Accounting Principles Chapter 4 Solution

CHAPTER 4
Completing the Accounting Cycle

ASSIGNMENT CLASSIFICATION TABLE
Brief
Exercises
Do It!
Exercises
A
Problems
B
Problems
1, 2, 3,
4, 5
1, 2, 3
1, 2, 3,
5, 6
1A, 2A, 3A,

4A, 5A
1B, 2B, 3B,

4B, 5B
Explain the process

of closing the books.
6, 7, 11,
12
4, 5, 6
4, 7, 8,
11, 19
1A, 2A, 3A,

4A, 5A
1B, 2B, 3B,

4B, 5B
*3.
Describe the content and

purpose of a post-closing
trial balance.
8, 9
4, 7, 8
1A, 2A, 3A,

4A, 5A
1B, 2B, 3B,

4B, 5B
*4.
State the required steps in

the accounting cycle.
10, 11, 12
10, 19
5A
5B
*5.
Explain the approaches

to preparing correcting
entries.
13
12, 13
6A
*6.
Identify the sections of a

classified balance sheet.
14, 15, 16,

17, 18, 19
10, 11
3, 9, 14, 15,
16, 17
1A, 2A, 3A,

4A, 5A
*7.
Prepare reversing entries.
10, 20, 21
12
Learning Objectives
Questions
*1.
Prepare a worksheet.
*2.
3, 4
1B, 2B, 3B,

4B, 5B
18, 19
*Note: All asterisked Questions, Exercises, and Problems relate to material contained in the appendix *to the
chapter.
Copyright 2013 John Wiley & Sons, Inc.Weygandt, Accounting Principles, 11/e, Solutions Manual(For Instructor Use Only)
4-1
ASSIGNMENT CHARACTERISTICS TABLE

Problem
Number
Description
Difficulty
Level
Time Allotted
(min.)
Simple
4050
1A
Prepare worksheet, financial statements, and adjusting

and closing entries.
2A
Complete worksheet; prepare financial statements,

closing entries, and post-closing trial balance.
Moderate
5060
3A
Prepare financial statements, closing entries, and postclosing trial balance.
Moderate
4050
4A
Complete worksheet; prepare classified balance sheet,

entries, and post-closing trial balance.
Moderate
5060
5A
Complete all steps in accounting cycle.
Complex
7090
6A
Analyze errors and prepare correcting entries and trial

balance.
Moderate
4050
1B
Prepare worksheet, financial statements, and adjusting

and closing entries.
Simple
4050
2B
Complete worksheet; prepare financial statements,

closing entries, and post-closing trial balance.
Moderate
5060
3B
Prepare financial statements, closing entries, and postclosing trial balance.
Moderate
4050
4B
Complete worksheet; prepare classified balance sheet,

entries, and post-closing trial balance.
Moderate
5060
5B
Complete all steps in accounting cycle.
Complex
7090
Comprehensive Problem: Chapters 2 to 4
4-2
WEYGANDT ACCOUNTING PRINCIPLES 11E

CHAPTER 4
COMPLETING THE ACCOUNTING CYCLE
Number
LO
BT
Difficulty
Time (min.)
BE1
Simple
24
BE2
AN
Moderate
68
BE3
Simple
35
BE4
AP
Simple
35
BE5
AP
Simple
46
BE6
AP
Simple
68
BE7
Simple
24
BE8
Simple
35
BE9
AN
Moderate
46
BE10
AP
Simple
46
BE11
Simple
35
BE12
AN
Moderate
46
DI1
Simple
46
DI2
AP
Simple
24
DI3
AP
Simple
68
DI4
Simple
46
EX1
AP
Simple
1215
EX2
AP
Simple
1012
EX3
1, 6
AP
Simple
1215
EX4
2, 3
AP
Simple
1215
EX5
AN
Simple
1012
EX6
AN
Moderate
1215
EX7
2, 3
AP
Simple
810
EX8
2, 3
AP
Simple
1012
EX9
AP
Simple
1215
EX10
Simple
35
EX11
AP
Simple
68
EX12
AN
Moderate
810
EX13
AN
Moderate
46
EX14
AP
Moderate
1012
EX15
Simple
58
EX16
AP
Simple
810
4-3
COMPLETING THE ACCOUNTING CYCLE (Continued)

Number
LO
BT
Difficulty
Time (min.)
EX17
AP
Simple
1215
EX18
AN
Moderate
57
EX19
2, 4, 7
AN
Moderate
1012
P1A
1-3, 6
AN
Simple
4050
P2A
1-3, 6
AP
Moderate
5060
P3A
1-3, 6
AP
Moderate
4050
P4A
1-3, 6
AN
Moderate
5060
P5A
1-4, 6
AN
Complex
7090
P6A
AN
Moderate
4050
P1B
1-3, 6
AN
Simple
4050
P2B
1-3, 6
AP
Moderate
5060
P3B
1-3, 6
AP
Moderate
4050
P4B
1-3, 6
AN
Moderate
5060
P5B
1-4, 6
AN
Complex
7090
BYP1
AN
Simple
1012
BYP2
AN
Simple
810
BYP3
AN
Simple
810
BYP4
Simple
1012
BYP5
AN
Moderate
1520
BYP6
Simple
1520
BYP7
Moderate
1015
BYP8
AP
Moderate
1216
BYP9
AP
Moderate
1015
4-4
Learning Objective
Knowledge
Comprehension
*1. Prepare a worksheet.
BE4-1
Q4-1
Q4-2
Q4-3
Q4-4
Q4-5
*2. Explain the process of closing

the books.
Q4-6
Q4-11
Q4-12
*3. Describe the content and

purpose of a post-closing trial
balance.
*4. State the required steps in
the accounting cycle.
Q4-11
Q4-12
BE4-8
*5. Explain the approaches to

preparing correcting entries.
*6. Identify the sections of

a classified balance sheet.
Q4-14
Q4-15
Q4-16
BE4-3
DI4-1
Application
Analysis
E4-1
E4-2
E4-3
P4-2A
P4-3A
P4-2B
P4-3B
BE4-2
E4-5
E4-6
P4-1A
P4-4A
P4-5A
P4-1B
P4-4B
P4-5B
Q4-7
BE4-4
BE4-5
BE4-6
DI4-2
E4-4
E4-7
E4-8
E4-11
P4-2A
P4-3A
P4-2B
P4-3B
E4-19
P4-1A
P4-4A
P4-5A
P4-1B
P4-4B
P4-5B
Q4-8
Q4-9
BE4-7
E4-4
E4-7
E4-8
P4-2A
P4-3A
P4-2B
P4-3B
P4-1A
P4-4A
P4-5A
P4-1B
P4-4B
P4-5B
Q4-10
E4-10
E4-19
P4-5A
P4-5B
Q4-13
BE4-9
E4-12
E4-13
P4-6A
Q4-17
Q4-18
BE4-11
DI4-4
E4-15
*7. Prepare reversing entries.
Q4-10
Q4-20
Broadening Your Perspective
Communication
Q4-19
BE4-10
DI4-3
E4-3
E4-9
E4-14
E4-16
E4-17
P4-2A
P4-3A
P4-2B
P4-3B
Synthesis
Evaluation
P4-1A
P4-4A
P4-5A
P4-1B
P4-4B
P4-5B
Q4-21
BE4-12
E4-18
E4-19
All About You

Financial Reporting
FASB Codification Comparative
Analysis
Decision Making
Across the
Organization
Real-World
Focus
Ethics Case
BLOOMS TAXONOMY TABLE
4-5
Correlation Chart between Blooms Taxonomy, Learning Objectives and End-of-Chapter Exercises and Problems
ANSWERS TO QUESTIONS
1.
No. A worksheet is not a permanent accounting record. The use of a worksheet is an optional
step in the accounting cycle.
2.
The worksheet is merely a device used to make it easier to prepare adjusting entries and the
financial statements.
3.
The amount shown in the adjusted trial balance column for an account equals the account
balance in the ledger after adjusting entries have been journalized and posted.
4.
The net income of $12,000 will appear in the income statement debit column and the balance
sheet credit column. A net loss will appear in the income statement credit column and the
balance sheet debit column.
5.
Formal financial statements are needed because the columnar data are not properly arranged
and classified for statement purposes. For example, a drawing account is listed with assets.
6.
(1)
(2)
(3)
(4)
7.
Income Summary is a temporary account that is used in the closing process. The account is
debited for expenses and credited for revenues. The difference, either net income or net loss, is
then closed to the owners capital account.
8.
The post-closing trial balance contains only balance sheet accounts. Its purpose is to prove the
equality of the permanent account balances that are carried forward into the next accounting
period.
9.
The accounts that will not appear in the post-closing trial balance are Depreciation Expense;
Owners Drawing; and Service Revenue.
10.
A reversing entry is the exact opposite, both in amount and in account titles, of an adjusting entry
and is made at the beginning of the new accounting period. Reversing entries are an optional
step in the accounting cycle.
11.
The steps that involve journalizing are: (1) journalize the transactions, (2) journalize the adjusting
entries, and (3) journalize the closing entries.
12.
The three trial balances are the: (1) trial balance, (2) adjusted trial balance, and (3) post-closing
trial balance.
13.
Correcting entries differ from adjusting entries because they: (1) are not a required part of the
accounting cycle, (2) may be made at any time, and (3) may affect any combination of accounts.
4-6
(Dr) Individual revenue accounts and (Cr) Income Summary.

(Dr) Income Summary and (Cr) Individual expense accounts.
(Dr) Income Summary and (Cr) Owners Capital (for net income).
(Dr) Owners Capital and (Cr) Owners Drawings.
Questions Chapter 4 (Continued)

*14. The standard classifications in a balance sheet are:
Assets
Current Assets
Long-term Investments
Property, Plant, and Equipment
Intangible Assets
Liabilities and Owners Equity

Current Liabilities
Long-term Liabilities
Owners Equity
*15. The operating cycle of a company is the average time that it takes to purchase inventory, sell it on
account, and then collect cash from customers.
*16. Current assets are assets that a company expects to convert to cash or use up in one year. Some
companies use a period longer than one year to classify assets and liabilities as current because they
have an operating cycle longer than one year. Companies usually list current assets in the order in
which they expect to convert them into cash.
*17. Long-term investments are generally investments in stocks and bonds of other companies that are
normally held for many years. Property, plant, and equipment are assets with relatively long useful
lives that a company is currently using in operating the business.
*18. (a) The owners equity section for a corporation is called stockholders equity.
(b) The two accounts and the purpose of each are: (1) Common stock is used to record investments of assets in the business by the owners (stockholders). (2) Retained earnings is used
to record net income retained in the business.
*19.. Apples current liabilities at September 24, 2011 and September 25, 2010 were $27,970 million
and $20,722 million respectively. Apples current liabilities were significantly lower than its current
assets in both years.
*20. After reversing entries have been made, the balances will be Interest Payable, zero balance;
Interest Expense, a credit balance.
*21. (a) Jan. 10 Salaries and Wages Expense....................................................
Cash.................................................................................
8,000
8,000
Because of the January 1 reversing entry that credited Salaries and Wages Expense for
$3,500, Salaries and Wages Expense will have a debit balance of $4,500 which equals the
expense for the current period.
(b) Jan. 10 Salaries and Wages Payable.....................................................
Salaries and Wages Expense....................................................
Cash.................................................................................
3,500
4,500
8,000
Note that Salaries and Wages Expense will again have a debit balance of $4,500.
Copyright 2013 John Wiley & Sons, Inc.Weygandt, Accounting Principles, 11/e, Solutions Manual (For Instructor Use Only)
4-7
SOLUTIONS TO BRIEF EXERCISES

BRIEF EXERCISE 4-1
The steps in using a worksheet are performed in the following sequence:
(1) prepare a trial balance on the worksheet, (2) enter adjustment data,
(3) enter adjusted balances, (4) extend adjusted balances to appropriate
statement columns and (5) total the statement columns, compute net
income (loss), and complete the worksheet. Filling in the blanks, the
answers are 1, 3, 4, 5, 2.
The solution to BRIEF EXERCISE 4-2 is on page 4-9.
BRIEF EXERCISE 4-3
Account
Accumulated Depreciation
Depreciation Expense
Owners Capital
Owners Drawings
Service Revenue
Supplies
Accounts Payable
Income Statement
Dr.
Cr.
X
X
Balance Sheet
Dr.
Cr.
X
X
X
BRIEF EXERCISE 4-4

Dec. 31
Service Revenue...............................................
Income Summary......................................
50,000
31
Income Summary..............................................
Salaries and Wages Expense...................
Supplies Expense.....................................
34,000
31
Income Summary..............................................
Owners Capital.........................................
16,000
4-8
50,000
27,000
7,000
16,000
31
Owners Capital.................................................
Owners Drawings.....................................
2,000
2,000
4-9
BRIEF EXERCISE 4-2
4-9
4-10
CLAYTON COMPANY
Worksheet
Trial Balance
Account Titles
Prepaid Insurance
Service Revenue
Salaries and Wages
Expense
Accounts Receivable
Salaries and Wages
Payable
Insurance Expense
Dr.
3,000
25,000
Cr.
Adjustments
Dr.
58,000
Cr.
(a) 1,800
(b) 1,100
(c) 800
(b) 1,100
(a) 1,800
Adjusted
Trial Balance
Dr.
1,200
Cr.
1,800
Dr.
59,100
25,800
1,100
(c) 800
Income
Statement
59,100
25,800
800
Cr.
1,800
Balance
Sheet
Dr.
1,200
Cr.
1,100
800
BRIEF EXERCISE 4-5

Salaries and Wages
Expense
Bal. 27,000 (2) 27,000
Supplies Expense
Bal. 7,000 (2) 7,000
Income Summary
(2) 34,000 (1) 50,000
(3) 16,000
50,000
50,000
Service Revenue
(1) 50,000 Bal. 50,000
Owners Capital
(4)
2,000 Bal. 30,000
(3) 16,000
Bal. 44,000
Owners Drawings
Bal. 2,000 (4) 2,000
BRIEF EXERCISE 4-6

July 31
Service Revenue................................................
Income Summary.......................................
16,400
31
Income Summary..............................................
Salaries and Wages Expense...................
Maintenance and Repairs Expense..........
10,700
Date
7/31
7/31
Date
7/31
7/31
Explanation
Balance
Closing entry
Explanation
Balance
Closing entry
Service Revenue
Ref.
Debit
16,400
Salaries and Wages Expense
Ref.
Debit
8,200
16,400
8,200
2,500
Credit
16,400
Balance
16,400
0
Credit
Balance
8,200
0
8,200
4-11
BRIEF EXERCISE 4-6 (Continued)

Date
7/31
7/31
Maintenance and Repairs Expense

Explanation
Ref.
Debit
Credit
Balance
2,500
Closing entry
2,500
Balance
2,500
0
BRIEF EXERCISE 4-7

The accounts that will appear in the post-closing trial balance are:
Owners Capital
Supplies
Accounts Payable
BRIEF EXERCISE 4-8
The proper sequencing of the required steps in the accounting cycle is as
follows:
1.
2.
3.
4.
5.
6.
7.
8.
9.
Analyze business transactions.

Journalize the transactions.
Post to ledger accounts.
Prepare a trial balance.
Journalize and post adjusting entries.
Prepare an adjusted trial balance.
Prepare financial statements.
Journalize and post closing entries.
Prepare a post-closing trial balance.
Filling in the blanks, the answers are 4, 2, 8, 7, 5, 3, 9, 6, 1.
4-12
BRIEF EXERCISE 4-9

1.
Service Revenue..................................................................
Accounts Receivable...................................................
870
2.
Accounts Payable ($1,750 $1,570)...................................

Supplies........................................................................
180
870
180
BRIEF EXERCISE 4-10

HAMIDI COMPANY
Partial Balance Sheet
Current assets
Cash...........................................................................................
Debt investments......................................................................
Accounts receivable.................................................................
Supplies.....................................................................................
Prepaid insurance....................................................................
Total current assets..........................................................
$ 4,100
6,700
12,500
5,200
3,600
$32,100
BRIEF EXERCISE 4-11

CL
CA
PPE
PPE
CA
IA
Accounts payable
Accounts receivable
Accum. depreciationbuildings
Buildings
Cash
Copyrights
CL
LTI
PPE
CA
IA
CA
Income taxes payable

Debt investments (long-term)
Land
Inventory
Patents
Supplies
*BRIEF EXERCISE 4-12

Nov. 1
Salaries and Wages Payable...................................... 2,100

Salaries and Wages Expense.............................
2,100
The balances after posting the reversing entry are Salaries and Wages
Expense (Cr.) $2,100 and Salaries and Wages Payable $0.
4-13
SOLUTIONS FOR DO IT! REVIEW EXERCISES

DO IT! 4-1
Income statement debit columnUtilities Expense
Income statement credit columnService Revenue
Balance sheet debit columnAccounts Receivable
Balance sheet credit columnNotes Payable; Accumulated Depreciation;
Owners Capital
DO IT! 4-2
Dec. 31
Income Summary..........................................
Owners Capital......................................
41,000
Dec. 31
Owners Capital............................................
Owners Drawings..................................
22,000
41,000
22,000
DO IT! 4-3
RYAN COMPANY
Partial Balance Sheet
Current assets
Cash........................................................................
Debt investments...................................................
Accounts receivable..............................................
Inventory.................................................................
Total current assets.........................................
Long-term investments
Stock investments ................................................
Property, plant and equipment
Equipment..............................................................
Less: Accumulated depreciation.........................
Total assets....................................................................
4-14
$4,300
1,200
4,300
2,900
$12,700
6,500
21,700
5,700
16,000
$35,200
DO IT! 4-4
NA
CL
CL
CA
LTL
IA
Interest revenue
Utilities payable
Accounts payable
Supplies
Bonds payable
Goodwill
OE
PPE
PPE
NA
LTI
CL
Owners capital
Accumulated depreciationequipment
Equipment
Salaries and wages expense
Debt investments (long-term)
Unearned rent revenue
4-15
SOLUTIONS TO EXERCISES
EXERCISE 4-1
NANDURI COMPANY
Worksheet
For the Month Ended June 30, 2014
Account Titles
Cash
Trial Balance
Adjustments
Dr.
Dr.
Cr.
Cr.
2,320
Adj. Trial Balance

Dr.
Cr.
Income Statement
Dr.
Cr.
Balance Sheet
Dr.
2,320
2,320
2,440
2,440
500
500
Cr.
Accounts
Receivable
Supplies
2,440
1,880
Accounts Payable
(a) 1,380
1,120
1,120
1,120
Unearned Service
Revenue
240 (b)
Owners Capital
3,600
Service Revenue
2,400
140
(b)
140
100
100
3,600
3,600
2,540
2,540
Salaries and
Wages Expense
560
(c)
210
770
770
160
160
1,380
1,380
Miscellaneous
Expense
Totals
160
7,360
7,360
(a)
Supplies Expense
1,380
Salaries and
Wages Payable
Totals
1,730
Net Income
Totals
4-16
(c)
210
1,730
210
7,570
7,570
210
2,310
2,540
5,260
230
2,540
5,030
230
2,540
5,260
5,260
EXERCISE 4-2
DESOUSA COMPANY
(Partial) Worksheet
For the Month Ended April 30, 2014
Adjusted
Trial Balance
Account Titles
Cash
Accounts Receivable
Prepaid Rent
Equipment
Accum. Depreciation
Equipment
Notes Payable
Accounts Payable
Owners Capital
Owners Drawings
Service Revenue
Salaries and Wages
Expense
Rent Expense
Interest Expense
Interest Payable
Totals
Net Income
Totals
Dr.
10,000
7,840
2,280
23,050
3,650
10,840
760
671
57
59,148
Cr.
Income
Statement
Dr.
Cr.
4,921
5,700
4,920
27,960
15,590
57
59,148
15,590
Balance Sheet
Dr.
10,000
7,840
2,280
23,050
3,650
10,840
760
671
57
12,328
3,262
15,590
15,590
46,820
15,590
46,820
Cr.
4,921
5,700
4,920
27,960
57
43,558
3,262
46,820
4-17
EXERCISE 4-3
DESOUSA COMPANY
Income Statement
Revenues
Service revenue.........................................................
Expenses
Salaries and wages expense....................................
Rent expense.............................................................
Depreciation expense...............................................
Interest expense........................................................
Total expenses...................................................
Net income........................................................................
$15,590
$10,840
760
671
57
12,328
$ 3,262
DESOUSA COMPANY
Owners Equity Statement
Owners Capital, April 1.............................................................
Add: Net income.......................................................................
Less: Drawings..........................................................................
Owners Capital, April 30...........................................................
$27,960
3,262
31,222
3,650
$27,572
DESOUSA COMPANY
Balance Sheet
April 30, 2014
Assets
Current assets
Cash...........................................................................
Accounts receivable.................................................
Prepaid rent...............................................................
Total current assets...........................................
Property, plant, and equipment
4-18
$10,000
7,840
2,280
$20,120
Equipment..................................................................
Less: Accumulated depreciationequipment......
Total assets........................................................
23,050
4,921
18,129
$38,249
4-19
EXERCISE 4-3 (Continued)
DESOUSA COMPANY
Balance Sheet (Continued)
April 30, 2014
Current liabilities
Notes payable............................................................
Accounts payable......................................................
Interest payable.........................................................
Total current liabilities......................................
Owners equity
Owners capital..........................................................
Total liabilities and owners equity..................
$5,700
4,920
57
$10,677
27,572
$38,249
EXERCISE 4-4
(a) Apr. 30
Service Revenue........................................
Income Summary...............................
15,590
30
Income Summary......................................
Salaries and Wages Expense...........
Rent Expense.....................................
Depreciation Expense.......................
Interest Expense................................
12,328
30
Income Summary......................................
Owners Capital.................................
3,262
30
Owners Capital.........................................
Owners Drawings.............................
3,650
(b)
(2)
(3)
4-20
Income Summary
12,328 (1)
15,590
3,262
15,590
15,590
(4)
Owners Capital
3,650 Bal.
(3)
Bal.
15,590
10,840
760
671
57
3,262
3,650
27,960
3,262
27,572

(c)
DESOUSA COMPANY
Post-Closing Trial Balance
April 30, 2014
Cash......................................................................
Accounts Receivable..........................................
Prepaid Rent........................................................
Equipment............................................................
Accumulated DepreciationEquipment...........
Notes Payable......................................................
Accounts Payable................................................
Interest Payable...................................................
Owners Capital...................................................
Debit
$10,000
7,840
2,280
23,050
$43,170
Credit
$ 4,921
5,700
4,920
57
27,572
$43,170
EXERCISE 4-5
(a) Accounts Receivable..........................................
Service Revenue..........................................
1,100
Insurance Expense..............................................
Prepaid Insurance........................................
300
Depreciation Expense.........................................
Accumulated DepreciationEquipment. . .
900
Salaries and Wages Expense.............................

Salaries and Wages Payable.......................
500
1,100
300
900
500
4-21

(b)
Accounts Receivable
Prepaid Insurance
Accum. DepreciationEquip.
Salaries and Wages Payable
Service Revenue
Salaries and Wages
Expense
Insurance Expense
Income Statement
Dr.
Cr.
Balance Sheet
Dr.
Cr.
X
X
X
X
X
X
X
EXERCISE 4-6
(a) Accounts Receivable$25,000 ($34,000 $9,000).
Supplies$2,500 ($7,000 $4,500).
Accumulated DepreciationEquipment$22,000 ($12,000 + $10,000).
Salaries and Wages Payable$0 No liability recorded until adjustments
are made.
Insurance Expense$6,000 ($26,000 $20,000).
Salaries and Wages Expense$43,400 ($49,000 $5,600).
(b) Accounts Receivable..................................................
Service Revenue.................................................
9,000
Insurance Expense.....................................................
Prepaid Insurance...............................................
6,000
Supplies Expense.......................................................
Supplies...............................................................
4,500
Depreciation Expense................................................
10,000
Salaries and Wages Expense....................................

Salaries and Wages Payable..............................
5,600
4-22
9,000
6,000
4,500
10,000
5,600
EXERCISE 4-7
(a) Service Revenue.....................................................
Income Summary..............................................
4,300
Income Summary....................................................
Salaries and Wages Expense..........................
Miscellaneous Expense...................................
Supplies Expense.............................................
3,500
Income Summary....................................................
Owners Capital.................................................
800
Owners Capital.......................................................
Owners Drawings............................................
628
(b)
4,300
1,344
256
1,900
800
628
KAY MAGILL COMPANY

June 30, 2014
Account Titles
Cash.........................................................................
Accounts Receivable..............................................
Supplies...................................................................
Accounts Payable...................................................
Salaries and Wages Payable..................................
Unearned Service Revenue....................................
Owners Capital.......................................................
Debit
$3,712
3,904
480
$8,096
Credit
$1,556
448
160
5,932
$8,096
4-23
EXERCISE 4-8
(a)
General Journal
Date
Account Titles
July 31 Service Revenue..................................
Rent Revenue.......................................
Income Summary........................
Ref.
400
429
350
Debit
64,000
6,500
31 Income Summary.................................
Salaries and Wages Expense....
Utilities Expense.........................
Depreciation Expense................
350
726
732
711
78,600
31 Owners Capital....................................
Income Summary........................
301
350
8,100
31 Owners Capital....................................
Owners Drawings......................
301
306
16,000
J15
Credit
70,500
55,700
14,900
8,000
8,100
16,000
(b)
Owners Capital
Date
Explanation
Ref.
Debit
July 31 Balance
31 Close net loss
J15
8,100
31 Close drawing
J15
16,000
Income Summary
Date
Explanation
Ref.
Debit
July 31 Close revenue
J15
31 Close expenses
J15
78,600
31 Close net loss
J15
4-24
Credit
Credit
70,500
8,100
No. 301
Balance
45,200
37,100
21,100
No. 350
Balance
70,500
(8,100)
0

(c)
PLEVIN COMPANY
July 31, 2014
Cash......................................................................
Equipment............................................................
Unearned Rent Revenue.....................................
Owners Capital...................................................
Debit
$9,840
8,780
15,900
$34,520
Credit
$ 7,400
4,220
1,800
21,100
$34,520
EXERCISE 4-9
(a)
PLEVIN COMPANY
Income Statement
For the Year Ended July 31, 2014
Revenues
Service revenue...........................................
Rent revenue................................................
Total revenues......................................
Expenses
Salaries and wages expense......................
Utilities expense...........................................
Depreciation expense..................................
Total expenses......................................
Net loss................................................................
$64,000
6,500
55,700
14,900
8,000
$70,500
78,600
($ 8,100)
4-25

PLEVIN COMPANY
Owners Capital, August 1, 2013........................
Less: Net loss.....................................................
Drawings...................................................
Owners Capital, July 31, 2014...........................
(b)
$ 8,100
16,000
$45,200
24,100
$21,100
PLEVIN COMPANY
Balance Sheet
July 31, 2014
Assets
Current assets
Cash.................................................................
Accounts receivable.......................................
Total current assets................................
Equipment.......................................................
Less: Accumulated depreciation.................
Total assets.............................................
$9,840
8,780
15,900
7,400
$18,620
8,500
$27,120
Current liabilities
Accounts payable...........................................
Unearned rent revenue..................................
Total current liabilities............................
Owners equity
Owners Capital..............................................
Total liabilities and owners equity........
4-26
$4,220
1,800
$ 6,020
21,100
$27,120
EXERCISE 4-10
1.
False Analyze business transactions is the first step in the accounting

cycle.
2.
False. Reversing entries are an optional step in the accounting cycle.
3.
True.
4.
True.
5.
True.
6.
False. Steps 13 may occur daily in the accounting cycle. Steps 47 are
performed on a periodic basis. Steps 8 and 9 are usually prepared only
at the end of a companys annual accounting period.
7.
False. The step of journalize the transactions occurs before the step
of post to the ledger accounts.
8.
False. Closing entries are prepared after financial statements are prepared.
EXERCISE 4-11
(a) June 30
Service Revenue.....................................
Income Summary............................
18,100
30
Income Summary...................................
Salaries and Wages Expense........
Supplies Expense...........................
Rent Expense..................................
13,100
30
Income Summary...................................
Owners Capital...............................
5,000
30
Owners Capital......................................
Owners Drawings..........................
2,500
(b)
18,100
8,800
1,300
3,000
5,000
2,500
Income Summary
June 30 13,100 June 30 18,100
June 30
5,000
18,100
18,100
4-27
EXERCISE 4-12
(a) 1.
Cash...................................................................
Equipment.................................................
700

Cash...........................................................
700
Service Revenue...............................................
Cash...........................................................
100
Cash...................................................................
Accounts Receivable...............................
1,000
Accounts Payable.............................................
Equipment.................................................
670
Equipment.........................................................
Accounts Payable....................................
760
(b) 1.

Equipment.................................................
700
2.
Service Revenue...............................................
Cash...................................................................
Accounts Receivable...............................
100
900
Equipment.........................................................
Accounts Payable.....................................
90
2.
3.
3.
4-28
700
700
100
1,000
670
760
700
1,000
90
EXERCISE 4-13
1.
Accounts Payable ($840 $480)..............................

Cash....................................................................
360
2.
Supplies.....................................................................
Equipment..........................................................
Accounts Payable..............................................
560
3.
Owners Drawings....................................................
Salaries and Wages Expense...........................
500
360
56
504
500
EXERCISE 4-14
(a)
MARTELL BOWLING ALLEY

Balance Sheet
December 31, 2014
Assets
Current assets
Cash..............................................
Accounts receivable....................
Prepaid insurance........................
Total current assets.............
Land..............................................
Buildings.......................................
Less: Acc. depr.buildings.......
Equipment....................................
Less: Acc. depr.equipment.....
Total assets...........................
$18,040
14,520
4,680
$128,800
42,600
62,400
18,720
$ 37,240
67,000
86,200
43,680
196,880
$234,120
4-29

MARTELL BOWLING ALLEY
December 31, 2014
Current liabilities
Notes payable(due 2015)..................................
Accounts payable..............................................
Interest payable.................................................
Total current liabilities..............................
Long-term liabilities
Notes payable....................................................
Total liabilities............................................
Owners equity
Owners capital ($115,000 + $6,440*)...............
Total liabilities and owners equity..........
$22,000
12,300
2,600
$ 36,900
75,780
112,680
121,440
$234,120
*Net income = $17,180 $780 $7,360 $2,600 = $6,440

(b) Current assets exceed current liabilities by only $340 ($37,240
$36,900). However, approximately 50% of current assets are in the form
of cash. The companys liquidity appears to be reasonably good, but
some caution is needed.
EXERCISE 4-15
CL Accounts payable
CA
CA
OE
IA
CL
CA
CA
4-30
Accounts receivable
Cash
Owners capital
Patents
Salaries and wages payable
Inventory
Stock investments
PPE Accumulated depreciation

equipment
PPE Buildings
PPE Land
LTL Notes payable (due in 2 years)
CA Supplies
PPE Equipment
CA Prepaid expenses
4-31
EXERCISE 4-16
D. GYGI COMPANY
Balance Sheet
December 31, 2014
(in thousands)
Assets
Current assets
Cash.............................................................
Short-term investments..............................
Accounts receivable...................................
Inventory......................................................
Prepaid insurance.......................................
Total current assets.............................
Long-term investments......................................
Equipment....................................................
Less: Accumulated depreciation
equipment.........................................
Total assets..........................................
$ 2,668
3,690
1,696
1,256
880
$10,190
264
11,500
(5,655)
5,845
$16,299
Current liabilities
Notes payable (due in 2015).......................
Accounts payable........................................
Total current liabilities........................
Long-term debt............................................
Notes payable..............................................
Total long-term liabilities......................
Total liabilities.....................................................
Owners equity
Owners capital............................................
Total liabilities and owners equity....
4-32
$ 500
1,444
1,000
400
$ 1,944
1,400
3,344
12,955
$16,299
EXERCISE 4-17
(a)
NORSTED COMPANY
Income Statement
Revenues
Service revenue........................................
Rent revenue.............................................
Total revenues...................................
Expenses
Salaries and wages expense...................
Utilities expense.......................................
Depreciation expense..............................
Total expense....................................
Net loss.............................................................
$62,000
8,500
51,700
22,600
4,000
$70,500
78,300
$ (7,800)
NORSTED COMPANY
Owners Capital, August 1, 2013....................
Less: Net loss..................................................
Drawings................................................
Owners Capital, July 31, 2014........................
$7,800
3,000
$51,200
10,800
$40,400
4-33

(b)
NORSTED COMPANY
Balance Sheet
July 31, 2014
Assets
Current assets
Cash.................................................................
Total current assets.................................
Equipment........................................................
equipment.............................................
Total assets .............................................
$14,200
9,780
$23,980
30,400
6,000
24,400
$48,380
Current liabilities
Accounts payable............................................
Salaries and wages payable...........................
Notes payable..................................................
Total liabilities..........................................
Owners equity
Owners capital................................................
4-34
$4,100
2,080
$ 6,180
1,800
7,980
40,400
$48,380
*EXERCISE 4-18
(a) Dec. 31
Jan. 6

($12,000 X 2/5).......................................
Salaries and Wages Payable...........
4,800
Salaries and Wages Payable..................

($12,000 X 3/5).......................................
Cash..................................................
4,800
(b) Dec.31
Salaries and Wages Expense.................

Salaries and Wages Payable...........
4,800
Jan. 1
Salaries and Wages Payable..................

Salaries and Wages Expense.........
4,800
Jan. 6
Salaries and Wages Expense................

Cash..................................................
12,000
7,200
4,800
12,000
4,800
4,800
12,000
*EXERCISE 4-19
(a) Dec. 31
Service Revenue......................................
Income Summary.............................
92,500
31
Income Summary....................................
Interest Expense..............................
8,300
(b) Jan. 1
Service Revenue......................................
Accounts Receivable.......................
5,000
Interest Payable.......................................
Interest Expense..............................
2,000
92,500
8,300
5,000
2,000
4-35
*EXERCISE 4-19 (Continued)

(c) & (e)
Accounts Receivable
Dec. 31 Balance
*19,500
31 Adjusting
5,000
24,500
Jan. 1 Reversing
5,000
*($24,500 $5,000)
Dec. 31 Closing
Jan. 1
Reversing
Service Revenue
92,500 Dec. 31 Balance
31 Adjusting
92,500
5,000 Jan. 10
87,500*
5,000
92,500
5,000
*($92,500 $5,000)
Jan. 1
Reversing
Dec. 31 Balance
31 Adjusting
Jan. 15
Interest Payable
Dec. 31 Adjusting
2,000
Interest Expense
*6,300 Dec. 31 Closing
2,000
8,300
3,000 Jan. 1 Reversing
2,000
8,300
8,300
2,000
*($8,300 $2,000)
(d)
4-36
Jan. 10
(1)
Cash................................................................
Service Revenue....................................
5,000
15
(2)
Interest Expense............................................
Cash........................................................
3,000
5,000
3,000
4-34
LAMPERT ROOFING
Worksheet
For the Month Ended March 31, 2014
Account Titles
Trial Balance
Dr.
Cash
Accounts Receivable
Supplies
Equipment
Accumulated
DepreciationEquipment
Accounts Payable
Unearned Service Revenue
Owners Capital
Owners Drawings
Service Revenue
Salaries and Wages
Expense
Miscellaneous Expense
Totals
Supplies Expense
Salaries and Wages
Payable
Totals
Net Income
Totals
Cr.
Adjustments
Dr.
4,500
3,200
2,000
11,000
(a) 1,450
1,250
2,500
550
12,900
1,100
1,300
400
23,500
Cr.
Dr.
Dr.
1,100
6,640
6,640
2,000
400
(a) 1,450
(b) 250
1,450
250
1,450
250
24,450
Cr.
1,500
2,500
210
12,900
2,000
400
(d) 700
2,740
Dr.
4,500
3,200
550
11,000
(d) 700
2,740
Cr.
Balance Sheet
1,500
2,500
210
12,900
(c) 340
(c) 340
Cr.
Income
Statement
4,500
3,200
550
11,000
(b) 250
6,300
23,500
Adjusted
Trial Balance
700
24,450
4,100
2,540
6,640
Key: (a) Supplies Used; (b) Depreciation Expensed; (c) Service Revenue Recognized; (d) Salaries Accrued.
1,100
6,640
20,350
6,640
20,350
700
17,810
2,540
20,350
PROBLEM 4-1A
(a)
PROBLEM 4-1A (Continued)

(b)
LAMPERT ROOFING
Income Statement
Revenues
Service revenue..................................................
Expenses
Salaries and wages expense..............................
Supplies expense................................................
Miscellaneous expense......................................
Depreciation expense.........................................
Total expenses.............................................
Net income..................................................................
$6,640
$2,000
1,450
400
250
4,100
$2,540
LAMPERT ROOFING
Owners Capital, March 1............................................................
Investments......................................................................
Add: Net income........................................................................
Less: Drawings...........................................................................
Owners Capital, March 31..........................................................
$ 2,900
10,000
2,540
15,440
1,100
$14,340
LAMPERT ROOFING
Balance Sheet
March 31, 2014
Assets
Current assets
Cash.....................................................................
Accounts receivable...........................................
Supplies...............................................................
4-38
$4,500
3,200
550
Total current assets....................................

Equipment...........................................................
Less: Accum. depreciationequipment..........
Total assets..................................................
$ 8,250
11,000
1,500
9,500
$17,750
Copyright 2013 John Wiley & Sons, Inc.Weygandt, Accounting Principles, 11/e, Solutions Manual(Fr oInstructor Use Only)
4-39

LAMPERT ROOFING
March 31, 2014
Current liabilities
Accounts payable..................................................
Salaries and wages payable.................................
Unearned service revenue....................................
Total current liabilities...................................
Owners equity
Owners capital......................................................
Total liabilities and owners equity..............
(c) Mar. 31Supplies Expense.............................................
Supplies................................................
31
$2,500
700
210
14,340
$17,750
1,450
Depreciation Expense.................................
Equipment.........................................
250
31
Unearned Service Revenue........................

Service Revenue..................................
340
31
Salaries and Wages Expense.....................

Salaries and Wages Payable...............
700
(d) Mar. 31Service Revenue...............................................

Income Summary.................................
6,640
4-40
$ 3,410
1,450
250
31
Income Summary.........................................
Salaries and Wages Expense..............
Supplies Expense................................
Depreciation Expense.........................
Miscellaneous Expense.......................
4,100
31
Income Summary.........................................
Owners Capital....................................
2,540
340
700
6,640
2,000
1,450
250
400
2,540
31
Owners Capital...........................................
Owners Drawing..................................
1,100
1,100
4-41
PROBLEM 4-2A
(a)
ALSHWER COMPANY
Partial Worksheet
For the Year Ended December 31, 2014
Account
No.
101
112
126
130
157
158
200
201
212
230
301
306
400
610
631
711
722
726
905
4-42
Titles
Cash
Accounts Receivable
Supplies
Prepaid Insurance
Equipment
Acc. Depr.Equip.
Notes Payable
Accounts Payable
Salaries and Wages
Payable
Interest Payable
Owners Capital
Owners Drawings
Service Revenue
Advertising Expense
Supplies Expense
Insurance Expense
Salaries and Wages
Expense
Interest Expense
Totals
Net Income
Totals
Adjusted
Trial Balance
Dr.
5,300
10,800
1,500
2,000
27,000
7,000
8,400
4,000
5,600
3,500
28,000
600
103,700
Cr.
Income
Statement
Dr.
Cr.
5,600
15,000
6,100
2,400
600
13,000
61,000
103,700
8,400
4,000
5,600
3,500
28,000
600
50,100
10,900
61,000
61,000
Balance
Sheet
Dr.
5,300
10,800
1,500
2,000
27,000
7,000
61,000
53,600
61,000
53,600
Cr.
5,600
15,000
6,100
2,400
600
13,000
42,700
10,900
53,600

(b)
ALSHWER COMPANY
Income Statement
Revenues
Service revenue..............................................
Expenses
Salaries and wages expense.........................
Advertising expense......................................
Depreciation expense....................................
Supplies expense...........................................
Insurance expense.........................................
Interest expense.............................................
Total expenses........................................
Net income..............................................................
$61,000
$28,000
8,400
5,600
4,000
3,500
600
50,100
$10,900
ALSHWER COMPANY
Owners Capital, January 1......................................................
Add: Net income.....................................................................
Less: Drawings........................................................................
Owners Capital, December 31................................................
$13,000
10,900
23,900
7,000
$16,900
4-43

ALSHWER COMPANY
Balance Sheet
December 31, 2014
Assets
Current assets
Cash.................................................................
Supplies..........................................................
Prepaid insurance..........................................
Equipment.......................................................
equipment...........................................
Total assets.............................................
$ 5,300
10,800
1,500
2,000
$19,600
27,000
5,600
21,400
$41,000
Current liabilities
Notes payable.................................................
Salaries and wages payable..........................
Interest payable..............................................
Notes payable.................................................
Total liabilities.........................................
Owners equity
Owners capital...............................................
4-44
$5,000
6,100
2,400
600
$14,100
10,000
24,100
16,900
$41,000

(c)
General Journal
Date
Account Titles and Explanation
Dec. 31 Service Revenue..................................
Income Summary........................
Ref.
400
350
Debit
61,000
31 Income Summary.................................
Advertising Expense..................
Supplies Expense.......................
Insurance Expense.....................
Interest Expense.........................
350
610
631
711
722
726
905
50,100
31 Income Summary................................
Owners Capital...........................
350
301
10,900
31 Owners Capital....................................
Owners Drawings......................
301
306
7,000
J14
Credit
61,000
8,400
4,000
5,600
3,500
28,000
600
10,900
7,000
(d)
Date
Jan. 1
Dec. 31
31
Date
Explanation
Balance
Closing entry
Closing entry
Explanation
Dec. 31 Balance
31 Closing entry
Owners Capital
Ref.
Debit
J14
J14
7,000
Owners Drawings
Ref.
Debit
J14
7,000
Credit
13,000
10,900
No. 301
Balance
13,000
23,900
16,900
Credit
No. 306
Balance
7,000
7,000
0
4-45

Explanation
Closing entry
Closing entry
Closing entry
Income Summary
Ref.
Debit
J14
J14
50,100
J14
10,900
Date
Dec. 31
31
Explanation
Balance
Closing entry
Service Revenue
Ref.
Debit
J14 61,000
Date
Dec. 31
31
Advertising Expense
Explanation
Ref.
Debit
Balance
8,400
Closing entry
J14
Date
Dec. 31
31
Explanation
Balance
Closing entry
Supplies Expense
Ref.
Debit
4,000
J14
Date
Dec. 31
31
Explanation
Ref.
Debit
Balance
5,600
Closing entry
J14
Date
Dec. 31
31
Insurance Expense
Ref.
Debit
3,500
J14
Date
Dec. 31
31
31
4-46
Explanation
Balance
Closing entry
Credit
61,000
No. 350
Balance
61,000
10,900
0
Credit
61,000
No. 400
Balance
61,000
0
Credit
No. 610
Balance
8,400
0
8,400
Credit
4,000
Credit
5,600
Credit
3,500
No. 631
Balance
4,000
0
No. 711
Balance
5,600
0
No. 722
Balance
3,500
0
4-47

Date
Dec. 31
31

Explanation
Ref.
Debit
Balance
28,000
Closing entry
J14
Date
Dec. 31
31
Interest Expense
Ref.
Debit
600
J14
(e)
Explanation
Balance
Closing entry
28,000
Credit
600
No. 905
Balance
600
0
ALSHWER COMPANY
December 31, 2014
Cash......................................................................
Supplies................................................................
Equipment............................................................
Equipment........................................................
Notes Payable......................................................
Owners Capital...................................................
Totals.............................................................
4-48
Credit
No. 726
Balance
28,000
0
Debit
$ 5,300
10,800
1,500
2,000
27,000
$46,600
Credit
$ 5,600
15,000
6,100
2,400
600
16,900
$46,600
PROBLEM 4-3A
(a)
FLEMING COMPANY
Income Statement
Revenues
Service revenue..............................................
Expenses
Maintenance and repairs expense................
Utilities expense.............................................
Total expenses........................................
Net income..............................................................
$60,000
$30,000
3,100
1,800
1,600
1,400
37,900
$22,100
FLEMING COMPANY
Owners Capital, January 1...............................................
Add: Net income...............................................................
Less: Drawings..................................................................
Owners Capital, December 31..........................................
$19,500
22,100
41,600
11,000
$30,600
FLEMING COMPANY
Balance Sheet
December 31, 2014
Assets
Current assets
Cash.................................................................
Equipment.......................................................
$8,900
10,800
2,800
$22,500
24,000
4-49

equipment...........................................
Total assets.............................................
4-50
4,500
19,500
$42,000

FLEMING COMPANY
December 31, 2014
Current liabilities
Total current liabilities.............................
Owners equity
Owners capital................................................
Total liabilities and owners
equity....................................................
(b)
$9,000
2,400
$11,400
30,600
$42,000
General Journal
Date
Dec. 31

Service Revenue..................................
Income Summary........................
Ref.
400
350
Debit
60,000
31
Income Summary.................................
Maintenance and Repairs
Expense....................................
350
37,900
31
Income Summary.................................
Owners Capital...........................
350
301
22,100
31
Owners Capital....................................
Owners Drawings.......................
301
306
11,000
622
711
722
726
732
Credit
60,000
1,600
3,100
1,800
30,000
1,400
22,100
11,000
4-51

(c)
12/31
Owners Capital
No. 301
11,000 1/1 Bal.
19,500
12/31
22,100
12/31 Bal.
30,600
Owners Drawings
12/31 Bal. 11,000 12/31
12/31
12/31
12/31
Income Summary
37,900 12/31
22,100
60,000
No. 306
11,000
No. 350
60,000
60,000
Service Revenue
No. 400
60,000 12/31 Bal. 60,000

Expense
No. 622
12/31 Bal.
1,600 12/31
1,600
Depreciation Expense No. 711
12/31 Bal.
3,100 12/31
3,100
Insurance Expense
1,800 12/31
No. 722
1,800
Salaries and Wages

Expense
12/31 Bal. 30,000 12/31
No. 726
30,000
12/31 Bal.
12/31 Bal.
(d)
Utilities Expense
1,400 12/31
FLEMING COMPANY
December 31, 2014
Cash......................................................................
Equipment............................................................
Owners Capital...................................................
Totals.............................................................
4-52
No. 732
1,400
Debit
$8,900
10,800
2,800
24,000
$46,500
Credit
$ 4,500
9,000
2,400
30,600
$46,500
4-46
4-74
JARMUZ MANAGEMENT SERVICES
Worksheet
Account Titles
Trial Balance
Dr.
Cash
Accounts Receivable
Prepaid Insurance
Land
Buildings
Equipment
Accounts Payable
Unearned Rent Revenue
Mortgage Payable
Owners Capital
Owners Drawings
Service Revenue
Rent Revenue
Salaries and Wages
Expense
Advertising Expense
Utilities Expense
Totals
Insurance Expense
Depr. Expense
Accum. Depr.Buildings
Accum. Depr.Equipment
Interest Expense
Interest Payable
Totals
Net Income
Totals
13,800
28,300
3,600
67,000
127,000
59,000
22,000
42,000
20,500
19,000
402,200
Cr.
Adjustments
Dr.
Cr.
(a) 1,200
12,500
6,000
120,000
144,000
Dr.
13,800
28,300
2,400
67,000
127,000
59,000
(c) 4,500
22,000
90,700
29,000
402,200
Adjusted
Trial Balance
(c) 4,500
(a) 1,200
(b) 6,600
(d) 10,000
22,300
(b) 3,000
(b) 3,600
(d) 10,000
22,300
Cr.
Income
Statement
Dr.
12,500
1,500
120,000
144,000
90,700
33,500
90,700
33,500
42,000
20,500
19,000
1,200
6,600
1,200
6,600
418,800
3,000
3,600
10,000
418,800
Balance Sheet
Dr.
13,800
28,300
2,400
67,000
127,000
59,000
42,000
20,500
19,000
10,000
Cr.
22,000
12,500
1,500
120,000
144,000
3,000
3,600
10,000
99,300
24,900
124,200
Cr.
124,200
319,500
124,200
319,500
10,000
294,600
24,900
319,500
Key: (a) Expired Insurance; (b) Depreciation ExpenseBuilding and Equipment; (c) Rent Revenue Recognized; (d) Accrued Interest Payable.
PROBLEM 4-4A
(a)

(b)

Balance Sheet
December 31, 2014
Assets
Current assets
Cash.............................................
Accounts receivable...................
Prepaid insurance......................
Total current assets............
Land.............................................
Buildings.....................................
Less: Accumulated
depreciationbuildings........
Equipment...................................
Less: Accumulated
depreciationequipment......
Total assets.........................
$13,800
28,300
2,400
$127,000
$ 44,500
67,000
3,000
59,000
124,000
3,600
55,400
246,400
$290,900
Current liabilities
Mortgage payable (due in 2015)...................
Accounts payable..........................................
Interest payable.............................................
Unearned rent revenue.................................
Total current liabilities...........................
Mortgage payable..........................................
Total liabilities........................................
Owners equity
Owners capital
($144,000 + $24,900 $22,000)....................
Total liabilities and owners equity.......
4-54
$30,000
12,500
10,000
1,500
$ 54,000
90,000
144,000
146,900
$290,900

(c) Dec. 31
Insurance Expense................................
Prepaid Insurance..........................
1,200
31
Depreciation Expense...........................
Buildings.....................................
Equipment...................................
6,600
31
Unearned Rent Revenue........................

Rent Revenue.................................
4,500
31
Interest Expense....................................
Interest Payable..............................
10,000
(d) Dec. 31
Service Revenue....................................
Rent Revenue.........................................
Income Summary...........................
90,700
33,500
31
Income Summary...................................
Salaries and Wages Expense........
Advertising Expense......................
Interest Expense............................
Utilities Expense............................
Depreciation Expense....................
Insurance Expense........................
99,300
31
Income Summary...................................
Owners Capital..............................
24,900
31
Owners Capital......................................
Owners Drawings..........................
22,000
1,200
3,000
3,600
4,500
10,000
124,200
42,000
20,500
10,000
19,000
6,600
1,200
24,900
22,000
4-55

(e)

December 31, 2014
Cash..................................................................
Accounts Receivable.......................................
Prepaid Insurance............................................
Land..................................................................
Buildings...........................................................
Accumulated DepreciationBuildings..........
Equipment........................................................
Accumulated DepreciationEquipment........
Accounts Payable............................................
Interest Payable...............................................
Unearned Rent Revenue..................................
Mortgage Payable............................................
Owners Capital................................................
4-56
Debit
$ 13,800
28,300
2,400
67,000
127,000
59,000
$297,500
Credit
3,000
3,600
12,500
10,000
1,500
120,000
146,900
$297,500
PROBLEM 4-5A
(a)
General Journal
Cash.....................................................
Owners Capital..........................
Ref.
101
301
Debit
20,000
Equipment...........................................
Cash............................................
Accounts Payable......................
157
101
201
9,000
Supplies...............................................
126
201
2,100
Prepaid Insurance...............................
Cash............................................
130
101
1,800
12
Accounts Receivable..........................
Service Revenue........................
112
400
4,500
18
Accounts Payable...............................
Cash............................................
201
101
2,900
20
Salaries and Wages Expense.............

Cash............................................
726
101
2,500
21
Cash.....................................................
Accounts Receivable.................
101
112
3,400
25
Service Revenue........................
112
400
6,000
31
Gasoline Expense...............................
Cash............................................
633
101
350
31
Owners Drawings...............................
Cash............................................
306
101
5,600
Date
July 1
J1
Credit
20,000
4,000
5,000
2,100
1,800
4,500
2,900
2,500
3,400
6,000
350
5,600
4-57
Account Titles
JARAS CLEANING SERVICE

Worksheet
For the Month Ended July 31, 2014
Trial Balance
Dr.
Cash
Accounts Receivable
Supplies
Prepaid Insurance
Equipment
Accounts Payable
Owners Capital
Owners Drawings
Service Revenue
Gasoline Expense
Totals
Insurance Expense
Supplies Expense
Totals
Net Income
Totals
Cr.
6,250
7,100
2,100
1,800
9,000
Adjustments
Dr.
(a) 2,700
Cr.
(d) 1,500
(c) 150
Adjusted
Trial Balance
Dr.
350
2,500
34,700
Dr.
(a) 2,700
(e) 1,000
(b) 500
(c) 150
(d) 1,500
5,850
(b) 500
(e) 1,000
5,850
5,600
350
3,500
500
150
1,500
38,900
Cr.
6,250
9,800
600
1,650
9,000
4,200
20,000
13,200
350
3,500
1,000
38,900
13,200
5,600
500
500
500
150
1,500
6,000
7,200
13,200
13,200
32,900
13,200
32,900
1,000
25,700
7,200
32,900
Key: (a) Service Revenue Accrued; (b) Depreciation Expense; (c) Insurance Expired; (d) Cleaning Supplies Used; (e) Unpaid Salaries.
4-51
4-58
Cr.
Balance Sheet
4,200
20,000
10,500
34,700
Dr.
6,250
9,800
600
1,650
9,000
4,200
20,000
5,600
Cr.
Income
Statement
(b) & (c)

(a), (e) & (f)
Date
Explanation
July 1
1
5
18
20
21
31
31
Date
Explanation
July 12
21
25
31 Adjusting
Date
July 3
31
Explanation
Adjusting
Date
Explanation
July 5
31 Adjusting
Date
July 1
Explanation
Cash
Ref.
J1
J1
J1
J1
J1
J1
J1
J1
Debit
20,000
3,400
Accounts Receivable
Ref.
Debit
J1
4,500
J1
J1
6,000
J2
2,700
Supplies
Ref.
J1
J2
Debit
2,100
Prepaid Insurance
Ref.
Debit
J1
1,800
J2
Equipment
Ref.
J1
Debit
9,000
Credit
4,000
1,800
2,900
2,500
350
5,600
Credit
3,400
Credit
1,500
Credit
150
Credit
No. 101
Balance
20,000
16,000
14,200
11,300
8,800
12,200
11,850
6,250
No. 112
Balance
4,500
1,100
7,100
9,800
No. 126
Balance
2,100
600
No. 130
Balance
1,800
1,650
No. 157
Balance
9,000
4-59

Date
July 31
Date
July 1
3
18
Accumulated DepreciationEquipment
Explanation
Ref.
Debit
Credit
Adjusting
J2
500
Explanation
Accounts Payable
Ref.
Debit
J1
J1
J1
2,900
Date
July 31

Explanation
Ref.
Debit
Adjusting
J2
Date
July 1
31
31
Owners Capital
Ref.
Debit
J1
J3
J3
5,600
Date
July 31
31
Date
July 31
31
31
4-60
Explanation
Closing
Closing
Closing
Owners Drawings
Ref.
Debit
J1
5,600
J3
Explanation
Closing
Closing
Closing
Income Summary
Ref.
Debit
J3
J3
6,000
J3
7,200
Explanation
Credit
5,000
2,100
Credit
1,000
No. 158
Balance
500
No. 201
Balance
5,000
7,100
4,200
No. 212
Balance
1,000
Credit
20,000
7,200
No. 301
Balance
20,000
27,200
21,600
Credit
No. 306
Balance
5,600
0
5,600
Credit
13,200
No. 350
Balance
13,200
7,200
0

Date
July 12
25
31
31
Date
July 31
31
Date
July 31
31
Adjusting
Closing
Service Revenue
Ref.
Debit
J1
J1
J2
J3
13,200
Explanation
Adjusting
Closing
Supplies Expense
Ref.
Debit
J2
1,500
J3
Explanation
Explanation
Closing
Gasoline Expense
Ref.
Debit
J1
350
J3
Explanation
Adjusting
Closing
Ref.
Debit
J2
500
J3
Date
July 31
31
Explanation
Adjusting
Closing
Insurance Expense
Ref.
Debit
J2
150
J3
Date
July 20
31
31

Explanation
Ref.
Debit
J1
2,500
Adjusting
J2
1,000
Closing
J3
Date
July 31
31
Credit
4,500
6,000
2,700
No. 400
Balance
4,500
10,500
13,200
0
Credit
No. 631
Balance
1,500
0
1,500
Credit
350
Credit
500
Credit
150
Credit
3,500
No. 633
Balance
350
0
No. 711
Balance
500
0
No. 722
Balance
150
0
No. 726
Balance
2,500
3,500
0
4-61

(d)

Income Statement
Revenues
Service revenue...............................................
Expenses
Salaries and wages expense..........................
Supplies expense.............................................
Depreciation expense......................................
Gasoline expense............................................
Insurance expense...........................................
Total expenses..........................................
Net income...............................................................
$13,200
$3,500
1,500
500
350
150
6,000
$ 7,200

Owners Capital, July 1...........................................
Add: Investments...................................................
Net income....................................................
$20,000
7,200
Less: Drawings.......................................................
Owners Capital, July 31.........................................
27,200
27,200
5,600
$21,600

Balance Sheet
July 31, 2014
Assets
Current assets
Cash..................................................................
Accounts receivable........................................
Supplies............................................................
4-62
$6,250
9,800
600
Prepaid insurance............................................
1,650
$18,300
4-63

July 31, 2014
Assets (Continued)
Equipment........................................................
equipment.............................................
Total assets...............................................
$9,000
500
8,500
$26,800
Current liabilities
Owners equity
Owners capital................................................
Total liabilities and owners equity.........
(e)
Date
July 31
$ 5,200
21,600
$26,800
Ref.
112
400
Debit
2,700
Depreciation Expense........................
Equipment..............................
711
500
31
Insurance Expense.............................
Prepaid Insurance.....................
722
130
150
31
Supplies Expense...............................
Supplies......................................
631
126
1,500
31
Salaries and Wages Expense............

Salaries and Wages Payable....
726
212
1,000
31
4-64
General Journal
Accounts Receivable.........................
Service Revenue........................
$4,200
1,000
158
J2
Credit
2,700
500
150
1,500
1,000

(f)
General Journal
Date
July 31

Service Revenue..................................
Income Summary.......................
Ref.
400
350
Debit
13,200
31
Income Summary................................
Insurance Expense....................
Supplies Expense......................
Gasoline Expense......................
350
726
711
722
631
633
6,000
31
Income Summary................................
Owners Capital..........................
350
301
7,200
31
Owners Capital...................................
Owners Drawings......................
301
306
5,600
(g)
J3
Credit
13,200
3,500
500
150
1,500
350
7,200
5,600

July 31, 2014
Cash......................................................................
Supplies................................................................
Equipment............................................................
Owners Capital...................................................
Debit
$ 6,250
9,800
600
1,650
9,000
$27,300
Credit
500
4,200
1,000
21,600
$27,300
4-65
4-58
(1)INCORRECT ENTRY
(2)CORRECT ENTRY
1.
Cash....................................
Accts. Receivable.........
950
2.
Misc. Expense....................
Cash...............................
75
3.
(3)CORRECTING ENTRY
950
Cash....................................
Accts. Receivable.........
590
Advertising Expense.........
Cash...............................
75
75
590
Accounts Receivable......... 360

Cash................................
360
75
Advertising Expense.......... 75
Misc. Expense...............
75
Salaries and Wages

Expense........................... 1,900
Cash...............................
1,900
Salaries and Wages

Expense........................... 1,200
Salaries and Wages
Payable............................ 700
Cash...............................
1,900
Salaries and Wages

Payable............................. 700
Salaries and Wages
Expense.......................
700
4.
Supplies..............................
Accounts Payable........
310
Equipment..........................
Accounts Payable........
Equipment........................... 310
Supplies.........................
310
5.
Equipment..........................
Cash...............................
69

Expense............................
Cash................................
Equipment......................
27
69
310
69

Expense...........................
Cash...............................
310
310
96
96
96
PROBLEM 4-6A
4-66
(a)

(b)
UNIVERSAL CABLE
Trial Balance
April 30, 2014
Cash ($4,100 $360 $27)....................................

Accounts Receivable ($3,200 + $360)..................
Supplies ($800 $310)..........................................
Equipment ($10,600 + $310 $69)........................
Accumulated Depreciation...................................
Accounts Payable..................................................
Salaries and Wages Payable ($700 $700).........
Unearned Service Revenue..................................
Owners Capital......................................................
Service Revenue....................................................
Salaries and Wages Expense ($3,300 $700).....
Advertising Expense ($600 + $75)........................
Miscellaneous Expense ($290 $75)...................
Depreciation Expense...........................................
Maintenance and Repairs Expense......................
Debit
$ 3,713
3,560
490
10,841
2,600
675
215
500
96
$22,690
Credit
$ 1,350
2,100
0
890
12,900
5,450
$22,690
4-67
4-60
MICHAEL PEVNICK, P.I.
Worksheet
For the Quarter Ended March 31, 2014
Account Titles
Trial Balance
Cash
Accounts Receivable
Supplies
Prepaid Insurance
Equipment
Notes Payable
Accounts Payable
Owners Capital
Owners Drawings
Service Revenue
Salaries and Wages
Expense
Travel Expense
Rent Expense
Miscellaneous Expense
Totals
Supplies Expense
Accumulated
DepreciationEquipment
Interest Expense
Interest Payable
Insurance Expense
Totals
Net Income
Totals
11,400
5,620
1,050
2,400
30,000
600
2,200
1,300
1,200
200
55,970
Cr.
Dr.
(e) 1,030
Cr.
(a) 570
(d) 600
10,000
12,350
20,000
13,620
55,970
(e) 1,030
(a) 570
(b)
800
(c) 300
(d) 600
3,300
(b)
800
(c) 300
3,300
Dr.
11,400
6,650
480
1,800
30,000
600
Cr.
Income
Statement
Dr.
10,000
12,350
20,000
14,650
14,650
2,200
1,300
1,200
200
570
800
570
800
600
58,100
800
300
58,100
Balance Sheet
Dr.
11,400
6,650
480
1,800
30,000
2,200
1,300
1,200
200
300
Cr.
600
10,000
12,350
20,000
800
300
600
7,170
7,480
14,650
Cr.
300
14,650
50,930
14,650
50,930
43,450
7,480
50,930
Key:(a) Supplies Used; (b) Depreciation Expensed; (c) Accrued Interest on note; (d) Insurance Expired; (e) Service Revenue
Accrued.
SOLUTIONS TO PROBLEMS
Dr.
Adjusted
Trial Balance
Adjustments
PROBLEM 4-1B
(a)
PROBLEM 4-1B (Continued)

(b)

Income Statement
Revenues
Service revenue...............................................
Expenses
Travel expense.................................................
Rent expense....................................................
Interest expense...............................................
Miscellaneous expense...................................
Total expenses..........................................
Net income...............................................................
$14,650
$2,200
1,300
1,200
800
600
570
300
200
7,170
$ 7,480

Owners Capital, January 1.....................................
Add: Investment by owner....................................
Net income....................................................
Less: Drawings.......................................................
Owners Capital, March 31......................................
$20,000
7,480
27,480
27,480
600
$26,880
4-69

Balance Sheet
March 31, 2014
Assets
Current assets
Cash.................................................................
Supplies..........................................................
Equipment.......................................................
equipment...........................................
Total assets.............................................
$11,400
6,650
480
1,800
$20,330
30,000
800
29,200
$49,530
Current liabilities
Notes payable.................................................
Owners equity
Owners capital...............................................
equity...................................................
(c) Mar. 31Supplies Expense.......................................

Supplies.........................................
31
4-70
$10,000
12,350
300
$22,650
26,880
$49,530
570
Depreciation Expense...........................
Equipment...................................
800
31
Interest Expense...................................
Interest Payable.............................
300
31
Insurance Expense...............................
600
570
800
300
Prepaid Insurance.........................
600
4-71

Mar. 31Accounts Receivable......................................
Service Revenue................................
1,030
(d) Mar. 31Service Revenue.............................................

Income Summary...............................
14,650
4-72
31
Income Summary......................................
Travel Expense...................................
Salaries and Wages Expense...........
Rent Expense.....................................
Insurance Expense............................
Depreciation Expense.......................
Supplies Expense..............................
Interest Expense................................
Miscellaneous Expense....................
7,170
31
Income Summary......................................
Owners Capital.................................
7,480
31
Owners Capital.........................................
Owners Drawings.............................
600
1,030
14,650
1,300
2,200
1,200
600
800
570
300
200
7,480
600
PROBLEM 4-2B
(a)
GREENWOOD COMPANY
Partial Worksheet
Account
No. Titles
101
112
126
130
157
158
200
201
212
230
301
306
400
610
631
711
722
726
905
Cash
Accounts Receivable
Supplies
Prepaid Insurance
Equipment
Acc. Depr.Equip.
Notes Payable
Accounts Payable
Salaries and Wages
Payable
Interest Payable
Owners Capital
Owners Drawings
Service Revenue
Advertising Expense
Supplies Expense
Insurance Expense
Salaries and Wages
Expense
Interest Expense
Totals
Net Income
Totals
Adjusted
Trial Balance
Dr.
Cr.
18,800
16,200
2,300
4,400
46,000
12,000
10,000
3,700
8,000
4,000
Income
Statement
Dr.
Cr.
18,800
16,200
2,300
4,400
46,000
20,000
20,000
8,000
2,600
1,000
26,000
87,800
39,000
1,000
165,400 165,400
Balance
Sheet
Dr.
Cr.
10,000
3,700
8,000
4,000
39,000
1,000
65,700
22,100
87,800
87,800
12,000
87,800
99,700
87,800
99,700
20,000
20,000
8,000
2,600
1,000
26,000
77,600
22,100
99,700
4-73

(b)
GREENWOOD COMPANY
Income Statement
Revenues
Service revenue..............................................
Expenses
Advertising expense......................................
Interest expense.............................................
Total expenses........................................
Net income..............................................................
$87,800
$39,000
10,000
8,000
4,000
3,700
1,000
65,700
$22,100
GREENWOOD COMPANY
Owners Capital, January 1......................................................
Add: Net income.....................................................................
Less: Drawings........................................................................
Owners Capital, December 31................................................
4-74
$26,000
22,100
48,100
12,000
$36,100

GREENWOOD COMPANY
Balance Sheet
December 31, 2014
Assets
Current assets
Cash.................................................................
Supplies..........................................................
Equipment.......................................................
equipment...........................................
Total assets.............................................
$18,800
16,200
2,300
4,400
$41,700
46,000
20,000
26,000
$67,700
Current liabilities
Notes payable.................................................
Salaries and wages payable..........................
Notes payable.................................................
Total liabilities.........................................
Owners equity
Owners capital...............................................
equity....................................................
$5,000
8,000
2,600
1,000
$16,600
15,000
31,600
36,100
$67,700
4-75

(c)
General Journal
Date
Income Summary........................
Ref.
400
350
Debit
87,800
31 Income Summary.................................
Advertising Expense..................
Supplies Expense.......................
Interest Expense.........................
350
610
631
711
722
726
905
65,700
31 Income Summary................................
Owners Capital...........................
350
301
22,100
31 Owners Capital....................................
Owners Drawings......................
301
306
12,000
J14
Credit
87,800
10,000
3,700
8,000
4,000
39,000
1,000
22,100
12,000
(d)
Date
Explanation
Jan. 31 Balance
Dec. 31 Closing entry
31 Closing entry
Owners Capital
Ref.
Debit
J14
J14
12,000
Date
Explanation
Dec. 31 Balance
31 Closing entry
Owners Drawings
Ref.
Debit
12,000
J14
4-76
Credit
26,000
22,100
No. 301
Balance
26,000
48,100
36,100
Credit
No. 306
Balance
12,000
0
12,000

Explanation
Closing entry
Closing entry
Closing entry
Income Summary
Ref.
Debit
J14
J14
65,700
J14
22,100
Date
Explanation
Dec. 31 Balance
31 Closing entry
Service Revenue
Ref.
Debit
J14
87,800
Date
Explanation
Dec. 31 Balance
31
Closing entry
Advertising Expense
Ref.
Debit
10,000
J14
Date
Dec. 31
31
31
Explanation
Balance
Closing entry
Supplies Expense
Ref.
Debit
3,700
J14
Date
Explanation
Dec. 31 Balance
31 Closing entry
Ref.
Debit
8,000
J14
Date
Dec. 31
31
Date
Dec. 31
31
Explanation
Balance
Closing entry
Insurance Expense
Ref.
Debit
4,000
J14
Credit
87,800
No. 350
Balance
87,800
22,100
0
Credit
87,800
No. 400
Balance
87,800
0
Credit
No. 610
Balance
10,000
0
10,000
Credit
3,700
Credit
8,000
Credit
4,000
No. 631
Balance
3,700
0
No. 711
Balance
8,000
0
No. 722
Balance
4,000
0
4-77

Date
Explanation
Ref.
Debit
Dec. 31 Balance
39,000
31 Closing entry
J14
Date
Explanation
Dec. 31 Balance
31 Closing entry
(e)
Interest Expense
Ref.
Debit
1,000
J14
39,000
Credit
1,000
No. 905
Balance
1,000
0
GREENWOOD COMPANY
December 31, 2014
Cash......................................................................
Supplies................................................................
Equipment............................................................
Equipment........................................................
Notes Payable......................................................
Owners Capital...................................................
4-78
Credit
No. 726
Balance
39,000
0
Debit
$18,800
16,200
2,300
4,400
46,000
$87,700
Credit
$20,000
20,000
8,000
2,600
1,000
36,100
$87,700
PROBLEM 4-3B
(a)
S. NIHO COMPANY
Income Statement
Revenues
Service revenue...........................................
Expenses
Salaries and wages expense......................
Maintenance and repairs expense.............
Utilities expense...........................................
Depreciation expense..................................
Insurance expense.......................................
Total expenses......................................
Net loss................................................................
$46,000
$35,200
4,400
4,000
2,800
1,200
47,600
$ (1,600)
S. NIHO COMPANY
Owners Capital, January 1.................................
Add: Additional investment by owner.............
Less: Net loss.....................................................
Drawings...................................................
Owners Capital, December 31...........................
$1,600
7,200
$30,000
4,000
34,000
8,800
$25,200
S. NIHO COMPANY
Balance Sheet
December 31, 2014
Assets
Current assets
Cash..............................................................
Accounts receivable....................................
Prepaid insurance........................................
Total current assets.............................
Equipment....................................................
$6,200
7,500
1,800
$15,500
33,000
4-79

equipment.........................................
Total assets...........................................
4-80
8,600
24,400
$39,900

S. NIHO COMPANY
December 31, 2014
Current liabilities
Salaries and wages payable.......................
Total current liabilities.........................
Owners equity
Owners capital............................................
equity.................................................
(b)
General Journal
$11,700
3,000
25,200
$39,900
Date
Account Titles
Income Summary........................
Ref.
400
350
Debit
46,000
Income Summary...............................
Expense....................................
350
47,600
31
Owners Capital...................................
Income Summary.......................
301
350
1,600
31
Owners Capital...................................
Owners Drawings......................
301
306
7,200
31
$14,700
622
711
722
726
732
Credit
46,000
4,400
2,800
1,200
35,200
4,000
1,600
7,200
4-81

(c)
12/31
12/31
Owners Capital
No. 301
1,600 12/31 Bal. 34,000
7,200
12/31 Bal. 25,200
Owners Drawings
12/31 Bal.
7,200 12/31
No. 306
7,200
Income Summary
47,600 12/31
12/31
47,600
No. 350
46,000
1,600
47,600
12/31
12/31
(d)
Service Revenue
No. 400
46,000 12/31 Bal. 46,000

Expense
12/31 Bal.
4,400 12/31
Depreciation Expense No. 711

12/31 Bal.
2,800 12/31
2,800
Insurance Expense
12/31 Bal.
1,200 12/31
No. 722
1,200

12/31 Bal. 35,200 12/31
No. 726
35,200
Utilities Expense
12/31 Bal.
4,000 12/31
No. 732
4,000
S. NIHO COMPANY
December 31, 2014
Cash......................................................................
Equipment............................................................
Owners Capital...................................................
Totals.............................................................
4-82
No. 622
4,400
Debit
$ 6,200
7,500
1,800
33,000
$48,500
Credit
$ 8,600
11,700
3,000
25,200
$48,500
AVALON AMUSEMENT PARK

Worksheet
For the Year Ended September 30, 2014
Account Titles
Trial Balance
Dr.
Cash
Supplies
Prepaid Insurance
Land
Equipment
Equipment
Accounts Payable
Unearned Ticket Revenue
Mortgage Payable
Owners Capital
Owners Drawings
Ticket Revenue
Expense
Advertising Expense
Utilities Expense
Property Tax Expense
Interest Expense
Totals
Insurance Expense
Supplies Expense
Interest Payable
Property Taxes Payable
Totals
Net Income
Totals
Cr.
Adjustments
Dr.
41,400
18,600
31,900
80,000
120,000
14,000
105,000
Cr.
(a) 16,400
(b) 21,000
36,200
14,600
3,700
50,000
109,700
Dr.
(d) 2,700
(d) 2,700
Cr.
Income
Statement
Dr.
14,000
105,000
42,200
14,600
1,000
50,000
109,700
280,200
105,000
(e) 3,000
(f) 4,000
30,500
9,400
16,900
21,000
10,000
(b) 21,000
(a) 16,400
21,000
16,400
21,000
16,400
53,100
(f) 4,000
(e) 3,000
53,100
Balance Sheet
Dr.
280,200
14,000
4,000
6,000
Cr.
41,400
2,200
10,900
80,000
120,000
30,500
9,400
16,900
21,000
10,000
(c) 6,000
Cr.
41,400
2,200
10,900
80,000
120,000
(c) 6,000
277,500
30,500
9,400
16,900
18,000
6,000
491,700 491,700
Adjusted
Trial Balance
3,000
504,700 504,700
42,200
14,600
1,000
50,000
109,700
4,000
6,000
236,200 280,200
44,000
280,200 280,200
268,500
268,500
3,000
224,500
44,000
268,500
Key:(a) Supplies Used; (b) Expired Insurance; (c) Depreciation Expensed; (d) Ticket Revenue Recognized; (e) Accrued Property Taxes;
(f) Accrued Interest Payable.
PROBLEM 4-4B
(a)
4-73

(b)

Balance Sheet
September 30, 2014
Assets
Current assets
Cash..............................................
Supplies........................................
Prepaid insurance........................
Total current assets.............
Land..............................................
Equipment....................................
Less: Accum. depreciation
equipment.........................
Total assets...........................
$41,400
2,200
10,900
$120,000
42,200
$ 54,500
80,000
77,800
157,800
$212,300
Current liabilities
Mortgage
payable (due in 2015)...............
Accounts payable........................
Interest payable............................
Property taxes payable................
Unearned ticket
revenue.....................................
Total current liabilities.........
Mortgage payable........................
Total liabilities.......................
Owners equity
Owners capital
($109,700 + $44,000 $14,000).......
Total liabilities and
owners equity..................
4-84
$15,000
14,600
4,000
3,000
1,000
$ 37,600
35,000
72,600
139,700
$212,300

(c) Sept. 30
Supplies Expense.................................
Supplies.........................................
16,400
30
Insurance Expense...............................
Prepaid Insurance.........................
21,000
30
Depreciation Expense..........................
Equipment..................................
6,000
30
Unearned Ticket Revenue....................

Ticket Revenue..............................
2,700
30
Property Tax Expense..........................

Property Taxes Payable................
3,000
30
Interest Expense...................................
Interest Payable.............................
4,000
(d) Sept. 30
Ticket Revenue.....................................
Income Summary..........................
280,200
30
Income Summary..................................
Salaries and Wages Expense.......
Expense......................................
Insurance Expense.......................
Property Tax Expense..................
Supplies Expense.........................
Utilities Expense...........................
Interest Expense...........................
Advertising Expense....................
Depreciation Expense..................
236,200
30
Income Summary..................................
Owners Capital.............................
44,000
30
Owners Capital....................................
Owners Drawings.........................
14,000
16,400
21,000
6,000
2,700
3,000
4,000
280,200
105,000
30,500
21,000
21,000
16,400
16,900
10,000
9,400
6,000
44,000
14,000
4-85

(e)

September 30, 2014
Cash......................................................................
Supplies................................................................
Land......................................................................
Equipment............................................................
Property Taxes Payable......................................
Unearned Ticket Revenue...................................
Mortgage Payable................................................
Owners Capital...................................................
4-86
Debit
$ 41,400
2,200
10,900
80,000
120,000
$254,500
Credit
$ 42,200
14,600
4,000
3,000
1,000
50,000
139,700
$254,500
PROBLEM 4-5B
(a)
General Journal
Cash.....................................................
Owners Capital..........................
Ref.
101
301
Debit
10,000
Equipment...........................................
Cash............................................
157
101
201
6,000
Supplies...............................................
126
201
1,200
.....................................................
Cash............................................
130
1,200
101
14
Service Revenue........................
112
400
4,800
18
Accounts Payable...............................
Cash............................................
201
101
2,000
20

Cash............................................
726
101
1,800
21
Cash.....................................................
101
112
1,400
28
Service Revenue........................
112
400
2,500
31
Gasoline Expense...............................
Cash............................................
633
101
200
31
Owners Drawings...............................
Cash............................................
306
101
700
Date
Mar. 1
J1
Credit
10,000
3,000
3,000
1,200
1,200
4,800
2,000
1,800
1,400
2,500
200
700
4-87
4-88
SHAWS CARPET CLEANERS

Worksheet
Account Titles
Trial Balance
Dr.
Cash
Accounts Receivable
Supplies
Prepaid Insurance
Equipment
Accounts Payable
Owners Capital
Owners Drawings
Service Revenue
Gasoline Expense
Totals
Insurance Expense
Supplies Expense
Totals
Net Income
Totals
Cr.
2,500
5,900
1,200
1,200
6,000
700
200
1,800
19,500
Adjustments
Dr.
(a) 500
Cr.
(d) 950
(c) 100
2,200
10,000
(a) 500
7,300
19,500
(e) 550
(b) 300
(c) 100
(d)
950
2,400
(b) 300
(e) 550
2,400
Adjusted
Trial Balance
Dr.
Cr.
Income
Statement
Dr.
Cr.
2,500
6,400
250
1,100
6,000
700
200
2,350
20,850
Dr.
Cr.
2,500
6,400
250
1,100
6,000
2,200
10,000
7,800
300
100
950
Balance Sheet
200
2,350
7,800
700
300
300
550
20,850
300
100
950
3,900
3,900
7,800
2,200
10,000
7,800
16,950
7,800
16,950
550
13,050
3,900
16,950
Key: (a) Service Revenue Earned; (b) Depreciation Expensed; (c) Insurance Expired; (d) Cleaning Supplies Used; (e) Unpaid Salaries.
4-78
(b)&(c)

(a), (e) & (f)
Date
Mar. 1
1
5
18
20
21
31
31
Date
Mar. 14
21
28
31
Date
Mar. 3
31
Date
Mar. 5
31
Date
Mar. 1
4-90
Explanation
Explanation
Adjusting
Explanation
Adjusting
Explanation
Adjusting
Explanation
Cash
Ref.
J1
J1
J1
J1
J1
J1
J1
J1
Debit
10,000
1,400
Accounts Receivable
Ref.
Debit
J1
4,800
J1
J1
2,500
J2
500
Supplies
Ref.
J1
J2
Debit
1,200
Prepaid Insurance
Ref.
Debit
J1
1,200
J2
Equipment
Ref.
J1
Debit
6,000
Credit
3,000
1,200
2,000
1,800
200
700
Credit
1,400
Credit
950
Credit
100
Credit
No. 101
Balance
10,000
7,000
5,800
3,800
2,000
3,400
3,200
2,500
No. 112
Balance
4,800
3,400
5,900
6,400
No. 126
Balance
1,200
250
No. 130
Balance
1,200
1,100
No. 157
Balance
6,000

Date
Mar. 31
Date
Mar. 1
3
18
Explanation
Ref.
Debit
Credit
Adjusting
J2
300
Explanation
Accounts Payable
Ref.
Debit
J1
J1
J1
2,000
Date
Mar. 31

Explanation
Ref.
Debit
Adjusting
J2
Date
Mar. 1
31
31
Owners Capital
Ref.
Debit
J1
J3
J3
700
Date
Mar. 31
31
Date
Mar. 31
31
31
Explanation
Closing
Closing
Closing
Owners Drawings
Ref.
Debit
J1
700
J3
Explanation
Closing
Closing
Closing
Income Summary
Ref.
Debit
J3
J3
3,900
J3
3,900
Explanation
Credit
3,000
1,200
Credit
550
No. 158
Balance
300
No. 201
Balance
3,000
4,200
2,200
No. 212
Balance
550
Credit
10,000
3,900
No. 301
Balance
10,000
13,900
13,200
Credit
No. 306
Balance
700
0
700
Credit
7,800
No. 350
Balance
7,800
3,900
0
4-91

Date
Mar. 14
28
31
31
Date
Mar. 31
31
Date
Mar. 31
31
Adjusting
Closing
Service Revenue
Ref.
Debit
J1
J1
J2
J3
7,800
Explanation
Adjusting
Closing
Supplies Expense
Ref.
Debit
J2
950
J3
Explanation
Explanation
Closing
Gasoline Expense
Ref.
Debit
J1
200
J3
Explanation
Adjusting
Closing
Ref.
Debit
J2
300
J3
Date
Mar. 31
31
Explanation
Adjusting
Closing
Insurance Expense
Ref.
Debit
J2
100
J3
Date
Mar. 20
31
31

Explanation
Ref.
Debit
J1
1,800
Adjusting
J2
550
Closing
J3
Date
Mar. 31
31
4-92
Credit
4,800
2,500
500
No. 400
Balance
4,800
7,300
7,800
0
Credit
No. 631
Balance
950
0
950
Credit
200
Credit
300
Credit
100
Credit
2,350
No. 633
Balance
200
0
No. 711
Balance
300
0
No. 722
Balance
100
0
No. 726
Balance
1,800
2,350
0

(d)

Income Statement
Revenues
Service revenue..............................................
Expenses
Gasoline expense...........................................
Total expenses........................................
Net income..............................................................
$7,800
$2,350
950
300
200
100
3,900
$3,900

Owners Capital, March 1......................................
Add: Investments.................................................
Net income..................................................
$10,000
3,900
Less: Drawings......................................................
Owners Capital, March 31....................................
13,900
13,900
700
$13,200

Balance Sheet
March 31, 2014
Assets
Current assets
Cash.................................................................
Supplies..........................................................
$2,500
6,400
250
4-93
4-94
1,100
$10,250

March 31, 2014
Assets (Continued)
Equipment........................................................
equipment.............................................
Total assets...............................................
$6,000
300
5,700
$15,950
Current liabilities
Salaries and wages payable............................
Owners equity
Owners capital................................................
(e)
Date
Mar. 31
General Journal
Service Revenue........................
$2,200
550
13,200
$15,950
Ref.
112
400
Debit
500
Equipment..............................
711
300
31
722
130
100
31
Supplies......................................
631
126
950
31

726
212
550
31
$ 2,750
J2
Credit
158
500
300
100
950
550
4-95

(f)
General Journal
Service Revenue.................................
Income Summary.......................
Ref.
400
350
Debit
7,800
31
Income Summary................................
350
726
711
722
631
633
3,900
31
Income Summary................................
Owners Capital..........................
350
301
3,900
31
Owners Capital...................................
Owners Drawings......................
301
306
700
Date
Mar. 31
(g)
7,800
2,350
300
100
950
200
3,900
700

March 31, 2014
Cash......................................................................
Supplies................................................................
Equipment............................................................
Owners Capital...................................................
000,000
4-96
J3
Credit
Debit
$ 2,500
6,400
250
1,100
6,000
$16,250
Credit
300
2,200
550
13,200
$16,250
COMPREHENSIVE PROBLEM: CHAPTERS 2 TO 4

(a)
General Journal
Cash......................................................
Owners Capital.........................
Ref.
101
301
Debit
14,000
Equipment............................................
Cash............................................
157
101
201
10,000
Supplies................................................
126
201
800
Cash............................................
130
101
1,800
12
Accounts Receivable...........................
Service Revenue........................
112
400
3,800
18
Accounts Payable................................
Cash............................................
201
101
1,400
20
Salaries and Wages Expense.............

Cash............................................
726
101
1,600
21
Cash......................................................
...............................................................
101
1,400
25
Accounts Receivable...........................
Service Revenue........................
112
400
1,500
31
Gasoline Expense................................
Cash............................................
633
101
400
31
Owners Drawings...............................
Cash............................................
306
101
600
Date
July 1
112
J1
Credit
14,000
3,000
7,000
800
1,800
3,800
1,400
1,600
1,400
1,500
400
600
4-97
4-87
Account Titles
KRISTINS MAIDS CLEANING SERVICE

Worksheet
Trial Balance
Dr.
Cash
Accounts Receivable
Supplies
Prepaid Insurance
Equipment
Accounts Payable
Owners Capital
Owners Drawings
Service Revenue
Gasoline Expense
Total
Insurance Expense
Supplies Expense
Totals
Net Income
Totals
Cr.
6,600
3,900
800
1,800
10,000
600
400
1,600
25,700
Adjustments
Dr.
(a) 1,300
Cr.
(d) 700
(c) 150
6,400
14,000
(a) 1,300
5,300
25,700
(e) 500
(b) 200
(c) 150
(d) 700
2,850
(b) 200
(e) 500
2,850
Adjusted
Trial Balance
Dr.
Cr.
Income
Statement
Dr.
Cr.
6,600
5,200
100
1,650
10,000
600
400
2,100
200
150
700
27,700
Balance Sheet
Dr.
Cr.
6,600
5,200
100
1,650
10,000
6,400
14,000
6,600
200
500
27,700
400
2,100
6,600
600
200
200
150
700
3,550
3,050
6,600
6,400
14,000
6,600
24,150
6,600
24,150
Key: (a) Service Revenue; (b) Depreciation Expense; (c) Insurance Expired; (d) Supplies Used; (e) Unpaid Salaries.
500
21,100
3,050
24,150
COMPREHENSIVE PROBLEM (Continued)
4-86
(b) & (c)

(a), (e) & (f)
Date
July 1
1
5
18
20
21
31
31
Date
July 12
21
25
31
Date
July 3
31
Date
July 5
31
Date
July 1
Explanation
Explanation
Adjusting
Explanation
Adjusting
Explanation
Adjusting
Explanation
Cash
Ref.
J1
J1
J1
J1
J1
J1
J1
J1
Debit
14,000
1,400
Accounts Receivable
Ref.
Debit
J1
3,800
J1
J1
1,500
J2
1,300
Supplies
Ref.
J1
J2
Debit
800
Prepaid Insurance
Ref.
Debit
J1
1,800
J2
Equipment
Ref.
Debit
J1
10,000
Credit
3,000
1,800
1,400
1,600
400
600
Credit
1,400
Credit
700
Credit
150
Credit
No. 101
Balance
14,000
11,000
9,200
7,800
6,200
7,600
7,200
6,600
No. 112
Balance
3,800
2,400
3,900
5,200
No. 126
Balance
800
100
No. 130
Balance
1,800
1,650
No. 157
Balance
10,000
4-99

Date
July 31
Date
July 1
3
18
Explanation
Ref.
Debit
Credit
Adjusting
J2
200
Explanation
Accounts Payable
Ref.
Debit
J1
J1
J1
1,400
Date
July 31

Explanation
Ref.
Debit
Adjusting
J2
Date
July 1
31
31
Owners Capital
Ref.
Debit
J1
J3
J3
600
Date
July 31
31
Date
July 31
31
31
4-100
Explanation
Closing
Closing
Closing
Owners Drawings
Ref.
Debit
J1
600
J3
Explanation
Closing
Closing
Closing
Income Summary
Ref.
Debit
J3
J3
3,550
J3
3,050
Explanation
Credit
7,000
800
Credit
500
No. 158
Balance
200
No. 201
Balance
7,000
7,800
6,400
No. 212
Balance
500
Credit
14,000
3,050
No. 301
Balance
14,000
17,050
16,450
Credit
No. 306
Balance
600
0
600
Credit
6,600
No. 350
Balance
6,600
3,050
0

Date
July 12
25
31
31
Date
July 31
31
Date
July 31
31
Adjusting
Closing
Service Revenue
Ref.
Debit
J1
J1
J2
J3
6,600
Explanation
Adjusting
Closing
Supplies Expense
Ref.
Debit
J2
700
J3
Explanation
Explanation
Closing
Gasoline Expense
Ref.
Debit
J1
400
J3
Explanation
Adjusting
Closing
Ref.
Debit
J2
200
J3
Date
July 31
31
Explanation
Adjusting
Closing
Insurance Expense
Ref.
Debit
J2
150
J3
Date
July 20
31
31

Explanation
Ref.
Debit
J1
1,600
Adjusting
J2
500
Closing
J3
Date
July 31
31
Credit
3,800
1,500
1,300
No. 400
Balance
3,800
5,300
6,600
0
Credit
No. 631
Balance
700
0
700
Credit
400
Credit
200
Credit
150
Credit
2,100
No. 633
Balance
400
0
No. 711
Balance
200
0
No. 722
Balance
150
0
No. 726
Balance
1,600
2,100
0
4-101

(d)

Income Statement
Revenues
Service revenue...............................................
Expenses
Gasoline expense............................................
Total expenses..........................................
Net income...............................................................
$6,600
$2,100
700
400
200
150
3,550
$3,050

Owners Capital, July 1...........................................
Add: Investments...................................................
Net income....................................................
Less: Drawings.......................................................
Owners Capital, July 31.........................................
4-102
$14,000
3,050
17,050
17,050
600
$16,450

Balance Sheet
July 31, 2014
Assets
Current assets
Cash..................................................................
Accounts receivable........................................
Supplies............................................................
Prepaid insurance............................................
Equipment........................................................
equipment.............................................
Total assets...............................................
$6,600
5,200
100
1,650
$13,550
10,000
200
9,800
$23,350
Current liabilities
Salaries and wages payable............................
Owners equity
Owners capital................................................
$6,400
500
$ 6,900
16,450
$23,350
4-103

(e)
Date
July 31
Ref.
112
400
Debit
1,300
Equipment..............................
711
200
31
722
130
150
31
Supplies......................................
631
126
700
31

726
212
500
31
(f)
158
J2
Credit
1,300
200
General Journal
Service Revenue.................................
Income Summary......................
Ref.
400
350
Debit
6,600
31
Income Summary...............................
Salaries and Wages Expense...
Depreciation Expense...............
350
726
711
722
631
633
3,550
31
Income Summary...............................
Owners Capital.........................
350
301
3,050
31
Owners Capital..................................
Owners Drawings.....................
301
306
600
Date
July 31
4-104
General Journal
Service Revenue........................
150
700
500
J3
Credit
6,600
2,100
200
150
700
400
3,050
600

(g)

July 31, 2014
Cash......................................................................
Supplies................................................................
Equipment............................................................
Owners Capital...................................................
Debit
$ 6,600
5,200
100
1,650
10,000
$23,550
Credit
200
6,400
500
16,450
$23,550
4-105
CCC4
(a)
CONTINUING COOKIE CHRONICLE
COOKIE CREATIONS
Income Statement
For the Two Months Ended December 31, 2013
Revenues
Service revenue.........................................................
Expenses
Supplies expense......................................................
Salaries and wages expense....................................
Advertising expense..................................................
Utilities expense........................................................
Insurance expense....................................................
Depreciation expense................................................
Interest expense........................................................
Total expenses......................................................
Net income.....................................................................
$4,515
$1,025
1,006
165
125
110
40
15
2,486
$2,029
COOKIE CREATIONS
For the Two Months Ended December 31, 2013
Owners Capital, November 1........................................
Add: Net income..........................................................
Less: Drawings..............................................................
Owners Capital, December 31......................................
4-106
$ 800
2,029
2,829
500
$2,329
CCC4 (Continued)
(a) (Continued)
COOKIE CREATIONS
Balance Sheet
December 31, 2013
Assets
Current assets
Cash.............................................................................
Accounts receivable...................................................
Supplies.......................................................................
Prepaid insurance.......................................................
Total current assets...............................................
Equipment...................................................................
Less: Accumulated depreciationequipment........
Total assets.............................................................
$1,180
875
350
1,210
3,615
$1,200
40
1,160
$4,775
Current liabilities
Accounts payable.......................................................
Salaries and wages payable.......................................
Unearned service revenue.........................................
Total current liabilities............................................
Interest payable...........................................................
Notes payable..............................................................
Total long-term liabilities........................................
Total liabilities...................................................
Owners equity
Owners capital............................................................
Total liabilities and owners equity........................
0$
75
56
300
15
2,000
$ 431
2,015
2,446
2,329
$4,775
4-107
CCC4 (Continued)
(b)
Date
GENERAL JOURNAL
2013
Dec. 31 Service Revenue......................................
Income Summary................................
4-108
Debit
4,515
31 Income Summary....................................
Utilities Expense.................................
Advertising Expense..........................
Interest Expense.................................
2,486
31 Income Summary....................................
Owners Capital...................................
2,029
31 Owners Capital.......................................
Owners Drawings...............................
500
J4
Credit
4,515
1,006
125
165
1,025
110
40
15
2,029
500
CCC4 (Continued)
(c)
COOKIE CREATIONS
December 31, 2013
Account
Cash..........................................................................
Accounts Receivable..............................................
Supplies...................................................................
Prepaid Insurance ..................................................
Equipment ...............................................................
Accumulated Depreciation, Equipment.................
Accounts Payable....................................................
Salaries and Wages Payable..................................
Unearned Service Revenue....................................
Interest Payable.......................................................
Notes Payable..........................................................
Owners Capital.......................................................
Debit
$1,180
875
350
1,210
1,200
$4,815
Credit
40
75
56
300
15
2,000
2,329
$4,815
4-109
BYP 4-1
FINANCIAL REPORTING PROBLEM
(a)
Total current assets were $44,988 million at September 24, 2011, and
$41,678 million at September 25, 2010.
(b)
Current assets are properly listed in the order of liquidity. As you will
learn in the next chapter, inventory is considered to be less liquid
than accounts receivable. Thus, it is listed below accounts receivable
and before prepaid expenses and other current assets.
(c)
The asset classifications are similar to the text: (1) current assets,
(2) investments, (3) property, plant, and equipment, and (4) intangible assets.
(d)
Apple reported $9,815 of cash and cash equivalents at September 24,

2011.
(e)
Total current liabilities were $27,970 million at September 24, 2011,

and $20,722 million at September 25, 2010.
4-110
BYP 4-2
(a)
COMPARATIVE ANALYSIS PROBLEM
(in millions)
1.
2.
3.
4.
Total current assets

Net property, plant & equipment
Total current liabilities
Total equity
PepsiCo
Coca-Cola
17,441
19,698
18,154
20,899
25,497
14,939
24,283
31,921
(b) PepsiCos current assets were 4% less than its current liabilities, while
Coca-Colas current assets were 5% greater than its current liabilities.
From this information, it appears that Coca-Cola is in a better liquidity
position than PepsiCo.
Coca-Colas equity represents a significantly larger percentage of total
$31,921
$20,899
assets 39.9% $79,974 than PepsiCos 28.7% $72,882 . As a result,
Coca-Cola has less debt relative to its total assets than PepsiCo. It
therefore appears that Coca-Cola is less likely to default on a debt
obligation.
4-111
BYP 4-3
(a)
1.
2.
3.
4.
COMPARATIVE ANALYSIS PROBLEM
(in millions)
Amazon
Wal-Mart
Total current assets

Net property, plant & equipment
Total current liabilities
Total stockholders (shareholders) equity
17,490
4,417
14,896
7,757
54,975
109,603
62,300
71,315
(b) Current assets are cash and other resources that are reasonably expected to be realized in cash or sold or consumed within one year or
the companys operating cycle, whichever is longer. Current liabilities
are obligations that are reasonably expected to be paid from existing
current assets or through the creation of other current liabilities.
Amazons current assets were 17% greater than its current liabilities,
while Wal-Marts current assets were 12% less than its current liabilities.
From this information, it appears that Amazon is in a better liquidity
position than Wal-Mart.
Wal-Marts stockholders equity represents a 20% larger percentage of
$71,315
$7,757
total assets 36.9% $193,406 than Amazons 30.7% $25,278 . As a
result, Wal-Mart has less debt relative to its total assets than Amazon. It
therefore appears that Wal-Mart is less likely to default on a debt
obligation.
4-112
BYP 4-4
REAL-WORLD FOCUS
The solution is dependent upon the companies chosen by the student.
4-113
BYP 4-5
(a)
DECISION MAKING ACROSS THE ORGANIZATION

WHITEGLOVES JANITORIAL SERVICE
Balance Sheet
December 31, 2014
Assets
Current assets
Cash.................................................
Accounts receivable
($9,000 + $3,700)..........................
Supplies ($5,200 $2,700)..............
Prepaid insurance ($4,800 X 2/3).......
Total current assets................
Equipment ($22,000 + $4,000).......
equipment
($4,000 + $2,000)..................
Delivery trucks
($34,000 + $5,000)........................
delivery trucks
($5,000 + $5,000)..................
Total assets..............................
$ 6,500
12,700
2,500
3,200
$24,900
$26,000
6,000
$20,000
39,000
10,000
29,000
49,000
$73,900
Current liabilities
Notes payable due within one year.................. $10,000
Accounts payable ($2,500 + $500)....................
3,000
Interest payable ($25,000 X 10% X 6/12)..........
1,250
Total current liabilities...............................
Notes payable, due July 1, 2016.......................
Total liabilities.............................................
Owners equity
Owners capital..................................................
Total liabilities and owners equity...........
4-114
$14,250
15,000
29,250
44,650*
$73,900
BYP 4-5 (Continued)

WHITEGLOVES JANITORIAL SERVICE
December 31, 2014
*Capital balance as reported..................................
Add: Earned but unbilled fees.............................
Less: Janitorial supplies used.............................
Insurance expired ($4,800 X 1/3)...............
Depreciation ($2,000 + $5,000)...................
Expenses incurred but unpaid..................
Interest accrued..........................................
Total......................................................
Capital balance as adjusted..................................
$2,700
1,600
7,000
500
1,250
$54,000
3,700
57,700
13,050
$44,650
(b) Whitegloves Janitorial Service met the terms of the bank loan because
current assets exceed current liabilities by $10,650 ($24,900 $14,250)
at December 31, 2014.
4-115
BYP 4-6
COMMUNICATION ACTIVITY
MEMO
To:
Accounting Instructor
From:
Student
Re:
Accounting Cycle
The required steps in the accounting cycle, in the order in which they
should be completed, are:
1.
2.
3.
4.
5.
6.
7.
8.
9.
Analyze business transactions.

Journalize the transactions.
Post to ledger accounts.
Prepare a trial balance.
Journalize and post adjusting entries.
Prepare an adjusted trial balance.
Prepare financial statements.
Journalize and post closing entries.
Prepare a post-closing trial balance.
The optional steps in the accounting cycle include preparing a worksheet

and preparing reversing entries. If a worksheet is prepared, it is done after
step 3 above, and it includes steps 4 and 6. The worksheet is a form used to
make it easier to prepare adjusting entries and financial statements. If reversing entries are prepared, they are journalized and posted after step 9,
at the beginning of the next accounting period. A reversing entry is the
exact opposite of a previously recorded adjusting entry and simplifies the
recording of subsequent transactions.
4-116
BYP 4-7
ETHICS CASE
(a) The stakeholders in this case are:

You, as controller.
Jeb Wilde, president.
Users of the companys financial statements.
(b) The ethical issue is the continued circulation of significantly misstated

financial statements. As controller, you have just issued misleading
financial statements. You have acted ethically by telling the companys
president. The president has reacted unethically by allowing the misleading financial statements to continue to circulate.
(c) As controller, you should impress upon the president the consequences
of having those misleading financial statements be detected by some
user or the SEC (if you are a public company). Also stress upon him
that you have a professional obligation to correct the statements or
to resign.
4-117
BYP 4-8
ALL ABOUT YOU
The following is a personal balance sheet using the classified presentation.

Note that the earnings from the part-time job as well as the tuition costs are
not listed since neither of those items is an asset, liability, or equity item.
Assets
Current assets
Cash...................................................................
Money market account.....................................
Certificate of deposit........................................
Accounts receivable from brother...................
Total current assets..................................
$1,200
1,800
3,000
300

Automobile........................................................
Video and stereo equipment............................
Home computer................................................
Total assets................................................
7,000
1,250
800
$ 6,300
9,050
$15,350

Current liabilities
Current portion of automobile loan................
Current portion of credit card payable...........
Total current liabilities..............................
Automobile loan................................................
Student loan......................................................
Credit card payable..........................................
Total long-term liabilities..........................
Total liabilities.....................................
Owners equity
Owners capital ($15,350 $12,300)................
Total liabilities and owners equity......
4-118
$1,500
150
4,000
5,000
1,650
$ 1,650
10,650
12,300
3,050
$15,350
BYP 4-9
(1)
(b)
FASB CODIFICATION ACTIVITY
1.
Current assets is used to designate cash and other assets or

resources commonly identified as those that are reasonably expected to be realized in cash or sold or consumed during the normal
operating cycle of the business.
2.
Current liabilities is used principally to designate obligations whose

liquidities is reasonably expected is require the use of existing
resource properly classified as current assets, or the creation of
other current liabilities.
Access FASB Codification 210-20-45

A right of setoff exists when all of the following conditions are met:
1.
Each of two parties owes the other determinable amounts.
2.
The reporting party has the right to set off the amount owed with
the amount owed by the other party.
3.
The reporting party intends to set off.
4.
The right of setoff is enforceable at law. As a result, a company may

not offset accounts payable against cash on its balance sheet.
4-119
IFRS EXERCISES
IFRS 4-1 The statement of financial position required under IFRS and the
balance sheet prepared under GAAP usually present the same information
regarding a companys assets, liabilities, and stockholders equity at a point
in time. IFRS does not dictate a specific order but most companies list
noncurrent items before current. Differences in ordering are
IFRS
Statement of Financial
Position presentation
Noncurrent assets
Current assets
Equity
Noncurrent liabilities
Current liabilities
GAAP
Balance Sheet
presentation
Current assets
Noncurrent assets
Current liabilities
Noncurrent liabilities
Stockholders equity
Under IFRS, current assets are usually listed in the reverse order of liquidity.
IFRS 4-2 IFRS uses the term statement of financial position rather than
balance sheet.
IFRS 4-3
SUNDELL COMPANY
Partial Statement of Financial Position
Current assets
Prepaid insurance....................................................................
Supplies.....................................................................................
Accounts receivable.................................................................
Debt investments......................................................................
Cash...........................................................................................
Total....................................................................................
4-120
3,600
5,200
12,500
6,700
15,400
43,400
IFRS 4-4
GLARUS COMPANY
Partial Statement of Financial Position
December 31, 2014
Property, plant and equipment
Equipment....................................................
equip..................................................
Long-term investments
Share Investments.......................................
Current assets
Inventory.......................................................
Accounts receivable....................................
Debt investments.........................................
Cash..............................................................
Total assets..........................................................
CHF21,700
5,700
CHF16,000
6,500
2,900
4,300
120
13,400
CHF43,220
20,720
4-121
IFRS 4-5
(a)
LESSILA BOWLING ALLEY

Statement of Financial Position
December 31, 2014
Assets

Land................................................
Buildings........................................
Less: Acc. depr.buildings.........
Equipment......................................
Less: Acc. depr.equipment.......
Current assets
Prepaid insurance.........................
Accounts receivable......................
Cash................................................
Total assets............................................
$128,800
42,600
62,400
18,720
$64,000
86,200
43,680
4,680
14,520
18,040
$193,880
37,240
$231,120
Equity and Liabilities
Equity
Owners capital ($115,000 + $3,440*).........
Non-current liabilities
Notes payable..............................................
Current liabilities
Current portion of notes payable...............
Interest payable...........................................
Total equity and liabilities..................................
$118,440
83,880
13,900
12,300
2,600
28,800
$231,120
*Net income = $14,180 $780 $7,360 $2,600 = $3,440

IFRS 4-6 It is possible to compare liquidity and solvency for companies
using different currencies. The ratios that are used to do so, such as the
current ratio and debt to assets ratio, indicate relative amounts of assets
and liabilities rather than absolute monetary values.
4-122
IFRS 4-7
INTERNATIONAL COMPARATIVE ANALYSIS PROBLEM
Differences in the format of the statement of financial position (balance

sheet) used by Zetar and Apple include the following
1.
2.
3.
4.
5.
6.
7.
Zetar
Apple
Non-current assets listed first

Goodwill listed before property,
plant and equipment
Current assets are shown in
reverse order of liquidity with
cash being last
Current liabilities are subtracted
from current assets to show net
current liabilities/assets
Total liabilities are subtracted
from total assets to show net
assets
The equity section uses Share
capital and Share premium
Reporting currency is (pounds)
Current assets listed first

listed before goodwill
Current assets are shown in
order of liquidity with cash being
first
No similar amount appears
No similar amount appears
The equity section uses Common
stock
Reporting currency is $ (dollars)
4-123
4-124

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Accounting Principles Chapter 4 Solution

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CHAPTER 4

Completing the Accounting Cycle

1A, 2A, 3A,

1B, 2B, 3B,

Explain the process

1A, 2A, 3A,

1B, 2B, 3B,

Describe the content and

1A, 2A, 3A,

1B, 2B, 3B,

State the required steps in

Explain the approaches

Identify the sections of a

14, 15, 16,

1A, 2A, 3A,

Prepare reversing entries.

1B, 2B, 3B,

ASSIGNMENT CHARACTERISTICS TABLE

Prepare worksheet, financial statements, and adjusting

Complete worksheet; prepare financial statements,

Prepare financial statements, closing entries, and postclosing trial balance.

Complete worksheet; prepare classified balance sheet,

Complete all steps in accounting cycle.

Analyze errors and prepare correcting entries and trial

Prepare worksheet, financial statements, and adjusting

Complete worksheet; prepare financial statements,

Prepare financial statements, closing entries, and postclosing trial balance.

Complete worksheet; prepare classified balance sheet,

Complete all steps in accounting cycle.

Comprehensive Problem: Chapters 2 to 4

WEYGANDT ACCOUNTING PRINCIPLES 11E

COMPLETING THE ACCOUNTING CYCLE (Continued)

*1. Prepare a worksheet.

*2. Explain the process of closing

*3. Describe the content and

*5. Explain the approaches to

*6. Identify the sections of

*7. Prepare reversing entries.

Broadening Your Perspective

All About You

BLOOMS TAXONOMY TABLE

(Dr) Individual revenue accounts and (Cr) Income Summary.

Questions Chapter 4 (Continued)

Liabilities and Owners Equity

SOLUTIONS TO BRIEF EXERCISES

BRIEF EXERCISE 4-4

BRIEF EXERCISE 4-2

BRIEF EXERCISE 4-5

BRIEF EXERCISE 4-6

BRIEF EXERCISE 4-6 (Continued)

Maintenance and Repairs Expense

BRIEF EXERCISE 4-7

Analyze business transactions.

Filling in the blanks, the answers are 4, 2, 8, 7, 5, 3, 9, 6, 1.

BRIEF EXERCISE 4-9

Accounts Payable ($1,750 $1,570)...................................

BRIEF EXERCISE 4-10

BRIEF EXERCISE 4-11

Income taxes payable

*BRIEF EXERCISE 4-12

Salaries and Wages Payable...................................... 2,100

SOLUTIONS FOR DO IT! REVIEW EXERCISES

Adj. Trial Balance

EXERCISE 4-3 (Continued)