Exercise 4-10 (20 minutes)
Instructor note: Entries are shown without an account reference column because no posting is required.
(a) Insurance Expense—Office Equipment ……………… 332
Insurance Expense—Store Equipment ………………. 568
Prepaid Insurance ………………………………………. 900
To record expired insurance.
(e) Office Salaries Expense …………………………………….. 560
Salaries Payable…………………………………………. 560
To record accrued salaries.
Exercise 4-11 (25 minutes)
1.
Work Sheet
Account Title
Debit
Credit
Rent earned ……………………………………. 120,000
Salaries expense …………………………….. 46,300
Insurance expense …………………………. 7,400
Office supplies expense ………………….. 16,000
2. Closing entries
(1) Rent Earned ………………………………………….. 120,000
Income Summary ……………………………. 120,000
To close the revenue account.
(2) Income Summary ………………………………….. 94,400
Salaries Expense ……………………………. 46,300
Insurance Expense …………………………. 7,400
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Fundamental Accounting Principles, 21st Edition
212
Exercise 4-12 Part 1 (30 minutes)
DYLAN DELIVERY COMPANY
Work Sheet
For Year Ended December 31, 2013
Unadjusted
Trial Balance
Adjustments
Adjusted
Trial Balance
Income
Statement
Balance Sheet
and Statement of
Owner’s Equtiy
Account Title
Dr.
Cr.
Dr.
Cr.
Dr.
Cr.
Dr.
Cr.
Dr.
Cr.
Cash …………………………………………………….…
16,000
16,000
16,000
Accounts receivable ………………………..…
34,000
34,000
34,000
Office supplies …………………………………..…….
5,000
(c)
3,000
2,000
2,000
Trucks ………………………………………………….……
350,000
350,000
350,000
Accum. Depreciation—Trucks ……..…….
80,000
(a)
40,000
120,000
120,000
Land …………………………………………………….…
160,000
160,000
160,000
Accounts payable …………………………….…….
24,000
24,000
24,000
Interest payable ……………………………………….
5,000
(b)
1,000
6,000
6,000
Long–term notes payable ……………….…….
100,000
100,000
100,000
S. Dylan, Capital ………………………………..…….
307,000
307,000
307,000
S. Dylan, Withdrawals ……………………..……
34,000
34,000
34,000
Delivery fees earned …………………………..
263,000
263,000
263,000
Depreciation expense—Trucks ………….
40,000
(a)
40,000
80,000
80,000
Salaries expense …………………………………….
110,000
110,000
110,000
Office supplies expense ………………….…….
15,000
(c)
3,000
18,000
18,000
Interest expense ………………………………..…….
5,000
(b)
1,000
6,000
6,000
Repairs expense—Trucks ……………..…….
10,000
______
_____
_____
10,000
______
10,000
______
______
______
Totals……………………………………………………….
779,000
779,000
44,000
44,000
820,000
820,000
224,000
263,000
596,000
557,000
Net Income ……………………………………………….
39,000
______
______
39,000
Totals……………………………………………………….
263,000
263,000
596,000
596,000
Exercise 4-12 (Continued)
2. Closing entries
Delivery Fees Earned ……………………………. 263,000
Income Summary …………………………... 263,000
To close the revenue account.
Income Summary …………………………………. 224,000
S. Dylan, Capital on the balance sheet
Beginning balance …………………………..……. $307,000
Add: Net income …………………………………… 39,000
346,000
Exercise 4-13A (30 minutes)
1. Adjusting entries
Oct. 31 Rent Expense ………………………………………… 2,800
Rent Payable ………………………………….. 2,800
To record accrued rent expense.
2. Subsequent entries without reversing
Nov. 5 Rent Payable …………………………………………. 2,800
Rent Expense ………………………………………… 2,800
Cash ………………………………………………. 5,600
To record payment of 2 months’ rent.
3. Reversing entries and subsequent entries
Nov. 1 Rent Payable …………………………………………. 2,800
Rent Expense …………………………………. 2,800
To reverse accrual of rent expense.
8 Cash ……………………………………………………… 1,700
Rent Earned ……………………………………. 1,700
To record collection of 2 months’ rent.
Exercise 4-14A (10 minutes)
Reversing entries are appropriate for accounting adjustments (a) and (e)
Sept. 1 Service Fees Earned ……………………………… 6,000
Accounts Receivable ………………………. 6,000
To reverse accrued revenues.
Exercise 4-15 (10 minutes)
Income Summary balance after closing revenues and expenses:
Revenues: $70,000 + $7,000 ………………………. = $77,000 Cr.
K. Capri, Capital balance after all closing entries:
Beginning balance …………………………..
$20,000
Plus net income ………………………………
26,400
46,400
Less withdrawals …………………………….
12,000
Ending balance ……………………………….
$34,400
Exercise 4-16 (10 minutes)
Dec. 31 Net Sales ………………………………………………. 1,014,345
Income Summary ……………………………. 1,014,345
To close the revenue account.
Exercise 4-17 (25 minutes)
WESTCOTT COMPANY
December 31, 2013
Unadjusted
Trial Balance
Dr. Cr.
Adjustments
Dr. Cr.
Adjusted
Trial Balance
Dr. Cr.
Cash ……………………………………………………….
21
21
Accounts receivable ……………………………..
12
12
Supplies ………………………………………………….
24
(d)
9
15
Prepaid insurance ………………………………….
18
(e)
15
3
Equipment ……………………………………………...
39
39
Accumulated depreciation–Equip ……...
15
(a)
3
18
Accounts payable ………………………………….
6
6
Salaries payable …………………………………….
(b)
6
6
Unearned revenue ………………………………...
12
(c)
12
W. Westcott, Capital ……………………………...
42
42
W. Westcott, Withdrawals …………………….
6
6
Revenue ………………………………………………….
75
(c)
12
87
Depreciation expense– Equipment …….
(a)
3
3
Salaries expense …………………………………...
18
(b)
6
24
Insurance expense ………………………………..
(e)
15
15
Supplies expense ………………………………….
(d)
9
9
Utilities expense ……………………………………..
12
__
__
__
12
__
Totals ……………………………………………………….
150
150
45
45
159
159
PROBLEM SET A
Problem 4-1A (15 minutes)
1.
B
6.
C
11.
E
16.
C
2.
Z
7.
F
12.
C
17.
C
3.
A
8.
E
13.
A
18.
Z
4.
A
9.
A
14.
C
19.
A
5.
E
10.
G
15.
A
20.
E
Problem 4-2A (90 minutes)
INSTRUCTOR NOTE: Ledger accounts are shown after Part 7 as they would appear after all entries
are posted.
Part 2 — Transactions for April
April 1 Cash ……………………………………………………… 101 30,000
Computer Equipment …………………………….. 167 20,000
J. Nozomi, Capital …………………………... 301 50,000
Owner invested in the business.
14 Salaries Expense ……………………………………. 622 1,600
Cash ………………………………………………. 101 1,600
Paid two weeks’ salaries.
29 Repairs Expense …………………………………… 684 350
Cash ………………………………………………. 101 350
Repaired the computer.
Problem 4-2A (Continued)
Part 3
ADVENTURE TRAVEL
Unadjusted Trial Balance
April 30, 2013
No. Account Title Debit Credit
101 Cash …………………………………………………. $27,000
106 Accounts receivable ………………………….. 0
124 Office supplies ………………………………….. 1,000
128 Prepaid insurance ……………………………… 2,400
637 Insurance expense ……………………………. 0
640 Rent expense …………………………………….. 1,800
650 Office supplies expense …………………….. 0
684 Repairs expense ……………………………….. 350
Problem 4-2A (Continued)
Part 4
Adjusting entries
(a) Apr 30 Insurance Expense ……………………………………….. 637 133
Prepaid Insurance …………………………………… 128 133
To record expired insurance ($2,400/12 x2/3).
(b) 30 Office Supplies Expense ……………………………….. 650 400
Office Supplies ……………………………………….. 124 400
To record cost of supplies used ($1,000 – $600).
To record accrued commissions.
Problem 4-2A (Continued)
Part 4
ADVENTURE TRAVEL
Adjusted Trial Balance
April 30, 2013
No. Account Title Debit Credit
101 Cash …………………………………………………. $27,000
106 Accounts receivable ………………………….. 1,750
124 Office supplies ………………………………….. 600
405 Commissions earned…………………………. 9,750
612 Depreciation expense—
Computer equipment ………………………… 500
622 Salaries expense ……………………………….. 3,620
637 Insurance expense ……………………………. 133
Problem 4-2A (Continued)
Part 5
ADVENTURE TRAVEL
Income Statement
For Month Ended April 30, 2013
Commissions earned ………………………………………….. $9,750
Expenses
Depreciation expense—Computer equipment ……. $ 500
Salaries expense ………………………………………………. 3,620
Insurance expense ……………………………………………. 133
Rent expense ……………………………………………………. 1,800
ADVENTURE TRAVEL
Statement of Owner’s Equity
For Month Ended April 30, 2013
J. Nozomi, Capital, April 1, 2013 ……………….. $ 0
Add: Owner investments …………………………. $50,000
Problem 4-2A (Continued)
Part 5—continued
ADVENTURE TRAVEL
Balance Sheet
April 30, 2013
Assets
Cash ………………………………………………………………………. $27,000
Accounts receivable ………………………………………………. 1,750
Office supplies ……………………………………………………….. 600
Prepaid insurance ………………………………………………….. 2,267
Problem 4-2A (Continued)
Part 6
Closing entries
30 Income Summary ………………………………….. 901 7,553
Depreciation Exp–Computer Equip …. 612 500
Salaries Expense ……………………………. 622 3,620
30 Income Summary ………………………………….. 901 2,197
J. Nozomi, Capital …………………………... 301 2,197
To close the Income Summary account.
Part 7
ADVENTURE TRAVEL
Post-Closing Trial Balance
April 30, 2013
Debit Credit
Cash …………………………………………………. $27,000
Accounts receivable ………………………….. 1,750
Office supplies …………………………..……… 600
Prepaid insurance ……………………………… 2,267