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
Wages expense………………………………….. 37,500
Insurance expense………………..…….….…. 800
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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
Add: Net income …………………………….…. 30 ,750
KARISE REPAIRS
Balance Sheet
December 31, 2015
Assets
Current assets
Cash…………………………..….…….…….….…….. $14,000
Accumulated depreciation—Equipment.... (5 ,000) 45 ,000
Total assets…………………………………………..… $62 ,350
Liabilities
Current liabilities
Accounts payable.………………………………… $14,000
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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
302 C. Karise, Withdrawals……16,000 (4) 16,000
401 Repair fees earned……….. 90,950 (1) 90,950
612 Depreciation expense—
Equipment……………….….
5,000 (2) 5,000
623 Wages expense……………..37,500 (2) 37,500
637 Insurance expense........... 800 (2) 800
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.
Wages Expense……………………………….... 37,500
Insurance Expense…………..….…….……... 800
Rent Expense…………………..….…….….….. 10,600
Office Supplies Expense………….…….….. 3,600
Utilities Expense…………………….…….…… 2,700
C. Karise, Withdrawals……..….….…….….. 16,000
To close the withdrawals account.
Problem 4-5A (Concluded)
Part 4
(a) If none of the $800 insurance expense had expired, the income statement
Financial Statement Changes
The income statement would reflect the following:
Net income would be increased by $800 + $600 = $1,400.
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Education.
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
Salaries payable…........ (a) 1,200 1,200
Unearned member
fees……..………………….. 15,000 (d) 9,200 5,800
(e)
9,300
Depreciation expense
—Equipment……………… (f) 15,000 15,000
Salaries expense….......30,000 (a) 1,200 31,200
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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.
(d) Unearned Member Fees………….….…….……. 9,200
Member Fees Earned……….…….…….…. 9,200
To record earned fees.
Part 3 (all reversing entries dated January 1, 2016)
(a) Salaries Payable…..……………………………….. 1,200
Salaries Expense…………………………….. 1,200
To reverse accrued salaries.
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Problem 4-6AA (Concluded)
Part 4
Instructor note: Entries are shown without an account reference column because no posting is required.
2016
Jan. 4 Salaries Expense………………….….…….…….. 1,500
Cash……………………………………………..… 1,500
To record payroll.
PROBLEM SET B
Problem 4-1B (90 minutes)
INSTRUCTOR NOTE: Ledger accounts are shown after Part 7 as they would appear after all
entries are posted.
Part 2
Transactions for July
July 1 Cash……………………………………..….…….……..101 30,000
Buildings………………………………………………..173 150,000
L. Plume, Capital……………………………..301 180,000
Owner invested in the business.
2 Rent Expense………………………..…….…….…..640 2,000
Cash……………………………………………..…101 2,000
Paid one month’s rent.
Paid two weeks’ salary.
24 Cash………………………………….….…….…….…..101 9,800
Storage Fees Earned………………………..401 9,800
Collected fees from customers.
28 Salaries Expense…………………….….…….……622 1,000
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Cash……………………………………………..…101 1,000
Paid two weeks’ salary.
29 Repairs Expense……………………………….……684 950
Cash……………………………………………..…101 950
Repaired the roof.
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Problem 4-1B (Continued)
Part 3
SAFE STORAGE CO.
Unadjusted Trial Balance
July 31, 2015
No. Account Title Debit Credit
101 Cash…………………………………..…….….…….…….… $ 22,850
106 Accounts receivable……………………….….…….…. 0
124 Office supplies…………………….….…….…….….….. 2,400
401 Storage fees earned………………………………….…. 9,800
606 Depreciation expense–Buildings……................ 0
622 Salaries expense………………………………….……... 2,000
637 Insurance expense………………………………………. 0
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Problem 4-1B (Continued)
Part 4
Adjusting entries
July 31 Insurance Expense………….….….…….…….….….637 400
Prepaid Insurance……………………………...128 400
To record expired insurance
(2/3 x $7,200/12 per month).
31 Salaries Expense………………………………..….…..622 100
Salaries Payable………………………………..209 100
To record accrued salaries.
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