M4–12
Account
Financial
Statement?
Classification?
Normal dr or cr
Balance?
Interest Expense
IS
E
Dr
Prepaid Rent
BS
CA
Dr
Amortization Expense
IS
E
Dr
Unearned Revenue
BS
CL
Cr
Retained Earnings
BS
SE
Cr
Accumulated Depreciation
BS
NCA
Cr
M4–13
MACRO COMPANY
Adjusted Trial Balance
At June 30
Account Titles
Debit
Credit
Cash
$ 1,020
Accounts Receivable
550
Supplies
710
Prepaid Rent
40
Equipment
1,400
Accumulated Depreciation–Equipment
$ 250
Software
200
Accumulated Amortization
150
Accounts Payable
300
Income Tax Payable
30
Unearned Revenue
100
Notes Payable (long–term)
1,300
Common Stock
300
Retained Earnings
120
Sales Revenue
3,600
Interest Revenue
50
Office Expense
820
Salaries and Wages Expense
660
Rent Expense
400
Depreciation Expense
110
Interest Expense
180
Income Tax Expense
110
Totals
$ 6,200
$ 6,200
M4–14 SKY BLUE CORPORATION
Income Statement
For the Year Ended December 31
$ 42,030
300
42,330
21,600
6,000
4,220
1,400
1,300
2,900
37,420
$ 4,910
The Sky Blue Corporation generated $4,910 of net income during the year.
M4–15 SKY BLUE CORPORATION
Statement of Retained Earnings
For the Year Ended December 31
Balance, January 1
$ 1,000
Add: Net Income
4,910
Subtract: Dividends
(300)
Balance, December 31
$ 5,610
M4–16 SKY BLUE CORPORATION
Balance Sheet
At December 31
Assets
Current Assets:
Cash
Accounts Receivable
Prepaid Insurance
Total Current Assets
Notes Receivable (long–term)
Equipment $12,000
Accumulated Depreciation (2,600)
Total Assets
Liabilities
Current Liabilities:
Accounts Payable
Salaries and Wages Payable
Income Taxes Payable
Unearned Revenue
Total Current Liabilities
Stockholders’ Equity
Common Stock
Retained Earnings
Total Stockholders’ Equity
Total Liabilities and Stockholders’ Equity
$ 1,230
2,000
2,300
5,530
3,000
9,400
$ 17,930
$ 5,420
1,000
2,900
600
9,920
2,400
5,610
8,010
$ 17,930
Sky Blue’s total assets are financed more by debt ($9,920) than by equity ($8,010).
M4–17
Sales Revenue (−R) ………………………………………..
Rent Revenue (−R) ………………………………………….
42,030
300
Salaries and Wages Expense (−E) …………..
Depreciation Expense (−E) ……………………..
Utilities Expense (−E) …………………………….
Insurance Expense (−E) …………………………
21,600
1,300
4,220
1,400
M4–18
Supplies Expense (+E, −SE) ………………………………...
1,300
Supplies (−A) …………………………..………………...
1,300
Prepaid Insurance (−A) ………………………………..
Unearned Revenue (−L) ……………………………………….
Service Revenue (+R, +SE) ………………………...
Fundamentals of Financial Accounting, 5/e 4–15
M4–22
Salaries and Wages Expense (+E, −SE) ………………...
1,200
Salaries and Wages Payable (+L) ………………...
1,200
Salaries and Wages
Payable (L)
Salaries and Wages
Expense (E)
0 Bal.
Bal. 20,000
1,200 AJE
AJE 1,200
1,200 End.
End. 21,200
M4–23
Interest Expense (+E, −SE) …………………………..……...
500
Interest Payable (+L) …………………………..……...
500
Interest Payable (L)
Interest Expense (E)
0 Bal.
Bal. 0
500 AJE
AJE 500
500 End.
End. 500
M4–24
Amortization Expense (+E, –SE) ……………………………………
5,000
Accumulated Amortization (+xA, −A) …………………….
5,000
Accum. Amortization (xA)
Amortization Expense (E)
0 Bal.
Bal. 0
5,000 AJE
AJE 5,000
5,000 End.
End. 5,000
Fundamentals of Financial Accounting, 5/e 4–16
M4–25 PI DETECTIVES
Adjusted Trial Balance
As of December 31
Account Titles
Debit
Credit
Cash
$ ?
Accounts Receivable
500
Supplies
9,000
Prepaid Insurance
7,200
Equipment
28,000
Accumulated Depreciation–Equipment
$ 4,000
Accounts Payable
200
Unearned Revenue
5,000
Notes Payable
3,000
Common Stock
22,000
Retained Earnings
5,700
Dividends
3,000
Service Revenue
33,800
Salaries and Wages Expense
20,000
Depreciation Expense
1,000
Totals
$ ?
$ 73,700
Total debits must equal total credits, so total debits must sum to $73,700. Thus, the
missing balance for Cash is $5,000.
M4–26
a
1/2/15
Prepaid Insurance (+A) ……………………………………
30,000
JE
Cash (−A) ………………………………………………..
30,000
b
12/31/15
Insurance Expense (+E, −SE) ………………………….
10,000
AJE
Prepaid Insurance (−A) ……………………………..
10,000
c
12/31/15
Retained Earnings (−SE) …………………………………
10,000
CJE
Insurance Expense (−E) …………………………...
10,000
d
12/31/16
Insurance Expense (+E, −SE) …………………………
10,000
AJE
Prepaid Insurance (−A) …………………………….
10,000
e
12/31/16
Retained Earnings (−SE) ……………………………….
10,000
CJE
Insurance Expense (−E) …………………………..
10,000
Fundamentals of Financial Accounting, 5/e 4–18
E4–1
Req. 1
Depreciation Exp.
Acc. Depn.–Equip.
Inc. Tax Expense
Inc. Tax Payable
0
18,100
0
2,030
3,000
3,000
26,200
26,200
3,000
21,100
26,200
28,230
GIBSON COMPANY
Adjusted Trial Balance
At December 31, 2015
Account Titles
Debit
Credit
Cash
$ 178,000
Accounts Receivable
225,400
Supplies
12,200
Prepaid Rent
10,200
Equipment
323,040
Accumulated Depreciation–Equipment
$ 21,100
Land
60,000
Accounts Payable
86,830
Unearned Revenue
32,500
Income Taxes Payable
28,230
Notes Payable (long–term)
160,000
Common Stock
233,370
Retained Earnings *
171,160
Service Revenue
2,564,200
Salaries and Wages Expense
1,590,000
Office Expense
632,250
Rent Expense
152,080
Utilities Expense
25,230
Supplies Expense
42,590
Interest Expense
17,200
Depreciation Expense
3,000
Income Tax Expense
26,200
Totals
$ 3,297,390
$ 3,297,390
Because debits must equal credits in a trial balance, the balance in Retained
E4–1 (continued)
Fundamentals of Financial Accounting, 5/e 4–19
Req. 2
Because the temporary accounts for 2015 have not yet been closed to Retained
Earnings, the Retained Earnings balance determined in requirement 1 must represent
the balance as of December 31, 2014.
E4–2
Req. 1
Req. 2
Req. 3
FEDEX CORP.
Income Statement
For the Year Ended May 31, 2013
Service Revenue
$ 44,200
Interest Revenue
20
Total Revenues
44,220
Salaries and Wages Expense
16,600
Transportation Expense
11,900
Office Expenses
7,540
Rent Expense
2,500
Depreciation Expense
2,400
Repairs and Maintenance Expense
1,900
Interest Expense
100
Income Tax Expense
900
Total Expenses
43,840
Net Income
$ 380
Fundamentals of Financial Accounting, 5/e 4–20
E4-2 (continued)
Req. 3 (continued)
FEDEX CORP.
Statement of Retained Earnings
For the Year Ended May 31, 2013
Beginning Balance, 6/1/2012
$ 17,100
Add: Net Income
380
Subtract: Dividends
(170)
Ending Balance, 5/31/2013
$ 17,310
FEDEX CORP.
Balance Sheet
At May 31, 2013
Assets
Liabilities
Current Assets
Current Liabilities
Cash
$ 4,900
Accounts Payable
$ 2,900
Accounts Receivable
5,000
Salaries and Wages Payable
1,700
Interest Receivable
Prepaid Rent
Supplies
Total Current Assets
10
850
450
11,210
Notes Payable (short-term)
Income Tax Payable
Total Current Liabilities
300
900
5,800
Notes Payable (long-term)
7,700
Equipment $38,100
Total Liabilities
13,500
Accum. Depn. (19,600)
Equipment, Net
18,500
Stockholders’ Equity
Common Stock
2,700
Goodwill
3,800
Retained Earnings
17,310
Total Stockholders’ Equity
20,010
Total Assets
$ 33,510
Total Liabilities and
Stockholders’ Equity
$ 33,510