33) The Sally Company has the following data available at December 31, 2018:
Account
Debit
Credit
Cash
$800
Accounts Receivable
800
Inventory
2100
Supplies
2000
Prepaid Rent
700
Land
6400
Building
39,400
Accumulated Depreciation
$8600
Accounts Payable
7600
Unearned Revenue
4500
Notes Payable, due 2020
2100
Common Stock
6800
Retained Earnings
3400
Service Revenue
32,100
Rent Expense
2,300
Supplies Expense
1,200
Salaries Expense
6,400
Depreciation Expense
1,400
Utilities Expense
1,600
Totals
$65,100
$65,100
At December 31, 2018, what are the total current liabilities?
A) $7600
B) $12,100
C) $14,200
D) $17,600
34) Trevor Company has the following adjusted trial balance at December 31, 2018:
Account
Debit
Credit
Cash
$900
Accounts Receivable
1100
Inventory
1900
Supplies
1900
Prepaid Rent
500
Land
6500
Building
39,500
Accumulated Depreciation
$8500
Accounts Payable
7100
Unearned Revenue
3800
Notes Payable, due 2020
2200
Common Stock
6400
Retained Earnings
3200
Dividends
800
Service Revenue
33,900
Rent Expense
1400
Supplies Expense
1300
Salaries Expense
6300
Depreciation Expense
1600
Utilities Expense
1400
Totals
$65,100
$65,100
What is the Retained Earnings balance at December 31, 2018?
A) $21,100
B) $24,300
C) $25,100
D) $21,900
35) A company has the following adjusted trial balance:
Account
Debit
Credit
Cash
$700
Accounts Receivable
1200
Inventory
2000
Supplies
1700
Prepaid Rent
400
Land
5700
Building
40,100
Accumulated Depreciation
$8100
Accounts Payable
7100
Unearned Revenue
4500
Notes Payable, due 2020
2500
Common Stock
6900
Retained Earnings
2800
Dividends
1000
Service Revenue
33,200
Rent Expense
1400
Supplies Expense
1400
Salaries Expense
6500
Depreciation Expense
1400
Utilities Expense
1600
Totals
$65,100
$65,100
Which closing entry is needed?
A) Debit Service Revenue for $33,200 and credit Retained Earnings for $33,200
B) Debit Rent Expense for $1400 and credit Retained Earnings for $1400
C) Credit Retained Earnings for $1800 and debit Cash for $1800
D) Debit Dividends for $1000 and credit Retained Earnings for $1000
36) A company has the following adjusted trial balance:
Account
Debit
Credit
Cash
$900
Accounts Receivable
1200
Inventory
2000
Supplies
2000
Prepaid Rent
300
Land
6500
Building
40,000
Accumulated Depreciation
$8500
Accounts Payable
7200
Unearned Revenue
4400
Notes Payable, due 2020
2600
Common Stock
6400
Retained Earnings
2900
Dividends
800
Service Revenue
33,100
Rent Expense
1200
Supplies Expense
1300
Salaries Expense
6100
Depreciation Expense
1400
Utilities Expense
1400
Totals
$65,100
$65,100
Which closing entry is needed?
A) Debit Retained Earnings for $800 and credit Dividends $800
B) Debit Retained Earnings for $2500, credit Rent Expense for $1200 and credit Supplies Expense for
$1300
C) Debit Retained Earnings for $8900, credit Salaries Expense for $6100, credit Depreciation Expense for
$1400 and credit Utilities Expense for $1400
D) all of the above
37) Revenues and expenses are closed to:
A) Cash.
B) Net Income.
C) Dividends.
D) Retained Earnings.
38) Operating income reflects:
A) income from a company’s main and secondary business activities.
B) earnings from a company’s core business activities.
C) earnings from a company ‘s core business activities which includes interest income.
D) an important measure that investors to use to evaluate the liquidity of the business.
39) On a multistep income statement, “Other income (expenses), net”:
A) includes sales returns and depreciation expense.
B) includes interest income and other investment income.
C) is seldom used because investors do not understand what is included.
D) includes dividend expense.
40) On a multistep income statement, a common subtotal is:
A) Income from Nonoperating Activities.
B) Gross Profit.
C) Interest Expense minus Interest Income.
D) none of the above.
41) Regarding income statement formats, which of the following statements is INCORRECT?
A) A single-step income statement lists all the revenues together under a heading such as Revenues and
Gains.
B) A single-step income statement lists income tax expense separate of all other expenses.
C) A multistep income statement reports a number of subtotals to highlight important relationships
between revenues and expenses.
D) A multistep income statement is the only format that allows users to evaluate the profitability of the
business.
42) Indicate if the account is a current asset (CA), long–term asset (LTA), current liability (CL), long-term
liability (LTL), or stockholders’ equity(SE):
1. Long-term Investments ________
2. Equipment ________
3. Building ________
4. Prepaid Rent ________
5. Notes Payable due in 6 months ________
6. Salary Payable ________
7. Notes Payable due in 3 years ________
8. Goodwill ________
9. Interest Payable ________
10. Accounts Receivable ________
11. Current Portion of Long-term Debt ________
12. Additional Paid-in Capital ________
13. Retained Earnings ________
43) Complete the chart below by putting an “X” in the appropriate box:
Account
Closed with a debit
to the account
Closed with a
credit to the
account
Not closed
Notes Payable
Prepaid Rent
Common Stock
Long-term Investment
Depreciation Expense
Dividends
Advertising Expense
Interest Revenue
Rent Revenue
Cost of Goods Sold
Selling Expense
Gain on Sale of Land
Unearned Revenue
Income Tax Expense
Account
Closed with a debit
credit to the
Notes Payable
Prepaid Rent
Common Stock
Long-term Investment
Depreciation Expense
Dividends
Advertising Expense
Interest Revenue
Rent Revenue
Cost of Goods Sold
Gain on Sale of Land
Unearned Revenue
Income Tax Expense
69
44) Christine’s Cleaning Services, Inc. has the following adjusted trial balance as of March 31, 2017.
Prepare a classified balance sheet as of that date.
Account
Debit
Credit
Cash
$600
Short-Term Investments
1,800
Inventory
2,000
Prepaid Rent
2,900
Prepaid Insurance
1,500
Building
50,000
Accumulated Depreciation—Building
$7,500
Long-Term Investments
23,000
Goodwill
20,000
Patent
7,500
Accounts Payable
6,000
Current Portion of Long-term Note Payable
2,500
Income Tax Payable
15,630
Long-term Notes Payable
8,000
Common Stock
1,650
Additional Paid-in Capital
30,000
Retained Earnings
2,520
Service Revenue
41,000
Rent Expense
1,000
Insurance Expense
2,000
Salaries Expense
1,000
Depreciation Expense—Building
1,500
_______
Totals
$114,800
$114,800
45) Why is it necessary to close the books at the end of the accounting period?
46) Describe the process of closing the books at the end of the accounting period.
47) The following accounts and balances are taken from Brown Company’s adjusted trial balance:
Accounts Payable
$10,000
Accounts Receivable
3,000
Accumulated Depreciation
1,400
Depreciation Expense
1,500
Dividends
2,400
Insurance Expense
2,300
Interest Revenue
1,240
Prepaid Insurance
2,320
Retained Earnings
10,500
Salary Expense
24,100
Service Revenue
37,800
Prepare the closing entries.
Closing Entries
Debit
Credit
Closing Entries
Debit
Credit
Service Revenue
Interest Revenue
Retained Earnings
Retained Earnings