Fundamental Accounting Principles
Fundamental Accounting Principles
24th Edition
ISBN: 9781259916960
Author: Wild, John J., Shaw, Ken W.
Publisher: Mcgraw-hill Education,
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Chapter 4, Problem 1BPSB
To determine

Concept Introduction:

General Ledger:

The accounts use to organize all the transactions of a business organization are termed as general ledger accounts.

Requirement 1:

Apply balance column format to prepare each ledger account.

Expert Solution
Check Mark

Answer to Problem 1BPSB

Format of balance column ledger account

    DateDescriptionDebitCreditBalance

Explanation of Solution

The balance column format of ledger account keeps track of balancing amount remaining in the account on each transaction.

To determine

Concept Introduction:

Journal Entries:

Journal entries are medium of recording the financial transactions which occurred during an accounting year.

Requirement 2:

Journalizing the transaction which occurred during July and posting them to the ledger accounts.

Expert Solution
Check Mark

Answer to Problem 1BPSB

    AccountsBalance
    Cash$22,850
    Accounts Receivable0
    Office Supplies2,400
    Prepaid Insurance7,200
    Buildings150,000
    Accumulated Depreciation - Buildings0
    Salaries Payable0
    L. Plume, Capital180,000
    L. Plume, Withdrawals2,000
    Storage Fees Earned9,800
    Depreciation Expense - Buildings0
    Salaries Expense2,000
    Insurance Expense0
    Rent Expense2,000
    Office Supplies Expense0
    Repairs Expense950
    Telephone Expense400

Explanation of Solution

Journal Entries

    DateAccountsDebitCredit
    July
    1Cash$30,000
    Building150,000
    L. Plume, Capital$180,000
    2Rent Expense2,000
    Cash2,000
    5Office Supplies2,400
    Cash2,400
    10Prepaid Insurance7,200
    Cash7,200
    14Salaries Expense1,000
    Cash1,000
    24Cash9,800
    Storage Fees Earned9,800
    28Salaries Expense1,000
    Cash1,000
    29Repair Expense950
    Cash950
    30Telephone Expense400
    Cash400
    31L. Plume, Withdrawals2,000
    Cash2,000

Ledger AccountsCash Account No. 101

    DateDescriptionDebitCreditBalance
    July 1L. Plume, Capital$30,000$30,000
    2Rent Expense$2,00028,000
    5Office Supplies2,40025,600
    10Prepaid Insurance7,20018,400
    14Salaries Expense1,00017,400
    24Storage Fees Earned9,80027,200
    28Salaries Expense1,00026,200
    29Repair Expense95025,250
    30Telephone Expense40024,850
    31L. Plume, Withdrawals2,00022,850
    July 31Balance22,850

Accounts ReceivableAccount No. 106

    DateDescriptionDebitCreditBalance
    July 31Balance0

Office SuppliesAccount No. 124

    DateDescriptionDebitCreditBalance
    July 5Cash$2,400$2,400
    July 31Balance2,400

Prepaid InsuranceAccount No. 128

    DateDescriptionDebitCreditBalance
    July 10Cash$7,200$7,200
    July 31Balance7,200

BuildingsAccount No. 173

    DateDescriptionDebitCreditBalance
    July 1L. Plume, Capital$150,000$150,000
    July 31Balance150,000

Accumulated Depreciation - Buildings Account No. 174

    DateDescriptionDebitCreditBalance
    July 31Balance0

Salaries PayableAccount No. 209

    DateDescriptionDebitCreditBalance
    July 31Balance0

L. Plume, Capital Account No. 301

    DateDescriptionDebitCreditBalance
    July 1Cash$30,000$30,000
    Building150,000180,000
    July 31Balance180,000

L. Plume, WithdrawalsAccount No. 302

    DateDescriptionDebitCreditBalance
    July 31Cash$2,000$2,000
    July 31Balance2,000

Storage Fees Earned Account No. 401

    DateDescriptionDebitCreditBalance
    July 24Cash$9,800$9,800
    July 31Balance9,800

Depreciation Expense - Buildings Account No. 606

    DateDescriptionDebitCreditBalance
    July 31Balance0

Salaries ExpenseAccount No. 622

    DateDescriptionDebitCreditBalance
    July 14Cash$1,000$1,000
    28Cash1,0002,000
    July 31Balance2,000

Insurance Expense Account No. 637

    DateDescriptionDebitCreditBalance
    July 31Balance0

Rent Expense Account No. 640

    DateDescriptionDebitCreditBalance
    July 2Cash$2,000$2,000
    July 31Balance2,000

Office Supplies Expense Account No. 650

    DateDescriptionDebitCreditBalance
    July 31Balance0

Repairs Expense Account No. 684

    DateDescriptionDebitCreditBalance
    July 29Cash$950$950
    July 31Balance950

Telephone Expense Account No. 688

    DateDescriptionDebitCreditBalance
    July 30Cash$400$400
    July 31Balance400

Income Summary Account No. 901

    DateDescriptionDebitCreditBalance
    July 31Balance0
To determine

Concept Introduction:

Unadjusted Trial Balance:

Unadjusted trial balance shows the balance of accounts before adjustments required to be made regarding the adjusting entries.

Requirement 3:

To Prepare:

Prepare the unadjusted trial balance as July 31.

Expert Solution
Check Mark

Answer to Problem 1BPSB

The total balance of unadjusted trial balance is $189,800.

Explanation of Solution

    SAFE STORAGE CO.

    Unadjusted Trial Balance

    July 31, 2018

    AccountsDebitCredit
    Cash$22,850
    Accounts Receivable0
    Office Supplies2,400
    Prepaid Insurance7,200
    Buildings150,000
    Accumulated Depreciation - Buildings0
    Salaries Payable0
    L. Plume, Capital$180,000
    L. Plume, Withdrawals2,000
    Storage Fees Earned9,800
    Depreciation Expense - Buildings0
    Salaries Expense2,000
    Insurance Expense0
    Rent Expense2,000
    Office Supplies Expense0
    Repairs Expense950
    Telephone Expense400
    Totals189,800189,800
To determine

Concept Introduction:

Adjusting Entries:

The journal entries which shows the expenses and revenue incurred or earned during a particular accounting year are called adjusting entries.

Requirement 4:

Journalizing and posting of adjusting entries for the month.

Expert Solution
Check Mark

Answer to Problem 1BPSB

    AccountsBalance
    Accounts Receivable$1,150
    Office Supplies1,525
    Prepaid Insurance6,800
    Accumulated Depreciation − Buildings1,500
    Salaries Payable100
    Storage Fees Earned10,950
    Depreciation Expense - Buildings1,500
    Salaries Expense2,100
    Insurance Expense400
    Office Supplies Expense875

Explanation of Solution

Adjusting Entries and posting of the entries

    DateAccountsDebitCredit
    July 31
    a)Insurance Expense$400
    Prepaid Insurance$400
    b)Office Supplies Expense875
    Office Supplies875
    c)Depreciation Expense − Buildings1,500
    Accumulated Depreciation - Buildings1,500
    d)Salaries Expense100
    Salaries Payable100
    e)Accounts Receivable1,150
    Storage Fees Earned1,150

Accounts ReceivableAccount No. 106

    DateDescriptionDebitCreditBalance
    July 31Balance$0
    4(e)Storage Fees Earned$1,1501,150

Office SuppliesAccount No. 124

    DateDescriptionDebitCreditBalance
    July 31Balance$2,400
    4(b)Office Supplies Expense$8751,525

Prepaid InsuranceAccount No. 128

    DateDescriptionDebitCreditBalance
    July 31Balance$7,200
    4(a)Insurance Expense$4006,800

Accumulated Depreciation - Buildings Account No. 174

    DateDescriptionDebitCreditBalance
    July 31Balance$0
    4(c)Depreciation Expense - Buildings$1,5001,500

Salaries PayableAccount No. 209

    DateDescriptionDebitCreditBalance
    July 31Balance$0
    4(d)Salaries Expense$100100

Storage Fees Earned Account No. 401

    DateDescriptionDebitCreditBalance
    July 31Balance$9,800
    4(e)Accounts Receivable$1,15010,950

Depreciation Expense - Buildings Account No. 606

    DateDescriptionDebitCreditBalance
    July 31Balance$0
    4(c)Accumulated Depreciation - Buildings$1,5001,500

Salaries ExpenseAccount No. 622

    DateDescriptionDebitCreditBalance
    July 31Balance$2,000
    4(d)Salaries Payable$1002,100

Insurance Expense Account No. 637

    DateDescriptionDebitCreditBalance
    July 31Balance$0
    4(a)Prepaid Insurance$400400

Office Supplies Expense Account No. 650

    DateDescriptionDebitCreditBalance
    July 31Balance$0
    4(b)Office Supplies$875875
To determine

Concept Introduction:

Adjusted Trial Balance:

Considering all the expenses and revenue occurred irrespective of whether cash is outstanding or received in advance during an accounting period, the adjusted trial balance shows the accurate balances of all the accounts.

Requirement 5

To Prepare:

Prepare adjusted trial balance, income statement, statement of owner's equity and balance sheet at July 31.

Expert Solution
Check Mark

Answer to Problem 1BPSB

    ParticularsAnswers
    Total balance of adjusted trial balance$192,550
    Net income2,725
    Owner's equity balance for the July month180,725
    Total balance of assets and liabilities and owner's equity180,825

Explanation of Solution

Adjusted Trial Balance

    SAFE STORAGE CO.

    Adjusted Trial Balance

    July 31, 2018

    AccountsDebitCredit
    Cash$22,850
    Accounts Receivable1,150
    Office Supplies1,525
    Prepaid Insurance6,800
    Buildings150,000
    Accumulated Depreciation - Buildings$1,500
    Salaries Payable100
    L. Plume, Capital180,000
    L. Plume, Withdrawals2,000
    Storage Fees Earned10,950
    Depreciation Expense - Buildings1,500
    Salaries Expense2,100
    Insurance Expense400
    Rent Expense2,000
    Office Supplies Expense875
    Repairs Expense950
    Telephone Expense400
    Totals192,550192,550
    SAFE STORAGE CO.Income Statement

    July 31, 2018

    Revenue:
    Storage Fees Earned$10,950
    Expenses:
    Depreciation Expense - Buildings$1,500
    Salaries Expense2,100
    Insurance Expense400
    Rent Expense2,000
    Office Supplies Expense875
    Repairs Expense950
    Telephone Expense400
    8,225
    Net Income$2,725
    SAFE STORAGE CO.Statement of Owner's Equity

    July 31, 2018

    L. Plume, Capital; June 30, 2018$0
    Add: Owner Investment during the month180,000
    Net Income2,725
    Subtotal182,725
    Less: L. Plume, Withdrawals2,000
    L. Plume, Capital; July 31, 2018$180,725
    SAFE STORAGE CO.Balance Sheet

    July 31, 2018

    Assets
    Current Assets:
    Cash$22,850
    Accounts Receivable1,150
    Office Supplies1,525
    Prepaid Insurance6,800
    Total Current Assets$32,325
    Property, Plant and Equipment
    Building150,000
    Less: Accumulated Depreciation1,500148,500
    Total Assets$180,825
    Liabilities and Owner's Equity
    Liabilities
    Current Liabilities:
    Salaries Payable100
    Total Current Liabilities100
    Owner's Equity
    L. Plume, Capital; July 31, 2018180,725
    Total Liabilities and Owner's Equity$180,825
To determine

Concept Introduction:

Closing Entries:

Closing entries intends to close all the temporary accounts and transfer its balances to "income summary account" and then to the owner's capital account. The accounts which are closed at the end of every accounting period are called temporary accounts. Examples: revenue accounts and expenses accounts like salaries, rent, depreciation, insurance, commission expenses, etc.

Requirement 6

To Prepare:

Prepare closing entries to close all the temporary accounts and post them into their concern ledger.

Expert Solution
Check Mark

Answer to Problem 1BPSB

    AccountsBalance
    Cash$22,850
    Accounts Receivable1,150
    Office Supplies1,525
    Prepaid Insurance6,800
    Buildings150,000
    Accumulated Depreciation − Buildings1,500
    Salaries Payable100
    L. Plume, Capital180,725
    L. Plume, Withdrawals0
    Storage Fees Earned0
    Depreciation Expense − Buildings0
    Salaries Expense0
    Insurance Expense0
    Rent Expense0
    Office Supplies Expense0
    Repairs Expense0
    Telephone Expense0
    Income Summary0

Explanation of Solution

Journalizing the closing entries and posting into accounts

    DateAccountsDebitCredit
    July 31
    a)Storage Fees Earned$10,950
    Income Summary$10,950
    b)Income Summary8,225
    Depreciation Expense - Buildings1,500
    Salaries Expense2,100
    Insurance Expense400
    Rent Expense2,000
    Office Supplies Expense875
    Repairs Expense950
    Telephone Expense400
    c)Income Summary2,725
    L. Plume, Capital2,725
    d)L. Plume, Capital2,000
    L. Plume, Withdrawals2,000

Storage Fees Earned Account No. 401

    DateDescriptionDebitCreditBalance
    July 31Balance$10,950
    6(a)Income Summary10,9500

Depreciation Expense - Buildings Account No. 606

    DateDescriptionDebitCreditBalance
    July 31Balance$1,500
    6(b)Income Summary$1,5000

Salaries ExpenseAccount No. 622

    DateDescriptionDebitCreditBalance
    July 31Balance$2,100
    6(b)Income Summary$2,1000

Insurance Expense Account No. 637

    DateDescriptionDebitCreditBalance
    July 31Balance$400
    6(b)Income Summary$400

Rent Expense Account No. 640

    DateDescriptionDebitCreditBalance
    July 31Balance$2,000
    6(b)Income Summary$2,0000

Office Supplies Expense Account No. 650

    DateDescriptionDebitCreditBalance
    July 31Balance$875
    6(b)Income Summary$8750

Repairs Expense Account No. 684

    DateDescriptionDebitCreditBalance
    July 31Balance$950
    6(b)Income Summary$9500

Telephone Expense Account No. 688

    DateDescriptionDebitCreditBalance
    July 31Balance$400
    6(b)Income Summary$4000

Income Summary Account No. 901

    DateDescriptionDebitCreditBalance
    July 31Balance$0
    6(a)Storage Fees Earned$10,950$10,950
    6(b)Depreciation Expense - Buildings$1,5009,450
    Salaries Expense2,1007,350
    Insurance Expense4006,950
    Rent Expense2,0004,950
    Office Supplies Expense8754,075
    Repairs Expense9503,125
    Telephone Expense4002,725
    6(c)L. Plume, Capital2,7250

L. Plume, Capital Account No. 301

    DateDescriptionDebitCreditBalance
    July 31Balance$180,000
    6(c)Income Summary$2,725182,725
    6(d)L. Plume, Withdrawals$2,000180,725

L. Plume, WithdrawalsAccount No. 302

    DateDescriptionDebitCreditBalance
    July 31Balance$2,000
    6(d)L. Plume, Capital$2,0000
To determine

Concept Introduction:

The trial balance which is prepare after closing all the temporary accounts are termed as post-closing trial balance.

Requirement 7

To Prepare:

Prepare the post-closing trial balance?

Expert Solution
Check Mark

Answer to Problem 1BPSB

The total balance of post-closing trial balance is $182,325.

Explanation of Solution

Post-Closing Trial Balance

    SAFE STORAGE CO.

    Adjusted Trial Balance

    July 31, 2018

    AccountsDebitCredit
    Cash$22,850
    Accounts Receivable1,150
    Office Supplies1,525
    Prepaid Insurance6,800
    Buildings150,000
    Accumulated Depreciation - Buildings$1,500
    Salaries Payable100
    L. Plume, Capital180,725
    L. Plume, Withdrawals0
    Storage Fees Earned0
    Depreciation Expense - Buildings0
    Salaries Expense0
    Insurance Expense0
    Rent Expense0
    Office Supplies Expense0
    Repairs Expense0
    Telephone Expense0
    Income Summary0
    Totals182,325182,325

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Chapter 4 Solutions

Fundamental Accounting Principles

Ch. 4 - Prob. 11DQCh. 4 - Prob. 12DQCh. 4 - Prob. 13DQCh. 4 - Prob. 14DQCh. 4 - Prob. 15DQCh. 4 - Prob. 16DQCh. 4 - Prob. 17DQCh. 4 - Prob. 1QSCh. 4 - Preparing a work sheet P1 In the blank space...Ch. 4 - Computing ending capital balance using work sheet...Ch. 4 - Preparing a partial work sheet P1 The ledger of...Ch. 4 - Explaining temporary and permanent accounts Choose...Ch. 4 - Preparing closing entries from the ledger P2 The...Ch. 4 - Identifying post-closing accounts P3 Identify...Ch. 4 - Identifying the accounting cycle C2 List the...Ch. 4 - Classifying balance sheet items C3 The following...Ch. 4 - Preparing financial statements C2 Use the...Ch. 4 - Preparing a classified balance sheet C3 Use the...Ch. 4 - Identifying current accounts and computing the...Ch. 4 - Prob. 13QSCh. 4 - Exercise 4-1 Extending adjusted account balances...Ch. 4 - Exercise 4-2 Extending accounts in a work sheet Pl...Ch. 4 - Exercise 4-3 Preparing adjusting entries from a...Ch. 4 - Exercise 4-4 Preparing unadjusted and adjusted...Ch. 4 - Exercise 4-5 Determining effects of closing...Ch. 4 - Exercise 4-6 Completing the income statement...Ch. 4 - Exercise 4-7 Preparing a work sheet and recording...Ch. 4 - Exercise 4-8 Preparing and posting closing...Ch. 4 - Exercise 4-9 Preparing closing entries and a...Ch. 4 - Exercise 4-10 Preparing closing entries and a...Ch. 4 - Prob. 11ECh. 4 - Exercise 4-12 Preparing a classified balance sheet...Ch. 4 - Exercise 4-13 Computing the current ratio A1 Use...Ch. 4 - Exercise 4-14 Preparing closing entries P2...Ch. 4 - Exercise 4-15 Computing and analysing the current...Ch. 4 - Exercise 4.16A Preparing reversing entries P4 Hawk...Ch. 4 - Exercise 4-17APreparing reversing entries P4 The...Ch. 4 - Problem 4-1A Applying the accounting cycle C2 P2...Ch. 4 - Problem 4-2A Preparing a work sheet, adjusting and...Ch. 4 - Problem 4-3A Determining balance sheet...Ch. 4 - Problem 4-4A Preparing closing entries, financial...Ch. 4 - Problem 4-5A Preparing trial balances, closing...Ch. 4 - Problem 4-6AA Preparing adjusting, reversing, and...Ch. 4 - Problem 4-1B Applying the accounting cycle C2 P2...Ch. 4 - Prob. 2BPSBCh. 4 - Problem 4-3B Determining balance sheet...Ch. 4 - Prob. 4BPSBCh. 4 - Problem 4-5B Preparing trial balances, closing...Ch. 4 - Problem 4-6BAPreparing adjusting, reversing, and...Ch. 4 - The December 31. 2019= adjusted trial balance of...Ch. 4 - Transactions from the Fast Forward illustration in...Ch. 4 - Prob. 2GLPCh. 4 - Prob. 3GLPCh. 4 - Based on Problem 4-6ACh. 4 - Prob. 5GLPCh. 4 - Refer to Apple' s financial statements in Appendix...Ch. 4 - Prob. 2AACh. 4 - Prob. 3AACh. 4 - Prob. 1BTNCh. 4 - Prob. 2BTNCh. 4 - Prob. 3BTNCh. 4 - The unadjusted trial balance and information for...Ch. 4 - Prob. 5BTNCh. 4 - Prob. 6BTN
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