CHAPTER 4 Completing the Accounting Cycle
Prob. 4-1B (Concluded)
4. 20Y1
June 30 Fees Earned 283,750
Rent Revenue 3,000
Tami Garrigan, Capital 12,025
Salaries and Wages Expense 147,000
Advertising Expense 86,800
Utilities Expense 30,000
5.
Debit Credit
Balances Balances
Cash 5,100
Accounts Receivable 26,500
Prepaid Insurance 2,300
Supplies 525
Land 80,000
594,425 594,425
Last Chance Company
Post-Closing Trial Balance
June 30, 20Y1
Closing Entries
CHAPTER 4 Completing the Accounting Cycle
Prob. 4-2B
1.
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
Net income $113,000
Nicole Gorman, capital, November 1, 20Y2 $220,000
Net income for the year $113,000
The Gorman Group
Statement of Owner’s Equity
For the Year Ended October 31, 20Y3
The Gorman Group
Income Statement
For the Year Ended October 31, 20Y3
CHAPTER 4 Completing the Accounting Cycle
Prob. 4-2B (Continued)
Current assets:
Land $ 75,000
Buildings $250,000
Less accumulated depreciation 117,200 132,800
Equipment $240,000
Less accumulated depreciation 151,700 88,300
Total property, plant, and equipment 296,100
Total assets $351,100
Current liabilities:
Accounts payable $ 33,300
Liabilities
The Gorman Group
Balance Sheet
October 31, 20Y3
Assets
2. 20Y3
Oct. 31 Service Fees 468,000
Rent Revenue 5,000
Salaries Expense 291,000
Depreciation Expense—Equipment 17,500
Rent Expense 15,500
Supplies Expense 9,000
3. $135,000 ($115,000 + $20,000) net income. The $115,000 increase is caused by
the net income of $135,000 less the $20,000 withdrawals.
Closing Entries
CHAPTER 4 Completing the Accounting Cycle
Prob. 4-3B
1., 3., and 6.
Aug. 31 Bal. 3,800
Aug. 31 Bal. 9,000 Aug. 31 Adj. 7,000
31
Adj. Bal.
2
,
000
Aug. 31 Bal. 49,200
31 Adj. 8,150
31 Adj. Bal. 57,350
Aug. 31 Bal. 7,800
Aug. 31 Adj. 2,200
Cash
Laundry Supplies
Prepaid Insurance
Accumulated Depreciation
Accounts Payable
Wages Payable
31
CHAPTER 4 Completing the Accounting Cycle
Prob. 4-3B (Continued)
Aug. 31 Clos. 248,000 Aug. 31 Bal. 248,000
Aug. 31 Bal. 43,200 Aug. 31 Clos. 43,200
Aug. 31 Bal. 16,000 Aug. 31 Clos. 16,000
Aug. 31 Adj. 8,150 Aug. 31 Clos. 8,150
Laundry Revenue
Rent Expense
Utilities Expense
Depreciation Expense
2. Optional (Appendix)
Account Title Debit Credit Debit Credit Debit Credit Debit Credit
Cash 3,800 3,800 3,800
Laundry Supplies 9,000 (c) 7,000 2,000 2,000
Bobbi Downey, Capital 95,000 95,000 95,000
Bobbi Downey, Drawing 2,400 2,400 2,400
Laundry Revenue 248,000 248,000 248,000
Wages Expense 135,800 (a) 2,200 138,000 138,000
Rent Expense 43,200 43,200 43,200
Utilities Expense 16,000 16,000 16,000
400,000 400,000 22,650 22,650 410,350 410,350 220,650 248,000 189,700 162,350
Net income 27,350 27,350
248,000 248,000 189,700 189,700
La Mesa Laundry
End-of-Period Spreadsheet (Work Sheet)
For the Year Ended August 31, 20Y5
BalanceUnadjusted Adjusted Income
SheetTrial Balance
Debit Credit
Trial Balance StatementAdjustments
3.
20Y5
Aug. 31 Wages Expense 2,200
Wages Payable 2,200
Accrued wages.
31 Depreciation Expense 8,150
Accumulated Depreciation 8,150
Equipment depreciation.
4.
Debit Credit
Balances Balances
Cash 3,800
Wages Payable 2,200
Bobbi Downey, Capital 95,000
Bobbi Downey, Drawing 2,400
Laundry Revenue 248,000
Wages Expense 138,000
Rent Expense 43,200
La Mesa Laundry
Adjusted Trial Balance
August 31, 20Y5
Adjusting Entries
CHAPTER 4 Completing the Accounting Cycle
Prob. 4-3B (Continued)
5.
Laundry revenue $248,000
Expenses:
Wages expense $138,000
Rent expense 43,200
Utilities expense 16,000
Depreciation expense 8,150
Bobbi Downey, capital, September 1, 20Y4 $ 95,000
Net income for the year $27,350
Withdrawals (2,400)
Statement of Owner’s Equity
For the Year Ended August 31, 20Y5
La Mesa Laundry
Income Statement
For the Year Ended August 31, 20Y5
La Mesa Laundry
CHAPTER 4 Completing the Accounting Cycle
Prob. 4-3B (Continued)
Current assets:
Cash $ 3,800
Less accumulated depreciation 57,350
Total property, plant, and equipment 123,450
Total assets $129,950
Current liabilities:
Accounts payable $ 7,800
Wages payable 2,200
Total liabilities $ 10,000
Liabilities
La Mesa Laundry
Balance Sheet
August 31, 20Y5
Assets
CHAPTER 4 Completing the Accounting Cycle
Prob. 4-3B (Concluded)
6.
20Y5
Aug. 31 Laundry Revenue 248,000
Wages Expense 138,000
Rent Expense 43,200
Utilities Expense 16,000
Depreciation Expense 8,150
Laundry Supplies Expense 7,000
Bobbi Downey, Drawing 2,400
7.
Debit Credit
Balances Balances
Cash 3,800
Laundry Supplies 2,000
Prepaid Insurance 700
Laundry Equipment 180,800
La Mesa Laundry
Post-Closing Trial Balance
August 31, 20Y5
Closing Entries
CHAPTER 4 Completing the Accounting Cycle
Prob. 4-4B
1., 3., and 6.
Account No. 11
Post.
Account No. 13
Post.
Item Ref. Debit Credit Debit Credit
20Y7
Jan. 31 Balance 8,000
31 Adjusting 26 5,150 2,850
Account No. 14
Post.
Account No. 16
Post.
Item Ref. Debit Credit Debit Credit
20Y7
Jan. 31 Balance 113,000
Account No. 17
Post.
Account No. 18
Post.
Item Ref. Debit Credit Debit Credit
20Y7
Jan. 31 Balance 90,000
Balance
Date
Balance
Cash
Account:
Account: Supplies
Balance
Date
Account: Prepaid Insurance
Balance
Account: Equipment
Balance
Date
Account: Accumulated Depreciation—Equipment
Balance
Account: Trucks
CHAPTER 4 Completing the Accounting Cycle
Prob. 4-4B (Continued)
Account No. 19
Post.
Item Ref. Debit Credit Debit Credit
Account No. 21
Post.
Item Ref. Debit Credit Debit Credit
20Y7
Jan. 31 Balance 4,500
Account No. 22
Account No. 31
Post.
Item Ref. Debit Credit Debit Credit
20Y7
Jan. 31 Balance 126,400
31 Closing 27 46,150 172,550
31 Closing 27 3,000 169,550
Account No. 32
Date
Balance
Accumulated Depreciation—Trucks
Account:
Account: Accounts Payable
Balance
Date
Balance
Date
Account: Jeanne McQuay, Drawing
Account: Wages Payable
Account: Jeanne McQuay, Capital
CHAPTER 4 Completing the Accounting Cycle
Prob. 4-4B (Continued)
Account No. 41
Account No. 51
Post.
Item Ref. Debit Credit Debit Credit
20Y7
Jan. 31 Balance 72,000
31 Adjusting 26 900 72,900
31 Closing 27 72,900 — —
Account No. 52
Account No. 53
Post.
Item Ref. Debit Credit Debit Credit
20Y7
Jan. 31 Balance 5,350
31 Closing 27 5,350 — —
Date
Balance
Date
Account: Rent Expense
Account: Truck Expense
Account: Service Revenue
Balance
Account: Wages Expense
CHAPTER 4 Completing the Accounting Cycle
Prob. 4-4B (Continued)
Account No. 54
Account No. 55
Post.
Item Ref. Debit Credit Debit Credit
20Y7
Jan. 31 Adjusting 26 5,150 5,150
31 Closing 27 5,150 — —
Account No. 56
Account No. 57
Post.
Item Ref. Debit Credit Debit Credit
20Y7
Jan. 31 Adjusting 26 3,150 3,150
31 Closing 27 3,150 — —
Account No. 59
Account: Depreciation Expense—Equipment
Account: Supplies Expense
Balance
Date
Account: Depreciation Expense—Trucks
Account: Insurance Expense
Balance
Date
Account: Miscellaneous Expense
CHAPTER 4 Completing the Accounting Cycle
Prob. 4-4B (Continued)
2. Optional (Appendix)
Account Title Debit Credit Debit Credit Debit Credit Debit Credit
Cash 13,100 13,100 13,100
Accounts Payable 4,500 4,500 4,500
Wages Payable (e) 900 900 900
Jeanne McQuay, Capital 126,400 126,400 126,400
Jeanne McQuay, Drawing 3,000 3,000 3,000
Service Revenue 155,000 155,000 155,000
Wages Expense 72,000 (e) 900 72,900 72,900
Rent Expense 7,600 7,600 7,600
Truck Expense 5,350 5,350 5,350
Depr. Exp.—Equipment (c) 5,250 5,250 5,250
155,000 155,000 226,300 226,300
Recessive Interiors
End-of-Period Spreadsheet (Work Sheet)
For the Year Ended January 31, 20Y7
BalanceUnadjusted Adjusted Income
SheetTrial Balance
Debit Credit
Trial Balance StatementAdjustments
CHAPTER 4 Completing the Accounting Cycle
Prob. 4-4B (Continued)
3. Page 26
Post.
Ref. Debit Credit
20Y7
Jan. 31 Supplies Expense 55 5,150
Supplies 13 5,150
Supplies used ($8,000 – $2,850).
31 Depreciation Expense—Equipment 54 5,250
Accumulated Depr.—Equipment 17 5,250
Equipment depreciation.
31 Depreciation Expense—Trucks 56 4,000
Accumulated Depr.—Trucks 19 4,000
Truck depreciation.
Date
Adjusting Entries
JOURNAL
CHAPTER 4 Completing the Accounting Cycle
Prob. 4-4B (Continued)
4.
Account Debit Credit
No. Balances Balances
Cash 11 13,100
Supplies 13 2,850
Prepaid Insurance 14 4,350
Equipment 16 113,000
Wages Payable 22 900
Jeanne McQuay, Capital 31 126,400
Jeanne McQuay, Drawing 32 3,000
Service Revenue 41 155,000
Wages Expense 51 72,900
Rent Expense 52 7,600
Truck Expense 53 5,350
Depreciation Expense—Equipment 54 5,250
Adjusted Trial Balance
January 31, 20Y7
Recessive Interiors
CHAPTER 4 Completing the Accounting Cycle
Prob. 4-4B (Continued)
5.
Service revenue $155,000
Expenses:
Wages expense $72,900
Rent expense 7,600
Truck expense 5,350
Jeanne McQuay, capital, February 1, 20Y6 $126,400
Net income for the year $46,150
Recessive Interiors
Statement of Owner’s Equity
For the Year Ended January 31, 20Y7
Recessive Interiors
Income Statement
For the Year Ended January 31, 20Y7
CHAPTER 4 Completing the Accounting Cycle
Prob. 4-4B (Continued)
Current assets:
Cash $13,100
Supplies 2,850
Equipment $113,000
Less accumulated depreciation 17,250 $95,750
Trucks $ 90,000
Less accumulated depreciation 31,100 58,900
Total property, plant, and equipment 154,650
Total assets $174,950
Current liabilities:
Accounts payable $ 4,500
Wages payable 900
Total liabilities $ 5,400
Liabilities
Recessive Interiors
Balance Sheet
January 31, 20Y7
Assets