Concept explainers
1,3, 5 and 8
Prepare T-accounts for the necessary accounts.
1,3, 5 and 8
Explanation of Solution
T-account:
T-account refers to an individual account, where the increases or decreases in the value of specific asset, liability,
This account is referred to as the T-account, because the alignment of the components of the account resembles the capital letter ‘T’.’ An account consists of the three main components which are as follows:
(a)The title of the account
(b)The left or debit side
(c)The right or credit side
Prepare T-accounts for the necessary accounts as follows:
Cash (A) | |||
Beg. | $3 | ||
a | 12 | b | $9 |
c | 23 | d | 10 |
h | 120 | f | 13 |
j | 24 | i | $85 |
Bal. | $65 |
Land(A) | |||
Beg. | $0 | ||
b | 9 | ||
Bal. | $9 |
Software (A) | |||
Beg. | $15 | ||
d | 10 | ||
Bal. | $25 |
Accounts Payable (L) | |||
Beg. | $5 | ||
f | $13 | e | 18 |
Bal. | $10 |
Salaries and Wages Payable (L) | |||
Beg. | $0 | ||
o | 12 | ||
Bal. | $12 |
Common Stock (SE) | |||
Beg. | $71 | ||
c | 23 | ||
Bal. | $94 |
Accounts Receivable(A) | |||
Beg. | $5 | ||
h | 40 | j | 24 |
Bal. | $21 |
Equipment (A) | |||
Beg. | $60 | ||
Bal. | $60 | ||
Accumulated Amortization (xA) | |||
Beg. | $5 | ||
k | 5 | ||
Bal. | $10 |
Notes Payable (short-term) (L) | |||
Beg | $0 | ||
a | 12 | ||
Bal. | $12 |
Interest Payable (L) | |||
Beg. | $0 | ||
n | 1 | ||
Bal. | $1 |
Beg. | $8 | ||
CE1 | 23 | ||
Bal. | $31 |
Supplies (A) | |||
Beg. | $12 | ||
e | 18 | ||
30 | |||
l | 20 | ||
Bal. | $10 |
Accumulated | |||
Beg. | $6 | ||
m | 6 | ||
Bal. | $12 |
Income Tax Payable (L) | |||
Beg. | $0 | ||
p | 8 | ||
Bal. | $8 |
Service Revenue (R) | |||
Beg. | 0 | ||
h | $160 | ||
CE1 | $160 | ||
Bal. | $0 |
Salaries and Wages Expense (E) | |||
Beg. | $0 | ||
i | 85 | ||
o | 12 | ||
97 | |||
CE1 | $97 | ||
Bal. | $0 |
Depreciation Expense (E) | |||
Beg. | $0 | ||
m | 6 | ||
CE1 | $6 | ||
Bal. | $0 |
Amortization Expense (E) | |||
Beg. | $0 | ||
k | 5 | ||
CE1 | $5 | ||
Bal. | $0 |
Income Tax Expense (E) | |||
Beg. | $0 | ||
p | 8 | ||
CE1 | $8 | ||
Bal. | $0 |
Interest Expense (E) | |||
Beg. | $0 | ||
n | 1 | ||
CE1 | $1 | ||
Bal. | $0 |
Supplies Expense (E) | |||
Beg. | $0 | ||
l | 20 | ||
CE1 | $20 | ||
Bal. | $0 |
2.
Record the necessary
2.
Explanation of Solution
Journal entries for the transactions (a) to (j) as follows:
Date | Account Title and Explanation | Debit ($) | Credit ($) | ||
a) | Cash (+A) | 12 | |||
Notes payable (Short-term) (+L) | 12 | ||||
(To record borrowed cash on note) | |||||
b) | Land (+A) | 9 | |||
Cash (-A) | 9 | ||||
(To record purchase of land for building site) | |||||
c) | Cash (+A) | 23 | |||
Common Stock (+SE) | 23 | ||||
(To record issued common stock for cash) | |||||
d) | Software (+A) | 10 | |||
Cash (-A) | 10 | ||||
(To record Purchase of additional software) | |||||
e) | Supplies (+A) | 18 | |||
Accounts payable (+L) | 18 | ||||
(To record supplies purchased for future use) | |||||
f) | Accounts payable (-L) | 13 | |||
Cash (-A) | 13 | ||||
(To record cash paid to creditors) | |||||
g) | No entry required, Because no revenue has been earned in 2018 | ||||
h) | Cash (+A) | 120 | |||
40 | |||||
Service Revenue (+R, +SE) | 160 | ||||
(To record service revenue earned during the year 2018) | |||||
i) | Salaries and Wages Expense (+E, -SE) | 85 | |||
Cash (-A) | 85 | ||||
(To record salaries and wages expense incurred during 2018) | |||||
j) | Cash (+A) | 24 | |||
Accounts Receivable (-A) | 24 | ||||
(To record cash collected on customer’s account) |
Table (1)
3.
Prepare an unadjusted
3.
Explanation of Solution
Prepare an unadjusted trial balance of Incorporation H&H as follows:
Incorporation H&H | ||
Unadjusted Trial Balance | ||
At December 31, 2018 | ||
(in thousands) | ||
Account Titles | Debit ($) | Credit ($) |
Cash | 65 | |
Accounts Receivable | 21 | |
Supplies | 30 | |
Land | 9 | |
Equipment | 60 | |
Accumulated Depreciation–Equipment | 6 | |
Software | 25 | |
Accumulated Amortization | 5 | |
Accounts Payable | 10 | |
Notes Payable (short–term) | 12 | |
Salaries and Wages Payable | ||
Interest Payable | ||
Income Taxes Payable | ||
Common Stock | 94 | |
Retained Earnings | 8 | |
Service Revenue | 160 | |
Salaries and Wages Expense | 85 | |
Supplies Expense | ||
Depreciation Expense | ||
Interest Expense | ||
Income Tax Expense | ||
Total | 295 | 295 |
Table (2)
4.
Record the adjusting journal entries (k) to (p).
4.
Explanation of Solution
Record the adjusting journal entries (k) to (p) as follows:
Date | Account Title and Explanation | Debit ($) | Credit ($) | ||
k. | Amortization Expense (+E, -SE) | 5 | |||
Accumulated Amortization (+xA, -A) | 5 | ||||
(To record | |||||
l. | Supplies expense (+E, -SE) (refer working note 1) | 20 | |||
Supplies(-A) | 20 | ||||
(To record the use of supplies) | |||||
m. | Depreciation expense (+E, -SE) | 6 | |||
Accumulated depreciation –Equipment (+xA, -A) | 6 | ||||
(To record adjusting entry for depreciation expense) | |||||
n. | Interest expense (+E, -SE) | 1 | |||
Interest payable(+L) | 1 | ||||
(To record the adjusting entry for interest expense) | |||||
o. | Salaries and wages expense (+E, -SE) | 12 | |||
Salaries and wages payable (+L) | 12 | ||||
(To record the adjusting entry for salaries and wages expenses) | |||||
p. | Income tax expense(+E, -SE) | 8 | |||
Income tax payable(+L) | 8 | ||||
(To record the adjusting entry for income tax expense) |
Table (3)
Working notes 1:
Calculate the value of supplies expenses:
5.
Prepare an adjusted trial balance from requirement 4.
5.
Explanation of Solution
Prepare an adjusted trial balance for Incorporation H&H for December 31, 2018 as follows:
Incorporation H&H | ||
Adjusted Trial Balance | ||
At December 31, 2018 | ||
(in thousands) | ||
Account Titles | Debit ($) | Credit ($) |
Cash | 65 | |
Accounts Receivable | 21 | |
Supplies | 10 | |
Land | 9 | |
Equipment | 60 | |
Accumulated Depreciation–Equipment | 12 | |
Software | 25 | |
Accumulated Amortization | 10 | |
Accounts Payable | 10 | |
Notes Payable (short–term) | 12 | |
Salaries and Wages Payable | 12 | |
Interest Payable | 1 | |
Income Taxes Payable | 8 | |
Common Stock | 94 | |
Retained Earnings | 8 | |
Service Revenue | 160 | |
Salaries and Wages Expense | 97 | |
Supplies Expense | 20 | |
Depreciation Expense | 6 | |
Amortization expense | 5 | |
Interest Expense | 1 | |
Income Tax Expense | 8 | |
Total | 327 | 327 |
Table (4)
6.
Prepare an income statement, statement of retained earnings and balance sheet.
6.
Explanation of Solution
Prepare an income statement for the year ended December 31, 2018 as follows:
Incorporation H&H | ||
Income Statement | ||
For the year ended December 31, 2018 | ||
(in thousands) | ||
Particulars | Amount ($) | Amount ($) |
Revenues: | ||
Service revenue | 160 | |
Total revenues | 160 | |
Less: Expenses | ||
Salaries and wage expense | 97 | |
Supplies expense | 20 | |
Depreciation expense | 6 | |
Amortization expense | 5 | |
Interest expense | 1 | |
Income tax expense | 8 | |
Total expenses | 137 | |
Net income | 23 |
Table (5)
Prepare a statement of retained earnings as follows:
Incorporation H&H | ||
Statement of Retained Earnings | ||
For the year ended December 31, 2018 | ||
(in thousands) | ||
Particulars | Amount ($) | Amount ($) |
Balance, January 1, 2018 | 8 | |
Add: Net income | 23 | |
31 | ||
Less: Dividends | (0) | |
Balance, December 31, 2018 | 31 |
Table (6)
Prepare a balance sheet for the year December 31, 2018 as follows:
Table (7)
7.
Prepare the closing entry for Incorporation H&H on December 31, 2018.
7.
Explanation of Solution
Prepare closing entries for Incorporation H&H on December 31, 2018:
Date | Account Title and Explanation | Debit ($) | Credit ($) |
December 31, 2018 | Sales revenue(-R) | 160 | |
Salaries and wages expense(-E) | 97 | ||
Depreciation expense(-E) | 6 | ||
Supplies expense(-E) | 20 | ||
Amortization expense (-E) | 5 | ||
Income tax expense(-E) | 8 | ||
Interest expense (-E) | 1 | ||
Retained earnings(+SE) (refer table 5) | 23 | ||
(To record the closing entries for Incorporation H&H) |
Table (8)
For closing of temporary accounts, the balances of revenues, expenses, and dividend accounts are transferred to retained earnings in order to bring zero balance for expenses and revenues accounts.
8.
Prepare post-closing trial balance from the requirement 7.
8.
Explanation of Solution
Prepare a Post-closing trial balance for Incorporation H&H for December 31, 2018 as follows:
Incorporation H&H | ||
Post-closing Trial Balance | ||
At December 31, 2018 | ||
(in thousands) | ||
Account Titles | Debit ($) | Credit ($) |
Cash | 65 | |
Accounts Receivable | 21 | |
Supplies | 10 | |
Land | 9 | |
Equipment | 60 | |
Accumulated Depreciation–Equipment | 12 | |
Software | 25 | |
Accumulated Amortization | 10 | |
Accounts Payable | 10 | |
Notes Payable (short–term) | 12 | |
Salaries and Wages Payable | 12 | |
Interest Payable | 1 | |
Income Taxes Payable | 8 | |
Common Stock | 94 | |
Retained Earnings | 31 | |
Dividends | 0 | |
Service Revenue | 0 | |
Salaries and Wages Expense | 0 | |
Supplies Expense | 0 | |
Depreciation Expense | 0 | |
Amortization expense | 0 | |
Interest Expense | 0 | |
Income Tax Expense | 0 | |
Total | 190 | 190 |
Table (9)
9.
Ascertain the net income of Incorporation H&H that has been generated during 2018 and calculate the net profit margin. Explain the company has been financed primarily by liabilities or stockholders’ equity, and find the
9.
Explanation of Solution
The net income of Incorporation H&H for 2018:
Incorporation H&H generated net income of $23(thousand) in the year 2018
Calculate the net profit margin:
The net profit margin of Incorporation H&H is 14.4%.
Whether the Incorporation H&H is financed primarily by liabilities or stockholders’ equity:
Incorporation H&H is financed primarily by stockholders’ equity, where by providing stockholders’ equity for $125(thousand) with the total assets and liabilities providing for $43(thousand).
The invested amount of assets primarily come from stockholder’s’ equity of Incorporation H&H, because the stockholder’s equity (common stock) has financed $125 thousand of the Incorporation H&H’s total assets, whereas liabilities has financed $34 thousand.
Calculate the current ratio:
The current ratio is 2.23:1.
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Chapter 4 Solutions
FUNDAMENTALS OF ACCT. W/CONNECT >LL<
- For the past several years, Jeff Horton has operated a part-time consulting business from his home. As of April 1, 2016, Jeff decided to move to rented quarters and to operate the business, which was to be known as Rosebud Consulting, on a full-time basis. Rosebud Consulting entered into the following transactions during April: Instructions 1.Journalize each transaction in a two-column journal starting on Page 1, referring to the following chart of accounts in selecting the accounts to be debited and credited. (Do not insert the account numbers in the journal at this time.) 2.Post the journal to a ledger of four-column accounts. 3.Prepare an unadjusted trial balance. 4.At the end of April, the following adjustment data were assembled. Analyze and use these data to complete parts (5) and (6). a. Insurance expired during April is 350. b. Supplies on hand on April 30 are 1,225. c. Depreciation of office equipment for April is 400. d. Accrued receptionist salary on April 30 is 275. e. Rent expired during April is 2,000. f. Unearned fees on April 30 are 2,350. 5.(Optional) Enter the unadjusted trial balance on an end-of-period spreadsheet and complete the spreadsheet. 6.Journalize and post the adjusting entries. Record the adjusting entries on Page 3 of the journal. 7.Prepare an adjusted trial balance. 8.Prepare an income statement, a statement of owners equity, and a balance sheet. 9.Prepare and post the closing entries. Record the closing entries on Page 4 of the journal. (Income Summary is account #33 in the chart of accounts.) Indicate closed accounts by inserting a line in both the Balance columns opposite the closing entry. 10.Prepare a post-closing trial balance.arrow_forwardFor the past several years, Steffy Lopez has operated a part-time consulting business from his home. As of July 1, 2016, Steffy decided to move to rented quarters and to operate the business, which was to be known as Diamond Consulting, on a full-time basis. Diamond Consulting entered into the following transactions during July: Instructions 1.Journalize each transaction in a two-column journal starting on Page 1, referring to the following chart of accounts in selecting the accounts to be debited and credited. (Do not insert the account numbers in the journal at this time.) 2.Post the journal to a ledger of four-column accounts. 3.Prepare an unadjusted trial balance. 4.At the end of July, the following adjustment data were assembled. Analyze and use these data to complete parts (5) and (6). a. Insurance expired during July is 375. b. Supplies on hand on July 31 are 1,525. c. Depreciation of office equipment for July is 750. d. Accrued receptionist salary on July 31 is 175. e. Rent expired during July is 2,400. f. Unearned fees on July 31 are 2,750. 5.(Optional) Enter the unadjusted trial balance on an end-of-period spreadsheet and complete the spreadsheet. 6.Journalize and post the adjusting entries. Record the adjusting entries on Page 3 of the journal. 7.Prepare an adjusted trial balance. 8.Prepare an income statement, a statement of owners equity, and a balance sheet. 9.Prepare and post the closing entries. (Income Summary is account #33 in the chart of accounts.) Record the closing entries on Page 4 of the journal. Indicate closed accounts by inserting a line in both the Balance columns opposite the closing entry. 10.Prepare a post-closing trial balance.arrow_forwardKelly Pitney began her consulting business, Kelly Consulting, on April 1, 2016. The accounting cycle for Kelly Consulting for April, including financial statements, was illustrated in this chapter. During May, Kelly Consulting entered into the following transactions: Instructions 1. The chart of accounts for Kelly Consulting is shown in Exhibit 9, and the post-closing trial balance as of April 30, 2016, is shown in Exhibit 17. For each account in the post-closing trial balance, enter the balance in the appropriate Balance column of a four-column account. Date the balances May 1, 2016, and place a check mark () in the Posting Reference column. Journalize each of the May transactions in a two column journal starting on Page 5 of the journal and using Kelly Consultings chart of accounts. (Do not insert the account numbers in the journal at this time.) 2. Post the journal to a ledger of four-column accounts. 3. Prepare an unadjusted trial balance. 4. At the end of May, the following adjustment data were assembled. Analyze and use these data to complete parts (5) and (6) a. Insurance expired during May is 275. b. Supplies on hand on May 31 are 715. c. Depreciation of office equipment for May is 330. d. Accrued receptionist salary on May 31 is 325. e. Rent expired during May is 1,600. f. Unearned fees on May 31 are 3,210. 5.(Optional) Enter the unadjusted trial balance on an end-of-period spreadsheet and complete the spreadsheet. 6.Journalize and post the adjusting entries. Record the adjusting entries on Page 7 of the journal. 7.Prepare an adjusted trial balance. 8.Prepare an income statement, a statement of owners equity, and a balance sheet. 9.Prepare and post the closing entries. Record the closing entries on Page 8 of the journal. (Income Summary is account #33 in the chart of accounts.) Indicate closed accounts by inserting a line in both the Balance columns opposite the closing entry. 10.Prepare a post-closing trial balance.arrow_forward
- The transactions completed by PS Music during June 2019 were described at the end of Chapter 1. The following transactions were completed during July, the second month of the businesss operations: July 1.Peyton Smith made an additional investment in PS Music by depositing 5,000 in PS Musics checking account. 1.Instead of continuing to share office space with a local real estate agency, Peyton decided to rent office space near a local music store. Paid rent for July, 1,750. 1.Paid a premium of 2,700 for a comprehensive insurance policy covering liability, theft, and fire. The policy covers a one-year period. 2.Received 1,000 cash from customers on account. 3.On behalf of PS Music, Peyton signed a contract with a local radio station, KXMD, to provide guest spots for the next three months. The contract requires PS Music to provide a guest disc jockey for 80 hours per month for a monthly fee of 3,600. Any additional hours beyond 80 will be billed to KXMD at 40 per hour. In accordance with the contract, Peyton received 7,200 from KXMD as an advance payment for the first two months. 3.Paid 250 to creditors on account. 4.Paid an attorney 900 for reviewing the July 3 contract with KXMD. (Record as Miscellaneous Expense.) 5.Purchased office equipment on account from Office Mart, 7,500. 8.Paid for a newspaper advertisement, 200. 11.Received 1,000 for serving as a disc jockey for a party. 13.Paid 700 to a local audio electronics store for rental of digital recording equipment. 14.Paid wages of 1,200 to receptionist and part-time assistant. Enter the following transactions on Page 2 of the two-column journal: 16.Received 2,000 for serving as a disc jockey for a wedding reception. 18.Purchased supplies on account, 850. July 21. Paid 620 to Upload Music for use of its current music demos in making various music sets. 22.Paid 800 to a local radio station to advertise the services of PS Music twice daily for the remainder of July. 23.Served as disc jockey for a party for 2,500. Received 750, with the remainder due August 4, 2019. 27.Paid electric bill, 915. 28.Paid wages of 1,200 to receptionist and part-time assistant. 29.Paid miscellaneous expenses, 540. 30.Served as a disc jockey for a charity ball for 1,500. Received 500, with the remainder due on August 9, 2019. 31.Received 3,000 for serving as a disc jockey for a party. 31.Paid 1,400 royalties (music expense) to National Music Clearing for use of various artists music during July. 31.Withdrew 1,250 cash from PS Music for personal use. PS Musics chart of accounts and the balance of accounts as of July 1, 2019 (all normal balances), are as follows: Instructions 1. Enter the July 1, 2019, account balances in the appropriate balance column of a four-column account. Write Balance in the Item column and place a check mark () in the Posting Reference column. (Hint: Verify the equality of the debit and credit balances in the ledger before proceeding with the next instruction.) 2. Analyze and journalize each transaction in a two-column journal beginning on Page 1, omitting journal entry explanations. 3. Post the journal to the ledger, extending the account balance to the appropriate balance column after each posting. 4. Prepare an unadjusted trial balance as of July 31, 2019.arrow_forwardThe transactions completed by PS Music during June 2019 were described at the end of Chapter 1. The following transactions were completed during July, the second month of the business's operations: July 1. Peyton Smith made an additional investment in PS Music by depositing 5,000 in PS Music's checking account. 1. Instead of continuing to share office space with a local real estate agency, Peyton decided to rent office space near a local music: store. Paid rent for July, 1,750. 1. Paid a premium of 2,700 for a comprehensive insurance policy covering liability, theft, and fire. The policy covers a one-year period. 2. Received 1,000 cash from customers on account. 3. On behalf of PS Music, Peyton signed a contract with a local radio station, KXMD, to provide guest spots for the next three months. The contract requires PS Music to provide a guest disc jockey for SO hours per month for a monthly fee of 3,600. Any additional hours beyond SO will be billed to KXMD at 40 per hour. In accordance with the contract, Peyton received 7,200 from KXMD as an advance payment for the first two months. 3. Paid 250 to creditors on account. 4. Paid an attorney 900 for reviewing the July 3 contract with KXMD. (Record as Miscellaneous Expense.) 5. Purchased office equipment on account from Office Mart, 7,500. 8. Paid for a newspaper advertisement, 200. 11. Received 1,000 for serving as a disc jockey for a party. 13. Paid 700 to a local audio electronics store for rental of digital recording equipment. 11. Paid wages of 1,200 to receptionist and part-time assistant. Enter the following transactions on Page 2 of the two-column journal: 16. Received 2,000 for serving as a disc jockey for a wedding reception. 18. Purchased supplies on account, 850. July 21. Paid 620 to Upload Music for use of its current music demos in making various music sets. 22. Paid 800 to a local radio station to advertise the services of PS Music twice daily for the remainder of July. 23. Served as disc jockey for a party for 2,500. Received 750, with the remainder due August 4, 2019. 27. Paid electric bill, 915. 28. Paid wages of 1,200 to receptionist and part-time assistant. 29. Paid miscellaneous expenses, 540. 30. Served as a disc jockey for a charity ball for 1,500. Received 500, with the remainder due on August 9, 2019. 31. Received 3,000 for serving as a disc jockey for a party. 31. Paid 1,400 royalties (music expense) to National Music Clearing for use of various artists' music during July. 31. Withdrew l,250 cash from PS Music for personal use. PS Music's chart of accounts and the balance of accounts as of July 1, 2019 (all normal balances), are as follows: 11 Cash 3,920 12 Accounts receivable 1,000 14 Supplies 170 15 Prepaid insurance 17 Office Equipment 21 Accounts payable 250 23 Unearned Revenue 31 Peyton smith, Drawing 4,000 32 Fees Earned 500 41 Wages Expense 6,200 50 Office Rent Expense 400 51 Equipment Rent Expense 800 52 Utilities Expense 675 53 Supplies Expense 300 54 music Expense 1,590 55 Advertising Expense 500 56 Supplies Expense 180 59 Miscellaneous Expense 415 Instructions 1.Enter the July 1, 2019, account balances in the appropriate balance column of a four-column account. Write Balance in the Item column and place a check mark () in the Posting Reference column. (Hint: Verify the equality of the debit and credit balances in the ledger before proceeding with the next instruction.) 2.Analyze and journalize each transaction in a two-column journal beginning on Page 1, omitting journal entry explanations. 3.Post the journal to the ledger, extending the account balance to the appropriate balance column after each posting. 4.Prepare an unadjusted trial balance as of July 31, 2019.arrow_forwardKelly Pitney began her consulting business, Kelly Consulting, on April 1, 2019. The accounting cycle for Kelly Consulting for April, including financial statements, was illustrated in this chapter. During May, Kelly Consulting entered into the following transactions: Instructions 1. The chart of accounts for Kelly Consulting is shown in Exhibit 9, and the post-closingtrial balance as of April 30, 2019, is shown in Exhibit 17. For each account in the post-closing trial balance, enter the balance in the appropriate Balance column of a four-column account. Date the balances May 1, 2019, and place a check mark () in the Posting Reference column. Journalize each of the May transactions in a twocolumn journal starting on Page 5 of the journal and using Kelly Consultings chart of accounts. (Do not insert the account numbers in the journal at this time.) 2. Post the journal to a ledger of four-column accounts. 3. Prepare an unadjusted trial balance. 4. At the end of May, the following adjustment data were assembled. Analyze and use these data to complete parts (5) and (6). a. Insurance expired during May is 275. b. Supplies on hand on May 31 are 715. c. Depreciation of office equipment for May is 330. d. Accrued receptionist salary on May 31 is 325. e. Rent expired during May is 1,600. f. Unearned fees on May 31 are 3,210. 5. (Optional) Enter the unadjusted trial balance on an end-of-period spreadsheet and complete the spreadsheet. 6. Journalize and post the adjusting entries. Record the adjusting entries on Page 7 of the journal. 7. Prepare an adjusted trial balance. 8. Prepare an income statement, a statement of owners equity, and a balance sheet. 9. Prepare and post the closing entries. Record the closing entries on Page 8 of the journal. Indicate closed accounts by inserting a line in both Balance columns opposite the closing entry. 10. Prepare a post-closing trial balance.arrow_forward
- On October 1, 2019, Jay Pryor established an interior decorating business, Pioneer Designs. During the month, Jay completed the following transactions related to the business: Oct. 1. Jay transferred cash from a personal bank account to an account to be used for the business, 18,000. 4.Paid rent for period of October 4 to end of month, 3,000. 10.Purchased a used truck for 23,750, paying 3,750 cash and giving a note payable for the remainder. 13.Purchased equipment on account, 10,500. 14.Purchased supplies for cash, 2,100. 15.Paid annual premiums on property and casualty insurance, 3,600. 15.Received cash for job completed, 8,950. Enter the following transactions on Page 2 of the two-column journal: 21.Paid creditor a portion of the amount owed for equipment purchased on October 13, 2,000. 24.Recorded jobs completed on account and sent invoices to customers, 14,150. 26.Received an invoice for truck expenses, to be paid in November, 700. 27.Paid utilities expense, 2,240. 27.Paid miscellaneous expenses, 1,100. Oct. 29. Received cash from customers on account, 7,600. 30.Paid wages of employees, 4,800. 31.Withdrew cash for personal use, 3,500. Instructions 1. Journalize each transaction in a two-column journal beginning on Page 1, referring to the following chart of accounts in selecting the accounts to be debited and credited. (Do not insert the account numbers in the journal at this time.) Journal entry explanations may be omitted. 2. Post the journal to a ledger of four-column accounts, inserting appropriate posting references as each item is posted. Extend the balances to the appropriate balance columns after each transaction is posted. 3. Prepare an unadjusted trial balance for Pioneer Designs as of October 31, 2019. 4. Determine the excess of revenues over expenses for October. 5. Can you think of any reason why the amount determined in (4) might not be the net income for October?arrow_forwardKelly Pitney began her consulting business, Kelly Consulting, on April 1, 2018. The accounting cycle for Kelly Consulting for April, including financial statements, was illustrated in this chapter. During May, Kelly Consulting entered into the following transactions: May 3. Received cash from clients as an advance payment for services to be provided and recorded it as unearned fees, 4,500. 5. Received cash from clients on account, 2,450. 9. Paid cash for a newspaper advertisement, 225. 13. Paid Office Station Co. for part of the debt incurred on April 5, 640. 15. Recorded services provided on account for the period May 115, 9,180. 16. Paid part-time receptionist for two weeks salary including the amount owed on April 30, 750. 17. Recorded cash from cash clients for fees earned during the period May 1-16, 8,360. Record the following transactions on Page 6 of the journal: 20. Purchased supplies on account, 735. 21. Recorded services provided on account for the period May 16-20,4,820. 25. Recorded cash from cash clients for fees earned for the period May 17- 23, 7,900. 27. Received cash from clients on account, 9,520. 28. Paid part-time receptionist for two weeks salary, 750. 30. Paid telephone bill for May, 260. 31. Paid electricity bill for May, 810. 31. Recorded cash from cash clients for fees earned for the period May 26-31, 3,300. 31. Recorded services provided on account for the remainder of May, 2,650. 31. Paid dividends, 10,500. Instructions 1. The cl1art of accounts for Kelly Consulting is shown in Exhibit 9, and the post-closing trial balance as of April 30, 2018, is shown in Exhibit 17. For each account in the post-closing trial balance, enter the balance in the appropriate Balance column of a four-column account. Date the balances May 1, 2018, and place a check mark () in the Posting Reference column. Journalize each of the May transactions in a two-column journal starting on Page 5 of the journal and using Kelly Consultings chart of accounts. (Do not insert the account numbers in the journal at this time.) 2. Post the journal to a ledger of four-column accounts. 3. Prepare an unadjusted trial balance. 4. At the end of May, the following adjustment data were assembled. Analyze and use these data to complete parts (5) and (6). (A) Insurance expired during May is 275. (B) Supplies on hand on May 31 are 715. (C) Depreciation of office equipment for May is 330. (D) Accrued receptionist salary on May 31 is 325. (E) Rent expired during May is 1,600. (F) Unearned fees on May 31 are 3,210. 5. (Optional) Enter the unadjusted trial balance on an end-of-period spreadsheet and complete the spreadsheet. 6. Journalize and post the adjusting entries. Record the adjusting entries on Page 7 of the journal. 7. Prepare an adjusted trial balance. 8. Prepare an income statement, a retained earnings statement, and a balance sheet. 9. Prepare and post the closing entries. Record the closing entries on Page 8 of d1e journal. (Income Summary is account #34 in d1e chart of accounts.) Indicate closed accounts by inserting a line in both the Balance columns opposite the closing entry. 10. Prepare a post-closing trial balance.arrow_forwardComplete accounting cycle For the past several years, Steffy Lopez has operated a part-time consulting business from his home. As of July 1, 20Y2, Steffy decided to move to rented quarters and to operate the business, which was to be known as Diamond Consulting, on a full-time basis. Diamond entered into the following transactions during July: Record the following transactions on Page 2 of the journal: Instructions 1. Journalize each transaction in a two-column journal starting on Page 1, referring to the following chart of accounts in selecting the accounts to be debited and credited. (Do not insert the account numbers in the journal at this time.) 2. Post the journal to a ledger of four-column accounts. 3. Prepare an unadjusted trial balance. 4. At the end of July, the following adjustment data were assembled. Analyze and use these data to complete parts (5) and (6). (a) Insurance expired during July is 375. (b) Supplies on hand on July 31 are 1,525. (c) Depreciation of office equipment for July is 750. (d) Accrued receptionist salary on July 31 is 175. (e) Rent expired during July is 2,400. (f) Unearned fees on July 31 are 2,750. 5. (Optional) Enter the unadjusted trial balance on an end-of-period spreadsheet and complete the spreadsheet. 6. Journalize and post the adjusting entries. Record the adjusting entries on Page 3 of the journal. 7. Prepare an adjusted trial balance. 8. Prepare an income statement, a statement of stockholders equity, and a balance sheet. 9. Prepare and post the closing entries. Record the closing entries on Page 4 of the journal. Indicate closed accounts by inserting a line in both the Balance columns opposite the closing entry. 10. Prepare a post-closing trial balance.arrow_forward
- Reece Financial Services Co., which specializes in appliance repair services, is owned and operated by Joni Reece. Reece Financial Services Co.s accounting clerk prepared the following unadjusted trial balance at July 31, 2016: The data needed to determine year-end adjustments are as follows: a. Depreciation of building for the year, 6,400. b. Depreciation of equipment for the year, 2,800. c. Accrued salaries and wages at July 31, 900. d. Unexpired insurance at July 31, 1,500. e. Fees earned but unbilled on July 31, 10,200. f. Supplies on hand at July 31, 615. g. Rent unearned at July 31, 300. Instructions 1. Journalize the adjusting entries using the following additional accounts: Salaries and Wages Payable; Rent Revenue; Insurance Expense; Depreciation ExpenseBuilding; Depreciation ExpenseEquipment; and Supplies Expense. 2. Determine the balances of the accounts affected by the adjusting entries and preparean adjusted trial balance.arrow_forwardRecurring and Adjusting Entries Following are Butler Realty Corporations accounts, identified by number. The company has been in the real estate business for ten years and prepares financial statements monthly. Following the list of accounts is a series of transactions entered into by Butler. For each transaction, enter the number(s) of the account(s) to be debited and credited.arrow_forwardComplete accounting cycle For the past several years, Jeff Horton has operated a part-time consulting business from his home. As of April 1, 20Y6, Jeff decided to move to rented quarters and to operate the business, which was to be known as Rosebud Consulting, on a full-time basis. Rosebud entered into the following transactions during April: Record the following transactions on Page 2 of the journal: Instructions 1. Journalize each transaction in a two-column journal starting on Page 1, referring to the following chart of accounts in selecting the accounts to be debited and credited. (Do not insert the account numbers in the journal at this time.) 2. Post the journal to a ledger of four-column accounts. 3. Prepare an unadjusted trial balance. 4. At the end of April, the following adjustment data were assembled. Analyze and use these data to complete parts (5) and (6). (a) Insurance expired during April is 350. (b) Supplies on hand on April 30 are 1,225. (c) Depreciation of office equipment for April is 400. (d) Accrued receptionist salary on April 30 is 275. (e) Rent expired during April is 2,000. (f) Unearned fees on April 30 are 2,350. 5. (Optional) Enter the unadjusted trial balance on an end-of-period spreadsheet and complete the spreadsheet. 6. Journalize and post the adjusting entries. Record the adjusting entries on Page 3 of the journal. 7. Prepare an adjusted trial balance. 8. Prepare an income statement, a statement of stockholders equity, and a balance sheet. 9. Prepare and post the closing entries. Record the closing entries on Page 4 of the journal. Indicate closed accounts by inserting a line in both the Balance columns opposite the closing entry. 10. Prepare a post-closing trial balance.arrow_forward
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