Chapter 22 End-of-Fiscal-Period Work for a Corporation • 683
Study
Guide
22
Name Perfect
Score
Your
Score
Identifying Accounting Concepts and Practices for End-of-Fiscal-Period Work 17 Pts.
Analyzing End-of-Fiscal-Period Entries for a Corporation 34 Pts.
Total 51 Pts.
Part One—Identifying Accounting Concepts and Practices for
End-of-Fiscal-Period Work
Directions: Place a T for True or an F for False in the Answers column to show whether each
of the following statements is true or false. Answers
1.
2.
3.
7.
8.
9.
10.
11.
12.
1. The unadjusted trial balance and other financial data are used to plan and record adjustments.
(p. 674)
2. Financial statements are prepared using an unadjusted trial balance. (p. 674)
3. All accounts that need to be brought up to date are adjusted after financial statements are
prepared. (p. 677)
7. Gains and losses from the sale of plant assets are listed before income from operations on
the income statement. (p. 686)
8. On an income statement, the difference between other revenues and other expenses is
reported as a net addition or net deduction. (p. 686)
9. If a company has issued both common and preferred stock, its statement of stockholders’
equity will contain only two major sections: capital stock and retained earnings. (p. 687)
10. Bonds Payable is an example of a long-term liability account. (p. 688)
11. The statement of cash flows is prepared on a cash basis rather than an accrual basis. (p. 691)
12. The purchase of office equipment for cash would be listed as a financing activity on the
statement of cash flows. (p. 692)
F
T
F
F
T
F
T
T
F
684 • Working Papers
Part Two—Analyzing End-of-Fiscal-Period Entries for a Corporation
Directions: For each closing or reversing entry described, decide which accounts are debited and
credited. Print the letter identifying your choice in the proper Answers columns. (Accounts are listed
in alphabetical order.)
Answers
Transactions Debit Credit
1–2. Closing entry for the Sales account. (p. 700) 1. 2.
3–4. Closing entry for the Purchases Discount
account. (p. 700)
3. 4.
15–16. Closing entry for the Purchases account.
(p. 701)
15. 16.
17–18. Closing entry for the Cash Short and Over
account (cash is short). (p. 701)
17. 18.
19–20. Closing entry for the Depreciation Expense—
Store Equipment account. (p. 701)
19. 20.
21–22. Closing entry for the Federal Income Tax
Expense account. (p. 701)
21. 22.
Account Titles
A. Cash Short and Over
B. Depreciation Expense—
Store Equipment
K. Interest Income
L. Interest Payable
M. Interest Receivable
N. Loss on Plant Assets
O. Purchases
P. Purchases Discount
Q. Purchases Returns and
TE
T
P
H
H
H
H
H
H
O
A
B
E
Chapter 22 End-of-Fiscal-Period Work for a Corporation • 685
Name Date Class
22-1 WORK TOGETHER, p. 684
Recording adjusting entries and preparing an adjusted trial balance
Travel Lite Corporation
Unadjusted Trial Balance
December 31, 20–
ACCOUNT TITLE DEBIT CREDIT
Cash 45 0 2 6 12
Supplies 1 2 7 6 04
Prepaid Insurance 4 5 3 5 80
Equipment 25 0 6 9 60
Accumulated Depreciation—Equipment 6 5 4 6 20
Accounts Payable 16 0 5 8 09
Sales Tax Payable 3 3 2 6 30
Notes Payable 7 2 0 0 00
Bonds Payable 10 0 0 0 00
Capital Stock—Common 5 0 0 0 00
Paid-in Capital in Excess of Par—Common 20 0 0 0 00
Capital Stock—Preferred 5 0 0 0 00
(Note: Unadjusted trial balance is continued on next page.)
686 • Working Papers
22-1 WORK TOGETHER (continued)
Travel Lite Corporation
Unadjusted Trial Balance (Concluded)
December 31, 20–
ACCOUNT TITLE DEBIT CREDIT
Paid-in Capital in Excess of Par—Preferred
Retained Earnings 19 6 2 0 77
Dividends 21 6 0 0 00
Advertising Expense 7 9 7 3 50
Cash Short and Over 4 58
Credit Card Fee Expense 5 0 3 3 47
Depreciation Expense—Equipment
Insurance Expense
Miscellaneous Expense 4 3 4 1 10
Payroll Taxes Expense 7 4 8 3 00
Interest Income 4 4 7 24
Rent Income
Gain on Plant Assets 5 5 00
Interest Expense 1 0 9 3 07
Loss on Plant Assets 1 2 4 00
Totals 696 9 7 0 38 696 9 7 0 38
TE
Chapter 22 End-of-Fiscal-Period Work for a Corporation • 687
Name Date Class
22-1 WORK TOGETHER (continued)
1., 4., 5.
GENERAL JOURNAL PAGE 12
DATE ACCOUNT TITLE DOC.
NO.
POST.
REF. DEBIT CREDIT
1 1
2 2
3 3
10 10
11 11
12 12
13 13
Adjusting Entries
20–
Dec. 31 Uncollectible Accounts Expense 3 6 7 5 00
31 Insurance Expense 3 0 0 0 00
Prepaid Insurance 3 0 0 0 00
31 Depreciation Expense—Equipment 2 2 5 0 00
Accumulated Depreciation—Equipment 2 2 5 0 00
Adjusted Trial Balance amounts:
Total of Income Statement Credit amounts, including Income Summary, $606,573.76
Total of Income Statement Debit amounts, $530,334.24
Net Income before Federal Income Tax: $606,573.76 2 $530,334.24 5 $76,239.52
Federal Income Tax from table on page 680 in text:
688 • Working Papers
22-1 WORK TOGETHER (continued)
2., 5.
Income Summary
Depreciation Expense—Equipment
Allowance for Uncollectible Accounts
Balance 22.32
Balance 3,697.32
Interest Receivable
TE
3,675.00
Adjustment
137.50
Adjustment
Adjustment
Adjustment
12,900.00
2,250.00
Chapter 22 End-of-Fiscal-Period Work for a Corporation • 689
Name Date Class
22-1 WORK TOGETHER (continued)
Prepaid Insurance
Balance 4,535.80
Balance 1,535.80
Accumulated Depreciation—Equipment
Balance 6,546.20
Balance 8,796.20
Uncollectible Accounts Expense
Federal Income Tax Expense
Balance 6,650.00
Balance 14,171.44
3,000.00
2,250.00
Adjustment
Adjustment
Adjustment
Adjustment
3,675.00
7,521.44
690 • Working Papers
22-1 WORK TOGETHER (continued)
3., 6.
Adjusted Trial Balance
ACCOUNT TITLE DEBIT CREDIT
Cash 45 0 2 6 12
Petty Cash 1 5 0 00
Equipment 25 0 6 9 60
Accumulated Depreciation—Equipment
Accounts Payable 16 0 5 8 09
Sales Tax Payable 3 3 2 6 30
Notes Payable 7 2 0 0 00
Interest Payable
Bonds Payable 10 0 0 0 00
Capital Stock—Common 5 0 0 0 00
Paid-in Capital in Excess of Par—Common 20 0 0 0 00
Capital Stock—Preferred 5 0 0 0 00
(Note: Adjusted trial balance is continued on next page.)
TE
Travel Lite Corporation
December 31, 20–
8 7 9 6 20
2 7 7 58
Chapter 22 End-of-Fiscal-Period Work for a Corporation • 691
Name Date Class
22-1 WORK TOGETHER (concluded)
Adjusted Trial Balance (Concluded)
ACCOUNT TITLE DEBIT CREDIT
Paid-in Capital in Excess of Par—Preferred
Retained Earnings 19 6 2 0 77
Advertising Expense 7 9 7 3 50
Cash Short and Over 4 58
Credit Card Fee Expense 5 0 3 3 47
Depreciation Expense—Equipment
Insurance Expense
Miscellaneous Expense 4 3 4 1 10
Federal Income Tax Expense
Interest Income
Rent Income
Gain on Plant Assets 5 5 00
Interest Expense
Loss on Plant Assets 1 2 4 00
Travel Lite Corporation
December 31, 20–
2 2 5 0 00
3 0 0 0 00
14 1 7 1 44
5 8 4 74
1 0 0 0 00
1 3 7 0 65
Totals 723 7 3 1 90 723 7 3 1 90
692 • Working Papers
22-1 ON YOUR OWN, p. 684
Recording adjusting entries and preparing an adjusted trial balance
Williams Corporation
Unadjusted Trial Balance
December 31, 20–
ACCOUNT TITLE DEBIT CREDIT
Cash 8 4 2 7 05
Petty Cash 1 5 0 00
Accounts Receivable 41 2 4 1 61
Supplies 4 6 0 9 12
Prepaid Insurance 7 9 0 0 00
Equipment 49 5 3 6 38
Accumulated Depreciation—Equipment 19 1 8 3 25
Accounts Payable 9 2 4 4 65
Sales Tax Payable 2 9 8 8 00
Notes Payable 4 5 0 0 00
Interest Payable
Unearned Rent Income 8 0 0 0 00
Federal Income Tax Payable
Dividends Payable 2 5 0 0 00
Bonds Payable 15 0 0 0 00
Capital Stock—Common 15 0 0 0 00
Paid-in Capital in Excess of Par—Common 5 0 0 0 00
Capital Stock—Preferred 10 0 0 0 00
(Note: Unadjusted trial balance is continued on next page.)
TE
22-1 ON YOUR OWN (continued)
Williams Corporation
Unadjusted Trial Balance (Concluded)
December 31, 20–
ACCOUNT TITLE DEBIT CREDIT
Paid-in Capital in Excess of Par—Preferred
Retained Earnings 20 0 7 1 08
Dividends 10 0 0 0 00
Purchases Returns and Allowances 3 0 7 4 10
Advertising Expense 19 0 5 7 10
Cash Short and Over 7 66
Credit Card Fee Expense 9 0 6 1 05
Depreciation Expense—Equipment
Insurance Expense
Miscellaneous Expense 14 7 4 2 63
Payroll Taxes Expense 16 0 7 4 12
Rent Expense 27 0 0 0 00
Interest Income 3 1 5 50
Rent Income
Gain on Plant Assets 1 2 2 9 00
Interest Expense 8 9 0 00
Loss on Plant Assets 1 0 0 9 50
Totals 1405 3 8 3 02 1405 3 8 3 02
694 • Working Papers
22-1 ON YOUR OWN (continued)
1., 4., 5.
GENERAL JOURNAL PAGE 12
DATE ACCOUNT TITLE DOC.
NO.
POST.
REF. DEBIT CREDIT
1 1
2 2
3 3
4 4
5 5
6 6
7 7
8 8
9 9
TE
Adjusting Entries
20–
Dec. 31 Uncollectible Accounts Expense 3 6 5 6 00
Allowance for Uncollectible Accounts 3 6 5 6 00
31 Interest Receivable 8 0 00
Interest Income 8 0 00
31 Merchandise Inventory 1 0 5 4 00
Income Summary 1 0 5 4 00
31 Supplies Expense 4 2 0 7 87
Supplies 4 2 0 7 87
Adjusted Trial Balance amounts:
Total of Income Statement Credit amounts, including Income Summary, $1,293,939.84
Total of Income Statement Debit amounts, $1,176,235.60
Net Income before Federal Income Tax: $1,293,939.84 2 $1,176,235.60 5 $117,704.24
Federal Income Tax from table on page 680 in text:
Chapter 22 End-of-Fiscal-Period Work for a Corporation • 695
Name Date Class
22-1 ON YOUR OWN (continued)
2., 5.
Income Summary
Depreciation Expense—Equipment
Allowance for Uncollectible Accounts
Balance 140.00
Balance 3,796.00
Interest Receivable
3,656.00
Adjustment
80.00
Adjustment
Adjustment
Adjustment
1,054.00
7,345.00
696 • Working Papers
Prepaid Insurance
Balance 7,900.00
Balance 600.00
Accumulated Depreciation—Equipment
Balance 19,183.25
Balance 26,528.25
Uncollectible Accounts Expense
Federal Income Tax Expense
Balance 28,000.00
Balance 29,154.65
22-1 ON YOUR OWN (continued)
TE
7,300.00
7,345.00
Adjustment
Adjustment
Adjustment
Adjustment
3,656.00
1,154.65
Chapter 22 End-of-Fiscal-Period Work for a Corporation • 697
Name Date Class
(Note: Adjusted trial balance is continued on next page.)
22-1 ON YOUR OWN (continued)
3., 6.
Adjusted Trial Balance
ACCOUNT TITLE DEBIT CREDIT
Cash 8 4 2 7 05
Petty Cash 1 5 0 00
Prepaid Insurance
Equipment 49 5 3 6 38
Accumulated Depreciation—Equipment
Accounts Payable 9 2 4 4 65
Sales Tax Payable 2 9 8 8 00
Notes Payable 4 5 0 0 00
Interest Payable
Unearned Rent Income
Bonds Payable 15 0 0 0 00
Capital Stock—Common 15 0 0 0 00
Paid-in Capital in Excess of Par—Common 5 0 0 0 00
Capital Stock—Preferred 10 0 0 0 00
Williams Corporation
December 31, 20–
6 0 0 00
26 5 2 8 25
1 5 0 00
6 0 0 0 00
698 • Working Papers
Adjusted Trial Balance (Concluded)
ACCOUNT TITLE DEBIT CREDIT
Paid-in Capital in Excess of Par—Preferred
Retained Earnings 20 0 7 1 08
Advertising Expense 19 0 5 7 10
Cash Short and Over 7 66
Credit Card Fee Expense 9 0 6 1 05
Depreciation Expense—Equipment
Insurance Expense
Miscellaneous Expense 14 7 4 2 63
Payroll Taxes Expense 16 0 7 4 12
Rent Expense 27 0 0 0 00
Repairs Expense 6 2 4 3 96
Salary Expense 210 7 9 2 50
Supplies Expense
22-1 ON YOUR OWN (concluded)
TE
Williams Corporation
December 31, 20–
7 3 4 5 00
7 3 0 0 00
4 2 0 7 87
Name Date Class
22-2 WORK TOGETHER, p. 690
Preparing an income statement, statement of stockholders’ equity, and balance sheet for a
corporation
1.
Income Statement
% OF
SALES
Operating Revenue:
Sales
Purchases Returns and Allowances
Net Purchases
Total Cost of Merchandise Available for Sale
Less Merchandise Inventory, December 31, 20–
Repairs Expense
Salary Expense
Supplies Expense
Uncollectible Accounts Expense
Utilities Expense
Total Operating Expenses
Income from Operations
Other Revenue:
Interest Income
Rent Income
Gain on Plant Assets
Total Other Income
Other Expenses:
Travel Lite Corporation
For Year Ended December 31, 20–
587 9 3 4 15
1 3 5 8 07 4 0 9 9 87
384 6 3 2 53
416 7 9 0 68
45 0 5 8 15
1 7 4 2 50
79 4 8 2 00
1 1 5 0 04
3 6 7 5 00
4 3 3 0 50
134 9 2 3 19 23.15
76 0 9 4 43 13.06
5 8 4 74
1 0 0 0 00
5 5 00
1 6 3 9 74
700 • Working Papers
Statement of Stockholders’ Equity
Capital Stock—Common:
$1.00 Par Value
January 1, 20–, 4,500 Shares Issued
Issued during Current Year, 500 Shares
Balance, December 31, 20–, 5,000 Shares Issued
Capital Stock—Preferred:
$10.00 Par Value, 5%
January 1, 20–, 0 Shares Issued
Issued during Current Year, 500 Shares
Balance, December 31, 20–, 500 Shares Issued
Retained Earnings:
22-2 WORK TOGETHER (continued)
2.
TE
Travel Lite Corporation
For Year Ended December 31, 20–
4 5 0 0 00
5 0 0 00
5 0 0 0 00
5 0 0 0 00
5 0 0 0 00
Chapter 22 End-of-Fiscal-Period Work for a Corporation • 701
Name Date Class
Balance Sheet
Assets
Current Assets:
Prepaid Insurance
Total Current Assets
Plant Assets:
Equipment
Less Accumulated Depreciation—Equipment
Total Plant Assets
Total Assets
Liabilities
Current Liabilities:
Medicare Tax Payable
Medical Insurance Payable
Unemployment Tax Payable—State
Unemployment Tax Payable—Federal
Federal Income Tax Payable
Dividends Payable
Total Current Liabilities
Long-term Liabilities:
Bonds Payable
Total Long-term Liabilities
Total Liabilities
Stockholders’ Equity
22-2 WORK TOGETHER (concluded)
3.
Travel Lite Corporation
December 31, 20–
1 5 3 5 80
128 8 5 9 30
25 0 6 9 60
8 7 9 6 20
16 2 7 3 40
145 1 3 2 70
1 7 8 76
3 5 1 30
1 1 2 86
1 6 72
7 5 2 1 44
5 4 0 0 00
45 0 4 3 85
10 0 0 0 00
10 0 0 0 00
55 0 4 3 85
702 • Working Papers
22-2 ON YOUR OWN, p. 690
Preparing an income statement, statement of stockholders’ equity, and balance sheet for a
corporation
1.
Income Statement
% OF
SALES
Operating Revenue:
Sales
Net Purchases
Total Cost of Merchandise Available for Sale
Less Merchandise Inventory, December 31, 20–
Cost of Merchandise Sold
Gross Profit
Operating Expenses:
Advertising Expense
Rent Expense
Repairs Expense
Salary Expense
Supplies Expense
Uncollectible Accounts Expense
Utilities Expense
Total Operating Expenses
Income from Operations
Other Revenue:
Interest Income
Rent Income
Net Addition
Net Income before Federal Income Tax
Less Federal Income Tax Expense
Net Income after Federal Income Tax
TE
Williams Corporation
For Year Ended December 31, 20–
1282 2 4 1 65
812 3 8 8 88
910 3 3 1 01
98 9 9 6 13
811 3 3 4 88 64.16
453 2 1 7 08 35.84
19 0 5 7 10
27 0 0 0 00
6 2 4 3 96
210 7 9 2 50
4 2 0 7 87
3 6 5 6 00
11 5 9 9 95
337 0 8 7 84 26.66
116 1 2 9 24 9.18
3 9 5 50
2 0 0 0 00
1 5 7 5 00 0.12
117 7 0 4 24 9.31
29 1 5 4 65 2.31
88 5 4 9 59 7.00