Loose Leaf for Fundamental Accounting Principles
Loose Leaf for Fundamental Accounting Principles
23rd Edition
ISBN: 9781259687709
Author: John J Wild, Ken Shaw Accounting Professor, Barbara Chiappetta Fundamental Accounting Principles
Publisher: McGraw-Hill Education
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Chapter 4, Problem 1BPSB
To determine

Adjusting Entries:

The journal entries framed to realize the revenues and expense for the specified accounting period are called adjusting entries.

Income Statement:

The statement which shows the revenues earned and expenses incurred during a particular year is called Income statement.

Statement of Owner’s Equity:

The statement which shows changes in the owners’ equity due to net income or loss and owners’ withdrawal during the accounting period is called statement of owner’s equity.

Balance Sheet:

A financial statement which shows the financial position of a company during specified accounting period is called a balance sheet.

Closing Entries:

The journal entries prepare to close all the temporary accounts at the end of the accounting period is called closing entries.

To determine:

1. Open ledger accounts using the balance column format.

2. Journalize the transactions for July and post them to the ledger accounts.

3. Prepare an unadjusted trial balance as of July 31.

4. Prepare adjusting entries and post them to the ledger accounts.

5. Prepare the adjusted trial balance as of July 31. Prepare the income statement and the statement of owner’s equity for the month of July and the balance sheet at July 31, 2017.

6. Prepare journal entries to close the temporary accounts and post these entries to the ledger.

7. Prepare a post-closing trial balance.

Expert Solution & Answer
Check Mark

Explanation of Solution

Explanation:

1.

Cash
Account No. 101
Date Debit Credit Balance
       
       
Accounts Receivable
Account No. 106
Date Debit Credit Balance
       
       
Office Supplies
Account No. 124
Date Debit Credit Balance
       
       
Prepaid Insurance
Account No. 128
Date Debit Credit Balance
       
       
Building
Account No. 173
Date Debit Credit Balance
       
       
Accumulated Depreciation – Buildings
Account No. 174
Date Debit Credit Balance
       
       
Salaries Payable
Account No. 209
Date Debit Credit Balance
       
       
L. Plume, Capital
Account No. 301
Date Debit Credit Balance
       
       
L. Plume, Withdrawals
Account No. 302
Date Debit Credit Balance
       
       
Storage Fees Earned
Account No. 401
Date Debit Credit Balance
       
       
Depreciation Expense – Buildings
Account No. 606
Date Debit Credit Balance
       
       
Salaries Expense
Account No. 622
Date Debit Credit Balance
       
       
Insurance Expense
Account No. 637
Date Debit Credit Balance
       
       
Rent Expense
Account No. 640
Date Debit Credit Balance
       
       
Office Supplies Expense
Account No. 650
Date Debit Credit Balance
       
       
Repairs Expense
Account No. 684
Date Debit Credit Balance
       
       
Telephone Expense
Account No. 688
Date Debit Credit Balance
       
       
Income Summary
Account No. 901
Date Debit Credit Balance
       
       

2.

Date Accounts Debit Credit
       
Jul. 1 Cash $30,000  
  Building $150,000  
  L. Plume Capital   $180,000
       
2 Rent Expense $2,000  
  Cash   $2,000
       
5 Office Supplies $2,400  
  Cash   $2,400
       
10 Prepaid Insurance $7,200  
  Cash   $7,200
       
14 Salaries Expense $1,000  
  Cash   $1,000
       
24 Cash $9,800  
  Storage Fees Earned   $9,800
       
28 Salaries Expense $1,000  
  Cash   $1,000
       
29 Repair Expense $950  
  Cash   $950
       
30 Telephone Expense $400  
  Cash   $400
       
31 L. Plume, Withdrawals $2,000  
  Cash   $2,000
       
Cash
Account No. 101
Date Debit Credit Balance
July 1 $30,000   $30,000
2   $2,000 $28,000
5   $2,400 $25,600
10   $7,200 $18,400
14   $1,000 $17,400
24 $9,800   $27,200
28   $1,000 $26,200
29   $950 $25,250
30   $400 $24,850
31   $2,000 $22,850
Accounts Receivable
Account No. 106
Date Debit Credit Balance
July 31     $0
       
Office Supplies
Account No. 124
Date Debit Credit Balance
July 5 $2,400   $2,400
       
Prepaid Insurance
Account No. 128
Date Debit Credit Balance
July 10 $7,200   $7,200
       
Building
Account No. 173
Date Debit Credit Balance
July 1 $150,000   $150,000
       
Accumulated Depreciation – Buildings
Account No. 174
Date Debit Credit Balance
July 31     $0
       
Salaries Payable
Account No. 209
Date Debit Credit Balance
July 31     $0
       
L. Plume, Capital
Account No. 301
Date Debit Credit Balance
July 1   $180,000 $180,000
       
L. Plume, Withdrawals
Account No. 302
Date Debit Credit Balance
July 31 $2,000   $2,000
       
Storage Fees Earned
Account No. 401
Date Debit Credit Balance
July 24   $9,800 $9,800
       
Depreciation Expense – Buildings
Account No. 606
Date Debit Credit Balance
July 31     $0
       
Salaries Expense
Account No. 622
Date Debit Credit Balance
July 14 $1,000   $1,000
28 $1,000   $2,000
Insurance Expense
Account No. 637
Date Debit Credit Balance
July 31     $0
       
Rent Expense
Account No. 640
Date Debit Credit Balance
July 2 $2,000   $2,000
       
Office Supplies Expense
Account No. 650
Date Debit Credit Balance
July 31     $0
       
Repairs Expense
Account No. 684
Date Debit Credit Balance
July 29 $950   $950
       
Telephone Expense
Account No. 688
Date Debit Credit Balance
July 30 $400   $400
       
Income Summary
Account No. 901
Date Debit Credit Balance
July 31     $0
       

3.

SAFE STORAGE CO.
Unadjusted Trial Balance
July 31, 2017
Cash $22,850  
Accounts Receivable $0  
Office Supplies $2,400  
Prepaid Insurance $7,200  
Buildings $150,000  
Accumulated Depreciation – Buildings   $0
Salaries Payable   $0
L. Plume, Capital   $180,000
L. Plume, Withdrawals $2,000  
Storage Fees Earned   $9,800
Depreciation Expense – Buildings $0  
Salaries Expense $2,000  
Insurance Expense $0  
Rent Expense $2,000  
Office Supplies Expense $0  
Repairs Expense $950  
Telephone Expense $400  
Income Summary   $0
     
Total $189,800 $189,800

4.

Date Accounts Debit Credit
       
July 31 a. Insurance Expense $400  
  Prepaid Insurance   $400
       
July 31 b. Office Supplies Expense $875  
  Office Supplies   $875
       
July 31 c. Depreciation Expense – Buildings $1,500  
  Accumulated Depreciation – Buildings   $1,500
       
July 31 d. Salaries Expense $100  
  Salaries Payable   $100
       
July 31 e. Accounts Receivable $1,150  
  Storage Fees Earned   $1,150
       
Cash
Account No. 101
Date Debit Credit Balance
July 31 $30,000   $22,850
       
Accounts Receivable
Account No. 106
Date Debit Credit Balance
July 31     $0
31. e $1,150   $1,150
Office Supplies
Account No. 124
Date Debit Credit Balance
July 31     $2,400
31 b.   $875 $1,525
Prepaid Insurance
Account No. 128
Date Debit Credit Balance
July 31     $7,200
31 a.   $400 $6,800
Building
Account No. 173
Date Debit Credit Balance
July 31     $150,000
       
Accumulated Depreciation – Buildings
Account No. 174
Date Debit Credit Balance
July 31     $0
31 c.   $1,500 $1,500
Salaries Payable
Account No. 209
Date Debit Credit Balance
July 31     $0
31 d.   $100 $100
L. Plume, Capital
Account No. 301
Date Debit Credit Balance
July 31     $180,000
       
L. Plume, Withdrawals
Account No. 302
Date Debit Credit Balance
July 31     $2,000
       
Storage Fees Earned
Account No. 401
Date Debit Credit Balance
July 31     $9,800
31. e   $1,150 $10,950
Depreciation Expense – Buildings
Account No. 606
Date Debit Credit Balance
July 31     $0
31 c. $1,500   $1,500
Salaries Expense
Account No. 622
Date Debit Credit Balance
July 31     $2,000
31 d. $100   $2,100
Insurance Expense
Account No. 637
Date Debit Credit Balance
July 31     $0
31 a. $400   $400
Rent Expense
Account No. 640
Date Debit Credit Balance
July 31     $2,000
       
Office Supplies Expense
Account No. 650
Date Debit Credit Balance
July 31     $0
31 b. $875   $875
Repairs Expense
Account No. 684
Date Debit Credit Balance
July 31     $950
       
Telephone Expense
Account No. 688
Date Debit Credit Balance
July 31     $400
       
Income Summary
Account No. 901
Date Debit Credit Balance
July 31     $0
       

5.

SAFE STORAGE CO.
Adjusted Trial Balance
July 31, 2017
Cash $22,850  
Accounts Receivable $1,150  
Office Supplies $1,525  
Prepaid Insurance $6,800  
Buildings $150,000  
Accumulated Depreciation – Buildings   $1,500
Salaries Payable   $100
L. Plume, Capital   $180,000
L. Plume, Withdrawals $2,000  
Storage Fees Earned   $10,950
Depreciation Expense – Buildings $1,500  
Salaries Expense $2,100  
Insurance Expense $400  
Rent Expense $2,000  
Office Supplies Expense $875  
Repairs Expense $950  
Telephone Expense $400  
Income Summary   $0
     
Total $192,550 $192,550
SAFE STORAGE CO.
Income Statement
July 31, 2017
Revenues:    
Storage Fees Earned   $10,950
     
Expenses:    
Depreciation Expense – Buildings $1,500  
Salaries Expense $2,100  
Insurance Expense $400  
Rent Expense $2,000  
Office Supplies Expense $875  
Repairs Expense $950  
Telephone Expense $400  
Total Expense   $8,225
     
Net Income   $2,725
SAFE STORAGE CO.
Statement of Owner’s Equity
July 31, 2017
L. Plume, Capital, July 1. $0
Owner’s contribution during the month $180,000
Net income for the month $2,725
Subtotal $182,725
Owner’s withdrawal ($2,000)
L. Plume, Capital, July 31. $180,725
SAFE STORAGE CO.
Balance Sheet
July 31, 2017
Assets    
Current Asset:    
Cash $22,850  
Accounts Receivable $1,150  
Office Supplies $1,525  
Prepaid Insurance $6,800  
Total Current Assets   $32,325
     
Plant, Property and Equipment:    
Buildings $150,000  
Accumulated Depreciation – Buildings $1,500 $148,500
     
Total Assets   $180,825
     
Liabilities    
Current Liabilities:    
Salaries Payable   $100
     
Owner’s Equity    
L. Plume, Capital   $180,725
     
Total Liabilities and Owner’s Equity   $180,825
     

6.

Date Accounts Debit Credit
       
Jul. 31 Storage Fees Earned $10,950  
  Income Summary   $10,950
       
  Income Summary $8,225  
  Depreciation Expense – Buildings   $1,500
  Salaries Expense   $2,100
  Insurance Expense   $400
  Rent Expense   $2,000
  Office Supplies Expense   $875
  Repairs Expense   $950
  Telephone Expense   $400
       
  Income Summary $2,725  
  L. Plume, Capital   $2,725
       
  L. Plume, Capital $2,000  
  L. Plume, Withdrawals   $2,000
       
L. Plume, Capital
Account No. 301
Date Debit Credit Balance
Adj. Bal.     $180,000
Clos. 3   $2,725 $182,725
Clos. 4 $2,000   $180,725
L. Plume, Withdrawals
Account No. 302
Date Debit Credit Balance
Adj. Bal.     $2,000
Clos. 4   $2,000 $0
Storage Fees Earned
Account No. 401
Date Debit Credit Balance
Adj. Bal.     $10,950
Clos. 1 $10,950   $0
Depreciation Expense – Buildings
Account No. 606
Date Debit Credit Balance
Adj. Bal.     $1,500
Clos. 2   $1,500 $0
Salaries Expense
Account No. 622
Date Debit Credit Balance
Adj. Bal.     $2,100
Clos. 2   $2,100 $0
Insurance Expense
Account No. 637
Date Debit Credit Balance
Adj. Bal.     $400
Clos. 2   $400 $0
Rent Expense
Account No. 640
Date Debit Credit Balance
Adj. Bal.     $2,000
Clos. 2   $2,000 $0
Office Supplies Expense
Account No. 650
Date Debit Credit Balance
Adj. Bal.     $875
Clos. 2   $875 $0
Repairs Expense
Account No. 684
Date Debit Credit Balance
Adj. Bal.     $950
Clos. 2   $950 $0
Telephone Expense
Account No. 688
Date Debit Credit Balance
Adj. Bal.     $400
Clos. 2   $400 $0
Income Summary
Account No. 901
Date Debit Credit Balance
July 31     $0
Clos. 1   $10,950 $10,950
Clos. 2 $8,225   $2,725
Clos. 3 $2,725   $0

7.

SAFE STORAGE CO.
Post-Closing Trial Balance
July 31, 2017
Cash $22,850  
Accounts Receivable $1,150  
Office Supplies $1,525  
Prepaid Insurance $6,800  
Buildings $150,000  
Accumulated Depreciation – Buildings   $1,500
Salaries Payable   $100
L. Plume, Capital   $180,725
     
Total $182,325 $182,325
Conclusion

Conclusion:

Safe Storage Co.’s net income for the month ended July 31, 2017 is $2,725 and total assets, liabilities and owner’s equity is $180,825.

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Chapter 4 Solutions

Loose Leaf for Fundamental Accounting Principles

Ch. 4 - Prob. 11DQCh. 4 - 12. How do reversing entries simplify...Ch. 4 - If a company recorded accrued salaries expense of...Ch. 4 - Prob. 14DQCh. 4 - Prob. 15DQCh. 4 - Prob. 16DQCh. 4 - Prob. 17DQCh. 4 - Prob. 1QSCh. 4 - Prob. 2QSCh. 4 - Prob. 3QSCh. 4 - Prob. 4QSCh. 4 - Prob. 5QSCh. 4 - Prob. 6QSCh. 4 - Prob. 7QSCh. 4 - Prob. 8QSCh. 4 - Prob. 9QSCh. 4 - Prob. 10QSCh. 4 - Prob. 11QSCh. 4 - Prob. 12QSCh. 4 - Exercise 4-1 Extending adjusted account balances...Ch. 4 - Prob. 2ECh. 4 - Prob. 3ECh. 4 - Exercise 4-4 Completing a work sheet Pl The...Ch. 4 - Exercise 4-5 Determining effects of closing...Ch. 4 - Prob. 6ECh. 4 - Exercise 4-7 Preparing a work sheet and recording...Ch. 4 - Prob. 8ECh. 4 - Prob. 9ECh. 4 - Prob. 10ECh. 4 - Prob. 11ECh. 4 - Prob. 12ECh. 4 - Exercise 4-13 Computing the current ratio A1 Use...Ch. 4 - Prob. 14ECh. 4 - Prob. 15ECh. 4 - Prob. 16ECh. 4 - Prob. 17ECh. 4 - Problem 4-1A Applying the accounting cycle C1 C2...Ch. 4 - Prob. 2APSACh. 4 - Prob. 3APSACh. 4 - Prob. 4APSACh. 4 - Problem 4-5A Preparing trial balances, closing...Ch. 4 - Prob. 6APSACh. 4 - Prob. 1BPSBCh. 4 - Prob. 2BPSBCh. 4 - Prob. 3BPSBCh. 4 - Prob. 4BPSBCh. 4 - Prob. 5BPSBCh. 4 - Prob. 6BPSBCh. 4 - Business Solutions P2 P3 (This serial problem...Ch. 4 - Prob. 1GLPCh. 4 - Prob. 2GLPCh. 4 - Prob. 3GLPCh. 4 - Prob. 4GLPCh. 4 - Prob. 5GLPCh. 4 - Prob. 1BTNCh. 4 - Prob. 2BTNCh. 4 - Prob. 3BTNCh. 4 - Prob. 4BTNCh. 4 - Prob. 5BTNCh. 4 - Prob. 6BTNCh. 4 - Prob. 7BTNCh. 4 - Prob. 8BTNCh. 4 - Prob. 9BTN
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