Chapter 4 – Completing the Accounting Cycle
170. Indicate whether each of the following would be reported in the financial statements as a (a) current asset, (b)
property, plant, and equipment, (c) current liability, (d) revenue, or (e) expense:
(1)
Truck
(2)
Accumulated depreciation
(3)
Telephone expense
(4)
Fees earned
(5)
Wages payable
(6)
Prepaid insurance
(7)
Office supplies
(8)
Dining expense
(9)
Unearned rent
(1)
property, plant, and equipment
(2)
property, plant, and equipment
(3)
expense
(4)
revenue
(5)
current liability
(6)
current asset
(7)
current asset
(8)
expense
(9)
current liability
171. List and describe the purpose of the four closing entries.
are called closing entries and the transfer process is called the closing process.
Chapter 4 – Completing the Accounting Cycle
172. Beachside Realty rents condominiums and furnishings. Below is the adjusted trial balance at December 31.
Debit
Credit
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
3,000
Accounts Payable
2,400
Accrued Expenses Payable
3,920
Income Taxes Payable
2,700
Unearned Rent Fees
500
Common Stock
5,000
Retained Earnings
2,700
Dividends
2,000
Rent Fees Earned
37,000
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.
Income Summary
173. Prior to adjustment at August 31, Salary Expense has a debit balance of $298,500. Salaries owed but not paid as of
the same date total $4,200.
Present the entries to record the following:
(1)
Accrued salaries as of August 31.
(2)
Closing of Salary Expense as of August 31.
Chapter 4 – Completing the Accounting Cycle
(1)
Salary Expense
(2)
Income Summary
174. Beachside Realty rents condominiums and furnishings. Below is the adjusted trial balance at December 31.
Debit
Credit
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
3,000
Accounts Payable
2,400
Accrued Expenses Payable
3,920
Income Taxes Payable
2,700
Unearned Rent Fees
500
Common Stock
5,000
Retained Earnings
2,700
Dividend
2,000
Rent Fees Earned
37,000
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
Total
58,520
58,520
Prepare the entry required to close the revenue accounts at the end of the period.
Rent Fees Earned
Furniture Rental Revenue
Interest Revenue
Chapter 4 – Completing the Accounting Cycle
175. Beachside Realty rents condominiums and furnishings. Below is the adjusted trial balance at December 31.
Debit
Credit
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
3,000
Accounts Payable
2,400
Accrued Expenses Payable
3,920
Income Taxes Payable
2,700
Unearned Rent Fees
500
Common Stock
5,000
Retained Earnings
2,700
Dividends
2,000
Rent 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.
Retained Earnings
Chapter 4 – Completing the Accounting Cycle
176. 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. Retained Earnings
10. Accumulated Depreciation—Equipment
11. Depreciation Expense—Equipment
12. Equipment
13. Prepaid Insurance
14. Insurance Expense
Chapter 4 – Completing the Accounting Cycle
177. Beachside Realty rents condominiums and furnishings. Below is the adjusted trial balance at December 31.
Debit
Credit
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
3,000
Accounts Payable
2,400
Accrued Expenses Payable
3,920
Income Taxes Payable
2,700
Unearned Rent Fees
500
Common Stock
5,000
Retained Earnings
2,700
Dividends
2,000
Rent Fees Earned
37,000
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.
Income Summary
178. After the accounts have been adjusted at January 31, the end of the fiscal year, the following balances are taken from
the ledger of Harrison’s Dog Walking Service Company:
Common Stock
$340,000
Retained Earnings
9,000
Dividends
6,000
Fees Earned
124,600
Wages Expense
29,000
Rent Expense
43,000
Supplies Expense
7,300
Miscellaneous Expense
5,700
Journalize the four entries required to close the accounts
Chapter 4 – Completing the Accounting Cycle
Jan.31
Fees Earned
Income Summary
Income Summary
Retained Earnings
LEARNING OBJECTIVES:
179. On the basis of the following data taken from the Adjusted Trial Balance columns of the end-of-period spreadsheet
for the year ended March 31 for Banes Domino’s Corporation, 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
Common Stock
51,600
Retained Earnings
20,000
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
Chapter 4 – Completing the Accounting Cycle
Mar. 31
Fees Earned
Income Summary
Income Summary
Retained Earnings
Retained Earnings
Dividends
LEARNING OBJECTIVES:
180. After all adjustments have been made, but before the accounts have been closed, the following balances were taken
from the ledger of Ramona’s Designs:
Accounts Payable
$ 27,600
Rent Expense
$ 32,700
Accounts Receivable
64,500
Salary Expense
41,390
Accumulated Depreciation
73,325
Salaries Payable
8,150
Cash
17,150
Service Revenue
186,000
Depreciation Expense
13,500
Supplies
1,500
Equipment
165,000
Supplies Expense
2,500
Insurance Expense
2,510
Common Stock
79,950
Prepaid Insurance
6,275
Dividends
48,000
Retained Earnings
20,000
Journalize the entries to close the appropriate accounts.
Chapter 4 – Completing the Accounting Cycle
Service Revenue
Income Summary
Income Summary
Retained Earnings
LEARNING OBJECTIVES:
181. On the basis of the following information taken from the Adjusted Trial Balance columns of the end-of-period
spreadsheet for the month ended September 30, journalize the closing entries for Perez Roofing Company.
Cash
22,500
Accounts Receivable
3,575
Office Supplies
2,850
Repair Parts
3,785
Machinery
17,750
Accumulated Depreciation
3,250
Accounts Payable
1,150
Notes Payable
6,500
Common Stock
1,500
Retained Earnings
1,000
Dividends
1,750
Service Revenue
47,200
Wages Expense
4,840
Office Supplies Expense
1,275
Repair Parts Expense
925
Depreciation Expense
1,350
60,600
60,600
Chapter 4 – Completing the Accounting Cycle
Sept. 30
Service Revenue
Income Summary
Income Summary
Retained Earnings
LEARNING OBJECTIVES:
182. The following adjusted trial balance is the result of the adjustments made at the end of the month of March for
Martin Corporation. Use these adjusted values to journalize the closing entries for Martin Corporation.
Cash
24,750
Accounts Receivable
5,750
Office Supplies
3,525
Store Supplies
4,785
Machinery
9,750
Accumulated Depreciation
2,150
Accounts Payable
3,550
Notes Payable
7,500
Common Stock
17,725
Retained Earnings
2,000
Dividends
6,250
Service Revenue
36,500
Wages Expense
6,425
Office Supplies Expense
1,465
Store Supplies Expense
5,150
Depreciation Expense
1,575
69,425
69,425
Chapter 4 – Completing the Accounting Cycle
Mar. 31
Service Revenue
Income Summary
Income Summary
Retained Earnings
LEARNING OBJECTIVES:
183. The following adjusted trial balance is the result of the adjustments made at the end of the month of July for Ladonna
Douglas Corporation. Utilize these adjusted values to perform the closing entries for Ladonna Douglas Corporation.
Cash
34,750
Accounts Receivable
9,750
Office Supplies
2,525
Store Supplies
4,785
Machinery
10,750
Accumulated Depreciation
2,150
Accounts Payable
14,300
Notes Payable
11,500
Common Stock
33,725
Retained Earnings
20,000
Dividends
13,250
Service Revenue
41,500
Wages Expense
37,425
Rent Expense
3,000
Advertising Expense
2,750
Office Supplies Expense
1,465
Store Supplies Expense
2,150
Depreciation Expense
575
123,175
123,175
Chapter 4 – Completing the Accounting Cycle
July 31
Service Revenue
Income Summary
Retained Earnings
Retained Earnings
LEARNING OBJECTIVES:
184. During the current year, Austin Enterprise shareholders invested $8,000 in the business. Based on the following end-
of-year spreadsheet, prepare an income statement for Austin Enterprises for the year ended December 31.
Austin Enterprises
End-of-Period Spreadsheet
For the Year Ended December 31
Adjusted Trial Balance
Income Statement
Balance Sheet
Account Title
Debit
Credit
Debit
Credit
Debit
Credit
Cash
26,500
26,500
Accounts Receivable
7,000
7,000
Supplies
1,000
1,000
Equipment
18,500
18,500
Accumulated Depr.—Equip.
5,000
5,000
Accounts Payable
11,000
11,000
Wages Payable
1,000
1,000
Common Stock
6,000
6,000
Retained Earnings
2,000
2,000
Dividends
2,000
2,000
Fees Earned
59,500
59,500
Wages Expense
19,000
19,000
Rent Expense
7,000
7,000
Depreciation Expense
3,500
3,500
Totals
84,500
84,500
29,500
59,500
55,000
25,000
Net Income (Loss)
30,000
30,000
59,500
59,500
55,000
55,000
Chapter 4 – Completing the Accounting Cycle
Fees earned
Expenses:
Wages expense
Rent expense
7,000
Depreciation expense
3,500
Total expenses
LEARNING OBJECTIVES:
185. Prepare closing entries from the following end-of-period spreadsheet.
Austin Enterprises
End-of-Period Spreadsheet
For the Year Ended December 31
Adjusted Trial Balance
Income Statement
Balance Sheet
Account Title
Debit
Credit
Debit
Credit
Debit
Credit
Cash
26,500
26,500
Accounts Receivable
7,000
7,000
Supplies
1,000
1,000
Equipment
18,500
18,500
Accumulated Depr.-
Equip.
5,000
5,000
Accounts Payable
11,000
11,000
Wages Payable
1,000
1,000
Common Stock
6,000
6,000
Retained Earnings
2,000
2,000
Dividends
2,000
2,000
Fees Earned
59,500
59,500
Wages Expense
19,000
19,000
Rent Expense
7,000
7,000
Depreciation
Expense
3,500
3,500
Totals
84,500
84,500
29,500
59,500
55,000
25,000
Net Income (Loss)
30,000
30,000
59,500
59,500
55,000
55,000