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Chapter 4--Completing the Accounting Cycle

Student: ___________________________________________________________________________
1. After analyzing transactions, the next step would be to post the transactions in the ledger.
True False

2. The most important output of the accounting cycle is the financial statements.
True False

3. The work sheet is not considered a part of the formal accounting records.
True False

4. Cross-referencing is useful in assuring that the debits and credits are in balance.
True False

5. When accounts do not appear on the unadjusted trial balance but are needed to post adjustments, they are
simply added to the account title column.
True False

6. Once the adjusted trial balance is in balance, the flow of accounts will now go into the financial statements.
True False

7. There is really no benefit in preparing financial statements in any particular order.


True False

8. Round tripping is a fraudulent scheme where business A artificially inflates revenue by lending money to
customer B who uses that money to buy products from A.
True False

9. On the income statement, miscellaneous expenses are usually presented as the last item without regard to the
dollar amount.
True False

10. The usual presentation of the statement of owner's equity is (1) Beginning capital, (2) Net income or loss,
(3) Drawing, (4) Owner's contributions, (5) Ending capital.
True False

11. The difference between a classified balance sheet and one that is not classified is that the classified one has
subheadings.
True False

12. Cash and other assets that may reasonably be expected to be realized in cash, sold, or consumed through the
normal operations of a business, usually longer than one year, are called current assets.
True False

13. Prepaid Insurance is an example of a current asset.


True False

14. Land is an example of a plant asset.


True False

15. Liabilities that will be due within one year or less and that are to be paid out of current assets are called
current liabilities.
True False

16. The amount of the net income for a period appears on both the income statement and the balance sheet for
that period.
True False

17. Accrued taxes payable are generally reported on the balance sheet as a current liability.
True False

18. At the end of the fiscal period, prepaid expenses are reported on the income statement as expenses.
True False

19. Office Equipment is an example of a current asset account.


True False

20. Capital and Drawing are reported in the owner's equity section of the balance sheet.
True False

21. Deferred expenses that benefit a relatively short period of time are listed on the balance sheet as current
assets.
True False

22. Unearned revenues that will be earned in a relatively short period of time are listed on the balance sheet as
current assets.
True False

23. Accrued expenses are ordinarily listed on the balance sheet as current assets.
True False

24. Accrued revenues are ordinarily listed on the balance sheet as current liabilities.
True False

25. The income statement is prepared from the adjusted trial balance or the income statement columns on the
work sheet.
True False

26. Examples of temporary accounts are supplies and prepaid expenses which are in the ledger for just a short
time before they expire.
True False

27. Accumulated Depreciation is a permanent account.


True False

28. The drawing account is a temporary account.


True False

29. The balance sheet accounts are referred to as real or permanent accounts.
True False

30. Journalizing and posting the adjustments and closing entries updates the ledger for the new accounting
period.
True False

31. The income summary account is closed to the owner's capital account.
True False

32. The accumulated depreciation account is closed to the income summary account.
True False

33. The drawing account is closed to the income summary account.


True False

34. The trial balance prepared after all the closing entries have been posted is called a pre-closing trial balance.
True False

35. Entries required to close the balances of the temporary accounts at the end of the period are called final
entries.
True False

36. Journalizing and posting closing entries must be completed before financial statements can be prepared.
True False

37. During the closing process, some balance sheet accounts are closed and end the period with a zero balance.
True False

38. Closing entries are entered directly on to the work sheet.


True False

39. The post-closing trial balance will generally have fewer accounts than the trial balance.
True False

40. A post-closing trial balance contains only asset and liability accounts.
True False

41. A post-closing trial balance should be prepared before the financial statements are prepared.
True False

42. Assets, liabilities, and owners capital are real accounts and do not get closed at the end of the period.
True False

43. The income summary account is also known as the clearing account.
True False

44. All income statement accounts will be closed at the end of the period.
True False

45. Balance Sheet accounts are not considered real accounts.


True False

46. It is not necessary to post the closing entries to the general ledger.
True False

47. Once an account has been closed for the period, inserting a line in the balance columns zeros out the
account, making it ready for the following period.
True False

48. The last step of the accounting cycle is to prepare a post-closing trial balance.
True False

49. The accounting cycle begins with preparing an unadjusted trial balance.
True False

50. Financial statements should be prepared before the closing entries are journalized and posted.
True False

51. The unadjusted, adjusted, and final trial balances are prepared during the accounting cycle of a period.
True False

52. Any twelve-month accounting period adopted by a company is known as its fiscal year.
True False

53. A fiscal year that ends when business activities have reached their lowest point is called the natural business
year.
True False

54. All companies must use a calendar year as their fiscal year.
True False

55. The majority of businesses end their fiscal year on December 31.
True False

56. The balances of the capital accounts from the Adjusted Trial Balance of the work sheet are extended to the
Statement of Owners Equity columns.
True False

57. The work sheet is a working paper that accountants can use to summarize adjusting entries and the account
balances for the financial statements.
True False

58. In a computerized accounting system, a work sheet may not be necessary because the software program
automatically posts entries to the accounts and prepares financial statements.
True False

59. The trial balance may be listed on the work sheet instead of being prepared separately.
True False

60. The totals of the Adjusted Trial Balance columns on a work sheet will always be the sum of the Trial
Balance column totals and the Adjustments column totals.
True False

61. A work sheet heading is dated for a period of time.


True False

62. On the work sheet, the capital and drawing account balances are extended to the Balance Sheet columns.
True False

63. After the account balances have been extended from the Adjusted Trial Balance columns on the work sheet,
the difference between the initial totals of the Balance Sheet debit and credit columns is Net Income or Net
Loss.
True False

64. After Net Income or Loss is entered on the work sheet, the debit column total must equal the credit column
total for the Balance Sheet pair of columns.
True False

65. A net loss is shown on the work sheet in the credit columns of both the Income Statement columns and the
Balance Sheet columns.
True False

66. Net income is shown on the work sheet in the Income Statement debit column and the Balance Sheet credit
column.
True False

67. If the totals of the Income Statement debit and credit columns of a work sheet are $27,000 and $29,000,
respectively, after all account balances have been extended, the amount of the net loss is $2,000.
True False

68. The worksheet and the financial statements both require dollar signs.
True False

69.
The balance in the capital account on the worksheet will equal the amount presented in the balance sheet.
True False

70. Since the adjustments are entered on the work sheet, it is not necessary to record them in the journal or post
them to the ledger.
True False

71. The chart of accounts, the journal, and the ledger are essential parts of the accounting system.
True False

72. The closing process is sometimes referred to as closing the books.


True False

73. Accounts reported on the balance sheet that are carried forward from year to year are known as permanent
accounts.
True False

74. Real accounts are not permanent accounts.


True False

75. In the accounting cycle, the last step is


A. preparing the financial statements
B. journalizing and posting the adjusting entries
C. preparing a post-closing trial balance
D. journalizing and posting the closing entries

76. During the end-of-period processing which of the following best describes the logical order of this process
A. Preparation of adjustments, adjusted trial balance, financial statements
B. Preparation of Income Statement, adjusted trial balance, Balance Sheet
C. Preparation of adjusted trial balance, cross-referencing, journalizing
D. Preparation of adjustments, adjusted trial balance, posting

77. What is the major difference between the Unadjusted Trial Balance and the Adjusted Trial Balance?
A. The Adjusted Trial Balance will show the net income (loss) as an additional account.
B. Unlike the Adjusted Trial Balance, the Unadjusted Trial Balance will continue with the end-of-period
processing even if it is not in balance.
C. The Adjusted Trial Balance includes the postings of the adjustments for the period in the balance of the
accounts.
D. The Adjusted Trial Balance will be used to record the adjustments for the period.

78. Once the adjusting entries are posted, the Adjusted Trial Balance is prepared to
A. verify that the debits and credits are in balance.
B. verify that the net income correctly flows into the statement of owners equity from the income statement
C. verify that the net income (loss) is correct for the period.
D. verify the correct flow of accounts into the financial statements.

79. When preparing the statement of owner's equity, the beginning capital balance can always be found
A. in the Income Statement columns of the work sheet
B. in the statement of cash flows
C. in the general ledger
D. in the Balance Sheet columns of the work sheet

80. Accumulated Depreciation appears on the


A. balance sheet in the current assets section
B. balance sheet in the property, plant and equipment section
C. balance sheet in the long-term liabilities section
D. income statement as an operating expense

81. Notes Receivable due in 350 days appear on the


A. balance sheet in the current assets section
B. balance sheet in the fixed assets section
C. balance sheet in the current liabilities section
D. income statement as an expense

82. Unearned Fees appear on the


A. balance sheet in the current assets section
B. balance sheet as a current liability
C. balance sheet in the owner's equity section
D. income statement as revenue

83. Which one of the fixed asset accounts listed below will not have a related contra asset account?
A. Office Equipment
B. Land
C. Delivery Equipment
D. Building

84. Prepaid insurance is reported on the balance sheet as a


A. current asset
B. fixed asset
C. current liability
D. long-term liability

85. The income statement is prepared from:


A. the adjusted trial balance.
B. the income statement columns of the work sheet.
C. either the adjusted trial balance or the income statement columns of the work sheet.
D. both the adjusted trial balance and the income statement columns of the work sheet.

86. Round-tripping is when


A. a selling company sells to a customer company with huge discounts.
B. a selling company pretends to sell to a fictitious company with the intent of inflating revenues
C. a selling company lends money to a customer company to increase assets.
D. a selling company lends money to a customer company to be used to purchase goods from the selling
company.

87. The Statement of Owners Equity should be prepared


A. before the income statement and after the balance sheet
B. before the income statement and balance sheet
C. after the income statement and balance sheet
D. after the income statement and before the balance sheet

88. The income statement should be prepared


A. before the statement of owners equity and balance sheet
B. after the statement of owners equity and before the balance sheet
C. after the statement of owners equity and balance sheet
D. after the balance sheet and before the statement of owners equity

89. Use the following information in the adjusted trial balance for Stockton Company to answer the following
questions.

Stockton Company
Adjusted Trial Balance
For the Year ended December 31, 20XX
Cash
Accounts Receivable
Prepaid Expenses
Equipment
Accumulated Depreciation
Accounts Payable
Notes Payable
Bob Steely, Capital
Bob Steely, Withdrawals
Fees Earned
Wages Expense
Rent Expense
Utilities Expense
Depreciation Expense
Miscellaneous Expense
Totals

$ 6,530
2,100
700
13,700
$ 1,100
1,900
4,300
12,940
790
9,250
2,500
1,960
775
250
185
$29,490

$29,490

Determine the net income (loss) for the period.

A. Net Income $9,250


B. Net Loss $790
C. Net Loss $5,670
D. Net Income $3,580
90. Use the following information in the adjusted trial balance for Stockton Company to answer the following
questions.

Stockton Company
Adjusted Trial Balance
For the Year ended December 31, 20XX
Cash
Accounts Receivable
Prepaid Expenses
Equipment
Accumulated Depreciation
Accounts Payable
Notes Payable
Bob Steely, Capital
Bob Steely, Withdrawals
Fees Earned
Wages Expense
Rent Expense
Utilities Expense
Depreciation Expense
Miscellaneous Expense
Totals

Determine the Owners Equity ending balance for the period.

A. $12,150
B. $15,730
C. $6,480
D. $21,400

$ 6,530
2,100
700
13,700
$ 1,100
1,900
4,300
12,940
790
9,250
2,500
1,960
775
250
185
$29,490

$29,490

91. Use the following information in the adjusted trial balance for Stockton Company to answer the following
questions.

Stockton Company
Adjusted Trial Balance
For the Year ended December 31, 20XX
Cash
Accounts Receivable
Prepaid Expenses
Equipment
Accumulated Depreciation
Accounts Payable
Notes Payable
Bob Steely, Capital
Bob Steely, Withdrawals
Fees Earned
Wages Expense
Rent Expense
Utilities Expense
Depreciation Expense
Miscellaneous Expense
Totals

$ 6,530
2,100
700
13,700
$ 1,100
1,900
4,300
12,940
790
9,250
2,500
1,960
775
250
185
$29,490

$29,490

Determine total assets.

A. $24,130
B. $15,830
C. $21,930
D. $23,030
92. Use the following information in the adjusted trial balance for Stockton Company to answer the following
questions.

Stockton Company
Adjusted Trial Balance
For the Year ended December 31, 20XX
Cash
Accounts Receivable
Prepaid Expenses
Equipment
Accumulated Depreciation
Accounts Payable
Notes Payable
Bob Steely, Capital
Bob Steely, Withdrawals
Fees Earned
Wages Expense
Rent Expense
Utilities Expense
Depreciation Expense
Miscellaneous Expense
Totals

$ 6,530
2,100
700
13,700
$ 1,100
1,900
4,300
12,940
790
9,250
2,500
1,960
775
250
185
$29,490

$29,490

Determine the current assets.

A. $23,030
B. $9,330
C. $21,930
D. $8,630
93. Use the following information in the adjusted trial balance for Stockton Company to answer the following
questions.

Stockton Company
Adjusted Trial Balance
For the Year ended December 31, 20XX
Cash
Accounts Receivable
Prepaid Expenses
Equipment
Accumulated Depreciation
Accounts Payable
Notes Payable
Bob Steely, Capital
Bob Steely, Withdrawals
Fees Earned
Wages Expense
Rent Expense
Utilities Expense
Depreciation Expense
Miscellaneous Expense
Totals

$ 6,530
2,100
700
13,700
$ 1,100
1,900
4,300
12,940
790
9,250
2,500
1,960
775
250
185
$29,490

Determine the total liabilities for the period.

A. $1,900
B. $6,200
C. $4,300
D. $20,240
94. The Balance Sheet should be prepared
A. before the income statement and the statement of owners equity
B. before the income statement and after the statement of owners equity
C. after the income statement and the statement of owners equity
D. after the income statement and before the statement of owners equity

$29,490

95. The Statement of Owners Equity begins with the beginning balance followed by
A. plus Net Income (loss) less withdrawals
B. plus Net Income (loss) plus investments
C. plus investments less withdrawals
D. plus investments plus Net Income (loss) less withdrawals

96. The Income Statement will include the following accounts


A. Revenues less Expenses (ordered largest to smallest amount) with Miscellaneous Expense listed last
B. Revenues less Expenses (ordered smallest to largest amounts) with Miscellaneous Expense listed last
C. Revenues less Expenses (ordered in alphabetical order)
D. Revenues less Expenses (order is not important)

97. The classified Balance Sheet will subsection the assets section as follows
A. Current Assets and Other Assets
B. Current Assets and Property, Plant, and Equipment
C. Current Assets and Short-Term Assets
D. Other Assets and Property, Plant and Equipment

98. The classified Balance Sheet will divide its Liabilities Section as the following subsections
A. Current Liabilities and Long-Term Liabilities
B. Current Liabilities and Other Liabilities
C. Other Liabilities and Long-Term Liabilities
D. Present Liabilities and Tomorrows Liabilities

99. Short-term liabilities are those liabilities that


A. will be paid in less than one year
B. are due to be paid in 5 to 10 years
C. are due to be paid in more than one year
D. are owed to the owner and will never be paid

100. Owners Equity is


A. added to assets and the two are equal to liabilities
B. added to liabilities and the two are equal to assets
C. subtracted from liabilities and the net amount is equal to assets
D. equal to the total of assets and liabilities

101. Balance sheet accounts


A. represent amounts accumulated during a specific period of time
B. are called real accounts
C. have zero balances after the closing entries have been posted
D. are not affected by adjustments

102. On which financial statement will Income Summary be shown?


A. Statement of Owners Equity
B. Balance Sheet
C. Income Statement
D. No financial statement

103. Which of the following is not true about closing entries?


A. There are four closing entries that update the owners equity account.
B. After the second closing entry, the income summary account is equal to the net income or (loss) for the
period.
C. All real accounts are closed at the end of the period.
D. By closing nominal accounts at the end of the period to zero, it is possible to isolate next periods
information correctly.

104. The income summary account is also called


A. the imprest account
B. the clearing account
C. the adjustments account
D. the helpful account

105. After posting the second closing entry to the income summary account, the balance will be equal to
A. zero.
B. owners equity.
C. revenues for the period
D. the net income or (loss) for the period.

106. What is the last account that should be listed in the Post Closing Trial Balance?
A. Income Summary
B. Capital account
C. Cash
D. Fees Earned

107. Which of the following account groups are all considered nominal accounts?
A. Cash, Owners Equity, Wages Payable
B. Prepaid Insurance, Property, Plant & Equipment, Fees Earned
C. Capital Account, Dividend Account, Income Summary
D. Rent Revenue, Fees Earned, Miscellaneous Expense

108. There are four closing entries. The first one is to close ____, the second one is to close ____, the third one
is to close ____, and the last one is to close ____.
A. Revenues, expenses, income summary, drawing account
B. Expenses, assets, income summary, capital account
C. Capital account, drawing account, income summary, assets
D. Drawing account, income summary, expenses, revenues

109. Closing entries


A. need not be journalized if adjusting entries are prepared
B. need not be posted if the financial statements are prepared from the work sheet
C. are not needed if adjusting entries are prepared
D. must be journalized and posted

110. Closing entries are dated in the journal as of


A. the date they are actually journalized, although they are generally prepared after the end of the accounting
period
B. the last day of the accounting period, although they are actually journalized after the end of the accounting
period
C. the first day of the accounting period, although they are actually journalized after the end of the accounting
period
D. the first day of the subsequent accounting period

111. Which of the accounts below would be closed by posting a debit to the account?
A. Unearned Revenue
B. Fees Earned
C. Josh Morton, Drawing
D. Miscellaneous Expense

112. Which of the following accounts should be closed to Income Summary at the end of the fiscal year?
A. Supplies Expense
B. Accumulated Depreciation
C. Prepaid Insurance
D. Unearned Rent

113. Which of the following accounts will not be closed to Income Summary at the end of the fiscal year?
A. Salaries Expense
B. Fees Earned
C. Unearned Rent
D. Depreciation Expense

114. Which of the following accounts will be closed to the Capital account at the end of the fiscal year?
A. Rent Expense
B. Fees Earned
C. Income Summary
D. Depreciation Expense

115. The entry to close the appropriate insurance account at the end of the accounting period is
A. debit Income Summary; credit Prepaid Insurance
B. debit Prepaid Insurance; credit Income Summary
C. debit Insurance Expense; credit Income Summary
D. debit Income Summary; credit Insurance Expense

116. Which of the following accounts ordinarily appears in the post-closing trial balance?
A. Fees Earned
B. Supplies Expense
C. Zane White, Drawing
D. Unearned Rent

117. The post-closing trial balance differs from the adjusted trial balance in that it
A. does not take into account closing entries
B. does not take into account adjusting entries
C. does not include balance sheet accounts
D. does not include income statement accounts

118. The following accounts were taken from the Adjusted Trial Balance columns of the work sheet:

Accumulated Depreciation
Fees Earned
Depreciation Expense
Insurance Expense
Prepaid Insurance
Supplies
Supplies Expense

$ 3,200
17,400
1,300
200
4,800
900
3,800

Net income for the period is

A. $3,200
B. $12,100
C. $17,400
D. $8,900
119. A summary of selected ledger accounts appear below for Albertos Plumbing Services for the current
calendar year end.

Alberto, Capital
12/31

8,500

1/1
12/31

6,500
15,000

Alberto, Drawing
6/30
11/30

3,500
5,000

12/31

8,500

Income Summary
12/31
12/31

18,500
15,000

12/31

33,500

Net income for the period is

A. $13,000
B. $33,500
C. $15,000
D. $18,500
120. Amir Designs purchased a one-year liability insurance policy on March 1st of this year for $7,200 and
recorded it as a prepaid expense. Which of the following amounts would be recorded for insurance expense
during the adjusting process at the end of Amirs first month of operations on March 31st?
A. $7,200
B. $720
C. $600
D. $6,600

121. The journal entry to close the Fees Earned, $750, and Rent Revenue, $175, accounts on December 31st
during the closing process would be:
A. Dec. 31 Fees Earned
750
Rent Revenue
175
Income Summary
925
B. Dec. 31 Income Summary
925
Fees Earned
750
Rent Revenue
175
C. Dec. 31 Revenues
925
Income Summary
925
D. Dec. 31 Income Summary
925
Revenues
925

122. Use the following worksheet to answer the following questions.

Account Title
Cash
Accounts Receivable
Supplies
Equipment
Accumulated Depr-Equip
Accounts Payable
Wages Payable
C. Finley, Capital
C. Finley, Drawing
Fees Earned
Wages Expense
Rent Expense
Depreciation Expense
Totals
Net Income (Loss)

Finley Company
Worksheet
For the Year
Ended December
31, 2014
Adjusted Trial Income Statement
Balance
Debit
Credit
48,000
18,000
6,000
57,000
18,000
25,000
6,000
33,000
3,000
155,000
63,000
27,000
15,000
237,000
237,000

Balance Sheet
Debit

Credit

Debit
48,000
18,000
6,000
57,000

Credit

18,000
25,000
6,000
33,000
3,000
155,000
63,000
27,000
15,000
105,000
50,000
155,000

The journal entry to close revenues would be:

A. debit Income Summary $155,000, credit Fees Earned $155,000


B. debit C. Finley, Capital $155,000, credit Fees Earned $155,000
C. debit Fees Earned $155,000; credit Income Summary $155,000
D. credit Fees Earned $155,000; credit C. Finley, Capital $155,000

155,000

132,000

155,000

132,000

82,000
50,000
132,000

123. Use the following worksheet to answer the following questions.

Account Title
Cash
Accounts Receivable
Supplies
Equipment
Accumulated Depr-Equip
Accounts Payable
Wages Payable
C. Finley, Capital
C. Finley, Drawing
Fees Earned
Wages Expense
Rent Expense
Depreciation Expense
Totals
Net Income (Loss)

Finley Company
Worksheet
For the Year
Ended December
31, 2014
Adjusted Trial Income Statement
Balance
Debit
Credit
48,000
18,000
6,000
57,000
18,000
25,000
6,000
33,000
3,000
155,000
63,000
27,000
15,000
237,000
237,000

Balance Sheet
Debit

Credit

Debit
48,000
18,000
6,000
57,000

Credit

18,000
25,000
6,000
33,000
3,000
155,000
63,000
27,000
15,000
105,000
50,000
155,000

Based on the preceding trial balance, the entry to close expenses would be:

A. Wages Expense
63,000
Rent Expense
27,000
Depreciation Expense 15,000
Income Summary
105,000
B. Expenses
105,000
Income Summary
105,000
C. Wages Expense
63,000
Rent Expense
27,000
Depreciation Expense 15,000
C. Finley, Drawing
105,000
D. Income Summary
105,000
Wages Expense
63,000
Rent Expense
27,000
Depreciation Expense 15,000
124. Use the following worksheet to answer the following questions.

Finley Company
Worksheet
For the Year
Ended December
31, 2014
Adjusted Trial Income Statement Balance Sheet
Balance

155,000

132,000

155,000

132,000

82,000
50,000
132,000

Account Title
Cash
Accounts Receivable
Supplies
Equipment
Accumulated Depr-Equip
Accounts Payable
Wages Payable
C. Finley, Capital
C. Finley, Drawing
Fees Earned
Wages Expense
Rent Expense
Depreciation Expense
Totals
Net Income (Loss)

Debit
48,000
18,000
6,000
57,000

Credit

Debit

Credit

Debit
48,000
18,000
6,000
57,000

18,000
25,000
6,000
33,000

18,000
25,000
6,000
33,000

3,000

3,000
155,000

63,000
27,000
15,000
237,000

Credit

237,000

155,000
63,000
27,000
15,000
105,000
50,000
155,000

155,000

132,000

155,000

132,000

Credit

Debit
48,000
18,000
6,000
57,000

82,000
50,000
132,000

Based on the preceding trial balance, the entry to close income summary would be:

A. debit C. Finley, Capital $50,000; credit Income Summary $50,000


B. debit Income Summary $155,000; credit C. Finley, Capital $155,000
C. debit Income Summary $50,000, credit C. Finley, Capital $50,000
D. debit C. Finley, Capital $9,000; credit Income Summary $9,000
125. Use the following worksheet to answer the following questions.

Account Title
Cash
Accounts Receivable
Supplies
Equipment
Accumulated Depr-Equip
Accounts Payable
Wages Payable
C. Finley, Capital
C. Finley, Drawing
Fees Earned
Wages Expense
Rent Expense
Depreciation Expense
Totals
Net Income (Loss)

Finley Company
Worksheet
For the Year
Ended December
31, 2014
Adjusted Trial Income Statement
Balance
Debit
Credit
48,000
18,000
6,000
57,000
18,000
25,000
6,000
33,000
3,000
155,000
63,000
27,000
15,000
237,000
237,000

Balance Sheet
Debit

Credit

18,000
25,000
6,000
33,000
3,000
155,000
63,000
27,000
15,000
105,000
50,000
155,000

155,000

132,000

155,000

132,000

82,000
50,000
132,000

Based on the preceding trial balance, the entry to close C. Finley, Drawing would be:

A. debit C. Finley, Capital $3,000, credit C. Finley, Drawing $3,000


B. debit C. Finley, Capital $12,000, credit C. Finley, Drawing $12,000
C. debit C. Finley, Drawing $3,000; credit C. Finley, Capital $3,000
D. debit C. Finley, Drawing $12,000; credit C. Finley, Capital $12,000
126. Use the following worksheet to answer the following questions.

Account Title
Cash
Accounts Receivable
Supplies
Equipment
Accumulated Depr-Equip
Accounts Payable
Wages Payable
C. Finley, Capital
C. Finley, Drawing
Fees Earned
Wages Expense
Rent Expense
Depreciation Expense
Totals
Net Income (Loss)

Finley Company
Worksheet
For the Year
Ended December
31, 2014
Adjusted Trial Income Statement
Balance
Debit
Credit
48,000
18,000
6,000
57,000
18,000
25,000
6,000
33,000
3,000
155,000
63,000
27,000
15,000
237,000
237,000

Balance Sheet
Debit

Debit
48,000
18,000
6,000
57,000

Credit

18,000
25,000
6,000
33,000
3,000
155,000
63,000
27,000
15,000
105,000
50,000
155,000

Based on the preceding trial balance, the ending balance in C. Finley, Capital is:

A. $33,000
B. $80,000
C. $30,000
D. $83,000

Credit

155,000

132,000

155,000

132,000

82,000
50,000
132,000

127. The proper sequence of steps in the accounting cycle is as follows


A. analyze and record transactions, post transaction to the ledger, prepare a trial balance, prepare financial
statements, journalize closing entries, analyze adjustment data and prepare adjusting entries
B. prepare a trial balance, analyze adjustment data, prepare adjusting entries, prepare financial statements,
journalize closing entries and post to the ledger, analyze and record transactions, post transactions to the ledger
C. analyze and record transactions, post transactions to the ledger, prepare a trial balance, analyze adjustment
data, prepare adjusting entries, prepare financial statements, journalize closing entries and post to the ledger,
and finally prepare a post-closing trial balance
D. prepare financial statements, journalize closing entries and post to the ledger, analyze and record
transactions, post transactions to the ledger, prepare a trial balance, analyze adjustment data, prepare adjusting
entries

128. The following are steps to the accounting cycle. Of the following, which step should be done first?
A. Closing entries are journalized and posted to the ledger.
B. Transactions are posted to the ledger.
C. Adjusting entries are journalized and posted to the ledger.
D. Financial statements are prepared.

129. The following are steps in the accounting cycle. Of the following, which would be prepared last?
A. An adjusted trial balance is prepared.
B. Transactions are posted to the ledger.
C. An unadjusted trial balance is prepared.
D. Adjusting entries are journalized and posted to the ledger.

130. The accounting cycle requires three trial balances be done. In what order should they be prepared?
A. Post-closing, unadjusted, adjusted
B. Unadjusted, post-closing, adjusted
C. Unadjusted, adjusted, post-closing
D. Post-closing, adjusted, unadjusted

131. The fiscal year selected by companies


A. is the same as the calendar year
B. begins with the first day of the month and ends on the last day of the twelfth month
C. must always begin on January 1
D. will change each year

132. A fiscal year


A. ordinarily begins on the first day of a month and ends on the last day of the following twelfth month
B. for a business is determined by the federal government
C. always begins on January 1 and ends on December 31 of the same year
D. should end at the height of the business's annual operating cycle

133. The natural business year


A. is a fiscal year that ends when business activities are at its lowest point.
B. is a calendar year that ends when business activities are at its lowest point.
C. is a fiscal year that ends when business activities are at its highest point.
D. is a calendar year that ends when business activities are at its highest point.

134. The worksheet


A. is an integral part of the accounting cycle
B. eliminates the need to rewrite the financial statements
C. is a working paper that is required
D. is used to summarize account balances and adjustments for the financial statements

135. Which one of the steps below is not aided by the preparation of the work sheet?
A. preparing the adjusted trial balance
B. posting to the general ledger
C. preparing the financial statements
D. preparing the closing entries

136. A work sheet includes columns for


A. adjusting entries
B. closing entries
C. reversing entries
D. adjusting and closing entries

137. When a work sheet is complete, the adjustment columns should have
A. total credits greater than total debits if a net income was earned
B. total debits greater than total credits if a net loss was incurred
C. total debits greater than total credits if a net income was earned
D. total debits equal total credits

138. The difference between the totals of the debit and credit columns of the Adjusted Trial Balance columns on
a work sheet
A. is the amount of net income or loss
B. indicates there is an error on the work sheet
C. is the amount of retained earnings
D. is the difference between revenue and expenses

139. Net income appears on the work sheet in the


A. debit column of the Balance Sheet columns
B. debit column of the Adjustments columns
C. debit column of the Income Statement columns
D. credit column of the Income Statement columns

140. A net loss appears on the work sheet in the


A. debit column of the Balance Sheet columns
B. credit column of the Balance Sheet columns
C. debit column of the Income Statement columns
D. credit column of the Adjustments columns

141. After net income is entered on the work sheet, the Balance Sheet debit and credit columns must
A. be the same amount as the total amount of the Income Statement debit and credit columns
B. equal each other
C. be the same amount as the total amount in the Adjusted Trial Balance debit and credit columns
D. not be equal to each other and need not be the same total amounts as any other pair of columns on the work
sheet

142. Which of the statements below indicates that a company earned a net income for the period?
A. The sum of the credits exceeds the sum of the debits in the Balance Sheet columns on the work sheet.
B. The sum of the credits exceeds the sum of the debits in the Income Statement columns on the work sheet.
C. The sum of the debits exceeds the sum of the credits in the Income Statement columns on the work sheet.
D. Cash inflows exceeded cash outflows.

143. Which of the items below would appear in the Income Statement columns of the work sheet?
A. Equipment
B. Unearned Fees
C. Prepaid Expense
D. Net Loss

144. Which of the accounts below would not appear in the balance sheet columns of the worksheet?
A. Chad Daniels, Drawing
B. Rent Earned
C. Unearned Revenue
D. Chad Daniels, Drawing and Unearned Revenue

145. Which of the accounts below would appear in the Balance Sheet columns of the work sheet?
A. Service Revenue
B. Prepaid Rent
C. Supplies Expense
D. None are correct

146. The work sheet at the end of July has $5,950 in the Balance Sheet credit column for Accumulated
Depreciation. The work sheet at the end of August has $7,600 in the Balance Sheet credit column for
Accumulated Depreciation. What was the amount of the depreciation expense adjustment for the month of
August?
A. amount can not be determined
B. $7,600
C. $5,950
D. $1,650

147. Which of the items below does not appear on the work sheet?
A. adjusting entries
B. the unadjusted trial balance
C. closing entries
D. the drawing account

148. An indication that the work sheet columns are in balance and the work sheet is completed is
A. the word "Total" is written at the bottom of each pair of columns
B. each pair of columns is double underlined
C. each pair of columns has the totals circled
D. the final figures are written in ink

149. After all of the account balances have been extended to the Balance Sheet columns of the work sheet, the
totals of the debit and credit columns are $38,755 and $32,735, respectively. What is the amount of net income
or net loss for the period?
A. $6,020 net income
B. $38,755 net loss
C. $6,020 net loss
D. $32,735 net income

150. After all of the account balances have been extended to the Income Statement columns of the work sheet,
the totals of the debit and credit columns are $77,500 and $83,900, respectively. What is the amount of the net
income or net loss for the period?
A. $6,400 net income
B. $6,400 net loss
C. $83,900 net income
D. $77,500 net loss

151. On September 1, the company pays rent for twelve months in advance and debits an asset account. At
year end, the adjusting entry on the work sheet would
A. increase an expense account
B. decrease a liability account
C. increase an asset account
D. decrease an expense account

152. On March 1, a company collects revenue in advance for the next twelve months and credits a liability
account. The adjusting entry at year end on the work sheet would
A. increase a liability account
B. decrease an asset account
C. decrease a revenue account
D. decrease a liability account

153. Which of the following is not an essential part of the accounting records?
A. The journal
B. The ledger
C. The chart of accounts
D. The work sheet

154. After all of the account balances have been extended to the Balance Sheet columns of the work sheet, the
totals of the debit and credit columns show debits of $37,686 and the credits of $41,101. This indicates that
A. neither net income or loss can be calculated because it is found on the income statement
B. the company has a net loss of $3,415 for the period
C. the company has a net income of $3,415 for the period
D. The amounts are out of balance and need to be corrected

155. The income statement columns in the worksheet show that debits are equal to $55,800 and credits are
$67,520. What does this information mean to the accountant?
A. Net income of $11,720
B. Net loss of $11,720
C. The accounts are out of balance, indicating an error has been made.
D. The accounts have not been updated.

156. Bob Evans owns a business, Beachside Realty, that rents condominiums and furnishings. Below is the
adjusted trial balance at December 31, 2014.

Cash
Accounts receivable
Interest receivable
Prepaid insurance
Notes receivable (long-term)
Equipment
Accumulated depreciation
Accounts payable
Accrued expenses payable
Income taxes payable
Unearned rent fees
Bob Evans, Capital
Bob Evans, Drawing
Rent fees earned
Furniture rental revenue
Interest revenue
Wages expense
Depreciation expense
Utilities expense
Insurance expense
Maintenance expense
Income tax expense

Debit
$ 1,500
2,000
100
1,600
2,800
15,000

Credit

$3,000
2,400
3,920
2,700
500
7,700
2,000
37,000
1,200
100
19,000
1,800
320
700
9,000
2,700
$58,520

$58,520

The entry required to close the revenue accounts at the end of the period includes a:

A. debit to Income Summary for $37,000


B. credit to Income Summary for $38,300
C. debit to Income Summary for $38,200
D. credit to Income Summary for $37,000

157. Bob Evans owns a business, Beachside Realty, that rents condominiums and furnishings. Below is the
adjusted trial balance at December 31, 2014.

Cash
Accounts receivable
Interest receivable
Prepaid insurance
Notes receivable (long-term)
Equipment
Accumulated depreciation
Accounts payable
Accrued expenses payable
Income taxes payable
Unearned rent fees
Bob Evans, Capital
Bob Evans, Drawing
Rent fees earned
Furniture rental revenue
Interest revenue
Wages expense
Depreciation expense
Utilities expense
Insurance expense
Maintenance expense
Income tax expense

Debit
$ 1,500
2,000
100
1,600
2,800
15,000

Credit

$3,000
2,400
3,920
2,700
500
7,700
2,000
37,000
1,200
100
19,000
1,800
320
700
9,000
2,700
$58,520

$58,520

The entry required to close the expense accounts at the end of the period includes a:

A. a debit to Income Summary for $35,520


B. a credit to Income Summary for $35,520
C. a debit to Income Summary for $33,520
D. a credit to Income Summary for $33,520

158. The balances for the accounts listed below appear in the Adjusted Trial balance columns of the
end-of-period spreadsheet (work sheet). Indicate whether each balance should be extended to an Income
Statement column or (b) a Balance Sheet column.
1.
2.
3.
4.
5.
6.
7.
8.

Dobson, Capital
Dobson, Drawing
Depreciation Expense
Accumulated Depreciation
Fees earned
Unearned Fees
Supplies
Supplies Expense

159. The end-of-period spreadsheet (work sheet) for the current year for Jamal Company shows Balance Sheet
columns with a debit total of $630,430 and a credit total of $614,210. This is before the amount for net
income or net loss has been included. In preparing the income statement from work sheet, what is the amount
of net income or net loss?

160. Morgan Olsen owns and operates Crystal Pool Service Company. On January 1, 2014, Morgan Olsen,
Capital had a balance of $252,000. During the year Morgan invested an additional $32,000 and withdrew
$52,400. For the year ended December 31, 2014 Crystal Pool Service Company reported a net income of
$73,200. Prepare a Statement of Owners Equity for the year ended December 31, 2014.

161. The following accounts appear in an adjusted trial balance of Brock Pool Service Company. Indicate
whether each account would be reported in the (a) current assets, (b) property, plant, and equipment, (c) current
liabilities, (d) long-term liabilities, or (e) owners equity section of the December 31, 2010, balance sheet of
Brock Pool Service Company.

1.
2.
3.
4.
5.
6.
7.
8.

Taylor Brock, Capital


Accumulated Depreciation
Unearned Revenues
Mortgage Payable
Equipment
Notes Payable (due in 2012)
Cash
Accounts Receivable

162. Describe a classified balance sheet.

163. List and describe the purpose of the four closing entries.

164. After the accounts have been adjusted at January 31, 2014, the end of the fiscal year, the following
balances are taken from the ledger of Taylor Pool Service Company:

Hope Taylor, Capital


Hope Taylor, Drawing
Fees Earned
Wages Expense
Rent Expense
Supplies Expense
Miscellaneous Expense

$349,000
5,000
124,600
29,000
43,000
7,300
5,700

Journalize the four entries required to close the accounts

165. Prior to adjustment at August 31, 2014, Salary Expense has a debit balance of $298,500. Salaries owed
but not paid as of the same date total $7,200.

Present
the
entries to
record
the
followin
g:
(1)
Accrued salaries as of August 31.
(2)
Closing of Salary Expense as of August 31.

166. The following are all the steps in the accounting cycle. List them in the order in which they should be
done.
- Closing entries are journalized and posted to the ledger.
- An unadjusted trial balance is prepared.
- An optional end-of-period spreadsheet (work sheet) is prepared.
- A post-closing trial balance is prepared.
- Adjusting entries are journalized and posted to the ledger.
- Transactions are analyzed and recorded in the journal.
- Adjustment data are assembled and analyzed.
- Financial statements are prepared.
- An adjusted trial balance is prepared.
- Transactions are posted to the ledger.

167. If working papers are not considered part of the formal accounting records, then why are they used?

168. Explain how net income or loss is determined by using the work sheet.

169. You evaluate loan requests as part of your job at Beach Front National Bank. One loan request you
received is from Surfer Dude Supplies, a small proprietorship. Tracy Roberts, the owner, is requesting $75,000
and brings you a trial balance (or Statement of Accounts) for his first year of operations ended December 31,
2010.
REQUIRED: While you are willing to work with Tracy, how would you explain to him that a complete set of
financial statements from his accountant would be more useful for evaluating the loan request?

170. You have just accepted your first job out of college, which requires you to evaluate loan requests at Beach
Front National Bank. The first loan request you receive is from Surfer Dude Enterprises, a small
proprietorship. Marty Monroe, the owner, is requesting $75,000 and brings you the following trial balance (or
Statement of Accounts) for his first year of operations ended December 31, 2010.
What three accounts do you think should be relabeled for greater clarity?

Surfer Dude Enterprises


Statement of Accounts
December 31, 2010
Cash
Billings Due from Others
Office Supplies
Trucks
Equipment
Amounts Owed to Others
Investment in Business
Service Revenues
Wages Expense
Rent Expense
Insurance Expense
Utilities Expenses
Miscellaneous Expenses

2,050
15,070
7,470
26,370
8,090
2,850
23,500
73,650
30,050
7,330
2,400
700
470
100,000

100,000

171. You have just accepted your first job out of college, which requires you to evaluate loan requests at Beach
Front National Bank. The first loan request you receive is from Surfer Dude Enterprises, a small
proprietorship. Marty Monroe, the owner, is requesting $75,000 and brings you the following trial balance (or
Statement of Accounts) for his first year of operations ended December 31, 2010.
Which of the following accounts do you think might need to be adjusted before an accurate set of financial
statements could be prepared?

Cash
Billings Due from Others
Office Supplies
Trucks
Equipment
Amounts Owed to Others
Investment in Business
Service Revenues
Wages Expense
Rent Expense
Insurance Expense
Utilities Expense
Miscellaneous Expenses

Surfer Dude Enterprises


Statement of Accounts
December 31, 2010
2,050
15,070
7,470
26,370
8,090
2,850
23,500
73,650
30,050
7,330
2,400
700
470
100,000

100,000

172. Hakik Enterprises offers rug cleaning services to business clients. Below is the trial balance for Hakik
Enterprises, which was prepared on the end of period spreadsheet (work sheet) for the year ended July 31,
2010.

Hakik Enterprises
End of Period Spreadsheet (Work
Sheet)
For the Year Ended July 31, 2010

Cash
Prepaid Insurance
Fees Receivable
Supplies
Equipment
Accum. Depreciation
Unearned Revenue
Accounts Payable
Wages Payable
Ramon Hakik, Capital
Ramon Hakik, Drawings
Service Revenue
Advertising Expense
Wage Expense
Insurance Expense
Supplies Expense
Depreciation Expense
Totals

Trial Balance Adjustments Adjusted


Trial Balance
Debit
Credit
Debit
Credit
36
12
56
12
60
12
20
32

Debit

Credit

84
4
80
28
20

228

228

REQUIRED: Enter the adjustment data in the work sheet for the transactions shown below and place the balances in the Adjusted Trial Balance
columns.
a) The equipment is estimated to last for 5 years with no salvage value. The asset will be depreciated evenly over its useful life. Record one
months depreciation.
b) Accrued Wages $2.
c) Unused supplies on hand $8.
d) Of the unearned revenue, 75% has been earned.
e) Unexpired insurance remaining at the end of the month, $9.

173. Hakik Enterprises offers rug cleaning services to business clients. Below are the adjustments data for the
year ended July 31, 2010. REQUIRED: Using this information along with the spreadsheet below, record the
adjusting entries in proper general journal form.
Adjustments:
a) The equipment is estimated to last for 5 years with no salvage value. The asset will be depreciated evenly
over its useful life. Please record one months depreciation.
b) Accrued Wages $2.
c) Unused supplies on hand $8.
d) Of the unearned revenue, 75% has been earned.
e) Unexpired insurance remaining at the end of the month, $9.

Hakik Enterprises
End of Period Spreadsheet (Work
Sheet)
For the Year Ended July 31, 2010

Cash
Prepaid Insurance
Fees Receivable
Supplies
Equipment
Accum. Deprec. - Equip
Unearned Revenue
Accounts Payable
Wages Payable
Ramon Hakik, Capital
Ramon Hakik, Drawings
Service Revenue
Advertising Expense
Wage Expense
Insurance Expense
Supplies Expense
Depreciation Expense
Totals

Trial Balance Adjustments Adjusted


Trial
Balance
Debit
Credit
Debit
36
12
56
12
60
12
20
32
84
4
80
28
20

228

228

Credit

Debit

Credit

174. Bob Evans owns a business, Beachside Realty, that rents condominiums and furnishings. Below is the
adjusted trial balance at December 31, 2010.

Cash
Accounts receivable
Interest receivable
Prepaid insurance
Notes receivable (long-term)
Equipment
Accumulated depreciation
Accounts payable
Accrued expenses payable
Income taxes payable
Unearned rent fees
Bob Evans, Capital
Bob Evans, Drawing
Rent fees earned
Furniture rental revenue
Interest revenue
Wages expense
Depreciation expense
Utilities expense
Insurance expense
Maintenance expense
Income tax expense
Total

Debit
$ 1,500
2,000
100
1,600
2,800
15,000

Credit

$3,000
2,400
3,920
2,700
500
7,700
2,000
37,000
1,200
100
19,000
1,800
320
700
9,000
2,700
$ 58,520

Prepare the entry required to close the revenue accounts at the end of the period.

$ 58,520

175. Bob Evans owns a business, Beachside Realty, that rents condominiums and furnishings. Below is the
adjusted trial balance at December 31, 2010.

Cash
Accounts receivable
Interest receivable
Prepaid insurance
Notes receivable (long-term)
Equipment
Accumulated depreciation
Accounts payable
Accrued expenses payable
Income taxes payable
Unearned rent fees
Bob Evans, Capital
Bob Evans, Drawing
Rent fees earned
Furniture rental revenue
Interest revenue
Wages expense
Depreciation expense
Utilities expense
Insurance expense
Maintenance expense
Income tax expense

Debit
$ 1,500
2,000
100
1,600
2,800
15,000

Credit

$3,000
2,400
3,920
2,700
500
7,700
2,000
37,000
1,200
100
19,000
1,800
320
700
9,000
2,700
$ 58,520

Prepare the entry required to close the expense accounts at the end of the period.

$ 58,520

176. Bob Evans owns a business, Beachside Realty, that rents condominiums and furnishings. Below is the
adjusted trial balance at December 31, 2010.

Cash
Accounts receivable
Interest receivable
Prepaid insurance
Notes receivable (long-term)
Equipment
Accumulated depreciation
Accounts payable
Accrued expenses payable
Income taxes payable
Unearned rent fees
Bob Evans, Capital
Bob Evans, Drawing
Rent fees earned
Furniture rental revenue
Interest revenue
Wages expense
Depreciation expense
Utilities expense
Insurance expense
Maintenance expense
Income tax expense

Debit
$ 1,500
2,000
100
1,600
2,800
15,000

Credit

$3,000
2,400
3,920
2,700
500
7,700
2,000
37,000
1,200
100
19,000
1,800
320
700
9,000
2,700
$ 58,520

$ 58,520

Prepare the closing entry required to transfer the income or loss at the end of the period.

177. Bob Evans owns a business, Beachside Realty, that rents condominiums and furnishings. Below is the
adjusted trial balance at December 31, 2010.

Cash
Accounts receivable
Interest receivable
Prepaid insurance
Notes receivable (long-term)
Equipment
Accumulated depreciation
Accounts payable
Accrued expenses payable
Income taxes payable
Unearned rent fees
Bob Evans, Capital
Bob Evans, Drawing
Rent fees earned
Furniture rental revenue
Interest revenue
Wages expense
Depreciation expense
Utilities expense
Insurance expense
Maintenance expense
Income tax expense

Debit
$ 1,500
2,000
100
1,600
2,800
15,000

Credit

$3,000
2,400
3,920
2,700
500
7,700
2,000
41,000
1,200
100
19,000
1,800
320
700
9,000
2,700
$ 58,520

Prepare the entry required to close the Drawing account at the end of the period.

$ 58,520

178. Each of the following transactions for Morrison Company requires an adjusting entry, which if omitted,
will overstate or understate assets, liabilities, owners equity, revenues, expenses, or net income. Indicate the
amount and direction of the misstatement that would result if the end of period adjusting entry suggested by the
transaction was omitted. Place your results in the table following the transactions and use (+) for overstate, (-)
for understate, and (NE) for no effect.
1. Morrison purchased supplies on December 1 for $900. On December 31, $350 of supplies were on hand.
2. Prepaid insurance had a debit balance of $5,400 on December 1, which represented a prepayment for 2 years
of insurance.
3. The unearned rent revenue account has a credit balance of $390 on December 1, which represents 3 months
rent.

Transaction
1.
2.
3.

Assets

Liabilities

Owners Equity

Revenues

Expenses

Net Income

179. The end-of-period spreadsheet (work sheet) for the current year for Jamal Company shows Balance Sheet
columns with a debit total of $614,210 and a credit total of $630,430. This is before the amount for net
income or net loss has been included. In preparing the income statement from work sheet, what is the amount
of net income or net loss?

180. Identify which of the following accounts should be closed with a debit or a credit to Income Summary at
the end of the fiscal year. If it is not closed to Income Summary, mark as n/a.
1. Utilities Payable
2. Utilities Expense
3. Supplies
4. Supplies Expense
5. Fees Earned
6. Unearned Fees
7. Accounts Receivable
8. Jason Hill, Drawing
9. Jason Hill, Capital
10. Accumulated Depreciation - Equipment
11. Depreciation Expense - Equipment
12. Equipment
13. Prepaid Insurance
14. Insurance Expense

181. The balances for the accounts listed below appeared in the Adjusted Trial Balance columns of the work
sheet. Indicate whether each balance should be extended to (a) the Income Statement columns or (b) the
Balance Sheet columns.

(1)
(2)
(3)
(4)
(5)
(6)

Salaries Payable
Fees Earned
Accounts Payable
Felipe Ramos, Capital
Supplies Expense
Unearned Rent

(7)
(8)
(9)
(10)
(11)
(12)

Felipe Ramos, Drawing


Equipment
Accounts Receivable
Accumulated Depreciation
Salary Expense
Depreciation Expense

182. Indicate whether each of the following would be reported in the financial statements as a(n) (a) current
asset, (b) current liability, (c) revenue, or (d) expense:

(1)
(2)
(3)
(4)

Supplies
Unearned Fees
Prepaid Advertising
Advertising Expense

(5)
(6)
(7)
(8)

Supplies Expense
Prepaid Insurance
Accounts Payable
Fees Earned

183. The following accounts were taken from the Adjusted Trial Balance columns of the work sheet for April
30, 2010 for Finnegan Co.:

Accumulated Depreciation
Fees Earned
Depreciation Expense
Rent Expense
Prepaid Insurance
Supplies
Supplies Expense

$ 32,000
78,000
7,250
34,000
6,000
400
1,800

Prepare an income statement.

184. The following revenue and expense account balances were taken from the Income Statement columns of
the work sheet for Fraser Services Co. for December 31, 2010:

Depreciation Expense
Insurance Expense
Miscellaneous Expense
Rent Expense
Service Revenue
Supplies Expense
Utilities Expense
Wages Expense

$ 4,950
2,900
1,200
24,000
92,500
3,150
5,000
63,750

Prepare an income statement.

185. The following data were taken from the Balance Sheet columns of the work sheet for April 30, 2010 for
Mackenzie Company:

Accumulated Depreciation-Trucks
Prepaid Rent
Supplies
Unearned Fees
Trucks
Cash
Mackenzie, Capital

$42,400
6,800
850
7,310
49,300
3,400
?

Prepare a classified balance sheet.

186. Indicate whether each of the following would be reported in the section of financial statements identified
as (a) current asset, (b) property, plant, and equipment, (c) current liability, (d) revenue, or (e) expense:

(1)
(2)
(3)
(4)
(5)
(6)
(7)
(8)
(9)

Automobile
Accumulated depreciation
Rent expense
Fees earned
Salaries payable
Prepaid rent
Store supplies
Advertising expense
Unearned rent

187. The following balance sheet contains errors.

Brock Morton Services Co.


Balance Sheet
For the Year Ended December 31, 2010
Assets
Current assets:
Cash
Accounts payable
Supplies
Prepaid insurance
Land
Total current assets

Property, plant, and equipment:


Building
Equipment
Total property, plant,
and equipment
Total assets

$ 7,170
7,500
2,590
800
24,000
$ 42,060

Liabilities
Current liabilities:
Accounts receivable
Accum. depr-building
Accum. depr-equipment
Net income

$ 10,000
12,525
7,340
11,500

Total liabilities

$ 41,365

Owner's Equity
Wages payable
Brock Morton, Capital
Total owner's equity

$43,700
29,250

1,500
88,645
$ 90,145

72,950
$131,510

Total liabilities and


owner's equity

(a) List the errors in the balance sheet above and (b) prepare a corrected balance sheet.

$131,510

188. The following is the adjusted trial balance for Nadia Company.

Nadia Company
Adjusted Trial Balance
December 31, 2014
Cash
Accounts Receivable
Prepaid Expenses
Equipment
Accumulated Depreciation
Accounts Payable
Notes Payable - Due on June 30, 2011
Nadia Porter, Capital
Nadia Porter, Drawing
Fees Earned
Wages Expense
Rent Expense
Utilities Expense
Depreciation Expense
Miscellaneous Expense
Totals

5,130
3,300
420
12,400
2,200
700
3,070
13,000
700
10,930
2,450
1,900
1,475
1,150
975
29,900

29,900

Prepare an Income Statement, Balance Sheet, and Statement of Owners Equity. Assume that the capital account started with a beginning balance of
$10,000.

189. Prepare an income statement and a statement of owners equity, for the month ended August 31, 2014,
from the following T-Accounts of Marley Company.

Prepaid
Insurance

Accou
nts
Receiv
able

1,100
200

Unearned
Revenues

5,400
800

Wages
Payable

1,400
400

480

Marley,
Capital

Marley
,
Drawin
g
6,500
2,800
5,780

Income
Summary

Fees Earned

3,200

3,995
5,780

3,200

9,775

3,200

7,500
2,000
275
9,775

Wages
Expense

Rent
Expens
e

2,200
425

Insurance
Expense
990

Utilities
Expense
285

990

95
285

95

2,625

190. Prepare an income statement and a statement of owners equity for the month ended September 30, 2010
from the T-accounts below of Carson Company.

Prepaid
Insurance

Accou
nts
Receiv
able

1,400

1,600
400

120

Carson,
Capital

Carson
,
Drawin
g
6,800
2,500

610
2,400

Unearned
Revenues

Wages
Payable

1,200

435

4,150

3,300
500
350

200

Income
Summary

Fees Earned

2400

4,760

2,400

610
4,150

Wages
Expense

Rent
Expens
e

3,200
225

Insurance
Expense
1,130

Utilities
Expense
80

1,130

125
80

125

3,425

191. Selected ledger accounts appear below for Fulton Surveying Services for 2014.

Fulton,
Capital
12/31

25,000

Income
Summary
12/31
19,000
12/31
48,000

Fulton,
Drawing
1/1
12/31

12/31

Prepare a statement of owner's equity.

20,000
48,000

67,000

3/31
12/22

12,000
13,000

12/31

25,000

192. On the basis of the following data taken from the Adjusted Trial Balance columns of the work sheet for the
year ended March 31 for Boles Athletic Company, journalize the four closing entries.

Cash
Accounts Receivable
Supplies
Equipment
Accumulated Depreciation
Accounts Payable
Jason Boles, Capital
Jason Boles, Drawing
Fees Earned
Salary Expense
Rent Expense
Depreciation Expense
Supplies Expense
Miscellaneous Expense

$ 30,000
45,200
5,000
169,900
$ 32,000
12,500
71,600
47,000
510,000
244,500
48,000
25,000
9,500
2,000
$626,100

$626,100

193. After all adjustments have been made, but before the accounts have been closed, the following balances
were taken from the ledger of Ramonas Designs:

Accounts Payable
Accounts Receivable
Accumulated Depreciation
Cash
Depreciation Expense
Equipment
Insurance Expense
Prepaid Insurance

$ 27,600
64,500
73,325
17,150
13,500
165,000
2,510
6,275

Journalize the entries to close the appropriate accounts.

Rent Expense
Salary Expense
Salaries Payable
Service Revenue
Supplies
Supplies Expense
Ramona Cross, Capital
Ramona Cross, Drawing

$ 32,700
41,390
8,150
186,000
1,500
2,500
99,950
48,000

194. On the basis of the following information taken from the Adjusted Trial Balance columns of the work
sheet for the month ended September 30th, journalize the closing entries for Perez Roofing Company.
Cash
Accounts Receivable
Office Supplies
Repair Parts
Machinery
Accumulated Depreciation
Accounts Payable
Notes Payable
Sam Perez, Capital
Sam Perez, Drawing
Service Revenue
Wages Expense
Office Supplies Expense
Repair Parts Expense
Depreciation Expense

$22,500.00
3,575.00
2,850.00
3,785.00
17,750.00
3,250.00
1,150.00
6,500.00
2,500.00
1,750.00
47,200.00
4,840.00
1,275.00
925.00
1,350.00
$60,600.00

$60,600.00

195. The following adjusted trial balance is the result of the adjustments made at the end of the month of March
for Erik Martin Company. Utilize these adjusted values to perform the closing entries for Erik Martin Company.
Cash
Accounts Receivable
Office Supplies
Store Supplies
Machinery
Accumulated Depreciation
Accounts Payable
Notes Payable
Erik Martin, Capital
Erik Martin, Drawing
Service Revenue
Wages Expense
Office Supplies Expense
Store Supplies Expense
Depreciation Expense

$24,750.00
5,750.00
3,525.00
4,785.00
9,750.00
2,150.00
3,550.00
7,500.00
19,725.00
6,250.00
36,500.00
6,425.00
1,465.00
5,150.00
1, 575.00
$69,425.00

________
$69,425.00

196. The following adjusted trial balance is the result of the adjustments made at the end of the month of July
for Ladonna Douglas Company. Utilize these adjusted values to perform the closing entries for Ladonna
Douglas Company.
Cash
Accounts Receivable
Office Supplies
Store Supplies
Machinery
Accumulated Depreciation
Accounts Payable
Notes Payable
Ladonna Douglas, Capital
Ladonna Douglas, Drawing
Service Revenue
Wages Expense
Rent Expense
Advertising Expense
Office Supplies Expense
Store Supplies Expense
Depreciation Expense

$34,750.00
9,750.00
2,525.00
4,785.00
10,750.00
2,150.00
14,300.00
11,500.00
53,725.00
13,250.00
41,500.00
37,425.00
3,000.00
2,750.00
1,465.00
2,150.00
575.00
$123,175.00

________
$123,175.00

197. Marcus Enterprises was started by Damien Marcus in 2010. During 2010, Damien Marcus invested
$8,000 in the business. Based on the following worksheet, prepare an income statement, statement of owners
equity, and balance sheet for Marcus Enterprises for the year ended December 31, 2010.
Marcus Enterprises
Worksheet
For the Year Ended December 31, 2010

Adjusted Trial
Balance

Income Statement Balance Sheet

Account Title
Cash
Accounts Receivable
Supplies
Equipment
Accumulated Depr-Equip
Accounts Payable
Wages Payable
Damien Marcus, Capital
Damien Marcus, Drawing
Fees Earned
Wages Expense
Rent Expense
Depreciation Expense
Totals
Net Income (Loss)

Debit
26,500
7,000
1,000
18,500

Credit

Debit

Credit

Debit
26,500
7,000
1,000
18,500

5,000
11,000
1,000
8,000

5,000
11,000
1,000
8,000

2,000

2,000
59,500

19,000
7,000
3,500
84,500

Credit

84,500

59,500
19,000
7,000
3,500
29,500
30,000
59,500

59,500

55,000

59,500

55,000

25,000
30,000
55,000

198. Prepare closing entries from the following work sheet.


Lakendra Enterprises
Worksheet
For the Year Ended December 31, 2010

Account Title
Cash
Accounts Receivable
Supplies
Equipment
Accumulated Depr-Equip
Accounts Payable
Wages Payable
Lakendra Thomas, Capital
Lakendra Thomas, Drawing
Fees Earned
Wages Expense
Rent Expense
Depreciation Expense
Totals
Net Income (Loss)

Adjusted Trial Income Statement


Balance
Debit
Credit
26,500
7,000
1,000
18,500
5,000
11,000
1,000
8,000
2,000
59,500
19,000
7,000
3,500
84,500
84,500

Balance Sheet
Debit

Credit

Debit
26,500
7,000
1,000
18,500

Credit

5,000
11,000
1,000
8,000
2,000
59,500
19,000
7,000
3,500
29,500
30,000
59,500

59,500

55,000

59,500

55,000

25,000
30,000
55,000

199. The following is the adjusted trial balance for Sandeep Company.

Sandeep Company
Adjusted Trial Balance
December 31, 2010
Cash
Accounts Receivable
Prepaid Expenses
Equipment
Accumulated Depreciation
Accounts Payable
Notes Payable
Rena Sandeep, Capital
Rena Sandeep, Drawing
Fees Earned
Wages Expense
Rent Expense
Utilities Expense
Depreciation Expense
Miscellaneous Expense
Totals

Prepare closing entries and the post closing trial balance.

8,130
3,300
2,750
10,400
2,200
2,700
1,000
11,200
4,870
36,600
12,450
4,900
3,475
2,150
1,275
53,700

53,700

200. Reconstruct the adjusting and closing entries from the following T-Accounts.

Prepaid
Insurance

Accou
nts
Receiv
able.

1,200

6,000
1,500
7,500

200
1,000

Madison
Cox, Capital

Unearned
Revenues

Madis
on
Cox,
Drawi
ng
7,000
5,280

Wages
Payable

1,350
915

Income
Summary

Fees Earned

2,100

4,655
5,280

2,100

2,100

530
530

435

9,935

0
10,180

8,000
1,500
435
9,935
0

Wages
Expense

Rent
Expens
e

2,600
530

Insurance
Expense
1,145

Utilities
Expense
200

1,145
3,130

180
200

180
0

201. Reconstruct adjusting and closing entries for the month ended September 30, 2010 from the T-accounts
below.

Prepaid
Insurance

Accou
nts
Receiv
able.

1,350
130
1,220

Unearned
Revenues

1,250
275
1,525

Wages
Payable

1,050
235
815

385
385

Mai Lui,
Capital

Mai
Lui,
Drawin
g
7,000

Income
Summary

Fees Earned

2,400

6,090

2,400

580
2,400

5,510

580

4,020

Wages
Expense

Insurance
Expense
1,880

Utilities
Expense
130

1,880
3,985

5,510

Rent
Expens
e

3,600
385

5,000
275
235

95
130

95
0

202.
1)

Dana Bowen
Company is
completing its
first year of
operations on
April 30,
2010. Reconstru
ct the entries for
the year ended
April 30, 2010
from the
T-accounts
below. Record
them as follows:
A - L Journal Entries
M- R Adjusting Journal Entries

2)

Balance and
prepare the
Income
Statement,
Statement of
Owners Equity,
and the Balance
Sheet from the
T-Accounts.

3)

Prepare the four


closing entries (S
- V).

4)

Prepare the
Post-Closing
Trial Balance.

Cash

Accou
nts
Receiv
able

6,500
900

Supplies

1,250
385

Prepaid
Insurance

870

1,940
540

725

870

225

400
420
1,940
2,500
50
350
930

Equipment

2,500

Accum
ulated
Deprec
iation

Accounts
Payable

130

Wages
Payable

Unearned
Revenues

Dana
Bowen
,
Capital
930

590

Fees Earned

Wages
Expens
e
900
1,250
2,500
385
590

Insurance
Expense

725

Dana
Bowen,
Drawing

Income
Summary

6,500
2,500

350

Rent
Expense

Supplies
Expense

420
225

Deprec
iation
Expens
e

400

540

Miscellaneo
us Expense

130

50

203. The balances in the ledger of Good Landscape Services as of January 31, 2014 before adjustments, are as
follows:

Cash
Supplies
Prepaid Insurance
Equipment
Accumulated
Depreciation

$ 6,750
3,900
8,400
41,750
9,950

Dalton Good, Capital


Dalton Good, Drawing
Service Revenue
Salary Expense
Rent Expense
Miscellaneous Expense

$29,775
3,425
56,300
24,300
6,000
1,500

Adjustment data are as follows: supplies on hand, January 31, $900; insurance expired for January, $1,100; depreciation on equipment for January,
$1,600; salaries accrued, January 31, $1,650.
(a)
(b)
(c)

Prepare a ten-column work sheet for Good Landscape Services for January, 2014.
On the basis of the work sheet in (a), present the following in good order: (1) income statement, (2) statement of owner's equity
(no additional investments were made during the month), and (3) balance sheet.
On the basis of the work sheet in (a), journalize the closing entries as of January 31, 2014.

204. Complete the following worksheet for Danilo Enterprises.


Danilo Enterprises
Worksheet
For the Year Ended December 31, 2010
Adjusted Trial
Balance

Account Title

Debit

Cash
Accounts Receivable
Supplies
Equipment
Accumulated Depr-Equip
Accounts Payable
Wages Payable
Tony Danilo, Capital
Tony Danilo, Drawing
Fees Earned
Wages Expense
Rent Expense
Depreciation Expense
Totals
Net Income (Loss)

14,500
7,500
500
20,500

Income Statement B
a
l
a
n
c
e

Credit

15,000
9,500
3,060
18,240
1,000
34,000
18,000
9,300
8,500
79,800

79,800

S
h
e
e
t
DCredit
e
b
i
t

Debit

Credit

Chapter 4--Completing the Accounting Cycle Key

1. After analyzing transactions, the next step would be to post the transactions in the ledger.
FALSE

2. The most important output of the accounting cycle is the financial statements.
TRUE

3. The work sheet is not considered a part of the formal accounting records.
TRUE

4. Cross-referencing is useful in assuring that the debits and credits are in balance.
FALSE

5. When accounts do not appear on the unadjusted trial balance but are needed to post adjustments, they are
simply added to the account title column.
TRUE

6. Once the adjusted trial balance is in balance, the flow of accounts will now go into the financial statements.
TRUE

7. There is really no benefit in preparing financial statements in any particular order.


FALSE

8. Round tripping is a fraudulent scheme where business A artificially inflates revenue by lending money to
customer B who uses that money to buy products from A.
TRUE

9. On the income statement, miscellaneous expenses are usually presented as the last item without regard to the
dollar amount.
TRUE

10. The usual presentation of the statement of owner's equity is (1) Beginning capital, (2) Net income or loss,
(3) Drawing, (4) Owner's contributions, (5) Ending capital.
FALSE

11. The difference between a classified balance sheet and one that is not classified is that the classified one has
subheadings.
TRUE

12. Cash and other assets that may reasonably be expected to be realized in cash, sold, or consumed through the
normal operations of a business, usually longer than one year, are called current assets.
FALSE

13. Prepaid Insurance is an example of a current asset.


TRUE

14. Land is an example of a plant asset.


TRUE

15. Liabilities that will be due within one year or less and that are to be paid out of current assets are called
current liabilities.
TRUE

16. The amount of the net income for a period appears on both the income statement and the balance sheet for
that period.
FALSE

17. Accrued taxes payable are generally reported on the balance sheet as a current liability.
TRUE

18. At the end of the fiscal period, prepaid expenses are reported on the income statement as expenses.
FALSE

19. Office Equipment is an example of a current asset account.


FALSE

20. Capital and Drawing are reported in the owner's equity section of the balance sheet.
FALSE

21. Deferred expenses that benefit a relatively short period of time are listed on the balance sheet as current
assets.
TRUE

22. Unearned revenues that will be earned in a relatively short period of time are listed on the balance sheet as
current assets.
FALSE

23. Accrued expenses are ordinarily listed on the balance sheet as current assets.
FALSE

24. Accrued revenues are ordinarily listed on the balance sheet as current liabilities.
FALSE

25. The income statement is prepared from the adjusted trial balance or the income statement columns on the
work sheet.
TRUE

26. Examples of temporary accounts are supplies and prepaid expenses which are in the ledger for just a short
time before they expire.
FALSE

27. Accumulated Depreciation is a permanent account.


TRUE

28. The drawing account is a temporary account.


TRUE

29. The balance sheet accounts are referred to as real or permanent accounts.
TRUE

30. Journalizing and posting the adjustments and closing entries updates the ledger for the new accounting
period.
TRUE

31. The income summary account is closed to the owner's capital account.
TRUE

32. The accumulated depreciation account is closed to the income summary account.
FALSE

33. The drawing account is closed to the income summary account.


FALSE

34. The trial balance prepared after all the closing entries have been posted is called a pre-closing trial balance.
FALSE

35. Entries required to close the balances of the temporary accounts at the end of the period are called final
entries.
FALSE

36. Journalizing and posting closing entries must be completed before financial statements can be prepared.
FALSE

37. During the closing process, some balance sheet accounts are closed and end the period with a zero balance.
FALSE

38. Closing entries are entered directly on to the work sheet.


FALSE

39. The post-closing trial balance will generally have fewer accounts than the trial balance.
TRUE

40. A post-closing trial balance contains only asset and liability accounts.
FALSE

41. A post-closing trial balance should be prepared before the financial statements are prepared.
FALSE

42. Assets, liabilities, and owners capital are real accounts and do not get closed at the end of the period.
TRUE

43. The income summary account is also known as the clearing account.
TRUE

44. All income statement accounts will be closed at the end of the period.
TRUE

45. Balance Sheet accounts are not considered real accounts.


FALSE

46. It is not necessary to post the closing entries to the general ledger.
FALSE

47. Once an account has been closed for the period, inserting a line in the balance columns zeros out the
account, making it ready for the following period.
TRUE

48. The last step of the accounting cycle is to prepare a post-closing trial balance.
TRUE

49. The accounting cycle begins with preparing an unadjusted trial balance.
FALSE

50. Financial statements should be prepared before the closing entries are journalized and posted.
TRUE

51. The unadjusted, adjusted, and final trial balances are prepared during the accounting cycle of a period.
FALSE

52. Any twelve-month accounting period adopted by a company is known as its fiscal year.
TRUE

53. A fiscal year that ends when business activities have reached their lowest point is called the natural business
year.
TRUE

54. All companies must use a calendar year as their fiscal year.
FALSE

55. The majority of businesses end their fiscal year on December 31.
TRUE

56. The balances of the capital accounts from the Adjusted Trial Balance of the work sheet are extended to the
Statement of Owners Equity columns.
FALSE

57. The work sheet is a working paper that accountants can use to summarize adjusting entries and the account
balances for the financial statements.
TRUE

58. In a computerized accounting system, a work sheet may not be necessary because the software program
automatically posts entries to the accounts and prepares financial statements.
TRUE

59. The trial balance may be listed on the work sheet instead of being prepared separately.
TRUE

60. The totals of the Adjusted Trial Balance columns on a work sheet will always be the sum of the Trial
Balance column totals and the Adjustments column totals.
FALSE

61. A work sheet heading is dated for a period of time.


TRUE

62. On the work sheet, the capital and drawing account balances are extended to the Balance Sheet columns.
TRUE

63. After the account balances have been extended from the Adjusted Trial Balance columns on the work sheet,
the difference between the initial totals of the Balance Sheet debit and credit columns is Net Income or Net
Loss.
TRUE

64. After Net Income or Loss is entered on the work sheet, the debit column total must equal the credit column
total for the Balance Sheet pair of columns.
TRUE

65. A net loss is shown on the work sheet in the credit columns of both the Income Statement columns and the
Balance Sheet columns.
FALSE

66. Net income is shown on the work sheet in the Income Statement debit column and the Balance Sheet credit
column.
TRUE

67. If the totals of the Income Statement debit and credit columns of a work sheet are $27,000 and $29,000,
respectively, after all account balances have been extended, the amount of the net loss is $2,000.
FALSE

68. The worksheet and the financial statements both require dollar signs.
FALSE

69.
The balance in the capital account on the worksheet will equal the amount presented in the balance sheet.
FALSE

70. Since the adjustments are entered on the work sheet, it is not necessary to record them in the journal or post
them to the ledger.
FALSE

71. The chart of accounts, the journal, and the ledger are essential parts of the accounting system.
TRUE

72. The closing process is sometimes referred to as closing the books.


TRUE

73. Accounts reported on the balance sheet that are carried forward from year to year are known as permanent
accounts.
TRUE

74. Real accounts are not permanent accounts.


FALSE

75. In the accounting cycle, the last step is


A. preparing the financial statements
B. journalizing and posting the adjusting entries
C. preparing a post-closing trial balance
D. journalizing and posting the closing entries

76. During the end-of-period processing which of the following best describes the logical order of this process
A. Preparation of adjustments, adjusted trial balance, financial statements
B. Preparation of Income Statement, adjusted trial balance, Balance Sheet
C. Preparation of adjusted trial balance, cross-referencing, journalizing
D. Preparation of adjustments, adjusted trial balance, posting

77. What is the major difference between the Unadjusted Trial Balance and the Adjusted Trial Balance?
A. The Adjusted Trial Balance will show the net income (loss) as an additional account.
B. Unlike the Adjusted Trial Balance, the Unadjusted Trial Balance will continue with the end-of-period
processing even if it is not in balance.
C. The Adjusted Trial Balance includes the postings of the adjustments for the period in the balance of the
accounts.
D. The Adjusted Trial Balance will be used to record the adjustments for the period.

78. Once the adjusting entries are posted, the Adjusted Trial Balance is prepared to
A. verify that the debits and credits are in balance.
B. verify that the net income correctly flows into the statement of owners equity from the income statement
C. verify that the net income (loss) is correct for the period.
D. verify the correct flow of accounts into the financial statements.

79. When preparing the statement of owner's equity, the beginning capital balance can always be found
A. in the Income Statement columns of the work sheet
B. in the statement of cash flows
C. in the general ledger
D. in the Balance Sheet columns of the work sheet

80. Accumulated Depreciation appears on the


A. balance sheet in the current assets section
B. balance sheet in the property, plant and equipment section
C. balance sheet in the long-term liabilities section
D. income statement as an operating expense

81. Notes Receivable due in 350 days appear on the


A. balance sheet in the current assets section
B. balance sheet in the fixed assets section
C. balance sheet in the current liabilities section
D. income statement as an expense

82. Unearned Fees appear on the


A. balance sheet in the current assets section
B. balance sheet as a current liability
C. balance sheet in the owner's equity section
D. income statement as revenue

83. Which one of the fixed asset accounts listed below will not have a related contra asset account?
A. Office Equipment
B. Land
C. Delivery Equipment
D. Building

84. Prepaid insurance is reported on the balance sheet as a


A. current asset
B. fixed asset
C. current liability
D. long-term liability

85. The income statement is prepared from:


A. the adjusted trial balance.
B. the income statement columns of the work sheet.
C. either the adjusted trial balance or the income statement columns of the work sheet.
D. both the adjusted trial balance and the income statement columns of the work sheet.

86. Round-tripping is when


A. a selling company sells to a customer company with huge discounts.
B. a selling company pretends to sell to a fictitious company with the intent of inflating revenues
C. a selling company lends money to a customer company to increase assets.
D. a selling company lends money to a customer company to be used to purchase goods from the selling
company.

87. The Statement of Owners Equity should be prepared


A. before the income statement and after the balance sheet
B. before the income statement and balance sheet
C. after the income statement and balance sheet
D. after the income statement and before the balance sheet

88. The income statement should be prepared


A. before the statement of owners equity and balance sheet
B. after the statement of owners equity and before the balance sheet
C. after the statement of owners equity and balance sheet
D. after the balance sheet and before the statement of owners equity

89. Use the following information in the adjusted trial balance for Stockton Company to answer the following
questions.

Stockton Company
Adjusted Trial Balance
For the Year ended December 31, 20XX
Cash
Accounts Receivable
Prepaid Expenses
Equipment
Accumulated Depreciation
Accounts Payable
Notes Payable
Bob Steely, Capital
Bob Steely, Withdrawals
Fees Earned
Wages Expense
Rent Expense
Utilities Expense
Depreciation Expense
Miscellaneous Expense
Totals

$ 6,530
2,100
700
13,700
$ 1,100
1,900
4,300
12,940
790
9,250
2,500
1,960
775
250
185
$29,490

$29,490

Determine the net income (loss) for the period.

A. Net Income $9,250


B. Net Loss $790
C. Net Loss $5,670
D. Net Income $3,580
90. Use the following information in the adjusted trial balance for Stockton Company to answer the following
questions.

Stockton Company
Adjusted Trial Balance
For the Year ended December 31, 20XX
Cash
Accounts Receivable
Prepaid Expenses
Equipment
Accumulated Depreciation
Accounts Payable
Notes Payable
Bob Steely, Capital
Bob Steely, Withdrawals
Fees Earned
Wages Expense
Rent Expense
Utilities Expense
Depreciation Expense
Miscellaneous Expense
Totals

Determine the Owners Equity ending balance for the period.

A. $12,150
B. $15,730
C. $6,480
D. $21,400

$ 6,530
2,100
700
13,700
$ 1,100
1,900
4,300
12,940
790
9,250
2,500
1,960
775
250
185
$29,490

$29,490

91. Use the following information in the adjusted trial balance for Stockton Company to answer the following
questions.

Stockton Company
Adjusted Trial Balance
For the Year ended December 31, 20XX
Cash
Accounts Receivable
Prepaid Expenses
Equipment
Accumulated Depreciation
Accounts Payable
Notes Payable
Bob Steely, Capital
Bob Steely, Withdrawals
Fees Earned
Wages Expense
Rent Expense
Utilities Expense
Depreciation Expense
Miscellaneous Expense
Totals

$ 6,530
2,100
700
13,700
$ 1,100
1,900
4,300
12,940
790
9,250
2,500
1,960
775
250
185
$29,490

$29,490

Determine total assets.

A. $24,130
B. $15,830
C. $21,930
D. $23,030
92. Use the following information in the adjusted trial balance for Stockton Company to answer the following
questions.

Stockton Company
Adjusted Trial Balance
For the Year ended December 31, 20XX
Cash
Accounts Receivable
Prepaid Expenses
Equipment
Accumulated Depreciation
Accounts Payable
Notes Payable
Bob Steely, Capital
Bob Steely, Withdrawals
Fees Earned
Wages Expense
Rent Expense
Utilities Expense
Depreciation Expense
Miscellaneous Expense
Totals

$ 6,530
2,100
700
13,700
$ 1,100
1,900
4,300
12,940
790
9,250
2,500
1,960
775
250
185
$29,490

$29,490

Determine the current assets.

A. $23,030
B. $9,330
C. $21,930
D. $8,630
93. Use the following information in the adjusted trial balance for Stockton Company to answer the following
questions.

Stockton Company
Adjusted Trial Balance
For the Year ended December 31, 20XX
Cash
Accounts Receivable
Prepaid Expenses
Equipment
Accumulated Depreciation
Accounts Payable
Notes Payable
Bob Steely, Capital
Bob Steely, Withdrawals
Fees Earned
Wages Expense
Rent Expense
Utilities Expense
Depreciation Expense
Miscellaneous Expense
Totals

$ 6,530
2,100
700
13,700
$ 1,100
1,900
4,300
12,940
790
9,250
2,500
1,960
775
250
185
$29,490

Determine the total liabilities for the period.

A. $1,900
B. $6,200
C. $4,300
D. $20,240
94. The Balance Sheet should be prepared
A. before the income statement and the statement of owners equity
B. before the income statement and after the statement of owners equity
C. after the income statement and the statement of owners equity
D. after the income statement and before the statement of owners equity

$29,490

95. The Statement of Owners Equity begins with the beginning balance followed by
A. plus Net Income (loss) less withdrawals
B. plus Net Income (loss) plus investments
C. plus investments less withdrawals
D. plus investments plus Net Income (loss) less withdrawals

96. The Income Statement will include the following accounts


A. Revenues less Expenses (ordered largest to smallest amount) with Miscellaneous Expense listed last
B. Revenues less Expenses (ordered smallest to largest amounts) with Miscellaneous Expense listed last
C. Revenues less Expenses (ordered in alphabetical order)
D. Revenues less Expenses (order is not important)

97. The classified Balance Sheet will subsection the assets section as follows
A. Current Assets and Other Assets
B. Current Assets and Property, Plant, and Equipment
C. Current Assets and Short-Term Assets
D. Other Assets and Property, Plant and Equipment

98. The classified Balance Sheet will divide its Liabilities Section as the following subsections
A. Current Liabilities and Long-Term Liabilities
B. Current Liabilities and Other Liabilities
C. Other Liabilities and Long-Term Liabilities
D. Present Liabilities and Tomorrows Liabilities

99. Short-term liabilities are those liabilities that


A. will be paid in less than one year
B. are due to be paid in 5 to 10 years
C. are due to be paid in more than one year
D. are owed to the owner and will never be paid

100. Owners Equity is


A. added to assets and the two are equal to liabilities
B. added to liabilities and the two are equal to assets
C. subtracted from liabilities and the net amount is equal to assets
D. equal to the total of assets and liabilities

101. Balance sheet accounts


A. represent amounts accumulated during a specific period of time
B. are called real accounts
C. have zero balances after the closing entries have been posted
D. are not affected by adjustments

102. On which financial statement will Income Summary be shown?


A. Statement of Owners Equity
B. Balance Sheet
C. Income Statement
D. No financial statement

103. Which of the following is not true about closing entries?


A. There are four closing entries that update the owners equity account.
B. After the second closing entry, the income summary account is equal to the net income or (loss) for the
period.
C. All real accounts are closed at the end of the period.
D. By closing nominal accounts at the end of the period to zero, it is possible to isolate next periods
information correctly.

104. The income summary account is also called


A. the imprest account
B. the clearing account
C. the adjustments account
D. the helpful account

105. After posting the second closing entry to the income summary account, the balance will be equal to
A. zero.
B. owners equity.
C. revenues for the period
D. the net income or (loss) for the period.

106. What is the last account that should be listed in the Post Closing Trial Balance?
A. Income Summary
B. Capital account
C. Cash
D. Fees Earned

107. Which of the following account groups are all considered nominal accounts?
A. Cash, Owners Equity, Wages Payable
B. Prepaid Insurance, Property, Plant & Equipment, Fees Earned
C. Capital Account, Dividend Account, Income Summary
D. Rent Revenue, Fees Earned, Miscellaneous Expense

108. There are four closing entries. The first one is to close ____, the second one is to close ____, the third one
is to close ____, and the last one is to close ____.
A. Revenues, expenses, income summary, drawing account
B. Expenses, assets, income summary, capital account
C. Capital account, drawing account, income summary, assets
D. Drawing account, income summary, expenses, revenues

109. Closing entries


A. need not be journalized if adjusting entries are prepared
B. need not be posted if the financial statements are prepared from the work sheet
C. are not needed if adjusting entries are prepared
D. must be journalized and posted

110. Closing entries are dated in the journal as of


A. the date they are actually journalized, although they are generally prepared after the end of the accounting
period
B. the last day of the accounting period, although they are actually journalized after the end of the accounting
period
C. the first day of the accounting period, although they are actually journalized after the end of the accounting
period
D. the first day of the subsequent accounting period

111. Which of the accounts below would be closed by posting a debit to the account?
A. Unearned Revenue
B. Fees Earned
C. Josh Morton, Drawing
D. Miscellaneous Expense

112. Which of the following accounts should be closed to Income Summary at the end of the fiscal year?
A. Supplies Expense
B. Accumulated Depreciation
C. Prepaid Insurance
D. Unearned Rent

113. Which of the following accounts will not be closed to Income Summary at the end of the fiscal year?
A. Salaries Expense
B. Fees Earned
C. Unearned Rent
D. Depreciation Expense

114. Which of the following accounts will be closed to the Capital account at the end of the fiscal year?
A. Rent Expense
B. Fees Earned
C. Income Summary
D. Depreciation Expense

115. The entry to close the appropriate insurance account at the end of the accounting period is
A. debit Income Summary; credit Prepaid Insurance
B. debit Prepaid Insurance; credit Income Summary
C. debit Insurance Expense; credit Income Summary
D. debit Income Summary; credit Insurance Expense

116. Which of the following accounts ordinarily appears in the post-closing trial balance?
A. Fees Earned
B. Supplies Expense
C. Zane White, Drawing
D. Unearned Rent

117. The post-closing trial balance differs from the adjusted trial balance in that it
A. does not take into account closing entries
B. does not take into account adjusting entries
C. does not include balance sheet accounts
D. does not include income statement accounts

118. The following accounts were taken from the Adjusted Trial Balance columns of the work sheet:

Accumulated Depreciation
Fees Earned
Depreciation Expense
Insurance Expense
Prepaid Insurance
Supplies
Supplies Expense

$ 3,200
17,400
1,300
200
4,800
900
3,800

Net income for the period is

A. $3,200
B. $12,100
C. $17,400
D. $8,900
119. A summary of selected ledger accounts appear below for Albertos Plumbing Services for the current
calendar year end.

Alberto, Capital
12/31

8,500

1/1
12/31

6,500
15,000

Alberto, Drawing
6/30
11/30

3,500
5,000

12/31

8,500

Income Summary
12/31
12/31

18,500
15,000

12/31

33,500

Net income for the period is

A. $13,000
B. $33,500
C. $15,000
D. $18,500
120. Amir Designs purchased a one-year liability insurance policy on March 1st of this year for $7,200 and
recorded it as a prepaid expense. Which of the following amounts would be recorded for insurance expense
during the adjusting process at the end of Amirs first month of operations on March 31st?
A. $7,200
B. $720
C. $600
D. $6,600

121. The journal entry to close the Fees Earned, $750, and Rent Revenue, $175, accounts on December 31st
during the closing process would be:
A. Dec. 31 Fees Earned
750
Rent Revenue
175
Income Summary
925
B. Dec. 31 Income Summary
925
Fees Earned
750
Rent Revenue
175
C. Dec. 31 Revenues
925
Income Summary
925
D. Dec. 31 Income Summary
925
Revenues
925

122. Use the following worksheet to answer the following questions.

Account Title
Cash
Accounts Receivable
Supplies
Equipment
Accumulated Depr-Equip
Accounts Payable
Wages Payable
C. Finley, Capital
C. Finley, Drawing
Fees Earned
Wages Expense
Rent Expense
Depreciation Expense
Totals
Net Income (Loss)

Finley Company
Worksheet
For the Year
Ended December
31, 2014
Adjusted Trial Income Statement
Balance
Debit
Credit
48,000
18,000
6,000
57,000
18,000
25,000
6,000
33,000
3,000
155,000
63,000
27,000
15,000
237,000
237,000

Balance Sheet
Debit

Credit

Debit
48,000
18,000
6,000
57,000

Credit

18,000
25,000
6,000
33,000
3,000
155,000
63,000
27,000
15,000
105,000
50,000
155,000

The journal entry to close revenues would be:

A. debit Income Summary $155,000, credit Fees Earned $155,000


B. debit C. Finley, Capital $155,000, credit Fees Earned $155,000
C. debit Fees Earned $155,000; credit Income Summary $155,000
D. credit Fees Earned $155,000; credit C. Finley, Capital $155,000

155,000

132,000

155,000

132,000

82,000
50,000
132,000

123. Use the following worksheet to answer the following questions.

Account Title
Cash
Accounts Receivable
Supplies
Equipment
Accumulated Depr-Equip
Accounts Payable
Wages Payable
C. Finley, Capital
C. Finley, Drawing
Fees Earned
Wages Expense
Rent Expense
Depreciation Expense
Totals
Net Income (Loss)

Finley Company
Worksheet
For the Year
Ended December
31, 2014
Adjusted Trial Income Statement
Balance
Debit
Credit
48,000
18,000
6,000
57,000
18,000
25,000
6,000
33,000
3,000
155,000
63,000
27,000
15,000
237,000
237,000

Balance Sheet
Debit

Credit

Debit
48,000
18,000
6,000
57,000

Credit

18,000
25,000
6,000
33,000
3,000
155,000
63,000
27,000
15,000
105,000
50,000
155,000

Based on the preceding trial balance, the entry to close expenses would be:

A. Wages Expense
63,000
Rent Expense
27,000
Depreciation Expense 15,000
Income Summary
105,000
B. Expenses
105,000
Income Summary
105,000
C. Wages Expense
63,000
Rent Expense
27,000
Depreciation Expense 15,000
C. Finley, Drawing
105,000
D. Income Summary
105,000
Wages Expense
63,000
Rent Expense
27,000
Depreciation Expense 15,000
124. Use the following worksheet to answer the following questions.

Finley Company
Worksheet
For the Year
Ended December
31, 2014
Adjusted Trial Income Statement Balance Sheet
Balance

155,000

132,000

155,000

132,000

82,000
50,000
132,000

Account Title
Cash
Accounts Receivable
Supplies
Equipment
Accumulated Depr-Equip
Accounts Payable
Wages Payable
C. Finley, Capital
C. Finley, Drawing
Fees Earned
Wages Expense
Rent Expense
Depreciation Expense
Totals
Net Income (Loss)

Debit
48,000
18,000
6,000
57,000

Credit

Debit

Credit

Debit
48,000
18,000
6,000
57,000

18,000
25,000
6,000
33,000

18,000
25,000
6,000
33,000

3,000

3,000
155,000

63,000
27,000
15,000
237,000

Credit

237,000

155,000
63,000
27,000
15,000
105,000
50,000
155,000

155,000

132,000

155,000

132,000

Credit

Debit
48,000
18,000
6,000
57,000

82,000
50,000
132,000

Based on the preceding trial balance, the entry to close income summary would be:

A. debit C. Finley, Capital $50,000; credit Income Summary $50,000


B. debit Income Summary $155,000; credit C. Finley, Capital $155,000
C. debit Income Summary $50,000, credit C. Finley, Capital $50,000
D. debit C. Finley, Capital $9,000; credit Income Summary $9,000
125. Use the following worksheet to answer the following questions.

Account Title
Cash
Accounts Receivable
Supplies
Equipment
Accumulated Depr-Equip
Accounts Payable
Wages Payable
C. Finley, Capital
C. Finley, Drawing
Fees Earned
Wages Expense
Rent Expense
Depreciation Expense
Totals
Net Income (Loss)

Finley Company
Worksheet
For the Year
Ended December
31, 2014
Adjusted Trial Income Statement
Balance
Debit
Credit
48,000
18,000
6,000
57,000
18,000
25,000
6,000
33,000
3,000
155,000
63,000
27,000
15,000
237,000
237,000

Balance Sheet
Debit

Credit

18,000
25,000
6,000
33,000
3,000
155,000
63,000
27,000
15,000
105,000
50,000
155,000

155,000

132,000

155,000

132,000

82,000
50,000
132,000

Based on the preceding trial balance, the entry to close C. Finley, Drawing would be:

A. debit C. Finley, Capital $3,000, credit C. Finley, Drawing $3,000


B. debit C. Finley, Capital $12,000, credit C. Finley, Drawing $12,000
C. debit C. Finley, Drawing $3,000; credit C. Finley, Capital $3,000
D. debit C. Finley, Drawing $12,000; credit C. Finley, Capital $12,000
126. Use the following worksheet to answer the following questions.

Account Title
Cash
Accounts Receivable
Supplies
Equipment
Accumulated Depr-Equip
Accounts Payable
Wages Payable
C. Finley, Capital
C. Finley, Drawing
Fees Earned
Wages Expense
Rent Expense
Depreciation Expense
Totals
Net Income (Loss)

Finley Company
Worksheet
For the Year
Ended December
31, 2014
Adjusted Trial Income Statement
Balance
Debit
Credit
48,000
18,000
6,000
57,000
18,000
25,000
6,000
33,000
3,000
155,000
63,000
27,000
15,000
237,000
237,000

Balance Sheet
Debit

Debit
48,000
18,000
6,000
57,000

Credit

18,000
25,000
6,000
33,000
3,000
155,000
63,000
27,000
15,000
105,000
50,000
155,000

Based on the preceding trial balance, the ending balance in C. Finley, Capital is:

A. $33,000
B. $80,000
C. $30,000
D. $83,000

Credit

155,000

132,000

155,000

132,000

82,000
50,000
132,000

127. The proper sequence of steps in the accounting cycle is as follows


A. analyze and record transactions, post transaction to the ledger, prepare a trial balance, prepare financial
statements, journalize closing entries, analyze adjustment data and prepare adjusting entries
B. prepare a trial balance, analyze adjustment data, prepare adjusting entries, prepare financial statements,
journalize closing entries and post to the ledger, analyze and record transactions, post transactions to the ledger
C. analyze and record transactions, post transactions to the ledger, prepare a trial balance, analyze adjustment
data, prepare adjusting entries, prepare financial statements, journalize closing entries and post to the ledger,
and finally prepare a post-closing trial balance
D. prepare financial statements, journalize closing entries and post to the ledger, analyze and record
transactions, post transactions to the ledger, prepare a trial balance, analyze adjustment data, prepare adjusting
entries

128. The following are steps to the accounting cycle. Of the following, which step should be done first?
A. Closing entries are journalized and posted to the ledger.
B. Transactions are posted to the ledger.
C. Adjusting entries are journalized and posted to the ledger.
D. Financial statements are prepared.

129. The following are steps in the accounting cycle. Of the following, which would be prepared last?
A. An adjusted trial balance is prepared.
B. Transactions are posted to the ledger.
C. An unadjusted trial balance is prepared.
D. Adjusting entries are journalized and posted to the ledger.

130. The accounting cycle requires three trial balances be done. In what order should they be prepared?
A. Post-closing, unadjusted, adjusted
B. Unadjusted, post-closing, adjusted
C. Unadjusted, adjusted, post-closing
D. Post-closing, adjusted, unadjusted

131. The fiscal year selected by companies


A. is the same as the calendar year
B. begins with the first day of the month and ends on the last day of the twelfth month
C. must always begin on January 1
D. will change each year

132. A fiscal year


A. ordinarily begins on the first day of a month and ends on the last day of the following twelfth month
B. for a business is determined by the federal government
C. always begins on January 1 and ends on December 31 of the same year
D. should end at the height of the business's annual operating cycle

133. The natural business year


A. is a fiscal year that ends when business activities are at its lowest point.
B. is a calendar year that ends when business activities are at its lowest point.
C. is a fiscal year that ends when business activities are at its highest point.
D. is a calendar year that ends when business activities are at its highest point.

134. The worksheet


A. is an integral part of the accounting cycle
B. eliminates the need to rewrite the financial statements
C. is a working paper that is required
D. is used to summarize account balances and adjustments for the financial statements

135. Which one of the steps below is not aided by the preparation of the work sheet?
A. preparing the adjusted trial balance
B. posting to the general ledger
C. preparing the financial statements
D. preparing the closing entries

136. A work sheet includes columns for


A. adjusting entries
B. closing entries
C. reversing entries
D. adjusting and closing entries

137. When a work sheet is complete, the adjustment columns should have
A. total credits greater than total debits if a net income was earned
B. total debits greater than total credits if a net loss was incurred
C. total debits greater than total credits if a net income was earned
D. total debits equal total credits

138. The difference between the totals of the debit and credit columns of the Adjusted Trial Balance columns on
a work sheet
A. is the amount of net income or loss
B. indicates there is an error on the work sheet
C. is the amount of retained earnings
D. is the difference between revenue and expenses

139. Net income appears on the work sheet in the


A. debit column of the Balance Sheet columns
B. debit column of the Adjustments columns
C. debit column of the Income Statement columns
D. credit column of the Income Statement columns

140. A net loss appears on the work sheet in the


A. debit column of the Balance Sheet columns
B. credit column of the Balance Sheet columns
C. debit column of the Income Statement columns
D. credit column of the Adjustments columns

141. After net income is entered on the work sheet, the Balance Sheet debit and credit columns must
A. be the same amount as the total amount of the Income Statement debit and credit columns
B. equal each other
C. be the same amount as the total amount in the Adjusted Trial Balance debit and credit columns
D. not be equal to each other and need not be the same total amounts as any other pair of columns on the work
sheet

142. Which of the statements below indicates that a company earned a net income for the period?
A. The sum of the credits exceeds the sum of the debits in the Balance Sheet columns on the work sheet.
B. The sum of the credits exceeds the sum of the debits in the Income Statement columns on the work sheet.
C. The sum of the debits exceeds the sum of the credits in the Income Statement columns on the work sheet.
D. Cash inflows exceeded cash outflows.

143. Which of the items below would appear in the Income Statement columns of the work sheet?
A. Equipment
B. Unearned Fees
C. Prepaid Expense
D. Net Loss

144. Which of the accounts below would not appear in the balance sheet columns of the worksheet?
A. Chad Daniels, Drawing
B. Rent Earned
C. Unearned Revenue
D. Chad Daniels, Drawing and Unearned Revenue

145. Which of the accounts below would appear in the Balance Sheet columns of the work sheet?
A. Service Revenue
B. Prepaid Rent
C. Supplies Expense
D. None are correct

146. The work sheet at the end of July has $5,950 in the Balance Sheet credit column for Accumulated
Depreciation. The work sheet at the end of August has $7,600 in the Balance Sheet credit column for
Accumulated Depreciation. What was the amount of the depreciation expense adjustment for the month of
August?
A. amount can not be determined
B. $7,600
C. $5,950
D. $1,650

147. Which of the items below does not appear on the work sheet?
A. adjusting entries
B. the unadjusted trial balance
C. closing entries
D. the drawing account

148. An indication that the work sheet columns are in balance and the work sheet is completed is
A. the word "Total" is written at the bottom of each pair of columns
B. each pair of columns is double underlined
C. each pair of columns has the totals circled
D. the final figures are written in ink

149. After all of the account balances have been extended to the Balance Sheet columns of the work sheet, the
totals of the debit and credit columns are $38,755 and $32,735, respectively. What is the amount of net income
or net loss for the period?
A. $6,020 net income
B. $38,755 net loss
C. $6,020 net loss
D. $32,735 net income

150. After all of the account balances have been extended to the Income Statement columns of the work sheet,
the totals of the debit and credit columns are $77,500 and $83,900, respectively. What is the amount of the net
income or net loss for the period?
A. $6,400 net income
B. $6,400 net loss
C. $83,900 net income
D. $77,500 net loss

151. On September 1, the company pays rent for twelve months in advance and debits an asset account. At
year end, the adjusting entry on the work sheet would
A. increase an expense account
B. decrease a liability account
C. increase an asset account
D. decrease an expense account

152. On March 1, a company collects revenue in advance for the next twelve months and credits a liability
account. The adjusting entry at year end on the work sheet would
A. increase a liability account
B. decrease an asset account
C. decrease a revenue account
D. decrease a liability account

153. Which of the following is not an essential part of the accounting records?
A. The journal
B. The ledger
C. The chart of accounts
D. The work sheet

154. After all of the account balances have been extended to the Balance Sheet columns of the work sheet, the
totals of the debit and credit columns show debits of $37,686 and the credits of $41,101. This indicates that
A. neither net income or loss can be calculated because it is found on the income statement
B. the company has a net loss of $3,415 for the period
C. the company has a net income of $3,415 for the period
D. The amounts are out of balance and need to be corrected

155. The income statement columns in the worksheet show that debits are equal to $55,800 and credits are
$67,520. What does this information mean to the accountant?
A. Net income of $11,720
B. Net loss of $11,720
C. The accounts are out of balance, indicating an error has been made.
D. The accounts have not been updated.

156. Bob Evans owns a business, Beachside Realty, that rents condominiums and furnishings. Below is the
adjusted trial balance at December 31, 2014.

Cash
Accounts receivable
Interest receivable
Prepaid insurance
Notes receivable (long-term)
Equipment
Accumulated depreciation
Accounts payable
Accrued expenses payable
Income taxes payable
Unearned rent fees
Bob Evans, Capital
Bob Evans, Drawing
Rent fees earned
Furniture rental revenue
Interest revenue
Wages expense
Depreciation expense
Utilities expense
Insurance expense
Maintenance expense
Income tax expense

Debit
$ 1,500
2,000
100
1,600
2,800
15,000

Credit

$3,000
2,400
3,920
2,700
500
7,700
2,000
37,000
1,200
100
19,000
1,800
320
700
9,000
2,700
$58,520

$58,520

The entry required to close the revenue accounts at the end of the period includes a:

A. debit to Income Summary for $37,000


B. credit to Income Summary for $38,300
C. debit to Income Summary for $38,200
D. credit to Income Summary for $37,000

157. Bob Evans owns a business, Beachside Realty, that rents condominiums and furnishings. Below is the
adjusted trial balance at December 31, 2014.

Cash
Accounts receivable
Interest receivable
Prepaid insurance
Notes receivable (long-term)
Equipment
Accumulated depreciation
Accounts payable
Accrued expenses payable
Income taxes payable
Unearned rent fees
Bob Evans, Capital
Bob Evans, Drawing
Rent fees earned
Furniture rental revenue
Interest revenue
Wages expense
Depreciation expense
Utilities expense
Insurance expense
Maintenance expense
Income tax expense

Debit
$ 1,500
2,000
100
1,600
2,800
15,000

Credit

$3,000
2,400
3,920
2,700
500
7,700
2,000
37,000
1,200
100
19,000
1,800
320
700
9,000
2,700
$58,520

$58,520

The entry required to close the expense accounts at the end of the period includes a:

A. a debit to Income Summary for $35,520


B. a credit to Income Summary for $35,520
C. a debit to Income Summary for $33,520
D. a credit to Income Summary for $33,520

158. The balances for the accounts listed below appear in the Adjusted Trial balance columns of the
end-of-period spreadsheet (work sheet). Indicate whether each balance should be extended to an Income
Statement column or (b) a Balance Sheet column.
1.
2.
3.
4.
5.
6.
7.
8.

Dobson, Capital
Dobson, Drawing
Depreciation Expense
Accumulated Depreciation
Fees earned
Unearned Fees
Supplies
Supplies Expense

1.
2.
3.
4.
5.
6.
7.
8.

Balance sheet column


Balance sheet column
Income statement column
Balance sheet column
Income statement column
Balance sheet column
Balance sheet column
Income statement column

159. The end-of-period spreadsheet (work sheet) for the current year for Jamal Company shows Balance Sheet
columns with a debit total of $630,430 and a credit total of $614,210. This is before the amount for net
income or net loss has been included. In preparing the income statement from work sheet, what is the amount
of net income or net loss?
A net income of $16,220

160. Morgan Olsen owns and operates Crystal Pool Service Company. On January 1, 2014, Morgan Olsen,
Capital had a balance of $252,000. During the year Morgan invested an additional $32,000 and withdrew
$52,400. For the year ended December 31, 2014 Crystal Pool Service Company reported a net income of
$73,200. Prepare a Statement of Owners Equity for the year ended December 31, 2014.

Crystal Pool Service Company


Statement of Owners Equity
For the Year Ended December 31, 2014
Morgan Olsen, Capital January 1, 2014
Additional investment during 2014
Total
Net Income
Less: Withdrawals
Increase in owners equity
Morgan Olsen, Capital, December 31, 2014

$252,000
32,000
$284,000
$ 73,200
(52,400)
20,800
$304,800

161. The following accounts appear in an adjusted trial balance of Brock Pool Service Company. Indicate
whether each account would be reported in the (a) current assets, (b) property, plant, and equipment, (c) current
liabilities, (d) long-term liabilities, or (e) owners equity section of the December 31, 2010, balance sheet of
Brock Pool Service Company.

1.
2.
3.
4.
5.
6.
7.
8.

1.
2.
3.
4.
5.
6.
7.
8.

Taylor Brock, Capital


Accumulated Depreciation
Unearned Revenues
Mortgage Payable
Equipment
Notes Payable (due in 2012)
Cash
Accounts Receivable

(e) Owners equity


(b) Property, plant and equipment
(c) Current liabilities
(d) Long-term liabilities
(b) Property, plant and equipment
(d) Long-term liabilities
(a) Current assets
(a) Current assets

162. Describe a classified balance sheet.


A classified balance sheet subsections assets as current assets and property, plant, and equipment. It also
subsections liabilities as current liabilities and long-term liabilities. It also includes the owner's equity section.

163. List and describe the purpose of the four closing entries.
1.
2.
3.
4.

Close revenues to income summary.


Close expenses to income summary.
Close income summary to capital account.
Close drawing account to capital account.

At the beginning of the next period, temporary accounts should have zero balances. To achieve a zero balance,
temporary account balances are transferred to permanent accounts at the end of the accounting period. The
entries that transfer these balances are called closing entries and the transfer process is called the closing
process.

164. After the accounts have been adjusted at January 31, 2014, the end of the fiscal year, the following
balances are taken from the ledger of Taylor Pool Service Company:

Hope Taylor, Capital


Hope Taylor, Drawing
Fees Earned
Wages Expense
Rent Expense
Supplies Expense
Miscellaneous Expense

$349,000
5,000
124,600
29,000
43,000
7,300
5,700

Journalize the four entries required to close the accounts


Jan 31

Fees Earned

124,600
Income Summary

31

Income
Summary

124,600
85,000

Wages Expense
Rent Expense
Supplies Expense
Miscellaneous Expense
31

Income
Summary

29,000
43,000
7,300
5,700
39,600

Hope Taylor, Capital


31

Hope Taylor,
Capital

39,600
5,000

Hope Taylor, Drawing

5,000

165. Prior to adjustment at August 31, 2014, Salary Expense has a debit balance of $298,500. Salaries owed
but not paid as of the same date total $7,200.

Present
the
entries to
record
the
followin
g:
(1)
Accrued salaries as of August 31.
(2)
Closing of Salary Expense as of August 31.

(1)

(2)

Salary Expense
Salaries Payable

7,200

Income Summary
Salary Expense

305,700

7,200

305,700

166. The following are all the steps in the accounting cycle. List them in the order in which they should be
done.
- Closing entries are journalized and posted to the ledger.
- An unadjusted trial balance is prepared.
- An optional end-of-period spreadsheet (work sheet) is prepared.
- A post-closing trial balance is prepared.
- Adjusting entries are journalized and posted to the ledger.
- Transactions are analyzed and recorded in the journal.
- Adjustment data are assembled and analyzed.
- Financial statements are prepared.
- An adjusted trial balance is prepared.
- Transactions are posted to the ledger.

1.
2.
3.
4.
5.
6.
7.
8.
9.
10.

Transactions are analyzed and recorded in the journal.


Transactions are posted to the ledger.
An unadjusted trial balance is prepared.
Adjustment data are assembled and analyzed.
An optional end-of-period spreadsheet (work sheet) is prepared.
Adjusting entries are journalized and posted to the ledger.
An adjusted trial balance is prepared.
Financial statements are prepared.
Closing entries are journalized and posted to the ledger.
A post-closing trial balance is prepared.

167. If working papers are not considered part of the formal accounting records, then why are they used?
Working papers are tools used by accountants to collect and summarize data for for various analysis and
reports.

168. Explain how net income or loss is determined by using the work sheet.
The difference between the debits and credits from the Income Statement columns are compared to the debits
and credits from the Balance Sheet columns. They should be the same amounts but opposite from each
other. If the debits are more than the credits on the income statement columns, signifying a net loss, then the
credits should be higher than the debits on the balance sheet columns by the same amount. If the credits are
more than the debits on the income statement columns, signifying a net income, then the debits should be higher
than the credits on the balance sheet columns by the same amount.

169. You evaluate loan requests as part of your job at Beach Front National Bank. One loan request you
received is from Surfer Dude Supplies, a small proprietorship. Tracy Roberts, the owner, is requesting $75,000
and brings you a trial balance (or Statement of Accounts) for his first year of operations ended December 31,
2010.
REQUIRED: While you are willing to work with Tracy, how would you explain to him that a complete set of
financial statements from his accountant would be more useful for evaluating the loan request?
A set of financial statements provides useful information concerning the economic condition of a company. For
example, the balance sheet describes the financial condition of the company as of a given date and is useful in
assessing the companys financial soundness and liquidity. The income statement describes the results of
operations for a period and indicates the profitability of the company. The statement of owners equity describes
the changes in the owners interest in the company for a period. Each of these statements is useful in evaluating
whether to extend credit to the company.

170. You have just accepted your first job out of college, which requires you to evaluate loan requests at Beach
Front National Bank. The first loan request you receive is from Surfer Dude Enterprises, a small
proprietorship. Marty Monroe, the owner, is requesting $75,000 and brings you the following trial balance (or
Statement of Accounts) for his first year of operations ended December 31, 2010.
What three accounts do you think should be relabeled for greater clarity?

Surfer Dude Enterprises


Statement of Accounts
December 31, 2010
Cash
Billings Due from Others
Office Supplies
Trucks
Equipment
Amounts Owed to Others
Investment in Business
Service Revenues
Wages Expense
Rent Expense
Insurance Expense
Utilities Expenses
Miscellaneous Expenses

2,050
15,070
7,470
26,370
8,090
2,850
23,500
73,650
30,050
7,330
2,400
700
470
100,000

The following items should be relabeled for greater clarity:


Billings Due from OthersAccounts Receivable
Amounts Owed to OthersAccounts Payable
Investment in BusinessMarty Monroe, Capital

100,000

171. You have just accepted your first job out of college, which requires you to evaluate loan requests at Beach
Front National Bank. The first loan request you receive is from Surfer Dude Enterprises, a small
proprietorship. Marty Monroe, the owner, is requesting $75,000 and brings you the following trial balance (or
Statement of Accounts) for his first year of operations ended December 31, 2010.
Which of the following accounts do you think might need to be adjusted before an accurate set of financial
statements could be prepared?

Cash
Billings Due from Others
Office Supplies
Trucks
Equipment
Amounts Owed to Others
Investment in Business
Service Revenues
Wages Expense
Rent Expense
Insurance Expense
Utilities Expense
Miscellaneous Expenses

Surfer Dude Enterprises


Statement of Accounts
December 31, 2010
2,050
15,070
7,470
26,370
8,090
2,850
23,500
73,650
30,050
7,330
2,400
700
470
100,000

100,000

The following adjustments might be necessary before an accurate set of financial statements could be prepared:

No office supplies expense is shown. The office supplies account should be adjusted for the supplies used during the year.
No depreciation expense is shown for the trucks or equipment accounts. An adjusting entry should be prepared for depreciation
expense on each of these assets.
An inquiry should be made as to whether any accrued expenses, such as wages or utilities, exist at the end of the year.
An inquiry should be made as to whether any prepaid expenses, such as rent or insurance, exist at the end of the year.
An inquiry should be made as to whether any unearned revenue exist at the end of the year.
An inquiry should be made as to whether the owner withdrew any funds from the company during the year. No drawing account is
shown in the Statement of Accounts.

172. Hakik Enterprises offers rug cleaning services to business clients. Below is the trial balance for Hakik
Enterprises, which was prepared on the end of period spreadsheet (work sheet) for the year ended July 31,
2010.

Hakik Enterprises
End of Period Spreadsheet (Work
Sheet)
For the Year Ended July 31, 2010

Cash
Prepaid Insurance
Fees Receivable
Supplies
Equipment
Accum. Depreciation
Unearned Revenue
Accounts Payable
Wages Payable
Ramon Hakik, Capital
Ramon Hakik, Drawings
Service Revenue
Advertising Expense
Wage Expense
Insurance Expense
Supplies Expense
Depreciation Expense
Totals

Trial Balance Adjustments Adjusted


Trial Balance
Debit
Credit
Debit
Credit
36
12
56
12
60
12
20
32
84
4
80
28
20

228

228

Debit

Credit

REQUIRED: Enter the adjustment data in the work sheet for the transactions shown below and place the balances in the Adjusted Trial Balance
columns.
a) The equipment is estimated to last for 5 years with no salvage value. The asset will be depreciated evenly over its useful life. Record one
months depreciation.
b) Accrued Wages $2.
c) Unused supplies on hand $8.
d) Of the unearned revenue, 75% has been earned.
e) Unexpired insurance remaining at the end of the month, $9.
Hakik Enterprises
End of Period Spreadsheet (Work
Sheet)
For the Year Ended July 31, 2010
Trial Balance

Cash
Prepaid Insurance
Fees Receivable
Supplies
Equipment
Accum. Depreciation
Unearned Revenue
Accounts Payable
Wages Payable
Ramon Hakik, Capital
Ramon Hakik, Drawings
Service Revenue
Advertising Expense
Wage Expense
Insurance Expense
Supplies Expense
Depreciation Expense
Totals

Debit
36
12
56
12
60

Adjustments
Credit

Adjusted Trial
Balance
Debit
Credit
(e) 3
(c) 4

12
20
32

Debit
36
9
56
8
60

(a) 1

13
5
32
2
84

(d) 15
(b) 2

84
4

4
80

28
20

228

Credit

228

(d) 15
(b) 2
(e) 3
(c) 4
(a) 1
25

25

95
28
22
3
4
1
231

231

173. Hakik Enterprises offers rug cleaning services to business clients. Below are the adjustments data for the
year ended July 31, 2010. REQUIRED: Using this information along with the spreadsheet below, record the
adjusting entries in proper general journal form.
Adjustments:
a) The equipment is estimated to last for 5 years with no salvage value. The asset will be depreciated evenly
over its useful life. Please record one months depreciation.
b) Accrued Wages $2.
c) Unused supplies on hand $8.
d) Of the unearned revenue, 75% has been earned.
e) Unexpired insurance remaining at the end of the month, $9.

Hakik Enterprises
End of Period Spreadsheet (Work
Sheet)
For the Year Ended July 31, 2010

Cash
Prepaid Insurance
Fees Receivable
Supplies
Equipment
Accum. Deprec. - Equip
Unearned Revenue
Accounts Payable
Wages Payable
Ramon Hakik, Capital
Ramon Hakik, Drawings
Service Revenue
Advertising Expense
Wage Expense
Insurance Expense
Supplies Expense
Depreciation Expense
Totals

Trial Balance Adjustments Adjusted


Trial
Balance
Debit
Credit
Debit
36
12
56
12
60
12
20
32
84
4
80
28
20

228

228

Credit

Debit

Credit

GENERAL
JOURNAL
Page 1
DATE
2010

Description Post.Ref.

(a)

(b)

(c)

(d)

(e)

Debit

Credit

Adjusting Entries
Depreciation Expense
Accum. Deprec. - Equipment

1
1

Wage Expense
Wages Payable

Supplies Expense
Supplies

Unearned Revenue
Service Revenue

15

Insurance Expense
Prepaid Insurance

15

174. Bob Evans owns a business, Beachside Realty, that rents condominiums and furnishings. Below is the
adjusted trial balance at December 31, 2010.

Cash
Accounts receivable
Interest receivable
Prepaid insurance
Notes receivable (long-term)
Equipment
Accumulated depreciation
Accounts payable
Accrued expenses payable
Income taxes payable
Unearned rent fees
Bob Evans, Capital
Bob Evans, Drawing
Rent fees earned
Furniture rental revenue
Interest revenue
Wages expense
Depreciation expense
Utilities expense
Insurance expense
Maintenance expense
Income tax expense
Total

Debit
$ 1,500
2,000
100
1,600
2,800
15,000

Credit

$3,000
2,400
3,920
2,700
500
7,700
2,000
37,000
1,200
100
19,000
1,800
320
700
9,000
2,700
$ 58,520

$ 58,520

Prepare the entry required to close the revenue accounts at the end of the period.

Dec. 31

Rent fees earned


Furniture rental revenue
Interest revenue
Income Summary

37,000
1,200
100
38,300

175. Bob Evans owns a business, Beachside Realty, that rents condominiums and furnishings. Below is the
adjusted trial balance at December 31, 2010.

Cash
Accounts receivable
Interest receivable
Prepaid insurance
Notes receivable (long-term)
Equipment
Accumulated depreciation
Accounts payable
Accrued expenses payable
Income taxes payable
Unearned rent fees
Bob Evans, Capital
Bob Evans, Drawing
Rent fees earned
Furniture rental revenue
Interest revenue
Wages expense
Depreciation expense
Utilities expense
Insurance expense
Maintenance expense
Income tax expense

Debit
$ 1,500
2,000
100
1,600
2,800
15,000

Credit

$3,000
2,400
3,920
2,700
500
7,700
2,000
37,000
1,200
100
19,000
1,800
320
700
9,000
2,700
$ 58,520

$ 58,520

Prepare the entry required to close the expense accounts at the end of the period.

Dec 31

Income Summary
Wages expense
Depreciation expense
Utilities expense
Insurance expense
Maintenance expense
Income tax expense

33,520
19,000
1,800
320
700
9,000
2,700

176. Bob Evans owns a business, Beachside Realty, that rents condominiums and furnishings. Below is the
adjusted trial balance at December 31, 2010.

Cash
Accounts receivable
Interest receivable
Prepaid insurance
Notes receivable (long-term)
Equipment
Accumulated depreciation
Accounts payable
Accrued expenses payable
Income taxes payable
Unearned rent fees
Bob Evans, Capital
Bob Evans, Drawing
Rent fees earned
Furniture rental revenue
Interest revenue
Wages expense
Depreciation expense
Utilities expense
Insurance expense
Maintenance expense
Income tax expense

Debit
$ 1,500
2,000
100
1,600
2,800
15,000

Credit

$3,000
2,400
3,920
2,700
500
7,700
2,000
37,000
1,200
100
19,000
1,800
320
700
9,000
2,700
$ 58,520

$ 58,520

Prepare the closing entry required to transfer the income or loss at the end of the period.

Dec 31

Income Summary
Bob Evans, Capital

4,780
4,780

177. Bob Evans owns a business, Beachside Realty, that rents condominiums and furnishings. Below is the
adjusted trial balance at December 31, 2010.

Cash
Accounts receivable
Interest receivable
Prepaid insurance
Notes receivable (long-term)
Equipment
Accumulated depreciation
Accounts payable
Accrued expenses payable
Income taxes payable
Unearned rent fees
Bob Evans, Capital
Bob Evans, Drawing
Rent fees earned
Furniture rental revenue
Interest revenue
Wages expense
Depreciation expense
Utilities expense
Insurance expense
Maintenance expense
Income tax expense

Debit
$ 1,500
2,000
100
1,600
2,800
15,000

Credit

$3,000
2,400
3,920
2,700
500
7,700
2,000
41,000
1,200
100
19,000
1,800
320
700
9,000
2,700
$ 58,520

$ 58,520

Prepare the entry required to close the Drawing account at the end of the period.

Dec 31

Bob Evans, Capital


Bob Evans, Drawing

2,000
2,000

178. Each of the following transactions for Morrison Company requires an adjusting entry, which if omitted,
will overstate or understate assets, liabilities, owners equity, revenues, expenses, or net income. Indicate the
amount and direction of the misstatement that would result if the end of period adjusting entry suggested by the
transaction was omitted. Place your results in the table following the transactions and use (+) for overstate, (-)
for understate, and (NE) for no effect.
1. Morrison purchased supplies on December 1 for $900. On December 31, $350 of supplies were on hand.
2. Prepaid insurance had a debit balance of $5,400 on December 1, which represented a prepayment for 2 years
of insurance.
3. The unearned rent revenue account has a credit balance of $390 on December 1, which represents 3 months
rent.

Transaction
1.
2.
3.

Assets

Liabilities

Owners Equity

Revenues

Expenses

Net Income

Transaction
1.
2.
3.

Assets
+550
+225
NE

Liabilities
NE
NE
+130

Owners Equity
+550
+225
-130

Revenues
NE
NE
-130

Expenses
-550
-225
NE

Net Income
+550
+225
-130

179. The end-of-period spreadsheet (work sheet) for the current year for Jamal Company shows Balance Sheet
columns with a debit total of $614,210 and a credit total of $630,430. This is before the amount for net
income or net loss has been included. In preparing the income statement from work sheet, what is the amount
of net income or net loss?
Net loss of $16,220

180. Identify which of the following accounts should be closed with a debit or a credit to Income Summary at
the end of the fiscal year. If it is not closed to Income Summary, mark as n/a.
1. Utilities Payable
2. Utilities Expense
3. Supplies
4. Supplies Expense
5. Fees Earned
6. Unearned Fees
7. Accounts Receivable
8. Jason Hill, Drawing
9. Jason Hill, Capital
10. Accumulated Depreciation - Equipment
11. Depreciation Expense - Equipment
12. Equipment
13. Prepaid Insurance
14. Insurance Expense

1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.

Utilities Payable
Utilities Expense
Supplies
Supplies Expense
Fees Earned
Unearned Fees
Accounts Receivable
Jason Hill, Drawing
Jason Hill, Capital
Accumulated Depreciation - Equipment
Depreciation Expense - Equipment
Equipment
Prepaid Insurance
Insurance Expense

n/a
debit
n/a
debit
credit
n/a
n/a
n/a
n/a
n/a
debit
n/a
n/a
debit

181. The balances for the accounts listed below appeared in the Adjusted Trial Balance columns of the work
sheet. Indicate whether each balance should be extended to (a) the Income Statement columns or (b) the
Balance Sheet columns.

(1)
(2)
(3)
(4)
(5)
(6)

Salaries Payable
Fees Earned
Accounts Payable
Felipe Ramos, Capital
Supplies Expense
Unearned Rent

(7)
(8)
(9)
(10)
(11)
(12)

Felipe Ramos, Drawing


Equipment
Accounts Receivable
Accumulated Depreciation
Salary Expense
Depreciation Expense

(a)
(b)

Income statement: 2, 5, 11, 12


Balance sheet: 1, 3, 4, 6, 7, 8, 9, 10

182. Indicate whether each of the following would be reported in the financial statements as a(n) (a) current
asset, (b) current liability, (c) revenue, or (d) expense:

(1)
(2)
(3)
(4)

Supplies
Unearned Fees
Prepaid Advertising
Advertising Expense

(1)
(2)
(3)
(4)
(5)
(6)
(7)
(8)

current asset
current liability
current asset
expense
expense
current asset
current liability
revenue

(5)
(6)
(7)
(8)

Supplies Expense
Prepaid Insurance
Accounts Payable
Fees Earned

183. The following accounts were taken from the Adjusted Trial Balance columns of the work sheet for April
30, 2010 for Finnegan Co.:

Accumulated Depreciation
Fees Earned
Depreciation Expense
Rent Expense
Prepaid Insurance
Supplies
Supplies Expense

$ 32,000
78,000
7,250
34,000
6,000
400
1,800

Prepare an income statement.


Finnegan Co.
Income Statement
For the Year Ended April 30, 2010
Fees earned
Expenses:
Rent expense
Depreciation expense
Supplies expense
Total expenses
Net income

$78,000
$34,000
7,250
1,800
43,050
$34,950

184. The following revenue and expense account balances were taken from the Income Statement columns of
the work sheet for Fraser Services Co. for December 31, 2010:

Depreciation Expense
Insurance Expense
Miscellaneous Expense
Rent Expense
Service Revenue
Supplies Expense
Utilities Expense
Wages Expense

$ 4,950
2,900
1,200
24,000
92,500
3,150
5,000
63,750

Prepare an income statement.


Fraser Services Co.
Income Statement
For the Year Ended December 31, 2010
Service revenue
Operating expenses:
Wages expense
Rent expense
Utilities expense
Depreciation expense
Supplies expense
Insurance expense
Miscellaneous expense
Total operating expenses
Net loss

$ 92,500
$63,750
24,000
5,000
4,950
3,150
2,900
1,200
104,950
$ (12,450)

185. The following data were taken from the Balance Sheet columns of the work sheet for April 30, 2010 for
Mackenzie Company:

Accumulated Depreciation-Trucks
Prepaid Rent
Supplies
Unearned Fees
Trucks
Cash
Mackenzie, Capital

$42,400
6,800
850
7,310
49,300
3,400
?

Prepare a classified balance sheet.


Mackenzie Company
Balance Sheet
April 30, 2010
Assets
Current assets:
Cash
Supplies
Prepaid rent
Total current assets
Property, plant, and equipment:
Trucks

Liabilities
$ 3,400
850
6,800

Current liabilities:
Unearned fees
$ 11,050

$49,300

Less accum.
depreciation
Total property, plant
and equipment
Total assets

Owner's Equity
Mackenzie, Capital
Total liabilities and owner's
equity

$ 7,310

10,640
$17,950

42,400
6,900
$17,950

186. Indicate whether each of the following would be reported in the section of financial statements identified
as (a) current asset, (b) property, plant, and equipment, (c) current liability, (d) revenue, or (e) expense:

(1)
(2)
(3)
(4)
(5)
(6)
(7)
(8)
(9)

Automobile
Accumulated depreciation
Rent expense
Fees earned
Salaries payable
Prepaid rent
Store supplies
Advertising expense
Unearned rent

(1)
(2)
(3)
(4)
(5)
(6)
(7)
(8)
(9)

property, plant, and equipment


property, plant, and equipment
expense
revenue
current liability
current asset
current asset
expense
current liability

187. The following balance sheet contains errors.

Brock Morton Services Co.


Balance Sheet
For the Year Ended December 31, 2010
Assets
Current assets:
Cash
Accounts payable
Supplies
Prepaid insurance
Land
Total current assets

Property, plant, and equipment:


Building
Equipment
Total property, plant,
and equipment
Total assets

$ 7,170
7,500
2,590
800
24,000
$ 42,060

Liabilities
Current liabilities:
Accounts receivable
Accum. depr-building
Accum. depr-equipment
Net income

$ 10,000
12,525
7,340
11,500

Total liabilities

$ 41,365

Owner's Equity
Wages payable
Brock Morton, Capital
Total owner's equity

$43,700
29,250

1,500
88,645
$ 90,145

72,950
$131,510

Total liabilities and


owner's equity

$131,510

(a) List the errors in the balance sheet above and (b) prepare a corrected balance sheet.

(a)
(1)
(2)
(3)
(4)
(5)
(6)
(7)
(8)

Date of statement should be "December 31, 2010" and not "For the Year Ended December 31, 2010."
Accounts payable should be a current liability.
Land is a fixed asset and should be listed as Property, Plant and Equipment.
Accumulated depreciation should be deducted from the related fixed asset in the Property Plant, and Equipment section.
An adding error was made in determining the amount of total assets.
Accounts receivable should be a current asset.
Net income would be reported on the income statement.
Wages payable should be a current liability.

A corrected balance sheet would be as follows:


Brock
Morto
n
Servic
es Co.
Balanc
e
Sheet
Decem
ber 31,
2010

Assets
Curren
t
assets:
Cash
Acco
unts
receiva
ble
Suppl
ies
Prepa
id
insuran
ce
Tota
l
current
assets
Propert
y,
plant,
and
equipm
ent:
Land
Build $43,700
ing
Less 12,525
accum.
depreci
ation
Equi 29,250
pment
Less 7,340
accum.
depreci
ation
Tota
l
propert
y,
plant,
and
equipm
ent
Total
assets

$ 7,1
70
10,00
0

2,590
8
00

$20,560

$24,0
00

31,17
5

21,9
10

77,085

$97,645

Liabilities
Current liabilities:
Accounts payable
Wages payable
Total liabilities

$7,50
0
1,500
$ 9,000

Owner's Equity
Brock Morton, Capital
Total liabilities and owner's equity

88,645
$97,645

188. The following is the adjusted trial balance for Nadia Company.

Nadia Company
Adjusted Trial Balance
December 31, 2014
Cash
Accounts Receivable
Prepaid Expenses
Equipment
Accumulated Depreciation
Accounts Payable
Notes Payable - Due on June 30, 2011
Nadia Porter, Capital
Nadia Porter, Drawing
Fees Earned
Wages Expense
Rent Expense
Utilities Expense
Depreciation Expense
Miscellaneous Expense
Totals

5,130
3,300
420
12,400
2,200
700
3,070
13,000
700
10,930
2,450
1,900
1,475
1,150
975
29,900

29,900

Prepare an Income Statement, Balance Sheet, and Statement of Owners Equity. Assume that the capital account started with a beginning balance of
$10,000.
Nadia Company
Income Statement
For Year Ended December 31, 2014
Fees Earned
Expenses:
Wages Expense
Rent Expense
Utilities Expense
Depreciation Expense
Miscellaneous Expense
Total Expenses
Net Income

$10,930
$2,450
1,900
1,475
1,150
975
7,950
$2,980

Nadia Company
Statement of Owners Equity
For Year Ended December 31, 2014
Nadia Porter, Capital, January 1, 2014
Additional investments during 2014
Total
Net Income
Sub-Total
Less Withdrawals
Nadia Porter, Capital, December 31, 2014

$10,000
3,000
$13,000
2,980
$15,980
700
$15,280

Nadia Company
Balance Sheet
December 31, 2014
Assets
Current Assets
Cash
Accounts Receivable
Prepaid Expenses
Total Current Assets

Liabilities
Current Liabilities
Accounts Payable
Notes Payable
Total Liabilities

$5,130
3,300
420

$ 700
3,070
$3,770

$8,850

Property, Plant, & Equip.:


Equipment
Less: Accum Depre.
Total Prop., Plant, & Equip
Total Assets

$12,400
2,200

Owners Equity
Nadia Porter, Capital
Total Liabilities
and Owners Equity

$10,200
$19,050

$15,280
$19,050

189. Prepare an income statement and a statement of owners equity, for the month ended August 31, 2014,
from the following T-Accounts of Marley Company.

Prepaid
Insurance

Accou
nts
Receiv
able

1,100

5,400
800

200

Marley,
Capital

Marley
,
Drawin
g
6,500
2,800
5,780

3,200

Unearned
Revenues

Wages
Payable

1,400

480

9,775

7,500
2,000
275

400

Income
Summary

Fees Earned

3,200

3,995
5,780

3,200

9,775

Wages
Expense

Rent
Expens
e

2,200
425

Insurance
Expense
990

Utilities
Expense
285

990

95
285

95

2,625

Marley Company
Income Statement
For the Month Ended August 31, 2014
Fees Earned
Expenses:
Wages Expense
Rent Expense
Insurance Expense
Utilities Expense
Total Expenses
Net Income

$9,775
$2,625
990
285
95
$3,995
$5,780

Marley Company
Statement of Owners Equity
For the Month Ended August 31, 2014
Marley, Capital, August 1, 2014
Add: Additional Investments during August, 2014
Sub-total
Add: Net Income Month Ended August 31, 2014
Less: withdrawals
Increase in Owners Equity
Marley, Capital, August 31, 2014

$6,500
2,800
$9,300
$5,780
3,200
2,580
$11,880

190. Prepare an income statement and a statement of owners equity for the month ended September 30, 2010
from the T-accounts below of Carson Company.

Prepaid
Insurance

Accou
nts
Receiv
able

1,400
120

Unearned
Revenues

1,600
400

Wages
Payable

1,200
200

435

Carson,
Capital

Carson
,
Drawin
g
6,800
2,500

Income
Summary

Fees Earned

2400

4,760

2,400

4,150

610
2,400

3,300
500
350

610
4,150

Wages
Expense

Rent
Expens
e

3,200
225

Insurance
Expense
1,130

Utilities
Expense
80

1,130

125
80

125

3,425

Carson Company
Income Statement
For the Month Ended September 30, 2010
Fees Earned
Expenses:
Wages Expense
Rent Expense
Insurance Expense
Utilities Expense
Total Expenses
Net Loss

$4,150
$3,425
1,130
80
125
$4,760
($610)

Carson Company
Statement of Owners Equity
For the Month Ended September 30, 2010
Carson, Capital, September 1, 2010
Add: Additional Investments during September, 2010
Sub-total
Less: Net Loss Month Ended September 30, 2010
Withdrawals
Decrease in Owners Equity
Carson, Capital, September 30, 2010

$6,800
2,500
$9,300
$610
2,400
3,010
$6,290

191. Selected ledger accounts appear below for Fulton Surveying Services for 2014.

Fulton,
Capital
12/31

25,000

Fulton,
Drawing
1/1
12/31

20,000
48,000

3/31
12/22

12,000
13,000

12/31

25,000

Income
Summary
12/31
19,000
12/31
48,000

12/31

67,000

Prepare a statement of owner's equity.


Fulton Surveying Services
Statement of Owner's Equity
For the Year Ended December 31, 2014
Fulton, Capital, 1/1/2014
Net income
Less withdrawals
Increase in owners equity
Fulton, Capital, 12/31/2014

$20,000
$ 48,000
25,000
23,000
$43,000

192. On the basis of the following data taken from the Adjusted Trial Balance columns of the work sheet for the
year ended March 31 for Boles Athletic Company, journalize the four closing entries.

Cash
Accounts Receivable
Supplies
Equipment
Accumulated Depreciation
Accounts Payable
Jason Boles, Capital
Jason Boles, Drawing
Fees Earned
Salary Expense
Rent Expense
Depreciation Expense
Supplies Expense
Miscellaneous Expense

Mar. 31

31

31

31

$ 30,000
45,200
5,000
169,900
$ 32,000
12,500
71,600
47,000
510,000
244,500
48,000
25,000
9,500
2,000
$626,100

Fees Earned
Income Summary

510,000

Income Summary
Salary Expense
Rent Expense
Depreciation Expense
Supplies Expense
Miscellaneous Expense

329,000

Income Summary
Jason Boles, Capital

181,000

Jason Boles, Capital


Jason Boles, Drawing

47,000

$626,100

510,000

244,500
48,000
25,000
9,500
2,000

181,000

47,000

193. After all adjustments have been made, but before the accounts have been closed, the following balances
were taken from the ledger of Ramonas Designs:

Accounts Payable
Accounts Receivable
Accumulated Depreciation
Cash
Depreciation Expense
Equipment
Insurance Expense
Prepaid Insurance

$ 27,600
64,500
73,325
17,150
13,500
165,000
2,510
6,275

Rent Expense
Salary Expense
Salaries Payable
Service Revenue
Supplies
Supplies Expense
Ramona Cross, Capital
Ramona Cross, Drawing

$ 32,700
41,390
8,150
186,000
1,500
2,500
99,950
48,000

Journalize the entries to close the appropriate accounts.

Service Revenue
Income Summary

186,000

Income Summary
Depreciation Expense
Insurance Expense
Rent Expense
Salary Expense
Supplies Expense

92,600

Income Summary
Ramona Cross, Capital

93,400

Ramona Cross, Capital


Ramona Cross, Drawing

48,000

186,000

13,500
2,510
32,700
41,390
2,500

93,400

48,000

194. On the basis of the following information taken from the Adjusted Trial Balance columns of the work
sheet for the month ended September 30th, journalize the closing entries for Perez Roofing Company.
Cash
Accounts Receivable
Office Supplies
Repair Parts
Machinery
Accumulated Depreciation
Accounts Payable
Notes Payable
Sam Perez, Capital
Sam Perez, Drawing
Service Revenue
Wages Expense
Office Supplies Expense
Repair Parts Expense
Depreciation Expense

$22,500.00
3,575.00
2,850.00
3,785.00
17,750.00
3,250.00
1,150.00
6,500.00
2,500.00
1,750.00
47,200.00
4,840.00
1,275.00
925.00
1,350.00
$60,600.00

$60,600.00

Sep 30

Service
47,200.00
Revenue
Income
47,200.00
Summary
Closing Entry
- Service
Revenue

Sep 30

Income
8,390.00
Summary
Wages
Expense
Office
Supplies
Expense
Repair Parts
Expense
Depreciation
Expense
Closing
Entry Expenses

4,840.00
1,275.00

925.00
1,350.00

Sep 30

Income
38,810.0
Summary 0
Sam Perez,
38,810.00
Capital
Closing
Entry Income
Summary

Sep 30

Sam Perez, 1,750.00


Capital
Sam Perez,
1,750.00
Drawing
Closing
Entry Drawing

195. The following adjusted trial balance is the result of the adjustments made at the end of the month of March
for Erik Martin Company. Utilize these adjusted values to perform the closing entries for Erik Martin Company.
Cash
Accounts Receivable
Office Supplies
Store Supplies
Machinery
Accumulated Depreciation
Accounts Payable
Notes Payable
Erik Martin, Capital
Erik Martin, Drawing
Service Revenue
Wages Expense
Office Supplies Expense
Store Supplies Expense
Depreciation Expense

March 31

March 31

March 31

Service 36,500.00
Revenue
Income
Summary
Closing
Entry Service
Revenue

Income
14,615.00
Summary
Wages
Expense
Office
Supplies
Expense
Store
Supplies
Expense
Depreciation
Expense
Closing
Entry Expenses

Income
21,885.00
Summary
Erik
Martin,
Capital
Closing
Entry Income
Summary

$24,750.00
5,750.00
3,525.00
4,785.00
9,750.00
2,150.00
3,550.00
7,500.00
19,725.00
6,250.00
36,500.00
6,425.00
1,465.00
5,150.00
1, 575.00
$69,425.00

36,500.00

6,425.00
1,465.00

5,150.00

1,575.00

21,885.00

________
$69,425.00

March 31

Erik
Martin,
Capital
Erik
Martin,
Drawing
Closing
Entry Drawing

6,250.00

6,250.00

196. The following adjusted trial balance is the result of the adjustments made at the end of the month of July
for Ladonna Douglas Company. Utilize these adjusted values to perform the closing entries for Ladonna
Douglas Company.
Cash
Accounts Receivable
Office Supplies
Store Supplies
Machinery
Accumulated Depreciation
Accounts Payable
Notes Payable
Ladonna Douglas, Capital
Ladonna Douglas, Drawing
Service Revenue
Wages Expense
Rent Expense
Advertising Expense
Office Supplies Expense
Store Supplies Expense
Depreciation Expense

July 31

Service
41,500.00
Revenue
Income
Summary
Closing
Entry Service
Revenue

$34,750.00
9,750.00
2,525.00
4,785.00
10,750.00
2,150.00
14,300.00
11,500.00
53,725.00
13,250.00
41,500.00
37,425.00
3,000.00
2,750.00
1,465.00
2,150.00
575.00
$123,175.00

41,500.00

________
$123,175.00

July 31

Income
47,365.00
Summary
Wages
37,425.00
Expense
Rent
3,000.00
Expense
Advertising
2,750.00
Expense
Office
1,465.00
Supplies
Expense
Store
2,150.00
Supplies
Expense
Depreciatio
575.00
n Expense
Closing
Entry Expenses

July 31

Ladonna 5,865.00
Douglas,
Capital
Income
Summary
Closing
Entry Income
Summary

July 31

Ladonna
Douglas,
Capital
Ladonna
Douglas,
Drawing
Closing
Entry Drawing

5,865.00

13,250.00

13,250.00

197. Marcus Enterprises was started by Damien Marcus in 2010. During 2010, Damien Marcus invested
$8,000 in the business. Based on the following worksheet, prepare an income statement, statement of owners
equity, and balance sheet for Marcus Enterprises for the year ended December 31, 2010.
Marcus Enterprises
Worksheet
For the Year Ended December 31, 2010

Adjusted Trial
Balance

Income Statement Balance Sheet

Account Title
Cash
Accounts Receivable
Supplies
Equipment
Accumulated Depr-Equip
Accounts Payable
Wages Payable
Damien Marcus, Capital
Damien Marcus, Drawing
Fees Earned
Wages Expense
Rent Expense
Depreciation Expense
Totals
Net Income (Loss)

Debit
26,500
7,000
1,000
18,500

Credit

Debit

Credit

Debit
26,500
7,000
1,000
18,500

5,000
11,000
1,000
8,000

5,000
11,000
1,000
8,000

2,000

2,000
59,500

19,000
7,000
3,500
84,500

84,500

59,500
19,000
7,000
3,500
29,500
30,000
59,500

59,500

55,000

59,500

55,000

Marcus Enterprises
Income Statement
For the Year Ended December 31, 2010
Fees Earned
Expenses:
Wages Expense
Rent Expense
Depreciation Expense
Total Expenses
Net Income

Marcus Enterprises
Statement of Owners Equity
For the Year Ended December 31, 2010
Damien Marcus, Capital, January 1, 2010
Investment during the year
Net income for the Year Ended December 31, 2010
Less Withdrawals
Increase in Owners Equity
Damien Marcus, Capital, December 31, 2010

Credit

$ 59,500
$ 19,000
7,000
3,500
29,500
$ 30,000

$ 0
$ 8,000
30,000
$38,000
2,000
36,000
$ 36,000

25,000
30,000
55,000

Marcus Enterprises
Balance Sheet
December 31, 2010
Assets
Current Assets:
Cash
Accounts Receivable
Supplies
Total current assets
Property, Plant and Equipment
Equipment
Less accum depr

Liabilities
Current Liabilities
Accounts Payable
Wages Payable
Total Liabilities

$26,500
7,000
1,000

$ 11,000
1,000
$12,000

$ 34,500
$18,500
5,000

Total property, plant and


equipment
Total Assets

Owners Equity
13,500
$48,000

Damien Marcus, Capital

$36,000

Total Liabilities and


Owners Equity

$48,000

198. Prepare closing entries from the following work sheet.


Lakendra Enterprises
Worksheet
For the Year Ended December 31, 2010

Account Title
Cash
Accounts Receivable
Supplies
Equipment
Accumulated Depr-Equip
Accounts Payable
Wages Payable
Lakendra Thomas, Capital
Lakendra Thomas, Drawing
Fees Earned
Wages Expense
Rent Expense
Depreciation Expense
Totals
Net Income (Loss)

Adjusted Trial Income Statement


Balance
Debit
Credit
26,500
7,000
1,000
18,500
5,000
11,000
1,000
8,000
2,000
59,500
19,000
7,000
3,500
84,500
84,500

Balance Sheet
Debit

Credit

Debit
26,500
7,000
1,000
18,500

Credit

5,000
11,000
1,000
8,000
2,000
59,500
19,000
7,000
3,500
29,500
30,000
59,500

59,500

55,000

59,500

55,000

25,000
30,000
55,000

Journal
Post Ref
Date
Dec 31

Dec 31

Dec 31

Dec 31

Description
Fees Earned
Income Summary

Debit
59,500

Income Summary
Wages Expense
Rent Expense
Depreciation Expense

29,500

Income Summary
Lakendra Thomas, Capital

30,000

Lakendra Thomas, Capital


Lakendra Thomas, Drawing

2,000

Credit
59,500

19,000
7,000
3,500

30,000

2,000

199. The following is the adjusted trial balance for Sandeep Company.

Sandeep Company
Adjusted Trial Balance
December 31, 2010
Cash
Accounts Receivable
Prepaid Expenses
Equipment
Accumulated Depreciation
Accounts Payable
Notes Payable
Rena Sandeep, Capital
Rena Sandeep, Drawing
Fees Earned
Wages Expense
Rent Expense
Utilities Expense
Depreciation Expense
Miscellaneous Expense
Totals

8,130
3,300
2,750
10,400
2,200
2,700
1,000
11,200
4,870
36,600
12,450
4,900
3,475
2,150
1,275
53,700

53,700

Prepare closing entries and the post closing trial balance.

Fees Earned
Income Summary

36,600

Income Summary
Wages Expense
Rent Expense
Utilities Expense
Depreciation Expense
Miscellaneous Expense

24,250

Income Summary
Rena Sandeep, Capital

12,350

Rena Sandeep, Capital


Rena Sandeep, Drawing

4,870

36,600

12,450
4,900
3,475
2,150
1,275

12,350

4,870

Sandeep Company
Post Closing Trial Balance
December 31, 2010
Cash
Accounts Receivable
Prepaid Expenses
Equipment
Accumulated Depreciation
Accounts Payable
Notes Payable
Rena Sandeep, Capital
Total

8,130
3,300
2,750
10,400

$24,580

200. Reconstruct the adjusting and closing entries from the following T-Accounts.

Prepaid
Insurance

Accou
nts
Receiv
able.

1,200
200
1,000

Unearned
Revenues

6,000
1,500
7,500

Wages
Payable

1,350
435
915

530
530

2,200
2,700
1,000
18,680
$24,580

Madison
Cox, Capital

Madis
on
Cox,
Drawi
ng
7,000
5,280

Income
Summary

Fees Earned

2,100

4,655
5,280

2,100

2,100

9,935

0
10,180

8,000
1,500
435
9,935
0

Wages
Expense

Rent
Expens
e

2,600
530

Insurance
Expense
1,145

Utilities
Expense
200

180

1,145
3,130

200
0

Adjusting Entries:

1)

2)

3)

4)

Insuranc 200
e
Expense
Prepaid
Insuranc
e
Account 1,500
s
Receiva
ble
Fees
Earned
Unearne 435
d
Revenue
Fees
Earned
Wages 530
Expense
Wages
Payable

180
0

200

1,500

435

530

Closing Entries:
1)

2)

3)

4)

Fees
Earned
Income
Summar
y
Income
Summar
y
Wages
Expense
Rent
Expense
Insuranc
e
Expense
Utilities
Expense
Income
Summar
y
Madison
Cox,
Capital
Madison
Cox,
Capital
Madison
Cox,
Drawing

9,935
9,935

4,655

3,130
1,145
200

180
5,280

5,280

2,100

2,100

201. Reconstruct adjusting and closing entries for the month ended September 30, 2010 from the T-accounts
below.

Prepaid
Insurance

Accou
nts
Receiv
able.

1,350

1,250
275
1,525

130
1,220

Mai Lui,
Capital

Unearned
Revenues

Mai
Lui,
Drawin
g
7,000

580
2,400

1,050

385
385

235
815

Income
Summary

Fees Earned

2,400

6,090

2,400
0

4,020

Wages
Payable

5,510

5,000
275
235

580
5,510

Wages
Expense

Rent
Expens
e

3,600
385

1,880

Utilities
Expense
130

1,880
3,985

Insurance
Expense

95
130

95
0

Adjusting Entries:

1)

2)

3)

4)

Ins 130
ura
nc
e
Ex
pe
nse
Pre
pai
d
Ins
ura
nc
e
Ac 275
co
unt
s
Re
cei
va
ble
Fe
es
Ea
rne
d
Un 235
ear
ne
d
Re
ve
nu
e
Fe
es
Ea
rne
d
W 385
ag
es
Ex
pe
nse
W
ag
es
Pa
ya
ble

130

275

235

385

Closing Entries:
1)

2)

3)

4)

Fees 5,510
Earne
d
Inco
me
Sum
mary
Inco 6,090
me
Sum
mary
Wage
s
Expe
nse
Rent
Expe
nse
Insura
nce
Expe
nse
Utiliti
es
Expe
nse
Mai 580
Lui,
Capit
al
Inco
me
Sum
mary
Mai 2,400
Lui,
Capit
al
Mai
Lui,
Drawi
ng

5,510

3,985

1,880

130

95

580

2,400

202.
1)

Dana Bowen
Company is
completing its
first year of
operations on
April 30,
2010. Reconstru
ct the entries for
the year ended
April 30, 2010
from the
T-accounts
below. Record
them as follows:
A - L Journal Entries
M- R Adjusting Journal Entries

2)

Balance and
prepare the
Income
Statement,
Statement of
Owners Equity,
and the Balance
Sheet from the
T-Accounts.

3)

Prepare the four


closing entries (S
- V).

4)

Prepare the
Post-Closing
Trial Balance.

Cash

Accou
nts
Receiv
able

6,500
900

Supplies

1,250
385

Prepaid
Insurance

870

1,940
540

725

870

225

400
420
1,940
2,500
50
350
930

Equipment

2,500

Accum
ulated
Deprec
iation

Accounts
Payable

130

Wages
Payable

Unearned
Revenues

Dana
Bowen
,
Capital
930

590

Fees Earned

Wages
Expens
e
900
1,250
2,500
385
590

Insurance
Expense

725

Dana
Bowen,
Drawing

Income
Summary

6,500
2,500

350

Rent
Expense

Supplies
Expense

420
225

Deprec
iation
Expens
e

400

Miscellaneo
us Expense

130

50

540

1)
Journal Entries:

a)

C
a
s
h

6,
5
0
0
Dana Bowen,
Capital

b)

E
q
ui
p
m
e
nt

6,500
2,
5
0
0

Dana Bowen,
Capital
c)

d)

e)

f)

R
e
nt
E
x
p
e
n
s
e

2,500
4
0
0

Cash
400
C 900
a
s
h
Fees Earned 9
0
0
A 1,250
c
c
o
u
nt
s
R
e
c
ei
v
a
bl
e
Fees Earned 1,
2
5
0
S 870
u
p
pl
ie
s
Accounts
8
Payable
7
0

g)

h)

i)

j)

W420
a
g
e
s
E
x
p
e
n
s
e
Cash

P 1,940
re
p
ai
d
I
n
s
u
ra
n
c
e
Cash

4
2
0

1,
9
4
0

C 2,500
a
s
h
Fees Earned 2,
5
0
0
M50
is
c
el
la
n
e
o
u
s
E
x
p
e
n
s
e
Cash
5
0

k)

l)

D 350
a
n
a
B
o
w
e
n,
D
ra
w
in
g
Cash

C 930
a
s
h
Unearned
Revenue

3
5
0

9
3
0

Adjusting Entries:
m)

Supplies
Expense

n)

Accounts
Receivable

o)

Insurance
Expense

p)

Depreciation
Expense

q)

Wages
Expense

r)

Unearned
Revenues

540
Supplies

540
385

Fees Earned

385
725

Prepaid Insurance

725
130

Accumulated Depreciation

130
225

Wages Payable

225
590

Fees Earned

590

2)
Dana Bowen Company
Income Statement
For the Year Ended April 30, 2010
Fees Earned
Expenses:
Wages Expense
Rent Expense
Supplies Expense
Insurance Expense
Depreciation Expense
Miscellaneous Expense
Total Expenses
Net Income

$5,625
$645
400
540
725
130
50
2,490
$3,135

Dana Bowen Company


Statement of Owners Equity
For the Year Ended April 30, 2010
Dana Bowen Capital, May 1, 2009
Add: Investments
Sub-Total
Net Income for the Period
Less: withdrawals
Increase in Owners Equity
Dana Bowen, Capital, April 20, 2010

Dana Bowen Company


Balance Sheet
April 30, 2010
Assets:
Current Assets:
Cash
Accounts Receivable
Supplies
Prepaid Insurance
Total Current Assets
Property, Plant, & Equipment
Equipment
Less: Accum Depre
Total Assets

$0
9,000
9,000
$3,135
350
2,785
$11,785

Liabilities:
$7,670
1,635
330
1,215

Accounts Payable
Wages Payable
Unearned Revenues
Total Liabilities

$870
225
340
1,435

Owners Equity
Dana Bowen, Capital
Total Liabilities and
Owners Equity

11,785
$13,220

$10,850
$2,500
130

2,370
$13,220

3)
Closing Entries:
s)

Fees Earned

5,625
Inc
om
e
Su
m
ma
ry

t)

Income
Summary

5,625

2,490
W
ag
es
Ex
pe
nse
Re
nt
Ex
pe
nse
Su
ppl
ies
Ex
pe
nse
Ins
ura
nc
e
Ex
pe
nse
De
pre
cia
tio
n
Ex
pe
nse
Mi
sce
lla
ne
ou
s
Ex
pe
nse

u)

Income
Summary

645

400

540

725

130

50

3,135
Da
na
Bo
we
n,
Ca
pit
al

v)

Dana Bowen,
Capital

3,135

350

Da
na
Bo
we
n,
Dr
aw
ing

350

4)
Dana Bowen Company
Post-Closing Trial Balance
For the Year Ended April 30, 2010
Cash
Accounts Receivable
Supplies
Prepaid Insurance
Equipment
Accumulated Depreciation
Accounts Payable
Wages Payable
Unearned Revenues
Dana Bowen, Capital
Total

$7,670
1,635
330
1,215
2,500

$13,350

$ 130
870
225
340
11,785
$13,350

203. The balances in the ledger of Good Landscape Services as of January 31, 2014 before adjustments, are as
follows:

Cash
Supplies
Prepaid Insurance
Equipment
Accumulated
Depreciation

$ 6,750
3,900
8,400
41,750
9,950

Dalton Good, Capital


Dalton Good, Drawing
Service Revenue
Salary Expense
Rent Expense
Miscellaneous Expense

$29,775
3,425
56,300
24,300
6,000
1,500

Adjustment data are as follows: supplies on hand, January 31, $900; insurance expired for January, $1,100; depreciation on equipment for January,
$1,600; salaries accrued, January 31, $1,650.
(a)
(b)
(c)

Prepare a ten-column work sheet for Good Landscape Services for January, 2014.
On the basis of the work sheet in (a), present the following in good order: (1) income statement, (2) statement of owner's equity
(no additional investments were made during the month), and (3) balance sheet.
On the basis of the work sheet in (a), journalize the closing entries as of January 31, 2014.

(a)
)
Good Landscape Services
Work Sheet
For the Month Ended January 31, 2014
)
)
)
)
Trial Balance

Adjustm
ents

Account Title

Dr.

Cr.

Dr.

Cr.

Cash
Supplies
Prepaid Insurance
Equipment
Accumulated Depreciation
Dalton Good, Capital
Dalton Good, Drawing
Service Revenue
Salary Expense
Rent Expense
Miscellaneous Expense

6,750
3,900
8,400
41,750
.....
.....
3,425
.....
24,300
6,000
1,500
96,025

.....
.....
.....
.....
9,950
29,775
.....
63,200
.....
.....
.....
96,025

.....
.....
.....
.....
.....
.....
.....
.....
(d) 1,650
.....
.....

.....
(a) 3,000
(b) 1,100
.....
(c) 1,600
.....
.....
.....
.....
.....
.....

Supplies Expense
Insurance Expense
Depreciation Expense
Salaries Payable

.....
.....
.....
.....

.....
.....
.....
.....

(a) 3,000
(b) 1,100
(c) 1,600
.....
7,350

.....
.....
.....
d) 1,650
7,350

)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)

Net Income

(
(

(
(
(
(
(
(
(
(
(
(
(
(
(
(
(
(
(
(
(
(

Adjusted
Trial Balance

Dr.
6,750
900
7,300
41,750
.....
.....
3,425
.....
25,950
6,000
1,500
3,000
1,100
1,600
...........
99,275

Income
Stateme
nt

Balance Sheet

Cr.

Dr.

Cr.

Dr.

Cr.

.....
.....
.....
.....
11,550
29,775
.....
56,300
.....
.....
.....
.....
.....
.....
1,650
99,275

.....
.....
.....
.....
.....
.....
.....
.....
25,950
6,000
1,500
3,000
1,100
1,600
...........
39,150
17,150
56,,300

.....
.....
.....
.....
.....
.....
.....
56,300
.....
.....
.....
.....
.....
.....
...........
56,300
...........
56,300

6,750
900
7,300
41,750
.....
.....
3,425
.....
.....
.....
.....
.....
.....
.....
...........
60,125
...........
60,125

.....
.....
.....
.....
11,550
29,275
.....
.....
.....
.....
.....
.....
.....
.....
1,650
43,875
17,150
60,125

(b) (1)
Good Landscape Services
Income Statement
For the Month Ended January 31, 2014
Service revenue
Operating expenses:
Salary expense
Rent expense
Supplies expense
Insurance expense
Depreciation expense
Miscellaneous expense
Total operating expenses
Net income

$56,300
$25,950
6,000
2,100
1,100
2,500
1,500
39,150
$17,150

(b) (2)
Good Landscape Services
Statement of Owner's Equity
For the Month Ended January 31, 2014
Dalton Good, Capital, January 1, 2014
Net income for the month
Less withdrawals
Increase in owner's equity
Dalton Good, Capital, January 31, 2014

(b) (3)
Good Landscape Services
Balance Sheet
January 31, 2014
Assets
Current assets:
Cash
Supplies
Prepaid insurance
Total current assets
Property, plant, and
equipment:
Equipment
Less accumulated
depreciation
Total property, plant,
and equipment
Total assets

$29,775
$17,150
3,425
13,725
$43,500

Liabilities
$ 6,750
1,800
7,300

Current liabilities:
Salaries payable
$15,850

$41,750
12,450
29,300
$45,150

Owner's Equity
Dalton Good, Capital
Total liabilities and
owner's equity

$ 1,650

43,500
$45,150

(c)
Jan. 31

31

31

31

Closing Entries
Service Revenue
Income Summary

56,300
56,300

Income Summary
Salary Expense
Rent Expense
Miscellaneous Expense
Supplies Expense
Insurance Expense
Depreciation Expense

39,150

Income Summary
Dalton Good, Capital

17,150

Dalton Good, Capital


Dalton Good, Drawing

3,425

25,950
6,000
1,500
2,100
1,100
2,500

17,150

3,425

204. Complete the following worksheet for Danilo Enterprises.


Danilo Enterprises
Worksheet
For the Year Ended December 31, 2010
Adjusted Trial
Balance

Account Title

Debit

Cash
Accounts Receivable
Supplies
Equipment
Accumulated Depr-Equip
Accounts Payable
Wages Payable
Tony Danilo, Capital
Tony Danilo, Drawing
Fees Earned
Wages Expense
Rent Expense
Depreciation Expense
Totals
Net Income (Loss)

14,500
7,500
500
20,500

Income Statement B
a
l
a
n
c
e

Credit

15,000
9,500
3,060
18,240
1,000
34,000
18,000
9,300
8,500
79,800

79,800

S
h
e
e
t
DCredit
e
b
i
t

Debit

Credit

Danilo Enterprises
Worksheet
For the Year Ended December 31, 2010
Adjusted Trial
Balance

Account Title

Debit

Cash
Accounts Receivable
Supplies
Equipment
Accumulated Depr-Equip
Accounts Payable
Wages Payable
Tony Danilo, Capital
Tony Danilo, Drawing
Fees Earned
Wages Expense

14,500
7,500
500
20,500

Rent Expense

9,300

Depreciation Expense

8,500

Totals

79,800

Net Loss

Income Statement B
a
l
a
n
c
e

Credit

S
h
e
e
t
DCredit
e
b
i
t

Debit

Credit

14,500
7,500
500
20,500
15,000
9,500
3,060
18,240

15,000
9,500
3,060
18,240

1,000

1,000
34,000

18,000

79,800

34,000
1
8
,
0
0
0
9
,
3
0
0
8
,
5
0
0
334,000
5
,
8
0
0
1,800
335,800
5
,
8
0
0

44,000

45,800

1,800
45,800

45,800