CHAPTER 4 Completing the Accounting Cycle
Comp. Prob. 1 (Continued)
Account No. 54
Post.
Item Ref. Debit Credit Debit Credit
2014
Account No. 55
Post.
Item Ref. Debit Credit Debit Credit
2014
Account No. 59
Post.
Item Ref. Debit Credit Debit Credit
2014
Account: Depreciation Expense
Balance
Date
Account: Miscellaneous Expense
Balance
Date
Account: Insurance Expense
Balance
Date
CHAPTER 4 Completing the Accounting Cycle
Comp. Prob. 1 (Continued)
3.
Debit Credit
Balances Balances
Cash 44,195
Accounts Receivable 8,080
Unadjusted Trial Balance
May 31, 2014
KELLY CONSULTING
5. Optional (Appendix)
Account Title Debit Credit Debit Credit Debit Credit Debit Credit
Cash 44,195 44,195 44,195
Kelly Pitney, Drawing 10,500 10,500 10,500
KELLY CONSULTING
End-of-Period Spreadsheet (Work Sheet)
For the Month Ended May 31, 2014
BalanceUnadjusted Adjusted Income
SheetTrial Balance
Debit Credit
Trial Balance StatementAdjustments
6. Page 7
Post.
Ref. Debit Credit
2014
May 31 Insurance Expense 55 275
Date
Adjusting Entries
JOURNAL
CHAPTER 4 Completing the Accounting Cycle
Comp. Prob. 1 (Continued)
7.
Debit Credit
Balances Balances
Cash 44,195
Accounts Receivable 8,080
Adjusted Trial Balance
May 31, 2014
KELLY CONSULTING
CHAPTER 4 Completing the Accounting Cycle
Comp. Prob. 1 (Continued)
8.
Fees earned $40,000
Expenses:
Salary expense $1,705
Rent expense 1,600
KELLY CONSULTING
Income Statement
For the Month Ended May 31, 2014
CHAPTER 4 Completing the Accounting Cycle
Comp. Prob. 1 (Continued)
Current assets: Current liabilities:
Cash $44,195 Accounts payable $ 895
KELLY CONSULTING
Balance Sheet
May 31, 2014
Assets Liabilities
CHAPTER 4 Completing the Accounting Cycle
Comp. Prob. 1 (Concluded)
9. Page 8
Post.
Ref. Debit Credit
2014
May 31 Fees Earned 41 40,000
Income Summary 33 40,000
10.
Debit Credit
Balances Balances
Cash 44,195
Accounts Receivable 8,080
JOURNAL
May 31, 2014
Closing Entries
Date
KELLY CONSULTING
Post-Closing Trial Balance
CHAPTER 4 Completing the Accounting Cycle
CP 4–1
It is unacceptable to prepare financial statements in such a way that users of
the statements would be misled. The July 31, 2014, balance sheet of Picasso
Graphics could be misleading in two ways. First, the account receivable from
CASES & PROJECTS
CP 4–2
1. (a) With the decreasing cost of computers and related software, Main Street
Co. may find it desirable to computerize its financial reporting
2. Supplies cannot have a credit balance, since the supplies account is an asset
CHAPTER 4 Completing the Accounting Cycle
CP 4–3
1. A set of financial statements provides useful information concerning the
economic condition of a company. For example, the balance sheet describes
2. The following adjustments might be necessary before an accurate set of
financial statements could be prepared:
No supplies expense is shown. The supplies account should be adjusted for
the supplies used during the year.
No depreciation expense is shown for the building or equipment accounts.
CHAPTER 4 Completing the Accounting Cycle
CP 4–3 (Concluded)
3. In general, the decision to extend a loan is based on an assessment of the
profitability and riskiness of the loan. Although the financial statements
provide useful data for this purpose, other factors such as the following
CP 4–4
The purpose of this activity is to familiarize students with the information (assets,
liabilities, and owner’s equity) that a balance sheet provides about a company.