accounting principles chapter 4 solution

CHAPTER 4

CHAPTER 4

Completing the Accounting Cycle

ASSIGNMENT CLASSIFICATION TABLE

Learning ObjectivesQuestionsBrief

ExercisesDo It!ExercisesA

ProblemsB

Problems

*1.Prepare a worksheet.1, 2, 3, 4, 51, 2, 311, 2, 3, 5, 61A, 2A, 3A,

4A, 5A1B, 2B, 3B,

4B, 5B

*2.Explain the process of closing the books.6, 7, 11,124, 5, 624, 7, 8, 11, 191A, 2A, 3A,

4A, 5A1B, 2B, 3B,

4B, 5B

*3.Describe the content and purpose of a post-closing trial balance.8, 974, 7, 81A, 2A, 3A,

4A, 5A1B, 2B, 3B,

4B, 5B

*4.State the required steps in the accounting cycle.10, 11, 12810, 195A5B

*5.Explain the approaches to preparing correcting entries.13912, 136A

*6.Identify the sections of a classified balance sheet.14, 15, 16,

17, 18, 1910, 113, 43, 9, 14, 15, 16, 171A, 2A, 3A,

4A, 5A1B, 2B, 3B,

4B, 5B

*7.Prepare reversing entries.10, 20, 211218, 19

*Note: All asterisked Questions, Exercises, and Problems relate to material contained in the appendix *to the chapter.

ASSIGNMENT CHARACTERISTICS TABLE

Problem

NumberDescriptionDifficulty

LevelTime Allotted (min.)

1APrepare worksheet, financial statements, and adjusting and closing entries.Simple4050

2AComplete worksheet; prepare financial statements, closing entries, and post-closing trial balance.Moderate5060

3APrepare financial statements, closing entries, and post-closing trial balance.Moderate4050

4AComplete worksheet; prepare classified balance sheet, entries, and post-closing trial balance.Moderate5060

5AComplete all steps in accounting cycle.Complex7090

6AAnalyze errors and prepare correcting entries and trial balance.Moderate4050

1BPrepare worksheet, financial statements, and adjusting and closing entries.Simple4050

2BComplete worksheet; prepare financial statements, closing entries, and post-closing trial balance.Moderate5060

3BPrepare financial statements, closing entries, and post-closing trial balance.Moderate4050

4BComplete worksheet; prepare classified balance sheet, entries, and post-closing trial balance.Moderate5060

5BComplete all steps in accounting cycle.Complex7090

Comprehensive Problem: Chapters 2 to 4

WEYGANDT ACCOUNTING PRINCIPLES 11E

CHAPTER 4

COMPLETING THE ACCOUNTING CYCLE

NumberLOBTDifficultyTime (min.)

BE11KSimple24

BE21ANModerate68

BE31CSimple35

BE42APSimple35

BE52APSimple46

BE62APSimple68

BE73CSimple24

BE84KSimple35

BE95ANModerate46

BE106APSimple46

BE116CSimple35

BE127ANModerate46

DI11CSimple46

DI22APSimple24

DI36APSimple68

DI46CSimple46

EX11APSimple1215

EX21APSimple1012

EX31, 6APSimple1215

EX42, 3APSimple1215

EX51ANSimple1012

EX61ANModerate1215

EX72, 3APSimple810

EX82, 3APSimple1012

EX96APSimple1215

EX104CSimple35

EX112APSimple68

EX125ANModerate810

EX135ANModerate46

EX146APModerate1012

EX156CSimple58

EX166APSimple810

COMPLETING THE ACCOUNTING CYCLE (Continued)

NumberLOBTDifficultyTime (min.)

EX176APSimple1215

EX187ANModerate57

EX192, 4, 7ANModerate1012

P1A1-3, 6ANSimple4050

P2A1-3, 6APModerate5060

P3A1-3, 6APModerate4050

P4A1-3, 6ANModerate5060

P5A1-4, 6ANComplex7090

P6A5ANModerate4050

P1B1-3, 6ANSimple4050

P2B1-3, 6APModerate5060

P3B1-3, 6APModerate4050

P4B1-3, 6ANModerate5060

P5B1-4, 6ANComplex7090

BYP16ANSimple1012

BYP26ANSimple810

BYP36ANSimple810

BYP4ESimple1012

BYP56ANModerate1520

BYP64CSimple1520

BYP7EModerate1015

BYP86APModerate1216

BYP9APModerate1015

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) Owners Capital (for net income).

(4)(Dr) Owners Capital and (Cr) Owners 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 owners 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; Owners 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:

AssetsLiabilities and Owners Equity

Current AssetsCurrent Liabilities

Long-term InvestmentsLong-term Liabilities

Property, Plant, and EquipmentOwners 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 owners 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..Apples current liabilities at September 24, 2011 and September 25, 2010 were $27,970 million and $20,722 million respectively. Apples 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. 10Salaries 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. 10Salaries 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 StatementBalance Sheet

AccountDr.Cr.Dr.Cr.

Accumulated DepreciationX

Depreciation ExpenseX

Owners CapitalX

Owners DrawingsX

Service RevenueX

SuppliesX

Accounts PayableX

BRIEF EXERCISE 4-4

Dec. 31Service Revenue

50,000

Income Summary

50,000

31Income Summary

34,000


27,000

Supplies Expense

7,000

31Income Summary

16,000

Owners Capital

16,000

31Owners Capital

2,000

Owners Drawings

2,000

BRIEF EXERCISE 4-5

Salaries and Wages ExpenseIncome SummaryService Revenue

Bal.27,000(2)27,000(2)34,000(1)50,000(1)50,000Bal.50,000

(3)16,000

50,00050,000

Supplies ExpenseOwners CapitalOwners Drawings

Bal.7,000(2)7,000(4)2,000Bal.30,000Bal.2,000(4)2,000

(3)16,000

Bal.44,000

BRIEF EXERCISE 4-6

July31Service Revenue

16,400

Income Summary

16,400

31Income Summary

10,700


8,200

Maintenance and Repairs Expense

2,500

Service Revenue

DateExplanationRef.DebitCreditBalance

7/31Balance16,40016,400

7/31Closing entry16,400 0



7/31Balance8,2008,200


BRIEF EXERCISE 4-6 (Continued)



7/31Balance2,5002,500


BRIEF EXERCISE 4-7

The accounts that will appear in the post-closing trial balance are:

Accumulated Depreciation

Owners 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

$32,100BRIEF EXERCISE 4-11

CL

Accounts payableCL

Income taxes payable

CA

Accounts receivableLTI

Debt investments (long-term)

PPE

Accum. depreciationbuildingsPPE

Land

PPE

BuildingsCA

Inventory

CA

CashIA

Patents

IA

CopyrightsCA

Supplies

*BRIEF EXERCISE 4-12

Nov.1 Salaries and Wages Payable

2,100


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 columnUtilities Expense

Income statement credit columnService Revenue

Balance sheet debit columnAccounts Receivable

Balance sheet credit columnNotes Payable; Accumulated Depreciation; Owners Capital

DO IT! 4-2

Dec. 31Income Summary

41,000

Owners Capital

41,000

Dec. 31Owners Capital

22,000

Owners 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


$12,700

Long-term investments

Stock investments

6,500

Property, plant and equipment

Equipment

21,700

Less: Accumulated depreciation

5,70016,000Total assets

$35,200DO IT! 4-4

NAInterest revenueOEOwners capital

CLUtilities payablePPEAccumulated depreciationequipment

CLAccounts payablePPEEquipment

CASuppliesNASalaries and wages expense

LTLBonds payableLTIDebt investments (long-term)

IAGoodwillCLUnearned rent revenue

SOLUTIONS TO EXERCISES

EXERCISE 4-1

NANDURI COMPANY

Worksheet

For the Month Ended June 30, 2014

Account TitlesTrial BalanceAdjustmentsAdj. Trial BalanceIncome StatementBalance Sheet

Dr.Cr.Dr.Cr.Dr.Cr.Dr.Cr.Dr.Cr.

Cash2,3202,3202,320

Accounts Receivable2,4402,4402,440

Supplies1,880(a) 1,380500500

Accounts Payable1,1201,1201,120

Unearned Service Revenue240(b) 140100100

Owners Capital3,6003,6003,600

Service Revenue2,400(b) 1402,5402,540

Salaries and Wages Expense560(c) 210770770

Miscellaneous Expense 160160160

Totals7,3607,360

Supplies Expense(a) 1,3801,3801,380

Salaries and Wages Payable(c) 210 210 210

Totals1,7301,7307,5707,5702,3102,5405,2605,030

Net Income230230

Totals2,5402,5405,2605,260

EXERCISE 4-2

DESOUSA COMPANY

(Partial) Worksheet

For the Month Ended April 30, 2014

Adjusted Trial BalanceIncome StatementBalance Sheet

Account TitlesDr.Cr.Dr.Cr.Dr.Cr.

Cash10,00010,000

Accounts Receivable7,8407,840

Prepaid Rent2,2802,280

Equipment23,05023,050

Accum. Depreciation Equipment4,9214,921

Notes Payable5,7005,700

Accounts Payable4,9204,920

Owners Capital27,96027,960

Owners Drawings3,6503,650

Service Revenue15,59015,590

Salaries and Wages Expense10,84010,840

Rent Expense760760

Depreciation Expense671671

Interest Expense5757

Interest Payable 57 57

Totals59,14859,14812,32815,59046,82043,558

Net Income 3,262 3,262

Totals15,59015,59046,82046,820

EXERCISE 4-3

DESOUSA COMPANY

Income Statement

For the Month Ended April 30, 2014Revenues

Service revenue

$15,590

Expenses

Salaries and wages expense

$10,840

Rent expense

760

Depreciation expense

671

Interest expense

57

Total expenses

12,328Net income

$ 3,262DESOUSA COMPANY

Owners Equity Statement

For the Month Ended April 30, 2014Owners Capital, April 1

$27,960

Add: Net income

3,262

31,222

Less: Drawings

3,650Owners Capital, April 30

$27,572DESOUSA COMPANY

Balance Sheet

April 30, 2014Assets

Current assets

Cash

$10,000

Accounts receivable

7,840

Prepaid rent

2,280


$20,120

Property, plant, and equipment

Equipment

23,050

Less: Accumulated depreciationequipment

4,921 18,129

Total assets

$38,249EXERCISE 4-3 (Continued)

DESOUSA COMPANY

Balance Sheet (Continued)

April 30, 2014Liabilities and Owners Equity

Current liabilities

Notes payable

$5,700

Accounts payable

4,920

Interest payable

57

Total current liabilities

$10,677

Owners equity

Owners capital

27,572

Total liabilities and owners equity

$38,249EXERCISE 4-4

(a)Apr. 30

Service Revenue

15,590

Income Summary

15,590

30Income Summary

12,328


10,840

Rent Expense

760

Depreciation Expense

671

Interest Expense

57

30Income Summary

3,262

Owners Capital

3,262

30Owners Capital

3,650

Owners Drawings

3,650

(b)

Income SummaryOwners Capital

(2)12,328(1)15,590(4)3,650 Bal.27,960

(3)3,262 (3)3,262

15,59015,590Bal.27,572

EXERCISE 4-4 (Continued)

(c)DESOUSA COMPANY

Post-Closing Trial Balance

April 30, 2014DebitCredit

Cash

$10,000

Accounts Receivable

7,840

Prepaid Rent

2,280

Equipment

23,050

Accumulated DepreciationEquipment

$ 4,921

Notes Payable

5,700

Accounts Payable

4,920

Interest Payable

57

Owners 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


900


900


500

Salaries and Wages Payable

500


(b)Income StatementBalance Sheet

Dr.Cr.Dr.Cr.

Accounts ReceivableX

Prepaid InsuranceX

Accum. DepreciationEquip.X

Salaries and Wages PayableX

Service RevenueX

Salaries and Wages ExpenseX

Insurance ExpenseX

Depreciation ExpenseX

EXERCISE 4-6

(a)Accounts Receivable$25,000 ($34,000 $9,000).

Supplies$2,500 ($7,000 $4,500).

Accumulated DepreciationEquipment$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


10,000


10,000


5,600


5,600

EXERCISE 4-7

(a)Service Revenue

4,300

Income Summary

4,300

Income Summary

3,500


1,344

Miscellaneous Expense

256

Supplies Expense

1,900

Income Summary

800

Owners Capital

800

Owners Capital

628

Owners Drawings

628

(b)KAY MAGILL COMPANY


June 30, 2014 Account TitlesDebitCredit

Cash

$3,712

Accounts Receivable

3,904

Supplies

480

Accounts Payable

$1,556


448

Unearned Service Revenue

160

Owners Capital

5,932

$8,096$8,096EXERCISE 4-8

(a)

General Journal J15

DateAccount TitlesRef.DebitCredit

July31Service Revenue

40064,000

Rent Revenue

429 6,500

Income Summary

35070,500

31Income Summary

35078,600


72655,700

Utilities Expense

73214,900


711 8,000

31Owners Capital

301 8,100

Income Summary

350 8,100

31Owners Capital

30116,000

Owners Drawings

30616,000

(b)

Owners CapitalNo. 301

DateExplanationRef. DebitCreditBalance

July 31Balance45,200

31Close net lossJ15 8,10037,100

31Close drawingJ1516,00021,100

Income SummaryNo. 350


July 31Close revenueJ15 70,50070,500

31Close expensesJ15 78,600(8,100)

31Close net lossJ15 8,1000


(c)PLEVIN COMPANY


July 31, 2014DebitCredit

Cash

$9,840

Accounts Receivable

8,780

Equipment

15,900


$ 7,400

Accounts Payable

4,220

Unearned Rent Revenue

1,800

Owners Capital

21,100

$34,520$34,520EXERCISE 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


55,700

Utilities expense

14,900


8,000

Total expenses

78,600

Net loss

($ 8,100)


PLEVIN COMPANY



Owners Capital, August 1, 2013

$45,200

Less: Net loss

$ 8,100

Drawings

16,000 24,100

Owners Capital, July 31, 2014

$21,100(b)PLEVIN COMPANY

Balance Sheet

July 31, 2014

Assets

Current assets

Cash

$9,840

Accounts receivable

8,780


$18,620


Equipment

15,900


7,400 8,500

Total assets

$27,120

Liabilities and Owners Equity

Current liabilities

Accounts payable

$4,220

Unearned rent revenue

1,800


$ 6,020

Owners equity

Owners Capital

21,100


$27,120EXERCISE 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 13 may occur daily in the accounting cycle. Steps 47 are performed on a periodic basis. Steps 8 and 9 are usually prepared only at the end of a companys 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)June30Service Revenue

18,100

Income Summary

18,100

30Income Summary

13,100


8,800

Supplies Expense

1,300

Rent Expense

3,000

30Income Summary

5,000

Owners Capital

5,000

30Owners Capital

2,500

Owners Drawings

2,500

(b)

Income Summary

June 3013,100June 3018,100

June 30 5,000

18,10018,100

EXERCISE 4-12

(a)1.Cash

700

Equipment

700


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.Owners Drawings 500


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


$ 37,240


Land

67,000

Buildings

$128,800

Less: Acc. depr.buildings

42,60086,200

Equipment

62,400

Less: Acc. depr.equipment

18,720 43,680 196,880

Total assets

$234,120EXERCISE 4-14 (Continued)

MARTELL BOWLING ALLEY


December 31, 2014


Current liabilities

Notes payable(due 2015)

$22,000

Accounts payable

12,300

Interest payable

2,600


$ 36,900

Long-term liabilities

Notes payable

75,780

Total liabilities

112,680

Owners equity

Owners capital ($115,000 + $6,440*)

121,440


$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 companys liquidity appears to be reasonably good, but some caution is needed.

EXERCISE 4-15

CL

Accounts payablePPE

Accumulated depreciationequipment

CA

Accounts receivablePPE

Buildings

CA

CashPPE

Land

OE

Owners capitalLTL

Notes payable (due in 2 years)

IA

PatentsCA

Supplies

CL

Salaries and wages payablePPE

Equipment

CA

InventoryCA

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


$10,190

Long-term investments

264


Equipment

11,500


equipment

(5,655) 5,845

Total assets

$16,299Liabilities and Owners Equity

Current liabilities

Notes payable (due in 2015)

$ 500

Accounts payable

1,444


$ 1,944


Long-term debt

1,000

Notes payable

400

Total long-term liabilities

1,400

Total liabilities

3,344

Owners equity

Owners capital

12,955


$16,299

EXERCISE 4-17

(a)

NORSTED COMPANY

Income Statement


Revenues

Service revenue

$62,000

Rent revenue

8,500

Total revenues

$70,500

Expenses


51,700

Utilities expense

22,600


4,000

Total expense

78,300

Net loss

$ (7,800)

NORSTED COMPANY



Owners Capital, August 1, 2013

$51,200

Less: Net loss

$7,800

Drawings

3,000 10,800

Owners Capital, July 31, 2014

$40,400


(b)

NORSTED COMPANY

Balance Sheet

July 31, 2014Assets

Current assets

Cash

$14,200

Accounts receivable

9,780


$23,980


Equipment

30,400


equipment

6,000 24,400

Total assets


Current liabilities

Accounts payable

$4,100

Salaries and wages payable

2,080


$ 6,180


Notes payable

1,800

Total liabilities

7,980

Owners equity

Owners capital

40,400


$48,380*EXERCISE 4-18

(a)Dec.31Salaries and Wages Expense

($12,000 X 2/5)

4,800


4,800

Jan.6Salaries and Wages Payable

4,800


($12,000 X 3/5)

7,200

Cash

12,000

(b)Dec.31 Salaries and Wages Expense

4,800


4,800

Jan.1Salaries and Wages Payable

4,800


4,800

Jan.6Salaries and Wages Expense

12,000

Cash

12,000

*EXERCISE 4-19

(a)Dec.31Service Revenue

92,500

Income Summary

92,500

31Income Summary

8,300

Interest Expense

8,300

(b)Jan.1Service Revenue

5,000

Accounts Receivable

5,000

1Interest Payable

2,000

Interest Expense

2,000

*EXERCISE 4-19 (Continued)

(c) & (e)

Accounts Receivable

Dec. 31Balance*19,500

31Adjusting 5,000

24,500

Jan. 1Reversing5,000

*($24,500 $5,000)

Service Revenue

Dec. 31Closing92,500 Dec. 31Balance87,500*

31Adjusting 5,000

92,500 92,500

Jan. 1 Reversing5,000 Jan. 10 5,000

*($92,500 $5,000)

Interest Payable

Dec. 31Adjusting2,000

Jan. 1 Reversing2,000

Interest Expense

Dec. 31Balance*6,300Dec. 31 Closing8,300

31Adjusting 2,000 .

8,300

8,300

Jan. 15 3,000Jan. 1 Reversing2,000

*($8,300 $2,000)

(d)(1)

Jan. 10 Cash

5,000

Service Revenue

5,000

(2)

15Interest 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


$2,000

Supplies expense

1,450

Miscellaneous expense

400


250

Total expenses

4,100

Net income

$2,540

LAMPERT ROOFING



Owners Capital, March 1

$ 2,900

Investments

10,000

Add: Net income

2,540

15,440

Less: Drawings

1,100


$14,340

LAMPERT ROOFING

Balance Sheet

March 31, 2014

Assets

Current assets

Cash

$4,500

Accounts receivable

3,200

Supplies

550


$ 8,250


Equipment

11,000

Less: Accum. depreciationequipment

1,500 9,500

Total assets

$17,750PROBLEM 4-1A (Continued)

LAMPERT ROOFING


March 31, 2014


Current liabilities

Accounts payable

$2,500


700

Unearned service revenue

210


$ 3,410

Owners equity

Owners capital

14,340


$17,750(c)Mar. 31Supplies Expense

1,450

Supplies

1,450

31Depreciation Expense

250


Equipment

250

31Unearned Service Revenue

340

Service Revenue

340

31Salaries and Wages Expense

700


700

(d)Mar. 31Service Revenue

6,640

Income Summary

6,640

31Income Summary

4,100


2,000

Supplies Expense

1,450


250


400

31Income Summary

2,540

Owners Capital

2,540

31Owners Capital

1,100

Owners Drawing

1,100

PROBLEM 4-2A

(a)ALSHWER COMPANY

Partial Worksheet

For the Year Ended December 31, 2014AccountAdjusted

Trial BalanceIncome

StatementBalance

Sheet

No.TitlesDr.Cr.Dr.Cr.Dr.Cr.

101Cash5,3005,300

112Accounts Receivable10,80010,800

126Supplies1,5001,500

130Prepaid Insurance2,0002,000

157Equipment27,00027,000

158Acc. Depr.Equip.5,6005,600

200Notes Payable15,00015,000

201Accounts Payable6,1006,100

212Salaries and Wages Payable2,4002,400

230Interest Payable600600

301Owners Capital13,00013,000

306Owners Drawings7,0007,000

400Service Revenue61,00061,000

610Advertising Expense8,4008,400

631Supplies Expense4,0004,000

711Depreciation Expense5,6005,600

722Insurance Expense3,5003,500

726Salaries and Wages Expense28,00028,000

905Interest Expense 600 600

Totals103,700103,70050,10061,00053,60042,700

Net Income 10,90010,900

Totals61,00061,00053,60053,600


(b)ALSHWER COMPANY

Income Statement

For the Year Ended December 31, 2014

Revenues

Service revenue

$61,000

Expenses


$28,000

Advertising expense

8,400


5,600

Supplies expense

4,000

Insurance expense

3,500

Interest expense

600

Total expenses

50,100

Net income

$10,900

ALSHWER COMPANY



Owners Capital, January 1

$13,000

Add:Net income

10,900

23,900

Less: Drawings

7,000

Owners Capital, December 31


ALSHWER COMPANY

Balance Sheet

December 31, 2014

Assets

Current assets

Cash

$ 5,300

Accounts receivable

10,800

Supplies

1,500

Prepaid insurance

2,000


$19,600


Equipment

27,000


equipment

5,600 21,400

Total assets

$41,000


Current liabilities

Notes payable

$5,000

Accounts payable

6,100


2,400

Interest payable

600


$14,100


Notes payable

10,000

Total liabilities

24,100

Owners equity

Owners capital

16,900


$41,000


(c)

General Journal J14

DateAccount Titles and ExplanationRef.DebitCredit

Dec.31Service Revenue

40061,000

Income Summary

35061,000

31Income Summary

35050,100

Advertising Expense

6108,400

Supplies Expense

631 4,000


711 5,600

Insurance Expense

722 3,500


72628,000

Interest Expense

905 600

31Income Summary 350 10,900

Owners Capital

30110,900

31Owners Capital

301 7,000

Owners Drawings

3067,000

(d)



Jan.1Balance13,00013,000

Dec.31Closing entryJ1410,90023,900

31Closing entryJ147,00016,900

Owners DrawingsNo. 306


Dec. 31Balance7,0007,000

31Closing entryJ147,0000







Service RevenueNo. 400


Dec.31Balance61,00061,000


Advertising ExpenseNo. 610




Supplies ExpenseNo. 631




Depreciation ExpenseNo. 711




Insurance ExpenseNo. 722





Salaries and Wages ExpenseNo. 726

DateExplanationRef.DebitCredit

Dec. 31Balance28,00028,000


Interest ExpenseNo. 905


Dec. 31Balance600600

31Closing entryJ146000

(e)ALSHWER COMPANY


December 31, 2014DebitCredit

Cash

$ 5,300

Accounts Receivable

10,800

Supplies

1,500

Prepaid Insurance

2,000

Equipment

27,000


Equipment

$ 5,600

Notes Payable

15,000

Accounts Payable

6,100


2,400

Interest Payable

600

Owners Capital

16,900

Totals

$46,600$46,600PROBLEM 4-3A

(a)FLEMING COMPANY

Income Statement


Revenues

Service revenue

$60,000

Expenses


$30,000


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




$19,500

Add: Net income

22,100

41,600

Less: Drawings

11,000


$30,600

FLEMING COMPANY

Balance Sheet

December 31, 2014

Assets

Current assets

Cash

$8,900

Accounts receivable

10,800

Prepaid insurance

2,800


$22,500


Equipment

24,000


equipment

4,500 19,500

Total assets

$42,000


FLEMING COMPANY


December 31, 2014


Current liabilities

Accounts payable

$9,000


2,400


$11,400

Owners equity

Owners capital

30,600

Total liabilities and owners

equity

$42,000(b)

General Journal



40060,000

Income Summary

35060,000

31Income Summary

35037,900

Maintenance and Repairs

Expense

6221,600


7113,100

Insurance Expense

7221,800


72630,000

Utilities Expense

7321,400

31Income Summary

35022,100

Owners Capital

30122,100

31Owners Capital

30111,000

Owners Drawings

30611,000


(c)


12/3111,0001/1 Bal.19,500

12/3122,100

12/31 Bal.30,600


12/31 Bal.11,00012/3111,000


12/3137,90012/3160,000

12/3122,100

60,00060,000


12/3160,00012/31 Bal.60,000

Maintenance and Repairs ExpenseNo. 622

12/31 Bal.1,60012/311,600


12/31 Bal.3,10012/313,100


12/31 Bal.1,80012/311,800

Salaries and Wages

ExpenseNo. 726

12/31 Bal.30,00012/3130,000

Utilities ExpenseNo. 732

12/31 Bal.1,40012/311,400

(d)FLEMING COMPANY



Cash

$8,900

Accounts Receivable

10,800

Prepaid Insurance

2,800

Equipment

24,000


$ 4,500

Accounts Payable

9,000


2,400

Owners Capital

30,600

Totals

$46,500$46,500


(b)JARMUZ MANAGEMENT SERVICES

Balance Sheet

December 31, 2014

Assets

Current assets

Cash

$13,800

Accounts receivable

28,300

Prepaid insurance

2,400


$ 44,500


Land

67,000

Buildings

$127,000

Less: Accumulated

depreciationbuildings

3,000124,000

Equipment

59,000

Less: Accumulated

depreciationequipment

3,600 55,400 246,400

Total assets

$290,900


Current liabilities

Mortgage payable (due in 2015)

$30,000

Accounts payable

12,500

Interest payable

10,000

Unearned rent revenue

1,500


$ 54,000


Mortgage payable

90,000

Total liabilities

144,000

Owners equity

Owners capital

($144,000 + $24,900 $22,000)

146,900



(c)Dec. 31Insurance Expense

1,200

Prepaid Insurance

1,200


6,600


Buildings

3,000


Equipment

3,600

31Unearned Rent Revenue

4,500

Rent Revenue

4,500

31Interest Expense

10,000

Interest Payable

10,000

(d)Dec. 31Service Revenue

90,700

Rent Revenue

33,500

Income Summary

124,200

31Income Summary

99,300


42,000

Advertising Expense

20,500

Interest Expense

10,000

Utilities Expense

19,000


6,600

Insurance Expense

1,200

31Income Summary

24,900

Owners Capital

24,900

31Owners Capital

22,000

Owners Drawings

22,000


(e)JARMUZ MANAGEMENT SERVICES



Cash

$ 13,800

Accounts Receivable

28,300

Prepaid Insurance

2,400

Land

67,000

Buildings

127,000

Accumulated DepreciationBuildings

$ 3,000

Equipment

59,000


3,600

Accounts Payable

12,500

Interest Payable

10,000

Unearned Rent Revenue

1,500

Mortgage Payable

120,000

Owners Capital

146,900

$297,500$297,500PROBLEM 4-5A

(a)

General Journal J1


July1Cash

10120,000

Owners Capital

30120,000

1Equipment

1579,000

Cash

1014,000

Accounts Payable

2015,000

3Supplies

1262,100

Accounts Payable

2012,100

5Prepaid Insurance

1301,800

Cash

1011,800

12Accounts Receivable

1124,500

Service Revenue

4004,500

18Accounts Payable

2012,900

Cash

1012,900


7262,500

Cash

1012,500

21Cash

1013,400

Accounts Receivable

1123,400


1126,000

Service Revenue

4006,000

31Gasoline Expense

633 350

Cash

101350

31Owners Drawings

3065,600

Cash

1015,600


(a), (e) & (f)

CashNo. 101


July1J120,00020,000

1J14,00016,000

5J11,80014,200

18J12,90011,300

20J12,5008,800

21J1 3,40012,200

31J135011,850

31J15,6006,250

Accounts ReceivableNo. 112


July12J1 4,5004,500

21J13,4001,100

25J1 6,0007,100

31AdjustingJ2 2,7009,800

SuppliesNo. 126DateExplanationRef.DebitCreditBalance

July3J1 2,1002,100

31AdjustingJ2 1,500600

Prepaid InsuranceNo. 130


July5J1 1,8001,800

31AdjustingJ21501,650

EquipmentNo. 157


July1J1 9,0009,000


Accumulated DepreciationEquipmentNo. 158


July31AdjustingJ2500500

Accounts PayableNo. 201


July1J15,0005,000

3J12,1007,100

18J12,9004,200

Salaries and Wages PayableNo. 212


July31AdjustingJ21,0001,000



July1J120,00020,000

31ClosingJ37,20027,200

31ClosingJ35,60021,600



July31J15,6005,600

31ClosingJ35,6000



July31ClosingJ313,20013,200

31ClosingJ36,0007,200

31ClosingJ37,2000




July12J14,5004,500

25J16,00010,500

31AdjustingJ22,70013,200

31ClosingJ313,2000

Supplies ExpenseNo. 631DateExplanationRef.DebitCreditBalance

July31AdjustingJ21,5001,500

31ClosingJ31,5000

Gasoline ExpenseNo. 633


July31J1350350

31ClosingJ33500



July31AdjustingJ2 500500

31ClosingJ35000




31ClosingJ31500



July20J12,5002,500


31ClosingJ33,5000


(d)JARAS CLEANING SERVICE

Income Statement

For the Month Ended July 31, 2014

Revenues

Service revenue

$13,200

Expenses


$3,500

Supplies expense

1,500


500

Gasoline expense

350

Insurance expense

150

Total expenses

6,000

Net income

$ 7,200

JARAS CLEANING SERVICE



Owners Capital, July 1

$ 0

Add: Investments

$20,000

Net income

7,200 27,200

27,200

Less: Drawings

5,600


$21,600


Balance Sheet

July 31, 2014

Assets

Current assets

Cash

$6,250

Accounts receivable

9,800

Supplies

600

Prepaid insurance

1,650


$18,300




July 31, 2014

Assets (Continued)


Equipment

$9,000


equipment

500 8,500

Total assets

$26,800


Current liabilities

Accounts payable

$4,200


1,000


$ 5,200

Owners equity

Owners capital

21,600


$26,800(e)

General Journal J2


July 31Accounts Receivable

1122,700

Service Revenue

4002,700


711500


Equipment

158500

31Insurance Expense

722150

Prepaid Insurance

130150

31Supplies Expense

6311,500

Supplies

1261,500


7261,000


2121,000


(f)General Journal

J3


July 31Service Revenue

40013,200

Income Summary

35013,200

31Income Summary

3506,000


7263,500


711500

Insurance Expense

722150

Supplies Expense

6311,500

Gasoline Expense

633350

31Income Summary

3507,200

Owners Capital

3017,200

31Owners Capital

3015,600

Owners Drawings

3065,600

(g)JARAS CLEANING SERVICE



Cash

$ 6,250

Accounts Receivable

9,800

Supplies

600

Prepaid Insurance

1,650

Equipment

9,000


$ 500

Accounts Payable

4,200


1,000

Owners Capital

21,600

$27,300$27,300


(b)UNIVERSAL CABLE

Trial Balance

April 30, 2014

DebitCredit

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


$ 1,350

Accounts Payable

2,100

Salaries and Wages Payable ($700 $700)

0


890

Owners 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


500


96

$22,690$22,690

PROBLEM 4-1B (Continued)

(b)MICHAEL PEVNICK, P.I.

Income Statement

For the Quarter Ended March 31, 2014

Revenues

Service revenue

$14,650

Expenses


$2,200

Travel expense

1,300

Rent expense

1,200


800

Insurance expense

600

Supplies expense

570

Interest expense

300

Miscellaneous expense

200

Total expenses

7,170

Net income

$ 7,480

MICHAEL PEVNICK, P.I.


For the Quarter Ended March 31, 2014


$ 0

Add: Investment by owner

$20,000

Net income

7,480 27,480

27,480

Less: Drawings

600


$26,880PROBLEM 4-1B (Continued)

MICHAEL PEVNICK, P.I.

Balance Sheet

March 31, 2014

Assets

Current assets

Cash

$11,400

Accounts receivable

6,650

Supplies

480

Prepaid insurance

1,800


$20,330


Equipment

30,000


equipment

800 29,200

Total assets

$49,530


Current liabilities

Notes payable

$10,000

Accounts payable

12,350

Interest payable

300


$22,650

Owners equity

Owners capital

26,880


equity

$49,530(c)Mar. 31Supplies Expense

570

Supplies

570


800


Equipment

800

31Interest Expense

300

Interest Payable

300

31Insurance Expense

600

Prepaid Insurance

600


Mar. 31Accounts Receivable

1,030

Service Revenue

1,030

(d)Mar. 31Service Revenue

14,650

Income Summary

14,650

31Income Summary

7,170

Travel Expense

1,300


2,200

Rent Expense

1,200

Insurance Expense

600


800

Supplies Expense

570

Interest Expense

300


200

31Income Summary

7,480

Owners Capital

7,480

31Owners Capital

600

Owners Drawings

600

PROBLEM 4-2B

(a)GREENWOOD COMPANY

Partial Worksheet


AccountAdjusted

Trial BalanceIncome

StatementBalance

Sheet

No.TitlesDr.Cr.Dr.Cr.Dr.Cr.

101Cash18,80018,800

112Accounts Receivable16,20016,200

126Supplies2,3002,300

130Prepaid Insurance4,4004,400

157Equipment46,00046,000

158Acc. Depr.Equip.20,00020,000

200Notes Payable20,00020,000

201Accounts Payable8,0008,000

212Salaries and Wages Payable2,6002,600

230Interest Payable1,0001,000

301Owners Capital26,00026,000

306Owners Drawings12,00012,000

400Service Revenue87,80087,800

610Advertising Expense10,00010,000

631Supplies Expense3,7003,700

711Depreciation Expense8,0008,000

722Insurance Expense4,0004,000

726Salaries and Wages Expense39,00039,000

905Interest Expense 1,000 1,000

Totals165,400165,40065,70087,80099,70077,600

Net Income22,10022,100

Totals87,80087,80099,70099,700


(b)GREENWOOD COMPANY

Income Statement


Revenues

Service revenue

$87,800

Expenses


$39,000

Advertising expense

10,000


8,000

Insurance expense

4,000

Supplies expense

3,700

Interest expense

1,000

Total expenses

65,700

Net income

$22,100

GREENWOOD COMPANY




$26,000

Add:Net income

22,100

48,100

Less: Drawings

12,000



GREENWOOD COMPANY

Balance Sheet

December 31, 2014

Assets

Current assets

Cash

$18,800

Accounts receivable

16,200

Supplies

2,300

Prepaid insurance

4,400


$41,700


Equipment

46,000


equipment

20,000 26,000

Total assets

$67,700


Current liabilities

Notes payable

$5,000

Accounts payable

8,000


2,600

Interest payable

1,000


$16,600


Notes payable

15,000

Total liabilities

31,600

Owners equity

Owners capital

36,100


equity


(c)

General JournalJ14



40087,800

Income Summary

35087,800

31Income Summary

35065,700

Advertising Expense

61010,000

Supplies Expense

631 3,700


711 8,000

Insurance Expense

722 4,000


72639,000

Interest Expense

9051,000

31Income Summary 35022,100

Owners Capital

30122,100

31Owners Capital

30112,000

Owners Drawings

30612,000

(d)



Jan.31Balance26,00026,000










Dec.31Closing entryJ1487,800 87,800

31Closing entryJ1465,700 22,100

31Closing entryJ1422,100 0



Dec. 31Balance87,800 87,800


Advertising ExpenseNo. 610


Dec. 31Balance10,000 10,000


Supplies ExpenseNo. 631


Dec.31Balance3,700 3,700




Dec.31Balance8,000 8,000











Interest ExpenseNo. 905




(e)GREENWOOD COMPANY


December 31, 2014

DebitCredit

Cash

$18,800

Accounts Receivable

16,200

Supplies

2,300

Prepaid Insurance

4,400

Equipment

46,000


Equipment

$20,000

Notes Payable

20,000

Accounts Payable

8,000


2,600

Interest Payable

1,000

Owners Capital

36,100

$87,700$87,700PROBLEM 4-3B

(a)S. NIHO COMPANY

Income Statement


Revenues

Service revenue

$46,000

Expenses


$35,200

Maintenance and repairs expense

4,400

Utilities expense

4,000


2,800

Insurance expense

1,200

Total expenses

47,600

Net loss

$ (1,600)

S. NIHO COMPANY




$30,000

Add: Additional investment by owner

4,000

34,000

Less: Net loss

$1,600

Drawings

7,200 8,800


$25,200

S. NIHO COMPANY

Balance Sheet

December 31, 2014

Assets

Current assets

Cash

$6,200

Accounts receivable

7,500

Prepaid insurance

1,800


$15,500


Equipment

33,000


equipment

8,600 24,400

Total assets

$39,900


S. NIHO COMPANY


December 31, 2014


Current liabilities

Accounts payable

$11,700


3,000


$14,700

Owners equity

Owners capital

25,200


equity

$39,900(b)

General Journal

DateAccount TitlesRef.DebitCredit

Dec. 31Service Revenue

Income Summary

400

35046,00046,000

31Income Summary


Expense


Insurance Expense


Utilities Expense

350

622

711

722

726

73247,6004,400

2,800

1,200

35,200

4,000

31Owners Capital

Income Summary

301

3501,6001,600

31Owners Capital

Owners Drawings

301

3067,2007,200


(c)


12/311,60012/31 Bal.34,000

12/317,200

12/31 Bal.25,200


12/31 Bal.7,20012/317,200


12/3147,60012/3146,000

12/311,600

47,60047,600


12/3146,00012/31 Bal.46,000


ExpenseNo. 622

12/31 Bal.4,40012/314,400


12/31 Bal.2,80012/312,800


12/31 Bal.1,20012/311,200


12/31 Bal.35,20012/3135,200

Utilities ExpenseNo. 732

12/31 Bal.4,00012/314,000

(d)S. NIHO COMPANY


December 31, 2014

DebitCredit

Cash

$ 6,200

Accounts Receivable

7,500

Prepaid Insurance

1,800

Equipment

33,000


$ 8,600

Accounts Payable

11,700


3,000

Owners Capital

25,200

Totals

$48,500$48,500


(b)AVALON AMUSEMENT PARK

Balance Sheet

September 30, 2014

Assets

Current assets

Cash

$41,400

Supplies

2,200

Prepaid insurance

10,900


$ 54,500


Land

80,000

Equipment

$120,000

Less: Accum. depreciation

equipment

42,200 77,800 157,800

Total assets

$212,300


Current liabilities

Mortgage

payable (due in 2015)

$15,000

Accounts payable

14,600

Interest payable

4,000

Property taxes payable

3,000

Unearned ticket

revenue

1,000


$ 37,600


Mortgage payable

35,000

Total liabilities

72,600

Owners equity

Owners capital

($109,700 + $44,000 $14,000)

139,700

Total liabilities and

owners equity


(c)Sept. 30

Supplies Expense

16,400

Supplies

16,400

30Insurance Expense

21,000

Prepaid Insurance

21,000


6,000


Equipment

6,000

30Unearned Ticket Revenue

2,700

Ticket Revenue

2,700

30Property Tax Expense

3,000

Property Taxes Payable

3,000

30Interest Expense

4,000

Interest Payable

4,000

(d)Sept. 30

Ticket Revenue

280,200

Income Summary

280,200

30Income Summary

236,200


105,000


Expense

30,500

Insurance Expense

21,000

Property Tax Expense

21,000

Supplies Expense

16,400

Utilities Expense

16,900

Interest Expense

10,000

Advertising Expense

9,400


6,000

30Income Summary

44,000

Owners Capital

44,000

30Owners Capital

14,000

Owners Drawings

14,000


(e)AVALON AMUSEMENT PARK


September 30, 2014

DebitCredit

Cash

$ 41,400

Supplies

2,200

Prepaid Insurance

10,900

Land

80,000

Equipment

120,000


$ 42,200

Accounts Payable

14,600

Interest Payable

4,000

Property Taxes Payable

3,000

Unearned Ticket Revenue

1,000

Mortgage Payable

50,000

Owners Capital

139,700

$254,500$254,500PROBLEM 4-5B

(a)

General Journal J1


Mar.1Cash

10110,000

Owners Capital

30110,000

1Equipment

1576,000

Cash

1013,000

Accounts Payable

2013,000

3Supplies

1261,200

Accounts Payable

2011,200

5Prepaid Insurance

1301,200

Cash

1011,200


1124,800

Service Revenue

4004,800

18Accounts Payable

2012,000

Cash

1012,000


7261,800

Cash

1011,800

21Cash

1011,400

Accounts Receivable

1121,400


1122,500

Service Revenue

4002,500

31Gasoline Expense

633200

Cash

101200

31Owners Drawings

306700

Cash

101700


(a), (e) & (f)

CashNo. 101


Mar.1J110,00010,000

1J13,0007,000

5J11,2005,800

18J12,0003,800

20J11,8002,000

21J11,4003,400

31J12003,200

31J17002,500



Mar.14J14,8004,800

21J11,4003,400

28J12,5005,900



Mar.3J11,2001,200

31AdjustingJ2950250



Mar.5J11,2001,200


EquipmentNo. 157


Mar.1J16,0006,000




Mar.31AdjustingJ2300300



Mar.1J13,0003,000

3J11,2004,200

18J12,0002,200






Mar.1J110,00010,000

31ClosingJ33,90013,900

31ClosingJ370013,200



Mar.31J1700700

31ClosingJ37000



Mar.31ClosingJ37,8007,800

31ClosingJ33,9003,900

31ClosingJ33,9000




Mar.14J14,8004,800

28J12,5007,300


31ClosingJ37,8000


Mar.31AdjustingJ2950 950

31ClosingJ39500



Mar.31J1200 200

31ClosingJ32000



Mar.31AdjustingJ2300 300

31ClosingJ33000




31ClosingJ3 1000



Mar.20J11,8001,800


31ClosingJ3 2,3500


(d)SHAWS CARPET CLEANERS

Income Statement


Revenues

Service revenue

$7,800

Expenses


$2,350

Supplies expense

950


300

Gasoline expense

200

Insurance expense

100

Total expenses

3,900

Net income

$3,900

SHAWS CARPET CLEANERS




$ 0

Add: Investments

$10,000

Net income

3,900 13,900

13,900

Less: Drawings

700


$13,200


Balance Sheet

March 31, 2014

Assets

Current assets

Cash

$2,500

Accounts receivable

6,400

Supplies

250

Prepaid insurance

1,100


$10,250




March 31, 2014

Assets (Continued)


Equipment

$6,000


equipment

300 5,700

Total assets

$15,950


Current liabilities

Accounts payable

$2,200


550


$ 2,750

Owners equity

Owners capital

13,200


$15,950(e)

General Journal J2


Mar. 31Accounts Receivable

112500

Service Revenue

400500


711300


Equipment

158300

31Insurance Expense

722100

Prepaid Insurance

130100

31Supplies Expense

631950

Supplies

126950


726550


212550


(f)

General Journal J3


Mar. 31Service Revenue

4007,800

Income Summary

3507,800

31Income Summary

3503,900


7262,350


711300

Insurance Expense

722100

Supplies Expense

631950

Gasoline Expense

633200

31Income Summary

3503,900

Owners Capital

3013,900

31Owners Capital

301700

Owners Drawings

306700

(g)SHAWS CARPET CLEANERS


March 31, 2014

DebitCredit

Cash

$ 2,500

Accounts Receivable

6,400

Supplies

250

Prepaid Insurance

1,100

Equipment

6,000


$ 300

Accounts Payable

2,200


550

Owners Capital

13,200000,000$16,250$16,250COMPREHENSIVE PROBLEM: CHAPTERS 2 TO 4

(a)

General Journal J1


July1Cash

10114,000

Owners Capital

30114,000

1Equipment

15710,000

Cash

1013,000

Accounts Payable

2017,000

3Supplies

126800

Accounts Payable

201800

5Prepaid Insurance

1301,800

Cash

1011,800


1123,800

Service Revenue

4003,800

18Accounts Payable

2011,400

Cash

1011,400


7261,600

Cash

1011,600

21Cash

1011,400

Accounts Receivable

1121,400


1121,500

Service Revenue

4001,500

31Gasoline Expense

633400

Cash

101400

31Owners Drawings

306600

Cash

101600

COMPREHENSIVE PROBLEM (Continued)

(a), (e) & (f)

CashNo. 101


July1J114,00014,000

1J13,00011,000

5J11,8009,200

18J11,4007,800

20J11,6006,200

21J11,4007,600

31J14007,200

31J16006,600



July12J13,8003,800

21J11,4002,400

25J11,5003,900



July3J1800800

31AdjustingJ2700100



July5J11,8001,800


EquipmentNo. 157


July1J110,00010,000







July1J17,0007,000

3J18007,800

18J11,4006,400






July1J114,00014,000

31ClosingJ33,05017,050

31ClosingJ360016,450



July31J1600600

31ClosingJ36000



July31ClosingJ36,6006,600

31ClosingJ33,5503,050

31ClosingJ33,0500




July12J13,8003,800

25J11,5005,300


31ClosingJ36,6000



31ClosingJ37000



July31J1400400

31ClosingJ34000




31ClosingJ32000




31ClosingJ31500



July20J11,6001,600


31ClosingJ32,1000


(d)KRISTINS MAIDS CLEANING SERVICE

Income Statement


Revenues

Service revenue

$6,600

Expenses


$2,100

Supplies expense

700

Gasoline expense

400


200

Insurance expense

150

Total expenses

3,550

Net income

$3,050

KRISTINS MAIDS CLEANING SERVICE




$ 0

Add: Investments

$14,000

Net income

3,050 17,050

17,050

Less: Drawings

600


$16,450COMPREHENSIVE PROBLEM (Continued)

KRISTINS MAIDS CLEANING SERVICE

Balance Sheet

July 31, 2014

Assets

Current assets

Cash

$6,600

Accounts receivable

5,200

Supplies

100

Prepaid insurance

1,650


$13,550


Equipment

10,000


equipment

200 9,800

Total assets

$23,350


Current liabilities

Accounts payable

$6,400


500


$ 6,900

Owners equity

Owners capital

16,450


$23,350COMPREHENSIVE PROBLEM (Continued)

(e)

General Journal J2


July 31Accounts Receivable

1121,300

Service Revenue

4001,300


711200


Equipment

158200

31Insurance Expense

722150

Prepaid Insurance

130150

31Supplies Expense

631700

Supplies

126700


726500


212500

(f)

General JournalJ3


July 31Service Revenue

4006,600

Income Summary

3506,600

31Income Summary

3503,550


7262,100


711200

Insurance Expense

722150

Supplies Expense

631700

Gasoline Expense

633400

31Income Summary

3503,050

Owners Capital

3013,050

31Owners Capital

301600

Owners Drawings

306600


(g)KRISTINS MAIDS CLEANING SERVICE



Cash

$ 6,600

Accounts Receivable

5,200

Supplies

100

Prepaid Insurance

1,650

Equipment

10,000


$ 200

Accounts Payable

6,400


500

Owners Capital

16,450

$23,550$23,550

CCC4CONTINUING COOKIE CHRONICLE

(a)

COOKIE CREATIONS

Income Statement

For the Two Months Ended December 31, 2013Revenues

Service revenue

$4,515

Expenses

Supplies expense

$1,025


1,006

Advertising expense

165

Utilities expense

125

Insurance expense

110


40

Interest expense

15

Total expenses

2,486

Net income

$2,029COOKIE CREATIONS


For the Two Months Ended December 31, 2013Owners Capital, November 1

$ 800

Add:Net income

2,029

2,829

Less: Drawings

500


$2,329CCC4 (Continued)

(a) (Continued)

COOKIE CREATIONS

Balance Sheet

December 31, 2013Assets

Current assets

Cash

$1,180

Accounts receivable

875

Supplies

350

Prepaid insurance

1,210


3,615


Equipment

$1,200

Less: Accumulated depreciationequipment

40 1,160

Total assets


Current liabilities

Accounts payable

0$ 75


56

Unearned service revenue

300 Total current liabilities

$ 431


Interest payable

15

Notes payable

2,000

Total long-term liabilities

2,015

Total liabilities

2,446

Owners equity

Owners capital

2,329


$4,775CCC4 (Continued)

(b)GENERAL JOURNALJ4

DateAccount Titles and ExplanationDebitCredit

2013Dec. 31

Service Revenue

4,515

Income Summary

4,515

31Income Summary

2,486


1,006

Utilities Expense

125

Advertising Expense

165

Supplies Expense

1,025

Insurance Expense

110


40

Interest Expense

15

31 Income Summary

2,029

Owners Capital

2,029

31 Owners Capital

500

Owners Drawings

500

CCC4 (Continued)

(c)

COOKIE CREATIONS


December 31, 2013Account DebitCreditCash

$1,180

Accounts Receivable

875

Supplies

350

Prepaid Insurance

1,210

Equipment

1,200

Accumulated Depreciation, Equipment

$ 40Accounts Payable

75


56


300

Interest Payable

15

Notes Payable

2,000

Owners Capital

2,329

$4,815 $4,815BYP 4-1FINANCIAL REPORTING PROBLEM

(a)Total current assets were $44,988 million at September 24, 2011, and $41,678 million at September 25, 2010.

(b)Current assets are properly listed in the order of liquidity. As you will learn in the next chapter, inventory is considered to be less liquid than accounts receivable. Thus, it is listed below accounts receivable and before prepaid expenses and other current assets.

(c)The asset classifications are similar to the text: (1) current assets, (2) investments, (3) property, plant, and equipment, and (4) intan-gible assets.(d)Apple reported $9,815 of cash and cash equivalents at September 24, 2011. (e)Total current liabilities were $27,970 million at September 24, 2011, and $20,722 million at September 25, 2010.

BYP 4-2COMPARATIVE ANALYSIS PROBLEM

(a)(in millions)PepsiCoCoca-Cola

1.Total current assets17,44125,497

2.Net property, plant & equipment19,69814,939

3.Total current liabilities18,15424,283

4.Total equity20,89931,921

(b)PepsiCos current assets were 4% less than its current liabilities, while Coca-Colas current assets were 5% greater than its current liabilities. From this information, it appears that Coca-Cola is in a better liquidity position than PepsiCo.

Coca-Colas equity represents a significantly larger percentage of total assets 39.9% than PepsiCos 28.7% . As a result, Coca-Cola has less debt relative to its total assets than PepsiCo. It therefore appears that Coca-Cola is less likely to default on a debt obligation.

BYP 4-3COMPARATIVE ANALYSIS PROBLEM

(a)(in millions)AmazonWal-Mart

1.Total current assets17,49054,975

2.Net property, plant & equipment4,417109,603

3.Total current liabilities14,89662,300

4.Total stockholders (shareholders) equity7,75771,315

(b)Current assets are cash and other resources that are reasonably ex-pected to be realized in cash or sold or consumed within one year or the companys operating cycle, whichever is longer. Current liabilities are obligations that are reasonably expected to be paid from existing current assets or through the creation of other current liabilities.

Amazons current assets were 17% greater than its current liabilities, while Wal-Marts current assets were 12% less than its current liabilities. From this information, it appears that Amazon is in a better liquidity position than Wal-Mart.

Wal-Marts stockholders equity represents a 20% larger percentage of total assets 36.9% than Amazons 30.7% . As a result, Wal-Mart has less debt relative to its total assets than Amazon. It therefore appears that Wal-Mart is less likely to default on a debt obligation.

BYP 4-4REAL-WORLD FOCUS

The solution is dependent upon the companies chosen by the student.

BYP 4-5DECISION MAKING ACROSS THE ORGANIZATION

(a)WHITEGLOVES JANITORIAL SERVICE

Balance Sheet

December 31, 2014

Assets

Current assets

Cash

$ 6,500

Accounts receivable

($9,000 + $3,700)

12,700

Supplies ($5,200 $2,700)

2,500

Prepaid insurance ($4,800 X 2/3)

3,200


$24,900


Equipment ($22,000 + $4,000)

$26,000


equipment

($4,000 + $2,000)

6,000$20,000

Delivery trucks

($34,000 + $5,000)

39,000


delivery trucks

($5,000 + $5,000)

10,000 29,000 49,000

Total assets

$73,900


Current liabilities

Notes payable due within one year

$10,000

Accounts payable ($2,500 + $500)

3,000

Interest payable ($25,000 X 10% X 6/12)

1,250


$14,250


Notes payable, due July 1, 2016

15,000

Total liabilities

29,250

Owners equity

Owners capital

44,650*


$73,900BYP 4-5 (Continued)

WHITEGLOVES JANITORIAL SERVICE


December 31, 2014

*Capital balance as reported

$54,000

Add: Earned but unbilled fees

3,700

57,700

Less:Janitorial supplies used

$2,700

Insurance expired ($4,800 X 1/3)

1,600

Depreciation ($2,000 + $5,000)

7,000

Expenses incurred but unpaid

500

Interest accrued

1,250

Total

13,050

Capital balance as adjusted

$44,650(b)Whitegloves Janitorial Service met the terms of the bank loan because current assets exceed current liabilities by $10,650 ($24,900 $14,250) at December 31, 2014.

BYP 4-6COMMUNICATION ACTIVITY

MEMO

To:

Accounting Instructor

From:Student

Re:

Accounting Cycle

The required steps in the accounting cycle, in the order in which they should be completed, are:

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.

The optional steps in the accounting cycle include preparing a worksheet and preparing reversing entries. If a worksheet is prepared, it is done after step 3 above, and it includes steps 4 and 6. The worksheet is a form used to make it easier to prepare adjusting entries and financial statements. If reversing entries are prepared, they are journalized and posted after step 9, at the beginning of the next accounting period. A reversing entry is the exact opposite of a previously recorded adjusting entry and simplifies the recording of subsequent transactions.

BYP 4-7ETHICS CASE

(a)The stakeholders in this case are:

You, as controller.

Jeb Wilde, president.

Users of the companys financial statements.

(b)

The ethical issue is the continued circulation of significantly misstated financial statements. As controller, you have just issued misleading financial statements. You have acted ethically by telling the companys president. The president has reacted unethically by allowing the misleading financial statements to continue to circulate.

(c)

As controller, you should impress upon the president the consequences of having those misleading financial statements be detected by some user or the SEC (if you are a public company). Also stress upon him that you have a professional obligation to correct the statements or to resign.

BYP 4-8ALL ABOUT YOU

The following is a personal balance sheet using the classified presentation. Note that the earnings from the part-time job as well as the tuition costs are not listed since neither of those items is an asset, liability, or equity item.

Assets

Current assets

Cash

$1,200

Money market account

1,800

Certificate of deposit

3,000

Accounts receivable from brother

300

Tot

accounting principles chapter 4 solution

Documents

postclosing trial balance

correcting entries

reversing entries

classified balance sheet

acomplete worksheet

bcomplete worksheet

aprepare financial statements

bprepare financial statements