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b.
Dec. 31 232,800
Income Summary 232,800
31 180,480
Insurance Expense 2,160
31 52,320
Retained Earnings 52,320
PROBLEM 5.2B
GARDEN WIZARDS
12/31/Current Year
(1)
GARDEN WIZARDS (continued)
Income Summary
(2)
General Journal
Service Revenue Earned
To close revenue account.
Income Summary
(3)
c.
33,360$
5,160
10,440
For the year ended December 31, Current Year, the company generated net income of
$52,320 on $232,800 sales. Thus, net income as a percentage of sales was approximately
PROBLEM 5.2B
GARDEN WIZARDS (concluded)
GARDEN WIZARDS
December 31, Current Year
After-Closing Trial Balance
Cash
Unexpired insurance
Accounts receivable
d.
a.
56,700$
6,200$
2,000$
Client revenue earned
PROBLEM 5.3B
DEBIT DOCTORS, INC.
Expenses:
DEBIT DOCTORS, INC.
For the Year Ended December 31, Current Year
Income Statement
Revenues:
Insurance expense
DEBIT DOCTORS, INC.
Retained earnings (1/1/Current Year)
Statement of Retained Earnings
For the Year Ended December 31, Current Year
a. (cont'd)
450$
220
1,600
PROBLEM 5.3B
DEBIT DOCTORS, INC. (continued)
Cash
12/31/Current Year
Balance Sheet
Assets
DEBIT DOCTORS, INC.
Accounts receivable
Unexpired insurance
b.
Dec. 31 56,700
Income Summary 56,700
31 88,300
Insurance Expense 6,200
Office Rent Expense 12,000
31 31,600
Income Summary 31,600
Retained Earnings
To transfer net loss to the Retained Earnings
PROBLEM 5.3B
DEBIT DOCTORS, INC.
December 31, Current Year
(1)
(3)
General Journal
DEBIT DOCTORS, INC. (continued)
Client revenue earned
To close revenue account.
Income Summary
(2)
c.
450$
220
1,600
1,800
d.
e.
The primary issue to be addressed in the notes to the financial statements is the company's
For the year ended December 31, Current Year, the company suffered a net loss of $31,600
on $56,700 sales. Thus, net loss as a percentage of sales was approximately 56%. The net
PROBLEM 5.3B
DEBIT DOCTORS, INC. (concluded)
DEBIT DOCTORS, INC.
Cash
After-Closing Trial Balance
December 31, Current Year
Unexpired insurance
Accounts receivable
Prepaid rent
a.
Month Ended Quarter Ended 9 Months Ended
Sept. 30 Sept. 30 Sept. 30
30,000$ 120,000$ 320,000$
b.
c.
Income Statement
PROBLEM 5.4B
HOWARD REALTY
HOWARD REALTY
For the Following Time Periods
Commissions earned
Revenue:
If Howard closed its accounts monthly , the current adjusted balances could be used in
preparing financial statements for the month ended September 30. However, to prepare
The balances in the revenue and expense accounts at September 30 represent the year-to-
date. To determine revenue or expense for the month of September, the balance as of
a.
Dec. 31 25,000
Consulting Services Revenue 25,000
31 1,200
Prepaid Rent 1,200
(6)
(5)
To record December rent expense.
Rent Expense
PROBLEM 5.5B
To record revenue accrued at the end of Dec.
December 31, Current Year
(1)
NEXT JOB, INC.
General Journal
NEXT JOB, INC.
Accounts Receivable
70 Minutes, Strong
a. (continued)
Computations for each of the adjusting journal entries:
1. Accounts receivable increased by the $25,000 of accrued revenue in December.
NEXT JOB, INC. (continued)
PROBLEM 5.5B
a. (cont'd.)
276,500$
115,000
300
Prepaid rent 2,400
Cash
Office supplies
NEXT JOB, INC. (continued)
PROBLEM 5.5B
NEXT JOB, INC.
December 31, Current Year
Adjusted Trial Balance
Accounts receivable
b.
540,000$
40,000$
Retained earnings (1/1/Current Year)
For the Year Ended December 31, Current Year
NEXT JOB, INC.
Statement of Retained Earnings
PROBLEM 5.5B
NEXT JOB, INC. (continued)
Revenues:
NEXT JOB, INC.
For the Year Ended December 31, Year 1
Income Statement
Consulting fees earned
Expenses:
b. (cont'd)
Assets
$ 276,500
115,000
300
$ 4,000
60,000
$ 200,000
141,650
PROBLEM 5.5B
NEXT JOB, INC. (continued)
Accounts receivable
Office supplies
NEXT JOB, INC.
December 31, Current Year
Balance Sheet
Cash
Capital stock
Retained earnings
Stockholders' Equity
Note payable (Due 3/1/Next Year)
Liabilities
Accounts payable
c.
Dec. 31 540,000
Income Summary 540,000
31 435,350
Rent expense 15,900
31 104,650
Retained Earnings 104,650
(2)
To transfer net income earned in Current Yr. to the
Income Summary
Retained Earnings account ($540,000 - $435,350 =
(3)
Income Summary
$104,650 ).
Consulting Services Revenue
To close Agency Fees Earned.
PROBLEM 5.5B
NEXT JOB, INC.
December 31, Current Year
(1)
NEXT JOB, INC. (continued)
General Journal
d.
276,500$
115,000
300
2,400
1,250
e.
2,450$
250
2,200$
Accounts receivable
PROBLEM 5.5B
NEXT JOB, INC. (continued)
Unexpired insurance
NEXT JOB, INC.
December 31, Current Year
After-Closing Trial Balance
Office supplies
Cash
Prepaid rent
Total expense incurred in Jan. through Nov.
Insurance expense incurred in Current Year
Less: Total insurance expense for December.
f.
15,900$
8,400 (at $1,200/mo.)
g.
25,000$
h.
3,200$
NEXT JOB, INC. (concluded)
Rent expense incurred in Current Year
PROBLEM 5.5B
Less: Total rent expense June through December
Accum. depreciation: office equip. (12/31/Current Yr.)
Interest expense incurred in Current Year
