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P4-37B, cont.
Requirement 2
WALSH 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
$ 6,710
$ 6,710
$ 6,710
Accounts Receivable
12,500
12,500
12,500
P4-37B, cont.
Requirement 3
Date
Accounts and Explanation
Debit
Credit
Dec. 31
Unearned Revenue
3,600
Service Revenue
3,600
To adjust revenue earned.
P4-37B, cont.
Requirement 4
WALSH ANVILS
Adjusted Trial Balance
December 31, 2016
Account Title
Balance
Debit
Credit
Cash
$ 6,710
Accounts Receivable
12,500
Prepaid Rent
2,900
P4-37B, cont.
Requirement 5
WALSH ANVILS
Income Statement
Year Ended December 31, 2016
Revenues:
Service Revenue
$ 24,100
WALSH ANVILS
Statement of Retained Earnings
Year Ended December 31, 2016
P4-37B, cont.
Requirement 5, cont.
WALSH ANVILS
Balance Sheet
December 31, 2016
Assets
Current Assets:
Cash
$ 6,710
Accounts Receivable
12,500
Prepaid Rent
2,900
Office Supplies
900
P4-37B, cont.
Requirement 6
Date
Accounts and Explanation
Debit
Credit
Dec. 31
Service Revenue
24,100
Income Summary
24,100
To close revenue.
Requirement 7
WALSH ANVILS
Post-Closing Trial Balance
December 31, 2016
Account Title
Balance
Debit
Credit
Cash
$ 6,710
Accounts Receivable
12,500
P4-37B, cont.
Requirement 8
Current ratio = Total current assets / Total current liabilities
= ($6,710 + $12,500 + $2,900 + $900) / ($6,700 + $280 + $3,000)
= $23,010 / $9,980 = 2.31
P4-38B Completing the accounting cycle from journal entries to post-closing trial balance with an
optional worksheet
Learning Objectives 1, 2, 3, 4, 5
6. Ending Retained Earnings $4,120
On December 1, Curt Walton began an auto repair shop, Walton’s Quality Automotive. The following
transactions occurred during December:
The business uses the following accounts: Cash; Accounts Receivable; Office Supplies; Prepaid
Insurance; Equipment; Accumulated Depreciation—Equipment; Land; Accounts Payable; Utilities
Payable; Interest Payable; Unearned Revenue; Notes Payable; Common Stock; Retained Earnings;
Dividends; Income Summary; Service Revenue; Salaries Expense; Rent Expense; Utilities Expense;
Advertising Expense; Supplies Expense; Insurance Expense; Interest Expense; and Depreciation
Expense—Equipment.
Requirements
1. Prepare the journal entries, and post to the T-accounts.
2. Prepare an unadjusted trial balance.
3. Complete the worksheet for the month ended December 31, 2016. (optional)
4. Prepare the adjusting entries, and post to the T-accounts.
5. Prepare an adjusted trial balance.
6. Prepare the income statement, the statement of retained earnings, and the classified balance sheet in
report form.
7. Prepare the closing entries, and post to the T-accounts.
8. Prepare a post-closing trial balance.
SOLUTION
Requirement 1
Date
Accounts
Debit
Credit
Dec. 1
Cash
55,000
Common Stock
55,000
1
Equipment
9,000
Cash
9,000
P4-38B, cont.
Requirements 1, 4, and 7
Cash
Dividends
Accounts Receivable
Service Revenue
Dec. 31
2,600
16,600
Dec. 31
Clos.
16,600
Bal.
2,600
0
Bal.
Office Supplies
Salaries Expense
Dec. 10
2,000
Dec. 31
3,800
1,000
Adj.
3,800
Clos.
Bal.
1,000
Bal.
0
P4-38B, cont.
Requirements 1, 4, and 7, cont.
Land
Supplies Expense
Dec. 9
16,000
Adj.
1,000
1,000
Clos.
Bal.
16,000
Bal.
0
Utilities Payable
Interest Expense
180
Dec. 28
Adj.
50
50
Clos.
180
Bal.
Bal.
0
Notes Payable
12,000
Dec. 19
12,000
Bal.
P4-38B, cont.
Requirement 2
WALTON’S QUALITY AUTOMOTIVE
Unadjusted Trial Balance
December 31, 2016
Account Title
Balance
Debit
Credit
Cash
$ 44,800
Accounts Receivable
2,600
Office Supplies
2,000
P4-38B, cont.
Requirement 3
WALTON’S QUALITY AUTOMOTIVE
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
$ 44,800
$ 44,800
$ 44,800
Accounts Receivable
2,600
2,600
2,600
Office Supplies
2,000
$ 1,000
a.
1,000
1,000
P4-38B, cont.
Requirement 4
Date
Accounts
Debit
Credit
Dec.31
Supplies Expense
1,000
Office Supplies
1,000
To adjust office supplies used.
P4-38B, cont.
Requirement 5
WALTON’S QUALITY AUTOMOTIVE
Adjusted Trial Balance
December 31, 2016
Account Title
Balance
Debit
Credit
Cash
$ 44,800
Accounts Receivable
2,600
Office Supplies
1,000
Prepaid Insurance
1,200
P4-38B, cont.
Requirement 6
WALTON’S QUALITY AUTOMOTIVE
Income Statement
Month Ended December 31, 2016
Revenues:
Service Revenue
$ 16,600
Expenses:
Salaries Expense
$ 3,800
P4-38B, cont.
Requirement 6, cont.
WALTON’S QUALITY AUTOMOTIVE
Balance Sheet
December 31, 2016
Assets
Current Assets:
Cash
$ 44,800
Accounts Receivable
2,600
P4-38B, cont.
Requirement 7
Date
Accounts
Debit
Credit
Dec.31
Service Revenue
16,600
Income Summary
16,600
To close revenue.
P4-38B, cont.
Requirement 8
WALTON’S QUALITY AUTOMOTIVE
Post-Closing Trial Balance
December 31, 2016
Account Title
Balance
Debit
Credit
Cash
$ 44,800
Accounts Receivable
2,600
Office Supplies
1,000
P4A-39B Preparing adjusting entries and reversing entries
Learning Objective 7
Appendix 4A
The unadjusted trial balance and adjustment data of Mark’s Motors at December 31, 2016, follow:
Adjustment data at December 31, 2016:
a. Depreciation on equipment, $1,600.
b. Accrued Wages Expense, $1,000.
c. Office Supplies on hand, $100.
d. Prepaid Insurance expired during December, $200.
e. Unearned Revenue earned during December, $4,400.
f. Accrued Service Revenue, $800.
2017 transactions:
a. On January 4, Mark’s Motors paid wages of $1,200. Of this, $1,000 related to the accrued wages
recorded on December 31.
b. On January 10, Mark’s Motors received $1,500 for Service Revenue. Of this, $800 related to the
accrued Service Revenue recorded on December 31.
Requirements
1. Journalize adjusting entries.
2. Journalize reversing entries for the appropriate adjusting entries.
3. Refer to the 2017 data. Journalize the cash payment and the cash receipt that
occurred in 2017.
