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Problem 4-4B (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........................... 59,600
Rent Earned................................................. 4,500
(2) Income Summary......................................... 37,530
Depreciation Expense—Building........ 2,000
Depreciation Expense—Equipment.... 1,000
(3) Income Summary......................................... 28,890
(4) P. Anara, Capital........................................... 8,000
Part 3
a. Return on assets = $28,890/[($160,000 + $164,700)/2] = 17.8% (or 0.178)
4-1
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Education.
Problem 4-5B (90 minutes)
Part 1
SANTO COMPANY
Income Statement
For Year Ended December 31, 2015
Repair fees earned.................................... $54,700
Expenses
Depreciation expense—Equipment........ $ 2,000
SANTO COMPANY
Statement of Owner’s Equity
For Year Ended December 31, 2015
P. Santo, Capital, December 31, 2014....... $35,650
4-2
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Education.
Problem 4-5B (Continued)
SANTO COMPANY
Balance Sheet
December 31, 2015
Assets
Current assets
Cash......................................................... $14,450
Store supplies......................................... 5,140
Liabilities
Current liabilities
Equity
4-3
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Education.
Problem 4-5B (Continued)
Parts 2 and 3
SANTO COMPANY
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................................ 14,450 14,450
125 Store supplies................. 5,140 5,140
128 Prepaid insurance........... 1,200 1,200
4-4
Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill
Education.
Problem 4-5B (Concluded)
Part 3
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........................................ 54,700
(2) Income Summary........................................... 35,760
Depreciation Expense, Equipment........ 2,000
Wages Expense....................................... 26,400
(3) Income Summary........................................... 18,940
(4) P. Santo, Capital............................................. 15,000
Part 4
(a) If none of the $600 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 $600 + $2,700 = $3,300. (a) & (b)
The balance sheet would reflect the following:
4-5
Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill
Education.
4-6
Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill
Education.
Problem 4-6BA (40 minutes)
Part 1
SOLUTIONS CO.
Work Sheet
For Year Ended December 31, 2015
Unadjusted
Trial Balance Adjustments
Adjusted
Trial Balance
Dr. Cr. Dr. Cr. Dr. Cr.
Cash....................................... 10,000 10,000
Accounts receivable............... (e) 2,450 2,450
Supplies................................. 7,600 (b) 4,150 3,450
4-7
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Education.
Problem 4-6BA (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......................................... 400
(b) Supplies Expense........................................ 4,150
(c) Interest Expense.......................................... 800
(d) Unearned Rental Fees................................. 4,000
(e) Accounts Receivable................................... 2,450
(f) Depreciation Expense—Machinery............ 3,800
Part 3 (all reversing entries dated January 1, 2016)
(a) Salaries Payable.......................................... 400
(c) Interest Payable........................................... 800
(e) Rental Fees Earned..................................... 2,450
4-8
Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill
Education.
Problem 4-6BA (Concluded)
Part 4
Instructor note: Entries are shown without an account reference column because no posting is required.
2016
Jan. 4 Salaries Expense......................................... 1,200
Cash...................................................... 1,200
To record payroll.
4-9
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Education.
SERIAL PROBLEM – SP 4
Serial Problem, Business Solutions (20 minutes) — Part 1
<Note: The general ledger is displayed at the end of Part 2>
Closing entries
2015
Dec. 31 Computer Services Revenue ......................... 403 31,284
Income Summary..................................... 901 31,284
To close the revenue account.
31 Income Summary............................................ 901 16,824
Depreciation Exp–Office Equipment....... 612 400
Depreciation Exp–Computer Equipment... 613 1,250
31 Income Summary............................................ 901 14,460
31 S. Rey, Capital.................................................. 301 7,100
Note: All accounts with numbers that start with the digits 1 or 2 (the permanent
accounts) are unaffected by the closing process.
4-10
Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill
Education.
