Exercise 4-5 (10 minutes)
Income Summary balance after closing revenues and expenses:
Revenues: $70,000 + $7,000..…………………….. = $77,000 Cr.
K. Capri, Capital balance after all closing entries:
Beginning balance…………..……………… $20,000
Ending balance………………………………. $34,400
Exercise 4-6 (25 minutes)
1.
Work Sheet—partial
Account Title Debit Credit
Rent earned…………………………………..… $120,000
Salaries expense………..…….…………….. $46,300
Insurance expense……………..…………… 7,400
Office supplies expense..………………... 16,000
Bike repair expense………………………... 4,200
………………………………………….$120,000
2. Closing entries
(1) Rent Earned……………………………………..……. 120,000
Income Summary.…………………………… 120,000
To close the revenue account.
4-1
Insurance Expense………………………….. 7,400
Office Supplies Expense..………........... 16,000
(3) Income Summary………………………….…….…. 25,600
4-2
Education.
Exercise 4-7 Part 1 (30 minutes)
DYLAN DELIVERY COMPANY
Work Sheet
For Year Ended December 31, 2015
Unadjusted
Trial Balance Adjustments
Adjusted
Trial Balance
Income
Statement
Balance Sheet
and Statement of
Owner’s Equtiy
Account Title Dr. Cr. Dr. Cr. Dr. Cr. Dr. Cr. Dr. Cr.
Cash………………………………….... 16,000 16,000 16,000
Accounts receivable………....…... 34,000 34,000 34,000
Office supplies.…………………….. 5,000 (c) 3,000 2,000 2,000
Trucks………………….…......…......
350,000 350,000 350,000
Accum. Depreciation—Trucks.... 80,000 (a) 40,000 120,000 120,000
Land…………………………………….
160,000 160,000 160,000
Accounts payable………………….. 24,000 24,000 24,000
Interest payable………………........ 5,000 (b) 1,000 6,000 6,000
Office supplies expense….......... 15,000 (c) 3,000 18,000 18,000
Net Income………………….......….. 39,000
______ ______ 39,000
Totals.………..……………………….. 263,000
263,000
596,000
596,000
4-3
4-4
Exercise 4-7 (Continued)
2. Closing entries
Delivery Fees Earned…………………………….. 263,000
Income Summary.…………………………… 263,000
To close the revenue account.
Income Summary…………………………………… 224,000
S. Dylan, Capital………………………………..…… 34,000
S. Dylan, Withdrawals ………..…………… 34,000
To close the withdrawals account.
S. Dylan, Capital on the balance sheet
Beginning balance……………………….………… $307,000
Add: Net income…………..……………………… 39,000
346,000
4-5
Exercise 4-8 (35 minutes)
Closing entries
(1) Services Revenue………………..…………………401 76,000
Income Summary.……………………………901 76,000
To close the revenue account.
To close the expense accounts.
(3) Income Summary………………………….…….….901 28,200
M. Muncel, Capital……………..…………….301 28,200
To close income summary.
(4) M. Muncel, Capital…………………………………..301 22,000
M. Muncel, Withdrawals…………….……..302 22,000
To close the withdrawals account.
Posted ledger accounts
M. Muncel, Capital No. 301 Salaries Expense No. 622
Date PR Debit Credit Balance Date PR Debit Credit Balance
M. Muncel, Withdrawals No. 302 Insurance Expense No. 637
Date PR Debit Credit Balance Date PR Debit Credit Balance
May31 22,000 May31 4,400
(4) 22,000 0 (2) 4,400 0
Services Revenue No. 401 Rent Expense No. 640
Date PR Debit Credit Balance Date PR Debit Credit Balance
May31 76,000 May31 8,400
(1) 76,000 0 (2) 8,400 0
Depreciation Expense No. 603 Income Summary No. 901
Date PR Debit Credit Balance Date PR Debit Credit Balance
4-6
Exercise 4-9 (30 minutes)
1.
2015
Dec. 31 Services Revenue…………………………………..404 44,000
Income Summary.……………………………901 44,000
To close the revenue account.
31 Income Summary……………………………………901 33,100
Depreciation Expense—Equipment....612 3,000
31 Income Summary……………………………………901 10,900
31 T. Cruz, Capital……………………………………….301 7,000
T. Cruz, Withdrawals…..………………......302 7,000
To close the withdrawals account.
2.
CRUZ COMPANY
Post-Closing Trial Balance
December 31, 2015
Debit Credit
Cash…………………………….………………………… $19,000
Supplies……………………………..………………….. 13,000
Prepaid insurance…………………………………… 3,000
*$47,600 + $10,900 – $7,000 = $51,500
4-7
Exercise 4-10 (40 minutes)
Salon Marketing Company
Work Sheet
Adjusted
Trial Balance
Closing Entry
Information
Post-Closing
Trial Balance
No. Account Title Dr. Cr. Dr. Cr. Dr. Cr.
101 Cash………………….……….. 9,200 9,200
106 Accounts receivable....... 25,000 25,000
153 Equipment………………….. 42,000 42,000
154 Accumulated depre-
302 E. Salon, Withdrawals.....15,400 (4) 15,400
401 Marketing fees earned.... 80,000 (1) 80,000
611 Depreciation expense—
Equipment….................. 12,000 (2) 12,000
622 Salaries expense….......... 32,500 (2) 32,500
4-8
Exercise 4-11 (20 minutes)
WILSON TRUCKING COMPANY
Income Statement
For Year Ended December 31, 2015
Trucking fees earned……………..…………………………. $130,000
Expenses
Depreciation expense—Trucks……………………… $23,500
Salaries expense……………………..….……………….. 61,000
WILSON TRUCKING COMPANY
Statement of Owner’s Equity
For Year Ended December 31, 2015
K. Wilson, Capital, December 31, 2014……………….. $175,000
Add: Net income………………………………………..……. 25 ,500
Exercise 4-12 (20 minutes)
WILSON TRUCKING COMPANY
Balance Sheet
December 31, 2015
Assets
Current assets
Cash…………………………………………………….… $ 8,000
Accounts receivable……………………………….. 17,500
4-9
Office supplies……………………………………….. 3 ,000
Total current assets.………………………………. 28,500
Plant assets
Trucks…………………………………………..……….. $172,000
Accumulated depreciation-Trucks…………… (36 ,000) 136,000
Land……………………………………………..…….…. 85 ,000
Total plant assets…………….…………………….. 221 ,000
Total assets……………………………………………… $249 ,500
Liabilities
Current liabilities
*From Exercise 4-11
* K. Wilson Capital is computed as:
Beginning balance
………………………………………………………………………………………….. $175,000
$12,000)
…………………………………………………………………………………………..
25,500
(
4-10