CHAPTER 4
Completing the Accounting Cycle
ASSIGNMENT CLASSIFICATION TABLE
Learning Objectives
Questions
Brief
Exercises
Do It!
Exercises
A
Problems
*1. Prepare a worksheet.
1, 2, 3, 4, 5
1, 2, 3
1
1, 2, 3, 5, 6
1A, 2A, 3A,
4A, 5A
*2. Prepare closing entries and
a post-closing trial balance.
6, 7, 8, 9, 11
4, 5, 6, 7
2
4, 7, 8, 11, 19
1A, 2A, 3A,
4A, 5A
entries.
*4. Identify the sections of a
classified balance sheet.
14, 15, 16, 17,
18, 19
10, 11
4
3, 9, 14, 15,
16, 17
1A, 2A, 3A,
4A, 5A
*5. Prepare reversing entries.
10, 20, 21
12
18, 19
ASSIGNMENT CHARACTERISTICS TABLE
Problem
Number
Description
Difficulty
Level
Time Allotted
(min.)
1A
Prepare worksheet, financial statements, and adjusting
and closing entries.
Simple
40–50
2A
Complete worksheet; prepare financial statements,
closing entries, and post-closing trial balance.
50–60
3A
Prepare financial statements, closing entries, and post-
closing trial balance.
40–50
4A
entries, and post-closing trial balance.
50–60
Complete all steps in accounting cycle.
6A
Analyze errors and prepare correcting entries and trial
balance.
40–50
Comprehensive Problem: Chapters 2 to 4
WEYGANDT FINANCIAL AND MANAGERIAL ACCOUNTING 2E
CHAPTER 4
COMPLETING THE ACCOUNTING CYCLE
Number
LO
BT
Difficulty
Time (min.)
BE1
1
K
Simple
2–4
BE2
1
AN
Moderate
6–8
BE3
1
C
Simple
3–5
BE4
2
AP
Simple
3–5
DI1
1
C
Simple
4–6
DI2
2
AP
Simple
2–4
DI3
3
AP
Simple
6–8
DI4
4
C
Simple
4–6
EX1
1
AP
Simple
12–15
EX2
1
AP
Simple
10–12
EX3
AP
Simple
12–15
EX4
2
AP
Simple
12–15
EX5
1
AN
Simple
10–12
EX6
1
AN
Moderate
12–15
EX7
2
AP
Simple
EX8
2
AP
Simple
10–12
EX9
4
AP
Simple
12–15
EX11
2
AP
Simple
6–8
EX12
3
AN
Moderate
EX13
3
AN
4–6
EX14
4
AP
Moderate
10–12
EX15
4
C
Simple
5–8
EX16
4
AP
Simple
BE5
2
AP
Simple
4–6
BE6
2
AP
Simple
6–8
BE7
2
C
Simple
2–4
BE8
3
K
Simple
3–5
BE9
3
AN
Moderate
4–6
BE10
4
AP
Simple
4–6
BE11
4
C
Simple
3–5
BE12
5
AN
Moderate
4–6
COMPLETING THE ACCOUNTING CYCLE (Continued)
Number
LO
BT
Difficulty
Time (min.)
EX17
4
AP
Simple
12–15
EX18
5
AN
Moderate
5–7
EX19
2, 3, 5
AN
Moderate
10–12
P1A
1, 2, 4
AN
Simple
40–50
P2A
1, 2, 4
AP
Moderate
50–60
P3A
1, 2, 4
AP
Moderate
40–50
P4A
1, 2, 4
AN
Moderate
50–60
P5A
AN
70–90
P6A
3
AN
Moderate
40–50
4
AN
Simple
10–12
4
AN
Simple
8–10
4
AN
Simple
8–10
Simple
10–12
4
AN
Moderate
15–20
3
Simple
15–20
Moderate
10–15
4
AP
Moderate
12–16
AP
Moderate
10–15
BLOOM’ S TAXONOMY TABLE
Correlation Chart between Bloom’s Taxonomy, Learning Objectives and End–of-Chapter Exercises and Problems
Learning Objective
Knowledge
Comprehension
Application
Analysis
Synthesis
Evaluation
*1. Prepare a worksheet.
BE4-1
Q4-1
Q4-2
Q4-3
Q4-4
Q4-5
BE4-3
DI4-1
E4-1
E4-2
E4-3
P4–2A
P4–3A
BE4-2
E4-5
E4-6
P4–1A
P4–4A
P4–5A
*2. Prepare closing entries and a post-
closing trial balance.
Q4-6
Q4–11
Q4-7
Q4-8
Q4-9
BE4-7
BE4-4
BE4-5
BE4-6
DI4-2
E4-4
E4-7
E4-8
E4–11
P4–2A
P4–3A
E4–19
P4–1A
P4–4A
P4–5A
ANSWERS TO QUESTIONS
1. No. A worksheet is not a permanent accounting record. The use of a worksheet is an optional
step in the accounting cycle.
2. The worksheet is merely a device used to make it easier to prepare adjusting entries and the
financial statements.
7. Income Summary is a temporary account that is used in the closing process. The account is
debited for expenses and credited for revenues. The difference, either net income or net loss, is
then closed to the retained earnings account.
8. The post-closing trial balance contains only balance sheet accounts. Its purpose is to prove the
equality of the permanent account balances that are carried forward into the next accounting
period.
Questions Chapter 4 (Continued)
*14. The standard classifications in a balance sheet are:
Assets
Liabilities and Stockholders’ Equity
*15. The operating cycle of a company is the average time that it takes to purchase inventory, sell it on
account, and then collect cash from customers.
*16. Current assets are assets that a company expects to convert to cash or use up in one year. Some
companies use a period longer than one year to classify assets and liabilities as current because they
have an operating cycle longer than one year. Companies usually list current assets in the order
in which they expect to convert them into cash.
*19.. Apple’s current liabilities at September 28, 2013 and September 29, 2012 were $43,658 million
and $38,542 million respectively. Apple’s current liabilities were significantly lower than its current
assets in both years.
*20. After reversing entries have been made, the balances will be Interest Payable, zero balance;
Interest Expense, a credit balance.
*21. (a) Jan. 10 Salaries and Wages Expense …………………………………………… 8,000
Cash …………………………………………………………………….. 8,000
Property, Plant, and Equipment
SOLUTIONS TO BRIEF EXERCISES
BRIEF EXERCISE 4-1
The steps in using a worksheet are performed in the following sequence:
answers are 1, 3, 4, 5, 2.
The solution to BRIEF EXERCISE 4-2 is on page 4-9.
BRIEF EXERCISE 4-3
Income Statement
Balance Sheet
BRIEF EXERCISE 4-4
Dec. 31 Service Revenue ……………………………………… 50,000
Income Summary ……………………………… 50,000
BRIEF EXERCISE 4-2
CLAYTON COMPANY
Worksheet
Trial Balance
Adjustments
Adjusted
Trial Balance
Income
Statement
Balance
Sheet
Account Titles
Dr.
Cr.
Dr.
Cr.
Dr.
Cr.
Dr.
Cr.
Dr.
Cr.
Insurance Expense
(a) 1,800
BRIEF EXERCISE 4-5
Salaries and Wages
Expense
Income Summary
Service Revenue
BRIEF EXERCISE 4-6
Service Revenue
Date
Explanation
Ref.
Debit
Credit
Balance
Closing entry
BRIEF EXERCISE 4-6 (Continued)
Maintenance and Repairs Expense
Date
Explanation
Ref.
Debit
Credit
Balance
BRIEF EXERCISE 4-7
The accounts that will appear in the post-closing trial balance are:
BRIEF EXERCISE 4-8
The proper sequencing of the required steps in the accounting cycle is as
follows:
Balance
2,500
Closing entry
BRIEF EXERCISE 4-9
BRIEF EXERCISE 4-10
HAMIDI COMPANY
Partial Balance Sheet
BRIEF EXERCISE 4-11
*BRIEF EXERCISE 4-12
SOLUTIONS FOR DO IT! REVIEW EXERCISES
DO IT! 4-1
DO IT! 4-2
DO IT! 4-3
DO IT! 4-4
SOLUTIONS TO EXERCISES
EXERCISE 4-1
NANDURI COMPANY
Worksheet
For the Month Ended June 30, 2017
EXERCISE 4-2
DESOUSA COMPANY
(Partial) Worksheet
For the Month Ended April 30, 2017
EXERCISE 4-3
DESOUSA COMPANY
Income Statement
For the Month Ended April 30, 2017
Net income …………………………………………………………….. $ 3,262
DESOUSA COMPANY
Retained Earnings Statement
For the Month Ended April 30, 2017
DESOUSA COMPANY
Balance Sheet
April 30, 2017
EXERCISE 4-3 (Continued) DESOUSA COMPANY
Balance Sheet (Continued)
April 30, 2017
EXERCISE 4-4
(b)
Income Summary
Retained Earnings
(3) 3,262
(3) 3,262
EXERCISE 4-4 (Continued)
(c) DESOUSA COMPANY
Post-Closing Trial Balance
April 30, 2017
EXERCISE 4-5
EXERCISE 4-5 (Continued)
(b)
Income Statement
Balance Sheet
Dr.
Cr.
Dr.
Cr.
EXERCISE 4-6
EXERCISE 4-7
(b) KAY MAGILL COMPANY
Post-Closing Trial Balance
June 30, 2017
EXERCISE 4-8
(a)
General Journal J15
Date
Account Titles
Ref.
Debit
Credit
(b)
Retained Earnings No. 320
Date
Explanation
Ref.
Debit
Credit
Balance
Close dividends
16,000
Close expenses
Income Summary …………………..
70,500
Salaries and Wages Expense …
55,700
EXERCISE 4-8 (Continued)
(c) PLEVIN COMPANY
Post-Closing Trial Balance
July 31, 2017
EXERCISE 4-9
(a) PLEVIN COMPANY
Income Statement
For the Year Ended July 31, 2017
EXERCISE 4-9 (Continued)
PLEVIN COMPANY
Retained Earnings Statement
For the Year Ended July 31, 2017
(b) PLEVIN COMPANY
Balance Sheet
July 31, 2017
EXERCISE 4-10
EXERCISE 4-11
(b)
Income Summary
June 30 5,000
18,100
18,100
EXERCISE 4-12
EXERCISE 4-13
EXERCISE 4-14
(a) MARTELL BOWLING ALLEY
Balance Sheet
December 31, 2017
EXERCISE 4-14 (Continued)
MARTELL BOWLING ALLEY
Balance Sheet (Continued)
December 31, 2017
EXERCISE 4-15
EXERCISE 4-16
D. GYGI COMPANY
Balance Sheet
December 31, 2017
(in thousands)
EXERCISE 4-17
(a) NORSTED COMPANY
Income Statement
For the Year Ended July 31, 2017
NORSTED COMPANY
Retained Earnings Statement
For the Year Ended July 31, 2017
EXERCISE 4-17 (Continued)
(b) NORSTED COMPANY
Balance Sheet
July 31, 2017
*EXERCISE 4-18
*EXERCISE 4-19
*EXERCISE 4-19 (Continued)
(c) & (e)
Interest Expense
Service Revenue
(a) LAMPERT ROOFING
Worksheet
For the Month Ended March 31, 2017
Account Titles
Trial Balance
Adjustments
Adjusted
Trial Balance
Income
Statement
Balance Sheet
Cr.
Dr.
Cr.
Cr.
Totals
Net Income
Totals
PROBLEM 4-1A (Continued)
(b) LAMPERT ROOFING
Income Statement
For the Month Ended March 31, 2017
LAMPERT ROOFING
Retained Earnings Statement
For the Month Ended March 31, 2017
LAMPERT ROOFING
Balance Sheet
March 31, 2017
PROBLEM 4-1A (Continued)
LAMPERT ROOFING
Balance Sheet (Continued)
March 31, 2017
PROBLEM 4-2A
(a) ALSHWER COMPANY
Partial Worksheet
For the Year Ended December 31, 2017
PROBLEM 4-2A (Continued)
(b) ALSHWER COMPANY
Income Statement
For the Year Ended December 31, 2017
ALSHWER COMPANY
Retained Earnings Statement
For the Year Ended December 31, 2017
PROBLEM 4-2A (Continued)
ALSHWER COMPANY
Balance Sheet
December 31, 2017
PROBLEM 4-2A (Continued)
(c)
General Journal J14
Date
Account Titles and Explanation
Ref.
Debit
Credit
(d)
Retained Earnings No. 320
Date
Explanation
Ref.
Debit
Credit
Balance
Jan. 1
Balance
Dec. 31
Closing entry
Closing entry
7,000
Dec. 31
Service Revenue…………………………….
Income Summary …………………..
Income Summary …………………………..
Advertising Expense ………………
Supplies Expense ………………….
Depreciation Expense …………….
Insurance Expense ………………..
Salaries and Wages Expense ….
Interest Expense ……………………
Retained Earnings ………………….
Retained Earnings ………………………….
Dividends ………………………………
PROBLEM 4-2A (Continued)
Income Summary No. 350
Date
Explanation
Ref.
Debit
Credit
Balance
Supplies Expense No. 631
Date
Explanation
Ref.
Debit
Credit
Balance
Date
Explanation
Ref.
Debit
Credit
Balance
Explanation
Ref.
Debit
Credit
Balance
PROBLEM 4-2A (Continued)
Salaries and Wages Expense No. 726
Date
Explanation
Ref.
Debit
Credit
Balance
(e) ALSHWER COMPANY
Post-Closing Trial Balance
December 31, 2017
Date
Explanation
Ref.
Credit
PROBLEM 4-3A
(a) FLEMING COMPANY
Income Statement
For the Year Ended December 31, 2017
FLEMING COMPANY
Balance Sheet
December 31, 2017
PROBLEM 4-3A (Continued)
FLEMING COMPANY
Balance Sheet (Continued)
December 31, 2017
(b)
General Journal
Date
Account Titles and Explanation
Ref.
Debit
Credit
PROBLEM 4-3A (Continued)
(c)
Retained Earnings No. 320
Maintenance and Repairs
(d) FLEMING COMPANY
Post-Closing Trial Balance
December 31, 2017
12/31 11,000
1/1 Bal. 7,500
12/31 22,100
12/31 Bal. 18,600
Dividends No. 332
12/31 Bal. 11,000
12/31 11,000
Income Summary No. 350
12/31 37,900
12/31 60,000
12/31 22,100
60,000
60,000
Service Revenue No. 400
12/31 60,000
12/31 Bal. 60,000
12/31 Bal. 1,600
12/31 1,600
Depreciation Expense No. 711
12/31 Bal. 3,100
12/31 3,100
Insurance Expense No. 722
12/31 Bal. 1,800
12/31 1,800
Expense No. 726
12/31 Bal. 30,000
12/31 30,000
Utilities Expense No. 732
12/31 Bal. 1,400
12/31 1,400
(a) JARMUZ MANAGEMENT SERVICES
Worksheet
For the Year Ended December 31, 2017
Account Titles
Trial Balance
Adjustments
Adjusted
Trial Balance
Income
Statement
Balance Sheet
Totals
Net Income
Totals
124,200
PROBLEM 4-4A (Continued)
(b) JARMUZ MANAGEMENT SERVICES
Balance Sheet
December 31, 2017
PROBLEM 4-4A (Continued)
(c) Dec. 31 Insurance Expense …………………………. 1,200
(d) Dec. 31 Service Revenue …………………………….. 90,700
Rent Revenue ………………………………… 33,500
Income Summary …………………….. 124,200
PROBLEM 4-4A (Continued)
(e) JARMUZ MANAGEMENT SERVICES
Post-Closing Trial Balance
December 31, 2017
PROBLEM 4-5A
(a)
General Journal J1
Date
Account Titles and Explanation
Ref.
Debit
Credit
PROBLEM 4-5A (Continued)
(b) & (c) JARA’S CLEANING SERVICE
Worksheet
For the Month Ended July 31, 2017
Account Titles
Trial Balance
Adjustments
Adjusted
Trial Balance
Income
Statement
Balance Sheet
Dr.
Dr.
Cr.
Cr.
Net Income
Totals
PROBLEM 4-5A (Continued)
Cash No. 101
Date
Explanation
Ref.
Debit
Credit
Balance
Accounts Receivable No. 112
Date
Explanation
Ref.
Debit
Credit
Balance
Supplies No. 126
Date
Explanation
Ref.
Debit
Credit
Balance
Prepaid Insurance No. 130
Date
Explanation
Ref.
Debit
Credit
Balance
Equipment No. 157
Date
Explanation
Ref.
Debit
Credit
Balance
July 1
PROBLEM 4-5A (Continued)
Accumulated Depreciation—Equipment No. 158
Date
Explanation
Ref.
Debit
Credit
Balance
Date
Explanation
Ref.
Debit
Credit
Balance
Date
Explanation
Ref.
Debit
Credit
Balance
Date
Explanation
Ref.
Debit
Credit
Date
Explanation
Ref.
Debit
Credit
PROBLEM 4-5A (Continued)
Service Revenue No. 400
Date
Explanation
Ref.
Debit
Credit
Balance
Gasoline Expense No. 633
Date
Explanation
Ref.
Debit
Credit
Balance
Date
Explanation
Ref.
Debit
Credit
Balance
Insurance Expense No. 722
Date
Explanation
Ref.
Debit
Credit
Balance
Date
Explanation
Ref.
Debit
Credit
Balance
Date
Ref.
Debit
Credit
Balance
PROBLEM 4-5A (Continued)
(d) JARA’S CLEANING SERVICE
Income Statement
For the Month Ended July 31, 2017
JARA’S CLEANING SERVICE
Retained Earnings Statement
For the Month Ended July 31, 2017
JARA’S CLEANING SERVICE
Balance Sheet
July 31, 2017
PROBLEM 4-5A (Continued)
JARA’S CLEANING SERVICE
Balance Sheet (Continued)
July 31, 2017
(e)
General Journal J2
Date
Account Titles and Explanation
Ref.
Debit
Credit
PROBLEM 4-5A (Continued)
(f) General Journal
J3
Date
Account Titles and Explanation
Ref.
Debit
Credit
(g) JARA’S CLEANING SERVICE
Post-Closing Trial Balance
July 31, 2017
(a)
(1) INCORRECT ENTRY
(2) CORRECT ENTRY
(3) CORRECTING ENTRY
Accts. Receivable ……..
Accts. Receivable ……..
Cash ………………………….
Cash …………………………
Cash …………………………
Misc. Expense ……………
Cash …………………………
Accounts Payable …….
Accounts Payable ……..
Supplies …………………….
Equipment …………………
PROBLEM 4-6A (Continued)
(b) UNIVERSAL CABLE
Trial Balance
April 30, 2017
COMPREHENSIVE PROBLEM: CHAPTERS 2 TO 4
(a)
General Journal J1
Date
Account Titles and Explanation
Ref.
Debit
Credit
COMPREHENSIVE PROBLEM (Continued)
(b) & (c) KRISTIN’S MAIDS CLEANING SERVICE
Worksheet
For the Month Ended July 31, 2017
Account Titles
Trial Balance
Adjustments
Adjusted
Trial Balance
Income
Statement
Balance Sheet
Totals
Net Income
Totals
COMPREHENSIVE PROBLEM (Continued)
(a), (e) & (f)
Cash No. 101
Date
Explanation
Ref.
Debit
Credit
Balance
Accounts Receivable No. 112
Date
Explanation
Ref.
Debit
Credit
Balance
Date
Explanation
Ref.
Debit
Credit
Balance
Date
Ref.
Credit
Balance
Date
Explanation
Ref.
Debit
Credit
Balance
COMPREHENSIVE PROBLEM (Continued)
Accumulated Depreciation—Equipment No. 158
Date
Explanation
Ref.
Debit
Credit
Balance
Common Stock No. 311
Date
Explanation
Ref.
Debit
Credit
Balance
Date
Explanation
Ref.
Debit
Credit
Balance
Date
Explanation
Ref.
Debit
Balance
Date
Explanation
Ref.
Debit
COMPREHENSIVE PROBLEM (Continued)
Service Revenue No. 400
Date
Explanation
Ref.
Debit
Credit
Balance
Depreciation Expense No. 711
Date
Explanation
Ref.
Debit
Credit
Balance
Date
Ref.
Debit
Balance
Date
Explanation
Ref.
Debit
Credit
Balance
COMPREHENSIVE PROBLEM (Continued)
(d) KRISTIN’S MAIDS CLEANING SERVICE
Income Statement
For the Month Ended July 31, 2017
KRISTIN’S MAIDS CLEANING SERVICE
Retained Earnings Statement
For the Month Ended July 31, 2017
COMPREHENSIVE PROBLEM (Continued)
KRISTIN’S MAIDS CLEANING SERVICE
Balance Sheet
July 31, 2017
COMPREHENSIVE PROBLEM (Continued)
(e)
General Journal J2
Date
Account Titles and Explanation
Ref.
Debit
Credit
(f)
General Journal J3
Date
Account Titles and Explanation
Ref.
Debit
Credit
COMPREHENSIVE PROBLEM (Continued)
(g) KRISTIN’S MAIDS CLEANING SERVICE
Post-Closing Trial Balance
July 31, 2017
BYP 4-1 FINANCIAL REPORTING PROBLEM
(a) Total current assets were $73,286 million at September 28, 2013, and
$57,653 million at September 29, 2012.
BYP 4-2 COMPARATIVE ANALYSIS PROBLEM
(a)
(in millions)
PepsiCo
Coca-Cola
Total current assets
Total current liabilities
BYP 4-3 COMPARATIVE ANALYSIS PROBLEM
(b) Current assets are cash and other resources that are reasonably ex–
BYP 4-4 REAL-WORLD FOCUS
BYP 4-5 DECISION MAKING ACROSS THE ORGANIZATION
(a) WHITEGLOVES JANITORIAL SERVICE
Balance Sheet
December 31, 2017
BYP 4-5 (Continued)
WHITEGLOVES JANITORIAL SERVICE
Balance Sheet (Continued)
December 31, 2017
BYP 4-6 COMMUNICATION ACTIVITY
MEMO
To: Accounting Instructor
From: Student
Re: Accounting Cycle
BYP 4-7 ETHICS CASE
(a) The stakeholders in this case are:
BYP 4-8 ALL ABOUT YOU
The following is a personal balance sheet using the classified presentation.
Note that the earnings from the part-time job as well as the tuition costs are
not listed since neither of those items is an asset, liability, or equity item.
BYP 4-9 FASB CODIFICATION ACTIVITY
(a) 1. Current assets is used to designate cash and other assets or
(b) Access FASB Codification 210-20–45
IFRS EXERCISES
IFRS 4-1 The statement of financial position required under IFRS and the
IFRS 4-2 IFRS uses the term statement of financial position rather than
balance sheet.
IFRS 4-3
SUNDELL COMPANY
Partial Statement of Financial Position
IFRS 4-4
(a) LESSILA BOWLING ALLEY
Statement of Financial Position
December 31, 2017
IFRS 4-5 INTERNATIONAL COMPARATIVE ANALYSIS PROBLEM
Differences in the format of the statement of financial position (balance
sheet) used by Zetar and Apple include the following
Zetar
Apple
Reporting currency is £ (pounds)
Reporting currency is $ (dollars)