LARSON/JENSEN, FUNDAMENTAL ACCOUNTING PRINCIPLES, TWELFTH CANADIAN EDITION

larson/jensen, fundamental accounting principles, twelfth canadian edition

QUICK STUDY solutions chapter five

Quick Study 5-1

1.BS4.BS

2.BS5.BS

3.IS6.IS

Quick Study 5-2

Balance Sheet

Unadjusted Adjusted & Statement of

Trial BalanceAdjustmentsTrial BalanceIncome StatementOwner's Equity

AccountDrCrDrCrDrCrDrCrDrCr

Cash151515

Accounts receivable222222

Supplies25101515

Ed Wolt, capital404040

Ed Wolt, withdrawals121212

Fees earned484848

Supplies expense14102424

Totals88881010888824486440

2424

Net income48486464

Quick Study 5-3

Alice Pursley, capital for the December 31, 2011 balance sheet:

Beginning capital

$50,000

Add: Net income ($184,000 $125,000)

59,000

Less: Withdrawals

32,000

Ending capital

$77,000

Quick Study 5-4

Sam Hascal, Capital for the December 31, 2011, balance sheet:

Beginning capital

$165,000

Less: Net loss ($74,000 $115,000)

41,000

Less: Withdrawals

32,000Ending capital

$ 92,000

Quick Study 5-5

Income Summary balance after closing revenues and expenses:

Revenues: $35,000 + $3,500

=$38,500

Expenses: $19,000 + $4,000 + $2,300

=25,300

Credit balance

=$13,200Peter Jontil, Capital balance after all closing entries:

Beginning balance

$14,000Peter Jontil, Capital

Add: Net income

13,20014,000(Beg. Bal.)

Total

$27,200OR(Withdrawals)6,00013,200(Net income)

Less: Withdrawals

6,00021,200(End. Bal.)

Ending balance

$21,200

Quick Study 56

AssetsLiabilitiesCapital

Apr. 3025030Apr. 30200Apr. 30

(4)2040(3)

220Balance

WithdrawalsRevenueExpenses

Apr. 302020(4)(1)100100Apr. 30Apr. 306060(2)

Balance-0--0-BalanceBalance-0-

Income Summary

(2)60100(1)

(3)4040Balance

-0-Balance

QS 5-7

AssetsLiabilitiesCapital

Oct. 31250110Oct. 31(4)20200Oct. 31

(3)40

140Balance

WithdrawalsRevenueExpenses

Oct. 312020(4)(1)100100Oct. 31Oct. 31140140(2)

Balance-0--0-BalanceBalance-0-

Income Summary

(2)140100(1)

Balance4040(3)

Balance-0-

Quick Study 5-8

SilverStar Automotive

Post-Closing Trial Balance

October 31, 2011

AccountDebitCredit

Cash

$ 40

Accounts receivable

20

Unearned revenue

$ 10

Capital

50

Totals

$ 60$ 60

Quick Study 5-9

1.(f)Journalizing transactions.

2.(g)Posting the transaction entries.

3.(a)Preparing the unadjusted trial balance.

4.(h)Completing the work sheet (optional).

5.(c)Journalizing and posting adjusting entries.

6.(e)Preparing the financial statements.

7.(d)Journalizing and posting closing entries.

8.(b)Preparing the post-closing trial balance.

Quick Study 5-10

1.C5.B

2.E6.A

3.A7.D

4.F

QS 5-11

1.z.6.f.11.c. 16.c.

2.g.7.e.12.a. 17.z.

3.a. 8.a.13.c.18.a.

4.z. 9.b.14.d.19.e.

5.c. 10.e.15.c.

20.b.

Quick Study 5-12

Jardine Servicing

Partial Balance Sheet

March 31, 2011

Liabilities

Current liabilities

Accounts payable

$14,000

Unearned fees

26,000

Notes payable, due February 1, 2012

45,000

Current portion of mortgage payable

56,000

Total current liabilities

$141,000

Long-term liabilities

Mortgage payable

(less $56,000 current portion)

59,000

Total liabilities

$200,000

*Quick Study 5-13

2012

Jan.1Rent Revenue

9,800

Rent Receivable

9,800

To reverse accrued revenue.

20Cash

15,500

Rent Revenue

15,500

To record collection of rent revenue.

*Quick Study 5-14Current assets:

Accounts receivable

$15,000

Cash

6,000

Office supplies

1,800

Prepaid insurance

2,500

Total

$25,300Current liabilities:

Accounts payable

$10,000

Unearned services revenue

4,000

Total

$14,000

Current ratio = $25,300 = 1.81

$14,000

Copyright 2007 by McGraw-Hill Ryerson Limited. All rights reserved.

Fundamental Accounting Principles, Twelfth Canadian Edition2

2011(1)Apr 30Revenue100 Income Summary100 To close the revenue account.(2)30Income Summary60 Expenses60 To close the expenses account.(3)30Income Summary40 Capital40 To close the income summary to capital.(4)30Capital20 Withdrawals20 To close withdrawals to capital.

Copyright 2007 by McGraw-Hill Ryerson Limited. All rights reserved.

Fundamental Accounting Principles, Twelfth Canadian Edition4

Copyright 2007 by McGraw-Hill Ryerson Limited. All rights reserved.

Fundamental Accounting Principles, Twelfth Canadian Edition5

2011(1)Oct. 31Revenue100 Income Summary100 To close the revenue account.(2)31Income Summary140 Expenses140 To close the expenses account.(3)31Capital40 Income Summary40 To close the income summary to capital.(4)31Capital20 Withdrawals20 To close withdrawals to capital.

1.81 is less than the industry average of 2.2 so compares unfavourably. However, a current ratio of 1.81 is generally considered to be favourable.

Solutions Manual, Chapter 5279PAGE Copyright 2007 by McGraw-Hill Ryerson Limited. All rights reserved.

Fundamental Accounting Principles, Twelfth Canadian Edition

1Copyright 2007 by McGraw-Hill Ryerson Limited. All rights reserved.

Fundamental Accounting Principles, Twelfth Canadian Edition