Accounting Chapter 4 Homework The July 31 2016 Balance Sheet Picasso

subject Type Homework Help
subject Pages 9
subject Words 1831
subject Authors Carl S. Warren, James M. Reeve, Jonathan Duchac

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CHAPTER 4 Completing the Accounting Cycle
Comp. Prob. 1 (Continued)
Account No. 54
Post.
Item Ref. Debit Credit Debit Credit
2016
May 31 Adjusting 7 330 330
Account No. 55
Post.
Item Ref. Debit Credit Debit Credit
2016
Account No. 59
Post.
Item Ref. Debit Credit Debit Credit
2016
May 9 5 225 225
Account: Depreciation Expense
Balance
Date
Account: Insurance Expense
Date
Balance
Date
Account: Miscellaneous Expense
Balance
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CHAPTER 4 Completing the Accounting Cycle
Comp. Prob. 1 (Continued)
3.
Debit Credit
Balances Balances
Cash 44,195
Accounts Receivable 8,080
Supplies 2,085
Prepaid Rent 3,200
Unadjusted Trial Balance
May 31, 2016
KELLY CONSULTING
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CHAPTER 4 Completing the Accounting Cycle
Comp. Prob. 1 (Continued)
5. Optional (Appendix)
Account Title Debit Credit Debit Credit Debit Credit Debit Credit
Cash 44,195 44,195 44,195
Accum. Depreciation 330 (c) 330 660 660
Accounts Payable 895 895 895
Salaries Payable (d) 325 325 325
Unearned Fees 7,000 (f) 3,790 3,210 3,210
Common Stock 30,000 30,000 30,000
Retained Earnings 12,300 12,300 12,300
Dividends 10,500 10,500 10,500
SheetTrial Balance
Debit Credit
Trial Balance StatementAdjustments
KELLY CONSULTING
End-of-Period Spreadsheet (Work Sheet)
For the Month Ended May 31, 2016
BalanceUnadjusted Adjusted Income
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CHAPTER 4 Completing the Accounting Cycle
Comp. Prob. 1 (Continued)
6. Page 7
Post.
Ref. Debit Credit
2016
May 31 Insurance Expense 55 275
Prepaid Insurance 16 275
Insurance expired.
31 Supplies Expense 53 1,370
Supplies 14 1,370
Supplies used ($2,085 – $715).
31 Depreciation Expense 54 330
Accumulated Depreciation 19 330
Date
Adjusting Entries
JOURNAL
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CHAPTER 4 Completing the Accounting Cycle
Comp. Prob. 1 (Continued)
7.
Debit Credit
Balances Balances
Cash 44,195
Accounts Receivable 8,080
Supplies 715
Accounts Payable 895
Salaries Payable 325
Unearned Fees 3,210
Common Stock 30,000
Retained Earnings 12,300
Dividends 10,500
Fees Earned 40,000
Adjusted Trial Balance
May 31, 2016
KELLY CONSULTING
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CHAPTER 4 Completing the Accounting Cycle
Comp. Prob. 1 (Continued)
8.
Fees earned $40,000
Expenses:
Salary expense $1,705
Rent expense 1,600
Retained earnings, May 1, 2016 $12,300
Net income for the month $33,425
KELLY CONSULTING
Retained Earnings Statement
For the Month Ended May 31, 2016
KELLY CONSULTING
Income Statement
For the Month Ended May 31, 2016
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CHAPTER 4 Completing the Accounting Cycle
Comp. Prob. 1 (Continued)
Current assets: Current liabilities:
Cash $44,195 Accounts payable $ 895
Accounts receivable 8,080 Salaries payable 325
KELLY CONSULTING
Balance Sheet
May 31, 2016
Assets Liabilities
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CHAPTER 4 Completing the Accounting Cycle
Comp. Prob. 1 (Concluded)
9. Page 8
Post.
Ref. Debit Credit
2016
May 31 Fees Earned 41 40,000
Income Summary 34 40,000
31 Income Summary 34 6,575
Salary Expense 51 1,705
10.
Debit Credit
Balances Balances
Cash 44,195
Accounts Receivable 8,080
Supplies 715
Prepaid Rent 1,600
JOURNAL
May 31, 2016
Closing Entries
Date
KELLY CONSULTING
Post-Closing Trial Balance
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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, 2016, balance sheet of Picasso
Graphics could be misleading in two ways. First, the account receivable from
CASES & PROJECTS
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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
system. In many cases, the computerization of a manual accounting
system reduces the overall cost of the accounting function.
(b) A computerized accounting system would allow for eliminating the end-of-
period spreadsheet, and thus, financial statements could be
prepared with "a push of a button." However, adjustment data would still
2. Supplies cannot have a credit balance, because the supplies account is an asset
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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 or accumulated depreciation is shown for the building
or equipment accounts.
An adjusting entry should be prepared for depreciation expense on each of
these assets.
The following items should be relabeled for greater clarity:
Billings Due from Others—Accounts Receivable
Amounts Owed to Others—Accounts Payable
Investment in Business—Common Stock and Retained Earnings
Other Expenses—Miscellaneous Expense
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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,

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