Solution steps Accounts payableProblem 4-4A Preparing closing entries, financial statements, and ratios G c34 A1 4 P2The adjusted trial balance for Tybalt Construction as of December 31, 2019, follows. O. Tybalt invested $5,000 cash in the businessduring year 2019 (the December 31, 2018, credit balance of the O. Tybalt, Capital account was $121,400).Adjusted Trial BalanceDecember 31, 2019No.Account TitleCreditDebit101Cash5,000104Short-term investments23,000126Supplies8,100128Prepaid insurance7,000167Equipment40,000168Accumulated depreciation-Equipment$ 20, 000173Building150,00O174Accumulated depreciation–Building50,00O183Land55.00O201Accounts payable16,500203Interest payable2,500208Rent payable3.500210Wages payable2,500213Property taxes payable900233Unearned professional fees7.500244Current portion of long-term note payable7,000251Long-term notes payable60,000O. Tybalt, CapitalO. Tybalt, Withdrawals301126,40030213.000401Professional fees earned97.000406Rent earned14.000407Dividends earned2,000409Interest earned2,100606Depreciation expense-Building11,000612Depreciation expense-Equipment6,000623Wages expense32,000633Interest expense5,100637Insurance expense10,000640Rent expense13.400652Supplies expense7.400682Postage expense4.200683Property taxes expense5,000684Repairs expense8,900688Telephone expense3,200690Utilities expense4,600Totals$411.900 $411.900Required1. Prepare the income statement and the statement of owner's equity for calendar-year 2019 and the classified balance sheet at December31, 2019.Check (1) Total assets (12/31/2019). $218.10O: Net income. $4.30O2. Prepare the necessary closing entries at December 31, 2019.3. Use the informnation in the financial statements to compute these ratios: (a) return on assets (total assets at December 31,2018, was $200,000), (b) debt ratio, (c) profit margin ratio (use total revenues as the denominator), and (d) current ratio. Roundratios to three decimals for parts a and e and to two decimals for parts b and d.Page 157

The financial statements are prepared at year end including income statement, balance sheet,…

Problem 4-4A Preparing closing entries, financial statements, and ratios c3 Q A1G P2 The adjusted trial balance for Tybalt Construction as of December 31, 2019, follows. O. Tybalt invested $5,00o cash in the business during year 2019 (the December 31, 2018, credit balance of the O. Tybalt, Capital account was $121,400). Adjusted Trial Balance December 31, 2019 No. Account Title Debit Credit Cash S 5.000 101 104 Short-term investments 23.000 126 Supplies 8,100 128 Prepaid insurance 7.000 167 Equipment 40,000 168 Accumulated depreciation–Equipment $ 20,000 173 Building 150,00O 174 Accumulated depreciation-Building 50,000 183 Land 55.000 Accounts payable 16.500 201 203 Interest payable 2.500 208 Rent payable 3.500 210 Wages payable 2.500 213 Property taxes payable 900 233 Unearned professional fees 7-500

Problem 4-4A Preparing closing entries, financial statements, and ratios c3 Q A1G P2 The adjusted trial balance for Tybalt Construction as of December 31, 2019, follows. O. Tybalt invested $5,00o cash in the business during year 2019 (the December 31, 2018, credit balance of the O. Tybalt, Capital account was $121,400). Adjusted Trial Balance December 31, 2019 No. Account Title Debit Credit Cash S 5.000 101 104 Short-term investments 23.000 126 Supplies 8,100 128 Prepaid insurance 7.000 167 Equipment 40,000 168 Accumulated depreciation–Equipment $ 20,000 173 Building 150,00O 174 Accumulated depreciation-Building 50,000 183 Land 55.000 Accounts payable 16.500 201 203 Interest payable 2.500 208 Rent payable 3.500 210 Wages payable 2.500 213 Property taxes payable 900 233 Unearned professional fees 7-500

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

Chapter3: Accrual Accounting

Section: Chapter Questions

Problem 33BE: Brief Exercise 3-33 Preparing an Income Statement The adjusted trial balance of Pelton Company at...

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Problem 2-593 Journalizing Transactions Monilast Chemicals engaged in the following transactions during December 2019: Dec 2 Paid rent on office furniture, $1,200. 3 Borrowed $25,030 on a 9-month, 3% note. 7 Provided services on credit. $42,600. 10 Purchased supplies on credit, $2,850. 13 Collected accounts receivable, $20,150. 19 Issued common stock, $50000. 22 Paid employee wages for December. $13,825. 23 Paid accounts payable, $1,280. 25 Provided services for cash, $13,500. 30 Paid utility bills for December, $1,975. Required: Prepare a journal entry for each transaction.
Exercise 3-59 Preparation of Closing Entries Grand Rapids Consulting Inc. began 2019 with a retained earnings balance of $38,100 and has the following accounts and balances at year end: Required: 1. Prepare the closing entries made by Grand Rapids Consulting at the end of 2019. 2. Prepare Grand Rapids Consultings retained earnings statement for 2019.
Problem 1-60A Income Statement and Balance Sheet The following information for Rogers Enterprises is available at December 31, 2019 and includes all of Rogers financial statement amounts except retained earnings: Required: Prepare a single-step income statement and a c1assified balance sheet for the year ending December 31, 2019, for Rogers.
Brief Exercise 3-32 Adjusting Entries-Deferrals Tyndal Company had the following items that required adjustment at December 31, 2019. Purchased equipment for $40,000 on January 1, 2019. Tyndal estimates annual depreciation to be $3,100. Paid $2,400 for a 2-year insurance policy on July 1, 2019. The amount was debited to Pre-paid Insurance when paid. Collected $1,200 rent for the period December 1, 2019 to March 30, 2020. The amount was credited to Unearned Service Revenue when received. Required: Prepare the adjusting entries needed at December 31. CONCEPTUAL CONNECTION What is the effect on the financial statements if these adjusting entries were not made?
Cornerstone Exercise 1-18 Balance Sheet An analysis of the transactions of Cavernous Homes Inc. yields the following totals at December 31, 2019: cash, $3,200; accounts receivable, $4,500; notes payable, $5,000; supplies, $8,100; common stock, $7,000; and retained earnings, 9,800. Required: Prepare a balance sheet for Cavernous Homes Inc. at December 31 , 2019.
OBJECTIVE 6 Exercise 1-46 Income Statement ERS Inc. maintains and repairs office equipment. ERS had an average of 10,000 shares of common stock outstanding for the year. The following income statement account balances are available for ERS at the end of 2019. Required: 1. Prepare a single-step income statement for ERS for 2019. 2. CONCEPTUAL CONNECTION Compute net profit margin for ERS. If ERS is able to increase its service revenue by $100,000, what should be the effect on future income? 3. CONCEPTUAL CONNECTION Assume that ERS net profit margin was 8.5% for 2018. As an investor, what conclusions might you draw about ERS future profitability?
Brief Exercise 3-33 Preparing an Income Statement The adjusted trial balance of Pelton Company at December 31, 2019, includes the following accounts: Wages Expense, $22,400; Service Revenue. Rent Expense, $3,200; Dividends, $4,000; Retained Earnings, $12,200; and Prepaid Rent, $1,000. Required: Prepare a single-step income Statement for Pelton for 2019.
Exercise 1-38 Identifying Current Assets and Liabilities Dunn Sporting Goods sells athletic clothing and footwear 10 retail customers. Dunns accountant indicates that the firms operating cycle averages 6 months. At December 31, 2019, Dunn has the following assets and liabilities: Prepaid rent in the amount of 58,500. Dunns rent is $500 per month. A $9,700 account payable due in 45 days. Inventory in the amount of $46,230. Dunn expects to sell $38,000 of the inventory within 3 months. The remainder will be placed in storage until September 2020. The items placed in storage should be sold by November 2020. An investment in marketable securities in the amount of $1,900. Dunn expects to sell $700 of the marketable securities in 6 months. The remainder are not expected to be sold until 2022. Cash in the amount of $1,050. An equipment loan in the amount of $60,000 due in March 2024. Interest of $4,500 is due in March 2020 ($3,750 of the interest relates to 2019. with the remainder relating to the first 3 months of 2020). An account receivable from a local university in the amount of $2,850. The university has promised to pay the full amount in 3 months. Store equipment at a cost of $9,200. Accumulated depreciation has been recorded on the store equipment in the amount of 51,250. Required: Prepare the current asset and current liability portions of Dunns December 31, 20191 balance-sheet. Compute Dunns working capital and current ratio at December 31, 2019. CONCEPTUAL CONNECTION As in investor or creditor. what do these ratios tell you about Dunns liquidity?
Adjusting Entries Exercise 3-52 Allentown Services Inc. is preparing adjusting entries for the year ending December 31, 2019. The following data are available: Interest is owed at December 31, 2019, on a 6-month, 8% note. Allentown borrowed $120,ooo from NBD on September 1, 2019. Allentown provides daily building maintenance services to Mack Trucks for a quarterly fee of $2,700 payable on the fifteenth of the month following the end of each quarter. No entries have been made for the services provided to Mack Trucks during the quarter ended December 31, and the related bill will not be sent until January 15, 2020. At the beginning of 2019, the cost of office supplies on hand was $1,220. During 2019, office supplies with a total cost of $6,480 were purchased from Office Depot and debited to office supplies inventory. On December 31, 2019, Allentown determined the cost of office supplies on hand to be $970. On September 23, 2019, Allentown received a $7,650 payment from Bethlehem Steel for 9 months of maintenance services beginning on October 1, 2019. The entire amount was credited to unearned service revenue when received. Required: Prepare the appropriate adjusting entries at December 31, 2019. CONCEPTUAL CONNECTION What would be the effect on the balance sheet and the income statement if the accountant failed to make the above adjusting entries?
Exercise 3-46 Identification and Analysis of Adjusting Entries Medina Motor Service is preparing adjusting entries for the year ended December 31, 2019. The following items describe Medina s continuous transactions during 2019: Medinas salaried employees are paid on the last day of every month. Medinas hourly employees are paid every other Friday for the 2 weeks' work. The next payday falls on January 5, 2020. In November 2019, Medina borrowed $600,000 from Bank One, giving a 9% note payable with interest due in January 2020. The note was properly recorded. Medina rents a portion of its parking lot to the neighboring business under a long-term lease agreement that requires payment of rent 6 months in advance on April 1 and October 1 of each year. The October 1, 2019, payment was made and recorded as prepaid rent. Medinas department recognizes the entire revenue on every auto service job when the job is complete. At December 31, several service jobs are in process. Medina recognizes depreciation on shop equipment annually at the end of each year. Medina purchases all of its office supplies from Office Supplies Inc. All purchases are recorded in the supplies account. Supplies expense is calculated and recorded annually at the end of each year. Required: Indicate whether or not each item requires an adjusting entry at December 31, 2019. If an item requires an adjusting entry, indicate which accounts are increased by the adjustment and which are decreased.
Exercise 1-39 Current Assets and Current Liabilities Hanson Construction has an operating cycle of '5' months. On December 31. 2019, Hanson has the following assets and liabilities: A note receivable in the amount of $1500 10 be collected in 6 months Cash totaling $1,380 Accounts payable totaling $2,100, all of which will be paid within 2 months Accounts receivable totaling $12,000, including an account for $7,000 that will be paid in 2 months and an account for $5,000 that will be paid in 18 months Construction supplies coming $6,200, all of which will be used in construction within the next 12 months Construction equipment costing $60,000 on which depreciation of $22,400 has accumulated A note payable to the bank in the amount of $6,800 is to be paid within the next year Required: Calculate the amounts of current assets and current liabilities reported on Hansons balance sheet at December 31, 2019. CONCEPTUAL CONNECTION Comment on Hansons liquidity.
Problem 2-6B The Accounting Cycle Sweetwater Temporary Clerical Help Service opened for business in June 2019. From the opening until the end of the year. Sweetwater engaged in the activities described below. So that a realistic trial balance can be prepared, the events described below are aggregations of many individual events. Sold 10,000 shares of common stock for $4.50 per share. Purchased office equipment from Furniture Max Inc. for $18,110 cash. Received $112,880 from clients for services provided. Paid wages $87,300. Borrowed $20,000 from the Bank of America on a 3-year note payable. Paid office rent of $10,200 Purchased office supplies on credit for $2,120 from Office Supply Inc. Paid $1,200 toward the payable established in Transaction g. Paid utility charges incurred during the year of $3,250. Required: 1. Analyze the events for their effect on the accounting equation. 2. Prepare journal entries. (Note: Ignore the date because these events are aggregations of individual events) 3. Post the journal entries to T-accounts. 4. Prepare a trial balance at December 31, 2019.