Problem 4-4A (75 minutes)
Part 1
TYBALT CONSTRUCTION
Income Statement
For Year Ended December 31, 2015
Revenues
Professional fees earned……………………………. $97,000
Expenses
Depreciation expense—Building…………………. 11,000
Depreciation expense—Equipment…………….. 6,000
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
130,700
Less: Withdrawals by owner……………………….. (13 ,000)
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
Liabilities
Current liabilities
Accounts payable $ 16,500
Interest payable 2,500
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100,400
Equity
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Problem 4-4A (Continued)
Part 2
Closing entries (all dated December 31, 2015)
Instructor note: Entries are shown without an account reference column because no posting is required.
(1) Professional Fees Earned……………………… 97,000
(2) Income Summary………………………………….. 110,800
Depreciation Expense—Building…….. 11,000
Depreciation Expense—Equipment…. 6,000
Wages Expense……………………………… 32,000
(3) Income Summary………………………………….. 4,300
(4) O. Tybalt, Capital ………………………………….. 13,000
Part 3
a. Return on assets = $4,300/[($200,000 + $218,100)/2] = 2.1% (or 0.021)
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Problem 4-5A (90 minutes)
Part 1
KARISE REPAIRS
Income Statement
For Year Ended December 31, 2015
Repair fees earned……………………………… $90,950
Expenses
Depreciation expense—Equipment…….. $ 5,000
4-5
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Problem 4-5A – (Continued)
KARISE REPAIRS
Statement of Owner’s Equity
For Year Ended December 31, 2015
C. Karise, Capital, Jan. 1, 2015…………….. $33,000
KARISE REPAIRS
Balance Sheet
December 31, 2015
Assets
Current assets
Cash……………………………………………………. $14,000
Office supplies…………………………………….. 1,300
Liabilities
Current liabilities
Accounts payable………………………………… $14,000
4-6
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Problem 4-5A (Continued)
Parts 2 and 3
KARISE REPAIRS
Work Sheet
For Year Ended December 31, 2015
Adjusted
Trial Balance
Closing
Entry Information
Post-Closing
Trial Balance
No. Account Title Dr. Cr. Dr. Cr. Dr. Cr.
101 Cash…………………………….14,000 14,000
124 Office supplies……………… 1,300 1,300
______ ______ (3) 30,75
0
______ ______ ______
Totals…………………………..
143,550
143,550
197,900
197,900
67,350
67,350
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Problem 4-5A (Continued)
Closing entries (all dated December 31, 2015)
Instructor note: Entries are shown without an account reference column because no posting is required.
(1) Repair Fees Earned…………………………………. 90,950
(2) Income Summary……………………………………. 60,200
Depreciation Expense—Equipment……. 5,000
Wages Expense………………………………… 37,500
(3) Income Summary……………………………………. 30,750
(4) C. Karise, Capital…………………………………….. 16,000
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Problem 4-5A (Concluded)
Part 4
(a) If none of the $800 insurance expense had expired, the income
(b) If there were no earned and unpaid wages (meaning Wages Payable
Financial Statement Changes
The income statement would reflect the following:
Net income would be increased by $800 + $600 = $1,400.
The balance sheet would reflect the following:
4-9
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Problem 4-6AA (40 minutes)
Part 1
HAWKEYE RANGES
Work Sheet
For Year Ended December 31, 2015
Unadjusted
Trial Balance Adjustments
Adjusted
Trial Balance
Account Title Dr. Cr. Dr. Cr. Dr. Cr.
Cash……………………….14,000 14,000
Accounts receivable…. (e) 9,300 9,300
Supplies………………….. 6,500 (b) 3,500 3,000
4-10
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Problem 4-6AA (Continued)
Part 2 (all adjusting entries dated December 31, 2015)
Instructor note: Entries are shown without an account reference column because no posting is required.
(a) Salaries Expense………………………………….. 1,200
Salaries Payable…………………………….. 1,200
To record accrued salaries.
(b) Supplies Expense…………………………………. 3,500
Supplies………………………………………… 3,500
To record cost of consumed supplies.
Part 3 (all reversing entries dated January 1, 2016)
(a) Salaries Payable…………………………………… 1,200
(c) Interest Payable……………………………………. 1,875
(e) Member Fees Earned…………………………….. 9,300
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