1. The end-of-period spreadsheet illustrates the flow of accounting information from the unadjusted
2. a. Current assets are composed of cash and other assets that may reasonably be expected
3. Current liabilities are liabilities that will be due within a short time (usually one year or less) and
5. Closing entries are necessary at the end of an accounting period (1) to transfer the balances in
6. Adjusting entries bring the accounts up to date, while closing entries reduce the revenue, expense,
8. a. The financial statements are the most important output of the accounting cycle.
b. Yes, all companies have an accounting cycle that begins with analyzing and journalizing
10. All the companies listed are general merchandisers whose busiest time of the year is during the
CHAPTER 4
COMPLETING THE ACCOUNTING CYCLE
DISCUSSION QUESTIONS
CHAPTER 4 Completing the Accounting Cycle
PE 4–1A
1. Balance sheet 5. Income statement
PE 4–1B
PE 4–2A
Retained earnings, January 1, 2013 $475,000
PE 4–2B
Retained earnings, January 1, 2013 $918,000
Grab Bag Delivery Services
Retained Earnings Statement
For the Year Ended December 31, 2013
PRACTICE EXERCISES
Daffodil Advertising Services
Retained Earnings Statement
For the Year Ended December 31, 2013
CHAPTER 4 Completing the Accounting Cycle
PE 4–3A
1. Property, plant, and equipment 5. Current liability
PE 4–3B
1. Current liability 5. Stockholders’ equity
PE 4–4A
Aug. 31 Fees Earned 880,000
Income Summary 880,000
Closing Entries
PE 4–4B
Apr. 30 Fees Earned 356,500
Income Summary 356,500
PE 4–5A
The following two steps are missing: (1) posting the transactions to the ledger
PE 4–5B
The following two steps are missing: (1) assembling and analyzing adjustment
PE 4–6A
a.
Current assets…………
…
…
Closing Entries
2014
$1,467,000
2013
$1,269,000
CHAPTER 4 Completing the Accounting Cycle
PE 4–6B
a.
Current assets………………
2014
$1,586,250
2013
$1,210,000
CHAPTER 4 Completing the Accounting Cycle
Ex. 4–1
Ex. 4–2
EXERCISES
CHAPTER 4 Completing the Accounting Cycle
Ex. 4–3
Fees earned $175,200
Expenses:
Current assets: Current liabilities:
Cash $38,000 Accounts payable $ 24,400
Property, plant, and
equipment: Capital stock $ 10,000
Office equipment $74,000 Retained earnings 154,900
Stockholders’ Equity
HOLISM CONSULTING
Retained Earnings Statement
For the Year Ended May 31, 2014
HOLISM CONSULTING
Balance Sheet
May 31, 2014
Assets Liabilities
HOLISM CONSULTING
Income Statement
For the Year Ended May 31, 2014
CHAPTER 4 Completing the Accounting Cycle
Ex. 4–4
Fees earned $60,000
Expenses:
Retained earnings, capital, May 1, 2013 $52,200
Current assets: Current liabilities:
Cash $27,500 Accounts payable $ 3,300
Property, plant, and
equipment: Capital stock $30,000
Office equipment $30,500 Retained earnings 73,700
Stockholders’ Equity
OLYMPIA CONSULTING
Income Statement
For the Year Ended April 30, 2014
OLYMPIA CONSULTING
Retained Earnings Statement
For the Year Ended April 30, 2014
OLYMPIA CONSULTING
Balance Sheet
April 30, 2014
Assets Liabilities
CHAPTER 4 Completing the Accounting Cycle
Ex. 4–5
Fees earned $440,000
Expenses:
Salaries expense $265,150
Ex. 4–6
Service revenue $270,900
Expenses:
Wages expense $213,100
Income Statement
For the Year Ended February 28, 2014
SHANGHAI MESSENGER SERVICE
Income Statement
For the Year Ended September 30, 2014
VEGGIE HEALTH SERVICES CO.
CHAPTER 4 Completing the Accounting Cycle
Ex. 4–7
a.
Revenues $39,304
Expenses:
Salaries and employee benefits $15,276
b. The income statements are very similar. The actual statement includes some
Ex. 4–8
Retained earnings, November 1, 2013 $475,000
WELL SYSTEMS CO.
Retained Earnings Statement
For the Year Ended October 31, 2014
FEDEX CORPORATION
Income Statement
(in millions)
For the Year Ended May 31, 2011
CHAPTER 4 Completing the Accounting Cycle
Ex. 4–9
Retained earnings, July 1, 2013 $115,800
Ex. 4–10
Ex. 4–11
WEIRD SPORTS
Retained Earnings Statement
For the Year Ended June 30, 2014
CHAPTER 4 Completing the Accounting Cycle
Ex. 4–12
Current assets: Current liabilities:
Cash* $ 37,500 Accounts payable $ 18,500
Accounts receivable 78,250 Salaries payable 8,500
LABRADOR WEIGHT LOSS CO.
Balance Sheet
June 30, 2014
Assets Liabilities
CHAPTER 4 Completing the Accounting Cycle
Ex. 4–13
1. The date of the statement should be “August 31, 2014” and not “For the Year
Ended August 31, 2014.”
CHAPTER 4 Completing the Accounting Cycle
Ex. 4–13 (Concluded)
Current assets: Current liabilities:
Cash $ 18,500 Accounts payable $ 31,300
Accounts receivable 41,400 Wages payable 6,500
LABYRINTH SERVICES CO.
Balance Sheet
August 31, 2014
Assets Liabilities
CHAPTER 4 Completing the Accounting Cycle
Ex. 4–14
d. Depreciation Expense—Equipment
g. Fees Earned
Ex. 4–15
The income summary account is used to close the revenue and expense accounts,
Ex. 4–16
a. Income Summary 122,650
Retained Earnings 122,650
Ex. 4–17
July 31 Fees Earned 337,900
Income Summary 337,900
Closing Entries
CHAPTER 4 Completing the Accounting Cycle
Ex. 4–18
a. Accounts Payable
b. Accumulated Depreciation
Ex. 4–19
Debit Credit
Balances Balances
Cash 21,350
Accounts Receivable 56,700
Ex. 4–20
1. h 6. d
IGLOO TREASURES CO.
Post-Closing Trial Balance
January 31, 2014
CHAPTER 4 Completing the Accounting Cycle
Ex. 4–21
a.
Current assets…………
…
Ex. 4–22
a.
Current assets…………
…
…
Appendix Ex. 4–23
1. i 6. f
December 31
Year 2 Year 1
Year 1Year 2
$555,850
$2,756,400 $2,035,800
$448,000
…
CHAPTER 4 Completing the Accounting Cycle
Appendix Ex. 4–24
Account Title Debit Credit Debit Credit
Cash 12 12
Wages Payable 0 (e) 1 1
Capital Stock 50 50
Retained Earnings 210 210
ALERT SECURITY SERVICES CO.
End-of-Period Spreadsheet (Work Sheet)
For the Year Ended October 31, 2014
Unadjusted Adjusted
Debit Credit
Trial Balance Adjustments Trial Balance
CHAPTER 4 Completing the Accounting Cycle
Appendix Ex. 4–25
Account Title Debit Credit Debit Credit
Cash 12 12
Wages Payable 1 1
Capital Stock 50 50
Retained Earnings 210 210
Sheet
ALERT SECURITY SERVICES CO.
End-of-Period Spreadsheet (Work Sheet)
For the Year Ended October 31, 2014
Adjusted BalanceIncome
Debit Credit
Trial Balance Statement
CHAPTER 4 Completing the Accounting Cycle
Appendix Ex. 4–26
Fees earned $213
Retained earnings, November 1, 2013 $210
Retained Earnings Statement
For the Year Ended October 31, 2014
ALERT SECURITY SERVICES CO.
Income Statement
For the Year Ended October 31, 2014
ALERT SECURITY SERVICES CO.