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Exercises: Set B

EXERCISES: SET B
E4-1B The trial balance columns of the worksheet for Green Company at June 30, 2008, are as
follows.

Complete the worksheet.

(SO 1)

GREEN COMPANY
Worksheet
for the Month Ended June 30, 2008

Trial Balance
Dr.
Cr.

Account Titles
Cash
Accounts Receivable
Supplies
Accounts Payable
Unearned Revenue
Lenny Briscoe, Capital
Service Revenue
Salaries Expense
Miscellaneous Expense

$1,760
2,100
1,320
$1,080
360
2,280
2,100
500
140
$5,820

$5,820

Other data:
1. A physical count reveals $250 of supplies on hand.
2. $120 of the unearned revenue is still unearned at month-end.
3. Accrued salaries are $250.
Instructions
Enter the trial balance on a worksheet and complete the worksheet.
E4-2B The adjusted trial balance columns of the worksheet for Bad Company are as follows.

Complete the worksheet.

(SO 1)

BAD COMPANY
Worksheet (partial)
for the Month Ended April 30, 2008

Adjusted Trial
Balance
Account Titles

Dr.

Cash
Accounts Receivable
Prepaid Rent
Equipment
Accumulated Depreciation
Notes Payable
Accounts Payable
J. Bad, Capital
J. Bad, Drawing
Service Revenue
Salaries Expense
Rent Expense
Depreciation Expense
Interest Expense
Interest Payable

11,400
7,000
2,000
20,000

Totals

54,500

Cr.

4,200
5,000
4,950
25,800
3,500
14,500
9,430
500
600
50
50
54,500

Income
Statement
Dr.

Cr.

Balance Sheet
Dr.

Cr.

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Chapter 4 Completing the Accounting Cycle

Instructions
Complete the worksheet.

Prepare financial statements

from worksheet.
(SO 1, 6)

Journalize and post closing

entries and prepare a postclosing trial balance.
(SO 2, 3)

Prepare adjusting entries from

a worksheet, and extend balances
to worksheet columns.

E4-3B Worksheet data for Bad Company are presented in E4-2B. The owner did not make any
additional investments in the business in April.
Instructions
Prepare an income statement, an owners equity statement, and a classified balance sheet.
E4-4B Worksheet data for Bad Company are presented in E4-2B.
Instructions
(a) Journalize the closing entries at April 30.
(b) Post the closing entries to Income Summary and J. Bad, Capital. Use T accounts.
(c) Prepare a post-closing trial balance at April 30.
E4-5B The adjustments columns of the worksheet for Myers Company are shown below.

(SO 1)

Adjustments
Account Titles

Debit

Accounts Receivable
Prepaid Insurance
Accumulated Depreciation
Salaries Payable
Service Revenue
Salaries Expense
Insurance Expense
Depreciation Expense

1,100

Credit
500
1,250
650
1,100

650
500
1,250
3,500

3,500

Instructions
(a) Prepare the adjusting entries.
(b) Assuming the adjusted trial balance amount for each account is normal, indicate the financial statement column to which each balance should be extended.
Derive adjusting entries from
worksheet data.

E4-6B Selected worksheet data for Nicklaus Company are presented below.

(SO 1)

Account Titles

Trial Balance
Dr.

Accounts Receivable
Prepaid Insurance
Supplies
Accumulated Depreciation
Salaries Payable
Service Revenue
Insurance Expense
Depreciation Expense
Supplies Expense
Salaries Expense

Cr.

?
28,000
8,000

Adjusted
Trial Balance
Dr.
35,000
24,000
?

24,000
?
80,000

Instructions
(a) Fill in the missing amounts.
(b) Prepare the adjusting entries that were made.

Cr.

?
6,000
92,000
?
12,000
6,500
52,000

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Exercises: Set B
E4-7B Kimmie Meissner Company had the following adjusted trial balance.

KIMMIE MEISSNER COMPANY

Prepare closing entries, and

prepare a post-closing trial
balance.
(SO 2, 3)

Adjusted Trial Balance

for the Month Ended June 30, 2008

Adjusted Trial Balance

Account Titles
Cash
Accounts Receivable
Supplies
Accounts Payable
Unearned Revenue
Kimmie Meissner, Capital
Kimmie Meissner, Drawing
Service Revenue
Salaries Expense
Miscellaneous Expense
Supplies Expense
Salaries Payable

Debits

Credits

$4,650
5,200
640
$2,500
200
7,280
400
5,360
1,650
350
3,050
600
$15,940

$15,940

Instructions
(a) Prepare closing entries at June 30, 2008.
(b) Prepare a post-closing trial balance.
E4-8B Commanche Company ended its fiscal year on July 31, 2008. The companys adjusted
trial balance as of the end of its fiscal year is as shown below.

(SO 2, 3)

COMMANCHE COMPANY
Adjusted Trial Balance
July 31, 2008

No.

Account Titles

Debits

101
112
157
167
201
208
301
306
404
429
711
720
732

Cash
Accounts Receivable
Equipment
Accumulated Depreciation
Accounts Payable
Unearned Rent Revenue
K. Commanche, Capital
K. Commanche, Drawing
Commission Revenue
Rent Revenue
Depreciation Expense
Salaries Expense
Utilities Expense

$ 9,900
6,200
10,600

Credits

$ 5,400
2,800
1,200
30,700
11,000
42,400
5,100
2,700
37,100
10,100
$87,600

Journalize and post closing

entries, and prepare a postclosing trial balance.

$87,600

Instructions
(a) Prepare the closing entries using page J15.
(b) Post to K. Commanche, Capital and No. 350 Income Summary accounts. (Use the three-column
form.)
(c) Prepare a post-closing trial balance at July 31.

27

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Chapter 4 Completing the Accounting Cycle

Prepare financial statements.

E4-9B The adjusted trial balance for Commanche Company is presented in E4-8B.

(SO 6)

Instructions
(a) Prepare an income statement and an owners equity statement for the year. Commanche did
not make any capital investments during the year.
(b) Prepare a classified balance sheet at July 31.

Answer questions related to the

accounting cycle.

E4-10B Angela Borke has prepared the following list of statements about the accounting cycle.

(SO 4)

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

Analyze business transactions is the first step in the accounting cycle.

Adjusting entries are a required step in the accounting cycle.
Correcting entries are a required step in the accounting cycle.
If a worksheet is prepared, all the steps of the accounting cycle are incorporated into the
worksheet.
The accounting cycle begins with the analysis of business transactions and ends with the
preparation of a post-closing trial balance.
All steps of the accounting cycle occur daily during the accounting period.
The step of post to the ledger accounts occurs after the step of journalize the transactions.
Closing entries must be prepared before financial statements can be prepared.

Instructions
Identify each statement as true of false. If false, indicate how to correct the statement.
Prepare closing entries.
(SO 2)

E4-11B Selected accounts for Lauras Salon are presented below. All June 30 postings are from
closing entries.

Salaries Expense
6/10
6/28

2,100
3,800

6/30

Service Revenue
5,900

6/30

Supplies Expense
6/12
6/24

400
450

6/30

10,100

6/15
6/24

Laura Francis, Capital

4,500
5,600

Rent Expense
850

6/1

2,000

6/30

6/30

1,700

6/1
6/30

10,000
1,350

Bal.

9,650

Laura Francis, Drawing

2,000

6/13
6/25

700
1,000

6/30

1,700

Instructions
(a) Prepare the closing entries that were made.
(b) Post the closing entries to Income Summary.
Prepare correcting entries.

E4-12B Pender Company discovered the following errors made in January 2008.

(SO 5)

1. A payment of Salaries Expense of $700 was debited to Supplies and credited to Cash,
both for $700.
2. A collection of $2,000 from a client on account was debited to Cash $200 and credited to
Service Revenue $200.
3. The purchase of supplies on account for $860 was debited to Supplies $680 and credited to
Accounts Payable $680.
Instructions
(a) Correct the errors by reversing the incorrect entry and preparing the correct entry.
(b) Correct the errors without reversing the incorrect entry.

Prepare correcting entries.

(SO 5)

E4-13B Jenny Company has an inexperienced accountant. During the first 2 weeks on the job, the
accountant made the following errors in journalizing transactions.All entries were posted as made.
1. A payment on account of $720 to a creditor was debited to Accounts Payable $270 and credited to Cash $270.
2. The purchase of supplies for $650 cash was debited to Inventory $65 and credited to
Cash $65.
3. A $500 withdrawal of cash for D. Jennys personal use was debited to Salaries Expense $500
and credited to Cash $500.
Instructions
Prepare the correcting entries.

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Exercises: Set B
E4-14B The adjusted trial balance for Anthony Bowling Alley at December 31, 2008, contains
the following accounts.

29

Prepare a classified balance

sheet.
(SO 6)

Debits
Building
Accounts Receivable
Prepaid Insurance
Cash
Equipment
Land
Insurance Expense
Depreciation Expense
Interest Expense

Credits
$ 77,000
9,000
2,700
10,840
37,500
38,000
540
4,400
1,600

Jess Anthony, Capital

Accumulated DepreciationBuilding
Accounts Payable
Note Payable
Accumulated DepreciationEquipment
Interest Payable
Bowling Revenues

$ 67,000
26,000
7,400
60,000
11,000
1,600
8,580
$181,580

$181,580
Instructions
(a) Prepare a classified balance sheet; assume that $15,000 of the note payable will be paid in 2009.
(b)
Comment on the liquidity of the company.
E4-15B The following are the major balance sheet classifications.
Current assets (CA)
Long-term investments (LTI)
Property, plant, and equipment (PPE)
Intangible assets (IA)

Classify accounts on balance

sheet.

Current liabilities (CL)

Long-term liabilities (LTL)
Owners equity (OE)

(SO 6)

Instructions
Classify each of the following accounts taken from Donn Companys balance sheet.
______ Accounts payable
______ Accounts receivable
______ Cash
______ Donn, Capital
______ Utilities payable
______ Trademarks
______ Investments
______ Inventories

______ Accumulated depreciation

______ Buildings.
______ Land
______ Long-term debt
______ Supplies
______ Prepaid insurance
______ Equipment

E4-16B The following items were taken from the financial statements of Cat Company.
(All dollars are in thousands.)

Long-term debt
Prepaid expenses
Property, plant, and equipment
Long-term investments
Short-term investments
Notes payable in 2009
Cash

$ 660
620
8,100
185
2,500
340
$ 1,800

Accumulated depreciation
Accounts payable
Notes payable after 2009
Steven Cat, Capital
Accounts receivable
Inventories

4,000
1,010
250
8,925
1,100
880

Prepare a classified balance

sheet.
(SO 6)

Instructions
Prepare a classified balance sheet in good form as of December 31, 2008.
E4-17B These financial statement items are for Luol Deng Company at year-end, July 31, 2008.

Salaries payable
Salaries expense
Utilities expense
Equipment
Accounts payable
Commission revenue
Rent revenue

$ 1,800
39,000
3,600
26,500
3,600
63,000
7,600

Note payable (long-term)

Cash
Accounts receivable
Accumulated depreciation
L. Deng, Drawing
Depreciation expense
L. Deng, Capital (beginning
of the year)

$ 2,000
18,300
21,200
5,400
3,600
16,200
45,000

Prepare financial statements.

(SO 1, 6)

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Chapter 4 Completing the Accounting Cycle

Instructions
(a) Prepare an income statement and an owners equity statement for the year. The owner did
not make any new investments during the year.
(b) Prepare a classified balance sheet at July 31.

Use reversing entries.

(SO 7)

*E4-18B Hosie Company pays salaries of $20,000 every Monday for the preceding 5-day week
(Monday through Friday).Assume December 31 falls on a Wednesday, so Hosies employees have
worked 3 days without being paid.
Instructions
(a) Assume the company does not use reversing entries. Prepare the December 31 adjusting entry and the entry on Monday, January 5, when Hosie pays the payroll.
(b) Assume the company does use reversing entries. Prepare the December 31 adjusting entry, the
January 1 reversing entry, and the entry on Monday, January 5, when Hosie pays the payroll.

Prepare closing and reversing

entries.
(SO 2, 4, 7)

*E4-19B On December 31, the adjusted trial balance of Norway Employment Agency shows the
following selected data.
Accounts Receivable
Interest Expense

$35,000
11,000

Commission Revenue
Interest Payable

$100,000
2,500

Analysis shows that adjusting entries were made to (1) accrue $6,000 of commission revenue and
(2) accrue $2,500 interest expense.
Instructions
(a) Prepare the closing entries for the temporary accounts at December 31.
(b) Prepare the reversing entries on January 1.
(c) Post the entries in (a) and (b). Rule and balance the accounts. (Use T accounts.)
(d) Prepare the entries to record (1) the collection of the accrued commissions on January 10
and (2) the payment of all interest due ($3,000) on January 15.
(e) Post the entries in (d) to the temporary accounts.

PROBLEMS: SET C
Prepare a worksheet, financial
statements, and adjusting and
closing entries.

P4-1C The trial balance columns of the worksheet for Sasse Roofing at March 31, 2008, are as
follows.

(SO 1, 2, 3, 6)

SASSE ROOFING
Worksheet
For the Month Ended March 31, 2008

Account Titles
Cash
Accounts Receivable
Roofing Supplies
Equipment
Accumulated DepreciationEquipment
Accounts Payable
Unearned Revenue
J. Sasse, Capital
J. Sasse, Drawing
Service Revenue
Salaries Expense
Miscellaneous Expense

Trial Balance
Dr.
Cr.
4,500
3,200
2,000
11,000
1,250
2,500
550
12,900
1,100
6,300
1,300
400
23,500

23,500

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Problems: Set C

31

Other data:
1.
2.
3.
4.

A physical count reveals only $650 of roofing supplies on hand.

Depreciation for March is $250.
Unearned revenue amounted to $170 at March 31.
Accrued salaries are $600.

Instructions
(a) Enter the trial balance on a worksheet and complete the worksheet.
(b) Prepare an income statement and owners equity statement for the month of March and a
classified balance sheet at March 31. J. Sasse did not make any additional investments in the
business in March.
(c) Journalize the adjusting entries from the adjustments columns of the worksheet.
(d) Journalize the closing entries from the financial statement columns of the worksheet.
P4-2C The adjusted trial balance columns of the worksheet for Rachel Company, owned by
Toni Rachel, are as follows.

(a) Adjusted trial balance

$24,350
(b) Net income $2,780
Total assets $17,850

Complete worksheet; prepare

financial statements, closing
entries, and post-closing trial
balance.
(SO 1, 2, 3, 6)

RACHEL COMPANY
Worksheet
For the Year Ended December 31, 2008

Account
No.

Account Titles

101
112
126
130
151
152
200
201
212
230
301
306
400
610
631
711
722
726
905

Cash
Accounts Receivable
Supplies
Prepaid Insurance
Office Equipment
Accumulated DepreciationOffice Equipment
Notes Payable
Accounts Payable
Salaries Payable
Interest Payable
T. Rachel, Capital
T. Rachel, Drawing
Service Revenue
Advertising Expense
Supplies Expense
Depreciation Expense
Insurance Expense
Salaries Expense
Interest Expense
Totals

Adjusted
Trial Balance
Dr.
Cr.
8,100
10,800
1,500
2,000
24,000
5,600
15,000
6,100
2,400
600
15,800
7,000
61,000
8,400
4,000
5,600
3,500
31,000
600
106,500

106,500

Instructions
(a) Complete the worksheet by extending the balances to the financial statement columns.
(b) Prepare an income statement, owners equity statement, and a classified balance sheet.
(Note: $9,000 of the notes payable become due in 2009.) Toni Rachel did not make any
additional investments in the business during the year.
(c) Prepare the closing entries. Use J14 for the journal page.
(d) Post the closing entries. Use the three-column form of account. Income Summary is No. 350.
(e) Prepare a post-closing trial balance.
P4-3C The completed financial statement columns of the worksheet for Muddy Company are
shown on the next page.

(a) Net income $7,900

(b) Current assets $22,400;
Current liabilities $18,100
(e) Post-closing trial balance
$46,400
Prepare financial statements,
closing entries, and post-closing
trial balance.
(SO 1, 2, 3, 6)

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Chapter 4 Completing the Accounting Cycle

MUDDY COMPANY
Worksheet
For the Year Ended December 31, 2008

(a) Ending capital $36,600;

Total current assets
$31,500
(d) Post-closing trial balance
$52,500
Complete worksheet; prepare
classified balance sheet, entries,
and post-closing trial balance.
(SO 1, 2, 3, 6)

Income Statement
Dr.
Cr.

Balance Sheet
Dr.
Cr.

Account
No.

Account Titles

101
112
130
157
167
201
212
301
306
400
622
711
722
726
732

Cash
Accounts Receivable
Prepaid Insurance
Equipment
Accumulated Depreciation
Accounts Payable
Salaries Payable
Melissa Muddy, Capital
Melissa Muddy, Drawing
Service Revenue
Repair Expense
Depreciation Expense
Insurance Expense
Salaries Expense
Utilities Expense

1,600
2,100
1,800
30,000
1,400

Totals
Net Income

36,900
19,100

56,000

63,500

44,400
19,100

56,000

56,000

63,500

63,500

17,900
10,800
2,800
21,000
4,500
9,000
2,400
28,500
11,000
56,000

Instructions
(a) Prepare an income statement, owners equity statement, and a classified balance sheet.
(b) Prepare the closing entries. Melissa did not make any additional investments during the year.
(c) Post the closing entries and rule and balance the accounts. Use T accounts. Income Summary
is account No. 350.
(d) Prepare a post-closing trial balance.
P4-4C Rockford Management Services began business on January 1, 2008, with a capital investment of $120,000. The company manages condominiums for owners (Service Revenue) and
rents space in its own office building (Rent Revenue). The trial balance and adjusted trial balance columns of the worksheet at the end of the first year are as follows.

ROCKFORD MANAGEMENT SERVICES

Worksheet
For the Year Ended December 31, 2008

Account Titles
Cash
Accounts Receivable
Prepaid Insurance
Land
Building
Equipment
Accounts Payable
Unearned Rent Revenue
Mortgage Note Payable
R. Neillsen, Capital
R. Neillsen, Drawing
Service Revenue
Rent Revenue

Trial Balance
Dr.
Cr.
13,800
28,300
3,600
67,000
127,000
59,000

Adjusted
Trial Balance
Dr.
Cr.
13,800
28,300
2,400
67,000
127,000
59,000

12,500
6,000
120,000
144,000
22,000

12,500
2,000
120,000
144,000
22,000

90,700
29,000

90,700
33,000

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Problems: Set C

Account Titles
Salaries Expense
Advertising Expense
Utilities Expense
Totals
Insurance Expense
Depreciation ExpenseBuilding
Accumulated DepreciationBuilding
Depreciation ExpenseEquipment
Accumulated DepreciationEquipment
Interest Expense
Interest Payable
Totals

Trial Balance
Dr.
Cr.
42,000
20,500
19,000
402,200

33

Adjusted
Trial Balance
Dr.
Cr.
42,000
20,500
19,000

402,200
1,200
3,000
3,000
4,700
4,700
11,000
11,000
420,900

420,900

Instructions
(a) Prepare a complete worksheet.
(b) Prepare a classified balance sheet. (Note: $20,000 of the mortgage note payable is due for
payment next year.)
(c) Journalize the adjusting entries.
(d) Journalize the closing entries.
(e) Prepare a post-closing trial balance.

(a) Net income $22,300

(b) Total current assets
$44,500
(e) Post-closing trial balance
$297,500

P4-5C Lee Chang opened Changs Cleaning Service on July 1, 2008. During July the following
transactions were completed.

Complete all steps in accounting cycle.

July 1
1
3
5
12
18
20
21
25
31
31

Chang invested $20,000 cash in the business.

Purchased used truck for $9,000, paying $4,000 cash and the balance on account.
Purchased cleaning supplies for $2,100 on account.
Paid $1,800 cash on one-year insurance policy effective July 1.
Billed customers $4,500 for cleaning services.
Paid $1,500 cash on amount owed on truck and $1,400 on amount owed on cleaning
supplies.
Paid $2,000 cash for employee salaries.
Collected $3,400 cash from customers billed on July 12.
Billed customers $9,000 for cleaning services.
Paid gas and oil for month on truck $350.
Withdrew $1,600 cash for personal use.

(SO 1, 2, 3, 4, 6)

The chart of accounts for Changs Cleaning Service contains the following accounts: No. 101 Cash,
No. 112 Accounts Receivable, No. 128 Cleaning Supplies, No. 130 Prepaid Insurance, No. 157
Equipment, No. 158 Accumulated DepreciationEquipment, No. 201 Accounts Payable, No. 212
Salaries Payable, No. 301 Lee Chang, Capital, No. 306 Lee Chang, Drawing, No. 350 Income
Summary, No. 400 Service Revenue, No. 633 Gas & Oil Expense, No. 634 Cleaning Supplies
Expense, No. 711 Depreciation Expense, No. 722 Insurance Expense, and No. 726 Salaries Expense.
Instructions
(a) Journalize and post the July transactions. Use page J1 for the journal and the three-column
form of account.
(b) Prepare a trial balance at July 31 on a worksheet.
(c) Enter the following adjustments on the worksheet and complete the worksheet.
(1) Services provided but unbilled and uncollected at July 31 were $2,700.
(2) Depreciation on equipment for the month was $500.
(3) One-twelfth of the insurance expired.
(4) An inventory count shows $700 of cleaning supplies on hand at July 31.
(5) Accrued but unpaid employee salaries were $1,000.
(d) Prepare the income statement and owners equity statement for July and a classified balance
sheet at July 31.

(b) Trial balance $37,700

(c) Adjusted trial balance
$41,900

(d) Net income $10,800;

Total assets $34,400

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Chapter 4 Completing the Accounting Cycle

(g) Post-closing trial balance

$34,900

(e) Journalize and post adjusting entries. Use page J2 for the journal.
(f) Journalize and post closing entries and complete the closing process. Use page J3 for the journal.
(g) Prepare a post-closing trial balance at July 31.

CONTINUING COOKIE CHRONICLE

(Note: This is a continuation of the Cookie Chronicle from Chapter 1 through 3.)
CCC4 Natalie had a very busy December. At the end of the month, after journalizing and posting the December transactions and adjusting entries, Natalie prepared the following adjusted
trial balance.

COOKIE CREATIONS
Adjusted Trial Balance
December 31, 2007

Debit
Cash
Accounts Receivable
Baking Supplies
Prepaid Insurance
Baking Equipment
Accumulated DepreciationBaking Equipment
Accounts Payable
Salaries Payable
Interest Payable
Unearned Revenue
Note Payable
N. Koebel, Capital
N. Koebel, Drawings
Teaching Revenue
Salaries Expense
Telephone Expense
Advertising Supplies Expense
Baking Supplies Expense
Depreciation Expense
Insurance Expense
Interest Expense

Credit

$1,130
875
350
1,210
1,300
$

43
75
56
15
300
2,000
900

500
4,315
856
125
165
1,025
43
110
15
$7,704

$7,704

Instructions
Using the information in the adjusted trial balance, do the following.
(a) Prepare an income statement and a statement of owners equity for the 2 months ended
December 31, 2007, and a classified balance sheet at December 31, 2007. The note payable
has a stated interest rate of 6%, and the principal and interest are due on November 16, 2009.
(b) Natalie has decided that her year-end will be December 31, 2007. Prepare and post closing
entries as of December 31, 2007.
(c) Prepare a post-closing trial balance.