Chapter 4--Completing the Accounting Cycle

Chapter 4--Completing the Accounting Cycle Student: ___________________________________________________________________________

1. After analyzing transactions, the next step would be to post the transactions in the ledger. True False

2. The most important output of the accounting cycle is the financial statements. True False

3. The work sheet is not considered a part of the formal accounting records. True False

4. Cross-referencing is useful in assuring that the debits and credits are in balance. True False

5. When accounts do not appear on the unadjusted trial balance but are needed to post adjustments, they are simply added to the account title column. True False

6. Once the adjusted trial balance is in balance, the flow of accounts will now go into the financial statements. True False

7. There is really no benefit in preparing financial statements in any an y particular order. True False

8. Round tripping is a fraudulent scheme where business A artificially inflates revenue by lending money to customer B who uses that money to buy products from A. True False

9. On the income statement, miscellaneous expenses ex penses are usually presented as the last item without regard to the dollar amount. True False

10. The usual presentation of the statement of owner's equity is (1) Beginning capital, (2) Net income or loss, (3) Drawing, (4) Owner's contributions, (5) Ending capital. True False

11. The difference between a classified balance sheet and one that is not classified is that the classified one has subheadings. True False

12. Cash and other assets that may reasonably be expected to be realized in cash, sold, or consumed through the normal operations of a business, usually longer than one year, are called current cu rrent assets. True False

13. Prepaid Insurance is an example ex ample of a current asset. True False

14. Land is an example examp le of a plant asset. True False

15. Liabilities that will be due within one year or less and that are to be paid out of current assets are called current liabilities. True False

16. The amount of the net income for a period appears on both the income statement and the balance sheet for that period. True False

17. Accrued taxes payable are generally reported on the balance sheet as a current liability. True False

18. At the end of the fiscal period, prepaid expenses are reported on the income statement as expenses. True False

19. Office Equipment is an example of a current asset account. True False

20. Capital and Drawing are reported in the owner's equity section of the balance sheet. True False

21. Deferred expenses that benefit a relatively short period of time are listed on the balanc e sheet as current assets. True False

22. Unearned revenues that will be b e earned in a relatively short period of o f time are listed on the balance sheet as current assets. True False

23. Accrued expenses are ordinarily listed on the balance sheet as current assets. True False

24. Accrued revenues are ordinarily o rdinarily listed on the balance sheet as current liabilities. True False

25. The income statement is prepared from the adjusted trial balance or the income statement columns on the work sheet. True False

26. Examples of temporary accounts are supplies and prepaid expenses which are in the ledger for just a short time before they expire. True False

27. Accumulated Depreciation is a permanent account. True False

28. The drawing account is a temporary account. True False

29. The balance sheet accounts are referred to as real or permanent accounts. True False

30. Journalizing and posting the adjustments and closing entries updates the ledger for the new accounting period. True False

31. The income summary account is closed to the owner's capital account. True False

32. The accumulated depreciation account is closed to the income summary account. True False

33. The drawing account is closed to the income summary account. True False

34. The trial balance prepared after all the closing entries have been posted is called a pre-closing trial balance. True False

35. Entries required to close the balances of the temporary accounts at the end of the period are called final entries. True False

36. Journalizing and posting closing entries must be completed before financial statements can be prepared. True False

37. During the closing process, some balance sheet accounts are closed and end the period with a zero balance. True False

38. Closing entries are entered directly on to the work sheet. True False

39. The post-closing trial balance will generally have fewer accounts than the trial balance. True False

40. A post-closing trial balance contains only asset and liability accounts. True False

41. A post-closing trial balance should be prepared before the financial statements are prepared. True False

42. Assets, liabilities, and owner’s capital are real accounts and do not get closed at the end of the period. True False

43. The income summary account is also known as the clearing account. True False

44. All income statement accounts will be closed at the end of the period. True False

45. Balance Sheet accounts are not considered real accounts. True False

46. It is not necessary to post the closing entries to the general ledger. True False

47. Once an account has been closed for the period, inserting a line in the balance columns zeros out the account, making it ready for the following period. True False

48. The last step of the accounting cycle is to prepare a post-closing trial balance. True False

49. The accounting cycle begins with preparing an unadjusted trial balance. True False

50. Financial statements should be prepared before the closing entries are journalized and posted. True False

51. The unadjusted, adjusted, and final trial balances are prepared during the accounting cycle of a period. True False

52. Any twelve-month accounting period adopted by a company is known as its fiscal year. True False

53. A fiscal year that ends when business activities have reached their lowest point is called the natural business year. True False

54. All companies must use a calendar year as their fiscal year. True False

55. The majority of businesses end their fiscal year on December 31. True False

56. The balances of the capital accounts from the Adjusted Trial Balance of the work sheet are extended to the Statement of Owner’s Equity columns. True False

57. The work sheet is a working paper that accountants can use to summarize adjusting entries and the account balances for the financial statements. True False

58. In a computerized accounting system, a work sheet may not be necessary because the software program automatically posts entries to the accounts and prepares financial statements. True False

59. The trial balance may be listed on the work sheet instead of being prepared separately. True False

60. The totals of the Adjusted Trial Balance columns on a work sheet will always be the sum of the Trial Balance column totals and the Adjustments column totals. True False

61. A work sheet heading is dated for a period of time. True False

62. On the work sheet, the capital and drawing account balances are extended to the Balance Sheet columns. True False

63. After the account balances have been extended from the Adjusted Trial Balance columns on the work sheet, the difference between the initial totals of the Balance Sheet debit and credit columns is Net Income or Net Loss. True False

64. After Net Income or Loss is entered on the work sheet, the debit column total must equal the credit column total for the Balance Sheet pair of columns. True False

65. A net loss is shown on the work sheet in the credit columns of both the Income Statement columns and the Balance Sheet columns. True False

66. Net income is shown on the work sheet in the Income Statement debit column and the Balance Sheet credit column. True False

67. If the totals of the Income Statement debit and credit columns of a work sheet are $27,000 and $29,000, respectively, after all account balances have been extended, the amount of the net loss is $2,000. True False

68. The worksheet and the financial statements both require dollar signs. True False

69. The balance in the capital account on the worksheet will equal the amount presented in the balance sheet. True False

70. Since the adjustments are entered on the work sheet, it is not necessary to record them in the journal or post them to the ledger. True False

71. The chart of accounts, the journal, and the ledger are essential parts of the accounting system. True False

72. The closing process is sometimes referred to as closing the books. True False

73. Accounts reported on the balance sheet that are carried forward from year to year are known as permanent accounts. True False

74. Real accounts are not permanent accounts. True False

75. In the accounting cycle, the last step is A. preparing the financial statements B. journalizing and posting the adjusting entries C. preparing a post-closing trial balance D. journalizing and posting the closing entries

76. During the end-of-period processing which of the following best describes the logical order of this process A. Preparation of adjustments, adjusted trial balance, financial statements B. Preparation of Income Statement, adjusted trial balance, Balance Sheet C. Preparation of adjusted trial balance, cross-referencing, journalizing D. Preparation of adjustments, adjusted trial balance, posting

77. What is the major difference between the Unadjusted Trial Balance and the Adjusted Trial Balance? A. The Adjusted Trial Balance will show the net income (loss) as an additional account. B. Unlike the Adjusted Trial Balance, the Unadjusted Trial Balance will continue with the end-of-period processing even if it is not in balance. C. The Adjusted Trial Balance includes the postings of the adjustments for the period in the balance of the accounts. D. The Adjusted Trial Balance will be used to record the adjustments for the period.

78. Once the adjusting entries are posted, the Adjusted Trial Balance is prepared to A. verify that the debits and credits are in balance. B. verify that the net income correctly flows into the statement of owner’s equity from the income statement C. verify that the net income (loss) is correct for the period. D. verify the correct flow of accounts into the financial statements.

79. When preparing the statement of owner's equity, the beginning capital balance can always be found A. in the Income Statement columns of the work sheet B. in the statement of cash flows C. in the general ledger D. in the Balance Sheet columns of the work sheet

80. Accumulated Depreciation appears on the A. balance sheet in the current assets section B. balance sheet in the property, plant and equipment section C. balance sheet in the long-term liabilities section D. income statement as an operating expense

81. Notes Receivable due in 350 days appear on the A. balance sheet in the current assets section B. balance sheet in the fixed assets section C. balance sheet in the current liabilities section D. income statement as an expense

82. Unearned Fees appear on the A. balance sheet in the current assets section B. balance sheet as a current liability C. balance sheet in the owner's equity section D. income statement as revenue

83. Which one of the fixed asset accounts listed below will not have a related contra asset account? A. Office Equipment B. Land C. Delivery Equipment D. Building

84. Prepaid insurance is reported on the balance sheet as a A. current asset B. fixed asset C. current liability D. long-term liability

85. The income statement is prepared from: A. the adjusted trial balance. B. the income statement columns of the work sheet. C. either the adjusted trial balance or the income statement columns of the work sheet. D. both the adjusted trial balance and the income statement columns of the work sheet.

86. Round-tripping is when A. a selling company sells to a customer company with huge discounts. B. a selling company pretends to sell to a fictitious company with the intent of inflating revenues C. a selling company lends money to a customer company to increase assets. D. a selling company lends money to a customer company to be used to purchase goods from the selling company.

87. The Statement of Owner’s Equity should be prepared A. before the income statement and after the balance sheet B. before the income statement and balance sheet C. after the income statement and balance sheet D. after the income statement and before the balance sheet

88. The income statement should be prepared A. before the statement of owner’s equity and balance sheet B. after the statement of owner’s equity and before the balance sheet C. after the statement of owner’s equity and balance sheet D. after the balance sheet and before the statement of owner’s equity

89. Use the following information in the adjusted trial balance for Stockton Company to answer the following questions.

Stockton Company Adjusted Trial Balance For the Year ended December 31, 20XX Cash Accounts Receivable Prepaid Expenses Equipment Accumulated Depreciation Accounts Payable Notes Payable Bob Steely, Capital Bob Steely, Withdrawals Fees Earned Wages Expense Rent Expense Utilities Expense Depreciation Expense Miscellaneous Expense Totals

$ 6,530 2,100 700 13,700 $ 1,100 1,900 4,300 12,940 790 9,250 2,500 1,960 775 250 185 $29,490

$29,490

Determine the net income (loss) for the period.

A. Net Income $9,250 B. Net Loss $790 C. Net Loss $5,670 D. Net Income $3,580



Determine the Owner’s Equity ending balance for the period.

A. $12,150 B. $15,730 C. $6,480 D. $21,400

$ 6,530 2,100 700 13,700 $ 1,100 1,900 4,300 12,940 790 9,250 2,500 1,960 775 250 185 $29,490

$29,490



$ 6,530 2,100 700 13,700 $ 1,100 1,900 4,300 12,940 790 9,250 2,500 1,960 775 250 185 $29,490

$29,490

Determine total assets.

A. $24,130 B. $15,830 C. $21,930 D. $23,030



$ 6,530 2,100 700 13,700 $ 1,100 1,900 4,300 12,940 790 9,250 2,500 1,960 775 250 185 $29,490

$29,490

Determine the current assets.

A. $23,030 B. $9,330 C. $21,930 D. $8,630



$ 6,530 2,100 700 13,700 $ 1,100 1,900 4,300 12,940 790 9,250 2,500 1,960 775 250 185 $29,490

Determine the total liabilities for the period.

A. $1,900 B. $6,200 C. $4,300 D. $20,240

94. The Balance Sheet should be prepared A. before the income statement and the statement of owner’s equity B. before the income statement and after the statement of owner’s equity C. after the income statement and the statement of owner’s equity D. after the income statement and before the statement of owner’s equity

$29,490

95. The Statement of Owner’s Equity begins with the beginning balance followed by A. plus Net Income (loss) less withdrawals B. plus Net Income (loss) plus investments C. plus investments less withdrawals D. plus investments plus Net Income (loss) less withdrawals

96. The Income Statement will include the following accounts A. Revenues less Expenses (ordered largest to smallest amount) with Miscellaneous Expense listed last B. Revenues less Expenses (ordered smallest to largest amounts) with Miscellaneous Expense listed last C. Revenues less Expenses (ordered in alphabetical order) D. Revenues less Expenses (order is not important)

97. The classified Balance Sheet will subsection the assets section as follows A. Current Assets and Other Assets B. Current Assets and Property, Plant, and Equipment C. Current Assets and Short-Term Assets D. Other Assets and Property, Plant and Equipment

98. The classified Balance Sheet will divide its Liabilities Section as the following subsections A. Current Liabilities and Long-Term Liabilities B. Current Liabilities and Other Liabilities C. Other Liabilities and Long-Term Liabilities D. Present Liabilities and Tomorrow’s Liabilities

99. Short-term liabilities are those liabilities that A. will be paid in less than one year B. are due to be paid in 5 to 10 years C. are due to be paid in more than one year D. are owed to the owner and will never be paid

100. Owner’s Equity is A. added to assets and the two are equal to liabilities B. added to liabilities and the two are equal to assets C. subtracted from liabilities and the net amount is equal to assets D. equal to the total of assets and liabilities

101. Balance sheet accounts A. represent amounts accumulated during a specific period of time B. are called real accounts C. have zero balances after the closing entries have been posted D. are not affected by adjustments

102. On which financial statement will Income Summary be b e shown? A. Statement of Owner’s Equity B. Balance Sheet C. Income Statement D. No financial statement

103. Which of the following is not true about closing entries? A. There are four closing entries that update the owner’s equity account. B. After the second closing entry, the income summary account is equal to the net income or (loss) for the period. C. All real accounts are closed at the end of the period. D. By closing nominal accounts at the end of the period to zero, it is possible to isolate next period’s information correctly.

104. The income summary account is also called A. the imprest account B. the clearing account C. the adjustments account D. the helpful account

105. After posting the second closing entry to the income summary account, the balance will be equal to A. zero. B. owner’s equity. C. revenues for the period D. the net income or (loss) for the period.

106. What is the last account that should be listed in the Post P ost Closing Trial Balance? A. Income Summary B. Capital account C. Cash D. Fees Earned

107. Which of the following account groups are all considered nominal accounts? A. Cash, Owner’s Equity, Wages Payable B. Prepaid Insurance, Property, Plant & Equipment, Fees Earned C. Capital Account, Dividend Account, Income Summary D. Rent Revenue, Fees Earned, Miscellaneous Expense

108. There are four closing entries. The first one is to close ____, the second one is to close ____, ____ , the third one is to close ____, and the last one is to close ____. A. Revenues, expenses, income summary, drawing account B. Expenses, assets, income summary, capital account C. Capital account, drawing account, income summary, assets D. Drawing account, income summary, expenses, revenues

109. Closing entries A. need not be journalized if adjusting entries are prepared B. need not be posted if the financial statements are prepared from the work sheet C. are not needed if adjusting adjus ting entries are prepared D. must be journalized and posted

110. Closing entries are dated in the journal as of A. the date they are actually journalized, although they are generally prepared after the end of the accounting period B. the last day of the accounting period, although they are actually journalized after the end of the accounting period C. the first day of the accounting period, although they are actually journalized after the end of the accounting period D. the first day of the subsequent accounting acco unting period

111. Which of the accounts below would be closed by posting a debit to the account? A. Unearned Revenue B. Fees Earned C. Josh Morton, Drawing D. Miscellaneous Expense

112. Which of the following accounts should be closed to Income Summary at the end of the fiscal year? A. Supplies Expense B. Accumulated Depreciation C. Prepaid Insurance D. Unearned Rent

113. Which of the following accounts will not be closed to Income Summary at the end of the fiscal year? A. Salaries Expense B. Fees Earned C. Unearned Rent D. Depreciation Expense

114. Which of the following accounts will be closed to the Capital account at the end of the fiscal year? A. Rent Expense B. Fees Earned C. Income Summary D. Depreciation Expense

115. The entry to close the appropriate insurance account at the end of the accounting period is A. debit Income Summary; credit Prepaid Insurance B. debit Prepaid Insurance; credit Income Summary C. debit Insurance Expense; credit Income Summary S ummary D. debit Income Summary; credit Insurance Expense

116. Which of the following accounts ordinarily appears a ppears in the post-closing trial balance? A. Fees Earned B. Supplies Expense C. Zane White, Drawing D. Unearned Rent

117. The post-closing trial balance differs from the adjusted trial balance in that it A. does not take into account closing entries B. does not take into account acc ount adjusting entries C. does not include balance sheet accounts D. does not include income statement accounts

118. The following accounts were taken tak en from the Adjusted Trial Balance columns co lumns of the work sheet:

Accumulated Depreciation Fees Earned Depreciation Expense Insurance Expense Prepaid Insurance Supplies Supplies Expense

$ 3,200 17,400 1,300 200 4,800 900 3,800

Net income for the period is

A. $3,200 B. $12,100 C. $17,400 D. $8,900

119. A summary of selected ledger accounts appear below for Alberto’s Plumbing Services for the current calendar year end.

Alberto, Capital 12/31

8,500

1/1 12/31

6,500 15,000

Alberto, Drawing 6/30 11/30

3,500 5,000

12/31

8,500

Income Summary 12/31 12/31

18,500 15,000

12/31

33,500


A. $13,000 B. $33,500 C. $15,000 D. $18,500

120. Amir Designs purchased a one-year liability insurance policy on March 1st of this year for $7,200 and recorded it as a prepaid expense. Which of the following amounts would be recorded for insurance expense during the adjusting process at the end of Amir’s first month of operations on March 31st? A. $7,200 B. $720 C. $600 D. $6,600

121. The journal entry to close the Fees Earned, $750, and Rent Revenue, $175, accounts on December 31st during the closing process would be: A. Dec. 31 Fees Earned 750 Rent Revenue 175 Income Summary 925 B. Dec. 31 Income Summary 925 Fees Earned 750 Rent Revenue 175 C. Dec. 31 Revenues 925 Income Summary 925 D. Dec. 31 Income Summary 925 Revenues 925

122. Use the following worksheet to answer the following questions.

Account Title Cash Accounts Receivable Supplies Equipment Accumulated Depr-Equip Accounts Payable Wages Payable C. Finley, Capital C. Finley, Drawing Fees Earned Wages Expense Rent Expense Depreciation Expense Totals Net Income (Loss)

Finley Company Worksheet For the Year Ended December 31, 2014 Adjusted Trial Income Statement Balance Debit Credit 48,000 18,000 6,000 57,000 18,000 25,000 6,000 33,000 3,000 155,000 63,000 27,000 15,000 237,000 237,000

Balance Sheet Debit

Credit

Debit 48,000 18,000 6,000 57,000

Credit

18,000 25,000 6,000 33,000 3,000 155,000 63,000 27,000 15,000 105,000 50,000 155,000

The journal entry to close revenues would be:

A. debit Income Summary $155,000, credit Fees Earned $155,000 B. debit C. Finley, Capital $155,000, credit Fees Earned $155,000 C. debit Fees Earned $155,000; credit Income Summary $155,000 D. credit Fees Earned $155,000; credit C. Finley, Capital $155,000

155,000

132,000

155,000

132,000

82,000 50,000 132,000




Balance Sheet Debit

Credit

Debit 48,000 18,000 6,000 57,000

Credit

18,000 25,000 6,000 33,000 3,000 155,000 63,000 27,000 15,000 105,000 50,000 155,000

Based on the preceding trial balance, the entry to close expenses would be:

A. Wages Expense 63,000 Rent Expense 27,000 Depreciation Expense 15,000 Income Summary 105,000 B. Expenses 105,000 Income Summary 105,000 C. Wages Expense 63,000 Rent Expense 27,000 Depreciation Expense 15,000 C. Finley, Drawing 105,000 D. Income Summary 105,000 Wages Expense 63,000 Rent Expense 27,000 Depreciation Expense 15,000


Finley Company Worksheet For the Year Ended December 31, 2014 Adjusted Trial Income Statement Balance Sheet Balance

155,000

132,000

155,000

132,000

82,000 50,000 132,000


Debit 48,000 18,000 6,000 57,000

Credit

Debit

Credit

Debit 48,000 18,000 6,000 57,000

18,000 25,000 6,000 33,000

18,000 25,000 6,000 33,000

3,000

3,000 155,000

63,000 27,000 15,000 237,000

Credit

237,000

155,000 63,000 27,000 15,000 105,000 50,000 155,000

155,000

132,000

155,000

132,000

Credit

Debit 48,000 18,000 6,000 57,000

82,000 50,000 132,000

Based on the preceding trial balance, the entry to close income summary would be:

A. debit C. Finley, Capital $50,000; credit Income Summary $50,000 B. debit Income Summary $155,000; credit C. Finley, Capital $155,000 C. debit Income Summary $50,000, credit C. Finley, Capital $50,000 D. debit C. Finley, Capital $9,000; credit Income Summary $9,000




Balance Sheet Debit

Credit

18,000 25,000 6,000 33,000 3,000 155,000 63,000 27,000 15,000 105,000 50,000 155,000

155,000

132,000

155,000

132,000

82,000 50,000 132,000

Based on the preceding trial balance, the entry to close C. Finley, Drawing would be:

A. debit C. Finley, Capital $3,000, credit C. Finley, Drawing $3,000 B. debit C. Finley, Capital $12,000, credit C. Finley, Drawing $12,000 C. debit C. Finley, Drawing $3,000; credit C. Finley, Capital $3,000 D. debit C. Finley, Drawing $12,000; credit C. Finley, Capital $12,000




Balance Sheet Debit

Debit 48,000 18,000 6,000 57,000

Credit

18,000 25,000 6,000 33,000 3,000 155,000 63,000 27,000 15,000 105,000 50,000 155,000

Based on the preceding trial balance, the ending balance in C. Finley, Capital is:

A. $33,000 B. $80,000 C. $30,000 D. $83,000

Credit

155,000

132,000

155,000

132,000

82,000 50,000 132,000

127. The proper sequence of steps in the accounting cycle is as follows A. analyze and record transactions, post transaction to the ledger, prepare a trial balance, prepare financial statements, journalize closing entries, analyze adjustment data and prepare adjusting entries B. prepare a trial balance, analyze adjustment data, prepare adjusting entries, prepare financial statements, journalize closing entries and post to the ledger, analyze and record transactions, post transactions to the ledger C. analyze and record transactions, post transactions to the ledger, prepare a trial balance, analyze adjustment data, prepare adjusting entries, prepare financial statements, journalize closing entries and post to the ledger, and finally prepare a post-closing trial balance D. prepare financial statements, journalize closing entries and post to the ledger, analyze and record transactions, post transactions to the ledger, prepare a trial balance, analyze adjustment data, prepare adjusting entries

128. The following are steps to the accounting cycle. Of the following, which step should be done first? A. Closing entries are journalized and posted to the ledger. B. Transactions are posted to the ledger. C. Adjusting entries are journalized and posted to the ledger. D. Financial statements are prepared.

129. The following are steps in the accounting cycle. Of the following, which would be prepared last? A. An adjusted trial balance is prepared. B. Transactions are posted to the ledger. C. An unadjusted trial balance is prepared. D. Adjusting entries are journalized and posted to the ledger.

130. The accounting cycle requires three trial balances be done. In what order should they be prepared? A. Post-closing, unadjusted, adjusted B. Unadjusted, post-closing, adjusted C. Unadjusted, adjusted, post-closing D. Post-closing, adjusted, unadjusted

131. The fiscal year selected by companies A. is the same as the calendar year B. begins with the first day of the month and ends on the last day of the twelfth month C. must always begin on January 1 D. will change each year

132. A fiscal year A. ordinarily begins on the first day of a month and ends on the last day of the following twelfth month B. for a business is determined by the federal fede ral government C. always begins on January 1 and ends on December 31 of the same year D. should end at the height of the business's annual operating cycle

133. The natural business year A. is a fiscal year that ends when business activities are at its lowest point. B. is a calendar year that ends when business activities are at its lowest point. C. is a fiscal year that ends when business activities are at its highest point. D. is a calendar year that ends when business activities are at its highest point.

134. The worksheet A. is an integral part of the accounting cycle B. eliminates the need to rewrite the financial statements C. is a working paper that is required D. is used to summarize account balances balan ces and adjustments for the financial statements

135. Which one of the steps below is not aided by the preparation of the work sheet? A. preparing the adjusted trial balance B. posting to the general ledger C. preparing the financial statements D. preparing the closing entries

136. A work sheet includes columns for A. adjusting entries B. closing entries C. reversing entries D. adjusting and closing entries

137. When a work sheet is complete, the adjustment columns should have A. total credits greater than total debits if a net income was earned B. total debits greater than total credits if a net los s was incurred C. total debits greater than total credits if a net inc ome was earned D. total debits equal total credits

138. The difference between the totals of the debit and credit columns of the Adjusted Trial Balance columns on a work sheet A. is the amount of net income or loss B. indicates there is an error on the work sheet C. is the amount of retained earnings D. is the difference between revenue and expenses

139. Net income appears on the work sheet in the A. debit column of the Balance Sheet columns B. debit column of the Adjustments columns C. debit column of the Income Statement columns D. credit column of the Income Statement columns

140. A net loss appears on the work sheet in the A. debit column of the Balance Sheet columns B. credit column of the Balance Sheet columns C. debit column of the Income Statement columns D. credit column of the Adjustments columns

141. After net income is entered on the work sheet, the Balance Sheet debit and credit columns must A. be the same amount as the total amount of the Income Statement debit and credit columns B. equal each other C. be the same amount as the total amount in the Adjusted Trial Balance debit and credit columns D. not be equal to each other and need not be the same total amounts as any other pair of columns on the work sheet

142. Which of the statements below indicates that a company earned a net income for the period? A. The sum of the credits exceeds the sum of the debits in the Balance Sheet columns on the work sheet. B. The sum of the credits exceeds the sum of the debits in the Income Statement columns on the work sheet. C. The sum of the debits exceeds the sum of the credits in the Income Statement columns on the work sheet. D. Cash inflows exceeded cash outflows.

143. Which of the items below would appear in the Income Statement columns of the work sheet? A. Equipment B. Unearned Fees C. Prepaid Expense D. Net Loss

144. Which of the accounts below would not appear in the balance sheet columns of the worksheet? A. Chad Daniels, Drawing B. Rent Earned C. Unearned Revenue D. Chad Daniels, Drawing and Unearned Revenue

145. Which of the accounts below would appear in the Balance Sheet columns of the work sheet? A. Service Revenue B. Prepaid Rent C. Supplies Expense D. None are correct

146. The work sheet at the end of July has $5,950 in the Balance Sheet credit column for Accumulated Depreciation. The work sheet at the end of August has $7,600 in the Balance Sheet credit column for Accumulated Depreciation. What was the amount of the depreciation depreciation expense adjustment for for the month of August? A. amount can not be determined B. $7,600 C. $5,950 D. $1,650

147. Which of the items below does not appear on the work sheet? A. adjusting entries B. the unadjusted trial balance C. closing entries D. the drawing account

148. An indication that the work sheet columns are in balance and the work sheet is completed is A. the word "Total" is written at the bottom of each pair of columns B. each pair of columns is double underlined C. each pair of columns has the totals circled D. the final figures are written in ink

149. After all of the account balances have been extended to the Balance Sheet columns of the work sheet, the totals of the debit and credit columns are $38,755 and $32,735, respectively. What is the amount of net income or net loss for the period? A. $6,020 net income B. $38,755 net loss C. $6,020 net loss D. $32,735 net income

150. After all of the account balances have been extended to the Income Statement columns of the work sheet, the totals of the debit and credit columns are $77,500 and $83,900, respectively. What is the amount of the net income or net loss for the period? A. $6,400 net income B. $6,400 net loss C. $83,900 net income D. $77,500 net loss

151. On September 1, the company pays rent for twelve months in advance and debits an asset account. At year end, the adjusting entry on the work sheet would A. increase an expense account B. decrease a liability account C. increase an asset account D. decrease an expense account

152. On March 1, a company collects revenue in advance for the next twelve months and credits a liability account. The adjusting entry at year end on the work sheet would A. increase a liability account B. decrease an asset account C. decrease a revenue account D. decrease a liability account

153. Which of the following is not an essential part of the accounting records? A. The journal B. The ledger C. The chart of accounts D. The work sheet

154. After all of the account balances have been extended to the Balance Sheet columns of the work sheet, the totals of the debit and credit columns show debits of $37,686 and the credits of $41,101. This indicates that A. neither net income or loss can be calculated because it is found on the income statement B. the company has a net loss of $3,415 for the period C. the company has a net income of $3,415 for the period D. The amounts are out of balance and need to be corrected

155. The income statement columns in the worksheet show that debits are equal to $55,800 and credits are $67,520. What does this information mean to the accountant? A. Net income of $11,720 B. Net loss of $11,720 C. The accounts are out of balance, indicating an error has been made. D. The accounts have not been updated.

156. Bob Evans owns a business, Beachside Realty, that rents condominiums and furnishings. Below is the adjusted trial balance at December 31, 2014.

Cash Accounts receivable Interest receivable Prepaid insurance Notes receivable (long-term) Equipment Accumulated depreciation Accounts payable Accrued expenses payable Income taxes payable Unearned rent fees Bob Evans, Capital Bob Evans, Drawing Rent fees earned Furniture rental revenue Interest revenue Wages expense Depreciation expense Utilities expense Insurance expense Maintenance expense Income tax expense

Debit $ 1,500 2,000 100 1,600 2,800 15,000

Credit

$3,000 2,400 3,920 2,700 500 7,700 2,000 37,000 1,200 100 19,000 1,800 320 700 9,000 2,700 $58,520

$58,520

The entry required to close the revenue accounts at the end of the period includes a:

A. debit to Income Summary for $37,000 B. credit to Income Summary for $38,300 C. debit to Income Summary for $38,200 D. credit to Income Summary for $37,000

157. Bob Evans owns a business, Beachside Beachside Realty, that rents condominiums and furnishings. furnishings. Below is the adjusted trial balance at December 31, 2014.


Debit $ 1,500 2,000 100 1,600 2,800 15,000

Credit

$3,000 2,400 3,920 2,700 500 7,700 2,000 37,000 1,200 100 19,000 1,800 320 700 9,000 2,700 $58,520

$58,520

The entry required to close the expense accounts at the end of the period includes a:

A. a debit to Income Summary for $35,520 B. a credit to Income Summary for $35,520 C. a debit to Income Summary for $33,520 D. a credit to Income Summary for $33,520

158. The balances for the accounts listed below appear in the Adjusted Trial balance columns of the end-of-period spreadsheet spreadsheet (work sheet). sheet). Indicate whether each balance should be extended to an Income Statement column or (b) a Balance Sheet column. 1. 2. 3. 4. 5. 6. 7. 8.

Dobson, Capital Dobson, Drawing Depreciation Expense Accumulated Depreciation Fees earned Unearned Fees Supplies Supplies Expense

159. The end-of-period spreadsheet (work sheet) for the current year for Jamal Company shows Balance Balan ce Sheet columns with a debit total of $630,430 and a credit total of $614,210. This is before the amount for net income or net loss has been included. In preparing the income statement statement from work sheet, what what is the amount of net income or net loss?

160. Morgan Olsen owns and operates Crystal Crystal Pool Service Company. On January 1, 2014, Morgan Olsen, Capital had a balance of $252,000. During the year Morgan invested an additional $32,000 and withdrew $52,400. For the year ended December 31, 2014 Crystal Crystal Pool Service Company reported a net income of $73,200. Prepare a Statement of Owner’s Equity for the year year ended December 31, 2014.

161. The following accounts appear in an adjusted trial balance of Brock Pool Service Company. Indicate whether each account would be reported in the (a) current assets, (b) property, plant, and an d equipment, (c) current liabilities, (d) long-term liabilities, or (e) owner’s equity section of the December 31, 2010, balance sheet of Brock Pool Service Company.

1. 2. 3. 4. 5. 6. 7. 8.

Taylor Brock, Capital Accumulated Depreciation Unearned Revenues Mortgage Payable Equipment Notes Payable (due in 2012) Cash Accounts Receivable

162. Describe a classified balance sheet.

163. List and describe the purpose of o f the four closing entries.

164. After the accounts have been adjusted at January 31, 2014, the end of the fiscal year, the following balances are taken from the ledger of Taylor Pool Service Company:

Hope Taylor, Capital Hope Taylor, Drawing Fees Earned Wages Expense Rent Expense Supplies Expense Miscellaneous Expense

$349,000 5,000 124,600 29,000 43,000 7,300 5,700

Journalize the four entries required to close the accounts

165. Prior to adjustment at August 31, 2014, Salary Expense has a debit balance of $298,500. Salaries owed but not paid as of the same date total $7,200.

Present the entries to record the followin g: (1) Accrued salaries as of August 31. (2) Closing of Salary Expense as of August 31.

166. The following are all the steps in the accounting cycle. List them in the order in which they should be done. - Closing entries are journalized and posted to the ledger. - An unadjusted trial balance is prepared. - An optional end-of-period spreadsheet (work sheet) is prepared. - A post-closing trial balance is prepared. - Adjusting entries are journalized and posted to the ledger. - Transactions are analyzed and recorded in the journal. - Adjustment data are assembled and analyzed. - Financial statements are prepared. - An adjusted trial balance is prepared. - Transactions are posted to the ledger.

167. If working papers are not considered part of the formal accounting records, then why are they used?

168. Explain how net income or loss is determined by using the work sheet.

169. You evaluate loan requests as part of your job at Beach Front National Bank. One loan request you received is from Surfer Dude Supplies, a small proprietorship. Tracy Roberts, the owner, is requesting $75,000 and brings you a trial balance (or Statement of Accounts) for his first year of operations ended December 31, 2010. REQUIRED: While you are willing to work with Tracy, how would you explain to him that a complete set of financial statements from his accountant would be more useful for evaluatin g the loan request?

170. You have just accepted your first job out of college, which requires you to evaluate loan requests at Beach Front National Bank. The first loan request you receive is from Surfer Dude Enterprises, a small proprietorship. Marty Monroe, the owner, is requesting $75,000 and brings you the following trial balance (or Statement of Accounts) for his first year of operations ended De cember 31, 2010. What three accounts do you think should be relabeled for greater clarity?

Surfer Dude Enterprises Statement of Accounts December 31, 2010 Cash Billings Due from Others Office Supplies Trucks Equipment Amounts Owed to Others Investment in Business Service Revenues Wages Expense Rent Expense Insurance Expense Utilities Expenses Miscellaneous Expenses

2,050 15,070 7,470 26,370 8,090 2,850 23,500 73,650 30,050 7,330 2,400 700 470 100,000

100,000

171. You have just accepted your first job out of college, which requires you to evaluate loan requests at Beach Front National Bank. The first loan request you receive is from Surfer Dude Enterprises, a small proprietorship. Marty Monroe, the owner, is requesting $75,000 and brings you the following trial balance (or Statement of Accounts) for his first year of operations ended De cember 31, 2010. Which of the following accounts do you think might need to be adjusted before an accurate set of financial statements could be prepared?

Cash Billings Due from Others Office Supplies Trucks Equipment Amounts Owed to Others Investment in Business Service Revenues Wages Expense Rent Expense Insurance Expense Utilities Expense Miscellaneous Expenses

Surfer Dude Enterprises Statement of Accounts December 31, 2010 2,050 15,070 7,470 26,370 8,090 2,850 23,500 73,650 30,050 7,330 2,400 700 470 100,000

100,000

172. Hakik Enterprises offers rug cleaning services to business clients. Below is the trial balance for Hakik Enterprises, which was prepared on the end of period spreadsheet (work sheet) for the year ended July 31, 2010.

Hakik Enterprises End of Period Spreadsheet (Work Sheet) For the Year Ended July 31, 2010

Cash Prepaid Insurance Fees Receivable Supplies Equipment Accum. Depreciation Unearned Revenue Accounts Payable Wages Payable Ramon Hakik, Capital Ramon Hakik, Drawings Service Revenue Advertising Expense Wage Expense Insurance Expense Supplies Expense Depreciation Expense Totals

Trial Balance Adjustments Adjusted Trial Balance Debit Credit Debit Credit 36 12 56 12 60 12 20 32

Debit

Credit

84 4 80 28 20

228

228

REQUIRED: Enter the adjustment data in the work sheet for the transactions shown below and place the balances in the Adjusted Trial Balance columns. a) The equipment is estimated to last for 5 years with no salvage value. The asset will be depreciated evenly over its useful life. Record one month’s depreciation. b) Accrued Wages $2. c) Unused supplies on hand $8. d) Of the unearned revenue, 75% has been earned. e) Unexpired insurance remaining at the end of the month, $9.

173. Hakik Enterprises offers rug cleaning services to business clients. Below are the adjustments data for the year ended July 31, 2010. REQUIRED: Using this information along with the spreadsheet below, record the adjusting entries in proper general journal form. Adjustments: a) The equipment is estimated to last for 5 years with no salvage value. The asset will be depreciated evenly over its useful life. Please record one month’s depreciation. b) Accrued Wages $2. c) Unused supplies on hand $8. d) Of the unearned revenue, 75% has been earned. e) Unexpired insurance remaining at the end of the month, $9.


Cash Prepaid Insurance Fees Receivable Supplies Equipment Accum. Deprec. - Equip Unearned Revenue Accounts Payable Wages Payable Ramon Hakik, Capital Ramon Hakik, Drawings Service Revenue Advertising Expense Wage Expense Insurance Expense Supplies Expense Depreciation Expense Totals

Trial Balance Adjustments Adjusted Trial Balance Debit Credit Debit 36 12 56 12 60 12 20 32 84 4 80 28 20

228

228

Credit

Debit

Credit


Cash Accounts receivable Interest receivable Prepaid insurance Notes receivable (long-te rm) Equipment Accumulated depreciation Accounts payable Accrued expenses payable Income taxes payable Unearned rent fees Bob Evans, Capital Bob Evans, Drawing Rent fees earned Furniture rental revenue Interest revenue Wages expense Depreciation expense Utilities expense Insurance expense Maintenance expense Income tax expense Total

Debit $ 1,500 2,000 100 1,600 2,800 15,000

Credit

$3,000 2,400 3,920 2,700 500 7,700 2,000 37,000 1,200 100 19,000 1,800 320 700 9,000 2,700 $ 58,520

Prepare the entry required to close the revenue accounts at the end of the period.

$ 58,520


Cash Accounts receivable Interest receivable Prepaid insurance Notes receivable (long-te rm) Equipment Accumulated depreciation Accounts payable Accrued expenses payable Income taxes payable Unearned rent fees Bob Evans, Capital Bob Evans, Drawing Rent fees earned Furniture rental revenue Interest revenue Wages expense Depreciation expense Utilities expense Insurance expense Maintenance expense Income tax expense

Debit $ 1,500 2,000 100 1,600 2,800 15,000

Credit

$3,000 2,400 3,920 2,700 500 7,700 2,000 37,000 1,200 100 19,000 1,800 320 700 9,000 2,700 $ 58,520

Prepare the entry required to close the expense accounts at the end of the period.

$ 58,520



Debit $ 1,500 2,000 100 1,600 2,800 15,000

Credit

$3,000 2,400 3,920 2,700 500 7,700 2,000 37,000 1,200 100 19,000 1,800 320 700 9,000 2,700 $ 58,520

$ 58,520

Prepare the closing entry required to transfer the income or loss at the end of the period.



Debit $ 1,500 2,000 100 1,600 2,800 15,000

Credit

$3,000 2,400 3,920 2,700 500 7,700 2,000 41,000 1,200 100 19,000 1,800 320 700 9,000 2,700 $ 58,520

Prepare the entry required to close the Drawing account at the end of the period.

$ 58,520

178. Each of the following transactions for Morrison Company requires an adjusting entry, which if omitted, will overstate or understate assets, liabilities, owner’s equity, revenues, expenses, or net income. Indicate the amount and direction of the misstatement that would result if the end of period adjusting entry suggested by the transaction was omitted. Place your results in the table following the transactions and use (+) for overstate, (-) for understate, and (NE) for no effect. 1. Morrison purchased supplies on December 1 for $900. On December 31, $350 of supplies were on hand. 2. Prepaid insurance had a debit balance of $5,400 on December 1, which represented a prepayment for 2 years of insurance. 3. The unearned rent revenue account has a credit balance of $390 on December 1, which represents 3 months rent.

Transaction 1. 2. 3.

Assets

Liabilities

Owner’s Equity

Revenues

Expenses

Net Income

179. The end-of-period spreadsheet (work sheet) for the current year for Jamal Company shows Balance Sheet columns with a debit total of $614,210 and a credit total of $630,430. This is before the amount for net income or net loss has been included. In preparing the income statement from work sheet, what is the amount of net income or net loss?

180. Identify which of the following accounts should be closed with a debit or a credit to Income Summary at the end of the fiscal year. If it is not closed to Income Summary, mark as n/a. 1. Utilities Payable 2. Utilities Expense 3. Supplies 4. Supplies Expense 5. Fees Earned 6. Unearned Fees 7. Accounts Receivable 8. Jason Hill, Drawing 9. Jason Hill, Capital 10. Accumulated Depreciation - Equipment 11. Depreciation Expense - Equipment 12. Equipment 13. Prepaid Insurance 14. Insurance Expense

181. The balances for the accounts listed below appeared in the Adjusted Trial Balance columns of the work sheet. Indicate whether each balance should be extended to (a) the Income Statement columns or (b) the Balance Sheet columns.

(1) (2) (3) (4) (5) (6)

Salaries Payable Fees Earned Accounts Payable Felipe Ramos, Capital Supplies Expense Unearned Rent

(7) (8) (9) (10) (11) (12)

Felipe Ramos, Drawing Equipment Accounts Receivable Accumulated Depreciation Salary Expense Depreciation Expense

182. Indicate whether each of the following would be reported in the financial statements as a(n) (a) current asset, (b) current liability, (c) revenue, or (d) expense:

(1) (2) (3) (4)

Supplies Unearned Fees Prepaid Advertising Advertising Expense

(5) (6) (7) (8)

Supplies Expense Prepaid Insurance Accounts Payable Fees Earned

183. The following accounts were taken from the Adjusted Trial Balance columns of the work sheet for April 30, 2010 for Finnegan Co.:

Accumulated Depreciation Fees Earned Depreciation Expense Rent Expense Prepaid Insurance Supplies Supplies Expense

$ 32,000 78,000 7,250 34,000 6,000 400 1,800

Prepare an income statement.

184. The following revenue and expense account balances were taken from the Income Statement columns of the work sheet for Fraser Services Co. for December 31, 2010:

Depreciation Expense Insurance Expense Miscellaneous Expense Rent Expense Service Revenue Supplies Expense Utilities Expense Wages Expense

$ 4,950 2,900 1,200 24,000 92,500 3,150 5,000 63,750

Prepare an income statement.

185. The following data were taken from the Balance Sheet columns of the work sheet for April 30, 2010 for Mackenzie Company:

Accumulated Depreciation-Trucks Prepaid Rent Supplies Unearned Fees Trucks Cash Mackenzie, Capital

$42,400 6,800 850 7,310 49,300 3,400 ?

Prepare a classified balance sheet.

186. Indicate whether each of the following would be reported in the section of financial statements identified as (a) current asset, (b) property, plant, and equipment, (c) current liability, (d) revenue, or (e) expense:

(1) (2) (3) (4) (5) (6) (7) (8) (9)

Automobile Accumulated depreciation Rent expense Fees earned Salaries payable Prepaid rent Store supplies Advertising expense Unearned rent

187. The following balance sheet contains errors.

Brock Morton Services Co. Balance Sheet For the Year Ended December 31, 2010

Assets Current assets: Cash Accounts payable Supplies Prepaid insurance Land Total current assets

Property, plant, and equipment: Building Equipment Total property, plant, and equipment Total assets

$ 7,170 7,500 2,590 800 24,000 $ 42,060

$43,700 29,250

Liabilities Current liabilities: Accounts receivable Accum. depr-building Accum. depr-equipment Net income

$ 10,000 12,525 7,340 11,500

Total liabilities

$ 41,365

Owner's Equity Wages payable Brock Morton, Capital Total owner's equity

1,500 88,645 $ 90,145

Total liabilities and owner's equity

$131,510

$

72,950 $131,510

(a) List the errors in the balance sheet above and (b) prepare a corrected balance sheet.

188. The following is the adjusted trial balance for Nadia Company.

Nadia Company Adjusted Trial Balance December 31, 2014

Cash Accounts Receivable Prepaid Expenses Equipment Accumulated Depreciation Accounts Payable Notes Payable - Due on June 30, 2011 Nadia Porter, Capital Nadia Porter, Drawing Fees Earned Wages Expense Rent Expense Utilities Expense Depreciation Expense Miscellaneous Expense Totals

5,130 3,300 420 12,400 2,200 700 3,070 13,000 700 10,930 2,450 1,900 1,475 1,150 975 29,900

29,900

Prepare an Income Statement, Balance Sheet, and Statement of Owner’s Equity. Assume that the capital account started with a beginning balance of $10,000.

189. Prepare an income statement and a statement of owner’s equity, for the month ended August 31, 2014, from the following T-Accounts of Marley Company.

Prepaid Insurance

Accou nts Receiv able

1,100 200

Unearned Revenues

5,400 800

Wages Payable

1,400 400

480

Marley, Capital

Marley , Drawin g 6,500 2,800 5,780

Income Summary

Fees Earned

3,200

3,995 5,780

3,200

9,775

3,200

7,500 2,000 275 9,775

Wages Expense

Rent Expens e

2,200 425

Insurance Expense 990

Utilities Expense 285

990

95 285

95

2,625

190. Prepare an income statement and a statement of owner’s equity for the month ended September 30, 2010 from the T-accounts below of Carson Company.

Prepaid Insurance


1,400

1,600 400

120

Carson, Capital

Carson , Drawin g 6,800 2,500

610 2,400

Unearned Revenues

Wages Payable

1,200

435

4,150

3,300 500 350

200

Income Summary

Fees Earned

2,400 2400

4,760 610 4,150

Wages Expense

Rent Expens e

3,200 225

Insurance Expense 1,130


1,130

125 80

125

3,425

191. Selected ledger accounts appear below for Fulton Surveying Services for 2014.

Fulton, Capital 12/31

25,000

Income Summary 12/31 19,000 12/31 48,000

Fulton, Drawing 1/1 12/31

12/31

Prepare a statement of owner's equity.

20,000 48,000

67,000

3/31 12/22

12,000 13,000

12/31

25,000

192. On the basis of the following data taken from the Adjusted Trial Balance columns of the work sheet for the year ended March 31 for Boles Athletic Company, journalize the four closing entries.

Cash Accounts Receivable Supplies Equipment Accumulated Depreciation Accounts Payable Jason Boles, Capital Jason Boles, Drawing Fees Earned Salary Expense Rent Expense Depreciation Expense Supplies Expense Miscellaneous Expense

$ 30,000 45,200 5,000 169,900 $ 32,000 12,500 71,600 47,000 510,000 244,500 48,000 25,000 9,500 2,000 $626,100

$626,100

193. After all adjustments have been made, but before the accounts have been closed, the following balances were taken from the ledger of Ramona’s Designs:

Accounts Payable Accounts Receivable Accumulated Depreciation Cash Depreciation Expense Equipment Insurance Expense Prepaid Insurance

$ 27,600 64,500 73,325 17,150 13,500 165,000 2,510 6,275

Journalize the entries to close the appropriate accounts.

Rent Expense Salary Expense Salaries Payable Service Revenue Supplies Supplies Expense Ramona Cross, Capital Ramona Cross, Drawing

$ 32,700 41,390 8,150 186,000 1,500 2,500 99,950 48,000

194. On the basis of the following information taken from the Adjusted Trial Balance columns of the work sheet for the month ended September 30th, journalize the closing entries for Perez Roofing Company. Cash Accounts Receivable Office Supplies Repair Parts Machinery Accumulated Depreciation Accounts Payable Notes Payable Sam Perez, Capital Sam Perez, Drawing Service Revenue Wages Expense Office Supplies Expense Repair Parts Expense Depreciation Expense

$22,500.00 3,575.00 2,850.00 3,785.00 17,750.00 3,250.00 1,150.00 6,500.00 2,500.00 1,750.00 47,200.00 4,840.00 1,275.00 925.00 1,350.00 $60,600.00

$60,600.00

195. The following adjusted trial balance is the result of the adjustments made at the end of the month of March for Erik Martin Company. Utilize these adjusted values to perform the closing entries for Erik Martin Company. Cash Accounts Receivable Office Supplies Store Supplies Machinery Accumulated Depreciation Accounts Payable Notes Payable Erik Martin, Capital Erik Martin, Drawing Service Revenue Wages Expense Office Supplies Expense Store Supplies Expense Depreciation Expense

$24,750.00 5,750.00 3,525.00 4,785.00 9,750.00 2,150.00 3,550.00 7,500.00 19,725.00 6,250.00 36,500.00 6,425.00 1,465.00 5,150.00 1, 575.00 $69,425.00

________ $69,425.00

196. The following adjusted trial balance is the result of the adjustments made at the end of the month of July for Ladonna Douglas Company. Utilize these adjusted values to perform the closing entries for Ladonna Douglas Company. Cash Accounts Receivable Office Supplies Store Supplies Machinery Accumulated Depreciation Accounts Payable Notes Payable Ladonna Douglas, Capital Ladonna Douglas, Drawing Service Revenue Wages Expense Rent Expense Advertising Expense Office Supplies Expense Store Supplies Expense Depreciation Expense

$34,750.00 9,750.00 2,525.00 4,785.00 10,750.00 2,150.00 14,300.00 11,500.00 53,725.00 13,250.00 41,500.00 37,425.00 3,000.00 2,750.00 1,465.00 2,150.00 575.00 $123,175.00

________ $123,175.00

197. Marcus Enterprises was started by Damien Marcus in 2010. During 2010, Damien Marcus invested $8,000 in the business. Based on the following worksheet, prepare an income statement, statement of owner’s equity, and balance sheet for Marcus Enterprises for the year ended December 31, 2010. Marcus Enterprises Worksheet For the Year Ended December 31, 2010

Adjusted Trial Balance

Income Statement Balance Sheet

Account Title Cash Accounts Receivable Supplies Equipment Accumulated Depr-Equip Accounts Payable Wages Payable Damien Marcus, Capital Damien Marcus, Drawing Fees Earned Wages Expense Rent Expense Depreciation Expense Totals Net Income (Loss)

Debit 26,500 7,000 1,000 18,500

Credit

Debit

Credit

Debit 26,500 7,000 1,000 18,500

5,000 11,000 1,000 8,000

5,000 11,000 1,000 8,000

2,000

2,000 59,500

19,000 7,000 3,500 84,500

Credit

84,500

59,500 19,000 7,000 3,500 29,500 30,000 59,500

59,500

55,000

59,500

55,000

25,000 30,000 55,000

198. Prepare closing entries from the following work sheet. Lakendra Enterprises Worksheet For the Year Ended December 31, 2010

Account Title Cash Accounts Receivable Supplies Equipment Accumulated Depr-Equip Accounts Payable Wages Payable Lakendra Thomas, Capital Lakendra Thomas, Drawing Fees Earned Wages Expense Rent Expense Depreciation Expense Totals Net Income (Loss)

Adjusted Trial Income Statement Balance Debit Credit 26,500 7,000 1,000 18,500 5,000 11,000 1,000 8,000 2,000 59,500 19,000 7,000 3,500 84,500 84,500

Balance Sheet Debit

Credit

Debit 26,500 7,000 1,000 18,500

Credit

5,000 11,000 1,000 8,000 2,000 59,500 19,000 7,000 3,500 29,500 30,000 59,500

59,500

55,000

59,500

55,000

25,000 30,000 55,000

199. The following is the adjusted trial balance for Sandeep Company.

Sandeep Company Adjusted Trial Balance December 31, 2010

Cash Accounts Receivable Prepaid Expenses Equipment Accumulated Depreciation Accounts Payable Notes Payable Rena Sandeep, Capital Rena Sandeep, Drawing Fees Earned Wages Expense Rent Expense Utilities Expense Depreciation Expense Miscellaneous Expense Totals

Prepare closing entries and the post closing trial balance.

8,130 3,300 2,750 10,400 2,200 2,700 1,000 11,200 4,870 36,600 12,450 4,900 3,475 2,150 1,275 53,700

53,700

200. Reconstruct the adjusting and closing entries from the following T-Accounts.

Prepaid Insurance

Accou nts Receiv able.

1,200

6,000 1,500 7,500

200 1,000

Madison Cox, Capital

Unearned Revenues

Madis on Cox, Drawi ng 7,000 5,280

Wages Payable

1,350 435 915

Income Summary

Fees Earned

2,100

4,655 5,280

2,100

2,100

530 530

9,935

0 10,180

0

8,000 1,500 435 9,935 0

Wages Expense

Rent Expens e

2,600 530



1,145 3,130

0

180 200

0

180 0

0

201. Reconstruct adjusting and closing entries for the month ended September 30, 2010 from the T-accounts below.

Prepaid Insurance


1,350 130 1,220

Unearned Revenues

1,250 275 1,525

Wages Payable

1,050 235 815

385 385

Mai Lui, Capital

Mai Lui, Drawin g 7,000

Income Summary

Fees Earned

2,400

6,090

2,400

580 2,400

5,510

0

580

4,020

Wages Expense



1,880 3,985

0

5,510

Rent Expens e

3,600 385

5,000 275 235

0

95 130

0

95 0

202. 1)

Dana Bowen Company is completing its first year of operations on April 30, 2010. Reconstru ct the entries for the year ended April 30, 2010 from the T-accounts below. Record them as follows: A - L Journal Entries M- R Adjusting Journal Entries

2)

Balance and prepare the Income Statement, Statement of Owner’s Equity, and the Balance Sheet from the T-Accounts.

3)

Prepare the four closing entries (S - V).

4)

Prepare the Post-Closing Trial Balance.

Cash


6,500 900

Supplies

1,250 385

Prepaid Insurance

870

1,940 540

725

870

225

400 420 1,940 2,500 50 350 930

Equipment

2,500

Accum ulated Deprec iation

Accounts Payable

130

Wages Payable

Unearned Revenues

Dana Bowen , Capital 930

590

Fees Earned

Wages Expens e 900 1,250 2,500 385 590

Insurance Expense

725

Dana Bowen, Drawing

Income Summary

6,500 2,500

350

Rent Expense

Supplies Expense

420 225

Deprec iation Expens e

400

540

Miscellaneo us Expense

130

50

203. The balances in the ledger of Good Landscape Services as of January 31, 2014 before adjustments, are as follows:

Cash Supplies Prepaid Insurance Equipment Accumulated Depreciation

$ 6,750 3,900 8,400 41,750 9,950

Dalton Good, Capital Dalton Good, Drawing Service Revenue Salary Expense Rent Expense Miscellaneous Expense

$29,775 3,425 56,300 24,300 6,000 1,500

Adjustment data are as follows: supplies on hand, January 31, $900; insurance expired for January, $1,100; depreciation on equipment for January, $1,600; salaries accrued, January 31, $1,650. (a) (b) (c)

Prepare a ten-column work sheet for Good Landscape Services for January, 2014. On the basis of the work sheet in (a), present the following in good order: (1) income statement, (2) statement of owner's equity (no additional investments were made during the month), and (3) balance sheet. On the basis of the work sheet in (a), journalize the closing entries as of January 31, 2014.

204. Complete the following worksheet for Danilo Enterprises. Danilo Enterprises Worksheet For the Year Ended December 31, 2010 Adjusted Trial Balance

Income Statement a l a c e

Account Title

Debit

Cash Accounts Receivable Supplies Equipment Accumulated Depr-Equip Accounts Payable Wages Payable Tony Danilo, Capital Tony Danilo, Drawing Fees Earned Wages Expense Rent Expense Depreciation Expense Totals Net Income (Loss)

14,500 7,500 500 20,500

Credit

15,000 9,500 3,060 18,240 1,000 34,000 18,000 9,300 8,500 79,800

79,800

e e t Credit e b i t

Debit

Credit

Chapter 4--Completing the Accounting Cycle Key

1. After analyzing transactions, the next step would be to post the transactions in the ledger. FALSE

2. The most important output of the accounting cycle is the financial statements. TRUE

3. The work sheet is not considered a part of the formal accounting records. TRUE

4. Cross-referencing is useful in assuring that the debits and credits are in balance. FALSE

5. When accounts do not appear on the unadjusted trial balance but are needed to post adjustments, they are simply added to the account title column. TRUE

6. Once the adjusted trial balance is in balance, the flow of accounts will now go into the financial statements. TRUE

7. There is really no benefit in preparing financial statements in any particular order. FALSE

8. Round tripping is a fraudulent scheme where business A artificially inflates revenue by lending money to customer B who uses that money to buy products from A. TRUE

9. On the income statement, miscellaneous expenses are usually presented as the last item without regard to the dollar amount. TRUE

10. The usual presentation of the statement of owner's equity is (1) Beginning capital, (2) Net income or loss, (3) Drawing, (4) Owner's contributions, (5) Ending capital. FALSE

11. The difference between a classified balance sheet and one that is not classified is that the classified one has subheadings. TRUE

12. Cash and other assets that may reasonably be expected to be realized in cash, sold, or consumed through the normal operations of a business, usually longer than one year, are called current assets. FALSE

13. Prepaid Insurance is an example of a current asset. TRUE

14. Land is an example of a plant asset. TRUE

15. Liabilities that will be due within one year or less and that are to be paid out of current assets are called current liabilities. TRUE

16. The amount of the net income for a period appears on both the income statement and the balance sheet for that period. FALSE

17. Accrued taxes payable are generally reported on the balance sheet as a current liability. TRUE

18. At the end of the fiscal period, prepaid expenses are reported on the income statement as expenses. FALSE

19. Office Equipment is an example of a current asset account. FALSE

20. Capital and Drawing are reported in the owner's equity section of the balance sheet. FALSE

21. Deferred expenses that benefit a relatively short period of time are listed on the balanc e sheet as current assets. TRUE

22. Unearned revenues that will be earned in a relatively short period of time are listed on the balance sheet as current assets. FALSE

23. Accrued expenses are ordinarily listed on the balance sheet as current assets. FALSE

24. Accrued revenues are ordinarily listed on the balance sheet as current liabilities. FALSE

25. The income statement is prepared from the adjusted trial balance or the income statement columns on the work sheet. TRUE

26. Examples of temporary accounts are supplies and prepaid expenses which are in the ledger for just a short time before they expire. FALSE

27. Accumulated Depreciation is a permanent account. TRUE

28. The drawing account is a temporary account. TRUE

29. The balance sheet accounts are referred to as real or permanent accounts. TRUE

30. Journalizing and posting the adjustments and closing entries updates the ledger for the new accounting period. TRUE

31. The income summary account is closed to the owner's capital account. TRUE

32. The accumulated depreciation account is closed to the income summary account. FALSE

33. The drawing account is closed to the income summary account. FALSE

34. The trial balance prepared after all the closing entries have been posted is called a pre-closing trial balance. FALSE

35. Entries required to close the balances of the temporary accounts at the end of the period are called final entries. FALSE

36. Journalizing and posting closing entries must be completed before financial statements can be prepared. FALSE

37. During the closing process, some balance sheet accounts are closed and end the period with a zero balance. FALSE

38. Closing entries are entered directly on to the work sheet. FALSE

39. The post-closing trial balance will generally have fewer accounts than the trial balance. TRUE

40. A post-closing trial balance contains only asset and liability accounts. FALSE

41. A post-closing trial balance should be prepared before the financial statements are prepared. FALSE

42. Assets, liabilities, and owner’s capital are real accounts and do not get closed at the end of the period. TRUE

43. The income summary account is also known as the clearing account. TRUE

44. All income statement accounts will be closed at the end of the period. TRUE

45. Balance Sheet accounts are not considered real accounts. FALSE

46. It is not necessary to post the closing entries to the general ledger. FALSE

47. Once an account has been closed for the period, inserting a line in the balance columns zeros out the account, making it ready for the following period. TRUE

48. The last step of the accounting cycle is to prepare a post-closing trial balance. TRUE

49. The accounting cycle begins with preparing an unadjusted trial balance. FALSE

50. Financial statements should be prepared before the closing entries are journalized and posted. TRUE

51. The unadjusted, adjusted, and final trial balances are prepared during the accounting cycle of a period. FALSE

52. Any twelve-month accounting period adopted by a company is known as its fiscal year. TRUE

53. A fiscal year that ends when business activities have reached their lowest point is called the natural business year. TRUE

54. All companies must use a calendar year as their fiscal year. FALSE

55. The majority of businesses end their fiscal year on December 31. TRUE

56. The balances of the capital accounts from the Adjusted Trial Balance of the work sheet are extended to the Statement of Owner’s Equity columns. FALSE

57. The work sheet is a working paper that accountants can use to summarize adjusting entries and the account balances for the financial statements. TRUE

58. In a computerized accounting system, a work sheet may not be necessary because the software program automatically posts entries to the accounts and prepares financial statements. TRUE

59. The trial balance may be listed on the work sheet instead of being prepared separately. TRUE

60. The totals of the Adjusted Trial Balance columns on a work sheet will always be the sum of the Trial Balance column totals and the Adjustments column totals. FALSE

61. A work sheet heading is dated for a period of time. TRUE

62. On the work sheet, the capital and drawing account balances are extended to the Balance Sheet columns. TRUE

63. After the account balances have been extended from the Adjusted Trial Balance columns on the work sheet, the difference between the initial totals of the Balance Sheet debit and credit columns is Net Income or Net Loss. TRUE

64. After Net Income or Loss is entered on the work sheet, the debit column total must equal the credit column total for the Balance Sheet pair of columns. TRUE

65. A net loss is shown on the work sheet in the credit columns of both the Income Statement columns and the Balance Sheet columns. FALSE

66. Net income is shown on the work sheet in the Income Statement debit column and the Balance Sheet credit column. TRUE

67. If the totals of the Income Statement debit and credit columns of a work sheet are $27,000 and $29,000, respectively, after all account balances have been extended, the amount of the net loss is $2,000. FALSE

68. The worksheet and the financial statements both require dollar signs. FALSE

69. The balance in the capital account on the worksheet will equal the amount presented in the balance sheet. FALSE

70. Since the adjustments are entered on the work sheet, it is not necessary to record them in the journal or post them to the ledger. FALSE

71. The chart of accounts, the journal, and the ledger are essential parts of the accounting system. TRUE

72. The closing process is sometimes referred to as closing the books. TRUE

73. Accounts reported on the balance sheet that are carried forward from year to year are known as permanent accounts. TRUE

74. Real accounts are not permanent accounts. FALSE

75. In the accounting cycle, the last step is A. preparing the financial statements B. journalizing and posting the adjusting entries C. preparing a post-closing trial balance D. journalizing and posting the closing entries

76. During the end-of-period processing which of the following best describes the logical order of this process A. Preparation of adjustments, adjusted trial balance, financial statements B. Preparation of Income Statement, adjusted trial balance, Balance Sheet C. Preparation of adjusted trial balance, cross-referencing, journalizing D. Preparation of adjustments, adjusted trial balance, posting

77. What is the major difference between the Unadjusted Trial Balance and the Adjusted Trial Balance? A. The Adjusted Trial Balance will show the net income (loss) as an additional account. B. Unlike the Adjusted Trial Balance, the Unadjusted Trial Balance will continue with the end-of-period processing even if it is not in balance. C. The Adjusted Trial Balance includes the postings of the adjustments for the period in the balance of the accounts. D. The Adjusted Trial Balance will be used to record the adjustments for the period.

78. Once the adjusting entries are posted, the Adjusted Trial Balance is prepared to A. verify that the debits and credits are in balance. B. verify that the net income correctly flows into the statement of owner’s equity from the income statement C. verify that the net income (loss) is correct for the period. D. verify the correct flow of accounts into the financial statements.

79. When preparing the statement of owner's equity, the beginning capital balance can always be found A. in the Income Statement columns of the work sheet B. in the statement of cash flows C. in the general ledger D. in the Balance Sheet columns of the work sheet

80. Accumulated Depreciation appears on the A. balance sheet in the current assets section B. balance sheet in the property, plant and equipment section C. balance sheet in the long-term liabilities section D. income statement as an operating expense

81. Notes Receivable due in 350 days appear on the A. balance sheet in the current assets section B. balance sheet in the fixed assets section C. balance sheet in the current liabilities section D. income statement as an expense

82. Unearned Fees appear on the A. balance sheet in the current assets section B. balance sheet as a current liability C. balance sheet in the owner's equity section D. income statement as revenue

83. Which one of the fixed asset accounts listed below will not have a related contra asset account? A. Office Equipment B. Land C. Delivery Equipment D. Building

84. Prepaid insurance is reported on the balance sheet as a A. current asset B. fixed asset C. current liability D. long-term liability

85. The income statement is prepared from: A. the adjusted trial balance. B. the income statement columns of the work sheet. C. either the adjusted trial balance or the income statement columns of the work sheet. D. both the adjusted trial balance and the income statement columns of the work sheet.

86. Round-tripping is when A. a selling company sells to a customer company with huge discounts. B. a selling company pretends to sell to a fictitious company with the intent of inflating revenues C. a selling company lends money to a customer company to increase assets. D. a selling company lends money to a customer company to be used to purchase goods from the selling company.

87. The Statement of Owner’s Equity should be prepared A. before the income statement and after the balance sheet B. before the income statement and balance sheet C. after the income statement and balance sheet D. after the income statement and before the balance sheet

88. The income statement should be prepared A. before the statement of owner’s equity and balance sheet B. after the statement of owner’s equity and before the balance sheet C. after the statement of owner’s equity and balance sheet D. after the balance sheet and before the statement of owner’s equity



$ 6,530 2,100 700 13,700 $ 1,100 1,900 4,300 12,940 790 9,250 2,500 1,960 775 250 185 $29,490

$29,490

Determine the net income (loss) for the period.

A. Net Income $9,250 B. Net Loss $790 C. Net Loss $5,670 D. Net Income $3,580



Determine the Owner’s Equity ending balance for the period.

A. $12,150 B. $15,730 C. $6,480 D. $21,400

$ 6,530 2,100 700 13,700 $ 1,100 1,900 4,300 12,940 790 9,250 2,500 1,960 775 250 185 $29,490

$29,490



$ 6,530 2,100 700 13,700 $ 1,100 1,900 4,300 12,940 790 9,250 2,500 1,960 775 250 185 $29,490

$29,490

Determine total assets.

A. $24,130 B. $15,830 C. $21,930 D. $23,030



$ 6,530 2,100 700 13,700 $ 1,100 1,900 4,300 12,940 790 9,250 2,500 1,960 775 250 185 $29,490

$29,490

Determine the current assets.

A. $23,030 B. $9,330 C. $21,930 D. $8,630



$ 6,530 2,100 700 13,700 $ 1,100 1,900 4,300 12,940 790 9,250 2,500 1,960 775 250 185 $29,490

Determine the total liabilities for the period.

A. $1,900 B. $6,200 C. $4,300 D. $20,240

94. The Balance Sheet should be prepared A. before the income statement and the statement of owner’s equity B. before the income statement and after the statement of owner’s equity C. after the income statement and the statement of owner’s equity D. after the income statement and before the statement of owner’s equity

$29,490

95. The Statement of Owner’s Equity begins with the beginning balance followed by A. plus Net Income (loss) less withdrawals B. plus Net Income (loss) plus investments C. plus investments less withdrawals D. plus investments plus Net Income (loss) less withdrawals

96. The Income Statement will include the following accounts A. Revenues less Expenses (ordered largest to smallest amount) with Miscellaneous Expense listed last B. Revenues less Expenses (ordered smallest to largest amounts) with Miscellaneous Expense listed last C. Revenues less Expenses (ordered in alphabetical order) D. Revenues less Expenses (order is not important)

97. The classified Balance Sheet will subsection the assets section as follows A. Current Assets and Other Assets B. Current Assets and Property, Plant, and Equipment C. Current Assets and Short-Term Assets D. Other Assets and Property, Plant and Equipment

98. The classified Balance Sheet will divide its Liabilities Section as the following subsections A. Current Liabilities and Long-Term Liabilities B. Current Liabilities and Other Liabilities C. Other Liabilities and Long-Term Liabilities D. Present Liabilities and Tomorrow’s Liabilities

99. Short-term liabilities are those liabilities that A. will be paid in less than one year B. are due to be paid in 5 to 10 years C. are due to be paid in more than one year D. are owed to the owner and will never be paid

100. Owner’s Equity is A. added to assets and the two are equal to liabilities B. added to liabilities and the two are equal to assets C. subtracted from liabilities and the net amount is equal to assets D. equal to the total of assets and liabilities

101. Balance sheet accounts A. represent amounts accumulated during a specific period of time B. are called real accounts C. have zero balances after the closing entries have been posted D. are not affected by adjustments

102. On which financial statement will Income Summary be shown? A. Statement of Owner’s Equity B. Balance Sheet C. Income Statement D. No financial statement

103. Which of the following is not true about closing entries? A. There are four closing entries that update the owner’s equity account. B. After the second closing entry, the income summary account is equal to the net income or (loss) for the period. C. All real accounts are closed at the end of the period. D. By closing nominal accounts at the end of the period to zero, it is possible to isolate next period’s information correctly.

104. The income summary account is also called A. the imprest account B. the clearing account C. the adjustments account D. the helpful account

105. After posting the second closing entry to the income summary account, the balance will be equal to A. zero. B. owner’s equity. C. revenues for the period D. the net income or (loss) for the period.

106. What is the last account that should be listed in the Post Closing Trial Balance? A. Income Summary B. Capital account C. Cash D. Fees Earned

107. Which of the following account groups are all considered nominal accounts? A. Cash, Owner’s Equity, Wages Payable B. Prepaid Insurance, Property, Plant & Equipment, Fees Earned C. Capital Account, Dividend Account, Income Summary D. Rent Revenue, Fees Earned, Miscellaneous Expense

108. There are four closing entries. The first one is to close ____, the second one is to close ____, the third one is to close ____, and the last one is to close ____. A. Revenues, expenses, income summary, drawing account B. Expenses, assets, income summary, capital account C. Capital account, drawing account, income summary, assets D. Drawing account, income summary, expenses, revenues

109. Closing entries A. need not be journalized if adjusting entries are prepared B. need not be posted if the financial statements are prepared from the work sheet C. are not needed if adjusting entries are prepared D. must be journalized and posted

110. Closing entries are dated in the journal as of A. the date they are actually journalized, although they are generally prepared after the end of the accounting period B. the last day of the accounting period, although they are actually journalized after the end of the accounting period C. the first day of the accounting period, although they are actually journalized after the end of the accounting period D. the first day of the subsequent accounting period

111. Which of the accounts below would be closed by posting a debit to the account? A. Unearned Revenue B. Fees Earned C. Josh Morton, Drawing D. Miscellaneous Expense

112. Which of the following accounts should be closed to Income Summary at the end of the fiscal year? A. Supplies Expense B. Accumulated Depreciation C. Prepaid Insurance D. Unearned Rent

113. Which of the following accounts will not be closed to Income Summary at the end of the fiscal year? A. Salaries Expense B. Fees Earned C. Unearned Rent D. Depreciation Expense

114. Which of the following accounts will be closed to the Capital account at the end of the fiscal year? A. Rent Expense B. Fees Earned C. Income Summary D. Depreciation Expense

115. The entry to close the appropriate insurance account at the end of the accounting period is A. debit Income Summary; credit Prepaid Insurance B. debit Prepaid Insurance; credit Income Summary C. debit Insurance Expense; credit Income Summary D. debit Income Summary; credit Insurance Expense

116. Which of the following accounts ordinarily appears in the post-closing trial balance? A. Fees Earned B. Supplies Expense C. Zane White, Drawing D. Unearned Rent

117. The post-closing trial balance differs from the adjusted trial balance in that it A. does not take into account closing entries B. does not take into account adjusting entries C. does not include balance sheet accounts D. does not include income statement accounts

118. The following accounts were taken from the Adjusted Trial Balance columns of the work sheet:

Accumulated Depreciation Fees Earned Depreciation Expense Insurance Expense Prepaid Insurance Supplies Supplies Expense

$ 3,200 17,400 1,300 200 4,800 900 3,800


A. $3,200 B. $12,100 C. $17,400 D. $8,900

119. A summary of selected ledger accounts appear below for Alberto’s Plumbing Services for the current calendar year end.

Alberto, Capital 12/31

8,500

1/1 12/31

6,500 15,000

Alberto, Drawing 6/30 11/30

3,500 5,000

12/31

8,500

Income Summary 12/31 12/31

18,500 15,000

12/31

33,500


A. $13,000 B. $33,500 C. $15,000 D. $18,500

120. Amir Designs purchased a one-year liability insurance policy on March 1st of this year for $7,200 and recorded it as a prepaid expense. Which of the following amounts would be recorded for insurance expense during the adjusting process at the end of Amir’s first month of operations on March 31st? A. $7,200 B. $720 C. $600 D. $6,600

121. The journal entry to close the Fees Earned, $750, and Rent Revenue, $175, accounts on December 31st during the closing process would be: 750 A. Dec. 31 Fees Earned Rent Revenue 175 Income Summary 925 B. Dec. 31 Income Summary 925 Fees Earned 750 Rent Revenue 175 C. Dec. 31 Revenues 925 Income Summary 925 D. Dec. 31 Income Summary 925 Revenues 925




Balance Sheet Debit

Credit

Debit 48,000 18,000 6,000 57,000

Credit

18,000 25,000 6,000 33,000 3,000 155,000 63,000 27,000 15,000 105,000 50,000 155,000

The journal entry to close revenues would be:

A. debit Income Summary $155,000, credit Fees Earned $155,000 B. debit C. Finley, Capital $155,000, credit Fees Earned $155,000 C. debit Fees Earned $155,000; credit Income Summary $155,000 D. credit Fees Earned $155,000; credit C. Finley, Capital $155,000

155,000

132,000

155,000

132,000

82,000 50,000 132,000




Balance Sheet Debit

Credit

Debit 48,000 18,000 6,000 57,000

Credit

18,000 25,000 6,000 33,000 3,000 155,000 63,000 27,000 15,000 105,000 50,000 155,000

Based on the preceding trial balance, the entry to close expenses would be:

A. Wages Expense 63,000 Rent Expense 27,000 Depreciation Expense 15,000 Income Summary 105,000 B. Expenses 105,000 Income Summary 105,000 C. Wages Expense 63,000 Rent Expense 27,000 Depreciation Expense 15,000 C. Finley, Drawing 105,000 105,000 D. Income Summary Wages Expense 63,000 Rent Expense 27,000 Depreciation Expense 15,000


Finley Company Worksheet For the Year Ended December 31, 2014 Adjusted Trial Income Statement Balance Sheet Balance

155,000

132,000

155,000

132,000

82,000 50,000 132,000


Debit 48,000 18,000 6,000 57,000

Credit

Debit

Credit

Debit 48,000 18,000 6,000 57,000

18,000 25,000 6,000 33,000

18,000 25,000 6,000 33,000

3,000

3,000 155,000

63,000 27,000 15,000 237,000

Credit

237,000

155,000 63,000 27,000 15,000 105,000 50,000 155,000

155,000

132,000

155,000

132,000

Credit

Debit 48,000 18,000 6,000 57,000

82,000 50,000 132,000

Based on the preceding trial balance, the entry to close income summary would be:

A. debit C. Finley, Capital $50,000; credit Income Summary $50,000 B. debit Income Summary $155,000; credit C. Finley, Capital $155,000 C. debit Income Summary $50,000, credit C. Finley, Capital $50,000 D. debit C. Finley, Capital $9,000; credit Income Summary $9,000




Balance Sheet Debit

Credit

18,000 25,000 6,000 33,000 3,000 155,000 63,000 27,000 15,000 105,000 50,000 155,000

155,000

132,000

155,000

132,000

82,000 50,000 132,000

Based on the preceding trial balance, the entry to close C. Finley, Drawing would be:

A. debit C. Finley, Capital $3,000, credit C. Finley, Drawing $3,000 B. debit C. Finley, Capital $12,000, credit C. Finley, Drawing $12,000 C. debit C. Finley, Drawing $3,000; credit C. Finley, Capital $3,000 D. debit C. Finley, Drawing $12,000; credit C. Finley, Capital $12,000




Balance Sheet Debit

Debit 48,000 18,000 6,000 57,000

Credit

18,000 25,000 6,000 33,000 3,000 155,000 63,000 27,000 15,000 105,000 50,000 155,000

Based on the preceding trial balance, the ending balance in C. Finley, Capital is:

A. $33,000 B. $80,000 C. $30,000 D. $83,000

Credit

155,000

132,000

155,000

132,000

82,000 50,000 132,000

127. The proper sequence of steps in the accounting cycle is as follows A. analyze and record transactions, post transaction to the ledger, prepare a trial balance, prepare financial statements, journalize closing entries, analyze adjustment data and prepare adjusting entries B. prepare a trial balance, analyze adjustment data, prepare adjusting entries, prepare financial statements, journalize closing entries and post to the ledger, analyze and record transactions, post transactions to the ledger C. analyze and record transactions, post transactions to the ledger, prepare a trial balance, analyze adjustment data, prepare adjusting entries, prepare financial statements, journalize closing entries and post to the ledger, and finally prepare a post-closing trial balance D. prepare financial statements, journalize closing entries and post to the ledger, analyze and record transactions, post transactions to the ledger, prepare a trial balance, analyze adjustment data, prepare adjusting entries

128. The following are steps to the accounting cycle. Of the following, which step should be done first? A. Closing entries are journalized and posted to the ledger. B. Transactions are posted to the ledger. C. Adjusting entries are journalized and posted to the ledger. D. Financial statements are prepared.

129. The following are steps in the accounting cycle. Of the following, which would be prepared last? A. An adjusted trial balance is prepared. B. Transactions are posted to the ledger. C. An unadjusted trial balance is prepared. D. Adjusting entries are journalized and posted to the ledger.

130. The accounting cycle requires three trial balances be done. In what order should they be prepared? A. Post-closing, unadjusted, adjusted B. Unadjusted, post-closing, adjusted C. Unadjusted, adjusted, post-closing D. Post-closing, adjusted, unadjusted

131. The fiscal year selected by companies A. is the same as the calendar year B. begins with the first day of the month and ends on the last day of the twelfth month C. must always begin on January 1 D. will change each year

132. A fiscal year A. ordinarily begins on the first day of a month and ends on the last day of the following twelfth month B. for a business is determined by the federal government C. always begins on January 1 and ends on December 31 of the same year D. should end at the height of the business's annual operating cycle

133. The natural business year A. is a fiscal year that ends when business activities are at its lowest point. B. is a calendar year that ends when business activities are at its lowest point. C. is a fiscal year that ends when business activities are at its highest point. D. is a calendar year that ends when business activities are at its highest point.

134. The worksheet A. is an integral part of the accounting cycle B. eliminates the need to rewrite the financial statements C. is a working paper that is required D. is used to summarize account balances and adjustments for the financial statements

135. Which one of the steps below is not aided by the preparation of the work sheet? A. preparing the adjusted trial balance B. posting to the general ledger C. preparing the financial statements D. preparing the closing entries

136. A work sheet includes columns for A. adjusting entries B. closing entries C. reversing entries D. adjusting and closing entries

137. When a work sheet is complete, the adjustment columns should have A. total credits greater than total debits if a net income was earned B. total debits greater than total credits if a net loss was incurred C. total debits greater than total credits if a net income was earned D. total debits equal total credits

138. The difference between the totals of the debit and credit columns of the Adjusted Trial Balance columns on a work sheet A. is the amount of net income or loss B. indicates there is an error on the work sheet C. is the amount of retained earnings D. is the difference between revenue and expenses

139. Net income appears on the work sheet in the A. debit column of the Balance Sheet columns B. debit column of the Adjustments columns C. debit column of the Income Statement columns D. credit column of the Income Statement columns

140. A net loss appears on the work sheet in the A. debit column of the Balance Sheet columns B. credit column of the Balance Sheet columns C. debit column of the Income Statement columns D. credit column of the Adjustments columns

141. After net income is entered on the work sheet, the Balance Sheet debit and credit columns must A. be the same amount as the total amount of the Income Statement debit and credit columns B. equal each other C. be the same amount as the total amount in the Adjusted Trial Balance debit and credit columns D. not be equal to each other and need not be the same total amounts as any other pair of columns on the work sheet

142. Which of the statements below indicates that a company earned a net income for the period? A. The sum of the credits exceeds the sum of the debits in the Balance Sheet columns on the work sheet. B. The sum of the credits exceeds the sum of the debits in the Income Statement columns on the work sheet. C. The sum of the debits exceeds the sum of the credits in the Income Statement columns on the work sheet. D. Cash inflows exceeded cash outflows.

143. Which of the items below would appear in the Income Statement columns of the work sheet? A. Equipment B. Unearned Fees C. Prepaid Expense D. Net Loss

144. Which of the accounts below would not appear in the balance sheet columns of the worksheet? A. Chad Daniels, Drawing B. Rent Earned C. Unearned Revenue D. Chad Daniels, Drawing and Unearned Revenue

145. Which of the accounts below would appear in the Balance Sheet columns of the work sheet? A. Service Revenue B. Prepaid Rent C. Supplies Expense D. None are correct

146. The work sheet at the end of July has $5,950 in the Balance Sheet credit column for Accumulated Depreciation. The work sheet at the end of August has $7,600 in the Balance Sheet credit column for Accumulated Depreciation. What was the amount of the depreciation expense adjustment for the month of August? A. amount can not be determined B. $7,600 C. $5,950 D. $1,650

147. Which of the items below does not appear on the work sheet? A. adjusting entries B. the unadjusted trial balance C. closing entries D. the drawing account

148. An indication that the work sheet columns are in balance and the work sheet is completed is A. the word "Total" is written at the bottom of each pair of columns B. each pair of columns is double underlined C. each pair of columns has the totals circled D. the final figures are written in ink

149. After all of the account balances have been extended to the Balance Sheet columns of the work sheet, the totals of the debit and credit columns are $38,755 and $32,735, respectively. What is the amount of net income or net loss for the period? A. $6,020 net income B. $38,755 net loss C. $6,020 net loss D. $32,735 net income

150. After all of the account balances have been extended to the Income Statement columns of the work sheet, the totals of the debit and credit columns are $77,500 and $83,900, respectively. What is the amount of the net income or net loss for the period? A. $6,400 net income B. $6,400 net loss C. $83,900 net income D. $77,500 net loss

151. On September 1, the company pays rent for twelve months in advance and debits an asset account. At year end, the adjusting entry on the work sheet would A. increase an expense account B. decrease a liability account C. increase an asset account D. decrease an expense account

152. On March 1, a company collects revenue in advance for the next twelve months and credits a liability account. The adjusting entry at year end on the work sheet would A. increase a liability account B. decrease an asset account C. decrease a revenue account D. decrease a liability account

153. Which of the following is not an essential part of the accounting records? A. The journal B. The ledger C. The chart of accounts D. The work sheet

154. After all of the account balances have been extended to the Balance Sheet columns of the work sheet, the totals of the debit and credit columns show debits of $37,686 and the credits of $41,101. This indicates that A. neither net income or loss can be calculated because it is found on the income statement B. the company has a net loss of $3,415 for the period C. the company has a net income of $3,415 for the period D. The amounts are out of balance and need to be corrected

155. The income statement columns in the worksheet show that debits are equal to $55,800 and credits are $67,520. What does this information mean to the accountant? A. Net income of $11,720 B. Net loss of $11,720 C. The accounts are out of balance, indicating an error has been made. D. The accounts have not been updated.



Debit $ 1,500 2,000 100 1,600 2,800 15,000

Credit

$3,000 2,400 3,920 2,700 500 7,700 2,000 37,000 1,200 100 19,000 1,800 320 700 9,000 2,700 $58,520

$58,520

The entry required to close the revenue accounts at the end of the period includes a:

A. debit to Income Summary for $37,000 B. credit to Income Summary for $38,300 C. debit to Income Summary for $38,200 D. credit to Income Summary for $37,000



Debit $ 1,500 2,000 100 1,600 2,800 15,000

Credit

$3,000 2,400 3,920 2,700 500 7,700 2,000 37,000 1,200 100 19,000 1,800 320 700 9,000 2,700 $58,520

$58,520

The entry required to close the expense accounts at the end of the period includes a:

A. a debit to Income Summary for $35,520 B. a credit to Income Summary for $35,520 C. a debit to Income Summary for $33,520 D. a credit to Income Summary for $33,520

158. The balances for the accounts listed below appear in the Adjusted Trial balance columns of the end-of-period spreadsheet (work sheet). Indicate whether each balance should be extended to an Income Statement column or (b) a Balance Sheet column. 1. 2. 3. 4. 5. 6. 7. 8.

Dobson, Capital Dobson, Drawing Depreciation Expense Accumulated Depreciation Fees earned Unearned Fees Supplies Supplies Expense

1. 2. 3. 4. 5. 6. 7. 8.

Balance sheet column Balance sheet column Income statement column Balance sheet column Income statement column Balance sheet column Balance sheet column Income statement column

159. The end-of-period spreadsheet (work sheet) for the current year for Jamal Company shows Balance Sheet columns with a debit total of $630,430 and a credit total of $614,210. This is before the amount for net income or net loss has been included. In preparing the income statement from work sheet, what is the amount of net income or net loss? A net income of $16,220

160. Morgan Olsen owns and operates Crystal Pool Service Company. On January 1, 2014, Morgan Olsen, Capital had a balance of $252,000. During the year Morgan invested an additional $32,000 and withdrew $52,400. For the year ended December 31, 2014 Crystal Pool Service Company reported a net income of $73,200. Prepare a Statement of Owner’s Equity for the year ended December 31, 2014.

Crystal Pool Service Company Statement of Owner’s Equity For the Year Ended December 31, 2014 Morgan Olsen, Capital January 1, 2014 Additional investment during 2014 Total Net Income Less: Withdrawals Increase in owner’s equity Morgan Olsen, Capital, December 31, 2014

$252,000 32,000 $284,000 $ 73,200 (52,400) 20,800 $304,800

161. The following accounts appear in an adjusted trial balance of Brock Pool Service Company. Indicate whether each account would be reported in the (a) current assets, (b) property, plant, and equipment, (c) current liabilities, (d) long-term liabilities, or (e) owner’s equity section of the December 31, 2010, balance sheet of Brock Pool Service Company.

1. 2. 3. 4. 5. 6. 7. 8.

1. 2. 3. 4. 5. 6. 7. 8.

Taylor Brock, Capital Accumulated Depreciation Unearned Revenues Mortgage Payable Equipment Notes Payable (due in 2012) Cash Accounts Receivable

(e) Owner’s equity (b) Property, plant and equipment (c) Current liabilities (d) Long-term liabilities (b) Property, plant and equipment (d) Long-term liabilities (a) Current assets (a) Current assets

162. Describe a classified balance sheet. A classified balance sheet subsections assets as current assets and property, plant, and equipment. It also subsections liabilities as current liabilities and long-term liabilities. It also includes the owner's equity section.

163. List and describe the purpose of the four closing entries. 1. 2. 3. 4.

Close revenues to income summary. Close expenses to income summary. Close income summary to capital account. Close drawing account to capital account.

At the beginning of the next period, temporary accounts should have zero balances. To achieve a zero balance, temporary account balances are transferred to permanent accounts at the end of the accounting period. The entries that transfer these balances are called closing entries and the transfer process is called the closing process.

164. After the accounts have been adjusted at January 31, 2014, the end of the fiscal year, the following balances are taken from the ledger of Taylor Pool Service Company:

Hope Taylor, Capital Hope Taylor, Drawing Fees Earned Wages Expense Rent Expense Supplies Expense Miscellaneous Expense

$349,000 5,000 124,600 29,000 43,000 7,300 5,700

Journalize the four entries required to close the accounts Jan 31

Fees Earned

124,600 Income Summary

31

Income Summary

124,600 85,000

Wages Expense Rent Expense Supplies Expense Miscellaneous Expense 31

Income Summary

29,000 43,000 7,300 5,700 39,600

Hope Taylor, Capital 31

Hope Taylor, Capital

39,600 5,000

Hope Taylor, Drawing

5,000

165. Prior to adjustment at August 31, 2014, Salary Expense has a debit balance of $298,500. Salaries owed but not paid as of the same date total $7,200.

Present the entries to record the followin g: (1) Accrued salaries as of August 31. (2) Closing of Salary Expense as of August 31.

(1)

(2)

Salary Expense Salaries Payable

7,200

Income Summary Salary Expense

305,700

7,200

305,700

166. The following are all the steps in the accounting cycle. List them in the order in which they should be done. - Closing entries are journalized and posted to the ledger. - An unadjusted trial balance is prepared. - An optional end-of-period spreadsheet (work sheet) is prepared. - A post-closing trial balance is prepared. - Adjusting entries are journalized and posted to the ledger. - Transactions are analyzed and recorded in the journal. - Adjustment data are assembled and analyzed. - Financial statements are prepared. - An adjusted trial balance is prepared. - Transactions are posted to the ledger.

1. 2. 3. 4. 5. 6. 7. 8. 9. 10.

Transactions are analyzed and recorded in the journal. Transactions are posted to the ledger. An unadjusted trial balance is prepared. Adjustment data are assembled and analyzed. An optional end-of-period spreadsheet (work sheet) is prepared. Adjusting entries are journalized and posted to the ledger. An adjusted trial balance is prepared. Financial statements are prepared. Closing entries are journalized and posted to the ledger. A post-closing trial balance is prepared.

167. If working papers are not considered part of the formal accounting records, then why are they used? Working papers are tools used by accountants to collect and summarize data for for various analysis and reports.

168. Explain how net income or loss is determined by using the work sheet. The difference between the debits and credits from the Income Statement columns are compared to the debits and credits from the Balance Sheet columns. They should be the same amounts but opposite from each other. If the debits are more than the credits on the income statement columns, signifying a net loss, then the credits should be higher than the debits on the balance sheet columns by the same amount. If the credits are more than the debits on the income statement columns, signifying a net income, then the debits should be higher than the credits on the balance sheet columns by the same amount.

169. You evaluate loan requests as part of your job at Beach Front National Bank. One loan request you received is from Surfer Dude Supplies, a small proprietorship. Tracy Roberts, the owner, is requesting $75,000 and brings you a trial balance (or Statement of Accounts) for his first year of operations ended December 31, 2010. REQUIRED: While you are willing to work with Tracy, how would you explain to him that a complete set of financial statements from his accountant would be more useful for evaluatin g the loan request? A set of financial statements provides useful information concerning the ec onomic condition of a company. For example, the balance sheet describes the financial condition of the company as of a given date and is useful in assessing the company’s financial soundness and liquidity. The income statement describes the results of operations for a period and indicates the profitability of the company. The statement of owner’s equity describes the changes in the owner’s interest in the company for a period. Each of these statements is useful in evaluating whether to extend credit to the company.

170. You have just accepted your first job out of college, which requires you to evaluate loan requests at Beach Front National Bank. The first loan request you receive is from Surfer Dude Enterprises, a small proprietorship. Marty Monroe, the owner, is requesting $75,000 and brings you the following trial balance (or Statement of Accounts) for his first year of operations ended De cember 31, 2010. What three accounts do you think should be relabeled for greater clarity?

Surfer Dude Enterprises Statement of Accounts December 31, 2010 Cash Billings Due from Others Office Supplies Trucks Equipment Amounts Owed to Others Investment in Business Service Revenues Wages Expense Rent Expense Insurance Expense Utilities Expenses Miscellaneous Expenses

·

2,050 15,070 7,470 26,370 8,090 2,850 23,500 73,650 30,050 7,330 2,400 700 470 100,000

The following items should be relabeled for greater clarity: Billings Due from Others—Accounts Receivable Amounts Owed to Others—Accounts Payable Investment in Business—Marty Monroe, Capital

100,000

171. You have just accepted your first job out of college, which requires you to evaluate loan requests at Beach Front National Bank. The first loan request you receive is from Surfer Dude Enterprises, a small proprietorship. Marty Monroe, the owner, is requesting $75,000 and brings you the following trial balance (or Statement of Accounts) for his first year of operations ended De cember 31, 2010. Which of the following accounts do you think might need to be adjusted before an accurate set of financial statements could be prepared?

Cash Billings Due from Others Office Supplies Trucks Equipment Amounts Owed to Others Investment in Business Service Revenues Wages Expense Rent Expense Insurance Expense Utilities Expense Miscellaneous Expenses

Surfer Dude Enterprises Statement of Accounts December 31, 2010 2,050 15,070 7,470 26,370 8,090 2,850 23,500 73,650 30,050 7,330 2,400 700 470 100,000

100,000

The following adjustments might be necessary before an accurate set of financial statements could be prepared: · · · · · ·

No office supplies expense is shown. The office supplies account should be adjusted for the supplies used during the year. No depreciation expense is shown for the trucks or equipment accounts. An adjusting entry should be prepared for depreciation expense on each of these assets. An inquiry should be made as to whether any accrued expenses, such as wages or utilities, exist at the end of the year. An inquiry should be made as to whether any prepaid expenses, such as rent or insurance, exist at the end of the year. An inquiry should be made as to whether any unearned revenue exist at the end of the year. An inquiry should be made as to whether the owner withdrew any funds from the company during the year. No drawing account is shown in the “Statement of Accounts.”

172. Hakik Enterprises offers rug cleaning services to business clients. Below is the trial balance for Hakik Enterprises, which was prepared on the end of period spreadsheet (work sheet) for the year ended July 31, 2010.



Trial Balance Adjustments Adjusted Trial Balance Debit Credit Debit Credit 36 12 56 12 60 12 20 32 84 4 80 28 20

228

228

Debit

Credit

REQUIRED: Enter the adjustment data in the work sheet for the transactions shown below and place the balances in the Adjusted Trial Balance columns. a) The equipment is estimated to last for 5 years with no salvage value. The asset will be depreciated evenly over its useful life. Record one month’s depreciation. b) Accrued Wages $2. c) Unused supplies on hand $8. d) Of the unearned revenue, 75% has been earned. e) Unexpired insurance remaining at the end of the month, $9. Hakik Enterprises End of Period Spreadsheet (Work Sheet) For the Year Ended July 31, 2010 Trial Balance


Debit 36 12 56 12 60

Adjustments Credit

Adjusted Trial Balance Debit Credit (e) 3 (c) 4

12 20 32

Debit 36 9 56 8 60

(a) 1

13 5 32 2 84

(d) 15 (b) 2

84 4

4 80

28 20

228

Credit

228

(d) 15 (b) 2 (e) 3 (c) 4 (a) 1 25

25

95 28 22 3 4 1 231

231

173. Hakik Enterprises offers rug cleaning services to business clients. Below are the adjustments data for the year ended July 31, 2010. REQUIRED: Using this information along with the spreadsheet below, record the adjusting entries in proper general journal form. Adjustments: a) The equipment is estimated to last for 5 years with no salvage value. The asset will be depreciated evenly over its useful life. Please record one month’s depreciation. b) Accrued Wages $2. c) Unused supplies on hand $8. d) Of the unearned revenue, 75% has been earned. e) Unexpired insurance remaining at the end of the month, $9.


Cash Prepaid Insurance Fees Receivable Supplies Equipment Accum. Deprec. - Equip Unearned Revenue Accounts Payable Wages Payable Ramon Hakik, Capital Ramon Hakik, Drawings Service Revenue Advertising Expense Wage Expense Insurance Expense Supplies Expense Depreciation Expense Totals

Trial Balance Adjustments Adjusted Trial Balance Debit Credit Debit 36 12 56 12 60 12 20 32 84 4 80 28 20

228

228

Credit

Debit

Credit

GENERAL JOURNAL Page 1 DATE Description Post.Ref. 2010 Adjusting Entries (a) Depreciation Expense Accum. Deprec. - Equipment (b)

(c)

(d)

(e)

Debit

Credit

1 1

Wage Expense Wages Payable

2

Supplies Expense Supplies

4

Unearned Revenue Service Revenue

15

Insurance Expense Prepaid Insurance

3

2

4

15

3


Cash Accounts receivable Interest receivable Prepaid insurance Notes receivable (long-te rm) Equipment Accumulated depreciation Accounts payable Accrued expenses payable Income taxes payable Unearned rent fees Bob Evans, Capital Bob Evans, Drawing Rent fees earned Furniture rental revenue Interest revenue Wages expense Depreciation expense Utilities expense Insurance expense Maintenance expense Income tax expense Total

Debit $ 1,500 2,000 100 1,600 2,800 15,000

Credit

$3,000 2,400 3,920 2,700 500 7,700 2,000 37,000 1,200 100 19,000 1,800 320 700 9,000 2,700 $ 58,520

$ 58,520

Prepare the entry required to close the revenue accounts at the end of the period.

Dec. 31

Rent fees earned Furniture rental revenue Interest revenue Income Summary

37,000 1,200 100 38,300



Debit $ 1,500 2,000 100 1,600 2,800 15,000

Credit

$3,000 2,400 3,920 2,700 500 7,700 2,000 37,000 1,200 100 19,000 1,800 320 700 9,000 2,700 $ 58,520

$ 58,520

Prepare the entry required to close the expense accounts at the end of the period.

Dec 31

Income Summary Wages expense Depreciation expense Utilities expense Insurance expense Maintenance expense Income tax expense

33,520 19,000 1,800 320 700 9,000 2,700



Debit $ 1,500 2,000 100 1,600 2,800 15,000

Credit

$3,000 2,400 3,920 2,700 500 7,700 2,000 37,000 1,200 100 19,000 1,800 320 700 9,000 2,700 $ 58,520

$ 58,520

Prepare the closing entry required to transfer the income or loss at the end of the period.

Dec 31

Income Summary Bob Evans, Capital

4,780 4,780



Debit $ 1,500 2,000 100 1,600 2,800 15,000

Credit

$3,000 2,400 3,920 2,700 500 7,700 2,000 41,000 1,200 100 19,000 1,800 320 700 9,000 2,700 $ 58,520

$ 58,520

Prepare the entry required to close the Drawing account at the end of the period.

Dec 31

Bob Evans, Capital Bob Evans, Drawing

2,000 2,000

178. Each of the following transactions for Morrison Company requires an adjusting entry, which if omitted, will overstate or understate assets, liabilities, owner’s equity, revenues, expenses, or net income. Indicate the amount and direction of the misstatement that would result if the end of period adjusting entry suggested by the transaction was omitted. Place your results in the table following the transactions and use (+) for overstate, (-) for understate, and (NE) for no effect. 1. Morrison purchased supplies on December 1 for $900. On December 31, $350 of supplies were on hand. 2. Prepaid insurance had a debit balance of $5,400 on December 1, which represented a prepayment for 2 years of insurance. 3. The unearned rent revenue account has a credit balance of $390 on December 1, which represents 3 months rent.


Assets

Liabilities

Owner’s Equity

Revenues

Expenses

Net Income


Assets +550 +225 NE

Liabilities NE NE +130

Owner’s Equity +550 +225 -130

Revenues NE NE -130

Expenses -550 -225 NE

Net Income +550 +225 -130

179. The end-of-period spreadsheet (work sheet) for the current year for Jamal Company shows Balance Sheet columns with a debit total of $614,210 and a credit total of $630,430. This is before the amount for net income or net loss has been included. In preparing the income statement from work sheet, what is the amount of net income or net loss? Net loss of $16,220

180. Identify which of the following accounts should be closed with a debit or a credit to Income Summary at the end of the fiscal year. If it is not closed to Income Summary, mark as n/a. 1. Utilities Payable 2. Utilities Expense 3. Supplies 4. Supplies Expense 5. Fees Earned 6. Unearned Fees 7. Accounts Receivable 8. Jason Hill, Drawing 9. Jason Hill, Capital 10. Accumulated Depreciation - Equipment 11. Depreciation Expense - Equipment 12. Equipment 13. Prepaid Insurance 14. Insurance Expense

1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14.

Utilities Payable Utilities Expense Supplies Supplies Expense Fees Earned Unearned Fees Accounts Receivable Jason Hill, Drawing Jason Hill, Capital Accumulated Depreciation - Equipment Depreciation Expense - Equipment Equipment Prepaid Insurance Insurance Expense

n/a debit n/a debit credit n/a n/a n/a n/a n/a debit n/a n/a debit

181. The balances for the accounts listed below appeared in the Adjusted Trial Balance columns of the work sheet. Indicate whether each balance should be extended to (a) the Income Statement columns or (b) the Balance Sheet columns.

(1) (2) (3) (4) (5) (6)

Salaries Payable Fees Earned Accounts Payable Felipe Ramos, Capital Supplies Expense Unearned Rent

(7) (8) (9) (10) (11) (12)

Felipe Ramos, Drawing Equipment Accounts Receivable Accumulated Depreciation Salary Expense Depreciation Expense

(a) (b)

Income statement: 2, 5, 11, 12 Balance sheet: 1, 3, 4, 6, 7, 8, 9, 10

182. Indicate whether each of the following would be reported in the financial statements as a(n) (a) current asset, (b) current liability, (c) revenue, or (d) expense:

(1) (2) (3) (4)

Supplies Unearned Fees Prepaid Advertising Advertising Expense

(1) (2) (3) (4) (5) (6) (7) (8)

current asset current liability current asset expense expense current asset current liability revenue

(5) (6) (7) (8)

Supplies Expense Prepaid Insurance Accounts Payable Fees Earned

183. The following accounts were taken from the Adjusted Trial Balance columns of the work sheet for April 30, 2010 for Finnegan Co.:

Accumulated Depreciation Fees Earned Depreciation Expense Rent Expense Prepaid Insurance Supplies Supplies Expense

$ 32,000 78,000 7,250 34,000 6,000 400 1,800

Prepare an income statement. Finnegan Co. Income Statement For the Year Ended April 30, 2010 Fees earned Expenses: Rent expense Depreciation expense Supplies expense Total expenses Net income

$78,000 $34,000 7,250 1,800 43,050 $34,950

184. The following revenue and expense account balances were taken from the Income Statement columns of the work sheet for Fraser Services Co. for December 31, 2010:

Depreciation Expense Insurance Expense Miscellaneous Expense Rent Expense Service Revenue Supplies Expense Utilities Expense Wages Expense

$ 4,950 2,900 1,200 24,000 92,500 3,150 5,000 63,750

Prepare an income statement. Fraser Services Co. Income Statement For the Year Ended December 31, 2010 Service revenue Operating expenses: Wages expense Rent expense Utilities expense Depreciation expense Supplies expense Insurance expense Miscellaneous expense Total operating expenses Net loss

$ 92,500 $63,750 24,000 5,000 4,950 3,150 2,900 1,200 104,950 $ (12,450)

185. The following data were taken from the Balance Sheet columns of the work sheet for April 30, 2010 for Mackenzie Company:

Accumulated Depreciation-Trucks Prepaid Rent Supplies Unearned Fees Trucks Cash Mackenzie, Capital

$42,400 6,800 850 7,310 49,300 3,400 ?

Prepare a classified balance sheet. Mackenzie Company Balance Sheet April 30, 2010 Assets Current assets: Cash Supplies Prepaid rent Total current assets Property, plant, and equipment: Trucks

Liabilities $ 3,400 850 6,800

Current liabilities: Unearned fees $ 11,050

$49,300

Less accum. depreciation Total property, plant and equipment Total assets

Owner's Equity Mackenzie, Capital Total liabilities and owner's equity

$ 7,310

10,640 $17,950

42,400 6,900 $17,950

186. Indicate whether each of the following would be reported in the section of financial statements identified as (a) current asset, (b) property, plant, and equipment, (c) current liability, (d) revenue, or (e) expense:

(1) (2) (3) (4) (5) (6) (7) (8) (9)

Automobile Accumulated depreciation Rent expense Fees earned Salaries payable Prepaid rent Store supplies Advertising expense Unearned rent

(1) (2) (3) (4) (5) (6) (7) (8) (9)

property, plant, and equipment property, plant, and equipment expense revenue current liability current asset current asset expense current liability

187. The following balance sheet contains errors.

Brock Morton Services Co. Balance Sheet For the Year Ended December 31, 2010

Assets Current assets: Cash Accounts payable Supplies Prepaid insurance Land Total current assets

Property, plant, and equipment: Building Equipment Total property, plant, and equipment Total assets

$ 7,170 7,500 2,590 800 24,000 $ 42,060

$43,700 29,250

Liabilities Current liabilities: Accounts receivable Accum. depr-building Accum. depr-equipment Net income

$ 10,000 12,525 7,340 11,500

Total liabilities

$ 41,365

Owner's Equity Wages payable Brock Morton, Capital Total owner's equity

1,500 88,645 $ 90,145

Total liabilities and owner's equity

$131,510

$

72,950 $131,510

(a) List the errors in the balance sheet above and (b) prepare a corrected balance sheet.

(a) (1) (2) (3) (4) (5) (6) (7) (8)

Date of statement should be "December 31, 2010" and not "For the Year Ended December 31, 2010." Accounts payable should be a current liability. Land is a fixed asset and should be listed as Property, Plant and Equipment. Accumulated depreciation should be deducted from the related fixed asset in the Property Plant, and Equipment section. An adding error was made in determining the amount of total assets. Accounts receivable should be a current asset. Net income would be reported on the income statement. Wages payable should be a current liability.

A corrected balance sheet would be as follows: Brock Morto n Servic es Co. Balanc e Sheet Decem ber 31, 2010

Assets Curren t assets: Cash

Acco unts receiva ble Suppl ies Prepa id insuran ce Tota l current assets Propert y, plant, and equipm ent: Land Build $43,700 ing Less 12,525 accum. depreci ation Equi 29,250 pment Less 7,340 accum. depreci ation Tota l propert y, plant, and equipm ent Total assets

$ 7,1 70 10,00 0

2,590 8 00

$20,560

$24,0 00

31,17 5

21,9 10

77,085

$97,645

Liabilities Current liabilities: Accounts payable

Wages payable Total liabilities

$7,50 0 1,500 $ 9,000

Owner's Equity Brock Morton, Capital Total liabilities and owner's equity

88,645 $97,645

188. The following is the adjusted trial balance for Nadia Company.

Nadia Company Adjusted Trial Balance December 31, 2014

Cash Accounts Receivable Prepaid Expenses Equipment Accumulated Depreciation Accounts Payable Notes Payable - Due on June 30, 2011 Nadia Porter, Capital Nadia Porter, Drawing Fees Earned Wages Expense Rent Expense Utilities Expense Depreciation Expense Miscellaneous Expense Totals

5,130 3,300 420 12,400 2,200 700 3,070 13,000 700 10,930 2,450 1,900 1,475 1,150 975 29,900

29,900

Prepare an Income Statement, Balance Sheet, and Statement of Owner’s Equity. Assume that the capital account started with a beginning balance of $10,000. Nadia Company Income Statement For Year Ended December 31, 2014

Fees Earned Expenses: Wages Expense Rent Expense Utilities Expense Depreciation Expense Miscellaneous Expense Total Expenses Net Income

$10,930 $2,450 1,900 1,475 1,150 975 7,950 $2,980

Nadia Company Statement of Owner’s Equity For Year Ended December 31, 2014

Nadia Porter, Capital, January 1, 2014 Additional investments during 2014 Total Net Income Sub-Total Less Withdrawals Nadia Porter, Capital, December 31 , 2014

$10,000 3,000 $13,000 2,980 $15,980 700 $15,280

Nadia Company Balance Sheet December 31, 2014 Assets Current Assets Cash Accounts Receivable Prepaid Expenses Total Current Assets

Liabilities

Current Liabilities Accounts Payable Notes Payable Total Liabilities

$5,130 3,300 420

$ 700 3,070 $3,770

$8,850

Property, Plant, & Equip.: Equipment Less: Accum Depre. Total Prop., Plant, & Equip Total Assets

$12,400 2,200

Owner’s Equity Nadia Porter, Capital Total Liabilities and Owner’s Equity

$10,200 $19,050

$15,280 $19,050

189. Prepare an income statement and a statement of owner’s equity, for the month ended August 31, 2014, from the following T-Accounts of Marley Company.

Prepaid Insurance


1,100

5,400 800

200

Marley, Capital

Marley , Drawin g 6,500 2,800 5,780

3,200

Unearned Revenues

Wages Payable

1,400

480

9,775

7,500 2,000 275

400

Income Summary

Fees Earned

3,200 3,200

3,995 5,780 9,775

Wages Expense

Rent Expens e

2,200 425

Insurance Expense 990


990

95 285

95

2,625

Marley Company Income Statement For the Month Ended August 31, 2014

Fees Earned Expenses: Wages Expense Rent Expense Insurance Expense Utilities Expense Total Expenses Net Income

$9,775 $2,625 990 285 95 $3,995 $5,780

Marley Company Statement of Owner’s Equity For the Month Ended August 31, 2014

Marley, Capital, August 1, 2014 Add: Additional Investments during August, 2014 Sub-total Add: Net Income Month Ended August 31, 2014 Less: withdrawals Increase in Owner’s Equity Marley, Capital, August 31, 2014

$6,500 2,800 $9,300 $5,780 3,200 2,580 $11,880

190. Prepare an income statement and a statement of owner’s equity for the month ended September 30, 2010 from the T-accounts below of Carson Company.

Prepaid Insurance


1,400 120

Unearned Revenues

1,600 400

Wages Payable

1,200 200

435

Carson, Capital

Carson , Drawin g 6,800 2,500

Income Summary

Fees Earned

2400

4,760

2,400

4,150

610 2,400

3,300 500 350

610 4,150

Wages Expense

Rent Expens e

3,200 225



1,130

125 80

125

3,425

Carson Company Income Statement For the Month Ended September 30, 2010

Fees Earned Expenses: Wages Expense Rent Expense Insurance Expense Utilities Expense Total Expenses Net Loss

$4,150 $3,425 1,130 80 125 $4,760 ($610)

Carson Company Statement of Owner’s Equity For the Month Ended September 30, 2010 Carson, Capital, September 1, 2010 Add: Additional Investments during September, 2010 Sub-total Less: Net Loss Month Ended September 30, 2010 Withdrawals Decrease in Owner’s Equity Carson, Capital, September 30, 2010

$6,800 2,500 $9,300 $610 2,400 3,010 $6,290

191. Selected ledger accounts appear below for Fulton Surveying Services for 2014.

Fulton, Capital 12/31

25,000

Fulton, Drawing 1/1 12/31

20,000 48,000

3/31 12/22

12,000 13,000

12/31

25,000

Income Summary 12/31 19,000 12/31 48,000

12/31

67,000

Prepare a statement of owner's equity. Fulton Surveying Services Statement of Owner's Equity For the Year Ended December 31, 2014 Fulton, Capital, 1/1/2014 Net income Less withdrawals Increase in owner’s equity Fulton, Capital, 12/31/2014

$20,000 $ 48,000 25,000 23,000 $43,000

192. On the basis of the following data taken from the Adjusted Trial Balance columns of the work sheet for the year ended March 31 for Boles Athletic Company, journalize the four closing entries.

Cash Accounts Receivable Supplies Equipment Accumulated Depreciation Accounts Payable Jason Boles, Capital Jason Boles, Drawing Fees Earned Salary Expense Rent Expense Depreciation Expense Supplies Expense Miscellaneous Expense

Mar. 31

31

31

31

$ 30,000 45,200 5,000 169,900 $ 32,000 12,500 71,600 47,000 510,000 244,500 48,000 25,000 9,500 2,000 $626,100

Fees Earned Income Summary

510,000

Income Summary Salary Expense Rent Expense Depreciation Expense Supplies Expense Miscellaneous Expense

329,000

Income Summary Jason Boles, Capital

181,000

Jason Boles, Capital Jason Boles, Drawing

47,000

$626,100

510,000

244,500 48,000 25,000 9,500 2,000

181,000

47,000

193. After all adjustments have been made, but before the accounts have been closed, the following balances were taken from the ledger of Ramona’s Designs:

Accounts Payable Accounts Receivable Accumulated Depreciation Cash Depreciation Expense Equipment Insurance Expense Prepaid Insurance

$ 27,600 64,500 73,325 17,150 13,500 165,000 2,510 6,275

Rent Expense Salary Expense Salaries Payable Service Revenue Supplies Supplies Expense Ramona Cross, Capital Ramona Cross, Drawing

$ 32,700 41,390 8,150 186,000 1,500 2,500 99,950 48,000

Journalize the entries to close the appropriate accounts.

Service Revenue Income Summary

186,000

Income Summary Depreciation Expense Insurance Expense Rent Expense Salary Expense Supplies Expense

92,600

Income Summary Ramona Cross, Capital

93,400

Ramona Cross, Capital Ramona Cross, Drawing

48,000

186,000

13,500 2,510 32,700 41,390 2,500

93,400

48,000

194. On the basis of the following information taken from the Adjusted Trial Balance columns of the work sheet for the month ended September 30th, journalize the closing entries for Perez Roofing Company. Cash Accounts Receivable Office Supplies Repair Parts Machinery Accumulated Depreciation Accounts Payable Notes Payable Sam Perez, Capital Sam Perez, Drawing Service Revenue Wages Expense Office Supplies Expense Repair Parts Expense Depreciation Expense

$22,500.00 3,575.00 2,850.00 3,785.00 17,750.00 3,250.00 1,150.00 6,500.00 2,500.00 1,750.00 47,200.00 4,840.00 1,275.00 925.00 1,350.00 $60,600.00

$60,600.00

Sep 30

Service 47,200.00 Revenue Income 47,200.00 Summary Closing Entry - Service Revenue

Sep 30

Income 8,390.00 Summary Wages Expense Office Supplies Expense Repair Parts Expense Depreciation Expense Closing Entry Expenses

4,840.00 1,275.00

925.00 1,350.00

Sep 30

Income 38,810.0 Summary 0 Sam Perez, 38,810.00 Capital Closing Entry Income Summary

Sep 30

Sam Perez, 1,750.00 Capital Sam Perez, 1,750.00 Drawing Closing Entry Drawing

195. The following adjusted trial balance is the result of the adjustments made at the end of the month of March for Erik Martin Company. Utilize these adjusted values to perform the closing entries for Erik Martin Company. Cash Accounts Receivable Office Supplies Store Supplies Machinery Accumulated Depreciation Accounts Payable Notes Payable Erik Martin, Capital Erik Martin, Drawing Service Revenue Wages Expense Office Supplies Expense Store Supplies Expense Depreciation Expense

March 31

March 31

March 31

Service 36,500.00 Revenue Income Summary Closing Entry Service Revenue

Income 14,615.00 Summary Wages Expense Office Supplies Expense Store Supplies Expense Depreciation Expense Closing Entry Expenses

Income 21,885.00 Summary Erik Martin, Capital Closing Entry Income Summary

$24,750.00 5,750.00 3,525.00 4,785.00 9,750.00 2,150.00 3,550.00 7,500.00 19,725.00 6,250.00 36,500.00 6,425.00 1,465.00 5,150.00 1, 575.00 $69,425.00

36,500.00

6,425.00 1,465.00

5,150.00

1,575.00

21,885.00

________ $69,425.00

March 31

Erik Martin, Capital Erik Martin, Drawing Closing Entry Drawing

6,250.00

6,250.00

196. The following adjusted trial balance is the result of the adjustments made at the end of the month of July for Ladonna Douglas Company. Utilize these adjusted values to perform the closing entries for Ladonna Douglas Company. Cash Accounts Receivable Office Supplies Store Supplies Machinery Accumulated Depreciation Accounts Payable Notes Payable Ladonna Douglas, Capital Ladonna Douglas, Drawing Service Revenue Wages Expense Rent Expense Advertising Expense Office Supplies Expense Store Supplies Expense Depreciation Expense

July 31

Service 41,500.00 Revenue Income Summary Closing Entry Service Revenue

$34,750.00 9,750.00 2,525.00 4,785.00 10,750.00 2,150.00 14,300.00 11,500.00 53,725.00 13,250.00 41,500.00 37,425.00 3,000.00 2,750.00 1,465.00 2,150.00 575.00 $123,175.00

41,500.00

________ $123,175.00

July 31

Income 47,365.00 Summary Wages 37,425.00 Expense Rent 3,000.00 Expense Advertising 2,750.00 Expense Office 1,465.00 Supplies Expense Store 2,150.00 Supplies Expense Depreciatio 575.00 n Expense Closing Entry Expenses

July 31

Ladonna 5,865.00 Douglas, Capital Income Summary Closing Entry Income Summary

July 31

Ladonna Douglas, Capital Ladonna Douglas, Drawing Closing Entry Drawing

5,865.00

13,250.00

13,250.00

197. Marcus Enterprises was started by Damien Marcus in 2010. During 2010, Damien Marcus invested $8,000 in the business. Based on the following worksheet, prepare an income statement, statement of owner’s equity, and balance sheet for Marcus Enterprises for the year ended December 31, 2010. Marcus Enterprises Worksheet For the Year Ended December 31, 2010


Income Statement Balance Sheet

Account Title Cash Accounts Receivable Supplies Equipment Accumulated Depr-Equip Accounts Payable Wages Payable Damien Marcus, Capital Damien Marcus, Drawing Fees Earned Wages Expense Rent Expense Depreciation Expense Totals Net Income (Loss)

Debit 26,500 7,000 1,000 18,500

Credit

Debit

Credit

Debit 26,500 7,000 1,000 18,500

5,000 11,000 1,000 8,000

5,000 11,000 1,000 8,000

2,000

2,000 59,500

19,000 7,000 3,500 84,500

84,500

59,500 19,000 7,000 3,500 29,500 30,000 59,500

59,500

55,000

59,500

55,000

Marcus Enterprises Income Statement For the Year Ended December 31, 2010 Fees Earned Expenses: Wages Expense Rent Expense Depreciation Expense Total Expenses Net Income

Marcus Enterprises Statement of Owner’s Equity For the Year Ended December 31, 2010 Damien Marcus, Capital, January 1, 2010 Investment during the year Net income for the Year Ended December 31, 2010

Less Withdrawals Increase in Owner’s Equity Damien Marcus, Capital, December 31, 2010

Credit

$ 59,500 $ 19,000 7,000 3,500 29,500 $ 30,000

$ 0 $ 8,000 30,000 $38,000 2,000 36,000 $ 36,000

25,000 30,000 55,000

Marcus Enterprises Balance Sheet December 31, 2010 Assets Current Assets: Cash Accounts Receivable Supplies Total current assets Property, Plant and Equipment Equipment Less accum depr

Liabilities Current Liabilities Accounts Payable Wages Payable Total Liabilities

$26,500 7,000 1,000

$ 11,000 1,000 $12,000

$ 34,500 $18,500 5,000

Total property, plant and equipment Total Assets

Owner’s Equity

13,500 $48,000

Damien Marcus, Capital

$36,000

Total Liabilities and Owner’s Equity

$48,000

198. Prepare closing entries from the following work sheet. Lakendra Enterprises Worksheet For the Year Ended December 31, 2010

Account Title Cash Accounts Receivable Supplies Equipment Accumulated Depr-Equip Accounts Payable Wages Payable Lakendra Thomas, Capital Lakendra Thomas, Drawing Fees Earned Wages Expense Rent Expense Depreciation Expense Totals Net Income (Loss)

Adjusted Trial Income Statement Balance Debit Credit 26,500 7,000 1,000 18,500 5,000 11,000 1,000 8,000 2,000 59,500 19,000 7,000 3,500 84,500 84,500

Balance Sheet Debit

Credit

Debit 26,500 7,000 1,000 18,500

Credit

5,000 11,000 1,000 8,000 2,000 59,500 19,000 7,000 3,500 29,500 30,000 59,500

59,500

55,000

59,500

55,000

25,000 30,000 55,000

Journal Post Ref Date Dec 31

Dec 31

Dec 31

Dec 31

Description Fees Earned Income Summary

Debit 59,500

Income Summary Wages Expense Rent Expense Depreciation Expense

29,500

Income Summary Lakendra Thomas, Capital

30,000

Lakendra Thomas, Capital Lakendra Thomas, Drawing

2,000

Credit

59,500

19,000 7,000 3,500

30,000

2,000

199. The following is the adjusted trial balance for Sandeep Company.

Sandeep Company Adjusted Trial Balance December 31, 2010

Cash Accounts Receivable Prepaid Expenses Equipment Accumulated Depreciation Accounts Payable Notes Payable Rena Sandeep, Capital Rena Sandeep, Drawing Fees Earned Wages Expense Rent Expense Utilities Expense Depreciation Expense Miscellaneous Expense Totals

8,130 3,300 2,750 10,400 2,200 2,700 1,000 11,200 4,870 36,600 12,450 4,900 3,475 2,150 1,275 53,700

53,700

Prepare closing entries and the post closing trial balance.

Fees Earned Income Summary

36,600

Income Summary Wages Expense Rent Expense Utilities Expense Depreciation Expense Miscellaneous Expense

24,250

Income Summary Rena Sandeep, Capital

12,350

Rena Sandeep, Capital Rena Sandeep, Drawing

4,870

36,600

12,450 4,900 3,475 2,150 1,275

12,350

4,870

Sandeep Company Post Closing Trial Balance December 31, 2010

Cash Accounts Receivable Prepaid Expenses Equipment Accumulated Depreciation Accounts Payable Notes Payable Rena Sandeep, Capital Total

8,130 3,300 2,750 10,400

$24,580

200. Reconstruct the adjusting and closing entries from the following T-Accounts.

Prepaid Insurance


1,200 200 1,000

Unearned Revenues

6,000 1,500 7,500

Wages Payable

1,350 435 915

530 530

2,200 2,700 1,000 18,680 $24,580

Madison Cox, Capital

Madis on Cox, Drawi ng 7,000 5,280

Income Summary

Fees Earned

2,100

9,935 2,100

2,100

0

8,000 1,500 435

4,655 5,280

10,180

0

9,935 0

Wages Expense

Rent Expens e

2,600 530



180

1,145 3,130

0

200 0

0

Adjusting Entries:

1)

2)

3)

4)

Insuranc 200 e Expense Prepaid Insuranc e Account 1,500 s Receiva ble Fees Earned Unearne 435 d Revenue Fees Earned Wages 530 Expense Wages Payable

180 0

200

1,500

435

530

Closing Entries:

1)

2)

3)

4)

Fees 9,935 Earned Income Summar y Income 4,655 Summar y Wages Expense Rent Expense Insuranc e Expense Utilities Expense Income 5,280 Summar y Madison Cox, Capital Madison 2,100 Cox, Capital Madison Cox, Drawing

9,935

3,130 1,145 200

180

5,280

2,100

201. Reconstruct adjusting and closing entries for the month ended September 30, 2010 from the T-accounts below.

Prepaid Insurance


1,350

1,250 275 1,525

130 1,220

Mai Lui, Capital

Unearned Revenues

Mai Lui, Drawin g 7,000

580 2,400

1,050

385 385

235 815

Income Summary

Fees Earned

2,400

6,090

2,400 0

4,020

Wages Payable

5,510

5,000 275 235

580 5,510

Wages Expense

Rent Expens e

3,600 385

1,880


1,880 3,985

0

Insurance Expense

0

95 130

0

95 0

Adjusting Entries:

1)

2)

3)

4)

Ins 130 ura nc e Ex pe nse Pre pai d Ins ura nc e Ac 275 co unt s Re cei va ble Fe es Ea rne d Un 235 ear ne d Re ve nu e Fe es Ea rne d W 385 ag es Ex pe nse W ag es Pa ya ble

130

275

235

385

Closing Entries:

1)

2)

3)

4)

Fees 5,510 Earne d Inco me Sum mary Inco 6,090 me Sum mary Wage s Expe nse Rent Expe nse Insura nce Expe nse Utiliti es Expe nse Mai 580 Lui, Capit al Inco me Sum mary Mai 2,400 Lui, Capit al Mai Lui, Drawi ng

5,510

3,985

1,880

130

95

580

2,400

202. 1)

Dana Bowen Company is completing its first year of operations on April 30, 2010. Reconstru ct the entries for the year ended April 30, 2010 from the T-accounts below. Record them as follows: A - L Journal Entries M- R Adjusting Journal Entries

2)

Balance and prepare the Income Statement, Statement of Owner’s Equity, and the Balance Sheet from the T-Accounts.

3)

Prepare the four closing entries (S - V).

4)

Prepare the Post-Closing Trial Balance.

Cash


6,500 900

Supplies

1,250 385

Prepaid Insurance

870

1,940 540

725

870

225

400 420 1,940 2,500 50 350 930

Equipment

2,500

Accum ulated Deprec iation

Accounts Payable

130

Wages Payable

Unearned Revenues

Dana Bowen , Capital 930

590

Fees Earned

Wages Expens e 900 1,250 2,500 385 590

Insurance Expense

725

Dana Bowen, Drawing

Income Summary

6,500 2,500

350

Rent Expense

Supplies Expense

420 225

Deprec iation Expens e

400

Miscellaneo us Expense

130

50

540

1) Journal Entries:

a)

C a s h

6, 5 0 0 Dana Bowen, Capital

b)

c)

d)

e)

f)

E q ui p m e nt Dana Bowen, Capital R e nt E x p e n s e Cash C 900 a s h Fees Earned

A 1,250 c c o u nt s R e c ei v a bl e Fees Earned

S 870 u p pl ie s Accounts Payable

6,500 2, 5 0 0

2,500 4 0 0

400

9 0 0

1, 2 5 0

8 7 0

g)

h)

i)

j)

W420 a g e s E x p e n s e Cash

P 1,940 re p ai d I n s u ra n c e Cash

C 2,500 a s h Fees Earned

M50 is c el la n e o u s E x p e n s e Cash

4 2 0

1, 9 4 0

2, 5 0 0

5 0

k)

l)

D 350 a n a B o w e n, D ra w in g Cash

C 930 a s h Unearned Revenue

3 5 0

9 3 0

Adjusting Entries:

m)

Supplies Expense

n)

Accounts Receivable

o)

Insurance Expense

p)

Depreciation Expense

q)

Wages Expense

r)

Unearned Revenues

540 Supplies

540 385

Fees Earned

385 725

Prepaid Insurance

725 130

Accumulated Depreciation

130 225

Wages Payable

225 590

Fees Earned

590

2) Dana Bowen Company Income Statement For the Year Ended April 30, 2010

Fees Earned Expenses: Wages Expense Rent Expense Supplies Expense Insurance Expense Depreciation Expense Miscellaneous Expense Total Expenses Net Income

$5,625 $645 400 540 725 130 50 2,490 $3,135

Dana Bowen Company Statement of Owner’s Equity For the Year Ended April 30, 2010

Dana Bowen Capital, May 1, 2009 Add: Investments Sub-Total Net Income for the Period Less: withdrawals Increase in Owner’s Equity Dana Bowen, Capital, April 20, 2010

Dana Bowen Company Balance Sheet April 30, 2010 Assets: Current Assets: Cash Accounts Receivable Supplies Prepaid Insurance Total Current Assets Property, Plant, & Equipment Equipment Less: Accum Depre Total Assets

$0 9,000 9,000 $3,135 350 2,785 $11,785

Liabilities:

$7,670 1,635 330 1,215

Accounts Payable Wages Payable Unearned Revenues Total Liabilities

$870 225 340 1,435

Owner’s Equity Dana Bowen, Capital Total Liabilities and Owner’s Equity

11,785 $13,220

$10,850 $2,500 130

2,370 $13,220

3) Closing Entries: s)

Fees Earned

5,625 Inc om e Su m ma ry

t)

Income Summary

5,625

2,490 W ag es Ex pe nse Re nt Ex pe nse Su ppl ies Ex pe nse Ins ura nc e Ex pe nse De pre cia tio n Ex pe nse Mi sce lla ne ou s Ex pe nse

u)

Income Summary

645

400

540

725

130

50

3,135 Da na Bo we n, Ca pit al

v)

Dana Bowen, Capital

3,135

350

Da na Bo we n, Dr aw ing

350

4) Dana Bowen Company Post-Closing Trial Balance For the Year Ended April 30, 2010 Cash Accounts Receivable Supplies Prepaid Insurance Equipment Accumulated Depreciation Accounts Payable Wages Payable Unearned Revenues Dana Bowen, Capital Total

$7,670 1,635 330 1,215 2,500

$13,350

$ 130 870 225 340 11,785 $13,350

203. The balances in the ledger of Good Landscape Services as of January 31, 2014 before adjustments, are as follows:

Cash Supplies Prepaid Insurance Equipment Accumulated Depreciation

$ 6,750 3,900 8,400 41,750 9,950

Dalton Good, Capital Dalton Good, Drawing Service Revenue Salary Expense Rent Expense Miscellaneous Expense

$29,775 3,425 56,300 24,300 6,000 1,500

Adjustment data are as follows: supplies on hand, January 31, $900; insurance expired for January, $1,100; depreciation on equipment for January, $1,600; salaries accrued, January 31, $1,650. (a) (b) (c)

Prepare a ten-column work sheet for Good Landscape Services for January, 2014. On the basis of the work sheet in (a), present the following in good order: (1) income statement, (2) statement of owner's equity (no additional investments were made during the month), and (3) balance sheet. On the basis of the work sheet in (a), journalize the closing entries as of January 31, 2014.

(a) ) Good Landscape Services Work Sheet For the Month Ended January 31, 2014 ) ) ) ) Trial Balance

Adjustm ents

Account Title

Dr.

Cr.

Dr.

Cr.

)

Cash Supplies Prepaid Insurance Equipment Accumulated Depreciation Dalton Good, Capital Dalton Good, Drawing Service Revenue Salary Expense Rent Expense Miscellaneous Expense

6,750 3,900 8,400 41,750 ..... ..... 3,425 ..... 24,300 6,000 1,500 96,025

..... ..... ..... ..... 9,950 29,775 ..... 63,200 ..... ..... ..... 96,025

..... ..... ..... ..... ..... ..... ..... ..... (d) 1,650 ..... .....

..... (a) 3,000 (b) 1,100 ..... (c) 1,600 ..... ..... ..... ..... ..... .....

Supplies Expense Insurance Expense Depreciation Expense Salaries Payable

..... ..... ..... .....

..... ..... ..... .....

(a) 3,000 (b) 1,100 (c) 1,600 ..... 7,350

..... ..... ..... d) 1,650 7,350

) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) )

Net Income

( (

( ( ( ( ( ( ( ( ( ( ( ( ( ( ( ( ( ( ( (


Dr. 6,750 900 7,300 41,750 ..... ..... 3,425 ..... 25,950 6,000 1,500 3,000 1,100 1,600 ........... 99,275

Income Stateme nt

Balance Sheet

Cr.

Dr.

Cr.

Dr.

Cr.

..... ..... ..... ..... 11,550 29,775 ..... 56,300 ..... ..... ..... ..... ..... ..... 1,650 99,275

..... ..... ..... ..... ..... ..... ..... ..... 25,950 6,000 1,500 3,000 1,100 1,600 ........... 39,150 17,150 56,,300

..... ..... ..... ..... ..... ..... ..... 56,300 ..... ..... ..... ..... ..... ..... ........... 56,300 ........... 56,300

6,750 900 7,300 41,750 ..... ..... 3,425 ..... ..... ..... ..... ..... ..... ..... ........... 60,125 ........... 60,125

..... ..... ..... ..... 11,550 29,275 ..... ..... ..... ..... ..... ..... ..... ..... 1,650 43,875 17,150 60,125

(b) (1) Good Landscape Services Income Statement For the Month Ended January 31, 2014 Service revenue Operating expenses: Salary expense Rent expense Supplies expense Insurance expense Depreciation expense Miscellaneous expense Total operating expenses Net income

$56,300 $25,950 6,000 2,100 1,100 2,500 1,500 39,150 $17,150

(b) (2) Good Landscape Services Statement of Owner's Equity For the Month Ended January 31, 2014 Dalton Good, Capital, January 1, 2014 Net income for the month Less withdrawals Increase in owner's equity Dalton Good, Capital, January 31, 2014

(b) (3) Good Landscape Services Balance Sheet January 31, 2014 Assets Current assets: Cash Supplies Prepaid insurance Total current assets Property, plant, and equipment: Equipment Less accumulated depreciation Total property, plant, and equipment Total assets

$29,775 $17,150 3,425 13,725 $43,500

Liabilities $ 6,750 1,800 7,300

Current liabilities: Salaries payable $15,850

$41,750 12,450 29,300 $45,150

Owner's Equity Dalton Good, Capital Total liabilities and owner's equity

$ 1,650

43,500 $45,150

(c) Jan. 31

31

31

31

Closing Entries Service Revenue Income Summary

56,300 56,300

Income Summary Salary Expense Rent Expense Miscellaneous Expense Supplies Expense Insurance Expense Depreciation Expense

39,150

Income Summary Dalton Good, Capital

17,150

Dalton Good, Capital Dalton Good, Drawing

3,425

25,950 6,000 1,500 2,100 1,100 2,500

17,150

3,425

204. Complete the following worksheet for Danilo Enterprises. Danilo Enterprises Worksheet For the Year Ended December 31, 2010 Adjusted Trial Balance

Income Statement a l a c e

Account Title

Debit

Cash Accounts Receivable Supplies Equipment Accumulated Depr-Equip Accounts Payable Wages Payable Tony Danilo, Capital Tony Danilo, Drawing Fees Earned Wages Expense Rent Expense Depreciation Expense Totals Net Income (Loss)

14,500 7,500 500 20,500

Credit

15,000 9,500 3,060 18,240 1,000 34,000 18,000 9,300 8,500 79,800

79,800

e e t Credit e b i t

Debit

Credit

Chapter 4--Completing the Accounting Cycle

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