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Problems (Group A)
P4-28A Preparing financial statements including a classified balance sheet in report form,
preparing and posting closing entries, and preparing a post-closing trial balance
Learning Objectives 1, 3, 4
1. Net Loss $(8,700)
The adjusted trial balance of Elmo Real Estate Appraisal at June 30, 2016, follows:
Requirements
1. Prepare the company’s income statement for the year ended June 30, 2016.
2. Prepare the company’s statement of retained earnings for the year ended June 30,
2016.
3. Prepare the company’s classified balance sheet in report form at June 30, 2016.
4. Journalize the closing entries.
5. Open the T-accounts using the balances from the adjusted trial balance, and post the closing entries
to the T-accounts.
6. Prepare the company’s post-closing trial balance at June 30, 2016.
SOLUTION
Requirement 1
ELMO REAL ESTATE APPRAISAL
Income Statement
Year Ended June 30, 2016
Revenues:
Service Revenue
$ 48,400
Expenses:
Requirement 2
ELMO REAL ESTATE APPRAISAL
Statement of Retained Earnings
Year Ended June 30, 2016
Retained Earnings, July 1, 2015
$ 37,000
P4-28A, cont.
Requirement 3
ELMO REAL ESTATE APPRAISAL
Balance Sheet
June 30, 2016
Assets
Current Assets:
Cash
$ 4,900
Accounts Receivable
4,800
Liabilities
Current Liabilities:
Accounts Payable
$ 19,300
Interest Payable
8,300
Salaries Payable
1,700
Unearned Revenue
800
P4-28A, cont.
Requirement 4
Date
Accounts and Explanation
Debit
Credit
Jun. 30
Service Revenue
48,400
Income Summary
48,400
To close revenue.
P4-28A, cont.
Requirement 5
Cash
Dividends
Bal.
4,900
Bal.
27,100
27,100
Clos.
Bal.
4,900
Bal.
0
Prepaid Insurance
Insurance Expense
Bal.
1,900
Bal.
4,000
4,000
Clos.
Bal.
1,900
Bal.
0
Land
Interest Expense
Bal.
12,600
Bal.
8,300
8,300
Clos.
Bal.
0
P4-28A, cont.
Requirement 5, cont.
Accounts Payable
Utilities Expense
19,300
Bal.
Bal.
2,800
2,800
Clos.
19,300
Bal.
Bal.
0
Unearned Revenue
800
Bal.
800
Bal.
Notes Payable
42,000
Bal.
42,000
Bal.
P4-28A, cont.
Requirement 6
ELMO REAL ESTATE APPRAISAL
Post-Closing Trial Balance
June 30, 2016
Account Title
Balance
Debit
Credit
Cash
$ 4,900
Accounts Receivable
4,800
P4-29A Preparing financial statements including a classified balance sheet in report form,
preparing closing entries, and using the current ratio to evaluate a company
Learning Objectives 1, 3, 6
2. Ending Retained Earnings $61,200
The adjusted trial balance of Bertrand Irrigation System at December 31, 2016, follows:
Requirements
1. Prepare the company’s income statement for the year ended December 31, 2016.
2. Prepare the company’s statement of retained earnings for the year ended December 31, 2016.
3. Prepare the company’s classified balance sheet in report form at December 31, 2016.
4. Journalize the closing entries for Bertrand Irrigation System.
5. Compute the company’s current ratio at December 31, 2016. At December 31, 2015, the current
ratio was 2.4. Did the company’s ability to pay current debts improve or deteriorate, or did it remain
the same?
SOLUTION
Requirement 1
BERTRAND IRRIGATION SYSTEM
Income Statement
Year Ended December 31, 2016
Requirement 2
BERTRAND IRRIGATION SYSTEM
Statement of Retained Earnings
Year Ended December 31, 2016
P4-29A, cont.
Requirement 3
BERTRAND IRRIGATION SYSTEM
Balance Sheet
December 31, 2016
Assets
Current Assets:
Cash
$ 43,700
Total Assets
$ 154,400
Liabilities
Current Liabilities:
Accounts Payable
$ 41,600
Interest Payable
1,200
Salaries Payable
3,600
Unearned Revenue
1,600
P4-29A, cont.
Requirement 4
Date
Accounts and Explanation
Debit
Credit
Dec. 31
Service Revenue
74,200
Income Summary
74,200
To close revenue.
Requirement 5
Current ratio = Total current assets / Total current liabilities
P4-30A Preparing a worksheet, financial statements, and closing entries
Learning Objectives 1, 2, 3
2. Total Assets $88,000
The unadjusted trial balance of Frank Investment Advisers at December 31, 2016, follows:
Adjustment data at December 31, 2016:
a. Unearned Revenue earned during the year, $100.
b. Office Supplies on hand, $4,000.
c. Depreciation for the year, $7,000.
d. Accrued Salaries Expense, $2,000.
e. Accrued Service Revenue, $6,000.
Requirements
1. Prepare a worksheet for Frank Investment Advisers at December 31, 2016.
2. Prepare the income statement, the statement of retained earnings, and the classified balance sheet in
account format.
3. Prepare closing entries.
SOLUTION: Requirement 1
FRANK INVESTMENT ADVISERS
Worksheet
December 31, 2016
Account Names
Unadjusted Trial
Balance
Adjustments
Adjusted Trial
Balance
Income Statement
Balance Sheet
Debit
Credit
Debit
Credit
Debit
Credit
Debit
Credit
Debit
Credit
Cash
$ 28,000
$ 28,000
$ 28,000
P4-30A, cont.
Requirement 2
FRANK INVESTMENT ADVISERS
Income Statement
Year Ended December 31, 2016
Revenues:
Service Revenue
$ 101,100
P4-30A, cont.
Requirement 2, cont.
FRANK INVESTMENT ADVISERS
Balance Sheet
December 31, 2016
Assets
Liabilities
Current Assets:
Current Liabilities:
Cash
$ 28,000
Accounts Payable
$ 16,000
P4-30A, cont.
Requirement 3
Date
Accounts and Explanation
Debit
Credit
Dec. 31
Service Revenue
101,100
Income Summary
101,100
To close revenue.
P4-31A Completing the accounting cycle from adjusting entries to post-closing trial balance with
an optional worksheet
Learning Objectives 1, 2, 3, 4, 5, 6
5. Net Income $19,890
The unadjusted trial balance of Williamson Anvils at December 31, 2016, and the data for the
adjustments follow:
Adjustment data:
a. Unearned Revenue still unearned at December 31, $3,300.
b. Prepaid Rent still in force at December 31, $2,400.
c. Office Supplies used, $1,200.
d. Depreciation, $350.
e. Accrued Salaries Expense at December 31, $230.
Requirements
1. Open the T-accounts using the balances in the unadjusted trial balance.
2. Complete the worksheet for the year ended December 31, 2016. (optional)
3. Prepare the adjusting entries, and post to the accounts.
4. Prepare an adjusted trial balance.
5. Prepare the income statement, the statement of retained earnings, and the classified balance sheet in
report form.
6. Prepare the closing entries, and post to the accounts.
7. Prepare a post-closing trial balance.
8. Calculate the current ratio for the company.
SOLUTION
Requirements 1, 3, and 6
Cash
Common Stock
Bal.
16,370
16,000
Bal.
Bal.
16,370
16,000
Bal.
P4-31A, cont.
Requirements 1, 3, and 6, cont.
Accumulated Depreciation—Equip.
Rent Expense
10,000
Bal.
Bal.
0
350
Adj.
Adj.
130
Bal.
130
130
Clos.
10,350
Bal.
Bal.
0
P4-31A, cont.
Requirement 2
WILLIAMSON ANVILS
Worksheet
December 31, 2016
Account Names
Unadjusted Trial Balance
Adjustments
Adjusted Trial Balance
Income Statement
Balance Sheet
Debit
Credit
Debit
Credit
Debit
Credit
Debit
Credit
Debit
Credit
Cash
$ 16,370
$ 16,370
$ 16,370
Accounts
16,500
16,500
16,500
