Problem 4-2A (Continued)
Part 7—continued
Ledger as of April 30
Cash Acct. No. 101
Date Explanation PR Debit Credit Balance
April 1 30,000 30,000
2 1,800 28,200
3 1,000 27,200
30 1,500 27,000
Accounts Receivable Acct. No. 106
Date Explanation PR Debit Credit Balance
April 30 Adjusting 1,750 1,750
Office Supplies Acct. No. 124
30 Adjusting 133 2,267
Computer Equipment Acct. No. 167
Date Explanation PR Debit Credit Balance
April 1 20,000 20,000
Accumulated Depreciation–Computer Equipment Acct. No. 168
Date Explanation PR Debit Credit Balance
April 30 Adjusting 500 500
Salaries Payable Acct. No. 209
Date Explanation PR Debit Credit Balance
Problem 4-2A (Continued)
J. Nozomi, Capital Acct. No. 301
Date Explanation PR Debit Credit Balance
J. Nozomi, Withdrawals Acct. No. 302
Date Explanation PR Debit Credit Balance
April 30 1,500 1,500
30 Closing 1,500 0
Commissions Earned Acct. No. 405
Date Explanation PR Debit Credit Balance
Depreciation Expense–Computer Equipment Acct. No. 612
Date Explanation PR Debit Credit Balance
April 30 Adjusting 500 500
30 Closing 500 0
Salaries Expense Acct. No. 622
Date Explanation PR Debit Credit Balance
Insurance Expense Acct. No. 637
Date Explanation PR Debit Credit Balance
April 30 Adjusting 133 133
30 Closing 133 0
Rent Expense Acct. No. 640
Date Explanation PR Debit Credit Balance
Office Supplies Expense Acct. No. 650
Date Explanation PR Debit Credit Balance
April 30 Adjusting 400 400
30 Closing 400 0
Problem 4-2A (Concluded)
Repairs Expense Acct. No. 684
Date Explanation PR Debit Credit Balance
Telephone Expense Acct. No. 688
Date Explanation PR Debit Credit Balance
April 30 750 750
30 Closing 750 0
Income Summary Acct. No. 901
Date Explanation PR Debit Credit Balance
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Fundamental Accounting Principles, 21st Edition
228
Problem 4-3A (90 minutes) Part 1
ACE CONSTRUCTION CO.
Work Sheet
For Year Ended June 30, 2013
Unadjusted
Trial Balance
Adjustments
Adjusted
Trial Balance
Income
Statement
Balance Sheet
No.
Account Title
Dr.
Cr.
Dr.
Cr.
Dr.
Cr.
Dr.
Cr.
Dr.
Cr.
101
Cash ………………………………………………………
18,500
18,500
18,500
126
Supplies ……………………………………..…………
9,900
(a)
6,600
3,300
3,300
128
Prepaid insurance …………………………..
7,200
(b)
3,800
3,400
3,400
167
Equipment ……………………………………………
132,000
132,000
132,000
168
Accumulated depreciation—
Equipment …………………………………..…………
26,250
(c)
8,400
34,650
34,650
201
Accounts payable …………………………..
6,800
(d)
650
7,450
7,450
203
Interest payable ………………………..…
(h)
250
250
250
208
Rent payable ……………………………..…………
(f)
500
500
500
210
Wages payable …………………………..
(e)
1,800
1,800
1,800
213
Property taxes payable …………..…………
(g)
1,000
1,000
1,000
251
Long–term notes payable …………………
25,000
25,000
25,000
301
V. Ace, Capital …………………………..
88,660
88,660
88,660
302
V. Ace, Withdrawals ………………..…………
33,000
33,000
33,000
401
Construction fees earned …………………
132,100
132,100
132,100
612
Depreciation expense—
Equipment ……………………………….…………
(c)
8,400
8,400
8,400
623
Wages expense ……………………….….
46,860
(e)
1,800
48,660
48,660
633
Interest expense ……………………….….
2,750
(h)
250
3,000
3,000
637
Insurance expense ………………….……….
(b)
3,800
3,800
3,800
640
Rent expense ………………………………………
12,000
(f)
500
12,500
12,500
652
Supplies expense …………………….…….
(a)
6,600
6,600
6,600
683
Property taxes expense ………….…………
7,800
(g)
1,000
8,800
8,800
684
Repairs expense …………………………..
2,910
2,910
2,910
690
Utilities expense ……………………….….
5,890
______
(d)
650
_____
6,540
______
6,540
______
______
______
Totals…………………………………………..…………
278,810
278,810
23,000
23,000
291,410
291,410
101,210
132,100
190,200
159,310
Net Income ………………………………..…………
30,890
______
______
30,890
Totals…………………………………………..…………
132,100
132,100
190,200
190,200
Problem 4-3A (Continued)
Part 2 Adjusting entries (all dated June 30, 2013)
Instructor note: Entries are shown without an account reference column because no posting is required.
(a) Supplies Expense ………………………………………. 6,600
Supplies ……………………………………………… 6,600
To record consumption of supplies.
(f) Rent Expense …………………………………………….. 500
Rent Payable ………………………………………. 500
To record remainder of annual rent.
(g) Property Taxes Expense …………………………….. 1,000
Property Taxes Payable ………………………. 1,000
To record additional property taxes.
Problem 4-3A (Continued)
Closing entries (all dated June 30, 2013)
Instructor note: Entries are shown without an account reference column because no posting is required.
(1) Construction Fees Earned ……………………… 132,100
Income Summary ……………………………. 132,100
To close the revenue account.
(2) Income Summary ………………………………….. 101,210
Depreciation Expense–Equipment …… 8,400
Wages Expense………………………………. 48,660
(3) Income Summary ………………………………….. 30,890
V. Ace, Capital ………………………………… 30,890
To close the Income Summary account.
Problem 4-3A (Continued)
Part 3
ACE CONSTRUCTION CO.
Income Statement
For Year Ended June 30, 2013
Construction fees earned …………………………... $132,100
Expenses
Depreciation expense—Equipment …………… $ 8,400
Wages expense ………………………………………… 48,660
Interest expense……………………………………….. 3,000
Insurance expense……………………………………. 3,800
ACE CONSTRUCTION CO.
Statement of Owner’s Equity
For Year Ended June 30, 2013
V. Ace, Capital, June 30, 2012 …………………….. $ 53,660
Add: Owner contribution …………………………... $35,000
Problem 4-3A (Continued)
ACE CONSTRUCTION CO.
Balance Sheet
June 30, 2013
Assets
Current assets
Cash …………………………………………………………….. $ 18,500
Supplies ……………………………………………………….. 3,300
Accumulated depreciation—Equipment…………. (34,650) 97,350
Total assets ……………………………………………………. $122,550
Liabilities
Current liabilities
Accounts payable …………………………………………. $ 7,450
Interest payable ……………………………………………. 250
Total current liabilities ………………………………….. $ 16,000
Noncurrent liabilities
Long-term note payable ………………………………… 20,000
Total liabilities ………………………………………………… 36,000
Equity
Problem 4-3A (Concluded)
Part 4
(a) This error enters the wrong amount in the correct accounts. The
ending balance of the Supplies account should be $3,300, but the entry
reduces Supplies by $3,300. Because its unadjusted balance was
This error is not likely to be detected as a result of completing the
work sheet. If it is not, the income statement will overstate net income
(b) This error inserts a credit in the adjusted trial balance when a debit
should have been inserted. As a result, the trial balance will not
balance (the credit column will be greater than the debit column by
Problem 4-4A (90 minutes)
Part 1
KARISE REPAIRS
Income Statement
For Year Ended December 31, 2013
Repair fees earned ………………………………. $90,950
Expenses
Depreciation expense—Equipment …….. $ 5,000
Wages expense …………………………………. 37,500
Insurance expense …………………………….. 800
Problem 4-4A – (Continued)
KARISE REPAIRS
Statement of Owner‘s Equity
For Year Ended December 31, 2013
C. Karise, Capital, Jan. 1, 2013……………… $33,000
Add: Net income ……………………………….. 30,750
63,750
KARISE REPAIRS
Balance Sheet
December 31, 2013
Assets
Current assets
Cash …………………………………………………….. $14,000
Office supplies ……………………………………… 1,300
Prepaid insurance ………………………………… 2,050
Liabilities
Current liabilities
Accounts payable …………………………………. $14,000
Wages payable …………………………………….. 600
Total current liabilities ………………………….. 14,600
Equity
Problem 4-4A (Continued)
Parts 2 and 3
KARISE REPAIRS
Work Sheet
For Year Ended December 31, 2013
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
128
Prepaid insurance ……………….
2,050
2,050
167
Equipment …………………………….
50,000
50,000
168
Accumulated depreciation—
Equipment ……………………………..
5,000
5,000
201
Accounts payable ………………..
14,000
14,000
210
Wages payable …………………….
600
600
301
C. Karise, Capital …………………..
33,000
(4)
16,000
(3)
30,750
47,750
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
640
Rent expense ………………………..
10,600
(2)
10,600
650
Office supplies expense ……..
3,600
(2)
3,600
690
Utilities expense ……………………
2,700
(2)
2,700
901
Income summary …………………
(2)
60,200
(1)
90,950
______
______
(3)
30,750
______
______
______
Totals ……………………………………..
143,550
143,550
197,900
197,900
67,350
67,350
Problem 4-4A (Continued)
Closing entries (all dated December 31, 2013)
Instructor note: Entries are shown without an account reference column because no posting is required.
(1) Repair Fees Earned ………………………………….. 90,950
Income Summary ………………………………. 90,950
To close the revenue account.
(2) Income Summary …………………………………….. 60,200
Depreciation Expense—Equipment ……. 5,000
Wages Expense…………………………………. 37,500
(3) Income Summary …………………………………….. 30,750
C. Karise, Capital ………………………………. 30,750
To close the Income Summary account.
Problem 4-4A (Concluded)
Part 4
(a) If none of the $800 insurance expense had expired, the income statement
would not report any insurance expense and net income would be
increased by $800.
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:
Problem 4-5A (75 minutes)
Part 1
TYBALT CONSTRUCTION
Income Statement
For Year Ended December 31, 2013
Revenues
Professional fees earned …………………………….. $97,000
Rent earned ………………………………………………… 14,000
Expenses
Depreciation expense—Building …………………. 11,000
Depreciation expense—Equipment ……………… 6,000
Wages expense …………………………..……………… 32,000
Property taxes expense ………………………………. 5,000
Repairs expense …………………………………………. 8,900
Telephone expense …………………………………….. 3,200
TYBALT CONSTRUCTION
Statement of Owner‘s Equity
For Year Ended December 31, 2013
O. Tybalt, Capital, December 31, 2012 …………… $121,400
Add: Investments by owner ………………………… $5,000
Net income …………………………………………. 4,300 9,300