Solutions CH 6 PDF

pri30597_SM_ch06.
qxd 8/2/08 1:24 PM Page 121
CHAPTER
Chapter Opener:
6 Closing Entries and the
Postclosing Trial Balance
Students should recognize that financial statements can be used to evaluate

Thinking Critically net profit or loss, return on investments, expense trends, or growth in compa-
ny net assets. The income statement is used to measure net income or loss,
while the balance sheet can be used to measure growth in assets or liabilities.
Executives and managers would use financial statements to make decisions
about expanding business, investing in new ventures, or hiring new
employees.
Fast Facts ❏ Carnival has 80,000 employees world wide.
❏ Of the 3 million passengers Carnival serves annually, approximately
1,000,000 are seniors and 500,000 are children.
❏ Carnival became a publicly traded company in 1987.
❏ Carnival Corporation is comprised of distinct brands operating in North
and South America, the United Kingdom, Germany, Italy, France, Spain
and Australia, which account for nearly 90 percent of cruise passengers
worldwide.
❏ Carnival Corporation operates 84 ships with 21 new vessels scheduled for
delivery between now and 2011.
Managerial Answers will vary but could include monthly or quarterly. Students should
Implications: want financial statements frequently so that trends can be observed and timely
Thinking Critically decisions made before the business is negatively impacted.
Discussion These questions are designed to check the students’ understanding of the new
Questions terms, concepts, and procedures presented in the chapter.
1. Avoids errors, proves total debits and credits are equal after the closing
process.
2. Asset, liability, and owner’s capital.
3. Steps to classify, record, and summarize financial data.
4. (1) analyze
(2) journalize
(3) post
(4) prepare worksheet
(5) prepare financial statements
(6) journalize and post adjusting entries
(7) journalize and post closing entries
(8) prepare postclosing trial balance
(9) interpret financial information.
5. Source document info to general journal, to general ledger, to worksheet,
to financial statements.
6. Journalize and post adjusting entries; Journalize and post closing entries;
Prepare a postclosing trial balance.
7. Adjustments columns of the worksheet.
8. Transfer results of operations to the owner’s capital account; Reduce
balances of revenue, expense, and drawing accounts to zero.
9. Balances of revenue and expense accounts are transferred to Income
Summary. Next the balance of the Income Summary account is transferred to
the owner’s equity account.
10. Worksheet.
Copyright © 2009 The McGraw-Hill Companies, Inc. All rights reserved. Chapter 6 ■ 121
pri30597_SM_ch06.qxd 8/2/08 1:24 PM Page 122
EXERCISE 6.1
GENERAL JOURNAL 4
PAGE __________
DATE DESCRIPTION POST. DEBIT CREDIT

REF.
1 Closing Entries 1
2 2010 2
3 Dec. 31 Fees Income 97 5 0 0 00 3
4 Income Summary 97 5 0 0 00 4
5 5
6 31 Income Summary 54 0 0 0 00 6
7 Depreciation Expense 4 5 0 0 00 7
8 Salaries Expense 32 0 0 0 00 8
9 Supplies Expense 5 0 0 0 00 9
10 Telephone Expense 4 2 0 0 00 10
11 Utilities Expense 8 3 0 0 00 11
12 12
13 31 Income Summary 43 5 0 0 00 13
14 Hayward Anderson, Capital 43 5 0 0 00 14
15 15
16 31 Hayward Anderson, Capital 25 0 0 0 00 16
17 Hayward Anderson, Drawing 25 0 0 0 00 17
18 18
19 19
20 20
21 21
EXERCISE 6.2
1. Cash 5. Accumulated Depreciation

2. Accounts Receivable 6. Accounts Payable
3. Supplies 7. Sally Harris, Capital
4. Equipment
122 ■ Chapter 6 Copyright © 2009 The McGraw-Hill Companies, Inc. All rights reserved.
EXERCISE 6.3
1. Analyze transactions.
2. Journalize the transactions.
3. Post the journal entries.
4. Prepare a worksheet.
5. Prepare financial statements.
6. Record adjusting entries.
7. Record closing entries.
8. Prepare a postclosing trial balance.
9. Interpret the financial information.
EXERCISE 6.4
1. B 6. B 11. I, E
2. I 7. E 12. B, E
3. B 8. B 13. B
4. B 9. I 14. I
5. I 10. B 15. B
EXERCISE 6.5
1. Total revenue for the period is $46,500 .
2. Total expenses for the period are $30,300 .
3. Net income for the period is $16,200 .
4. Owner’s withdrawals for the period are $5,000 .
EXERCISE 6.6
GENERAL JOURNAL 4
PAGE __________

REF.
1 Closing Entries 1
2 2010 2
3 Mar. 31 Fees Income 401 276 0 0 0 00 3
4 Income Summary 399 276 0 0 0 00 4
5 5
6 31 Income Summary 399 206 5 8 0 00 6
7 Depreciation Expense—Equipment 510 10 0 8 0 00 7
8 Insurance Expense 511 9 6 0 0 00 8
9 Rent Expense 514 28 8 0 0 00 9
10 Salaries Expense 517 141 6 0 0 00 10
11 Supplies Expense 518 3 9 0 0 00 11
12 Telephone Expense 519 5 4 0 0 00 12
13 Utilities Expense 523 7 2 0 0 00 13
14 14
15 31 Income Summary 399 69 4 2 0 00 15
16 Elizabeth Chavez, Capital 301 69 4 2 0 00 16
17 17
18 31 Elizabeth Chavez, Capital 301 6 0 0 0 00 18
19 Elizabeth Chavez, Drawing 302 6 0 0 0 00 19
20 20
21 21
22 22
23 23
24 24
25 25
26 26
27 27
28 28
29 29
30 30
31 31
32 32
33 33
34 34
35 35
36 36
37 37
EXERCISE 6.6 (continued)
GENERAL LEDGER
Elizabeth Chavez, Capital
ACCOUNT ________________________________________________________________ 301
ACCOUNT NO. ______________
POST. BALANCE
DATE DESCRIPTION DEBIT CREDIT
REF. DEBIT CREDIT
2010
Mar. 31 Balance ✔ 117 6 0 0 00
31 Closing J4 69 4 2 0 00 187 0 2 0 00
31 Closing J4 6 0 0 0 00 181 0 2 0 00
Elizabeth Chavez, Drawing

ACCOUNT ________________________________________________________________ 302
ACCOUNT NO. ______________
POST. BALANCE
REF. DEBIT CREDIT
2010
Mar. 31 Balance ✔ 6 0 0 0 00
31 Closing J4 6 0 0 0 00 – 0 – 00
Income Summary
ACCOUNT ________________________________________________________________ 399
ACCOUNT NO. ______________
POST. BALANCE
REF. DEBIT CREDIT
2010
Mar. 31 Closing J4 276 0 0 0 00 276 0 0 0 00
31 Closing J4 206 5 8 0 00 69 4 2 0 00
31 Closing J4 69 4 2 0 00 – 0 – 00
Fees Income
ACCOUNT ________________________________________________________________ 401
ACCOUNT NO. ______________
POST. BALANCE
REF. DEBIT CREDIT
2010
Mar. 31 Balance ✔ 276 0 0 0 00
31 Closing J4 276 0 0 0 00 – 0 – 00
Depreciation Expense—Equipment
ACCOUNT ________________________________________________________________ 510
ACCOUNT NO. ______________
POST. BALANCE
REF. DEBIT CREDIT
2010
Mar. 31 Balance ✔ 10 0 8 0 00
31 Closing J4 10 0 8 0 00 – 0 – 00
GENERAL LEDGER
Insurance Expense
ACCOUNT ________________________________________________________________ 511
ACCOUNT NO. ______________
POST. BALANCE
REF. DEBIT CREDIT
2010
Mar. 31 Balance ✔ 9 6 0 0 00
31 Closing J4 9 6 0 0 00 – 0 – 00
Rent Expense
ACCOUNT ________________________________________________________________ 514
ACCOUNT NO. ______________
POST. BALANCE
REF. DEBIT CREDIT
2010
Mar. 31 Balance ✔ 28 8 0 0 00
31 Closing J4 28 8 0 0 00 – 0 – 00
Salaries Expense
ACCOUNT ________________________________________________________________ 517
ACCOUNT NO. ______________
POST. BALANCE
REF. DEBIT CREDIT
2010
Mar. 31 Balance ✔ 141 6 0 0 00
31 Closing J4 141 6 0 0 00 – 0 – 00
Supplies Expense
ACCOUNT ________________________________________________________________ 518
ACCOUNT NO. ______________
POST. BALANCE
REF. DEBIT CREDIT
2010
Mar. 31 Balance ✔ 3 9 0 0 00
31 Closing J4 3 9 0 0 00 – 0 – 00
Telephone Expense
ACCOUNT ________________________________________________________________ 519
ACCOUNT NO. ______________
POST. BALANCE
REF. DEBIT CREDIT
2010
Mar. 31 Balance ✔ 5 4 0 0 00
31 Closing J4 5 4 0 0 00 – 0 – 00
GENERAL LEDGER
Utilities Expense
ACCOUNT ________________________________________________________________ 523
ACCOUNT NO. ______________
POST. BALANCE
REF. DEBIT CREDIT
2010
Mar. 31 Balance ✔ 7 2 0 0 00
31 Closing J4 7 2 0 0 00 – 0 – 00
EXERCISE 6.7
GENERAL JOURNAL 4
PAGE __________

REF.
1 Closing Entries 1
2 2010 2
3 Dec. 31 Gladys Zamarripa, Capital 54 0 0 0 00 3
5 5
6 31 Gladys Zamarripa, Capital 6 0 0 0 00 6
7 Gladys Zamarripa, Drawing 6 0 0 0 00 7
8 8
The new balance of Gladys Zamarripa, Capital is $36,000 ($96,000 – $54,000 – $6,000).
EXERCISE 6.8
Analyze transactions
Journalize transactions
Post transactions
Prepare a worksheet
Prepare financial statements
Record adjusting entries
Record closing entries
Prepare postclosing trial balance
Interpret financial information
PROBLEM 6.1A
GENERAL JOURNAL 3
PAGE __________

REF.
1 Adjusting Entries 1
2 2010 2
3 Jan. 31 Supplies Expense 1 1 2 0 00 3
4 Supplies 1 1 2 0 00 4
5 5
6 31 Rent Expense 6 0 0 0 00 6
7 Prepaid Rent 6 0 0 0 00 7
8 8
9 31 Depreciation Expense—Office Equipment 2 2 4 0 00 9
10 Accumulated Depreciation—Office Equipment 2 2 4 0 00 10
11 11
GENERAL JOURNAL 4
PAGE __________

REF.
1 Closing Entries 1
2 2010 2
3 Jan. 31 Fees Income 87 0 0 0 00 3
5 5
6 31 Income Summary 66 7 4 5 00 6
7 Depreciation Expense—Office Equipment 2 2 4 0 00 7
8 Rent Expense 6 0 0 0 00 8
11 Telephone Expense 9 8 5 00 11
12 Travel Expense 9 2 8 0 00 12
13 Utilities Expense 9 2 0 00 13
14 14
15 31 Income Summary 20 2 5 5 00 15
16 Jeff Sager, Capital 20 2 5 5 00 16
17 17
18 31 Jeff Sager, Capital 5 4 0 0 00 18
19 Jeff Sager, Drawing 5 4 0 0 00 19
20 20
Analyze: Credit the drawing account; debit the capital account.
PROBLEM 6.2A
GENERAL JOURNAL 3
PAGE __________

REF.
2 2010 2
3 Dec. 31 Supplies Expense 517 1 2 0 0 00 3
4 Supplies 121 1 2 0 0 00 4
5 5
6 31 Advertising Expense 526 1 5 0 0 00 6
7 Prepaid Advertising 131 1 5 0 0 00 7
8 8
9 31 Depreciation Expense—Equipment 523 1 2 0 0 00 9
10 Accumulated Depreciation—Equipment 142 1 2 0 0 00 10
11 11
GENERAL JOURNAL 4
PAGE __________

REF.
1 Closing Entries 1
2 2010 2
3 Dec. 31 Fees Income 401 37 5 0 0 00 3
4 Income Summary 309 37 5 0 0 00 4
5 5
6 31 Income Summary 309 12 0 0 0 00 6
8 Advertising Expense 526 1 5 0 0 00 8
12 12
13 31 Income Summary 309 25 5 0 0 00 13
14 Patonia Bell, Capital 301 25 5 0 0 00 14
15 15
16 31 Patonia Bell, Capital 301 4 2 0 0 00 16
17 Patonia Bell, Drawing 302 4 2 0 0 00 17
18 18
PROBLEM 6.2A (continued)
GENERAL LEDGER
Supplies
ACCOUNT ________________________________________________________________ 121
ACCOUNT NO. ______________
POST. BALANCE
REF. DEBIT CREDIT
2010
Dec. 31 Balance ✔ 3 0 0 0 00
31 Adjusting J3 1 2 0 0 00 1 8 0 0 00
Prepaid Advertising
ACCOUNT ________________________________________________________________ 131
ACCOUNT NO. ______________
POST. BALANCE
REF. DEBIT CREDIT
2010
Dec. 31 Balance ✔ 12 0 0 0 00
31 Adjusting J3 1 5 0 0 00 10 5 0 0 00
Accumulated Depreciation—Equipment
ACCOUNT ________________________________________________________________ 142
ACCOUNT NO. ______________
POST. BALANCE
REF. DEBIT CREDIT
2010
Dec. 31 Adjusting J3 1 2 0 0 00 1 2 0 0 00
Patonia Bell, Capital

ACCOUNT ________________________________________________________________ 301
ACCOUNT NO. ______________
POST. BALANCE
REF. DEBIT CREDIT
2010
Dec. 31 Balance ✔ 66 0 0 0 00
31 Closing J4 25 5 0 0 00 91 5 0 0 00
31 Closing J4 4 2 0 0 00 87 3 0 0 00
Patonia Bell, Drawing

ACCOUNT ________________________________________________________________ 302
ACCOUNT NO. ______________
POST. BALANCE
REF. DEBIT CREDIT
2010
Dec. 31 Balance ✔ 4 2 0 0 00
31 Closing J4 4 2 0 0 00 – 0 – 00
GENERAL LEDGER
Income Summary
ACCOUNT ________________________________________________________________ 399
ACCOUNT NO. ______________
POST. BALANCE
REF. DEBIT CREDIT
2010
Dec. 31 Closing J4 37 5 0 0 00 37 5 0 0 00
31 Closing J4 12 0 0 0 00 25 5 0 0 00
31 Closing J4 25 5 0 0 00 – 0 – 00
Fees Income
ACCOUNT ________________________________________________________________ 401
ACCOUNT NO. ______________
POST. BALANCE
REF. DEBIT CREDIT
2010
Dec. 31 Balance ✔ 37 5 0 0 00
31 Closing J4 37 5 0 0 00 – 0 – 00
GENERAL LEDGER
Salaries Expense
ACCOUNT ________________________________________________________________ 511
ACCOUNT NO. ______________
POST. BALANCE
REF. DEBIT CREDIT
2010
Dec. 31 Balance ✔ 7 2 0 0 00
31 Closing J4 7 2 0 0 00 – 0 – 00
Utilities Expense
ACCOUNT ________________________________________________________________ 514
ACCOUNT NO. ______________
POST. BALANCE
REF. DEBIT CREDIT
2010
Dec. 31 Balance ✔ 9 0 0 00
31 Closing J4 9 0 0 00 – 0 – 00
Supplies Expense
ACCOUNT ________________________________________________________________ 517
ACCOUNT NO. ______________
POST. BALANCE
REF. DEBIT CREDIT
2010
Dec. 31 Adjusting J3 1 2 0 0 00 1 2 0 0 00
31 Closing J4 1 2 0 0 00 – 0 – 00
ACCOUNT ________________________________________________________________ 523
ACCOUNT NO. ______________
POST. BALANCE
REF. DEBIT CREDIT
2010
Dec. 31 Adjusting J3 1 2 0 0 00 1 2 0 0 00
31 Closing J4 1 2 0 0 00 – 0 – 00
Advertising Expense
ACCOUNT ________________________________________________________________ 526
ACCOUNT NO. ______________
POST. BALANCE
REF. DEBIT CREDIT
2010
Dec. 31 Adjusting J3 1 5 0 0 00 1 5 0 0 00
31 Closing J4 1 5 0 0 00 – 0 – 00
Bell Enterprises
December 31, 2010
ACCOUNT NAME DEBIT CREDIT
Cash 46 2 0 0 00
Accounts Receivable 6 0 0 0 00
Supplies 1 8 0 0 00
Prepaid Advertising 10 5 0 0 00
Equipment 30 0 0 0 00
Accumulated Depreciation—Equipment 1 2 0 0 00
Accounts Payable 6 0 0 0 00
Patonia Bell, Capital 87 3 0 0 00
Totals 94 5 0 0 00 94 5 0 0 00
Analyze: Fifteen accounts are listed in the Adjusted Trial Balance section. Eight accounts are listed on
the postclosing trial balance.
PROBLEM 6.3A
GENERAL JOURNAL 4
PAGE __________

REF.
1 Closing Entries 1
2 2010 2
3 Dec. 31 Fees Income 401 138 0 0 0 00 3
4 Income Summary 399 138 0 0 0 00 4
5 5
6 31 Income Summary 399 44 8 2 0 00 6
8 Depreciation Expense—Equipment 514 9 0 0 00 8
9 Rent Expense 517 3 6 0 0 00 9
12 12
13 31 Income Summary 399 93 1 8 0 00 13
14 Monica Cavazos, Capital 301 93 1 8 0 00 14
15 15
16 31 Monica Cavazos, Capital 301 7 2 0 0 00 16
17 Monica Cavazos, Drawing 302 7 2 0 0 00 17
18 18
19 19
20 20
21 21
22 22
23 23
24 24
25 25
26 26
27 27
28 28
29 29
30 30
31 31
32 32
33 33
34 34
35 35
36 36
37 37
GENERAL LEDGER
Monica Cavazos, Capital
ACCOUNT ________________________________________________________________ 301
ACCOUNT NO. ______________
POST. BALANCE
REF. DEBIT CREDIT
2010
Dec. 31 Balance ✔ 55 6 2 0 00
31 Closing J4 93 1 8 0 00 148 8 0 0 00
31 Closing J4 7 2 0 0 00 141 6 0 0 00
Monica Cavazos, Drawing

ACCOUNT ________________________________________________________________ 302
ACCOUNT NO. ______________
POST. BALANCE
REF. DEBIT CREDIT
2010
Dec. 31 Balance ✔ 7 2 0 0 00
31 Closing J4 7 2 0 0 00 – 0 – 00
Income Summary
ACCOUNT ________________________________________________________________ 399
ACCOUNT NO. ______________
POST. BALANCE
REF. DEBIT CREDIT
2010
Dec. 31 Closing J4 138 0 0 0 00 138 0 0 0 00
31 Closing J4 44 8 2 0 00 93 1 8 0 00
31 Closing J4 93 1 8 0 00 – 0 – 00
Fees Income
ACCOUNT ________________________________________________________________ 401
ACCOUNT NO. ______________
POST. BALANCE
REF. DEBIT CREDIT
2010
Dec. 31 Balance ✔ 138 0 0 0 00
31 Closing J4 138 0 0 0 00 – 0 – 00
GENERAL LEDGER
Advertising Expense
ACCOUNT ________________________________________________________________ 511
ACCOUNT NO. ______________
POST. BALANCE
REF. DEBIT CREDIT
2010
Dec. 31 Balance ✔ 4 8 0 0 00
31 Closing J4 4 8 0 0 00 – 0 – 00
ACCOUNT ________________________________________________________________ 514
ACCOUNT NO. ______________
POST. BALANCE
REF. DEBIT CREDIT
2010
Dec. 31 Balance ✔ 9 0 0 00
31 Closing J4 9 0 0 00 – 0 – 00
Rent Expense
ACCOUNT ________________________________________________________________ 517
ACCOUNT NO. ______________
POST. BALANCE
REF. DEBIT CREDIT
2010
Dec. 31 Balance ✔ 3 6 0 0 00
31 Closing J4 3 6 0 0 00 – 0 – 00
GENERAL LEDGER
ACCOUNT ________________________________________________________________
Salaries Expense ACCOUNT NO. ______________
519
POST. BALANCE
REF. DEBIT CREDIT
2010
Dec. 31 Balance ✔ 28 8 0 0 00
31 Closing J4 28 8 0 0 00 – 0 – 00
Utilities Expense
ACCOUNT ________________________________________________________________ 523
ACCOUNT NO. ______________
POST. BALANCE
REF. DEBIT CREDIT
2010
Dec. 31 Balance ✔ 6 7 2 0 00
31 Closing J4 6 7 2 0 00 – 0 – 00
Analyze: The balance in the Salaries Expense account is $0.0
PROBLEM 6.4A
Nationwide Auto Detailing Service

Worksheet
Month Ended December 31, 2010
TRIAL BALANCE ADJUSTMENTS
ACCOUNT NAME
DEBIT CREDIT DEBIT CREDIT
1 Cash 31 0 5 0 00
2 Accounts Receivable 4 9 5 0 00
3 Supplies 4 0 0 0 00 (a) 1 6 0 0 00
4 Prepaid Advertising 3 0 0 0 00 (b) 1 4 0 0 00
5 Equipment 20 0 0 0 00
6 Accumulated Depreciation—Equipment (c) 4 8 0 00
7 Accounts Payable 5 0 0 0 00
8 Richard Harris, Capital 35 5 0 0 00
9 Richard Harris, Drawing 2 0 0 0 00
10 Fees Income 30 0 0 0 00
11 Supplies Expense (a) 1 6 0 0 00
12 Advertising Expense (b) 1 4 0 0 00
13 Depreciation Expense—Equipment (c) 4 8 0 00
14 Salaries Expense 4 8 0 0 00
15 Utilities Expense 7 0 0 00
16 Totals 70 5 0 0 00 70 5 0 0 00 3 4 8 0 00 3 4 8 0 00
17 Net Income
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
ADJUSTED TRIAL BALANCE INCOME STATEMENT BALANCE SHEET

DEBIT CREDIT DEBIT CREDIT DEBIT CREDIT
31 0 5 0 00 31 0 5 0 00 1
4 9 5 0 00 4 9 5 0 00 2
2 4 0 0 00 2 4 0 0 00 3
1 6 0 0 00 1 6 0 0 00 4
20 0 0 0 00 20 0 0 0 00 5
4 8 0 00 4 8 0 00 6
5 0 0 0 00 5 0 0 0 00 7
35 5 0 0 00 35 5 0 0 00 8
2 0 0 0 00 2 0 0 0 00 9
30 0 0 0 00 30 0 0 0 00 10
1 6 0 0 00 1 6 0 0 00 11
1 4 0 0 00 1 4 0 0 00 12
4 8 0 00 4 8 0 00 13
4 8 0 0 00 4 8 0 0 00 14
7 0 0 00 7 0 0 00 15
70 9 8 0 00 70 9 8 0 00 8 9 8 0 00 30 0 0 0 00 62 0 0 0 00 40 9 8 0 00 16
21 0 2 0 00 21 0 2 0 00 17
30 0 0 0 00 30 0 0 0 00 62 0 0 0 00 62 0 0 0 00 18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
GENERAL JOURNAL 3
PAGE __________

REF.
2 2010 (a) 2
4 Supplies 121 1 6 0 0 00 4
5 5
6 (b) 6
9 9
10 (c) 10
11 31 Depreciation Expense—Equipment 523 4 8 0 00 11
12 Accumulated Depreciation—Equipment 142 4 8 0 00 12
13 13
GENERAL JOURNAL 4
PAGE __________

REF.
1 Closing Entries 1
2 2010 2
3 Dec. 31 Fees Income 401 30 0 0 0 00 3
4 Income Summary 309 30 0 0 0 00 4
5 5
6 31 Income Summary 309 8 9 8 0 00 6
12 12
13 31 Income Summary 309 21 0 2 0 00 13
14 Richard Harris, Capital 301 21 0 2 0 00 14
15 15
16 31 Richard Harris, Capital 301 2 0 0 0 00 16
17 Richard Harris, Drawing 302 2 0 0 0 00 17
18 18
GENERAL LEDGER
Supplies
ACCOUNT ________________________________________________________________ 121
ACCOUNT NO. ______________
POST. BALANCE
REF. DEBIT CREDIT
2010
Dec. 31 Balance ✔ 4 0 0 0 00
31 Adjusting J3 1 6 0 0 00 2 4 0 0 00
Prepaid Advertising
ACCOUNT ________________________________________________________________ 131
ACCOUNT NO. ______________
POST. BALANCE
REF. DEBIT CREDIT
2010
Dec. 31 Balance ✔ 3 0 0 0 00
31 Adjusting J3 1 4 0 0 00 1 6 0 0 00
ACCOUNT ________________________________________________________________ 142
ACCOUNT NO. ______________
POST. BALANCE
REF. DEBIT CREDIT
2010
Dec. 31 Adjusting J3 4 8 0 00 4 8 0 00
Richard Harris, Capital

ACCOUNT ________________________________________________________________ 301
ACCOUNT NO. ______________
POST. BALANCE
REF. DEBIT CREDIT
2010
Dec. 31 Balance ✔ 35 5 0 0 00
31 Closing J4 21 0 2 0 00 56 5 2 0 00
31 Closing J4 2 0 0 0 00 54 5 2 0 00
Richard Harris, Drawing

ACCOUNT ________________________________________________________________ 302
ACCOUNT NO. ______________
POST. BALANCE
REF. DEBIT CREDIT
2010
Dec. 31 Balance ✔ 2 0 0 0 00
31 Closing J4 2 0 0 0 00 – 0 – 00
GENERAL LEDGER
Income Summary
ACCOUNT ________________________________________________________________ 399
ACCOUNT NO. ______________
POST. BALANCE
REF. DEBIT CREDIT
2010
Dec. 31 Closing J4 30 0 0 0 00 30 0 0 0 00
31 Closing J4 8 9 8 0 00 21 0 2 0 00
31 Closing J4 21 0 2 0 00 – 0 – 00
Fees Income
ACCOUNT ________________________________________________________________ 401
ACCOUNT NO. ______________
POST. BALANCE
REF. DEBIT CREDIT
2010
Dec. 31 Balance ✔ 30 0 0 0 00
31 Closing J4 30 0 0 0 00 – 0 – 00
GENERAL LEDGER
Salaries Expense
ACCOUNT ________________________________________________________________ 511
ACCOUNT NO. ______________
POST. BALANCE
REF. DEBIT CREDIT
2010
Dec. 31 Balance ✔ 4 8 0 0 00
31 Closing J4 4 8 0 0 00 – 0 – 00
Utilities Expense
ACCOUNT ________________________________________________________________ 514
ACCOUNT NO. ______________
POST. BALANCE
REF. DEBIT CREDIT
2010
Dec. 31 Balance ✔ 7 0 0 00
31 Closing J4 7 0 0 00 – 0 – 00
Supplies Expense
ACCOUNT ________________________________________________________________ 517
ACCOUNT NO. ______________
POST. BALANCE
REF. DEBIT CREDIT
2010
Dec. 31 Adjusting J3 1 6 0 0 00 1 6 0 0 00
31 Closing J4 1 6 0 0 00 – 0 – 00
ACCOUNT ________________________________________________________________ 523
ACCOUNT NO. ______________
POST. BALANCE
REF. DEBIT CREDIT
2010
Dec. 31 Adjusting J3 4 8 0 00 4 8 0 00
31 Closing J4 4 8 0 00 – 0 – 00
Advertising Expense
ACCOUNT ________________________________________________________________ 526
ACCOUNT NO. ______________
POST. BALANCE
REF. DEBIT CREDIT
2010
Dec. 31 Adjusting J3 1 4 0 0 00 1 4 0 0 00
31 Closing J4 1 4 0 0 00 – 0 – 00
Nationwide Auto Detailing Service

December 31, 2010
Cash 31 0 5 0 00
Supplies 2 4 0 0 00
Accumulated Depreciation—Equipment 4 8 0 00
Richard Harris, Capital 54 5 2 0 00
Totals 60 0 0 0 00 60 0 0 0 00
Analyze: Total debits of $62,000 were posted to the general ledger to complete the closing entries.
PROBLEM 6.1B
GENERAL JOURNAL 3
PAGE __________

REF.
2 2010 (a) 2
3 Jan. 31 Supplies Expense 523 2 8 6 0 00 3
4 Supplies 121 2 8 6 0 00 4
5 (b) 5
6 31 Insurance Expense 514 1 4 8 0 00 6
7 Prepaid Insurance 134 1 4 8 0 00 7
8 (c) 8
9 31 Depreciation Expense—Machinery 511 1 1 2 0 00 9
10 Accumulated Depreciation—Machinery 142 1 1 2 0 00 10
11 11
GENERAL JOURNAL 4
PAGE __________

REF.
1 Closing Entries 1
2 2010 2
3 Jan. 31 Fees Income 401 32 8 0 0 00 3
4 Income Summary 309 32 8 0 0 00 4
5 5
6 31 Income Summary 309 25 3 1 0 00 6
7 Depreciation Expense—Machinery 511 1 1 2 0 00 7
8 Insurance Expense 514 1 4 8 0 00 8
9 Rent Expense 517 3 0 0 0 00 9
14 14
15 31 Income Summary 309 7 4 9 0 00 15
16 James Wilson, Capital 301 7 4 9 0 00 16
17 17
18 31 James Wilson, Capital 301 2 4 0 0 00 18
19 James Wilson, Drawing 302 2 4 0 0 00 19
20 20
Analyze: The adjusting entry for expired insurance created a debit to Insurance Expense, increasing the Insurance
Expense account balance to $1,480.
PROBLEM 6.2B
GENERAL JOURNAL 3
PAGE __________

REF.
2 2010 (a) 2
4 Supplies 121 3 0 0 0 00 4
5 (b) 5
8 (c) 8
9 31 Depreciation Expense—Equipment 523 1 5 0 0 00 9
10 Accumulated Depreciation—Equipment 142 1 5 0 0 00 10
11 11
GENERAL JOURNAL 4
PAGE __________

REF.
1 Closing Entries 1
2 2010 2
3 Dec. 31 Fees Income 401 46 8 0 0 00 3
4 Income Summary 399 46 8 0 0 00 4
5 5
6 31 Income Summary 399 21 9 0 0 00 6
12 12
13 31 Income Summary 399 24 9 0 0 00 13
14 James McDonald, Capital 301 24 9 0 0 00 14
15 15
16 31 James McDonald, Capital 301 8 4 0 0 00 16
17 James McDonald, Drawing 302 8 4 0 0 00 17
18 18
PROBLEM 6.2B (continued)
GENERAL LEDGER
Supplies
ACCOUNT ________________________________________________________________ 121
ACCOUNT NO. ______________
POST. BALANCE
REF. DEBIT CREDIT
2010
Dec. 31 Balance ✔ 6 0 0 0 00
31 Adjusting J3 3 0 0 0 00 3 0 0 0 00
Prepaid Advertising
ACCOUNT ________________________________________________________________ 131
ACCOUNT NO. ______________
POST. BALANCE
REF. DEBIT CREDIT
2010
Dec. 31 Balance ✔ 9 0 0 0 00
31 Adjusting J3 1 2 0 0 00 7 8 0 0 00
ACCOUNT ________________________________________________________________ 142
ACCOUNT NO. ______________
POST. BALANCE
REF. DEBIT CREDIT
2010
Dec. 31 Adjusting J3 1 5 0 0 00 1 5 0 0 00
James McDonald, Capital

ACCOUNT ________________________________________________________________ 301
ACCOUNT NO. ______________
POST. BALANCE
REF. DEBIT CREDIT
2010
Dec. 31 Balance ✔ 82 2 0 0 00
31 Closing J4 24 9 0 0 00 107 1 0 0 00
31 Closing J4 8 4 0 0 00 98 7 0 0 00
James McDonald, Drawing

ACCOUNT ________________________________________________________________ 302
ACCOUNT NO. ______________
POST. BALANCE
REF. DEBIT CREDIT
2010
Dec. 31 Balance ✔ 8 4 0 0 00
31 Closing J4 8 4 0 0 00 – 0 – 00
GENERAL LEDGER
Income Summary
ACCOUNT ________________________________________________________________ 399
ACCOUNT NO. ______________
POST. BALANCE
REF. DEBIT CREDIT
2010
Dec. 31 Closing J4 46 8 0 0 00 46 8 0 0 00
31 Closing J4 21 9 0 0 00 24 9 0 0 00
31 Closing J4 24 9 0 0 00 – 0 – 00
Fees Income
ACCOUNT ________________________________________________________________ 401
ACCOUNT NO. ______________
POST. BALANCE
REF. DEBIT CREDIT
2010
Dec. 31 Balance ✔ 46 8 0 0 00
31 Closing J4 46 8 0 0 00 – 0 – 00
Salaries Expense
ACCOUNT ________________________________________________________________ 511
ACCOUNT NO. ______________
POST. BALANCE
REF. DEBIT CREDIT
2010
Dec. 31 Balance ✔ 14 4 0 0 00
31 Closing J4 14 4 0 0 00 – 0 – 00
Utilities Expense
ACCOUNT ________________________________________________________________ 514
ACCOUNT NO. ______________
POST. BALANCE
REF. DEBIT CREDIT
2010
Dec. 31 Balance ✔ 1 8 0 0 00
31 Closing J4 1 8 0 0 00 – 0 – 00
Supplies Expense
ACCOUNT ________________________________________________________________ 517
ACCOUNT NO. ______________
POST. BALANCE
REF. DEBIT CREDIT
2010
Dec. 31 Adjusting J3 3 0 0 0 00 3 0 0 0 00
31 Closing J4 3 0 0 0 00 – 0 – 00
GENERAL LEDGER
ACCOUNT ________________________________________________________________ 523
ACCOUNT NO. ______________
POST. BALANCE
REF. DEBIT CREDIT
2010
Dec. 31 Adjusting J3 1 5 0 0 00 1 5 0 0 00
31 Closing J4 1 5 0 0 00 – 0 – 00
Advertising Expense
ACCOUNT ________________________________________________________________ 526
ACCOUNT NO. ______________
POST. BALANCE
REF. DEBIT CREDIT
2010
Dec. 31 Adjusting J3 1 2 0 0 00 1 2 0 0 00
31 Closing J4 1 2 0 0 00 – 0 – 00
Big Valley Nursery and Landscape

December 31, 2010
Cash 32 4 0 0 00
Supplies 3 0 0 0 00
Accumulated Depreciation—Equipment 1 5 0 0 00
James McDonald, Capital 98 7 0 0 00
Totals 109 2 0 0 00 109 2 0 0 00
Analyze: Total credits of $102,000 were posted to the general ledger to complete the closing entries.
PROBLEM 6.3B
GENERAL JOURNAL 4
PAGE __________

REF.
1 Closing Entries 1
2 2010 2
3 Dec. 31 Fees Income 401 108 0 0 0 00 3
4 Income Summary 399 108 0 0 0 00 4
5 5
6 31 Income Summary 399 41 4 0 0 00 6
9 Rent Expense 517 4 2 0 0 00 9
12 12
13 31 Income Summary 399 66 6 0 0 00 13
14 Patty Slade, Capital 301 66 6 0 0 00 14
15 15
16 31 Patty Slade, Capital 301 7 2 0 0 00 16
17 Patty Slade, Drawing 302 7 2 0 0 00 17
18 18
19 19
20 20
21 21
22 22
23 23
24 24
25 25
26 26
27 27
28 28
29 29
30 30
31 31
32 32
33 33
34 34
35 35
36 36
37 37
GENERAL LEDGER
Supplies
ACCOUNT ________________________________________________________________ 121
ACCOUNT NO. ______________
POST. BALANCE
REF. DEBIT CREDIT
2010
Dec. 31 Balance ✔ 6 0 0 0 00
Prepaid Rent
ACCOUNT ________________________________________________________________ 131
ACCOUNT NO. ______________
POST. BALANCE
REF. DEBIT CREDIT
2010
Dec. 31 Balance ✔ 46 2 0 0 00
Equipment
ACCOUNT ________________________________________________________________ 141
ACCOUNT NO. ______________
POST. BALANCE
REF. DEBIT CREDIT
2010
Dec. 31 Balance ✔ 72 0 0 0 00
ACCOUNT ________________________________________________________________ 142
ACCOUNT NO. ______________
POST. BALANCE
REF. DEBIT CREDIT
2010
Dec. 31 Balance ✔ 1 8 0 0 00
Patty Slade, Capital

ACCOUNT ________________________________________________________________ 301
ACCOUNT NO. ______________
POST. BALANCE
REF. DEBIT CREDIT
2010
Dec. 1 Balance ✔ 114 9 0 0 00
31 Closing J4 66 6 0 0 00 181 5 0 0 00
31 Closing J4 7 2 0 0 00 174 3 0 0 00
GENERAL LEDGER
Patty Slade, Drawing
ACCOUNT ________________________________________________________________ 302
ACCOUNT NO. ______________
POST. BALANCE
REF. DEBIT CREDIT
2010
Dec. 31 Balance ✔ 7 2 0 0 00
31 Closing J4 7 2 0 0 00 – 0 – 00
Income Summary
ACCOUNT ________________________________________________________________ 399
ACCOUNT NO. ______________
POST. BALANCE
REF. DEBIT CREDIT
2010
Dec. 31 Closing J4 108 0 0 0 00 108 0 0 0 00
31 Closing J4 41 4 0 0 00 66 6 0 0 00
31 Closing J4 66 6 0 0 00 – 0 – 00
Fees Income
ACCOUNT ________________________________________________________________ 401
ACCOUNT NO. ______________
POST. BALANCE
REF. DEBIT CREDIT
2010
Dec. 31 Balance ✔ 108 0 0 0 00
31 Closing J4 108 0 0 0 00 – 0 – 00
Advertising Expense
ACCOUNT ________________________________________________________________ 511
ACCOUNT NO. ______________
POST. BALANCE
REF. DEBIT CREDIT
2010
Dec. 31 Balance ✔ 6 6 0 0 00
31 Closing J4 6 6 0 0 00 – 0 – 00
GENERAL LEDGER
ACCOUNT ________________________________________________________________ 514
ACCOUNT NO. ______________
POST. BALANCE
REF. DEBIT CREDIT
2010
Dec. 31 Balance ✔ 1 8 0 0 00
31 Closing J4 1 8 0 0 00 – 0 – 00
Rent Expense
ACCOUNT ________________________________________________________________ 517
ACCOUNT NO. ______________
POST. BALANCE
REF. DEBIT CREDIT
2010
Dec. 31 Balance ✔ 4 2 0 0 00
31 Closing J4 4 2 0 0 00 – 0 – 00
GENERAL LEDGER
ACCOUNT ________________________________________________________________
Salaries Expense ACCOUNT NO. ______________
519
POST. BALANCE
REF. DEBIT CREDIT
2010
Dec. 31 Balance ✔ 21 6 0 0 00
31 Closing J4 21 6 0 0 00 – 0 – 00
Utilities Expense
ACCOUNT ________________________________________________________________ 523
ACCOUNT NO. ______________
POST. BALANCE
REF. DEBIT CREDIT
2010
Dec. 31 Balance ✔ 7 2 0 0 00
31 Closing J4 7 2 0 0 00 – 0 – 00
Analyze: Fees Income, Income Summary, Patty Slade—Capital, Patty Slade—Drawing, Advertising, Depreciation,
Rent, Salaries, and Utilities Expense.
PROBLEM 6.4B
Scott Wilson, CPA

Worksheet
Month Ended June 30, 2010
ACCOUNT NAME
1 Cash 31 9 5 0 00
3 Supplies 15 7 5 0 00 (a) 2 7 0 0 00
4 Computers 28 8 0 0 00
5 Accumulated Depreciation—Computers 2 8 8 0 00 (b) 2 4 0 00
7 Scott Wilson, Capital 62 2 3 5 00
8 Scott Wilson, Drawing 12 0 0 0 00
9 Fees Income 67 9 5 0 00
12 Depreciation Expense—Computers (b) 2 4 0 00
13 Travel Expense 5 4 0 0 00
15 Totals 145 6 6 5 00 145 6 6 5 00 2 9 4 0 00 2 9 4 0 00
16 Net Income
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32

31 9 5 0 00 31 9 5 0 00 1
11 3 4 0 00 11 3 4 0 00 2
13 0 5 0 00 13 0 5 0 00 3
28 8 0 0 00 28 8 0 0 00 4
3 1 2 0 00 3 1 2 0 00 5
12 6 0 0 00 12 6 0 0 00 6
62 2 3 5 00 62 2 3 5 00 7
12 0 0 0 00 12 0 0 0 00 8
67 9 5 0 00 67 9 5 0 00 9
37 7 2 5 00 37 7 2 5 00 10
2 7 0 0 00 2 7 0 0 00 11
2 4 0 00 2 4 0 00 12
5 4 0 0 00 5 4 0 0 00 13
2 7 0 0 00 2 7 0 0 00 14
145 9 0 5 00 145 9 0 5 00 48 7 6 5 00 67 9 5 0 00 97 1 4 0 00 77 9 5 5 00 15
19 1 8 5 00 19 1 8 5 00 16
67 9 5 0 00 67 9 5 0 00 97 1 4 0 00 97 1 4 0 00 17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
GENERAL JOURNAL 3
PAGE __________

REF.
2 2010 2
3 Jun. 30 Supplies Expense 517 2 7 0 0 00 3
4 Supplies 121 2 7 0 0 00 4
5 5
6 6
7 30 Depreciation Expense—Computers 523 2 4 0 00 7
8 Accumulated Depreciation—Computers 142 2 4 0 00 8
9 9
10 10
11 11
12 12
13 13
GENERAL JOURNAL 4
PAGE __________

REF.
1 Closing Entries 1
2 2010 2
3 Jun. 30 Fees Income 401 67 9 5 0 00 3
4 Income Summary 309 67 9 5 0 00 4
5 5
6 30 Income Summary 309 48 7 6 5 00 6
9 Depreciation Expense—Computers 523 2 4 0 00 9
10 Travel Expense 519 5 4 0 0 00 10
12 12
13 30 Income Summary 309 19 1 8 5 00 13
14 Scott Wilson, Capital 301 19 1 8 5 00 14
15 15
16 30 Scott Wilson, Capital 301 12 0 0 0 00 16
17 Scott Wilson, Drawing 302 12 0 0 0 00 17
18 18
GENERAL LEDGER
Supplies
ACCOUNT ________________________________________________________________ 121
ACCOUNT NO. ______________
POST. BALANCE
REF. DEBIT CREDIT
2010
Jun. 30 Balance ✔ 15 7 5 0 00
30 Adjusting J3 2 7 0 0 00 13 0 5 0 00
Computers
ACCOUNT ________________________________________________________________ 131
ACCOUNT NO. ______________
POST. BALANCE
REF. DEBIT CREDIT
2010
Jun. 30 Balance ✔ 28 8 0 0 00
Accumulated Depreciation—Computers
ACCOUNT ________________________________________________________________ 142
ACCOUNT NO. ______________
POST. BALANCE
REF. DEBIT CREDIT
2010
Jun. 30 Balance ✔ 2 8 8 0 00
30 Adjusting J3 2 4 0 00 3 1 2 0 00
Scott Wilson, Capital

ACCOUNT ________________________________________________________________ 301
ACCOUNT NO. ______________
POST. BALANCE
REF. DEBIT CREDIT
2010
Jun. 30 Balance ✔ 62 2 3 5 00
30 Closing J4 19 1 8 5 00 81 4 2 0 00
30 Closing J4 12 0 0 0 00 69 4 2 0 00
Scott Wilson, Drawing

ACCOUNT ________________________________________________________________ 302
ACCOUNT NO. ______________
POST. BALANCE
REF. DEBIT CREDIT
2010
Jun. 30 Balance ✔ 12 0 0 0 00
30 Closing J4 12 0 0 0 00 – 0 – 00
GENERAL LEDGER
Income Summary
ACCOUNT ________________________________________________________________ 309
ACCOUNT NO. ______________
POST. BALANCE
REF. DEBIT CREDIT
2010
Jun. 30 Closing J4 67 9 5 0 00 67 9 5 0 00
30 Closing J4 48 7 6 5 00 19 1 8 5 00
30 Closing J4 19 1 8 5 00 – 0 – 00
Fees Income
ACCOUNT ________________________________________________________________ 401
ACCOUNT NO. ______________
POST. BALANCE
REF. DEBIT CREDIT
2010
Jun. 30 Balance ✔ 67 9 5 0 00
30 Closing J4 67 9 5 0 00 – 0 – 00
Salaries Expense
ACCOUNT ________________________________________________________________ 511
ACCOUNT NO. ______________
POST. BALANCE
REF. DEBIT CREDIT
2010
Jun. 30 Balance ✔ 37 7 2 5 00
30 Closing J4 37 7 2 5 00 – 0 – 00
Utilities Expense
ACCOUNT ________________________________________________________________ 514
ACCOUNT NO. ______________
POST. BALANCE
REF. DEBIT CREDIT
2010
Jun. 30 Balance ✔ 2 7 0 0 00
30 Closing J4 2 7 0 0 00 – 0 – 00
Supplies Expense
ACCOUNT ________________________________________________________________ 517
ACCOUNT NO. ______________
POST. BALANCE
REF. DEBIT CREDIT
2010
Jun. 30 Adjusting J3 2 7 0 0 00 2 7 0 0 00
30 Closing J4 2 7 0 0 00 – 0 – 00
GENERAL LEDGER
Travel Expense
ACCOUNT ________________________________________________________________ 519
ACCOUNT NO. ______________
POST. BALANCE
REF. DEBIT CREDIT
2010
Jun. 30 Balance ✔ 5 4 0 0 00
30 Closing J4 5 4 0 0 00 – 0 – 00
Depreciation Expense—Computers
ACCOUNT ________________________________________________________________ 523
ACCOUNT NO. ______________
POST. BALANCE
REF. DEBIT CREDIT
2010
Jun. 30 Adjusting J3 2 4 0 00 2 4 0 00
30 Closing J4 2 4 0 00 – 0 – 00
Scott Wilson, CPA

June 30, 2010
Cash 31 9 5 0 00
Supplies 13 0 5 0 00
Computers 28 8 0 0 00
Accumulated Depreciation—Computers 3 1 2 0 00
Scott Wilson, Capital 69 4 2 0 00
Totals 85 1 4 0 00 85 1 4 0 00
Analyze: Net Income for Scott Wilson, CPA for the month of June 2010 was $19,185.
CRITICAL THINKING PROBLEM 6.1
The Style Shop

Worksheet
ACCOUNT NAME
1 Cash 81 6 0 0 00
3 Supplies 14 4 0 0 00 (a) 7 2 0 0 00
4 Prepaid Insurance 21 6 0 0 00 (b) 4 8 0 0 00
5 Machinery 168 0 0 0 00
6 Accumulated Depreciation—Machinery (c) 2 4 0 0 00
8 Sarah Palmer, Capital 149 1 6 0 00
9 Sarah Palmer, Drawing 12 0 0 0 00
10 Fees Income 165 0 0 0 00
12 Insurance Expense (b) 4 8 0 0 00
14 Depreciation Expense—Machinery (c) 2 4 0 0 00
16 Totals 341 1 6 0 00 341 1 6 0 00 14 4 0 0 00 14 4 0 0 00
17 Net Income
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
CRITICAL THINKING PROBLEM 6.1 (continued)

81 6 0 0 00 81 6 0 0 00 1
18 0 0 0 00 18 0 0 0 00 2
7 2 0 0 00 7 2 0 0 00 3
16 8 0 0 00 16 8 0 0 00 4
168 0 0 0 00 168 0 0 0 00 5
2 4 0 0 00 2 4 0 0 00 6
27 0 0 0 00 27 0 0 0 00 7
149 1 6 0 00 149 1 6 0 00 8
12 0 0 0 00 12 0 0 0 00 9
165 0 0 0 00 165 0 0 0 00 10
7 2 0 0 00 7 2 0 0 00 11
4 8 0 0 00 4 8 0 0 00 12
22 2 0 0 00 22 2 0 0 00 13
2 4 0 0 00 2 4 0 0 00 14
3 3 6 0 00 3 3 6 0 00 15
343 5 6 0 00 343 5 6 0 00 39 9 6 0 00 165 0 0 0 00 303 6 0 0 00 178 5 6 0 00 16
125 0 4 0 00 125 0 4 0 00 17
165 0 0 0 00 165 0 0 0 00 303 6 0 0 00 303 6 0 0 00 18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
The Style Shop

Income Statement
Revenue
Fees Income 165 0 0 0 00
Expenses
Supplies Expense 7 2 0 0 00
Insurance Expense 4 8 0 0 00
Salaries Expense 22 2 0 0 00
Depreciation Expense—Machinery 2 4 0 0 00
Utilities Expense 3 3 6 0 00
Total Expenses 39 9 6 0 00
Net Income 125 0 4 0 00
The Style Shop

Statement of Owner’s Equity
Sarah Palmer, Capital, December 1, 2010 149 1 6 0 00

Net Income for December 125 0 4 0 00
Less Withdrawals for December 12 0 0 0 00
Increase in Capital 113 0 4 0 00
Sarah Palmer, Capital, December 31, 2010 262 2 0 0 00
The Style Shop

Balance Sheet
December 31, 2010
Assets
Cash 81 6 0 0 00
Supplies 7 2 0 0 00
Prepaid Insurance 16 8 0 0 00
Machinery 168 0 0 0 00
Accumulated Depreciation—Machinery 2 4 0 0 00 165 6 0 0 00
Total Assets 289 2 0 0 00
Liabilities and Owner’s Equity

Liabilities
Owner’s Equity
Sarah Palmer, Capital 262 2 0 0 00
Total Liabilities and Owner’s Equity 289 2 0 0 00
GENERAL JOURNAL 3
PAGE __________

REF.
2 2010 2
3 Dec. 31 Supplies Expense 7 2 0 0 00 3
4 Supplies 7 2 0 0 00 4
5 5
6 31 Insurance Expense 4 8 0 0 00 6
7 Prepaid Insurance 4 8 0 0 00 7
8 8
9 31 Depreciation Expense—Machinery 2 4 0 0 00 9
10 Accumulated Depreciation—Machinery 2 4 0 0 00 10
11 11
12 12
13 13
14 14
15 15
16 16
GENERAL JOURNAL 4
PAGE __________

REF.
1 Closing Entries 1
2 2010 2
3 Dec. 31 Fees Income 165 0 0 0 00 3
5 5
6 31 Income Summary 39 9 6 0 00 6
8 Insurance Expense 4 8 0 0 00 8
10 Depreciation Expense—Machinery 2 4 0 0 00 10
12 12
13 31 Income Summary 125 0 4 0 00 13
14 Sarah Palmer, Capital 125 0 4 0 00 14
15 15
16 31 Sarah Palmer, Capital 12 0 0 0 00 16
17 Sarah Palmer, Drawing 12 0 0 0 00 17
18 18
The Style Shop

December 31, 2010
Cash 81 6 0 0 00
Supplies 7 2 0 0 00
Machinery 168 0 0 0 00
Accumulated Depreciation—Machinery 2 4 0 0 00
Sarah Palmer, Capital 262 2 0 0 00
Totals 291 6 0 0 00 291 6 0 0 00
Analyze: The net income would be $134,640.
CRITICAL THINKING PROBLEM 6.2
1. Reed made the following errors preparing the closing entries:

a. Accumulated Depreciation and Accounts Payable are permanent accounts that continue from accounting
period to accounting period and, consequently, are not closed.
b. The Drawing account is not an expense account to be closed to Income Summary but is a reduction of equity
and is closed directly to the Capital account.
Wilson Reed closed accounts based on what kind of balance they had (debit/credit) rather than looking at the
type of account (permanent/temporary) they were. Only temporary, or nominal, accounts are closed.
2.
GENERAL JOURNAL PAGE __________

REF.
1 2010 1
2 Dec. 31 James Walker, Capital 20 7 5 0 00 2
3 Accumulated Depreciation 4 2 5 0 00 3
4 Accounts Payable 16 5 0 0 00 4
5 To correct errors made in closing entries 5
6 6
3. The proof of this entry is:

Fees Income 49,000
Expenses:
Salaries Expense 39,000
Supplies Expense 2,500
Depreciation Expense 1,200 42,700
Net Income 6,300
Withdrawals (3,500)
Increase in Capital 2,800
Capital, Beginning 25,000
Capital, Ending 27,800
Corrected balance per Reed’s entries 48,550

Less debit from correcting entry (20,750)
Corrected ending Capital balance 27,800
Note: It is not necessary to make an entry to correct the closing of the Drawing account to the Income Summary
account. Closing the Drawing account to the Income Summary account, which in turn was closed to the Capital
account, results in reducing the Capital account by the amount of the withdrawals. So, while incorrect, Reed’s
entry with regard to Drawing achieves the correct end result.
The balance of the Capital account after closing entries have been posted must agree with the ending Capital
balance as shown. Posting the entry closing the Income Summary account increases the Capital account by the
amount of the net income (or decreases it by the amount of a net loss), while posting the entry closing the
Drawing account decreases the Capital account. These postings reflect the same changes to Capital that are
shown on the statement of owner’s equity and on the balance sheet, and therefore, the ending Capital amount
must be the same for both.
Note that the errors Reed made in preparing the closing entries would not be revealed by the postclosing
trial balance. Since each entry Reed made had equal debits and credits, the postclosing trial balance
would be in balance. The errors would not become evident until the next year when postings were made to the
Accumulated Depreciation and Accounts Payable accounts or when the ledger account balances were
compared to the balance sheet amounts.
Business Connections
Managerial Focus:
1. No. A thorough analysis of the components of the income statement would reveal how costs directly impact
net income. The balance sheet helps determine the amount of the firm’s assets and its liquidity, liabilities,
and equity.
2. Current assets compared with current liabilities.
3. Timely preparation of financial statements support future planning, prompt payment of debts, developing
effective credit policies.
4. The income statement might help determine the adequacy of profit, how to improve revenue and hold down
expenses, how to reduce expenses without decreasing revenue, and how to even out the business operating
cycle. Balance sheet data might influence decisions concerning growth of equity, the return on investment,
adequacy of the firm’s assets, whether collections on accounts receivable should be accelerated, and
whether more capital is needed.
Ethical Dilemma:
You should wait to verify the invoice is an actual invoice. At the end of the year, Miscellaneous Expense will be
closed and the $1,000 expense will be in the previous year and not given the verification it so badly needs.
Streetwise:
1. Answers will vary, but permanent accounts may include Cash and Cash Equivalents, Short-Term Investments,
Receivables, etc. Temporary accounts include Sales, Selling and Store Operating Expenses, Interest and
Investment Income.
2. Dr. Inc. Summ., $20,110 million; Cr. Selling, General and Administrative, $18,348 million; credit Depreciation
and Amortization, $1,762 million.
Financial Statement Analysis:

1. Dr. Inc. Summ., $7,440,000,000; Dr. Gain on Insurance Recoveries, $168,000,000; Cr. Labor and Fringe,
$2,922,000,000; Cr. Materials, Supplies, and Other $1,889,000; Cr. Conrail Fees, Rents, and Services,
$75,000,000; Cr. Inland Trans., $242,000,000; Cr. Depreciation, $856,000,000; Cr. Fuel, $1,112,000,000; Cr.
Equipment & Other Rents, $512,000,000
2. Dr. Intermodal, $1,412,000,000; Dr. Rail, $8,154,000,000; Cr. Inc. Summ., $9,566,000,000
Analyze Online:
Answers will vary depending on the year.
Extending the Thought:

Answers will vary. Students may suggest that skipping the preparation of the worksheet will increase the
chance for errors in the accounting records.
Business Communication:
Students’ reports will vary. Students should demonstrate an understanding of the types of accounts that should
be closed at the end of an accounting period.
Team Work:
1) Analyze transactions, 2) journalize the data about transactions, 3) post the data about transactions, 4) prepare
a worksheet, 5) prepare financial statements, 6) record adjusting entries, 7) record closing entries, 8) prepare a
postclosing trial balance, and 9) interpret the financial information.
Internet Connection:
1. Requirements Experience: At least 2 years full-time experience or the part-time or freelance equivalent.
2. Examination: Candidates must pass a 4-part national examination, including 2 parts given at any Prometric
Test Center (there are over 300 nationwide).
3. Code of Ethics: Applicants must sign a Code of Ethics.
Chapter 6 Practice Test Answer Key

Part A True-False Part B Matching
1. F 1. d
2. F 2. e
3. T 3. c
4. F 4. b
5. T 5. a
6. F
7. T
8. F
9. F
10. T
MINI-PRACTICE SET
1 Service Business
Accounting Cycle
GENERAL JOURNAL 3
PAGE __________

REF.
1 2011 1
2 Jan. 2 Supplies 121 3 0 0 0 00 2
3 Cash 101 3 0 0 0 00 3
4 Bought supplies for cash, Check 1015 4
5 5
6 2 Prepaid Insurance 134 4 8 0 0 00 6
7 Cash 101 4 8 0 0 00 7
8 Purchased one year of insurance, Check 1016 8
9 9
10 7 Cash 101 15 0 0 0 00 10
11 Accounts Receivable 111 1 8 0 0 00 11
12 Fees Income 401 16 8 0 0 00 12
13 Performed services for cash and on account 13
14 14
15 12 Cash 101 1 5 0 0 00 15
17 Received cash on account 17
18 18
20 Cash 101 2 1 5 0 00 20
21 Paid for advertising on radio, Check 1017 21
22 22
23 13 Cash 101 2 2 5 0 00 23
26 26
27 14 Cash 101 2 7 5 00 27
28 Supplies 121 2 7 5 00 28
29 Returned damaged supplies for cash refund 29
30 30
31 31
32 32
33 33
34 34
Copyright © 2009 The McGraw-Hill Companies. All rights reserved. Mini-Practice Set 1 ■ 169
MINI-PRACTICE SET 1 (continued)
GENERAL JOURNAL 4
PAGE __________

REF.
1 2011 1
2 Jan. 15 Cash 101 18 2 5 0 00 2
4 Fees Income 401 20 6 2 5 00 4
6 6
7 20 Supplies 121 1 8 0 0 00 7
8 Accounts Payable 202 1 8 0 0 00 8
9 Bought supplies on account 9
10 10
11 20 Cash 101 9 0 5 0 00 11
13 Fees Income 401 14 9 0 0 00 13
15 15
16 20 Cash 101 1 7 5 0 00 16
19 19
20 21 Maintenance Expense 529 4 2 5 0 00 20
21 Cash 101 4 2 5 0 00 21
22 Paid cash for equipment maintenance, 22
23 Check 1018 23
24 24
26 Cash 101 2 7 5 0 00 26
27 Paid cash for newspaper ads, Check 1019 27
28 28
29 23 Telephone Expense 532 4 1 0 00 29
30 Cash 101 4 1 0 00 30
31 Paid monthly telephone bill, Check 1020 31
32 32
33 26 Cash 101 4 5 7 0 00 33
36 36
37 37
38 38
39 39
170 ■ Mini-Practice Set 1 Copyright © 2009 The McGraw-Hill Companies. All rights reserved.
GENERAL JOURNAL 5
PAGE __________

REF.
1 2011 1
2 Jan. 27 Accounts Payable 202 2 0 0 0 00 2
3 Cash 101 2 0 0 0 00 3
4 Made payment to creditor, Check 1021 4
5 5
6 28 Utilities Expense 514 1 0 5 0 00 6
7 Cash 101 1 0 5 0 00 7
8 Paid monthly utility bill, Check 1022 8
9 9
10 29 Cash 101 14 0 5 0 00 10
12 Fees Income 401 16 3 0 0 00 12
14 14
15 31 Salaries Expense 511 15 5 0 0 00 15
16 Cash 101 15 5 0 0 00 16
17 Paid monthly salaries, Checks 1023–1027 17
18 18
19 31 Carolyn Wells, Drawing 302 6 0 0 0 00 19
20 Cash 101 6 0 0 0 00 20
21 Owner withdrew cash for personal use, 21
22 Check 1028 22
23 23
24 31 Maintenance Expense 529 1 0 5 0 00 24
25 Cash 101 1 0 5 0 00 25
26 Paid for monthly maintenance services, 26
27 Check 1029 27
28 28
29 31 Equipment 141 10 5 0 0 00 29
30 Cash 101 5 5 0 0 00 30
31 Accounts Payable 202 5 0 0 0 00 31
32 Bought equipment for cash and on account, 32
33 Check 1030 33
34 34
35 31 Cash 101 2 8 5 0 00 35
37 Fees Income 401 4 3 0 0 00 37
39 39
GENERAL JOURNAL 6
PAGE __________

REF.
2 2011 2
3 Jan. 31 Supplies Expense 517 3 5 2 5 00 3
4 Supplies 121 3 5 2 5 00 4
5 5
6 31 Insurance Expense 535 4 0 0 00 6
7 Prepaid Insurance 134 4 0 0 00 7
8 8
9 31 Rent Expense 520 4 0 0 0 00 9
10 Prepaid Rent 137 4 0 0 0 00 10
11 11
12 31 Depreciation Expense—Equipment 523 1 8 3 00 12
13 Accumulated Depreciation—Equipment 142 1 8 3 00 13
14 14
15 Closing Entries 15
16 16
17 31 Fees Income 401 72 9 2 5 00 17
18 Income Summary 309 72 9 2 5 00 18
19 19
20 31 Income Summary 309 35 2 6 8 00 20
24 Rent Expense 520 4 0 0 0 00 24
27 Maintenance Expense 529 5 3 0 0 00 27
29 Insurance Expense 535 4 0 0 00 29
30 30
31 31 Income Summary 309 37 6 5 7 00 31
32 Carolyn Wells, Capital 301 37 6 5 7 00 32
33 33
34 31 Carolyn Wells, Capital 301 6 0 0 0 00 34
35 Carolyn Wells, Drawing 302 6 0 0 0 00 35
36 36
37 37
38 38
39 39
GENERAL LEDGER
Cash
ACCOUNT ________________________________________________________________ 101
ACCOUNT NO. ______________
POST. BALANCE
REF. DEBIT CREDIT
2011
Jan. 1 Balance ✔ 111 3 5 0 00
2 J3 3 0 0 0 00 108 3 5 0 00
2 J3 4 8 0 0 00 103 5 5 0 00
7 J3 15 0 0 0 00 118 5 5 0 00
12 J3 1 5 0 0 00 120 0 5 0 00
12 J3 2 1 5 0 00 117 9 0 0 00
13 J3 2 2 5 0 00 120 1 5 0 00
14 J3 2 7 5 00 120 4 2 5 00
15 J4 18 2 5 0 00 138 6 7 5 00
20 J4 9 0 5 0 00 147 7 2 5 00
20 J4 1 7 5 0 00 149 4 7 5 00
21 J4 4 2 5 0 00 145 2 2 5 00
22 J4 2 7 5 0 00 142 4 7 5 00
23 J4 4 1 0 00 142 0 6 5 00
26 J4 4 5 7 0 00 146 6 3 5 00
27 J5 2 0 0 0 00 144 6 3 5 00
28 J5 1 0 5 0 00 143 5 8 5 00
29 J5 14 0 5 0 00 157 6 3 5 00
31 J5 15 5 0 0 00 142 1 3 5 00
31 J5 6 0 0 0 00 136 1 3 5 00
31 J5 1 0 5 0 00 135 0 8 5 00
31 J5 5 5 0 0 00 129 5 8 5 00
31 J5 2 8 5 0 00 132 4 3 5 00
Accounts Receivable
ACCOUNT ________________________________________________________________ 111
ACCOUNT NO. ______________
POST. BALANCE
REF. DEBIT CREDIT
2011
Jan. 1 Balance ✔ 5 0 0 0 00
7 J3 1 8 0 0 00 6 8 0 0 00
12 J3 1 5 0 0 00 5 3 0 0 00
13 J3 2 2 5 0 00 3 0 5 0 00
15 J4 2 3 7 5 00 5 4 2 5 00
20 J4 5 8 5 0 00 11 2 7 5 00
20 J4 1 7 5 0 00 9 5 2 5 00
26 J4 4 5 7 0 00 4 9 5 5 00
29 J5 2 2 5 0 00 7 2 0 5 00
31 J5 1 4 5 0 00 8 6 5 5 00
GENERAL LEDGER
Supplies
ACCOUNT ________________________________________________________________ 121
ACCOUNT NO. ______________
POST. BALANCE
REF. DEBIT CREDIT
2011
Jan. 1 Balance ✔ 1 0 0 0 00
2 J3 3 0 0 0 00 4 0 0 0 00
14 J3 2 7 5 00 3 7 2 5 00
20 J4 1 8 0 0 00 5 5 2 5 00
31 Adjusting J6 3 5 2 5 00 2 0 0 0 00
Prepaid Insurance
ACCOUNT ________________________________________________________________ 134
ACCOUNT NO. ______________
POST. BALANCE
REF. DEBIT CREDIT
2011
Jan. 2 J3 4 8 0 0 00 4 8 0 0 00
31 Adjusting J6 4 0 0 00 4 4 0 0 00
Prepaid Rent
ACCOUNT ________________________________________________________________ 137
ACCOUNT NO. ______________
POST. BALANCE
REF. DEBIT CREDIT
2011
Jan. 1 Balance ✔ 4 0 0 0 00
31 Adjusting J6 4 0 0 0 00 – 0 – 00
Equipment
ACCOUNT ________________________________________________________________ 141
ACCOUNT NO. ______________
POST. BALANCE
REF. DEBIT CREDIT
2011
Jan. 1 Balance ✔ 11 0 0 0 00
31 J5 10 5 0 0 00 21 5 0 0 00
ACCOUNT ________________________________________________________________ 142
ACCOUNT NO. ______________
POST. BALANCE
REF. DEBIT CREDIT
2011
Jan. 1 Balance ✔ 1 8 3 00
31 Adjusting J6 1 8 3 00 3 6 6 00
GENERAL LEDGER
Accounts Payable
ACCOUNT ________________________________________________________________ 202
ACCOUNT NO. ______________
POST. BALANCE
REF. DEBIT CREDIT
2011
Jan. 1 Balance ✔ 3 5 0 0 00
20 J4 1 8 0 0 00 5 3 0 0 00
27 J5 2 0 0 0 00 3 3 0 0 00
31 J5 5 0 0 0 00 8 3 0 0 00
Carolyn Wells, Capital

ACCOUNT ________________________________________________________________ 301
ACCOUNT NO. ______________
POST. BALANCE
REF. DEBIT CREDIT
2011
Jan. 1 Balance ✔ 128 6 6 7 00
31 Closing J6 37 6 5 7 00 166 3 2 4 00
31 Closing J6 6 0 0 0 00 160 3 2 4 00
Carolyn Wells, Drawing

ACCOUNT ________________________________________________________________ 302
ACCOUNT NO. ______________
POST. BALANCE
REF. DEBIT CREDIT
2011
Jan. 31 J5 6 0 0 0 00 6 0 0 0 00
31 Closing J6 6 0 0 0 00 – 0 – 00
Income Summary
ACCOUNT ________________________________________________________________ 309
ACCOUNT NO. ______________
POST. BALANCE
REF. DEBIT CREDIT
2011
Jan. 31 Closing J6 72 9 2 5 00 72 9 2 5 00
31 Closing J6 35 2 6 8 00 37 6 5 7 00
31 Closing J6 37 6 5 7 00 – 0 – 00
GENERAL LEDGER
Fees Income
ACCOUNT ________________________________________________________________ 401
ACCOUNT NO. ______________
POST. BALANCE
REF. DEBIT CREDIT
2011
Jan. 7 J3 16 8 0 0 00 16 8 0 0 00
15 J4 20 6 2 5 00 37 4 2 5 00
20 J4 14 9 0 0 00 52 3 2 5 00
29 J5 16 3 0 0 00 68 6 2 5 00
31 J5 4 3 0 0 00 72 9 2 5 00
31 Closing J6 72 9 2 5 00 – 0 – 00
Salaries Expense
ACCOUNT ________________________________________________________________ 511
ACCOUNT NO. ______________
POST. BALANCE
REF. DEBIT CREDIT
2011
Jan. 31 J5 15 5 0 0 00 15 5 0 0 00
31 Closing J6 15 5 0 0 00 – 0 – 00
Utilities Expense
ACCOUNT ________________________________________________________________ 514
ACCOUNT NO. ______________
POST. BALANCE
REF. DEBIT CREDIT
2011
Jan. 28 J5 1 0 5 0 00 1 0 5 0 00
31 Closing J6 1 0 5 0 00 – 0 – 00
Supplies Expense
ACCOUNT ________________________________________________________________ 517
ACCOUNT NO. ______________
POST. BALANCE
REF. DEBIT CREDIT
2011
Jan. 31 Adjusting J6 3 5 2 5 00 3 5 2 5 00
31 Closing J6 3 5 2 5 00 – 0 – 00
Rent Expense
ACCOUNT ________________________________________________________________ 520
ACCOUNT NO. ______________
POST. BALANCE
REF. DEBIT CREDIT
2011
Jan. 31 Adjusting J6 4 0 0 0 00 4 0 0 0 00
31 Closing J6 4 0 0 0 00 – 0 – 00
GENERAL LEDGER
ACCOUNT ________________________________________________________________ 523
ACCOUNT NO. ______________
POST. BALANCE
REF. DEBIT CREDIT
2011
Jan. 31 Adjusting J6 1 8 3 00 1 8 3 00
31 Closing J6 1 8 3 00 – 0 – 00
Advertising Expense
ACCOUNT ________________________________________________________________ 526
ACCOUNT NO. ______________
POST. BALANCE
REF. DEBIT CREDIT
2011
Jan. 12 J3 2 1 5 0 00 2 1 5 0 00
22 J4 2 7 5 0 00 4 9 0 0 00
31 Closing J6 4 9 0 0 00 – 0 – 00
Maintenance Expense
ACCOUNT ________________________________________________________________ 529
ACCOUNT NO. ______________
POST. BALANCE
REF. DEBIT CREDIT
2011
Jan. 21 J4 4 2 5 0 00 4 2 5 0 00
31 J5 1 0 5 0 00 5 3 0 0 00
31 Closing J6 5 3 0 0 00 – 0 – 00
Telephone Expense
ACCOUNT ________________________________________________________________ 532
ACCOUNT NO. ______________
POST. BALANCE
REF. DEBIT CREDIT
2011
Jan. 23 J4 4 1 0 00 4 1 0 00
31 Closing J6 4 1 0 00 – 0 – 00
Insurance Expense
ACCOUNT ________________________________________________________________ 535
ACCOUNT NO. ______________
POST. BALANCE
REF. DEBIT CREDIT
2011
Jan. 31 Adjusting J6 4 0 0 00 4 0 0 00
31 Closing J6 4 0 0 00 – 0 – 00
Wells’ Consulting Services

Worksheet
Month Ended January 31, 2011
ACCOUNT NAME
1 Cash 132 4 3 5 00
3 Supplies 5 5 2 5 00 (a) 3 5 2 5 00
4 Prepaid Rent 4 0 0 0 00 (b) 4 0 0 0 00
5 Prepaid Insurance 4 8 0 0 00 (c) 4 0 0 00
6 Equipment 21 5 0 0 00
7 Accumulated Depreciation—Equipment 1 8 3 00 (d) 1 8 3 00
9 Carolyn Wells, Capital 128 6 6 7 00
10 Carolyn Wells, Drawing 6 0 0 0 00
11 Income Summary
12 Fees Income 72 9 2 5 00
16 Rent Expense (b) 4 0 0 0 00
17 Depreciation Expense—Equipment (d) 1 8 3 00
18 Insurance Expense (c) 4 0 0 00
19 Advertising Expense 4 9 0 0 00
20 Telephone Expense 4 1 0 00
21 Maintenance Expense 5 3 0 0 00
22 Totals 210 0 7 5 00 210 0 7 5 00 8 1 0 8 00 8 1 0 8 00
23 Net Income
24
25
26
27
28
29
30
31
32
33
34
35
36
37

132 4 3 5 00 132 4 3 5 00 1
8 6 5 5 00 8 6 5 5 00 2
2 0 0 0 00 2 0 0 0 00 3
– 0 – 00 – 0 – 00 4
4 4 0 0 00 4 4 0 0 00 5
21 5 0 0 00 21 5 0 0 00 6
3 6 6 00 3 6 6 00 7
8 3 0 0 00 8 3 0 0 00 8
128 6 6 7 00 128 6 6 7 00 9
6 0 0 0 00 6 0 0 0 00 10
11
72 9 2 5 00 72 9 2 5 00 12
15 5 0 0 00 15 5 0 0 00 13
1 0 5 0 00 1 0 5 0 00 14
3 5 2 5 00 3 5 2 5 00 15
4 0 0 0 00 4 0 0 0 00 16
1 8 3 00 1 8 3 00 17
4 0 0 00 4 0 0 00 18
4 9 0 0 00 4 9 0 0 00 19
4 1 0 00 4 1 0 00 20
5 3 0 0 00 5 3 0 0 00 21
210 2 5 8 00 210 2 5 8 00 35 2 6 8 00 72 9 2 5 00 174 9 9 0 00 137 3 3 3 00 22
37 6 5 7 00 37 6 5 7 00 23
72 9 2 5 00 72 9 2 5 00 174 9 9 0 00 174 9 9 0 00 24
25
26
27
28
29
30
31
32
33
34
35
36
37

Income Statement
Revenue
Fees Income 72 9 2 5 00
Expenses
Salaries Expense 15 5 0 0 00
Utilities Expense 1 0 5 0 00
Supplies Expense 3 5 2 5 00
Rent Expense 4 0 0 0 00
Depreciation Expense—Equipment 1 8 3 00
Insurance Expense 4 0 0 00
Advertising Expense 4 9 0 0 00
Telephone Expense 4 1 0 00
Maintenance Expense 5 3 0 0 00
Total Expenses 35 2 6 8 00
Net Income 37 6 5 7 00

Statement of Owner’s Equity
Carolyn Wells, Capital, January 1, 2011 128 6 6 7 00

Net Income for January 37 6 5 7 00
Less Withdrawals for January 6 0 0 0 00
Increase in Capital for January 31 6 5 7 00
Carolyn Wells, Capital, January 31, 2011 160 3 2 4 00

Balance Sheet
January 31, 2011
Assets
Cash 132 4 3 5 00
Supplies 2 0 0 0 00
Less Accumulated Depreciation—Equipment 3 6 6 00 21 1 3 4 00
Total Assets 168 6 2 4 00
Liabilities and Owner’s Equity

Liabilities
Owner’s Equity
Carolyn Wells, Capital 160 3 2 4 00
Total Liabilities and Owner’s Equity 168 6 2 4 00

January 31, 2011
Cash 132 4 3 5 00
Supplies 2 0 0 0 00
Accumulated Depreciation—Equipment 3 6 6 00
Carolyn Wells, Capital 160 3 2 4 00
Totals 168 9 9 0 00 168 9 9 0 00
Analyze: a. Total assets increased by $36,457 ($168,624 – $132,167).

Total liabilities increased by $4,800 ($8,300 – $3,500).
Owner’s capital increased by $31,657 ($160,324 – 128,667).
b. The balance of Cash increased by $21,085 ($132,435 – $111,350).

The balance of Accounts Receivable increased by $3,655 ($8,655 – $5,000).
c. Yes. The firm’s financial position improved through the increases in capital of $31,657
($160,324 – $128,667).

Solutions CH 6 PDF

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Solutions CH 6 PDF

Uploaded by

Copyright:

Available Formats

pri30597_SM_ch06.

qxd 8/2/08 1:24 PM Page 121

Students should recognize that financial statements can be used to evaluate

DATE DESCRIPTION POST. DEBIT CREDIT

3 Dec. 31 Fees Income 97 5 0 0 00 3

14 Hayward Anderson, Capital 43 5 0 0 00 14

16 31 Hayward Anderson, Capital 25 0 0 0 00 16

17 Hayward Anderson, Drawing 25 0 0 0 00 17

1. Cash 5. Accumulated Depreciation

2. Total expenses for the period are $30,300 .

3. Net income for the period is $16,200 .

4. Owner’s withdrawals for the period are $5,000 .

DATE DESCRIPTION POST. DEBIT CREDIT

3 Mar. 31 Fees Income 401 276 0 0 0 00 3

4 Income Summary 399 276 0 0 0 00 4

6 31 Income Summary 399 206 5 8 0 00 6

7 Depreciation Expense—Equipment 510 10 0 8 0 00 7

8 Insurance Expense 511 9 6 0 0 00 8

9 Rent Expense 514 28 8 0 0 00 9

10 Salaries Expense 517 141 6 0 0 00 10

11 Supplies Expense 518 3 9 0 0 00 11

12 Telephone Expense 519 5 4 0 0 00 12

13 Utilities Expense 523 7 2 0 0 00 13

15 31 Income Summary 399 69 4 2 0 00 15

16 Elizabeth Chavez, Capital 301 69 4 2 0 00 16

18 31 Elizabeth Chavez, Capital 301 6 0 0 0 00 18

19 Elizabeth Chavez, Drawing 302 6 0 0 0 00 19

EXERCISE 6.6 (continued)

Elizabeth Chavez, Drawing

EXERCISE 6.6 (continued)

EXERCISE 6.6 (continued)

DATE DESCRIPTION POST. DEBIT CREDIT

3 Dec. 31 Gladys Zamarripa, Capital 54 0 0 0 00 3

6 31 Gladys Zamarripa, Capital 6 0 0 0 00 6

7 Gladys Zamarripa, Drawing 6 0 0 0 00 7

Prepare financial statements

Record adjusting entries

Record closing entries

Prepare postclosing trial balance

Interpret financial information

DATE DESCRIPTION POST. DEBIT CREDIT

3 Jan. 31 Supplies Expense 1 1 2 0 00 3

9 31 Depreciation Expense—Office Equipment 2 2 4 0 00 9

10 Accumulated Depreciation—Office Equipment 2 2 4 0 00 10

DATE DESCRIPTION POST. DEBIT CREDIT

3 Jan. 31 Fees Income 87 0 0 0 00 3

7 Depreciation Expense—Office Equipment 2 2 4 0 00 7

16 Jeff Sager, Capital 20 2 5 5 00 16

18 31 Jeff Sager, Capital 5 4 0 0 00 18

19 Jeff Sager, Drawing 5 4 0 0 00 19

Analyze: Credit the drawing account; debit the capital account.

DATE DESCRIPTION POST. DEBIT CREDIT

3 Dec. 31 Supplies Expense 517 1 2 0 0 00 3

6 31 Advertising Expense 526 1 5 0 0 00 6

7 Prepaid Advertising 131 1 5 0 0 00 7

9 31 Depreciation Expense—Equipment 523 1 2 0 0 00 9

10 Accumulated Depreciation—Equipment 142 1 2 0 0 00 10

DATE DESCRIPTION POST. DEBIT CREDIT

3 Dec. 31 Fees Income 401 37 5 0 0 00 3

4 Income Summary 309 37 5 0 0 00 4

6 31 Income Summary 309 12 0 0 0 00 6

7 Supplies Expense 517 1 2 0 0 00 7

8 Advertising Expense 526 1 5 0 0 00 8