Academic Success Centre www.rrc.mb.ca/asc These answers were created by Michael Reimer for the Academic Success Centre.

You can find more questions, answers and Wise Guys video links at blogs.rrc.ca/michael

Supplemental Instruction Handouts

Financial Accounting Chapter 4:

Completing the Accounting Cycle and Classifying Accounts

Answer Key

Step 1: Close all revenue accounts:

General Journal Page ____ Date Account Titles and Explanations PR Debit Credit

Dec 31 Consulting Fees Earned 217,900 Interest Earned 1,500 Rent Earned 10,200 Income Summary

229,600

Step 2: Close all expense accounts:

General Journal Page ____ Date Account Titles and Explanations PR Debit Credit

Dec 31 Income Summary 108,500 Advertising Expense

2,500

Depreciation Expense – Building

1,500 Depreciation Expense – Computer Equipment

7,100

Insurance Expense

2,200 Interest Expense

1,200

Rent Expense

7,700 Salaries Expense

85,000

Supplies Expense

900 Telephone Expense

400

Academic Success Centre www.rrc.mb.ca/asc These answers were created by Michael Reimer for the Academic Success Centre.

You can find more questions, answers and Wise Guys video links at blogs.rrc.ca/michael

Step 3: Close the Income Summary Account Income Summary 108,500 229,600 121,100

General Journal Page ____ Date Account Titles and Explanations PR Debit Credit

Dec 31 Income Summary 121,100 J. Burns, Capital

121,100

Step 4: Close the withdrawals account.

General Journal Page ____ Date Account Titles and Explanations PR Debit Credit

Dec 31 J. Burns, Capital 35,000 J. Burns, Withdrawals

35,000

J. Burns, Capital 110,000 35,000 121,100 196,100

Academic Success Centre www.rrc.mb.ca/asc These answers were created by Michael Reimer for the Academic Success Centre.

You can find more questions, answers and Wise Guys video links at blogs.rrc.ca/michael

Burns Consulting Balance Sheet

December 31, 2012

Assets Current Assets: Cash $7,800 Accounts Receivable 3,500 Prepaid Insurance 200 Prepaid Rent 700 Supplies 500

Total Current Assets

$12,700 Long – Term Investments:

Land held for future expansion

25,000 Property, Plant and Equipment:

Land $25,000 Building $210,000

Less: Accumulated Depreciation – Building 10,500 199,500 Computer Equipment $106,500

Less: Accumulated Depreciation – 35,500 71,000 Computer Equipment

295,500

Total Property, Plant and Equipment Intangible Assets: Copyright

9,500 Total Assets

$342,700

Liabilities Current Liabilities: Accounts Payable $4,500

Interest Payable 600 Note Payable – due 2013 10,000 Unearned Consulting Fees 6,500 Total Current Liabilities $21,600

Long – Term Liabilities: Note Payable – due in 2014 $75,000 Bonds Payable 50,000 Total Long – Term Liabilities 125,000

Total Liabilities $146,600 Equity

J. Burns, Capital

196,100 Total Liabilities and Equity $342,700