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CHAPTER 4
Completing the Accounting Cycle
ASSIGNMENT CLASSIFICATION TABLE
Learning Objectives
Questions
Brief
Exercises
Do It!
Exercises
A
Problems
*1. Prepare a worksheet.
1, 2, 3, 4, 5
1, 2, 3
1
1, 2, 3,
5, 6
1A, 2A, 3A,
4A, 5A
*2. Prepare closing entries and a
post-closing trial balance.
6, 7, 8, 9, 11
4, 5, 6, 7
2
4, 7, 8, 11,
19
1A, 2A, 3A,
4A, 5A
ASSIGNMENT CHARACTERISTICS TABLE
Problem
Number
Description
Difficulty
Level
Time Allotted
(min.)
1A
Prepare worksheet, financial statements, and adjusting
and closing entries.
Simple
40–50
2A
Complete worksheet; prepare financial statements,
closing entries, and post-closing trial balance.
Moderate
50–60
WEYGANDT ACCOUNTING PRINCIPLES 12E
CHAPTER 4
COMPLETING THE ACCOUNTING CYCLE
Number
LO
BT
Difficulty
Time (min.)
BE1
1
K
Simple
2–4
BE2
1
AN
Moderate
6–8
BE3
1
C
Simple
3–5
BE4
2
AP
Simple
3–5
BE9
3
AN
Moderate
4–6
BE10
4
AP
Simple
4–6
BE11
4
C
Simple
3–5
BE12
5
AN
Moderate
4–6
DI1
1
C
Simple
4–6
DI2
2
AP
Simple
2–4
DI3
3
AP
Simple
6–8
DI4
4
C
Simple
4–6
EX1
1
AP
Simple
12–15
EX2
1
AP
Simple
10–12
EX3
1, 4
AP
Simple
12–15
EX4
2
AP
Simple
12–15
EX5
1
AN
Simple
10–12
EX12
3
AN
Moderate
8–10
EX13
3
AN
Moderate
4–6
EX14
4
AP
Moderate
10–12
EX15
4
C
Simple
5–8
EX16
4
AP
Simple
8–10
COMPLETING THE ACCOUNTING CYCLE (Continued)
Number
LO
BT
Difficulty
Time (min.)
EX17
4
AP
Simple
12–15
EX18
5
AN
Moderate
5–7
EX19
2, 5
AN
Moderate
10–12
P6A
3
AN
Moderate
40–50
BYP1
4
AN
Simple
10–12
BYP2
4
AN
Simple
8–10
BYP3
4
AN
Simple
8–10
BYP4
—
E
Simple
10–12
BLOOM’ S TAXONOMY TABLE
Correlation Chart between Bloom’s Taxonomy, Learning Objectives and End-of-Chapter Exercises and Problems
Learning Objective
Knowledge
Comprehension
Application
Analysis
Synthesis
Evaluation
*1. Prepare a worksheet.
BE4-1
Q4-1
Q4-2
Q4-3
Q4-4
Q4-5
BE4-3
DI4-1
E4-1
E4-2
E4-3
P4-2A
P4-3A
BE4-2
E4-5
E4-6
P4-1A
P4-4A
P4-5A
*3. Explain the steps in the
accounting cycle and how to
prepare correcting entries.
Q4-11
Q4-12
BE4-8
Q4-10
Q4-13
E4-10
DI4-3
BE4-9 P4-5A
E4-12 P4-6A
E4-13
*4. Identify the sections of
a classified balance sheet.
Q4-14
Q4-15
Q4-16
Q4-18
Q4-17
Q4-19
BE4-11
DI4-4
E4-15
BE4-10
E4-3
E4-9
E4-14
E4-16
E4-17
P4-2A
P4-3A
P4-1A
P4-4A
P4-5A
*5. Prepare reversing entries.
Q4-10
Q4-20
Q4-21
BE4-12
E4-18
E4-19
ANSWERS TO QUESTIONS
1. No. A worksheet is not a permanent accounting record. The use of a worksheet is an optional
step in the accounting cycle.
2. The worksheet is merely a device used to make it easier to prepare adjusting entries and the
financial statements.
3. The amount shown in the adjusted trial balance column for an account equals the account
balance in the ledger after adjusting entries have been journalized and posted.
6. (1) (Dr) Individual revenue accounts and (Cr) Income Summary.
(2) (Dr) Income Summary and (Cr) Individual expense accounts.
(3) (Dr) Income Summary and (Cr) Owner’s Capital (for net income).
(4) (Dr) Owner’s Capital and (Cr) Owner’s Drawings.
7. Income Summary is a temporary account that is used in the closing process. The account is
debited for expenses and credited for revenues. The difference, either net income or net loss, is
then closed to the owner’s capital account.
8. The post-closing trial balance contains only balance sheet accounts. Its purpose is to prove the
equality of the permanent account balances that are carried forward into the next accounting
period.
11. The steps that involve journalizing are: (1) journalize the transactions, (2) journalize the adjusting
entries, and (3) journalize the closing entries.
12. The three trial balances are the: (1) trial balance, (2) adjusted trial balance, and (3) post-closing
trial balance.
Questions Chapter 4 (Continued)
*14. The standard classifications in a balance sheet are:
Assets
Liabilities and Owner’s Equity
Current Assets
Current Liabilities
Long-term Investments
Long-term Liabilities
Property, Plant, and Equipment
Owner’s Equity
Intangible Assets
*17. Long-term investments are generally investments in stocks and bonds of other companies that
are normally held for many years. Property, plant, and equipment are assets with relatively long
useful lives that a company is currently using in operating the business.
*19.. Apple’s current liabilities at September 28, 2013 and September 29, 2012 were $43,658 million
and $38,542 million respectively. Apple’s current liabilities were significantly lower than its current
assets in both years.
*20. After reversing entries have been made, the balances will be Interest Payable, zero balance;
Interest Expense, a credit balance.
(b) Jan. 10 Salaries and Wages Payable .................................................... 3,500
Salaries and Wages Expense ................................................... 4,500
Cash ................................................................................ 8,000
Note that Salaries and Wages Expense will again have a debit balance of $4,500.
SOLUTIONS TO BRIEF EXERCISES
BRIEF EXERCISE 4-1
The steps in using a worksheet are performed in the following sequence:
(1) prepare a trial balance on the worksheet, (2) enter adjustment data,
BRIEF EXERCISE 4-3
Income Statement
Balance Sheet
Account
Dr.
Cr.
Dr.
Cr.
Accumulated Depreciation
X
Depreciation Expense
X
BRIEF EXERCISE 4-4
Dec. 31 Service Revenue ............................................. 50,000
Income Summary .................................... 50,000
31 Income Summary ............................................ 36,000
Salaries and Wages Expense ................. 29,000
BRIEF EXERCISE 4-2
LENTZ COMPANY
Worksheet
Trial Balance
Adjustments
Adjusted
Trial Balance
Income
Statement
Balance
Sheet
Account Titles
Dr.
Cr.
Dr.
Cr.
Dr.
Cr.
Dr.
Cr.
Dr.
Cr.
Prepaid Insurance
Service Revenue
3,000
58,000
(a) 1,800
(b) 1,100
1,200
59,100
59,100
1,200
BRIEF EXERCISE 4-5
Salaries and Wages
Expense
Income Summary
Service Revenue
Bal. 29,000
(2) 29,000
(2) 36,000
(1) 50,000
(1) 50,000
Bal. 50,000
(3) 14,000
50,000
50,000
BRIEF EXERCISE 4-6
July 31 Service Revenue .............................................. 16,400
Income Summary ..................................... 16,400
Service Revenue
Date
Explanation
Ref.
Debit
Credit
Balance
7/31
Balance
16,400
16,400
7/31
Closing entry
16,400
0
Salaries and Wages Expense
Date
Explanation
Ref.
Debit
Credit
Balance
BRIEF EXERCISE 4-6 (Continued)
Maintenance and Repairs Expense
Date
Explanation
Ref.
Debit
Credit
Balance
7/31
Balance
2,500
2,500
7/31
Closing entry
2,500
0
BRIEF EXERCISE 4-7
The accounts that will appear in the post-closing trial balance are:
BRIEF EXERCISE 4-8
The proper sequencing of the required steps in the accounting cycle is as
follows:
1. Analyze business transactions.
2. Journalize the transactions.
3. Post to ledger accounts.
BRIEF EXERCISE 4-9
1. Service Revenue ................................................................ 870
Accounts Receivable .................................................. 870
BRIEF EXERCISE 4-10
MROTET COMPANY
Partial Balance Sheet
Current assets
Cash ......................................................................................... $ 4,100
Debt investments .................................................................... 6,700
Accounts receivable ............................................................... 12,500
BRIEF EXERCISE 4-11
CL
Accounts payable
CL
Income taxes payable
CA
Accounts receivable
LTI
Debt investments (long-term)
*BRIEF EXERCISE 4-12
Nov. 1 Salaries and Wages Payable ..................................... 2,100
Salaries and Wages Expense ............................ 2,100
SOLUTIONS FOR DO IT! REVIEW EXERCISES
DO IT! 4-1
Income statement debit column—Utilities Expense
Income statement credit column—Service Revenue
DO IT! 4-2
Dec. 31 Income Summary ......................................... 41,000
Owner’s Capital ..................................... 41,000
DO IT! 4-3
1. Supplies ........................................................ 650
Equipment ................................................ 210
Cash.......................................................... 440
DO IT! 4-4
NA
Interest revenue
OE
Owner’s capital
CL
Utilities payable
PPE
Accumulated depreciation—equipment
SOLUTIONS TO EXERCISES
EXERCISE 4-1
DIXON COMPANY
Worksheet
For the Month Ended June 30, 2017
Account Titles
Trial Balance
Adjustments
Adj. Trial Balance
Income Statement
Balance Sheet
Dr.
Cr.
Dr.
Cr.
Dr.
Cr.
Dr.
Cr.
Dr.
Cr.
Cash
2,320
2,320
2,320
Accounts
Revenue
240
(b) 140
100
100
Owner’s Capital
3,600
3,600
3,600
Service Revenue
2,400
(b) 140
2,540
2,540
Salaries and
EXERCISE 4-2
SAVAGLIA COMPANY
(Partial) Worksheet
For the Month Ended April 30, 2017
Adjusted
Trial Balance
Income
Statement
Balance Sheet
Account Titles
Dr.
Cr.
Dr.
Cr.
Dr.
Cr.
Cash
10,000
10,000
Accounts Receivable
7,840
7,840
Accum. Depreciation—
Equipment
4,900
4,900
Salaries and Wages
Expense
10,840
10,840
Rent Expense
760
760
Depreciation Expense
650
650
EXERCISE 4-3
SAVAGLIA COMPANY
Income Statement
For the Month Ended April 30, 2017
Revenues
Service revenue ....................................................... $15,590
Expenses
Salaries and wages expense .................................. $10,840
SAVAGLIA COMPANY
Owner’s Equity Statement
For the Month Ended April 30, 2017
Owner’s Capital, April 1 ........................................................... $27,960
Add: Net income ..................................................................... 3,283
SAVAGLIA COMPANY
Balance Sheet
April 30, 2017
Assets
Current assets
Cash .......................................................................... $10,000
Accounts receivable ................................................ 7,840
Prepaid rent .............................................................. 2,280
EXERCISE 4-3 (Continued)
SAVAGLIA COMPANY
Balance Sheet (Continued)
April 30, 2017
Liabilities and Owner’s Equity
Current liabilities
Notes payable ........................................................... $5,700
Accounts payable .................................................... 4,920
EXERCISE 4-4
(a) Apr. 30 Service Revenue ...................................... 15,590
Income Summary ............................. 15,590
30 Income Summary ..................................... 12,307
Salaries and Wages Expense .......... 10,840
Rent Expense .................................... 760
30 Income Summary ..................................... 3,283
Owner’s Capital ................................ 3,283
(b)
Income Summary
Owner’s Capital
EXERCISE 4-4 (Continued)
(c) SAVAGLIA COMPANY
Post-Closing Trial Balance
April 30, 2017
Debit
Credit
Cash ..................................................................... $10,000
Accounts Receivable .......................................... 7,840
Prepaid Rent ....................................................... 2,280
Equipment ........................................................... 23,050
EXERCISE 4-5
(a) Accounts Receivable .......................................... 1,100
Service Revenue ......................................... 1,100
Insurance Expense ............................................. 300
Prepaid Insurance ....................................... 300
EXERCISE 4-5 (Continued)
(b)
Income Statement
Balance Sheet
Dr.
Cr.
Dr.
Cr.
Accounts Receivable
X
Prepaid Insurance
X
Accum. Depreciation—Equip.
X
EXERCISE 4-6
(a) Accounts Receivable—$25,000 ($34,000 – $9,000).
Supplies—$2,500 ($7,000 – $4,500).
(b) Accounts Receivable ................................................ 9,000
Service Revenue ................................................ 9,000
Insurance Expense ................................................... 6,000
Prepaid Insurance ............................................. 6,000
