Chapter 4 Practice – Answer Key

XYZ Company
Account Balances as of July 31, 2018
All accounts have “normal” account balances.

Account Account Name Current

Number Balance

1010 Cash 125,845

1020 Accounts Receivable 25,742
1040 Office Supplies 1,410
2010 Accounts Payable 5,723
2020 Note Payable 15,753
3010 Bill Smith, Owner Capital 47,482
3020 Bill Smith, Owner Withdrawals 2,000
4010 Ticket Sales 145,784
5010 Salary Expense 55,432
5040 Automobile Expense 3,863
5050 Insurance Expense 0
5090 Miscellaneous Expense 450

Part 1: Income Statement

Income Statement
XYZ Company
Month ended July 31,2018

Revenue
Ticket Sales 145,784
Total Revenue 145,784

Expenses
Salary Expense 55,432
Automobile Expense 3,863
Miscellaneous Expense 450
Total Expenses 59,745
Total Net Profit 86,039
Part 2: Statement of Owner’s Equity
Opening Balance at July 1, 2018 $35,482

Statement of Owner’s Equity

XYZ Company
As of July 31,2018

Opening Balance at July 1, 2018 35,482

Add: Owner Contribution during July 12,000
Net Profit for July 86,039
Increase in fund 133,521

Less: Owner’s Withdrawal during July (2,000)

Closing Balance at July 31, 2018 131,521

Part 3: Classified Balance Sheet

Classified Balance Sheet

XYZ Company
As of July 31,2018

Assets
Current Assets:
Cash 125,845
Accounts Receivable 25,742
Office Supplies 1,410
Total Current Assets / Total Assets 152,997

Liabilities & Owner’s Equity

Current Liabilities:
Accounts Payable 5,723
Note Payable 15,753
Total Current Liabilities / Total Liabilities 21,476

Bill Smith, Owner Capital 131,521

Total Liabilities & Owner’s Equity 152,997
Part 4: Closing Entries

July 31/18 Ticket Sales 145,784

Income Summary 145,784
To close out Revenue Accounts

July 31/18 Income Summary 59,745

Salary Expense 55,432
Automobile Expense 3,863
Miscellaneous Expense 450
To close out Expense Accounts

July 31/18 Income Summary 86,039

Bill Smith, Owner Capital 86,039
To close Net Profit into Owner Capital

July 31/18 Bill Smith, Owner Capital 2,000

Bill Smith, Owner Withdrawals 2,000
To close out owner withdrawals into Owner Capital

Income Summary 3300 Bill Smith, Owner Capital 3010

145,782 (1) 35,482 (open balance)

12,000 (contributed in July)
(2) 59,745

86,039 Balance 86,039 (closing entry 3)

(closing Entry 4) 2,000

(3) 86,039

0 0 131,521