87) Equipment was purchased for $20,000, residual value is $2,000 and it is expected that the useful life is
10 years. What is the book value of the equipment after the first year assuming straight-line depreciation?
$ ________
88) Equipment was purchased for $20,000, residual value is $2,000 and it is expected that the useful life is
10 years. What is the amount in the Accumulated Depreciation account after 3 years assuming straight–
line depreciation?
$ ________
89) On January 1 the Prepaid Insurance account had a balance of $6,000 that represented 6 months’ worth
of advance payment. It is now the end of March and there have been no adjustments to the account
balance. Determine the amount of expense to record at the end of March.
$ ________
90) On November 30, the balance in the Supplies account was $1000. During December additional
supplies were purchased of $200. On December 31, there was $700 worth of Supplies on hand. What
would be the adjustment for the month of December for Supplies?
$ ________
91) The company pays $2,000 per 5 day work week. The total expenses as of Friday, April 27 were $8,000.
What would be the month’s total expenses as of April 30 (assuming no pay is earned over the weekend)?
$ ________
92) On the worksheet, the Income Statement debit column totaled $1000 and the credit column totaled
$1,100. What is the amount of Net Income?
$ ________
93) On the worksheet, the Balance Sheet debit column totaled $1,500 and the credit column totaled $1,400.
What is the amount of Net Loss?
$ ________
1) The order of the steps to prepare the worksheet are:
A) prepare the trial balance, complete adjustments, prepare the adjusted trial balance, extend the
respective totals to the Income Statement and Balance Sheet columns.
B) complete the adjustments, prepare the adjusted trial balance, prepare the trial balance, extend the
respective totals to the Income Statement and Balance Sheet columns.
C) extend the totals to the Income Statement and Balance Sheet columns, prepare the trial balance,
complete the adjustments, prepare the adjusted trial balance.
D) prepare the adjusted trial balance, complete the adjustments, prepare the trial balance, extend the
respective totals to the Income Statement and Balance Sheet columns.
2) The adjusted trial balance columns:
A) help to ensure the ledger is still in balance.
B) help to identify any errors that may have been made during adjustment.
C) show updated account balances to aid in preparation of the financial statements.
D) All of the above are correct.
3) The debits must equal credits on the adjusted trial balance columns of the worksheet.
24
4) Provide the adjusting entries to account for the differences between the trial balance amounts and the
adjusted trial balance amounts for the accounts shown. Only a partial trial balance is provided. Use T
accounts to show the adjustments.
Trial Balance Adjusted Trial Balance
Debit Credit Debit Credit
Supplies 500 250
Prepaid Rent 1,100 300
Equipment 10,000 10,000
Accum. Depr. – Equip 3,000 3,400
Service Fees 1,200 1,200
Depreciation Expense 400
Telephone Expense 150 150
Salaries Expense 500 600
Rent Expense 800
Supplies Expense 250
26
5) Given the income statement columns and the balance sheet columns of the worksheet, prepare an
income statement for the month of October 31, 20XX, for the company.
28
6) Given the income statement columns and the balance sheet columns of the worksheet, prepare a
balance sheet dated December 31, 200x, for Baur Company.
7) Discuss the benefits of the worksheet. Explain how the financial reports are prepared from the
worksheet.
8) Determine the ending owner’s equity of a business having a beginning owner’s equity of $10,200,
withdrawals of $1,200, and net income of $8,000.
$ ________
9) Show which columns would contain the adjusted balances by placing an “x” in the appropriate column.
Assume all accounts have normal balances.
Income Statement Balance Sheet
Debit Credit Debit Credit
Cash (example) ________ ________ x ________
Accounts Receivable ________ ________ ________ ________
Office Supplies ________ ________ ________ ________
Prepaid Rent ________ ________ ________ ________
Word Processing Equipment ________ ________ ________ ________
Accounts Payable ________ ________ ________ ________
M. Bryant, Capital ________ ________ ________ ________
M. Bryant, Withdrawals ________ ________ ________ ________
Word Processing Fees ________ ________ ________ ________
Office Salaries Expense ________ ________ ________ ________
Supplies Expense ________ ________ ________ ________
Accumulated Depreciation ________ ________ ________ ________
Rent Expense ________ ________ ________ ________
4.3 Learning Objective 4-3
1) The capital balance amount shown in the balance sheet column of the worksheet represents:
A) the beginning capital plus net income.
B) the beginning capital plus net income less withdrawal.
C) the beginning capital less withdrawals.
D) the beginning capital plus any investments to capital that occurred during the period.
2) On a worksheet, the income statement debit column totals $10,200 and the credit column totals $10,000.
Which of the following statements is correct?
A) The company had a net loss of $200.
B) The company had a net income of $200.
C) The company’s revenues were greater than expenses.
D) None of the above are correct.
3) On a worksheet, the balance sheet debit column total is $1,000 and the credit column total is $2,000.
Which of the following statements is correct?
A) The company had a net income of $1,000.
B) The company had a loss of $1,000.
C) The company’s expenses were greater than revenues.
D) None of the above are correct.
4) Withdrawals would most likely be found in which column of the worksheet?
A) Income statement
B) Balance sheet
C) Adjustments
D) Withdrawals would not appear on the work sheet.
5) Which of the following accounts would appear on the balance sheet?
A) Accumulated Depreciation
B) Depreciation Expense
C) Fees Earned
D) None of these are correct.
6) Which of the following accounts would appear on the Income Statement?
A) Accumulated Depreciation
B) Rent Expense
C) Equipment
D) Cash
7) The accumulated depreciation will appear in which of the following worksheet statement columns?
A) The Income Statement debit
B) The Income Statement credit
C) The Balance Sheet debit
D) The Balance Sheet credit
8) When Income Statement credits exceed the debits on the worksheet:
A) a net loss has occurred.
B) a net income has occurred.
C) an error has been made.
D) Not enough information has been provided.
9) All of the following are reasons to adjust the account balances at the end of the period, except:
A) to accurately report the assets on the balance sheet.
B) to report all revenues earned during the period.
C) to report all expenses incurred during the period.
D) to correct any errors made during the period.
10) On the worksheet, the difference between the debits and credits in the income statement columns
would be the net income or net loss for the period.
11) Debits must equal credits on the Statement of Owner’s equity.
12) For each account listed identify the category it belongs to, the normal balance (debit or credit), and the
financial statement the account appears.
Account
Category
Normal Balance
Financial
Statement
0. Cash
Asset
Debit
Balance Sheet
1. Depreciation Expense
2. Accumulated
Depreciation
3 Wages Expense
4. Office Supplies
5. Office Supplies Expense
6. Wages Payable
7. Prepaid Rent
Financial Statement
Expense
Debit
Income Statement
Contra-asset
Credit
Balance Sheet
Expense
Debit
Income Statement
Asset
Debit
Balance Sheet
Expense
Debit
Income Statement
Liability
Credit
Balance Sheet
Asset
Debit
Balance Sheet
13) For each account listed, identify the category it belongs to, the normal balance (debit or credit), and
the financial statement in which the account appears.
Account
Category
Normal Balance
Financial
Statement
0. Cash
Asset
Debit
Balance Sheet
1 Capital, Beginning
2. Salaries Expense
3. Salaries Payable
4. Accounts Receivable
5. Prepaid Insurance
6. Withdrawals
7. Service Fees
8. Accounts Payable
Asset
Debit
Balance Sheet
Capital
Credit
Statement of Owner‘s Equity
Expense
Debit
Income Statement
Liability
Credit
Balance Sheet
Asset
Debit
Balance Sheet
Asset
Debit
Balance Sheet
Withdrawal
Debit
Statement of Owner‘s Equity
Liability
Credit
Balance Sheet
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14) From the following data, make the following adjustments, and complete the worksheet for the month.
a. Depreciation Expense is $350.
b. Supplies remaining at end of period $75.
c. Prepaid Insurance balance $400, $100 has expired.
d. Wages for the 5 day work-week are $500, the month ended on a Wednesday.
Account Trial Balance Adjustments Adj. Trial Balance Income Stmt Balance Shee
DR
CR
DR
CR
DR
CR
DR
CR
DR
CR
Cash
750
Accts.
Receivable
400
Supplies
250
Prepaid Ins.
400
Equipment
7,000
Accts. Pay.
900
Capital
7,100
Fees Earned
900
Wages Expense
100
Totals
8,900
8,900
15) Using the following data, make the adjustments, and complete the worksheet for one month.
a. Equipment costing $750 with a residual value of $150 has an expected life of 12 months.
b. Accrued salaries of $100.
c. Supplies ledger balance $900, supplies used $400.
Account Trial Balance Adjustments Adj. Trial Bal Inc. Statement Balance Sheet
DR
CR
DR
CR
DR
CR
DR
CR
DR
CR
Cash
1,100
Accts. Rec.
400
Supplies
900
Equipment
750
Accts. Payable
800
Capital
1,950
Withdrawals
200
Fees Earned
900
Sal. Expense
300
Totals
3,650
3,650
Cash
1,100
1,100
1,100
Accts. Rec.
400
400
400
Supplies
900
c 400
500
500
Equipment
750
750
750
Acct. Pay.
Capital
1,950
1,950
1,950
Withdrawals
200
200
200
Fees Earned
900
900
900
Sal. Exp.
300
400
Totals
3,650
3,650
Depr. Exp.
Accm. Depr.
Sal. Pay
Supp. Exp.
c 400
400
Totals
550
900
Net Loss
900
2,950
2,950
4.4 Learning Objective 4-4
1) Financial statements are prepared from the:
A) trial balance.
B) worksheet income and balance sheet columns.
C) adjusted trial balance.
D) ledger.
2) Which of the financial statements is prepared first from the worksheet?
A) Balance sheet
B) Income statement
C) Statement of owner’s equity
D) None of these answers are correct.
3) The ending figure for capital, used on the balance sheet, will be obtained from:
A) balance sheet credit column of the worksheet.
B) the statement of owner’s equity.
C) balance sheet debit column of the worksheet.
D) credit column of the income statement.
4) The inside columns on the financial statements are used to:
A) show debits.
B) show credits.
C) show subtotals.
D) None of these answers are correct.
5) The beginning capital balance used on the Statement of Owner’s Equity is obtained from:
A) the worksheet in the balance sheet credit column.
B) the worksheet in the income statement credit column.
C) the amount calculated on the statement of owner’s equity.
D) the general ledger.
6) The amount for withdrawals, to be used on the Statement of Owner’s Equity, would be obtained from:
A) the worksheet in the balance sheet debit column.
B) the worksheet in the income statement credit column.
C) the worksheet in the income statement debit column.
D) the worksheet in the balance sheet credit column.
7) Every amount needed for the income statement can be found on the worksheet.
8) On the formal income statement, the left column is the debit column, and the right column is the credit
column.