174. Beachside Realty rents condominiums and furnishings. It’s adjusted trial balance at December 31, 2011,
is as follows:
Debit Balances
Credit Balances
Cash
1,500
Accounts Receivable
2,000
Interest Receivable
100
Prepaid Insurance
1,600
Notes Receivable (long-term)
2,800
Equipment
15,000
Accumulated Depreciation
1,500
Accounts Payable
1,400
Accrued Expenses Payable
2,920
Income Taxes Payable
1,700
Unearned Rental Fees
500
Capital Stock
3,000
Retained Earnings
5,200
Dividends
2,000
Rental Fees Earned
41,000
Furniture Rental Revenue
1,200
Interest Revenue
100
Wages Expense
19,000
Depreciation Expense
1,800
Utilities Expense
320
Insurance Expense
700
Maintenance Expense
9,000
Income Tax Expense
2,700
58,520
58,520
Prepare the entry required to close the revenue accounts at the end of the period.
Dec. 31
Rental Fees Earned
41,000
Furniture Rental Revenue
1,200
Interest Revenue
100
Income Summary
42,300
175. Beachside Realty rents condominiums and furnishings. It’s adjusted trial balance at December 31, 2011,
is as follows:
Debit Balances
Credit Balances
Cash
1,500
Accounts Receivable
2,000
Interest Receivable
100
Prepaid Insurance
1,600
Notes Receivable (long-term)
2,800
Equipment
15,000
Accumulated Depreciation
1,500
Accounts Payable
1,400
Accrued Expenses Payable
2,920
Income Taxes Payable
1,700
Unearned Rental Fees
500
Capital Stock
3,000
Retained Earnings
5,200
Dividends
2,000
Rental Fees Earned
41,000
Furniture Rental Revenue
1,200
Interest Revenue
100
Wages Expense
19,000
Depreciation Expense
1,800
Utilities Expense
320
Insurance Expense
700
Maintenance Expense
9,000
Income Tax Expense
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
33,520
Wages Expense
19,000
Depreciation Expense
1,800
Utilities Expense
320
Insurance Expense
700
Maintenance Expense
9,000
Income Tax Expense
2,700
176. Beachside Realty rents condominiums and furnishings. It’s adjusted trial balance at December 31, 2011,
is as follows:
Debit Balances
Credit Balances
Cash
1,500
Accounts Receivable
2,000
Interest Receivable
100
Prepaid Insurance
1,600
Notes Receivable (long-term)
2,800
Equipment
15,000
Accumulated Depreciation
1,500
Accounts Payable
1,400
Accrued Expenses Payable
2,920
Income Taxes Payable
1,700
Unearned Rental Fees
500
Capital Stock
3,000
Retained Earnings
5,200
Dividends
2,000
Rental Fees Earned
41,000
Furniture Rental Revenue
1,200
Interest Revenue
100
Wages Expense
19,000
Depreciation Expense
1,800
Utilities Expense
320
Insurance Expense
700
Maintenance Expense
9,000
Income Tax Expense
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
8,780
Retained Earnings
8,780
177. Beachside Realty rents condominiums and furnishings. It’s adjusted trial balance at December 31, 2011,
is as follows:
Debit Balances
Credit Balances
Cash
1,500
Accounts Receivable
2,000
Interest Receivable
100
Prepaid Insurance
1,600
Notes Receivable (long-term)
2,800
Equipment
15,000
Accumulated Depreciation
1,500
Accounts Payable
1,400
Accrued Expenses Payable
2,920
Income Taxes Payable
1,700
Unearned Rental Fees
500
Capital Stock
3,000
Retained Earnings
5,200
Dividends
2,000
Rental Fees Earned
41,000
Furniture Rental Revenue
1,200
Interest Revenue
100
Wages Expense
19,000
Depreciation Expense
1,800
Utilities Expense
320
Insurance Expense
700
Maintenance Expense
9,000
Income Tax Expense
2,700
58,520
58,520
Prepare the entry required to close the dividends account at the end of the period.
Dec. 31
Retained Earnings
2,000
Dividends
2,000
178. Each of the following transactions for Morrison Company requires an adjusting entry, which if omitted,
will overstate or understate assets, liabilities, stockholders’ 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
Assets
Liabilities
Stockholders’ Equity
Revenues
Expenses
Net Income
1.
2.
3.
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?
Transaction
Assets
Liabilities
Stockholders’ Equity
Revenues
Expenses
Net Income
1.
+550
+550
-550
+550
2.
+225
+225
-225
+225
3.
+130
-130
-130
-130
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. Dividends
9. Capital Stock
10. Accumulated Depreciation – Equipment
11. Depreciation Expense – Equipment
12. Equipment
13. Prepaid Insurance
14. Insurance Expense
15. Retained Earnings
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)
Salaries Payable
(7)
Retained Earnings
(2)
Fees Earned
(8)
Equipment
(3)
Accounts Payable
(9)
Accounts Receivable
(4)
Capital Stock
(10)
Accumulated Depreciation
(5)
Supplies Expense
(11)
Salary Expense
(6)
Unearned Rent
(12)
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)
Supplies
(5)
Supplies Expense
(2)
Unearned Fees
(6)
Prepaid Insurance
(3)
Prepaid Advertising
(7)
Accounts Payable
(4)
Advertising Expense
(8)
Fees Earned
(1)
(a) current asset
(2)
(b) current liability
(3)
(a) current asset
(4)
(d) expense
(5)
(d) expense
(6)
(a) current asset
(7)
(b) current liability
(8)
(c) revenue
(a)
Income statement: 2, 5, 11, 12
(b)
Balance sheet: 1, 3, 4, 6, 7, 8, 9, 10
183. The following accounts were taken from the Adjusted Trial Balance columns of the work sheet for the year
ended April 30, 2011, for Finnegan Co.:
Accumulated Depreciation
$ 32,000
Fees Earned
78,000
Depreciation Expense
7,250
Dividends
5,000
Rent Expense
34,000
Prepaid Insurance
6,000
Supplies
400
Supplies Expense
1,800
Insurance Expense
2,000
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 the year ended December 31, 2011:
Depreciation Expense
$ 4,950
Insurance Expense
2,900
Miscellaneous Expense
1,200
Rent Expense
24,000
Service Revenue
92,500
Supplies Expense
3,150
Utilities Expense
5,000
Wages Expense
63,750
Prepare an income statement.
Service revenue
$ 92,500
Operating expenses:
Wages expense
$63,750
Rent expense
24,000
Utilities expense
5,000
Depreciation expense
4,950
Supplies expense
3,150
Total operating expenses
104,950
Fees earned
$78,000
Expenses:
Rent expense
$34,000
Depreciation expense
7,250
Insurance expense
2,000
Supplies expense
1,800
Total expenses
45,050
Net income
$32,950
185. The following data were taken from the Balance Sheet columns of the work sheet for April 30, 2011 for
Mackenzie Company:
Accumulated Depreciation—Trucks
$42,400
Prepaid Rent
6,800
Supplies
850
Unearned Fees
7,310
Trucks
49,300
Cash
3,400
Capital Stock
4,000
Retained Earnings
?
Prepare a classified balance sheet.
Current assets:
Cash
$ 3,400
Current liabilities:
Supplies
850
Unearned fees
$ 7,310
Prepaid rent
6,800
Total current assets
$11,050
Property, plant, and equip.:
Capital stock $4,000
Trucks
$49,300
Retained earnings 6,640
Less accum. depr.
(42,400)
Total stockholders’ equity
10,640
Total property, plant
and equipment
6,900
Total liabilities and
Total assets
$17,950
$17,950
186. Indicate whether each of the following would be reported in the section of financial statements identified
as (a) current assets, (b) property, plant, and equipment, (c) current liabilities, (d) revenues, or (e) expenses:
(1)
Automobile
(2)
Accumulated depreciation
(3)
Rent expense
(4)
Fees earned
(5)
Salaries payable
(6)
Prepaid rent
(7)
Store supplies
(8)
Advertising expense
(9)
Unearned rent
(1)
(b) property, plant, and equipment
(2)
(b) property, plant, and equipment
(3)
(e) expenses
(4)
(d) revenues
(5)
(c) current liabilities
(6)
(a) current assets
(7)
(a) current assets
(8)
(e) expenses
(9)
(c) current liabilities
187. The following balance sheet contains errors.
Brock Morton Services Co.
Balance Sheet
For the Year Ended December 31, 2011
Assets
Liabilities
Current assets:
Current liabilities:
Cash
$ 7,170
Accounts receivable
$ 10,000
Accounts payable
7,500
Accum. depr.—building
12,525
Supplies
2,590
Accum. depr.—equipment
7,340
Prepaid insurance
800
Net income
11,500
Land
24,000
Total current assets
$ 42,060
Total liabilities
$ 41,365
Stockholders’ Equity
Property, plant, and equip:
Wages payable
$ 1,500
Building
$ 43,700
Capital stock
25,000
Equipment
29,250
Retained earnings
63,645
Total property, plant,
and equipment
$ 72,950
Total stockholders’ equity
$ 90,145
Total liabilities and
Total assets
$131,510
stockholders’ equity
$131,510
(a) List the errors in the balance sheet above and (b) prepare a corrected balance sheet.
(a)
(2)
Accounts payable should be a current liability.
(3)
Land is a fixed asset and should be listed as Property, Plant, and Equipment.
(4)
Accumulated depreciation should be deducted from the related fixed asset in the Property, Plant, and Equipment section.
(5)
An adding error was made in determining the amount of total assets.
(6)
Accounts receivable should be a current asset.
(7)
Net income would be reported on the income statement, not the balance sheet.
(8)
Wages payable should be a current liability.
188. The following is the adjusted trial balance for Nadia Company prepared at the end of Nadia’s fiscal year.
Nadia Company
Adjusted Trial Balance
December 31, 2014
Cash
5,130
Accounts Receivable
3,300
Prepaid Expenses
420
Equipment
12,400
Accumulated Depreciation
2,200
Accounts Payable
700
Notes Payable – Due on June 30, 2015
3,070
Capital Stock
2,000
Retained Earnings
11,000
Dividends
700
Fees Earned
10,930
Wages Expense
2,450
Rent Expense
1,900
Utilities Expense
1,475
Depreciation Expense
1,150
Miscellaneous Expense
975
Totals
29,900
29,900
Prepare an income statement, retained earnings statement, and classified balance sheet.
Nadia Company
Income Statement
For the Year Ended December 31, 2014
Fees earned
$10,930
Expenses:
Wages expense
$2,450
Rent expense
1,900
Utilities expense
1,475
Depreciation expense
1,150
Miscellaneous expense
Total expenses
7,950
Net income
$2,980
Nadia Company
Retained Earnings Statement
For Year Ended December 31, 2014
Retained earnings, January 1, 2014
$11,000
Net income $ 2,980
Increase in retained earnings
2,280
Retained earnings, December 31, 2014
$13,280
189. Prepare an income statement and a retained earnings statement for the month ended August 31, 2014, from
the following T accounts of Marley Company.
Prepaid
Insurance
Account
s
Receiva
ble
Unearned
Revenues
Wages
Payable
1,100
5,400
1,400
425
135
1,600
400
Retained
Earnings
Divide
nds
Income
Summary
Fees Earned
6,500
3,200
9,775
7,775
5,780
3,200
3,995
1,600
3,200
5,730
400
9,775
Wages
Expense
Rent
Expens
e
Insurance
Expense
Utilities
Expense
2,200
990
285
95
425
990
285
95
2,625
Fees earned
$9,775
Expenses:
Wages expense
$2,625
Rent expense
990
Insurance expense
285
Utilities expense
95
Total expenses
3,995
Net income
$5,780
Retained earnings, August 1, 2014
$6,500
Net income for the month
$5,780
Less dividends
3,200
Increase in retained earnings
2,580
Retained earnings, August 31, 2014
$9,080
190. Prepare an income statement and a retained earnings statement for the month ended September 30, 2011,
from the T accounts below of Carson Company.
Prepaid
Insurance
Accou
nts
Receiv
able
Unearned
Revenues
Wages
Payable
1,400
1,600
1,200
225
80
500
350
Retained
Earnings
Divide
nds
Income
Summary
Fees Earned
6,800
2,400
4,150
3,300
610
2400
4,760
500
2,400
610
350
4,150
Wages
Expense
Rent
Expens
e
Insurance
Expense
Utilities
Expense
3,200
1,130
80
125
225
1,130
80
125
3,425
Fees earned
$4,150
Expenses:
Wages expense
$3,425
Rent expense
1,130
Insurance expense
80
Utilities expense
125
Total expenses
4,760
Net loss
$ (610)
Retained earnings, September 1, 2011
$6,800
Net loss for the month
$ 610
Dividends
2,400
Decrease in retained earnings
3,010
Retained earnings, September 30, 2011
$3,790
191. Selected ledger accounts appear below for Fulton Surveying Services for 2014.
Retained
Earnings
Dividends
12/31
25,000
1/1
20,000
3/31
12,000
12/31
25,000
12/31
48,000
12/22
13,000
Income
Summary
12/31
19,000
12/31
67,000
12/31
48,000
Prepare a retained earnings statement.
Retained earnings, January 1, 2014
$20,000
Net income
$48,000
Less dividends
25,000
Retained earnings, December 31, 2014
$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
$ 30,000
Accounts Receivable
45,200
Supplies
5,000
Equipment
169,900
Accumulated Depreciation
$ 32,000
Accounts Payable
12,500
Capital Stock
20,000
Retained Earnings
51,600
Dividends
47,000
Fees Earned
510,000
Salary Expense
244,500
Rent Expense
48,000
Depreciation Expense
25,000
Supplies Expense
9,500
Miscellaneous Expense
2,000
$626,100
$626,100
Mar. 31
Fees Earned
510,000
Income Summary
510,000
31
Income Summary
329,000
Salary Expense
244,500
Rent Expense
48,000
Depreciation Expense
25,000
Supplies Expense
9,500
Miscellaneous Expense
2,000
31
Income Summary
181,000
Retained Earnings
181,000
31
Retained Earnings
47,000
Dividends
47,000