259
Problem 4-2B (90 minutes) Part 1
POWER DEMOLITION COMPANY
Work Sheet
For Year Ended April 30, 2017
Unadjusted
Trial Balance
Adjustments
Adjusted
Trial Balance
Income
Statement
Balance Sheet
and Statement of
Owner’s Equity
No.
Account Title
Cr.
Dr.
Cr.
Dr.
Cr.
Dr.
Cr.
Dr.
Cr.
101
Cash ……………………………………………
7,000
7,000
7,000
126
Supplies ………………………………………
16,000
(a)
7,900
7,900
128
Prepaid insurance ………………………
12,600
(b)
2,000
2,000
167
Equipment …………………………………..
200,000
200,000
200,000
201
Accounts payable ……………………….
6,800
(d)
7,600
203
Interest payable …………………………..
(h)
208
Rent payable …………………………..
3,000
210
Wages payable …………………………..
(e)
2,000
213
Property taxes payable ……………….
(g)
251
Long–term notes payable ……………
30,000
30,000
30,000
301
J. Bonn, Capital …………………………..
86,900
86,900
86,900
302
J. Bonn, Withdrawals ………………….
12,000
12,000
12,000
401
Demolition fees earned……………….
187,000
187,000
187,000
612
Depreciation expense—Equip ……
(c)
7,000
7,000
7,000
623
Wages expense …………………………..
41,400
(e)
2,000
43,400
43,400
633
Interest expense………………………….
3,300
(h)
3,600
3,600
637
Insurance expense ……………………..
(b)
10,600
10,600
640
Rent expense …………………………..
13,200
3,000
16,200
16,200
652
Supplies expense ……………………….
(a)
8,100
8,100
8,100
683
Property taxes expense ………………
9,700
(g)
10,250
10,250
684
Repairs expense …………………………
4,700
4,700
4,700
Totals ………………………………………….
324,700
324,700
338,350
338,350
109,450
187,000
228,900
151,350
260
Problem 4-2B (Continued)
Part 2 Adjusting entries (all on April 30, 2017)
Instructor note: Entries are shown without an account reference column because no posting is required.
(a) Supplies Expense ……………………………………… 8,100
Problem 4-2B (Continued)
Closing entries (all on April 30, 2017)
Instructor note: Entries are shown without an account reference column because no posting is required.
(1) Demolition Fees Earned ………………………… 187,000
(2) Income Summary ………………………………….. 109,450
Depreciation Expense–Equipment …… 7,000
Wages Expense………………………………. 43,400
(3) Income Summary ………………………………….. 77,550
(4) J. Bonn, Capital …………………………………….. 12,000
262
Problem 4-2B (Continued)
Part 3
POWER DEMOLITION COMPANY
Income Statement
For Year Ended April 30, 2017
Demolition fees earned …………………………………. $187,000
Expenses
POWER DEMOLITION COMPANY
Statement of Owner’s Equity
For Year Ended April 30, 2017
J. Bonn, Capital, April 30, 2016 ……………………… $ 46,900
263
Problem 4-2B (Continued)
POWER DEMOLITION COMPANY
Balance Sheet
April 30, 2017
Assets
Current assets
Cash …………………………………………………………… $ 7,000
Liabilities
Current liabilities
Accounts payable ……………………………………….. $ 7,600
Interest payable ………………………………………….. 300
264
Problem 4-2B (Concluded)
Part 4
(a) This error enters the wrong amount in the correct accounts. The
ending balance of the Prepaid Insurance account should be $2,000,
but the entry reduces that account by $2,000. Because its
(b) This error inserts a debit in the balance sheet columns instead of the
income statement columns. In the unlikely event that this error is
265
Problem 4-3B (15 minutes)
Problem 4-4B (75 minutes)
Part 1
ANARA CO.
Income Statement
For Year Ended December 31, 2017
Revenues
Professional fees earned …………………………….. $59,600
Rent earned ………………………………………………… 4,500
ANARA CO.
Statement of Owner‘s Equity
For Year Ended December 31, 2017
P. Anara, Capital, December 31, 2016 ……………. $ 52,800
Problem 4-4B (Continued)
ANARA CO.
Balance Sheet
December 31, 2017
Assets
Current assets
Cash …………………………………………………………… $ 7,400
Short-term investments …………………………..….. 11,200
Liabilities
Current liabilities
Accounts payable ……………………………………….. $ 3,500
Interest payable ………………………………………….. 1,750
268
Problem 4-4B (Continued)
Part 2
Closing entries (all dated December 31, 2017)
Instructor note: Entries are shown without an account reference column because no posting is required.
(1) Professional Fees Earned ……………………… 59,600
(2) Income Summary ………………………………….. 37,530
Depreciation Expense—Building …….. 2,000
Depreciation Expense—Equipment …. 1,000
Part 3
269
Problem 4-5B (90 minutes)
Part 1
SANTO COMPANY
Income Statement
For Year Ended December 31, 2017
Repair fees earned ………………………………. $54,700
Expenses
SANTO COMPANY
Statement of Owner’s Equity
For Year Ended December 31, 2017
P. Santo, Capital, December 31, 2016 …… $35,650
270
Problem 4-5B (Continued)
SANTO COMPANY
Balance Sheet
December 31, 2017
Assets
Current assets
Cash ………………………………………………….. $14,450
271
Problem 4-5B (Continued)
Parts 2 and 3
SANTO COMPANY
Work Sheet
For Year Ended December 31, 2017
Adjusted
Trial Balance
Closing Entry Information
Post–Closing
Trial Balance
No.
Account Title
Dr.
Cr.
Dr.
Cr.
Dr.
Cr.
101
Cash ………………………………
14,450
14,450
167
31,000
31,000
201
302
15,000
623
Problem 4-5B (Concluded)
Part 3
Closing entries (all dated December 31, 2017)
Instructor note: Entries are shown without an account reference column because no posting is required.
(1) Repair Fees Earned ………………………………….. 54,700
Part 4
(a) If none of the $600 insurance expense had expired, the income
273
Problem 4-6BA (40 minutes)
Part 1
SOLUTIONS CO.
Work Sheet
For Year Ended December 31, 2017
Unadjusted
Trial Balance
Adjustments
Adjusted
Trial Balance
Dr. Cr.
Dr. Cr.
Dr. Cr.
Cash ……………………………………….
10,000
10,000
Accounts receivable ………………
Machinery ………………………………
50,000
50,000
20,000
23,800
Interest payable ……………………..
Salaries payable ……………………
Unearned rental fees ……………..
Notes payable ………………………..
30,000
30,000
G. Clay, Capital ………………………
14,200
14,200
G. Clay, Withdrawals ……………..
Salaries expense ……………………
24,500
24,900
Interest expense …………………….
Supplies expense …………………..
4,150
274
Problem 4-6BA (Continued)
Part 2 (all adjusting entries dated December 31, 2017)
Instructor note: Entries are shown without an account reference column because no posting is required.
(a) Salaries Expense …………………………………… 400
Part 3 (all reversing entries dated January 1, 2018)
(a) Salaries Payable ……………………………………. 400