 Salaries payable 150 247 Unearned repair revenue Bank loan 9,000 depreciation. 100 260 Income taxes payable 500 Accounts payable 700 320 Share capital 10,000 Interest payable 18 350 Dividends 200 Salaries payable 150 430 Interest earned 25 Unearned repair rev. 100 440 Rent earned 400 Income taxes pay. 500 10,468 450 Repair revenue 10,300 623 Dep. expense - equipment 25 624 Dep. expense - t 100 Shareholders' Equity 631 Insurance expense 200 Share capital 10,000 632 Interest expense 18 Retained earnings 1,732 11,732 654 Rent expense 1,600 Total liabilities and 656 Salaries expense 4,150 shareholders' equity $22,200 Supplies e 1,500 670 Truck operating expense 700 These amounts are transferred from 830 Income taxes expense 500 the Statement of Changes in Equity. $30,318 $30,318 E. The Accounting Cycle LO5 - Identify and Recall from Chapter 2 that the accounting cycle is the process used to convert economic data into financial statement information using the explain the steps in double-entry accounting model. The complete accounting cycle the accounting consists of eight steps: cycle Step 1: Transactions are analyzed and recorded in the general journal. CHAPTER THREE / Financial Accounting and the Use of Adjusting Entries 115 Step 2: The journal entries in the general journal are posted to accounts in the general ledger. Step 3: An unadjusted trial balance is prepared to ensure total debits equal total credits. Step 4: The unadjusted account balances are analyzed and adjusting entries are journalized in the general journal and posted to the general ledger. Step 5: An adjusted trial balance is prepared to prove the equality of debits and credits. Step 6: The adjusted trial balance is used to prepare financial statements. Step 7: Closing entries are journalized and posted. Step 8: A post-closing trial balance is prepared. Steps 4 was introduced in this chapter. Steps 7 and 8 are discussed in the next section. F. The Closing Process LO6 - Explain the At the end of a fiscal year after steps 1-6 of the accounting cycle have