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CHAPTER 4
Completing the Accounting Cycle
ASSIGNMENT CLASSIFICATION TABLE
Learning Objectives
Questions
Brief
Exercises
Do It!
Exercises
A
Problems
B
Problems
*1. Prepare a worksheet.
1, 2, 3, 4, 5
1, 2, 3
1
1, 2, 3, 5, 6
1A, 2A, 3A,
4A, 5A
1B, 2B, 3B,
4B, 5B
*2. Explain the process of closing the books.
6, 7, 11, 12
4, 5, 6
2
4, 7, 8, 11, 19
1A, 2A, 3A,
4A, 5A
1B, 2B, 3B,
4B, 5B
*3. Describe the content and purpose of a post-closing trial balance.
8, 9
7
4, 7, 8
1A, 2A, 3A,
4A, 5A
1B, 2B, 3B,
4B, 5B
*4. State the required steps in the accounting cycle.
10, 11, 12
8
10, 19
5A
5B
*5. Explain the approaches to preparing correcting entries.
13
9
12, 13
6A
*6. Identify the sections of a classified balance sheet.
14, 15, 16,
17, 18, 19
10, 11
3, 4
3, 9, 14, 15, 16, 17
1A, 2A, 3A,
4A, 5A
1B, 2B, 3B,
4B, 5B
*7. Prepare reversing entries.
10, 20, 21
12
18, 19
*Note: All asterisked Questions, Exercises, and Problems relate to material contained in the appendix *to the chapter.
ASSIGNMENT CHARACTERISTICS TABLE
Problem
Number
Description
Difficulty
Level
Time Allotted (min.)
1A
Prepare worksheet, financial statements, and adjusting and closing entries.
Simple
40–50
2A
Complete worksheet; prepare financial statements, closing entries, and post-closing trial balance.
Moderate
50–60
3A
Prepare financial statements, closing entries, and post-closing trial balance.
Moderate
40–50
4A
Complete worksheet; prepare classified balance sheet, entries, and post-closing trial balance.
Moderate
50–60
5A
Complete all steps in accounting cycle.
Complex
70–90
6A
Analyze errors and prepare correcting entries and trial balance.
Moderate
40–50
1B
Prepare worksheet, financial statements, and adjusting and closing entries.
Simple
40–50
2B
Complete worksheet; prepare financial statements, closing entries, and post-closing trial balance.
Moderate
50–60
3B
Prepare financial statements, closing entries, and post-closing trial balance.
Moderate
40–50
4B
Complete worksheet; prepare classified balance sheet, entries, and post-closing trial balance.
Moderate
50–60
5B
Complete all steps in accounting cycle.
Complex
70–90
Comprehensive Problem: Chapters 2 to 4
WEYGANDT ACCOUNTING PRINCIPLES 11E
CHAPTER 4
COMPLETING THE ACCOUNTING CYCLE
Number
LO
BT
Difficulty
Time (min.)
BE1
1
K
Simple
2–4
BE2
1
AN
Moderate
6–8
BE3
1
C
Simple
3–5
BE4
2
AP
Simple
3–5
BE5
2
AP
Simple
4–6
BE6
2
AP
Simple
6–8
BE7
3
C
Simple
2–4
BE8
4
K
Simple
3–5
BE9
5
AN
Moderate
4–6
BE10
6
AP
Simple
4–6
BE11
6
C
Simple
3–5
BE12
7
AN
Moderate
4–6
DI1
1
C
Simple
4–6
DI2
2
AP
Simple
2–4
DI3
6
AP
Simple
6–8
DI4
6
C
Simple
4–6
EX1
1
AP
Simple
12–15
EX2
1
AP
Simple
10–12
EX3
1, 6
AP
Simple
12–15
EX4
2, 3
AP
Simple
12–15
EX5
1
AN
Simple
10–12
EX6
1
AN
Moderate
12–15
EX7
2, 3
AP
Simple
8–10
EX8
2, 3
AP
Simple
10–12
EX9
6
AP
Simple
12–15
EX10
4
C
Simple
3–5
EX11
2
AP
Simple
6–8
EX12
5
AN
Moderate
8–10
EX13
5
AN
Moderate
4–6
EX14
6
AP
Moderate
10–12
EX15
6
C
Simple
5–8
EX16
6
AP
Simple
8–10
COMPLETING THE ACCOUNTING CYCLE (Continued)
Number
LO
BT
Difficulty
Time (min.)
EX17
6
AP
Simple
12–15
EX18
7
AN
Moderate
5–7
EX19
2, 4, 7
AN
Moderate
10–12
P1A
1-3, 6
AN
Simple
40–50
P2A
1-3, 6
AP
Moderate
50–60
P3A
1-3, 6
AP
Moderate
40–50
P4A
1-3, 6
AN
Moderate
50–60
P5A
1-4, 6
AN
Complex
70–90
P6A
5
AN
Moderate
40–50
P1B
1-3, 6
AN
Simple
40–50
P2B
1-3, 6
AP
Moderate
50–60
P3B
1-3, 6
AP
Moderate
40–50
P4B
1-3, 6
AN
Moderate
50–60
P5B
1-4, 6
AN
Complex
70–90
BYP1
6
AN
Simple
10–12
BYP2
6
AN
Simple
8–10
BYP3
6
AN
Simple
8–10
BYP4
—
E
Simple
10–12
BYP5
6
AN
Moderate
15–20
BYP6
4
C
Simple
15–20
BYP7
—
E
Moderate
10–15
BYP8
6
AP
Moderate
12–16
BYP9
—
AP
Moderate
10–15
ANSWERS TO QUESTIONS
1. No. A worksheet is not a permanent accounting record. The use of a worksheet is an optional step in the accounting cycle.
2. The worksheet is merely a device used to make it easier to prepare adjusting entries and the financial statements.
3. The amount shown in the adjusted trial balance column for an account equals the account balance in the ledger after adjusting entries have been journalized and posted.
4. The net income of $12,000 will appear in the income statement debit column and the balance sheet credit column. A net loss will appear in the income statement credit column and the balance sheet debit column.
5. Formal financial statements are needed because the columnar data are not properly arranged and classified for statement purposes. For example, a drawing account is listed with assets.
6. (1) (Dr) Individual revenue accounts and (Cr) Income Summary.
(2) (Dr) Income Summary and (Cr) Individual expense accounts.
(3) (Dr) Income Summary and (Cr) Owner’s Capital (for net income).
(4) (Dr) Owner’s Capital and (Cr) Owner’s Drawings.
7. Income Summary is a temporary account that is used in the closing process. The account is debited for expenses and credited for revenues. The difference, either net income or net loss, is then closed to the owner’s capital account.
8. The post-closing trial balance contains only balance sheet accounts. Its purpose is to prove the equality of the permanent account balances that are carried forward into the next accounting period.
9. The accounts that will not appear in the post-closing trial balance are Depreciation Expense; Owner’s Drawing; and Service Revenue.
10. A reversing entry is the exact opposite, both in amount and in account titles, of an adjusting entry and is made at the beginning of the new accounting period. Reversing entries are an optional step in the accounting cycle.
11. The steps that involve journalizing are: (1) journalize the transactions, (2) journalize the adjusting entries, and (3) journalize the closing entries.
12. The three trial balances are the: (1) trial balance, (2) adjusted trial balance, and (3) post-closing trial balance.
13. Correcting entries differ from adjusting entries because they: (1) are not a required part of the accounting cycle, (2) may be made at any time, and (3) may affect any combination of accounts.
Questions Chapter 4 (Continued)
*14. The standard classifications in a balance sheet are:
Assets
Liabilities and Owner’s Equity
Current Assets
Current Liabilities
Long-term Investments
Long-term Liabilities
Property, Plant, and Equipment
Owner’s Equity
Intangible Assets
*15. The operating cycle of a company is the average time that it takes to purchase inventory, sell it on account, and then collect cash from customers.
*16. Current assets are assets that a company expects to convert to cash or use up in one year. Some companies use a period longer than one year to classify assets and liabilities as current because they have an operating cycle longer than one year. Companies usually list current assets in the order in which they expect to convert them into cash.
*17. Long-term investments are generally investments in stocks and bonds of other companies that are normally held for many years. Property, plant, and equipment are assets with relatively long useful lives that a company is currently using in operating the business.
*18. (a) The owner’s equity section for a corporation is called stockholders’ equity.
(b) The two accounts and the purpose of each are: (1) Common stock is used to record investments of assets in the business by the owners (stockholders). (2) Retained earnings is used to record net income retained in the business.
*19.. Apple’s current liabilities at September 24, 2011 and September 25, 2010 were $27,970 million and $20,722 million respectively. Apple’s current liabilities were significantly lower than its current assets in both years.
*20. After reversing entries have been made, the balances will be Interest Payable, zero balance; Interest Expense, a credit balance.
*21. (a) Jan. 10 Salaries and Wages Expense 8,000
Cash 8,000
Because of the January 1 reversing entry that credited Salaries and Wages Expense for $3,500, Salaries and Wages Expense will have a debit balance of $4,500 which equals the expense for the current period.
(b) Jan. 10 Salaries and Wages Payable 3,500
Salaries and Wages Expense 4,500
Cash 8,000
Note that Salaries and Wages Expense will again have a debit balance of $4,500.
SOLUTIONS TO BRIEF EXERCISES
BRIEF EXERCISE 4-1
The steps in using a worksheet are performed in the following sequence: (1) prepare a trial balance on the worksheet, (2) enter adjustment data, (3) enter adjusted balances, (4) extend adjusted balances to appropriate statement columns and (5) total the statement columns, compute net income (loss), and complete the worksheet. Filling in the blanks, the answers are 1, 3, 4, 5, 2.
The solution to BRIEF EXERCISE 4-2 is on page 4-9.
BRIEF EXERCISE 4-3
Income Statement
Balance Sheet
Account
Dr.
Cr.
Dr.
Cr.
Accumulated Depreciation
X
Depreciation Expense
X
Owner’s Capital
X
Owner’s Drawings
X
Service Revenue
X
Supplies
X
Accounts Payable
X
BRIEF EXERCISE 4-4
Dec. 31 Service Revenue 50,000
Income Summary 50,000
31 Income Summary 34,000
Salaries and Wages Expense 27,000
Supplies Expense 7,000
31 Income Summary 16,000
Owner’s Capital 16,000
31 Owner’s Capital 2,000
Owner’s Drawings 2,000
BRIEF EXERCISE 4-5
Salaries and Wages Expense
Income Summary
Service Revenue
Bal. 27,000
(2) 27,000
(2) 34,000
(1) 50,000
(1) 50,000
Bal. 50,000
(3) 16,000
50,000
50,000
Supplies Expense
Owner’s Capital
Owner’s Drawings
Bal. 7,000
(2) 7,000
(4) 2,000
Bal. 30,000
Bal. 2,000
(4) 2,000
(3) 16,000
Bal. 44,000
BRIEF EXERCISE 4-6
July 31 Service Revenue 16,400
Income Summary 16,400
31 Income Summary 10,700
Salaries and Wages Expense 8,200
Maintenance and Repairs Expense 2,500
Service Revenue
Date
Explanation
Ref.
Debit
Credit
Balance
7/31
Balance
16,400
16,400
7/31
Closing entry
16,400
0
Salaries and Wages Expense
Date
Explanation
Ref.
Debit
Credit
Balance
7/31
Balance
8,200
8,200
7/31
Closing entry
8,200
0
BRIEF EXERCISE 4-6 (Continued)
Maintenance and Repairs Expense
Date
Explanation
Ref.
Debit
Credit
Balance
7/31
Balance
2,500
2,500
7/31
Closing entry
2,500
0
BRIEF EXERCISE 4-7
The accounts that will appear in the post-closing trial balance are:
Accumulated Depreciation
Owner’s Capital
Supplies
Accounts Payable
BRIEF EXERCISE 4-8
The proper sequencing of the required steps in the accounting cycle is as follows:
1. Analyze business transactions.
2. Journalize the transactions.
3. Post to ledger accounts.
4. Prepare a trial balance.
5. Journalize and post adjusting entries.
6. Prepare an adjusted trial balance.
7. Prepare financial statements.
8. Journalize and post closing entries.
9. Prepare a post-closing trial balance.
Filling in the blanks, the answers are 4, 2, 8, 7, 5, 3, 9, 6, 1.
BRIEF EXERCISE 4-9
1. Service Revenue 870
Accounts Receivable 870
2. Accounts Payable ($1,750 – $1,570) 180
Supplies 180
BRIEF EXERCISE 4-10
HAMIDI COMPANY
Partial Balance Sheet
Current assets
Cash $ 4,100
Debt investments 6,700
Accounts receivable 12,500
Supplies 5,200
Prepaid insurance 3,600
Total current assets $32,100
BRIEF EXERCISE 4-11
CL
Accounts payable
CL
Income taxes payable
CA
Accounts receivable
LTI
Debt investments (long-term)
PPE
Accum. depreciation—buildings
PPE
Land
PPE
Buildings
CA
Inventory
CA
Cash
IA
Patents
IA
Copyrights
CA
Supplies
*BRIEF EXERCISE 4-12
Nov. 1 Salaries and Wages Payable 2,100
Salaries and Wages Expense 2,100
The balances after posting the reversing entry are Salaries and Wages Expense (Cr.) $2,100 and Salaries and Wages Payable $0.
SOLUTIONS FOR DO IT! REVIEW EXERCISES
DO IT! 4-1
Income statement debit column—Utilities Expense
Income statement credit column—Service Revenue
Balance sheet debit column—Accounts Receivable
Balance sheet credit column—Notes Payable; Accumulated Depreciation; Owner’s Capital
DO IT! 4-2
Dec. 31 Income Summary 41,000
Owner’s Capital 41,000
Dec. 31 Owner’s Capital 22,000
Owner’s Drawings 22,000
DO IT! 4-3
RYAN COMPANY
Partial Balance Sheet
Current assets
Cash $4,300
Debt investments 1,200
Accounts receivable 4,300
Inventory 2,900
Total current assets $12,700
Long-term investments
Stock investments 6,500
Property, plant and equipment
Equipment 21,700
Less: Accumulated depreciation 5,700 16,000
Total assets $35,200
DO IT! 4-4
NA
Interest revenue
OE
Owner’s capital
CL
Utilities payable
PPE
Accumulated depreciation—equipment
CL
Accounts payable
PPE
Equipment
CA
Supplies
NA
Salaries and wages expense
LTL
Bonds payable
LTI
Debt investments (long-term)
IA
Goodwill
CL
Unearned rent revenue
SOLUTIONS TO EXERCISES
EXERCISE 4-1
NANDURI COMPANY
Worksheet
For the Month Ended June 30, 2014
Account Titles
Trial Balance
Adjustments
Adj. Trial Balance
Income Statement
Balance Sheet
Dr.
Cr.
Dr.
Cr.
Dr.
Cr.
Dr.
Cr.
Dr.
Cr.
Cash
2,320
2,320
2,320
Accounts Receivable
2,440
2,440
2,440
Supplies
1,880
(a) 1,380
500
500
Accounts Payable
1,120
1,120
1,120
Unearned Service Revenue
240
(b) 140
100
100
Owner’s Capital
3,600
3,600
3,600
Service Revenue
2,400
(b) 140
2,540
2,540
Salaries and Wages Expense
560
(c) 210
770
770
Miscellaneous Expense
160
160
160
Totals
7,360
7,360
Supplies Expense
(a) 1,380
1,380
1,380
Salaries and Wages Payable
(c) 210
210
210
Totals
1,730
1,730
7,570
7,570
2,310
2,540
5,260
5,030
Net Income
230
230
Totals
2,540
2,540
5,260
5,260
EXERCISE 4-2
DESOUSA COMPANY
(Partial) Worksheet
For the Month Ended April 30, 2014
Adjusted Trial Balance
Income Statement
Balance Sheet
Account Titles
Dr.
Cr.
Dr.
Cr.
Dr.
Cr.
Cash
10,000
10,000
Accounts Receivable
7,840
7,840
Prepaid Rent
2,280
2,280
Equipment
23,050
23,050
Accum. Depreciation Equipment
4,921
4,921
Notes Payable
5,700
5,700
Accounts Payable
4,920
4,920
Owner’s Capital
27,960
27,960
Owner’s Drawings
3,650
3,650
Service Revenue
15,590
15,590
Salaries and Wages Expense
10,840
10,840
Rent Expense
760
760
Depreciation Expense
671
671
Interest Expense
57
57
Interest Payable
57
57
Totals
59,148
59,148
12,328
15,590
46,820
43,558
Net Income
3,262
3,262
Totals
15,590
15,590
46,820
46,820
EXERCISE 4-3
DESOUSA COMPANY
Income Statement
For the Month Ended April 30, 2014
Revenues
Service revenue $15,590
Expenses
Salaries and wages expense $10,840
Rent expense 760
Depreciation expense 671
Interest expense 57
Total expenses 12,328
Net income $ 3,262
DESOUSA COMPANY
Owner’s Equity Statement
For the Month Ended April 30, 2014
Owner’s Capital, April 1 $27,960
Add: Net income 3,262
31,222
Less: Drawings 3,650
Owner’s Capital, April 30 $27,572
DESOUSA COMPANY
Balance Sheet
April 30, 2014
Assets
Current assets
Cash $10,000
Accounts receivable 7,840
Prepaid rent 2,280
Total current assets $20,120
Property, plant, and equipment
Equipment 23,050
Less: Accumulated depreciation—equipment 4,921 18,129
Total assets $38,249
EXERCISE 4-3 (Continued)
DESOUSA COMPANY
Balance Sheet (Continued)
April 30, 2014
Liabilities and Owner’s Equity
Current liabilities
Notes payable $5,700
Accounts payable 4,920
Interest payable 57
Total current liabilities $10,677
Owner’s equity
Owner’s capital 27,572
Total liabilities and owner’s equity $38,249
EXERCISE 4-4
(a) Apr. 30 Service Revenue 15,590
Income Summary 15,590
30 Income Summary 12,328
Salaries and Wages Expense 10,840
Rent Expense 760
Depreciation Expense 671
Interest Expense 57
30 Income Summary 3,262
Owner’s Capital 3,262
30 Owner’s Capital 3,650
Owner’s Drawings 3,650
(b)
Income Summary
Owner’s Capital
(2) 12,328
(1) 15,590
(4) 3,650
Bal. 27,960
(3) 3,262
(3) 3,262
15,590
15,590
Bal. 27,572
EXERCISE 4-4 (Continued)
(c) DESOUSA COMPANY
Post-Closing Trial Balance
April 30, 2014
Debit
Credit
Cash $10,000
Accounts Receivable 7,840
Prepaid Rent 2,280
Equipment 23,050
Accumulated Depreciation—Equipment $ 4,921
Notes Payable 5,700
Accounts Payable 4,920
Interest Payable 57
Owner’s Capital 27,572
$43,170 $43,170
EXERCISE 4-5
(a) Accounts Receivable 1,100
Service Revenue 1,100
Insurance Expense 300
Prepaid Insurance 300
Depreciation Expense 900
Accumulated Depreciation—Equipment 900
Salaries and Wages Expense 500
Salaries and Wages Payable 500
EXERCISE 4-5 (Continued)
(b)
Income Statement
Balance Sheet
Dr.
Cr.
Dr.
Cr.
Accounts Receivable
X
Prepaid Insurance
X
Accum. Depreciation—Equip.
X
Salaries and Wages Payable
X
Service Revenue
X
Salaries and Wages Expense
X
Insurance Expense
X
Depreciation Expense
X
EXERCISE 4-6
(a) Accounts Receivable—$25,000 ($34,000 – $9,000).
Supplies—$2,500 ($7,000 – $4,500).
Accumulated Depreciation—Equipment—$22,000 ($12,000 + $10,000).
Salaries and Wages Payable—$0 No liability recorded until adjustments are made.
Insurance Expense—$6,000 ($26,000 – $20,000).
Salaries and Wages Expense—$43,400 ($49,000 – $5,600).
(b) Accounts Receivable 9,000
Service Revenue 9,000
Insurance Expense 6,000
Prepaid Insurance 6,000
Supplies Expense 4,500
Supplies 4,500
Depreciation Expense 10,000
Accumulated Depreciation—Equipment 10,000
Salaries and Wages Expense 5,600
Salaries and Wages Payable 5,600
EXERCISE 4-7
(a) Service Revenue 4,300
Income Summary 4,300
Income Summary 3,500
Salaries and Wages Expense 1,344
Miscellaneous Expense 256
Supplies Expense 1,900
Income Summary 800
Owner’s Capital 800
Owner’s Capital 628
Owner’s Drawings 628
(b) KAY MAGILL COMPANY
Post-Closing Trial Balance
June 30, 2014
Account Titles
Debit
Credit
Cash $3,712
Accounts Receivable 3,904
Supplies 480
Accounts Payable $1,556
Salaries and Wages Payable 448
Unearned Service Revenue 160
Owner’s Capital 5,932
$8,096 $8,096
EXERCISE 4-8
(a)
General Journal J15
Date
Account Titles
Ref.
Debit
Credit
July 31
Service Revenue
400
64,000
Rent Revenue
429
6,500
Income Summary
350
70,500
31
Income Summary
350
78,600
Salaries and Wages Expense
726
55,700
Utilities Expense
732
14,900
Depreciation Expense
711
8,000
31
Owner’s Capital
301
8,100
Income Summary
350
8,100
31
Owner’s Capital
301
16,000
Owner’s Drawings
306
16,000
(b)
Owner’s Capital No. 301
Date
Explanation
Ref.
Debit
Credit
Balance
July 31
Balance
45,200
31
Close net loss
J15
8,100
37,100
31
Close drawing
J15
16,000
21,100
Income Summary No. 350
Date
Explanation
Ref.
Debit
Credit
Balance
July 31
Close revenue
J15
70,500
70,500
31
Close expenses
J15
78,600
(8,100)
31
Close net loss
J15
8,100
0
EXERCISE 4-8 (Continued)
(c) PLEVIN COMPANY
Post-Closing Trial Balance
July 31, 2014
Debit
Credit
Cash $9,840
Accounts Receivable 8,780
Equipment 15,900
Accumulated Depreciation—Equipment $ 7,400
Accounts Payable 4,220
Unearned Rent Revenue 1,800
Owner’s Capital 21,100
$34,520 $34,520
EXERCISE 4-9
(a) PLEVIN COMPANY
Income Statement
For the Year Ended July 31, 2014
Revenues
Service revenue $64,000
Rent revenue 6,500
Total revenues $70,500
Expenses
Salaries and wages expense 55,700
Utilities expense 14,900
Depreciation expense 8,000
Total expenses 78,600
Net loss ($ 8,100)
EXERCISE 4-9 (Continued)
PLEVIN COMPANY
Owner’s Equity Statement
For the Year Ended July 31, 2014
Owner’s Capital, August 1, 2013 $45,200
Less: Net loss $ 8,100
Drawings 16,000 24,100
Owner’s Capital, July 31, 2014 $21,100
(b) PLEVIN COMPANY
Balance Sheet
July 31, 2014
Assets
Current assets
Cash $9,840
Accounts receivable 8,780
Total current assets $18,620
Property, plant, and equipment
Equipment 15,900
Less: Accumulated depreciation 7,400 8,500
Total assets $27,120
Liabilities and Owner’s Equity
Current liabilities
Accounts payable $4,220
Unearned rent revenue 1,800
Total current liabilities $ 6,020
Owner’s equity
Owner’s Capital 21,100
Total liabilities and owner’s equity $27,120
EXERCISE 4-10
1. False “Analyze business transactions” is the first step in the accounting cycle.
2. False. Reversing entries are an optional step in the accounting cycle.
3. True.
4. True.
5. True.
6. False. Steps 1–3 may occur daily in the accounting cycle. Steps 4–7 are performed on a periodic basis. Steps 8 and 9 are usually prepared only at the end of a company’s annual accounting period.
7. False. The step of “journalize the transactions” occurs before the step of “post to the ledger accounts.”
8. False. Closing entries are prepared after financial statements are prepared.
EXERCISE 4-11
(a) June 30 Service Revenue 18,100
Income Summary 18,100
30 Income Summary 13,100
Salaries and Wages Expense 8,800
Supplies Expense 1,300
Rent Expense 3,000
30 Income Summary 5,000
Owner’s Capital 5,000
30 Owner’s Capital 2,500
Owner’s Drawings 2,500
(b)
Income Summary
June 30 13,100
June 30 18,100
June 30 5,000
18,100
18,100
EXERCISE 4-12
(a) 1. Cash 700
Equipment 700
Salaries and Wages Expense 700
Cash 700
2. Service Revenue 100
Cash 100
Cash 1,000
Accounts Receivable 1,000
3. Accounts Payable 670
Equipment 670
Equipment 760
Accounts Payable 760
(b) 1. Salaries and Wages Expense 700
Equipment 700
2. Service Revenue 100
Cash 900
Accounts Receivable 1,000
3. Equipment 90
Accounts Payable 90
EXERCISE 4-13
1. Accounts Payable ($840 – $480) 360
Cash 360
2. Supplies 560
Equipment 56
Accounts Payable 504
3. Owner’s Drawings 500
Salaries and Wages Expense 500
EXERCISE 4-14
(a) MARTELL BOWLING ALLEY
Balance Sheet
December 31, 2014
Assets
Current assets
Cash $18,040
Accounts receivable 14,520
Prepaid insurance 4,680
Total current assets $ 37,240
Property, plant, and equipment
Land 67,000
Buildings $128,800
Less: Acc. depr.—buildings 42,600 86,200
Equipment 62,400
Less: Acc. depr.—equipment 18,720 43,680 196,880
Total assets $234,120
EXERCISE 4-14 (Continued)
MARTELL BOWLING ALLEY
Balance Sheet (Continued)
December 31, 2014
Liabilities and Owner’s Equity
Current liabilities
Notes payable(due 2015) $22,000
Accounts payable 12,300
Interest payable 2,600
Total current liabilities $ 36,900
Long-term liabilities
Notes payable 75,780
Total liabilities 112,680
Owner’s equity
Owner’s capital ($115,000 + $6,440*) 121,440
Total liabilities and owner’s equity $234,120
*Net income = $17,180 – $780 – $7,360 – $2,600 = $6,440
(b) Current assets exceed current liabilities by only $340 ($37,240 – $36,900). However, approximately 50% of current assets are in the form of cash. The company’s liquidity appears to be reasonably good, but some caution is needed.
EXERCISE 4-15
CL
Accounts payable
PPE
Accumulated depreciation–equipment
CA
Accounts receivable
PPE
Buildings
CA
Cash
PPE
Land
OE
Owner’s capital
LTL
Notes payable (due in 2 years)
IA
Patents
CA
Supplies
CL
Salaries and wages payable
PPE
Equipment
CA
Inventory
CA
Prepaid expenses
CA
Stock investments
EXERCISE 4-16
D. GYGI COMPANY
Balance Sheet
December 31, 2014
(in thousands)
Assets
Current assets
Cash $ 2,668
Short-term investments 3,690
Accounts receivable 1,696
Inventory 1,256
Prepaid insurance 880
Total current assets $10,190
Long-term investments 264
Property, plant, and equipment
Equipment 11,500
Less: Accumulated depreciation—
equipment (5,655) 5,845
Total assets $16,299
Liabilities and Owner’s Equity
Current liabilities
Notes payable (due in 2015) $ 500
Accounts payable 1,444
Total current liabilities $ 1,944
Long-term liabilities
Long-term debt 1,000
Notes payable 400
Total long-term liabilities 1,400
Total liabilities 3,344
Owner’s equity
Owner’s capital 12,955
Total liabilities and owner’s equity $16,299
EXERCISE 4-17
(a)
NORSTED COMPANY
Income Statement
For the Year Ended July 31, 2014
Revenues
Service revenue $62,000
Rent revenue 8,500
Total revenues $70,500
Expenses
Salaries and wages expense 51,700
Utilities expense 22,600
Depreciation expense 4,000
Total expense 78,300
Net loss $ (7,800)
NORSTED COMPANY
Owner’s Equity Statement
For the Year Ended July 31, 2014
Owner’s Capital, August 1, 2013 $51,200
Less: Net loss $7,800
Drawings 3,000 10,800
Owner’s Capital, July 31, 2014 $40,400
EXERCISE 4-17 (Continued)
(b)
NORSTED COMPANY
Balance Sheet
July 31, 2014
Assets
Current assets
Cash $14,200
Accounts receivable 9,780
Total current assets $23,980
Property, plant, and equipment
Equipment 30,400
Less: Accumulated depreciation—
equipment 6,000 24,400
Total assets $48,380
Liabilities and Owner’s Equity
Current liabilities
Accounts payable $4,100
Salaries and wages payable 2,080
Total current liabilities $ 6,180
Long-term liabilities
Notes payable 1,800
Total liabilities 7,980
Owner’s equity
Owner’s capital 40,400
Total liabilities and owner’s equity $48,380
*EXERCISE 4-18
(a) Dec. 31 Salaries and Wages Expense
($12,000 X 2/5) 4,800
Salaries and Wages Payable 4,800
Jan. 6 Salaries and Wages Payable 4,800
Salaries and Wages Expense
($12,000 X 3/5) 7,200
Cash 12,000
(b) Dec. 31 Salaries and Wages Expense 4,800
Salaries and Wages Payable 4,800
Jan. 1 Salaries and Wages Payable 4,800
Salaries and Wages Expense 4,800
Jan. 6 Salaries and Wages Expense 12,000
Cash 12,000
*EXERCISE 4-19
(a) Dec. 31 Service Revenue 92,500
Income Summary 92,500
31 Income Summary 8,300
Interest Expense 8,300
(b) Jan. 1 Service Revenue 5,000
Accounts Receivable 5,000
1 Interest Payable 2,000
Interest Expense 2,000
*EXERCISE 4-19 (Continued)
(c) & (e)
Accounts Receivable
Dec. 31 Balance *19,500
31 Adjusting 5,000
24,500
Jan. 1 Reversing 5,000
*($24,500 – $5,000)
Service Revenue
Dec. 31 Closing 92,500
Dec. 31 Balance 87,500*
31 Adjusting 5,000
92,500
92,500
Jan. 1 Reversing 5,000
Jan. 10 5,000
*($92,500 – $5,000)
Interest Payable
Dec. 31 Adjusting 2,000
Jan. 1 Reversing 2,000
Interest Expense
Dec. 31 Balance *6,300
Dec. 31 Closing 8,300
31 Adjusting 2,000
.
8,300
8,300
Jan. 15 3,000
Jan. 1 Reversing 2,000
*($8,300 – $2,000)
(d) (1)
Jan. 10 Cash 5,000
Service Revenue 5,000
(2)
15 Interest Expense 3,000
Cash 3,000
PROBLEM 4-1A (Continued)
(b) LAMPERT ROOFING
Income Statement
For the Month Ended March 31, 2014
Revenues
Service revenue $6,640
Expenses
Salaries and wages expense $2,000
Supplies expense 1,450
Miscellaneous expense 400
Depreciation expense 250
Total expenses 4,100
Net income $2,540
LAMPERT ROOFING
Owner’s Equity Statement
For the Month Ended March 31, 2014
Owner’s Capital, March 1 $ 2,900
Investments 10,000
Add: Net income 2,540
15,440
Less: Drawings 1,100
Owner’s Capital, March 31 $14,340
LAMPERT ROOFING
Balance Sheet
March 31, 2014
Assets
Current assets
Cash $4,500
Accounts receivable 3,200
Supplies 550
Total current assets $ 8,250
Property, plant, and equipment
Equipment 11,000
Less: Accum. depreciation—equipment 1,500 9,500
Total assets $17,750
PROBLEM 4-1A (Continued)
LAMPERT ROOFING
Balance Sheet (Continued)
March 31, 2014
Liabilities and Owner’s Equity
Current liabilities
Accounts payable $2,500
Salaries and wages payable 700
Unearned service revenue 210
Total current liabilities $ 3,410
Owner’s equity
Owner’s capital 14,340
Total liabilities and owner’s equity $17,750
(c) Mar. 31 Supplies Expense 1,450
Supplies 1,450
31 Depreciation Expense 250
Accumulated Depreciation—
Equipment 250
31 Unearned Service Revenue 340
Service Revenue 340
31 Salaries and Wages Expense 700
Salaries and Wages Payable 700
(d) Mar. 31 Service Revenue 6,640
Income Summary 6,640
31 Income Summary 4,100
Salaries and Wages Expense 2,000
Supplies Expense 1,450
Depreciation Expense 250
Miscellaneous Expense 400
31 Income Summary 2,540
Owner’s Capital 2,540
31 Owner’s Capital 1,100
Owner’s Drawing 1,100
PROBLEM 4-2A
(a) ALSHWER COMPANY
Partial Worksheet
For the Year Ended December 31, 2014
Account
Adjusted
Trial Balance
Income
Statement
Balance
Sheet
No.
Titles
Dr.
Cr.
Dr.
Cr.
Dr.
Cr.
101
Cash
5,300
5,300
112
Accounts Receivable
10,800
10,800
126
Supplies
1,500
1,500
130
Prepaid Insurance
2,000
2,000
157
Equipment
27,000
27,000
158
Acc. Depr.—Equip.
5,600
5,600
200
Notes Payable
15,000
15,000
201
Accounts Payable
6,100
6,100
212
Salaries and Wages Payable
2,400
2,400
230
Interest Payable
600
600
301
Owner’s Capital
13,000
13,000
306
Owner’s Drawings
7,000
7,000
400
Service Revenue
61,000
61,000
610
Advertising Expense
8,400
8,400
631
Supplies Expense
4,000
4,000
711
Depreciation Expense
5,600
5,600
722
Insurance Expense
3,500
3,500
726
Salaries and Wages Expense
28,000
28,000
905
Interest Expense
600
600
Totals
103,700
103,700
50,100
61,000
53,600
42,700
Net Income
10,900
10,900
Totals
61,000
61,000
53,600
53,600
PROBLEM 4-2A (Continued)
(b) ALSHWER COMPANY
Income Statement
For the Year Ended December 31, 2014
Revenues
Service revenue $61,000
Expenses
Salaries and wages expense $28,000
Advertising expense 8,400
Depreciation expense 5,600
Supplies expense 4,000
Insurance expense 3,500
Interest expense 600
Total expenses 50,100
Net income $10,900
ALSHWER COMPANY
Owner’s Equity Statement
For the Year Ended December 31, 2014
Owner’s Capital, January 1 $13,000
Add: Net income 10,900
23,900
Less: Drawings 7,000
Owner’s Capital, December 31 $16,900
PROBLEM 4-2A (Continued)
ALSHWER COMPANY
Balance Sheet
December 31, 2014
Assets
Current assets
Cash $ 5,300
Accounts receivable 10,800
Supplies 1,500
Prepaid insurance 2,000
Total current assets $19,600
Property, plant, and equipment
Equipment 27,000
Less: Accumulated depreciation—
equipment 5,600 21,400
Total assets $41,000
Liabilities and Owner’s Equity
Current liabilities
Notes payable $5,000
Accounts payable 6,100
Salaries and wages payable 2,400
Interest payable 600
Total current liabilities $14,100
Long-term liabilities
Notes payable 10,000
Total liabilities 24,100
Owner’s equity
Owner’s capital 16,900
Total liabilities and owner’s equity $41,000
PROBLEM 4-2A (Continued)
(c)
General Journal J14
Date
Account Titles and Explanation
Ref.
Debit
Credit
Dec. 31
Service Revenue
400
61,000
Income Summary
350
61,000
31
Income Summary
350
50,100
Advertising Expense
610
8,400
Supplies Expense
631
4,000
Depreciation Expense
711
5,600
Insurance Expense
722
3,500
Salaries and Wages Expense
726
28,000
Interest Expense
905
600
31
Income Summary
350
10,900
Owner’s Capital
301
10,900
31
Owner’s Capital
301
7,000
Owner’s Drawings
306
7,000
(d)
Owner’s Capital No. 301
Date
Explanation
Ref.
Debit
Credit
Balance
Jan. 1
Balance
13,000
13,000
Dec. 31
Closing entry
J14
10,900
23,900
31
Closing entry
J14
7,000
16,900
Owner’s Drawings No. 306
Date
Explanation
Ref.
Debit
Credit
Balance
Dec. 31
Balance
7,000
7,000
31
Closing entry
J14
7,000
0
PROBLEM 4-2A (Continued)
Income Summary No. 350
Date
Explanation
Ref.
Debit
Credit
Balance
Dec. 31
Closing entry
J14
61,000
61,000
31
Closing entry
J14
50,100
10,900
31
Closing entry
J14
10,900
0
Service Revenue No. 400
Date
Explanation
Ref.
Debit
Credit
Balance
Dec. 31
Balance
61,000
61,000
31
Closing entry
J14
61,000
0
Advertising Expense No. 610
Date
Explanation
Ref.
Debit
Credit
Balance
Dec. 31
Balance
8,400
8,400
31
Closing entry
J14
8,400
0
Supplies Expense No. 631
Date
Explanation
Ref.
Debit
Credit
Balance
Dec. 31
Balance
4,000
4,000
31
Closing entry
J14
4,000
0
Depreciation Expense No. 711
Date
Explanation
Ref.
Debit
Credit
Balance
Dec. 31
Balance
5,600
5,600
31
Closing entry
J14
5,600
0
Insurance Expense No. 722
Date
Explanation
Ref.
Debit
Credit
Balance
Dec. 31
Balance
3,500
3,500
31
Closing entry
J14
3,500
0
PROBLEM 4-2A (Continued)
Salaries and Wages Expense No. 726
Date
Explanation
Ref.
Debit
Credit
Dec. 31
Balance
28,000
28,000
31
Closing entry
J14
28,000
0
Interest Expense No. 905
Date
Explanation
Ref.
Debit
Credit
Balance
Dec. 31
Balance
600
600
31
Closing entry
J14
600
0
(e) ALSHWER COMPANY
Post-Closing Trial Balance
December 31, 2014
Debit
Credit
Cash $ 5,300
Accounts Receivable 10,800
Supplies 1,500
Prepaid Insurance 2,000
Equipment 27,000
Accumulated Depreciation—
Equipment $ 5,600
Notes Payable 15,000
Accounts Payable 6,100
Salaries and Wages Payable 2,400
Interest Payable 600
Owner’s Capital 16,900
Totals $46,600 $46,600
PROBLEM 4-3A
(a) FLEMING COMPANY
Income Statement
For the Year Ended December 31, 2014
Revenues
Service revenue $60,000
Expenses
Salaries and wages expense $30,000
Depreciation expense 3,100
Insurance expense 1,800
Maintenance and repairs expense 1,600
Utilities expense 1,400
Total expenses 37,900
Net income $22,100
FLEMING COMPANY
Owner’s Equity Statement
For the Year Ended December 31, 2014
Owner’s Capital, January 1 $19,500
Add: Net income 22,100
41,600
Less: Drawings 11,000
Owner’s Capital, December 31 $30,600
FLEMING COMPANY
Balance Sheet
December 31, 2014
Assets
Current assets
Cash $8,900
Accounts receivable 10,800
Prepaid insurance 2,800
Total current assets $22,500
Property, plant, and equipment
Equipment 24,000
Less: Accumulated depreciation—
equipment 4,500 19,500
Total assets $42,000
PROBLEM 4-3A (Continued)
FLEMING COMPANY
Balance Sheet (Continued)
December 31, 2014
Liabilities and Owner’s Equity
Current liabilities
Accounts payable $9,000
Salaries and wages payable 2,400
Total current liabilities $11,400
Owner’s equity
Owner’s capital 30,600
Total liabilities and owner’s
equity $42,000
(b)
General Journal
Date
Account Titles and Explanation
Ref.
Debit
Credit
Dec. 31
Service Revenue
400
60,000
Income Summary
350
60,000
31
Income Summary
350
37,900
Maintenance and Repairs
Expense
622
1,600
Depreciation Expense
711
3,100
Insurance Expense
722
1,800
Salaries and Wages Expense
726
30,000
Utilities Expense
732
1,400
31
Income Summary
350
22,100
Owner’s Capital
301
22,100
31
Owner’s Capital
301
11,000
Owner’s Drawings
306
11,000
PROBLEM 4-3A (Continued)
(c)
Owner’s Capital No. 301
12/31 11,000
1/1 Bal. 19,500
12/31 22,100
12/31 Bal. 30,600
Owner’s Drawings No. 306
12/31 Bal. 11,000
12/31 11,000
Income Summary No. 350
12/31 37,900
12/31 60,000
12/31 22,100
60,000
60,000
Service Revenue No. 400
12/31 60,000
12/31 Bal. 60,000
Maintenance and Repairs Expense No. 622
12/31 Bal. 1,600
12/31 1,600
Depreciation Expense No. 711
12/31 Bal. 3,100
12/31 3,100
Insurance Expense No. 722
12/31 Bal. 1,800
12/31 1,800
Salaries and Wages
Expense No. 726
12/31 Bal. 30,000
12/31 30,000
Utilities Expense No. 732
12/31 Bal. 1,400
12/31 1,400
(d) FLEMING COMPANY
Post-Closing Trial Balance
December 31, 2014
Debit
Credit
Cash $8,900
Accounts Receivable 10,800
Prepaid Insurance 2,800
Equipment 24,000
Accumulated Depreciation—Equipment $ 4,500
Accounts Payable 9,000
Salaries and Wages Payable 2,400
Owner’s Capital 30,600
Totals $46,500 $46,500
PROBLEM 4-4A (Continued)
(b) JARMUZ MANAGEMENT SERVICES
Balance Sheet
December 31, 2014
Assets
Current assets
Cash $13,800
Accounts receivable 28,300
Prepaid insurance 2,400
Total current assets $ 44,500
Property, plant, and equipment
Land 67,000
Buildings $127,000
Less: Accumulated
depreciation—buildings 3,000 124,000
Equipment 59,000
Less: Accumulated
depreciation—equipment 3,600 55,400 246,400
Total assets $290,900
Liabilities and Owner’s Equity
Current liabilities
Mortgage payable (due in 2015) $30,000
Accounts payable 12,500
Interest payable 10,000
Unearned rent revenue 1,500
Total current liabilities $ 54,000
Long-term liabilities
Mortgage payable 90,000
Total liabilities 144,000
Owner’s equity
Owner’s capital
($144,000 + $24,900 – $22,000) 146,900
Total liabilities and owner’s equity $290,900
PROBLEM 4-4A (Continued)
(c) Dec. 31 Insurance Expense 1,200
Prepaid Insurance 1,200
31 Depreciation Expense 6,600
Accumulated Depreciation—
Buildings 3,000
Accumulated Depreciation—
Equipment 3,600
31 Unearned Rent Revenue 4,500
Rent Revenue 4,500
31 Interest Expense 10,000
Interest Payable 10,000
(d) Dec. 31 Service Revenue 90,700
Rent Revenue 33,500
Income Summary 124,200
31 Income Summary 99,300
Salaries and Wages Expense 42,000
Advertising Expense 20,500
Interest Expense 10,000
Utilities Expense 19,000
Depreciation Expense 6,600
Insurance Expense 1,200
31 Income Summary 24,900
Owner’s Capital 24,900
31 Owner’s Capital 22,000
Owner’s Drawings 22,000
PROBLEM 4-4A (Continued)
(e) JARMUZ MANAGEMENT SERVICES
Post-Closing Trial Balance
December 31, 2014
Debit
Credit
Cash $ 13,800
Accounts Receivable 28,300
Prepaid Insurance 2,400
Land 67,000
Buildings 127,000
Accumulated Depreciation—Buildings $ 3,000
Equipment 59,000
Accumulated Depreciation—Equipment 3,600
Accounts Payable 12,500
Interest Payable 10,000
Unearned Rent Revenue 1,500
Mortgage Payable 120,000
Owner’s Capital 146,900
$297,500 $297,500
PROBLEM 4-5A
(a)
General Journal J1
Date
Account Titles and Explanation
Ref.
Debit
Credit
July 1
Cash
101
20,000
Owner’s Capital
301
20,000
1
Equipment
157
9,000
Cash
101
4,000
Accounts Payable
201
5,000
3
Supplies
126
2,100
Accounts Payable
201
2,100
5
Prepaid Insurance
130
1,800
Cash
101
1,800
12
Accounts Receivable
112
4,500
Service Revenue
400
4,500
18
Accounts Payable
201
2,900
Cash
101
2,900
20
Salaries and Wages Expense
726
2,500
Cash
101
2,500
21
Cash
101
3,400
Accounts Receivable
112
3,400
25
Accounts Receivable
112
6,000
Service Revenue
400
6,000
31
Gasoline Expense
633
350
Cash
101
350
31
Owner’s Drawings
306
5,600
Cash
101
5,600
PROBLEM 4-5A (Continued)
(a), (e) & (f)
Cash No. 101
Date
Explanation
Ref.
Debit
Credit
Balance
July 1
J1
20,000
20,000
1
J1
4,000
16,000
5
J1
1,800
14,200
18
J1
2,900
11,300
20
J1
2,500
8,800
21
J1
3,400
12,200
31
J1
350
11,850
31
J1
5,600
6,250
Accounts Receivable No. 112
Date
Explanation
Ref.
Debit
Credit
Balance
July 12
J1
4,500
4,500
21
J1
3,400
1,100
25
J1
6,000
7,100
31
Adjusting
J2
2,700
9,800
Supplies No. 126
Date
Explanation
Ref.
Debit
Credit
Balance
July 3
J1
2,100
2,100
31
Adjusting
J2
1,500
600
Prepaid Insurance No. 130
Date
Explanation
Ref.
Debit
Credit
Balance
July 5
J1
1,800
1,800
31
Adjusting
J2
150
1,650
Equipment No. 157
Date
Explanation
Ref.
Debit
Credit
Balance
July 1
J1
9,000
9,000
PROBLEM 4-5A (Continued)
Accumulated Depreciation—Equipment No. 158
Date
Explanation
Ref.
Debit
Credit
Balance
July 31
Adjusting
J2
500
500
Accounts Payable No. 201
Date
Explanation
Ref.
Debit
Credit
Balance
July 1
J1
5,000
5,000
3
J1
2,100
7,100
18
J1
2,900
4,200
Salaries and Wages Payable No. 212
Date
Explanation
Ref.
Debit
Credit
Balance
July 31
Adjusting
J2
1,000
1,000
Owner’s Capital No. 301
Date
Explanation
Ref.
Debit
Credit
Balance
July 1
J1
20,000
20,000
31
Closing
J3
7,200
27,200
31
Closing
J3
5,600
21,600
Owner’s Drawings No. 306
Date
Explanation
Ref.
Debit
Credit
Balance
July 31
J1
5,600
5,600
31
Closing
J3
5,600
0
Income Summary No. 350
Date
Explanation
Ref.
Debit
Credit
Balance
July 31
Closing
J3
13,200
13,200
31
Closing
J3
6,000
7,200
31
Closing
J3
7,200
0
PROBLEM 4-5A (Continued)
Service Revenue No. 400
Date
Explanation
Ref.
Debit
Credit
Balance
July 12
J1
4,500
4,500
25
J1
6,000
10,500
31
Adjusting
J2
2,700
13,200
31
Closing
J3
13,200
0
Supplies Expense No. 631
Date
Explanation
Ref.
Debit
Credit
Balance
July 31
Adjusting
J2
1,500
1,500
31
Closing
J3
1,500
0
Gasoline Expense No. 633
Date
Explanation
Ref.
Debit
Credit
Balance
July 31
J1
350
350
31
Closing
J3
350
0
Depreciation Expense No. 711
Date
Explanation
Ref.
Debit
Credit
Balance
July 31
Adjusting
J2
500
500
31
Closing
J3
500
0
Insurance Expense No. 722
Date
Explanation
Ref.
Debit
Credit
Balance
July 31
Adjusting
J2
150
150
31
Closing
J3
150
0
Salaries and Wages Expense No. 726
Date
Explanation
Ref.
Debit
Credit
Balance
July 20
J1
2,500
2,500
31
Adjusting
J2
1,000
3,500
31
Closing
J3
3,500
0
PROBLEM 4-5A (Continued)
(d) JARA’S CLEANING SERVICE
Income Statement
For the Month Ended July 31, 2014
Revenues
Service revenue $13,200
Expenses
Salaries and wages expense $3,500
Supplies expense 1,500
Depreciation expense 500
Gasoline expense 350
Insurance expense 150
Total expenses 6,000
Net income $ 7,200
JARA’S CLEANING SERVICE
Owner’s Equity Statement
For the Month Ended July 31, 2014
Owner’s Capital, July 1 $ 0
Add: Investments $20,000
Net income 7,200 27,200
27,200
Less: Drawings 5,600
Owner’s Capital, July 31 $21,600
JARA’S CLEANING SERVICE
Balance Sheet
July 31, 2014
Assets
Current assets
Cash $6,250
Accounts receivable 9,800
Supplies 600
Prepaid insurance 1,650
Total current assets $18,300
PROBLEM 4-5A (Continued)
JARA’S CLEANING SERVICE
Balance Sheet (Continued)
July 31, 2014
Assets (Continued)
Property, plant, and equipment
Equipment $9,000
Less: Accumulated depreciation—
equipment 500 8,500
Total assets $26,800
Liabilities and Owner’s Equity
Current liabilities
Accounts payable $4,200
Salaries and wages payable 1,000
Total current liabilities $ 5,200
Owner’s equity
Owner’s capital 21,600
Total liabilities and owner’s equity $26,800
(e)
General Journal J2
Date
Account Titles and Explanation
Ref.
Debit
Credit
July 31
Accounts Receivable
112
2,700
Service Revenue
400
2,700
31
Depreciation Expense
711
500
Accumulated Depreciation—
Equipment
158
500
31
Insurance Expense
722
150
Prepaid Insurance
130
150
31
Supplies Expense
631
1,500
Supplies
126
1,500
31
Salaries and Wages Expense
726
1,000
Salaries and Wages Payable
212
1,000
PROBLEM 4-5A (Continued)
(f) General Journal
J3
Date
Account Titles and Explanation
Ref.
Debit
Credit
July 31
Service Revenue
400
13,200
Income Summary
350
13,200
31
Income Summary
350
6,000
Salaries and Wages Expense
726
3,500
Depreciation Expense
711
500
Insurance Expense
722
150
Supplies Expense
631
1,500
Gasoline Expense
633
350
31
Income Summary
350
7,200
Owner’s Capital
301
7,200
31
Owner’s Capital
301
5,600
Owner’s Drawings
306
5,600
(g) JARA’S CLEANING SERVICE
Post-Closing Trial Balance
July 31, 2014
Debit
Credit
Cash $ 6,250
Accounts Receivable 9,800
Supplies 600
Prepaid Insurance 1,650
Equipment 9,000
Accumulated Depreciation—Equipment $ 500
Accounts Payable 4,200
Salaries and Wages Payable 1,000
Owner’s Capital 21,600
$27,300 $27,300
PROBLEM 4-6A (Continued)
(b) UNIVERSAL CABLE
Trial Balance
April 30, 2014
Debit
Credit
Cash ($4,100 – $360 – $27) $ 3,713
Accounts Receivable ($3,200 + $360) 3,560
Supplies ($800 – $310) 490
Equipment ($10,600 + $310 – $69) 10,841
Accumulated Depreciation $ 1,350
Accounts Payable 2,100
Salaries and Wages Payable ($700 – $700) 0
Unearned Service Revenue 890
Owner’s Capital 12,900
Service Revenue 5,450
Salaries and Wages Expense ($3,300 – $700) 2,600
Advertising Expense ($600 + $75) 675
Miscellaneous Expense ($290 – $75) 215
Depreciation Expense 500
Maintenance and Repairs Expense 96
$22,690 $22,690
PROBLEM 4-1B (Continued)
(b) MICHAEL PEVNICK, P.I.
Income Statement
For the Quarter Ended March 31, 2014
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