SOLUTION
Requirement 1
Date
Accounts and Explanation
Debit
Credit
Dec. 31
Depreciation Expense—Equipment
1,600
Accumulated Depreciation—Equipment
1,600
To adjust depreciation.
Wages Expense
1,000
Wages Payable
1,000
To adjust accrued wages.
Supplies Expense
Office Supplies
To adjust office supplies.
Insurance Expense
Prepaid Insurance
To adjust insurance.
Unearned Revenue
4,400
Service Revenue
4,400
Accounts Receivable
Service Revenue
Requirement 2
Date
Accounts and Explanation
Debit
Credit
Jan. 1
Wages Payable
1,000
Wages Expense
1,000
To reverse accrued wages.
Service Revenue
Accounts Receivable
To reverse accrued revenue.
P4A-39B, cont.
Requirement 3
Date
Accounts and Explanation
Debit
Credit
Jan. 4
Wages Expense
1,200
Cash
1,200
To pay wages.
Cash
1,500
Service Revenue
1,500
Receipt of cash for revenue.
Continuing Problem
This problem continues the Daniels Consulting situation from Problem P3-45 of Chapter 3.
P4-40 Completing the accounting cycle from adjusted trial balance to post-closing trial balance
with an optional worksheet
Start from the posted T-accounts and the adjusted trial balance that Daniels Consulting prepared for the
company at December 31.
Requirements
1. Complete the worksheet at December 31. (optional)
2. Prepare an income statement for the month ended December 31.
P4-40, cont.
Requirement 2
DANIELS CONSULTING
Income Statement
Month Ended December 31, 2016
Revenues:
Service Revenue
$ 6,700
Expenses:
2,000
Total expenses
Net Income
$ 3,255
Requirement 3
DANIELS CONSULTING
Statement of Retained Earnings
Month Ended December 31, 2016
Retained Earnings, December 1, 2016
$ 0
Net income for the month
3,255
3,255
Dividends
Retained Earnings, December 31, 2016
$ 2,255
P4-40, cont.
Requirement 4
DANIELS CONSULTING
Balance Sheet
December 31, 2016
Assets
Current Assets:
Cash
$ 17,950
Accounts Receivable
3,600
Office Supplies
Total Current Assets
$ 21,850
Plant Assets:
Equipment
Less: Accu. Depr.—Equipment
(60)
Furniture
3,000
Less: Accu. Depr.—Furniture
(50)
2,950
Total Plant Assets
6,490
Total Assets
$ 28,340
Liabilities
Current Liabilities:
Accounts Payable
$ 3,600
Unearned Revenue
1,800
Salaries Payable
Total Liabilities
$ 6,085
Common Stock
Retained Earnings
2,255
Total Stockholders’ Equity
P4-40, cont.
Requirement 5
Date
Accounts
Debit
Credit
Dec. 31
Service Revenue
6,700
Income Summary
6,700
To close revenue.
Income Summary
3,445
2,000
To close expenses.
Income Summary
3,255
3,255
To close income summary.
Retained Earnings
1,000
Dividends
1,000
To close dividends.
Cash
Accounts Payable
Dec. 2 20,000
2,000 Dec. 2
Dec. 26 200
3,000 Dec. 4
Dec. 18 2,100
3,600 Dec. 3
800 Dec. 5
Dec. 21 2,400
150 Dec. 12
3,600 Balance
Dec. 28 400
200 Dec. 26
1,000 Dec. 30
Balance 17,950
Dec. 5 800
500 Adj.
P4-40, cont.
Requirement 5, cont.
Clo. 1,000
3,255 Clo.
Dec. 30 1,000
Bal. 1,000
1,000 Clo.
6,700 Balance
0 Bal.
Dec. 2 2,000
2,000 Clo.
150 Clo.
Common Stock
20,000 Dec. 2
20,000 Balance
Furniture
Income Summary
Dec. 4 3,000
Clos. 3,445
6,700 Clo.
Bal. 3,000
Clos. 3,255
3,255 Bal.
0 Bal.
Accumulated Depreciation—Furniture
Service Revenue
50 Adj.
2,500 Dec. 9
50 Bal.
2,100 Dec. 18
1,500 Adj.
P4-40, cont.
Requirement 5, cont.
685 Clo.
60 Clo.
Adj. 50
Bal. 50
50 Clo.
Bal. 0
Supplies Expense
Adj. 500
Bal. 500
500 Clo.
Bal. 0
Requirement 6
DANIELS CONSULTING
Post-Closing Trial Balance
December 31, 2016
Account Title
Balance
Debit
Credit
Cash
$ 17,950
Accounts Receivable
3,600
Office Supplies
Equipment
3,600
Accumulated Depreciation—Equipment
Furniture
3,000
Accumulated Depreciation—Furniture
Accounts Payable
Unearned Revenue
Salaries Payable
Retained Earnings
Total
$ 28,450
Practice Set
P4-41 Completing the accounting cycle from adjusted trial balance to post-closing trial balance
with an optional worksheet
Refer to the Practice Set data provided in Chapters 2 and 3 for Crystal Clear Cleaning.
Requirements
1. Prepare an accounting worksheet. (optional)
2. Prepare an income statement, statement of retained earnings, and classified balance sheet using the
P4-41, cont.
Requirement 2
CRYSTAL CLEAR CLEANING
Income Statement
Month Ended November 30, 2017
Revenues:
Service Revenue
$ 5,300
Expenses:
Salaries Expense
Rent Expense
Supplies Expense
Insurance Expense
Utilities Expense
Depreciation Expense
Advertising Expense
Interest Expense
Total Expenses
Net Income
$ 2,850
CRYSTAL CLEAR CLEANING
Statement of Retained Earnings
Month Ended November 30, 2017
Retained Earnings, November 1, 2017
$ 0
Net income for the month
2,850
Dividends
Retained Earnings November 30, 2017
$ 2,650
P4-41, cont.
Requirement 2, cont.
CRYSTAL CLEAR CLEANING
Balance Sheet
November 30, 2017
Assets
Current Assets:
Cash
$ 138,150
Accounts Receivable
2,600
Cleaning Supplies
Prepaid Rent
1,500
Prepaid Insurance
1,650
Total Current Assets
$ 143,930
Plant Assets:
Equipment
3,200
Truck
7,000
Less: Accumulated Depreciation
(270)
Total Plant Assets
9,930
Total Assets
$ 153,860
Liabilities
Current Liabilities:
Accounts Payable
$ 1,470
Unearned Revenue
Interest Payable
Total Current Liabilities
$ 13,210
Long-term Liabilities:
Notes Payable
Total Liabilities
Common Stock
Retained Earnings
2,650
Total Liabilities and Stockholders’ Equity
$ 153,860
P4-41, cont.
Requirement 3
Date
Accounts and Explanation
Debit
Credit
Nov. 30
Service Revenue
5,300
Income Summary
5,300
To close revenue.
Income Summary
2,450
Salaries Expense
Advertising Expense
Utilities Expense
Supplies Expense
Depreciation Expense
Rent Expense
Insurance Expense
Interest Expense
To close expenses.
Income Summary
2,850
Retained Earnings
2,850
To close Income Summary.
Retained Earnings
Dividends
P4-41, cont.
Requirement 3, cont.
Cash
Accounts Payable
Nov. 1 35,000
2,000 Nov. 2
Nov. 25 1,000
220 Nov. 4
Nov. 10 300
1,800 Nov. 3
2,000 Nov. 5
Nov. 17 1,000
350 Nov. 15
Nov. 20 96,000
1,000 Nov. 25
Nov. 21 900
500 Nov. 29
200 Nov. 30
240 Adj.
Accounts Receivable
Unearned Revenue
Nov. 9 3,800
300 Nov. 10
Adj. 500
12,000 Nov. 16
900 Nov. 21
11,500 Balance
Balance 2,600
Cleaning Supplies
Nov. 4 220
190 Adj.
96,000 Nov. 20
Balance 30
96,000 Balance
Nov. 2 2,000
500 Adj.
42,000 Nov. 1
Balance 1,500
42,000 Balance
Prepaid Insurance
Retained Earnings
Nov. 3 1,800
150 Adj.
Clos. 200
2,850 Clos.
Balance 1,650
2,650 Balance
Equipment
Income Summary
Nov. 5 2,000
Clos. 2,450
5,300 Clos.
Nov. 7 1,200
Clos. 2,850
2,850 Balance
Balance 3,200
Balance 0
200 Clos.
Nov. 1 7,000
Balance 7,000
3,800 Nov. 9
1,000 Nov. 17
P4-41, cont.
Requirement 3, cont.
Nov. 29 500
500 Clos.
Balance 0
Nov. 18 250
250 Clos.
Balance 0
190 Clos.
Balance 0
Salaries Expense
Nov. 15 350
350 Clos.
Balance 0
Depreciation Expense
Adj. 270
270 Clos.
Balance 0
Rent Expense
Adj. 500
500 Clos.
Balance 0
Adj. 150
150 Clos.
Balance 0
Adj. 240
240 Clos.
Balance 0
P4-41, cont.
Requirement 4
CRYSTAL CLEAR CLEANING
Post-Closing Trial Balance
November 30, 2017
Account Title
Balance
Debit
Credit
Cash
$ 138,150
Accounts Receivable
2,600
Cleaning Supplies
30
Prepaid Rent
1,500
Prepaid Insurance
1,650
Equipment
3,200
Truck
7,000
Accumulated Depreciation—Truck
Accounts Payable
1,470
Unearned Revenue
Interest Payable
Notes Payable
Common Stock
Total
$ 154,130
Comprehensive Problem 1 for Chapters 1–4:
Miller Delivery Service completed the following transactions during December 2016:
Requirements
1. Record each transaction in the journal using the following chart of accounts. Explanations are not
required.
2. Post the transactions in the T-accounts.
Adjustment data:
a. Accrued Salaries Expense, $1,000.
b. Depreciation was recorded on the truck using the straight-line method. Assume a useful life of
6. Prepare an adjusted trial balance as of December 31, 2016.
7. Prepare Miller Delivery Service’s income statement and statement of retained earnings for the month
ended December 31, 2016, and the classified balance sheet on that date. On the income statement,
list expenses in decreasing order by amount—that is, the largest expense first, the smallest expense
SOLUTION
Requirement 1
Date
Accounts
Debit
Credit
Dec. 1
Cash
10,000
Truck
20,000
Common Stock
30,000
Prepaid Insurance
1,000
Cash
500
Cash
Service Revenue
2,000
15
Accounts Receivable
Service Revenue
2,500
18
Salaries Expense
Cash
1,000
20
Cash
15,000
Service Revenue
15,000
22
Cash
800
Unearned Revenue
800
25
Cash
2,500
Accounts Payable
300
28
Accounts Receivable
Service Revenue
700
29
Rent Expense