CHAPTER 4 The Accounting Cycle
4–41
Prob. 4–4A (Continued)
Lakota Freight Co.
Balance Sheet
March 31, 20Y4
Assets
Current assets:
Cash
$ 12,000
Supplies
7,500
Prepaid insurance
1,800
Total current assets
$ 21,300
Property, plant, and equipment:
Equipment
$ 110,000
Accumulated depreciation—equipment
(33,350)
Book value—equipment
$ 76,650
Trucks
$ 60,000
Accumulated depreciation—trucks
(21,200)
Book value—trucks
38,800
Total property, plant, and
equipment
115,450
Total assets
$ 136,750
Liabilities
Current liabilities:
Accounts payable
$ 4,000
Wages payable
600
Total liabilities
$ 4,600
Stockholders’ Equity
Common stock
$ 26,000
Retained earnings
106,150
Total stockholders’ equity
132,150
Total liabilities and stockholders’ equity
$ 136,750
CHAPTER 4 The Accounting Cycle
4–42
Prob. 4–4A (Concluded)
6. JOURNAL Page 27
Date
Debit
Credit
20Y4
Closing Entries
Mar.
31
Service Revenue
160,000
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
Retained Earnings
51,150
31
Retained Earnings
15,000
Dividends
15,000
7.
Lakota Freight Co.
Post-Closing 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
106,150
191,300
191,300
CHAPTER 4 The Accounting Cycle
4–43
Prob. 4–5A
1. and 2.
JOURNAL Page 1
Date
Post.
Ref.
Debit
Credit
20Y2
July
1
Cash
11
13,500
Accounts Receivable
12
20,800
Supplies
14
3,200
Office Equipment
18
7,500
Common Stock
31
45,000
1
Prepaid Rent
15
4,800
Cash
11
4,800
2
Prepaid Insurance
16
4,500
Cash
11
4,500
4
Cash
11
5,500
Unearned Fees
23
5,500
5
Office Equipment
18
6,500
Accounts Payable
21
6,500
6
Cash
11
15,300
Accounts Receivable
12
15,300
10
Miscellaneous Expense
59
400
Cash
11
400
12
Accounts Payable
21
5,200
Cash
11
5,200
12
Accounts Receivable
12
13,300
Fees Earned
41
13,300
14
Salary Expense
51
1,750
Cash
11
1,750
CHAPTER 4 The Accounting Cycle
4–44
Prob. 4–5A (Continued)
JOURNAL Page 2
Date
Post.
Ref.
Debit
Credit
20Y2
July
17
Cash
11
9,450
Fees Earned
41
9,450
18
Supplies
14
600
Cash
11
600
20
Accounts Receivable
12
6,650
Fees Earned
41
6,650
24
Cash
11
4,000
Fees Earned
41
4,000
26
Cash
11
12,000
Accounts Receivable
12
12,000
27
Salary Expense
51
1,750
Cash
11
1,750
29
Miscellaneous Expense
59
325
Cash
11
325
31
Miscellaneous Expense
59
675
Cash
11
675
31
Cash
11
5,200
Fees Earned
41
5,200
31
Accounts Receivable
12
3,000
Fees Earned
41
3,000
31
Dividends
33
12,500
Cash
11
12,500
CHAPTER 4 The Accounting Cycle
4–45
Prob. 4–5A (Continued)
2., 6., and 9.
Account:
Cash
Account No.
11
Date
Item
Post.
Ref.
Debit
Balance
Credit
Debit
Credit
20Y2
July
1
1
13,500
13,500
1
1
4,800
8,700
2
1
4,500
4,200
4
1
5,500
9,700
6
1
15,300
25,000
10
1
400
24,600
12
1
5,200
19,400
14
1
1,750
17,650
17
2
9,450
27,100
18
2
600
26,500
24
2
4,000
30,500
26
2
12,000
42,500
27
2
1,750
40,750
29
2
325
40,425
31
2
675
39,750
31
2
5,200
44,950
31
2
12,500
32,450
Account:
Accounts Receivable
Account No.
12
Date
Item
Post.
Ref.
Debit
Balance
Credit
Debit
Credit
20Y2
July
1
1
20,800
20,800
6
1
15,300
5,500
12
1
13,300
18,800
20
2
6,650
25,450
26
2
12,000
13,450
31
2
3,000
16,450
Account:
Supplies
Account No.
14
Date
Item
Post.
Ref.
Debit
Credit
Balance
Debit
Credit
20Y2
July
1
1
3,200
3,200
18
2
600
3,800
31
Adjusting
3
2,275
1,525
CHAPTER 4 The Accounting Cycle
4–46
Prob. 4–5A (Continued)
Account:
Prepaid Rent
Account No.
15
Post.
Balance
Date
Item
Ref.
Debit
Credit
Debit
Credit
20Y2
July
1
1
4,800
4,800
31
Adjusting
3
2,400
2,400
Account:
Prepaid Insurance
Account No.
16
Post.
Balance
Date
Item
Ref.
Debit
Credit
Debit
Credit
20Y2
July
2
1
4,500
4,500
31
Adjusting
3
375
4,125
Account:
Office Equipment
Account No.
18
Post.
Balance
Date
Item
Ref.
Debit
Credit
Debit
Credit
20Y2
July
1
1
7,500
7,500
5
1
6,500
14,000
Account:
Accumulated Depreciation
Account No.
19
Post.
Balance
Date
Item
Ref.
Debit
Credit
Debit
Credit
20Y2
July
31
Adjusting
3
750
750
Account:
Accounts Payable
Account No.
21
Post.
Balance
Date
Item
Ref.
Debit
Credit
Debit
Credit
20Y2
July
5
1
6,500
6,500
12
1
5,200
1,300
Account:
Salaries Payable
Account No.
22
Post.
Balance
Date
Item
Ref.
Debit
Credit
Debit
Credit
20Y2
July
31
Adjusting
3
175
175
CHAPTER 4 The Accounting Cycle
4–47
Prob. 4–5A (Continued)
Account:
Unearned Fees
Account No.
23
Post.
Balance
Date
Item
Ref.
Debit
Credit
Debit
Credit
20Y2
July
4
1
5,500
5,500
31
Adjusting
3
2,750
2,750
Account:
Common Stock
Account No.
31
Post.
Balance
Date
Item
Ref.
Debit
Credit
Debit
Credit
20Y2
July
1
1
45,000
45,000
Account:
Retained Earnings
Account No.
32
Date
Item
Post.
Ref.
Debit
Credit
Balance
Debit
Credit
20Y2
July
1
0
31
Closing
4
33,475
33,475
31
Closing
4
12,500
20,975
Account:
Dividends
Account No.
33
Post.
Balance
Date
Item
Ref.
Debit
Credit
Debit
Credit
20Y2
July
31
2
12,500
12,500
31
Closing
4
12,500
—
—
CHAPTER 4 The Accounting Cycle
Prob. 4–5A (Continued)
Account:
Fees Earned
Account No.
41
Date
Item
Post.
Ref.
Debit
Credit
Balance
Debit
Credit
20Y2
July
12
1
13,300
13,300
17
2
9,450
22,750
20
2
6,650
29,400
24
2
4,000
33,400
31
2
5,200
38,600
31
2
3,000
41,600
31
Adjusting
3
2,750
44,350
31
Closing
4
44,350
—
—
Account:
Salary Expense
Account No.
51
Date
Item
Post.
Ref.
Debit
Credit
Balance
Debit
Credit
20Y2
July
14
1
1,750
1,750
27
2
1,750
3,500
31
Adjusting
3
175
3,675
31
Closing
4
3,675
—
—
Account:
Rent Expense
Account No.
52
Post.
Balance
Date
Item
Ref.
Debit
Credit
Debit
Credit
20Y2
July
31
Adjusting
3
2,400
2,400
31
Closing
4
2,400
—
—
Account:
Supplies Expense
Account No.
53
Date
Item
Ref.
Debit
Credit
Debit
Credit
20Y2
July
31
Adjusting
3
2,275
2,275
31
Closing
4
2,275
—
—
CHAPTER 4 The Accounting Cycle
Prob. 4–5A (Continued)
Account:
Depreciation Expense
Account No.
54
Post.
Balance
Date
Item
Ref.
Debit
Credit
Debit
Credit
20Y2
July
31
Adjusting
3
750
750
31
Closing
4
750
—
—
Account:
Insurance Expense
Account No.
55
Post.
Balance
Date
Item
Ref.
Debit
Credit
Debit
Credit
20Y2
July
31
Adjusting
3
375
375
31
Closing
4
375
—
—
Account:
Miscellaneous Expense
Account No.
59
Debit
Balance
Debit
Credit
20Y2
July
10
400
400
29
325
725
31
675
31
Closing
CHAPTER 4 The Accounting Cycle
4–50
Prob. 4–5A (Continued)
3.
Diamond Consulting
Unadjusted Trial Balance
July 31, 20Y2
Account
Debit
Credit
No.
Balances
Balances
Cash
11
32,450
Accounts Receivable
12
16,450
Supplies
14
3,800
Prepaid Rent
15
4,800
Prepaid Insurance
16
4,500
Office Equipment
18
14,000
Accumulated Depreciation
19
0
Accounts Payable
21
1,300
Salaries Payable
22
0
Unearned Fees
23
5,500
Common Stock
31
45,000
Retained Earnings
32
0
Dividends
33
12,500
Fees Earned
41
41,600
Salary Expense
51
3,500
Rent Expense
52
0
Supplies Expense
53
0
Depreciation Expense
54
0
Insurance Expense
55
0
Miscellaneous Expense
59
1,400
93,400
93,400
CHAPTER 4 The Accounting Cycle
4–51
Prob. 4–5A (Continued)
5. Optional (Appendix)
Diamond Consulting
End-of-Period Spreadsheet (Work Sheet)
For the Month Ended July 31, 20Y2
Unadjusted
Trial Balance
Adjusted
Trial Balance
Income
Statement
Balance
Sheet
Adjustments
Account Title
Debit
Credit
Debit
Credit
Debit
Credit
Debit
Credit
Debit
Credit
Cash
32,450
32,450
32,450
Accounts Receivable
16,450
16,450
16,450
Supplies
3,800
(b) 2,275
1,525
1,525
Prepaid Rent
4,800
(e) 2,400
2,400
2,400
Prepaid Insurance
4,500
(a) 375
4,125
4,125
Office Equipment
14,000
14,000
14,000
Accum. Depreciation
(c) 750
750
750
Accounts Payable
1,300
1,300
1,300
Salaries Payable
(d) 175
175
175
Unearned Fees
5,500
(f) 2,750
2,750
2,750
Common Stock
45,000
45,000
45,000
Retained Earnings
Dividends
12,500
12,500
12,500
Fees Earned
41,600
(f) 2,750
44,350
44,350
Salary Expense
3,500
(d) 175
3,675
3,675
Rent Expense
(e) 2,400
2,400
2,400
Supplies Expense
(b) 2,275
2,275
2,275
Depreciation Expense
(c) 750
750
750
Insurance Expense
(a) 375
375
375
Miscellaneous
Expense
1,400
1,400
1,400
93,400
93,400
8,725
8,725
94,325
94,325
10,875
44,350
83,450
49,975
Net income
33,475
33,475
44,350
44,350
83,450
83,450
CHAPTER 4 The Accounting Cycle
4–52
Prob. 4–5A (Continued)
6. JOURNAL Page ______ 3
Date
Post.
Ref.
Debit
Credit
20Y2
Adjusting Entries
July
31
Insurance Expense
55
375
Prepaid Insurance
16
375
Insurance expired.
31
Supplies Expense
53
2,275
Supplies
14
2,275
Supplies used ($3,800 – $1,525).
31
Depreciation Expense
54
750
Accumulated Depreciation
19
750
Equipment depreciation.
31
Salary Expense
51
175
Salaries Payable
22
175
Accrued salaries.
31
Rent Expense
52
2,400
Prepaid Rent
15
2,400
Rent expired.
31
Unearned Fees
23
2,750
Fees Earned
41
2,750
Unearned fees earned
($5,500 – $2,750).
CHAPTER 4 The Accounting Cycle
4–53
Prob. 4–5A (Continued)
7.
Diamond Consulting
Adjusted Trial Balance
July 31, 20Y2
Account
Debit
Credit
No.
Balances
Balances
Cash
11
32,450
Accounts Receivable
12
16,450
Supplies
14
1,525
Prepaid Rent
15
2,400
Prepaid Insurance
16
4,125
Office Equipment
18
14,000
Accumulated Depreciation
19
750
Accounts Payable
21
1,300
Salaries Payable
22
175
Unearned Fees
23
2,750
Common Stock
31
45,000
Retained Earnings
32
0
Dividends
33
12,500
Fees Earned
41
44,350
Salary Expense
51
3,675
Rent Expense
52
2,400
Supplies Expense
53
2,275
Depreciation Expense
54
750
Insurance Expense
55
375
Miscellaneous Expense
59
1,400
94,325
94,325
CHAPTER 4 The Accounting Cycle
4–54
Prob. 4–5A (Continued)
8.
Diamond Consulting
Income Statement
For the Month Ended July 31, 20Y2
Fees earned
$ 44,350
Expenses:
Salary expense
$3,675
Rent expense
2,400
Supplies expense
2,275
Depreciation expense
750
Insurance expense
375
Miscellaneous expense
1,400
Total expenses
(10,875)
Net income
$ 33,475
Diamond Consulting
Statement of Stockholders’ Equity
For the Month Ended July 31, 20Y2
Common
Stock
Retained
Earnings
Total
Balances, July 1, 20Y2
$ 0
$ 0
$ 0
Issued common stock
45,000
45,000
Net income
33,475
33,475
Dividends
(12,500)
(12,500)
Balances, July 31, 20Y2
$45,000
$ 20,975
$ 65,975
CHAPTER 4 The Accounting Cycle
4–55
Prob. 4–5A (Continued)
Diamond Consulting
Balance Sheet
July 31, 20Y2
Assets
Current assets:
Cash
$ 32,450
Accounts receivable
16,450
Supplies
1,525
Prepaid rent
2,400
Prepaid insurance
4,125
Total current assets
$ 56,950
Property, plant, and equipment:
Office equipment
$ 14,000
Accumulated depreciation
(750)
Total property, plant, and equipment
13,250
Total assets
$ 70,200
Liabilities
Current liabilities:
Accounts payable
$ 1,300
Salaries payable
175
Unearned fees
2,750
Total liabilities
$ 4,225
Stockholders’ Equity
Common stock
$ 45,000
Retained earnings
20,975
Total stockholders’ equity
65,975
Total liabilities and stockholders’ equity
$ 70,200
CHAPTER 4 The Accounting Cycle
4–56
Prob. 4–5A (Concluded)
9. JOURNAL Page_____4
Date
Post.
Ref.
Debit
Credit
20Y2
Closing Entries
July
31
Fees Earned
41
44,350
Salary Expense
51
3,675
Rent Expense
52
2,400
Supplies Expense
53
2,275
Depreciation Expense
54
750
Insurance Expense
55
375
Miscellaneous Expense
59
1,400
Retained Earnings
32
33,475
31
Retained Earnings
32
12,500
Dividends
33
12,500
10.
Diamond Consulting
Post-Closing Trial Balance
July 31, 20Y2
Account
No.
Debit
Balances
Credit
Balances
Cash
11
32,450
Accounts Receivable
12
16,450
Supplies
14
1,525
Prepaid Rent
15
2,400
Prepaid Insurance
16
4,125
Office Equipment
18
14,000
Accumulated Depreciation
19
750
Accounts Payable
21
1,300
Salaries Payable
22
175
Unearned Fees
23
2,750
Common Stock
31
45,000
Retained Earnings
32
20,975
70,950
70,950
CHAPTER 4 The Accounting Cycle
4–57
Prob. 4–1B
1.
Last Chance Company
Income Statement
For the Year Ended June 30, 20Y3
Revenues:
Fees earned
$283,750
Rent revenue
3,000
Total revenues
$ 286,750
Expenses:
Salaries and wages expense
$147,000
Advertising expense
86,800
Utilities expense
30,000
Travel expense
18,750
Depreciation expense—equipment
4,550
Depreciation expense—building
3,000
Supplies expense
1,500
Insurance expense
1,300
Miscellaneous expense
5,875
Total expenses
(298,775)
Net loss
$ (12,025)
2.
Last Chance Company
Statement of Stockholders’ Equity
For the Year Ended June 30, 20Y3
Common
Stock
Retained
Earnings
Total
Balances, July 1, 20Y2
$70,000
$271,300
$341,300
Issued common stock
20,000
20,000
Net loss
(12,025)
(12,025)
Dividends
(20,000)
(20,000)
Balances, June 30, 20Y3
$90,000
$239,275
$329,275
CHAPTER 4 The Accounting Cycle
4–58
Prob. 4–1B (Continued)
3.
Last Chance Company
Balance Sheet
June 30, 20Y3
Assets
Current assets:
Cash
$ 5,100
Accounts receivable
26,500
Prepaid insurance
2,300
Supplies
525
Total current assets
$ 34,425
Property, plant, and equipment:
Land
$ 80,000
Building
$ 340,000
Accumulated depreciation—building
(193,000)
Book value—building
147,000
Equipment
$ 140,000
Accumulated depreciation—equipment
(59,000)
Book value—equipment
81,000
Total property, plant, and
equipment
308,000
Total assets
$ 342,425
Liabilities
Current liabilities:
Accounts payable
$ 9,750
Salaries and wages payable
1,900
Unearned rent
1,500
Total liabilities
$ 13,150
Stockholders’ Equity
Common stock
$90,000
Retained earnings
239,275
Total stockholders’ equity
329,275
Total liabilities and stockholders’ equity
$ 342,425
CHAPTER 4 The Accounting Cycle
4–59
Prob. 4–1B (Concluded)
4.
20Y3
June
30
Fees Earned
283,750
Rent Revenue
3,000
Retained Earnings
12,025
Salaries and Wages Expense
147,000
Advertising Expense
86,800
Utilities Expense
30,000
Travel Expense
18,750
Depreciation Expense—Equipment
4,550
Depreciation Expense—Building
3,000
Supplies Expense
1,500
Insurance Expense
1,300
Miscellaneous Expense
5,875
30
Retained Earnings
20,000
Dividends
20,000
5.
Last Chance Company
Post-Closing Trial Balance
June 30, 20Y3
Debit
Balances
Credit
Balances
Cash
5,100
Accounts Receivable
26,500
Prepaid Insurance
2,300
Supplies
525
Land
80,000
Building
340,000
Accumulated Depreciation—Building
193,000
Equipment
140,000
Accumulated Depreciation—Equipment
59,000
Accounts Payable
9,750
Salaries and Wages Payable
1,900
Unearned Rent
1,500
Common Stock
90,000
Retained Earnings
239,275
594,425
594,425
CHAPTER 4 The Accounting Cycle
Prob. 4–2B
1.
The Gorman Group
Income Statement
For the Year Ended October 31, 20Y9
Revenues:
Service fees
$468,000
Rent revenue
5,000
Total revenues
$ 473,000
Expenses:
Salaries expense
$291,000
Depreciation expense—equipment
17,500
Rent expense
15,500
Supplies expense
9,000
Utilities expense
8,500
Depreciation expense—buildings
6,600
Repairs expense
3,450
Insurance expense
3,000
Miscellaneous expense
5,450
Total expenses
(360,000)
Net income
$ 113,000
The Gorman Group
Statement of Stockholders’ Equity
For the Year Ended October 31, 20Y9
Common
Stock
Retained
Earnings
Total
Balances, November 1, 20Y8
$25,000
$195,000
$220,000
Net income
113,000
113,000
Dividends
(20,000)
(20,000)
Balances, October 31, 20Y9
$25,000
$288,000
$313,000