141
145
147
148
273) Randy’s Services provides general home repairs to customers. The company’s fiscal year-
end is December 31. The December 31, 2021, adjusted trial balance appears below.
Adjusted Trial Balance
Account Title
Debit
Credit
Cash
$18,100
Accounts Receivable
16,200
Supplies
3,000
Prepaid Insurance
3,750
Equipment
95,000
Accumulated
Depreciation
$40,800
Accounts Payable
10,500
Salaries Payable
4,200
Utilities Payable
1,900
Interest Payable
2,000
Notes Payable
40,000
Common Stock
24,000
Retained Earnings
10,500
Dividends
2,500
Service Revenue
224,900
Salaries Expense
162,700
Depreciation Expense
13,600
Insurance Expense
11,250
Supplies Expense
17,400
Utilities Expense
13,300
Interest Expense
2,000
Total
$358,800
$358,800
Required:
Complete the following steps:
1. Using the adjusted trial balance, prepare an income statement and a statement of shareholders’
equity for the year ended December 31, 2021, and a classified balance sheet as of December 31,
2021. Assume that no common stock is issued during the year.
2. Record closing entries.
3. Calculate account balances after closing entries and prepare a post-closing trial balance.
149
152
274) Russell Engineering provides consulting services related to land development. Below is the
year-end adjusted trial balance of Russell Engineering.
Russell Engineering
Adjusted Trial Balance
December 31, 2021
Accounts
Debits
Credits
Cash
$5,500
Accounts Receivable
4,200
Supplies
2,300
Prepaid Rent
6,100
Equipment
114,000
Accumulated Depreciation
$25,000
Accounts Payable
3,600
Salaries Payable
3,500
Utilities Payable
1,500
Notes Payable (due in 4
years)
20,000
Common Stock
44,800
Retained Earnings
20,200
Service Revenue
118,500
Salaries Expense
45,000
Rent Expense
17,600
Depreciation Expense
6,000
Supplies Expense
9,400
Advertising Expense
15,000
Utilities Expense
10,800
Interest Expense
1,200
Totals
$237,100
$237,100
Required:
Prepare an income statement, statement of stockholders’ equity, and classified balance sheet. In
preparing the statement of stockholders’ equity, note that additional common stock was issued
during the year for $8,000. This amount is included in the amount for Common Stock in the
adjusted trial balance.
155
275) The year-end financial statements are provided below.
Income Statement Statement Of Stockholders’ Equity
Service revenue $87,500
Expenses: Common Retained Total
Stock Earnings
Salaries
$47,100
January 1
$70,000
$34,500
$104,500
Supplies
9,600
Issue stock
12,000
12,000
Rent
7,700
Net income
17,900
17,900
Delivery
5,200
69,600
Dividends
______
(5,000)
(5,000)
Net
income
$17,900
December 31
$82,000
$47,400
$129,400
Balance Sheet
Assets:
Liabilities:
Cash
$7,500
Accounts payable
$9,800
Accounts
receivable
8,300
Stockholders’
Equity:
Land
Common stock
$ 82,000
Retained earnings
47,400
129,400
Total assets
$139,200
Total liabilities and
stockholder’s equity
129,400
Required:
1. Record year-end closing entries.
2. Prepare a post-closing trial balance (Hint: the balance of retained earnings will be the amount
shown in the balance sheet).
276) Describe the revenue and expense recognition under accrual-basis accounting. Describe
each of the following: (1) revenue recognized before cash is received, (2) revenue recognized
after cash is received, (3) expense recognized before cash is paid, and (4) expense recognized
after cash is paid.
277) Describe the primary differences between revenue and expense recognition under accrual-
basis accounting versus cash-basis accounting.
278) Describe what is meant by deferred revenues and give two examples.
279) Describe what is meant by prepaid expenses and give two examples.
280) What is an accrued expense? Give two examples.
281) What is the difference between permanent accounts and temporary accounts and why does
an accounting system have both types of accounts?
282) What are the purposes of closing entries?