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P4-39B, cont.
Requirement 8
P4A-40B Preparing adjusting entries and reversing entries
Learning Objective 7 Appendix 4A
The unadjusted trial balance and adjustment data of Myla’s Motors at December 31, 2018, follow:
Adjustment data at December 31, 2018:
a. Depreciation on equipment, $1,700.
b. Accrued Wages Expense, $1,300.
c. Office Supplies on hand, $400.
d. Prepaid Insurance expired during December, $250.
e. Unearned Revenue earned during December, $4,200.
f. Accrued Service Revenue, $1,000.
2019 transactions:
a. On January 4, Myla’s Motors paid wages of $1,900. Of this, $1,300 related to the accrued wages
recorded on December 31.
b. On January 10, Myla’s Motors received $1,700 for Service Revenue. Of this, $1,000 related to the
accrued Service Revenue recorded on December 31.
Requirements
1. Journalize adjusting entries.
2. Journalize reversing entries for the appropriate adjusting entries.
3. Refer to the 2019 data. Journalize the cash payment and the cash receipt that occurred in 2019.
SOLUTION
Requirement 1
Using Excel
P4-41 Using Excel to prepare financial statements, closing entries, and the post-closing trial
balance
Download an Excel template for this problem online in MyAccountingLab or at
http://www.pearsonhighered.com/Horngren.
Cedar River Corporation started operations on July 1, 2018. On July 31, a trial balance was prepared,
adjusting entries were journalized and posted, and an adjusted trial balance was completed. A worksheet
is to be used to help prepare the financial statements and the post-closing trial balance.
Requirements
1. Use Excel to complete the Income Statement and Balance Sheet columns of the worksheet. Carry
numbers from the adjusted trial balance columns of the worksheet to the income statement and
balance sheet columns using Excel formulas.
a. Use formulas to total the columns.
b. Use a formula to determine the amount of the net income or net loss.
c. Format the cells requiring dollar signs.
d. Boldface the totals.
2. Prepare the income statement, the statement of retained earnings, and a classified balance sheet.
a. Use the Increase Indent button on the Home tab to indent items.
b. Use formulas to sum items.
c. Format the cells requiring dollar signs.
d. Format the cells requiring double underlines.
3. Journalize the closing entries. The account titles are available when you click on the down-arrow.
Indent the account to be credited.
4. Post the closing entries to the T-accounts. Use cell references from the closing entries.
5. Complete the post-closing trial balance using formulas referencing the T-accounts. The account titles
are available when you click the down-arrow.
a. Format the cells requiring dollar signs.
b. Boldface the totals.
c. Format the cells requiring double underlines.
SOLUTION
Continuing Problem
P4-42 Completing the accounting cycle from adjusted trial balance to post-closing trial balance with
an optional worksheet
This problem continues the Canyon Canoe Company situation from Chapter 3.
Requirements
1. Complete the worksheet at December 31, 2018 (optional). Use the unadjusted trial balance from Chapter
2 and the adjusting entries from Chapter 3.
2. Prepare an income statement for the two months ended December 31, 2018. Use the worksheet prepared
in Requirement 1 or the adjusted trial balance from Chapter 3.
3. Prepare a statement of retained earnings for the two months ended December 31, 2018.
4. Prepare a classified balance sheet (report form) at December 31, 2018. Assume the note payable is
long-term.
5. Journalize and post the closing entries at December 31, 2018. Open T-accounts for Income Summary
and Retained earnings. Determine the ending balance for each account. Denote each closing amount as
Clos. and each account balance as Balance.
6. Prepare a post-closing trial balance at December 31, 2018.
SOLUTION
P4-42, cont.
Requirement 2
Requirement 3
Requirement 5
