CHAPTER 4 The Accounting Cycle
4–21
Prob. 4–1A (Continued)
3.
Beacons Company
Balance Sheet
December 31, 20Y5
Assets
Current assets:
Cash
$ 10,800
Accounts receivable
48,000
Prepaid insurance
1,050
Supplies
550
Total current assets
$ 60,400
Property, plant, and equipment:
Land
$ 98,000
Building
$ 400,000
Accumulated depreciation—building
(217,300)
Book value—building
182,700
Equipment
$ 101,000
Accumulated depreciation—equipment
(89,900)
Book value—equipment
11,100
Total property, plant, and
equipment
291,800
Total assets
$352,200
Liabilities
Current liabilities:
Accounts payable
$ 15,700
Salaries and wages payable
5,000
Unearned rent
1,000
Total liabilities
$ 21,700
Stockholders’ Equity
Common stock
$ 75,000
Retained earnings
255,500
Total stockholders’ equity
330,500
Total liabilities and stockholders’ equity
$352,200
CHAPTER 4 The Accounting Cycle
4–22
Prob. 4–1A (Concluded)
4.
20Y5
Closing Entries
Dec.
31
Fees Earned
372,800
Rent Revenue
1,100
Salaries and Wages Expense
163,100
Advertising Expense
21,700
Utilities Expense
16,400
Depreciation Expense—Building
12,000
Repairs Expense
8,850
Depreciation Expense—Equipment
4,800
Insurance Expense
3,150
Supplies Expense
2,180
Miscellaneous Expense
4,320
Retained Earnings
137,400
31
Retained Earnings
10,000
Dividends
10,000
5.
Beacons Company
Post-Closing Trial Balance
December 31, 20Y5
Debit
Credit
Balances
Balances
Cash
10,800
Accounts Receivable
48,000
Prepaid Insurance
1,050
Supplies
550
Land
98,000
Building
400,000
Accumulated Depreciation—Building
217,300
Equipment
101,000
Accumulated Depreciation—Equipment
89,900
Accounts Payable
15,700
Salaries and Wages Payable
5,000
Unearned Rent
1,000
Common Stock
75,000
Retained Earnings
255,500
659,400
659,400
CHAPTER 4 The Accounting Cycle
4–23
Prob. 4–2A
1.
Foxy Investigative Services
Income Statement
For the Year Ended November 30, 20Y8
Revenues:
Service fees
$675,500
Rent revenue
9,000
Total revenues
$ 684,500
Expenses:
Salaries expense
$435,000
Rent expense
55,000
Supplies expense
11,850
Depreciation expense—building
10,000
Utilities expense
8,800
Repairs expense
4,250
Insurance expense
3,000
Miscellaneous expense
11,100
Total expenses
(539,000)
Net income
$ 145,500
Foxy Investigative Services
Statement of Stockholders’ Equity
For the Year Ended November 30, 20Y8
Common
Stock
Retained
Earnings
Total
Balances, December 1, 20Y7
$40,000
$ 70,300
$110,300
Net income
145,500
145,500
Dividends
(30,000)
(30,000)
Balances, November 30, 20Y8
$40,000
$185,800
$225,800
CHAPTER 4 The Accounting Cycle
4–24
Prob. 4–2A (Continued)
Foxy Investigative Services
Balance Sheet
November 30, 20Y8
Assets
Current assets:
Cash
$ 27,500
Accounts receivable
71,800
Supplies
3,550
Prepaid insurance
750
Total current assets
$103,600
Property, plant, and equipment:
Building
$ 330,500
Accumulated depreciation—building
(184,100)
Total property, plant, and equipment
146,400
Total assets
$250,000
Liabilities
Current liabilities:
Accounts payable
$ 16,100
Salaries payable
6,600
Unearned rent
1,500
Total liabilities
$ 24,200
Stockholders’ Equity
Common stock
$ 40,000
Retained earnings
185,800
Total stockholders’ equity
225,800
Total liabilities and stockholders’ equity
$250,000
CHAPTER 4 The Accounting Cycle
4–25
Prob. 4–2A (Concluded)
2.
20Y8
Closing Entries
Nov.
30
Service Fees
675,500
Rent Revenue
9,000
Salaries Expense
435,000
Rent Expense
55,000
Supplies Expense
11,850
Depreciation Expense—Building
10,000
Utilities Expense
8,800
Repairs Expense
4,250
Insurance Expense
3,000
Miscellaneous Expense
11,100
Retained Earnings
145,500
30
Retained Earnings
30,000
Dividends
30,000
CHAPTER 4 The Accounting Cycle
4–26
Prob. 4–3A
1., 3., and 6.
Cash
June
30
Bal.
11,000
Laundry Supplies
June
30
Bal.
26,500
June
30
Adj.
17,900
30
Adj. Bal.
8,600
Prepaid Insurance
June
30
Bal.
9,600
June
30
Adj.
5,700
30
Adj. Bal.
3,900
Laundry Equipment
June
30
Bal.
232,600
Accumulated Depreciation
June
30
Bal.
125,400
30
Adj.
6,500
30
Adj. Bal.
131,900
Accounts Payable
June
30
Bal.
11,800
Wages Payable
June
30
Adj.
1,100
Common Stock
June
30
Bal.
40,000
Retained Earnings
June
30
Clos.
5,000
June
30
Bal.
65,600
30
Clos.
10,700
30
Bal.
71,300
Dividends
June
30
Bal.
5,000
June
30
Clos.
5,000
CHAPTER 4 The Accounting Cycle
4–27
Prob. 4–3A (Continued)
Laundry Revenue
June
30
Clos.
232,200
June 30
Bal.
232,200
Wages Expense
June
30
Bal.
125,200
June
30
Clos.
126,300
30
Adj.
1,100
30
Adj. Bal.
126,300
Rent Expense
June
30
Bal.
40,000
June
30
Clos.
40,000
Utilities Expense
June
30
Bal.
19,700
June
30
Clos.
19,700
Laundry Supplies Expense
June
30
Adj.
17,900
June
30
Clos.
17,900
Depreciation Expense
June
30
Adj.
6,500
June
30
Clos.
6,500
Insurance Expense
June
30
Adj.
5,700
June
30
Clos.
5,700
Miscellaneous Expense
June
30
Bal.
5,400
June
30
Clos.
5,400
CHAPTER 4 The Accounting Cycle
4–28
Prob. 4–3A (Continued)
2. Optional (Appendix)
Epicenter Laundry
End-of-Period Spreadsheet (Work Sheet)
For the Year Ended June 30, 20Y6
Account Title
Unadjusted Trial
Balance
Adjustments
Adjusted Trial
Balance
Income
Statement
Balance
Sheet
Debit
Credit
Debit
Credit
Debit
Credit
Debit
Credit
Debit
Credit
Cash
11,000
11,000
11,000
Laundry Supplies
26,500
(a) 17,900
8,600
8,600
Prepaid Insurance
9,600
(b) 5,700
3,900
3,900
Laundry Equipment
232,600
232,600
232,600
Accum. Depreciation
125,400
(c) 6,500
131,900
131,900
Accounts Payable
11,800
11,800
11,800
Wages Payable
(d) 1,100
1,100
1,100
Common Stock
40,000
40,000
40,000
Retained Earnings
65,600
65,600
65,600
Dividends
5,000
5,000
5,000
Laundry Revenue
232,200
232,200
232,200
Wages Expense
125,200
(d) 1,100
126,300
126,300
Rent Expense
40,000
40,000
40,000
Utilities Expense
19,700
19,700
19,700
Laundry Supplies Exp.
(a) 17,900
17,900
17,900
Depreciation Expense
(c) 6,500
6,500
6,500
Insurance Expense
(b) 5,700
5,700
5,700
Miscellaneous Expense
5,400
5,400
5,400
475,000
475,000
31,200
31,200
482,600
482,600
221,500
232,200
261,100
250,400
Net income
10,700
10,700
232,200
232,200
261,100
261,100
CHAPTER 4 The Accounting Cycle
4–29
Prob. 4–3A (Continued)
3.
Adjusting Entries
20Y6
June
30
Laundry Supplies Expense
17,900
Laundry Supplies
17,900
Supplies used ($26,500 – $8,600).
30
Insurance Expense
5,700
Prepaid Insurance
5,700
Insurance expired.
30
Depreciation Expense
6,500
Accumulated Depreciation
6,500
Equipment depreciation.
30
Wages Expense
1,100
Wages Payable
1,100
Accrued wages.
4.
Epicenter Laundry
Adjusted Trial Balance
June 30, 20Y6
Debit
Credit
Balances
Balances
Cash
11,000
Laundry Supplies
8,600
Prepaid Insurance
3,900
Laundry Equipment
232,600
Accumulated Depreciation
131,900
Accounts Payable
11,800
Wages Payable
1,100
Common Stock
40,000
Retained Earnings
65,600
Dividends
5,000
Laundry Revenue
232,200
Wages Expense
126,300
Rent Expense
40,000
Utilities Expense
19,700
Laundry Supplies Expense
17,900
Depreciation Expense
6,500
Insurance Expense
5,700
Miscellaneous Expense
5,400
482,600
482,600
CHAPTER 4 The Accounting Cycle
4–30
Prob. 4–3A (Continued)
5.
Epicenter Laundry
Income Statement
For the Year Ended June 30, 20Y6
Laundry revenue
$ 232,200
Expenses:
Wages expense
$126,300
Rent expense
40,000
Utilities expense
19,700
Laundry supplies expense
17,900
Depreciation expense
6,500
Insurance expense
5,700
Miscellaneous expense
5,400
Total expenses
(221,500)
Net income
$ 10,700
Epicenter Laundry
Statement of Stockholders’ Equity
For the Year Ended June 30, 20Y6
Common
Stock
Retained
Earnings
Total
Balances, July 1, 20Y5
$32,500
$65,600
$ 98,100
Issued common stock
7,500
7,500
Net income
10,700
10,700
Dividends
(5,000)
(5,000)
Balances, June 30, 20Y6
$40,000
$71,300
$111,300
CHAPTER 4 The Accounting Cycle
4–31
Prob. 4–3A (Continued)
Epicenter Laundry
Balance Sheet
June 30, 20Y6
Assets
Current assets:
Cash
$ 11,000
Laundry supplies
8,600
Prepaid insurance
3,900
Total current assets
$ 23,500
Property, plant, and equipment:
Laundry equipment
$ 232,600
Accumulated depreciation
(131,900)
Total property, plant, and equipment
100,700
Total assets
$ 124,200
Liabilities
Current liabilities:
Accounts payable
$ 11,800
Wages payable
1,100
Total liabilities
$ 12,900
Stockholders’ Equity
Common stock
$ 40,000
Retained earnings
71,300
Total stockholders’ equity
111,300
Total liabilities and stockholders’ equity
$ 124,200
CHAPTER 4 The Accounting Cycle
4–32
Prob. 4–3A (Concluded)
6.
Closing Entries
20Y6
June
30
Laundry Revenue
232,200
Wages Expense
126,300
Rent Expense
40,000
Utilities Expense
19,700
Laundry Supplies Expense
17,900
Depreciation Expense
6,500
Insurance Expense
5,700
Miscellaneous Expense
5,400
Retained Earnings
10,700
30
Retained Earnings
5,000
Dividends
5,000
7.
Epicenter Laundry
Post-Closing Trial Balance
June 30, 20Y6
Debit
Credit
Balances
Balances
Cash
11,000
Laundry Supplies
8,600
Prepaid Insurance
3,900
Laundry Equipment
232,600
Accumulated Depreciation
131,900
Accounts Payable
11,800
Wages Payable
1,100
Common Stock
40,000
Retained Earnings
71,300
256,100
256,100
CHAPTER 4 The Accounting Cycle
4–33
Prob. 4–4A
1., 3., and 6.
Account:
Cash
Account No.
11
Post.
Balance
Date
Item
Ref.
Debit
Credit
Debit
Credit
20Y4
Mar.
31
Balance
✓
12,000
Account:
Supplies
Account No.
13
Post.
Balance
Date
Item
Ref.
Debit
Credit
Debit
Credit
20Y4
Mar.
31
Balance
✓
30,000
31
Adjusting
26
22,500
7,500
Account:
Prepaid Insurance
Account No.
14
Post.
Balance
Date
Item
Ref.
Debit
Credit
Debit
Credit
20Y4
Mar.
31
Balance
✓
3,600
31
Adjusting
26
1,800
1,800
Account:
Equipment
Account No.
16
Post.
Balance
Date
Item
Ref.
Debit
Credit
Debit
Credit
20Y4
Mar.
31
Balance
✓
110,000
Account:
Accumulated Depreciation—Equipment
Account No.
17
Post.
Balance
Date
Item
Ref.
Debit
Credit
Debit
Credit
20Y4
Mar.
31
Balance
✓
25,000
31
Adjusting
26
8,350
33,350
Account:
Trucks
Account No.
18
Post.
Balance
Date
Item
Ref.
Debit
Credit
Debit
Credit
20Y4
Mar.
31
Balance
✓
60,000
CHAPTER 4 The Accounting Cycle
4–34
Prob. 4–4A (Continued)
Account:
Accumulated Depreciation—Trucks
Account No.
19
Post.
Balance
Date
Item
Ref.
Debit
Credit
Debit
Credit
20Y4
Mar.
31
Balance
✓
15,000
31
Adjusting
26
6,200
21,200
Account:
Accounts Payable
Account No.
21
Post.
Balance
Date
Item
Ref.
Debit
Credit
Debit
Credit
20Y4
Mar.
31
Balance
✓
4,000
Account:
Wages Payable
Account No.
22
Post.
Ref.
Balance
Date
Item
Debit
Credit
Debit
Credit
20Y4
Mar.
31
Adjusting
26
600
600
Account:
Common Stock
Account No.
31
Post.
Ref.
Balance
Date
Item
Debit
Credit
Debit
Credit
20Y4
Mar.
31
Balance
✓
26,000
Account:
Retained Earnings
Account No.
32
Date
Item
Post.
Ref.
Debit
Credit
Balance
Debit
Credit
20Y4
Mar.
31
Balance
✓
70,000
31
Closing
27
51,150
121,150
31
Closing
27
15,000
106,150
Account:
Dividends
Account No.
33
Post.
Ref.
Balance
Date
Item
Debit
Credit
Debit
Credit
20Y4
Mar.
31
Balance
✓
15,000
31
Closing
27
15,000
—
—
CHAPTER 4 The Accounting Cycle
4–35
Prob. 4–4A (Continued)
Account:
Service Revenue
Account No.
41
Post.
Balance
Date
Item
Ref.
Debit
Credit
Debit
Credit
20Y4
Mar.
31
Balance
✓
160,000
31
Closing
27
160,000
—
—
Account:
Wages Expense
Account No.
51
Post.
Balance
Date
Item
Ref.
Debit
Credit
Debit
Credit
20Y4
Mar.
31
Balance
✓
45,000
31
Adjusting
26
600
45,600
31
Closing
27
45,600
—
—
Account:
Supplies Expense
Account No.
52
Post.
Balance
Date
Item
Ref.
Debit
Credit
Debit
Credit
20Y4
Mar.
31
Adjusting
26
22,500
22,500
31
Closing
27
22,500
—
—
Account:
Rent Expense
Account No.
53
Post.
Balance
Date
Item
Ref.
Debit
Credit
Debit
Credit
20Y4
Mar.
31
Balance
✓
10,600
31
Closing
27
10,600
—
—
CHAPTER 4 The Accounting Cycle
Prob. 4–4A (Continued)
Account:
Truck Expense
Account No.
54
Post.
Balance
Date
Item
Ref.
Debit
Credit
Debit
Credit
20Y4
Mar.
31
Balance
✓
9,000
31
Closing
27
9,000
—
—
Post.
Balance
Date
Item
Ref.
Debit
Credit
Debit
Credit
20Y4
Mar.
31
Adjusting
26
8,350
8,350
31
Closing
27
8,350
—
—
Post.
Balance
Date
Item
Ref.
Debit
Credit
Debit
Credit
20Y4
Mar.
31
Adjusting
26
6,200
6,200
31
Closing
27
6,200
—
—
Account:
Insurance Expense
Post.
Balance
Date
Item
Ref.
Debit
Credit
Debit
Credit
20Y4
Mar.
31
Adjusting
26
1,800
1,800
31
Closing
27
1,800
—
—
Post.
Balance
Date
Item
Ref.
Debit
Credit
Debit
Credit
20Y4
Mar.
31
Balance
✓
4,800
31
Closing
27
4,800
—
—
CHAPTER 4 The Accounting Cycle
4–37
Prob. 4–4A (Continued)
2. Optional (Appendix)
Lakota Freight Co.
End-of-Period Spreadsheet (Work Sheet)
For the Year Ended March 31, 20Y4
Account Title
Unadjusted Trial
Balance
Adjustments
Adjusted
Trial Balance
Income
Statement
Balance
Sheet
Debit
Credit
Debit
Credit
Debit
Credit
Debit
Credit
Debit
Credit
Cash
12,000
12,000
12,000
Supplies
30,000
(a) 22,500
7,500
7,500
Prepaid Insurance
3,600
(b) 1,800
1,800
1,800
Equipment
110,000
110,000
110,000
Accum. Depr.—Equip.
25,000
(c) 8,350
33,350
33,350
Trucks
60,000
60,000
60,000
Accum. Depr.—Trucks
15,000
(d) 6,200
21,200
21,200
Accounts Payable
4,000
4,000
4,000
Wages Payable
(e) 600
600
600
Common Stock
26,000
26,000
26,000
Retained Earnings
70,000
70,000
70,000
Dividends
15,000
15,000
15,000
Service Revenue
160,000
160,000
160,000
Wages Expense
45,000
(e) 600
45,600
45,600
Supplies Expense
(a) 22,500
22,500
22,500
Rent Expense
10,600
10,600
10,600
Truck Expense
9,000
9,000
9,000
Depr. Exp.—Equipment
(c) 8,350
8,350
8,350
Depr. Exp.—Trucks
(d) 6,200
6,200
6,200
Insurance Expense
(b) 1,800
1,800
1,800
Miscellaneous Expense
4,800
4,800
4,800
300,000
300,000
39,450
39,450
315,150
315,150
108,850
160,000
206,300
155,150
Net income
51,150
51,150
160,000
160,000
206,300
206,300
CHAPTER 4 The Accounting Cycle
4–38
Prob. 4–4A (Continued)
3.
JOURNAL
Page
26
Date
Post.
Ref.
Debit
Credit
20Y4
Adjusting Entries
Mar.
31
Supplies Expense
52
22,500
Supplies
13
22,500
Supplies used ($30,000 – $7,500).
31
Insurance Expense
57
1,800
Prepaid Insurance
14
1,800
Insurance expired.
31
Depreciation Expense—Equipment
55
8,350
Accumulated Depr.—Equipment
17
8,350
Equipment depreciation.
31
Depreciation Expense—Trucks
56
6,200
Accumulated Depr.—Trucks
19
6,200
Truck depreciation.
31
Wages Expense
51
600
Wages Payable
22
600
Accrued wages.
CHAPTER 4 The Accounting Cycle
4–39
Prob. 4–4A (Continued)
4.
Lakota Freight Co.
Adjusted Trial Balance
March 31, 20Y4
Account
Debit
Credit
No.
Balances
Balances
Cash
11
12,000
Supplies
13
7,500
Prepaid Insurance
14
1,800
Equipment
16
110,000
Accumulated Depreciation—Equipment
17
33,350
Trucks
18
60,000
Accumulated Depreciation—Trucks
19
21,200
Accounts Payable
21
4,000
Wages Payable
22
600
Common Stock
31
26,000
Retained Earnings
32
70,000
Dividends
33
15,000
Service Revenue
41
160,000
Wages Expense
51
45,600
Supplies Expense
52
22,500
Rent Expense
53
10,600
Truck Expense
54
9,000
Depreciation Expense—Equipment
55
8,350
Depreciation Expense—Trucks
56
6,200
Insurance Expense
57
1,800
Miscellaneous Expense
59
4,800
315,150
315,150
CHAPTER 4 The Accounting Cycle
4–40
Prob. 4–4A (Continued)
5.
Lakota Freight Co.
Income Statement
For the Year Ended March 31, 20Y4
Service revenue
$ 160,000
Expenses:
Wages expense
$45,600
Supplies expense
22,500
Rent expense
10,600
Truck expense
9,000
Depreciation expense—equipment
8,350
Depreciation expense—trucks
6,200
Insurance expense
1,800
Miscellaneous expense
4,800
Total expenses
(108,850)
Net income
$ 51,150
Lakota Freight Co.
Statement of Stockholders’ Equity
For the Year Ended March 31, 20Y4
Common
Stock
Retained
Earnings
Total
Balances, April 1, 20Y3
$20,000
$ 70,000
$ 90,000
Issued common stock
6,000
6,000
Net income
51,150
51,150
Dividends
(15,000)
(15,000)
Balances, March 31, 20Y4
$26,000
$106,150
$132,150