1. The end-of-period spreadsheet illustrates the flow of accounting information from the unadjusted
2. a. Current assets are composed of cash and other assets that may reasonably be expected
to be realized in cash or sold or used up, usually within one year or less, through the normal
3. Current liabilities are liabilities that will be due within a short time (usually one year or less) and
5. Closing entries are necessary at the end of an accounting period (1) to transfer the balances in
6. Adjusting entries bring the accounts up to date, while closing entries reduce the revenue, expense,
p
7. The purpose of the post-closing trial balance is to make sure that the ledger is in balance at the
b
eginning of the next period.
8. a. The financial statements are the most important output of the accounting cycle.
10. All the companies listed are general merchandisers whose busiest time of the year is during the
b
CHAPTER 4
COMPLETING THE ACCOUNTING CYCLE
DISCUSSION QUESTIONS
CHAPTER 4 Completing the Accounting Cycle
PE 4–1A
PE 4–1B
PE 4–2A
Francis Matthews, capital, January 1, 2013 $475,000
PE 4–2B
Blake Knudson, capital, January 1, 2013 $918,000
Grab Bag Delivery Services
Statement of Owner’s Equity
For the Year Ended December 31, 2013
PRACTICE EXERCISES
Daffodil Advertising Services
Statement of Owner’s Equity
For the Year Ended December 31, 2013
CHAPTER 4 Completing the Accounting Cycle
PE 4–3A
PE 4–4A
Aug. 31 Fees Earned 880,000
Income Summary 880,000
Closing Entries
PE 4–4B
Apr. 30 Fees Earned 356,500
Income Summary 356,500
PE 4–5A
The following two steps are missing: (1) posting the transactions to the ledger
PE 4–5B
The following two steps are missing: (1) assembling and analyzing adjustment
PE 4–6A
a.
Current assets…………
…
…
Closing Entries
2014
$1,467,000
2013
$1,269,000
CHAPTER 4 Completing the Accounting Cycle
PE 4–6B
a.
2014
2013
CHAPTER 4 Completing the Accounting Cycle
Ex. 4–1
EXERCISES
CHAPTER 4 Completing the Accounting Cycle
Ex. 4–3
Fees earned $175,200
Expenses:
Scott Cutler, capital, June 1, 2013 $ 90,400
Net income $86,500
Current assets: Current liabilities:
Cash $38,000 Accounts payable $24,400
HOLISM CONSULTING
Statement of Owner’s Equity
For the Year Ended May 31, 2014
HOLISM CONSULTING
Balance Sheet
May 31, 2014
Assets Liabilities
HOLISM CONSULTING
Income Statement
For the Year Ended May 31, 2014
CHAPTER 4 Completing the Accounting Cycle
Ex. 4–4
Fees earned $60,000
Expenses:
Raul Hann, capital, May 1, 2013 $ 82,200
Current assets: Current liabilities:
OLYMPIA CONSULTING
Income Statement
For the Year Ended April 30, 2014
OLYMPIA CONSULTING
Statement of Owner’s Equity
For the Year Ended April 30, 2014
OLYMPIA CONSULTING
Balance Sheet
April 30, 2014
Assets Liabilities
CHAPTER 4 Completing the Accounting Cycle
Ex. 4–5
Fees earned $440,000
Expenses:
Ex. 4–6
Service revenue $270,900
Expenses:
Income Statement
For the Year Ended February 28, 2014
SHANGHAI MESSENGER SERVICE
Income Statement
For the Year Ended September 30, 2014
VEGGIE HEALTH SERVICES CO.
CHAPTER 4 Completing the Accounting Cycle
Ex. 4–7
a.
Revenues $39,304
Expenses:
Salaries and employee benefits $15,276
b. The income statements are very similar. The actual statement includes some
Ex. 4–8
Wendy McGee, capital, November 1, 2013 $475,000
WELL SYSTEMS CO.
Statement of Owner’s Equity
For the Year Ended October 31, 2014
FEDEX CORPORATION
Income Statement
(in millions)
For the Year Ended May 31, 2011
CHAPTER 4 Completing the Accounting Cycle
Ex. 4–9
Paige Demar, capital, July 1, 2013 $115,800
Ex. 4–10
WEIRD SPORTS
Statement of Owner’s Equity
For the Year Ended June 30, 2014
CHAPTER 4 Completing the Accounting Cycle
Ex. 4–12
Current assets: Current liabilities:
Cash* $ 37,500 Accounts payable $18,500
LABRADOR WEIGHT LOSS CO.
Balance Sheet
June 30, 2014
Assets Liabilities
CHAPTER 4 Completing the Accounting Cycle
Ex. 4–13
1. The date of the statement should be “August 31, 2014” and not “For the Year
CHAPTER 4 Completing the Accounting Cycle
Ex. 4–13 (Concluded)
Current assets: Current liabilities:
Cash $ 18,500 Accounts payable $31,300
Accounts receivable 41,400 Wages payable 6,500
LABYRINTH SERVICES CO.
Balance Sheet
August 31, 2014
Assets Liabilities
CHAPTER 4 Completing the Accounting Cycle
Ex. 4–14
c. Depreciation Expense—Equipment
Ex. 4–15
The income summary account is used to close the revenue and expense accounts,
Ex. 4–16
a. Income Summary 122,650
Ex. 4–17
July 31 Fees Earned 337,900
Income Summary 337,900
Closing Entries
CHAPTER 4 Completing the Accounting Cycle
Ex. 4–18
a. Accounts Payable
Ex. 4–19
Debit Credit
Balances Balances
Cash 21,350
Ex. 4–20
1. h 6. d
IGLOO TREASURES CO.
Post-Closing Trial Balance
January 31, 2014
CHAPTER 4 Completing the Accounting Cycle
Ex. 4–21
a.
Ex. 4–22
a.
Appendix Ex. 4–23
1. i 6. f
December 31
Year 2 Year 1
Year 1Year 2
CHAPTER 4 Completing the Accounting Cycle
Appendix Ex. 4–24
Account Title Debit Credit Debit Credit
Cash 12 12
Debit Credit
Trial Balance Adjustments Trial Balance
ALERT SECURITY SERVICES CO.
End-of-Period Spreadsheet (Work Sheet)
For the Year Ended October 31, 2014
Unadjusted Adjusted
CHAPTER 4 Completing the Accounting Cycle
Appendix Ex. 4–25
Account Title Debit Credit Debit Credit
Cash 12 12
Accum. Depr.—Equipment 7 7
Accounts Payable 36 36
Wages Payable 1 1
Brenda Schultz, Capital 260 260
Brenda Schultz, Drawing 8 8
Debit Credit
Trial Balance Statement Sheet
ALERT SECURITY SERVICES CO.
End-of-Period Spreadsheet (Work Sheet)
For the Year Ended October 31, 2014
Adjusted BalanceIncome
CHAPTER 4 Completing the Accounting Cycle
Appendix Ex. 4–26
Fees earned $213
Expenses:
Brenda Schultz, capital, November 1, 2013 $260
Statement of Owner’s Equity
For the Year Ended October 31, 2014
ALERT SECURITY SERVICES CO.
Income Statement
For the Year Ended October 31, 2014
ALERT SECURITY SERVICES CO.