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120. Use the work sheet for Finley Company to answer the questions that follow.
Finley
Company
Work Sheet
For the Year
Ended
December 31,
2014
Adjusted Trial Balance
Income
Statement
Balance
Sheet
Account Title
Debit
Credit
Debit
Credit
Debit
Credit
Cash
48,000
48,000
Accounts Receivable
18,000
18,000
Supplies
6,000
6,000
Equipment
57,000
57,000
Accum. Depr. - Equip.
18,000
18,000
Accounts Payable
25,000
25,000
Wages Payable
6,000
6,000
Capital Stock
5,000
5,000
Retained Earnings
28,000
28,000
Dividends
3,000
3,000
Fees Earned
155,000
155,000
Wages Expense
63,000
63,000
Rent Expense
27,000
27,000
Depreciation Expense
15,000
15,000
Totals
237,000
237,000
105,000
155,000
132,000
82,000
Net Income (Loss)
50,000
50,000
155,000
155,000
132,000
132,000
The journal entry to close revenues would be
121. Use the work sheet for Finley Company to answer the questions that follow.
Finley Company
Work Sheet
For the Year Ended
December 31, 2014
Adjusted Trial Balance
Income
Statement
Balance
Sheet
Account Title
Debit
Credit
Debit
Credit
Debit
Credit
Cash
48,000
48,000
Accounts Receivable
18,000
18,000
Supplies
6,000
6,000
Equipment
57,000
57,000
Accum. Depr. - Equip.
18,000
18,000
Accounts Payable
25,000
25,000
Wages Payable
6,000
6,000
Capital Stock
5,000
5,000
Retained Earnings
28,000
28,000
Dividends
3,000
3,000
Fees Earned
155,000
155,000
Wages Expense
63,000
63,000
Rent Expense
27,000
27,000
Depreciation Expense
15,000
15,000
Totals
237,000
237,000
105,000
155,000
132,000
82,000
Net Income (Loss)
50,000
50,000
155,000
155,000
132,000
132,000
The entry to close expenses would be
122. Use the work sheet for Finley Company to answer the questions that follow.
Finley Company
Work Sheet
For the Year Ended
December 31, 2014
Adjusted Trial Balance
Income
Statement
Balance
Sheet
Account Title
Debit
Credit
Debit
Credit
Debit
Credit
Cash
48,000
48,000
Accounts Receivable
18,000
18,000
Supplies
6,000
6,000
Equipment
57,000
57,000
Accum. Depr. - Equip.
18,000
18,000
Accounts Payable
25,000
25,000
Wages Payable
6,000
6,000
Capital Stock
5,000
5,000
Retained Earnings
28,000
28,000
Dividends
3,000
3,000
Fees Earned
155,000
155,000
Wages Expense
63,000
63,000
Rent Expense
27,000
27,000
Depreciation Expense
15,000
15,000
Totals
237,000
237,000
105,000
155,000
132,000
82,000
Net Income (Loss)
50,000
50,000
155,000
155,000
132,000
132,000
The entry to close Income Summary would be
123. Use the work sheet for Finley Company to answer the questions that follow.
Finley Company
Work Sheet
For the Year Ended
December 31, 2014
Adjusted Trial Balance
Income
Statement
Balance
Sheet
Account Title
Debit
Credit
Debit
Credit
Debit
Credit
Cash
48,000
48,000
Accounts Receivable
18,000
18,000
Supplies
6,000
6,000
Equipment
57,000
57,000
Accum. Depr. - Equip.
18,000
18,000
Accounts Payable
25,000
25,000
Wages Payable
6,000
6,000
Capital Stock
5,000
5,000
Retained Earnings
28,000
28,000
Dividends
3,000
3,000
Fees Earned
155,000
155,000
Wages Expense
63,000
63,000
Rent Expense
27,000
27,000
Depreciation Expense
15,000
15,000
Totals
237,000
237,000
105,000
155,000
132,000
82,000
Net Income (Loss)
50,000
50,000
155,000
155,000
132,000
132,000
The entry to close Dividends would be
124. Use the work sheet for Finley Company to answer the questions that follow.
Finley Company
Work Sheet
For the Year Ended
December 31, 2014
Adjusted Trial Balance
Income
Statement
Balance
Sheet
Account Title
Debit
Credit
Debit
Credit
Debit
Credit
Cash
48,000
48,000
Accounts Receivable
18,000
18,000
Supplies
6,000
6,000
Equipment
57,000
57,000
Accum. Depr. - Equip.
18,000
18,000
Accounts Payable
25,000
25,000
Wages Payable
6,000
6,000
Capital Stock
5,000
5,000
Retained Earnings
28,000
28,000
Dividends
3,000
3,000
Fees Earned
155,000
155,000
Wages Expense
63,000
63,000
Rent Expense
27,000
27,000
Depreciation Expense
15,000
15,000
Totals
237,000
237,000
105,000
155,000
132,000
82,000
Net Income (Loss)
50,000
50,000
155,000
155,000
132,000
132,000
The ending balance in Retained Earnings is
125. The proper sequence of steps in the accounting cycle is as follows
126. The following are steps to the accounting cycle. Of the following, which step should be done first?
127. The following are steps in the accounting cycle. Of the following, which would be prepared last?
128. The accounting cycle requires three trial balances be done. In what order should they be prepared?
129. The fiscal year selected by companies
130. A fiscal year
131. The natural business year
132. In the accounting cycle, the last step is
133. During the end-of-period processing, which of the following best describes the logical order of steps?
134. The work sheet
135. Which one of the steps below is not aided by the preparation of the work sheet?
136. A work sheet includes columns for
137. When a work sheet is complete, the adjustment columns should have
138. The unequal totals of the debit and credit columns of the Adjusted Trial Balance columns on a work sheet
139. Net income appears on the work sheet in the
140. A net loss appears on the work sheet in the
141. After net income is entered on the work sheet, the Balance Sheet Debit and Credit columns must
142. Which of the statements below indicates that a company earned a net income for the period?
143. Which item would appear in the Income Statement columns of the work sheet?
144. Which account would not appear in the Balance Sheet columns of the work sheet?
145. Which of the accounts below would appear in the Balance Sheet columns of the work sheet?
146. The work sheet at the end of July has $5,950 in the Balance Sheet credit column for Accumulated
Depreciation. The work sheet at the end of August has $7,600 in the Balance Sheet credit column for
Accumulated Depreciation. What was the amount of the depreciation expense adjustment for the month of
August?
147. Which of the items below does not appear on the work sheet?
148. An indication that the work sheet columns are in balance and the work sheet is completed is
149. After all of the account balances have been extended to the Balance Sheet columns of the work sheet, the
totals of the debit and credit columns are $38,755 and $32,735, respectively. What is the amount of net income
or net loss for the period?
150. After all of the account balances have been extended to the Income Statement columns of the work sheet,
the totals of the debit and credit columns are $77,500 and $83,900, respectively. What is the amount of the net
income or net loss for the period?
151. On September 1, the company pays rent for twelve months in advance and debits an asset account. At
year end, the adjusting entry on the work sheet would
152. On March 1, a company collects revenue in advance for the next twelve months and credits a liability
account. The adjusting entry at year end on the work sheet would
153. Which of the following is not an essential part of the accounting records?
154. After all of the account balances have been extended to the Balance Sheet columns of the work sheet, the
totals of the debit and credit columns show debits of $37,686 and the credits of $41,101. This indicates that
155. The income statement columns in the worksheet show that debits are equal to $55,800 and credits are
$67,520. What does this information mean to the accountant?
156. Bob Evans owns a business, Beachside Realty, that rents condominiums and furnishings. Below is the
adjusted trial balance at December 31, 2014.
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 rental fees
500
Capital Stock
2,700
Retained Earnings
5,000
Dividends
2,000
Rental 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
The entry required to close the revenue accounts at the end of the period includes a:
157. Bob Evans owns a business, Beachside Realty, that rents condominiums and furnishings. Below is the
adjusted trial balance at December 31, 2014.
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 rental fees
500
Capital Stock
2,700
Retained Earnings
5,000
Dividends
2,000
Rental 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
The entry required to close the expense accounts at the end of the period includes a:
158. The balances for the accounts listed below appear in the Adjusted Trial balance columns of the end-of-
period spreadsheet (work sheet). Indicate whether each balance should be extended to an Income Statement
column or (b) a Balance Sheet column.
1. Capital Stock
2. Retained Earnings
3. Depreciation Expense
4. Accumulated Depreciation
5. Fees Earned
6. Unearned Fees
7. Supplies
8. Supplies Expense
159. The end-of-period spreadsheet (work sheet) for the current year for Jamal Company shows Balance Sheet
columns with a debit total of $630,430 and a credit total of $614,210. 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?
160. On January 1, 2014, the retained earnings account of Crystal Pool Service Company had a balance of
$252,000. During the year, the company issued an additional $20,000 of capital stock and paid $52,400 in
dividends. For the year ended December 31, 2014, Crystal Pool Service Company reported a net income of
$73,200. Prepare a retained earnings statement for the year ended December 31, 2014.
161. The following accounts appear in an adjusted trial balance of Brock Pool Service Company. Indicate
whether each account would be reported in the (a) current assets, (b) property, plant, and equipment, (c) current
liabilities, (d) long-term liabilities, or (e) stockholders’ equity section of the December 31, 2011, balance sheet
of Brock Pool Service Company.
1.
Retained Earnings
2.
Accumulated Depreciation
3.
Unearned Revenues
4.
Mortgage Payable
5.
Equipment
6.
Notes Payable (due in 2014)
7.
Cash
8.
Accounts Receivable
162. Explain the differences between a nonclassified balance sheet and a classified balance sheet.
163. List/describe the four closing entries in the order that they should occur.
164. After the accounts were adjusted at January 31, 2014, the end of the fiscal year, the following balances
were taken from the ledger of Taylor Pool Service Company:
Capital Stock
$ 20,000
Retained Earnings
115,000
Dividends
5,000
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
165. Prior to adjustment at August 31, 2014, Salary Expense has a debit balance of $298,500. Salaries owed
but not paid as of the same date total $7,200.
Present the entries to record the following:
(1) Accrued salaries as of August 31.
(2) Closing of Salary Expense as of August 31.
166. The following are all the steps in the accounting cycle. List them in the order in which they should be
done.
- Closing entries are journalized and posted to the ledger.
- An unadjusted trial balance is prepared.
- An optional end-of-period spreadsheet (work sheet) is prepared.
- A post-closing trial balance is prepared.
- Adjusting entries are journalized and posted to the ledger.
- Transactions are analyzed and recorded in the journal.
- Adjustment data are assembled and analyzed.
- Financial statements are prepared.
- An adjusted trial balance is prepared.
- Transactions are posted to the ledger.
167. If working papers are not considered part of the formal accounting records, then why are they used?
168. Explain how net income or loss is determined by using the work sheet.
169. You evaluate loan requests as part of your job at Beach Front National Bank. One loan request you
received is from Surfer Dude Supplies, a small company. Tracy Roberts, the manager, is requesting $75,000
and brings you a trial balance (or Statement of Accounts) of the first year of operations ended December 31,
2010.
REQUIRED: While you are willing to work with Tracy, how would you explain to him that a complete set of
financial statements from his accountant would be more useful for evaluating the loan request?
170. Tracy Roberts, the sole stockholder of Surfer Dude Supplies, is requesting a $75,000 loan from the bank
where you work as a loan officer. He brings to you the following trial balance (or statement of accounts) as of
the end of his first year of operations.
What three accounts do you think should be relabeled for greater clarity?
171. Tracy Roberts, the sole stockholder of Surfer Dude Supplies, is requesting a $75,000 loan from the bank
where you work as a loan officer. He brings to you the following trial balance (or statement of accounts) as of
the end of his first year of operations.
What adjustments might be necessary before an accurate set of financial statements could be prepared?
172. Hakik Enterprises offers rug cleaning services to business clients. Below is the work sheet containing the
trial balance for the month ended July 31, 2012.
Hakik Enterprises
Work Sheet
For the Month Ended July 31,
2012
Trial Balance
Adjustments
Adjusted
Trial Balance
Debit
Credit
Debit
Credit
Debit
Credit
Cash
36
Prepaid Insurance
12
Fees Receivable
56
Supplies
12
Equipment
60
Accum. Depreciation
12
Unearned Revenue
20
Accounts Payable
32
Wages Payable
Capital Stock
30
Retained Earnings
54
Dividends
4
Service Revenue
80
Advertising Expense
28
Wage Expense
20
Insurance Expense
Supplies Expense
Depreciation Expense
Totals
228
228
Enter the adjustments in the work sheet based on the data provided below. Then enter the adjusted account balances in the Adjusted Trial Balance
columns.
173. Hakik Enterprises offers rug cleaning services to business clients. Below is the work sheet containing the
trial balance for the month ended July 31, 2012.
Hakik Enterprises
Work Sheet
For the Month Ended July 31,
2012
Trial Balance
Adjustments
Adjusted
Trial Balance
Debit
Credit
Debit
Credit
Debit
Credit
Cash
36
Prepaid Insurance
12
Fees Receivable
56
Supplies
12
Equipment
60
Accum. Depreciation
12
Unearned Revenue
20
Accounts Payable
32
Wages Payable
Capital Stock
30
Retained Earnings
54
Dividends
4
Service Revenue
80
Advertising Expense
28
Wage Expense
20
Insurance Expense
Supplies Expense
Depreciation Expense
Totals
228
228
Journalize adjusting entries based on the work sheet trial balance and the adjustment data provided below.
a) The equipment is estimated to last for 5 years with no salvage value. The asset will be depreciated evenly over its useful life. Record one
month’s depreciation.
b) Accrued wages, $2.
c) Unused supplies on hand, $8.
d) Of the unearned revenue, 75% has been earned.
e) Unexpired insurance remaining at the end of the month, $9.
