Problem 4-1B (Concluded)
Office Supplies Expense Acct. No. 650
Date Explanation PR Debit Credit Balance
Repairs Expense Acct. No. 684
Date Explanation PR Debit Credit Balance
Telephone Expense Acct. No. 688
Date Explanation PR Debit Credit Balance
Income Summary Acct. No. 901
Date Explanation PR Debit Credit Balance
July 31 Closing 10,950 10,950
4-1
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Problem 4-2B (90 minutes) Part 1
POWER DEMOLITION COMPANY
Work Sheet
For Year Ended April 30, 2015
Unadjusted
Trial Balance Adjustments
Adjusted
Trial Balance
Income
Statement
Balance Sheet
and Statement
of Owner’s
Equity
No
.
Account Title Dr. Cr. Dr. Cr. Dr. Cr. Dr. Cr. Dr. Cr.
101 Cash……….………….……......…......7,000 7,000 7,000
126 Supplies………………………………...
16,000 (a) 8,100 7,900 7,900
128 Prepaid insurance…………..….......
12,600 (b) 10,600 2,000 2,000
0
Net Income…………………………….. 77,550
______ ______ 77,550
Totals…………………………....……...
187,000
187,00
228,900
228,900
4-3
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Problem 4-2B (Continued)
Part 2 Adjusting entries (all on April 30, 2015)
Instructor note: Entries are shown without an account reference column because no posting is required.
(a) Supplies Expense…………………………………….. 8,100
Supplies……………………………………………. 8,100
To record consumption of supplies.
(b) Insurance Expense………………………………..…. 10,600
Prepaid Insurance..………………................ 10,600
To record expiration of insurance.
4-4
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Education.
Problem 4-2B (Continued)
Closing entries (all on April 30, 2015)
Instructor note: Entries are shown without an account reference column because no posting is required.
(1) Demolition Fees Earned….…….................... 187,000
(2) Income Summary….……………………….......... 109,450
Depreciation Expense–Equipment...... 7,000
Wages Expense….………....................... 43,400
(3) Income Summary….……………………….......... 77,550
(4) J. Bonn, Capital…………………………………….. 12,000
4-5
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Education.
Problem 4-2B (Continued)
Part 3
POWER DEMOLITION COMPANY
Income Statement
For Year Ended April 30, 2015
Demolition fees earned..…………………………....... $187,000
Expenses
Depreciation expense–Equipment................... $ 7,000
Wages expense….…………..……......................... 43,400
POWER DEMOLITION COMPANY
Statement of Owner’s Equity
For Year Ended April 30, 2015
J. Bonn, Capital, April 30, 2014..................…..... $ 46,900
4-6
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Education.
Problem 4-2B (Continued)
POWER DEMOLITION COMPANY
Balance Sheet
April 30, 2015
Assets
Current assets
Cash…………………………………………………………. $ 7,000
Supplies………………………………………………..….. 7,900
Liabilities
Current liabilities
Accounts payable….……................................... $ 7,600
Interest payable…………………………………………. 300
4-7
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Education.
Problem 4-2B (Concluded)
Part 4
(a) This error enters the wrong amount in the correct accounts. The
ending balance of the Prepaid Insurance account should be $2,000,
but the entry reduces that account by $2,000. Because its
This error is not likely to be detected as a result of completing the
(b) This error inserts a debit in the balance sheet columns instead of the
In all likelihood, the error will be discovered in the process of
drafting the balance sheet because the accountant will realize that
4-8
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Education.
Problem 4-3B (15 minutes)
1. Z 6. F 11. A 16. E
4-9
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Education.
Problem 4-4B (75 minutes)
Part 1
ANARA CO.
Income Statement
For Year Ended December 31, 2015
Revenues
Professional fees earned..…………..……............ $59,600
Rent earned………………………..…....................... 4,500
ANARA CO.
Statement of Owner’s Equity
For Year Ended December 31, 2015
P. Anara, Capital, December 31, 2014................ $ 52,800
4-10
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Education.
Problem 4-4B (Continued)
ANARA CO.
Balance Sheet
December 31, 2015
Assets
Current assets
Cash $ 7,400
Short-term investments 11,200
$164 ,700
Liabilities
Current liabilities
Accounts payable $ 3,500
4-11
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Education.
Total liabilities
51,010
Equity
P. Anara, Capital
4-12
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Education.