Problem 4-1A (Continued)
J. Nozomi, Capital Acct. No. 301
Date Explanation PR Debit Credit Balance
30 Closing 9,750 0
Depreciation Expense–Computer Equipment Acct. No. 612
Date Explanation PR Debit Credit Balance
April 30 Adjusting 500 500
30 Closing 500 0
Salaries Expense Acct. No. 622
Date Explanation PR Debit Credit Balance
April 14 1,600 1,600
28 1,600 3,200
30 Adjusting 420 3,620
30 Closing 3,620 0
Insurance Expense Acct. No. 637
Rent Expense Acct. No. 640
Date Explanation PR Debit Credit Balance
April 2 1,800 1,800
30 Closing 1,800 0
Office Supplies Expense Acct. No. 650
Date Explanation PR Debit Credit Balance
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Problem 4-1A (Concluded)
Repairs Expense Acct. No. 684
Telephone Expense Acct. No. 688
Date Explanation PR Debit Credit Balance
April 30 750 750
30 Closing 750 0
Income Summary Acct. No. 901
Date Explanation PR Debit Credit Balance
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Problem 4-2A (90 minutes) Part 1
ACE CONSTRUCTION CO.
Work Sheet
For Year Ended June 30, 2015
Unadjusted
Trial Balance Adjustments
Adjusted
Trial Balance
Income
Statement
Balance
Sheet
No. Account Title Dr. Cr. Dr. Cr. Dr. Cr. Dr. Cr. Dr. Cr.
101 Cash…………………………..……….
18,500 18,500 18,500
126 Supplies………………………………
9,900 (a) 6,600 3,300 3,300
128 Prepaid insurance..……………....
7,200 (b
)
3,800 3,400 3,400
167 Equipment…………………………...
132,000 132,000 132,000
168 Accumulated depreciation—
Equipment………………............… 26,250 (c) 8,400 34,650 34,650
201 Accounts payable…..…….......... 6,800 (d
)
650 7,450 7,450
)
640 Rent expense……………………….
12,000 (f) 500 12,500 12,500
652 Supplies expense………….……… (a) 6,600 6,600 6,600
683 Property taxes expense….………
7,800 (g
)
1,000 8,800 8,800
684 Repairs expense……………………
2,910 2,910 2,910
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0
0
4-4
Problem 4-2A (Continued)
Part 2 Adjusting entries (all dated June 30, 2015)
Instructor note: Entries are shown without an account reference column because no posting is required.
To record depreciation.
(d) Utilities Expense………………………………..………. 650
Accounts Payable….……………………………. 650
Rent Payable……………………………….…….... 500
To record remainder of annual rent.
(g) Property Taxes Expense……....………..………….. 1,000
Property Taxes Payable…………..………..…. 1,000
To record additional property taxes.
Instructor note: Entries are shown without an account reference column because no posting is required.
(1) Construction Fees Earned……....…………..… 132,100
Income Summary.…………………………… 132,100
To close the revenue account.
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Education.
(2) Income Summary………………………………..…. 101,210
Depreciation Expense–Equipment...... 8,400
Wages Expense…………….…………..……. 48,660
Repairs Expense.……………………………. 2,910
Utilities Expense……………………………... 6,540
To close the expense accounts.
(3) Income Summary………………………………..…. 30,890
Problem 4-2A (Continued)
Part 3
ACE CONSTRUCTION CO.
Income Statement
For Year Ended June 30, 2015
Construction fees earned..………..…………..…... $132,100
Rent expense……………………………………………. 12,500
Supplies expense…….………………………………. 6,600
Property taxes expense……………………………. 8,800
Repairs expense………………..…..………..………. 2,910
Utilities expense………..………..………..……….... 6 ,540
4-6
ACE CONSTRUCTION CO.
Statement of Owner’s Equity
For Year Ended June 30, 2015
V. Ace, Capital, June 30, 2014…………..……..….. $ 53,660
Add: Owner contribution..………..…………..…... $35,000
Problem 4-2A (Continued)
ACE CONSTRUCTION CO.
Balance Sheet
June 30, 2015
Assets
Current assets
Cash……………………………………………..……..………. $ 18,500
Supplies……………………………………………………….. 3,300
Prepaid insurance…………………………………………. 3 ,400
97,350
Total assets……………………………..…..…………..……. $122 ,550
Liabilities
Current liabilities
Accounts payable……………………..………..………… $ 7,450
Interest payable…………………………..………..……… 250
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Current portion of long-term note payable........ 5 ,000
Total current liabilities…………………………………… $ 16,000
Total liabilities and equity………………………..……… $122 ,550
4-8
Problem 4-2A (Concluded)
Part 4
(a) This error enters the wrong amount in the correct accounts. The
ending balance of the Supplies account should be $3,300, but the
entry reduces Supplies by $3,300. Because its unadjusted balance
was $9,900, the adjusted balance will be $6,600 ($9,900 – $3,300),
which is $3,300 greater than the correct $3,300 balance. In addition,
the supplies available and the capital account by $3,300.
(b) This error inserts a credit in the adjusted trial balance when a debit
should have been inserted. As a result, the trial balance will not
balance (the credit column will be greater than the debit column by
Problem 4-3A (15 minutes)
1. B 6. C 11. E 16. C
4-9
4-10
Problem 4-4A (75 minutes)
Part 1
TYBALT CONSTRUCTION
Income Statement
For Year Ended December 31, 2015
Revenues
Total revenues……………………..…..………..………. $115,100
Expenses
Depreciation expense—Building..……..………... 11,000
Supplies expense…………………………………..…… 7,400
Postage expense…………………………....………..… 4,200
Property taxes expense………………….…..………. 5,000
Repairs expense…………………………………..…..… 8,900
TYBALT CONSTRUCTION
Statement of Owner’s Equity
For Year Ended December 31, 2015
O. Tybalt, Capital, December 31, 2014……....…… $121,400
Add: Investments by owner..…..…………..……... $5,000
Net income…………………………………..…….. 4 ,300 9 ,300
O. Tybalt, Capital, December 31, 2015……....…… $117 ,700
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Problem 4-4A (Continued)
TYBALT CONSTRUCTION
Balance Sheet
December 31, 2015
Assets
Current assets
Cash $ 5,000
Short-term investments 23,000
43,100
20,000
Building 150,000
Accumulated depreciation—Building (50 ,000)
100,000
Land
55,000
Total plant assets
175,000
Total assets
$218,100
Liabilities
40,400
Long-term liabilities
4-12
60,000
Total liabilities
100,400
Equity
O. Tybalt, Capital
117,700
4-13
Problem 4-4A (Continued)
Part 2
Closing entries (all dated December 31, 2015)
Income Summary.…………………………… 115,100
To close the revenue accounts.
(2) Income Summary………………………………..…. 110,800
Depreciation Expense—Building.…….. 11,000
Depreciation Expense—Equipment.... 6,000
Postage Expense…………………………….. 4,200
Property Taxes Expense…………..…..…. 5,000
Repairs Expense.……………………………. 8,900
Telephone Expense………………....……… 3,200
Utilities Expense……………………………... 4,600
O. Tybalt, Withdrawals………..………..…. 13,000
To close the withdrawals account.
Part 3
a. Return on assets = $4,300/[($200,000 + $218,100)/2] = 2.1% (or 0.021)
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