Chapter 03 – Adjusting Accounts for Financial Statements
Serial Problem, SP 3 (Continued)
Part 7
Closing entries
2013
Dec. 31 Computer Services Revenue …………………….. 403 31,284
Income Summary ……………………………….. 901 31,284
Miscellaneous Expenses …………………… 677 250
Repairs Expense—Computer …………….. 684 1,305
To close the expense accounts.
31 Income Summary ……………………………………… 901 14,248
Retained Earnings ……………………………… 318 14,248
© 2015 by McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
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Financial Accounting, 7th Edition
92
December 31, 2013
Debit Credit
Cash ……………………………………………………………………. $ 58,160
Accounts receivable …………………………………………….. 5,668
Computer supplies ………………………………………………. 580
Retained earnings ($14,248 – $7,100) …………………………... _______ 7,148
Totals ………………………………………………………………….. $ 94,898 $ 94,898
Chapter 03 – Adjusting Accounts for Financial Statements
Serial Problem, SP 3 (Continued)
[Note: Ledger includes all entries from prior three months. The Working Papers shorten
Chapter 03 – Adjusting Accounts for Financial Statements
Serial Problem, SP 3 (Concluded)
Computer Supplies Expense
Acct. No. 652
Date
Explanation
PR
Debit
Credit
Balance
Dec.
31
3,065
3,065
31
Closing
3,065
0
Advertising Expense
Acct. No. 655
Date
Explanation
PR
Debit
Credit
Balance
Oct.
20
1,940
1,940
Dec.
2
1,025
2,965
31
Closing
2,965
0
Mileage Expense
Acct. No. 676
Date
Explanation
PR
Debit
Credit
Balance
Nov.
1
320
320
28
384
704
Dec.
29
192
896
31
Closing
896
0
Miscellaneous Expense
Acct. No. 677
Date
Explanation
PR
Debit
Credit
Balance
Nov.
22
250
250
Dec.
31
Closing
250
0
Repairs Expense—Computer
Acct. No. 684
Date
Explanation
PR
Debit
Credit
Balance
Oct.
17
805
805
Dec.
3
500
1,305
31
Closing
1,305
0
Income Summary
Acct. No. 901
Date
Explanation
PR
Debit
Credit
Balance
Dec.
31
Closing
31,284
31,284
31
Closing
17,036
14,248
31
Closing
14,248
0
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McGraw-Hill Education.
Financial Accounting, 7th Edition
98
1. The revenue recognition principle requires that revenue be recorded
2. Apple provides information on revenue recognition in its Note 1 titled
“Summary of Significant Accounting Policies.” It reports that “The
Company recognizes revenue when persuasive evidence of an arrangement
exists, delivery has occurred, the sales price is fixed or determinable, and
3. For fiscal year-end September 29, 2012, the profit margin is ($ millions):
4. The revenue items from its income statement must be identified, and
those would be credited to Income Summary as step 1 in the closing
5. The total expenses that would be debited to Income Summary as step 2
in the closing entry process must be computed. Apple’s total expenses