Professional Documents
Culture Documents
Student: ___________________________________________________________________________
1. After analyzing transactions, the next step would be to post the transactions in the ledger.
True False
2. The most important output of the accounting cycle is the financial statements.
True False
3. The work sheet is not considered a part of the formal accounting records.
True False
4. Cross-referencing is useful in assuring that the debits and credits are in balance.
True False
5. When accounts do not appear on the unadjusted trial balance but are needed to post adjustments, they are
simply added to the account title column.
True False
6. Once the adjusted trial balance is in balance, the flow of accounts will now go into the financial statements.
True False
8. Round tripping is a fraudulent scheme where business A artificially inflates revenue by lending money to
customer B who uses that money to buy products from A.
True False
9. On the income statement, miscellaneous expenses are usually presented as the last item without regard to the
dollar amount.
True False
10. The usual presentation of the statement of owner's equity is (1) Beginning capital, (2) Net income or loss,
(3) Drawing, (4) Owner's contributions, (5) Ending capital.
True False
11. The difference between a classified balance sheet and one that is not classified is that the classified one has
subheadings.
True False
12. Cash and other assets that may reasonably be expected to be realized in cash, sold, or consumed through the
normal operations of a business, usually longer than one year, are called current assets.
True False
15. Liabilities that will be due within one year or less and that are to be paid out of current assets are called
current liabilities.
True False
16. The amount of the net income for a period appears on both the income statement and the balance sheet for
that period.
True False
17. Accrued taxes payable are generally reported on the balance sheet as a current liability.
True False
18. At the end of the fiscal period, prepaid expenses are reported on the income statement as expenses.
True False
20. Capital and Drawing are reported in the owner's equity section of the balance sheet.
True False
21. Deferred expenses that benefit a relatively short period of time are listed on the balance sheet as current
assets.
True False
22. Unearned revenues that will be earned in a relatively short period of time are listed on the balance sheet as
current assets.
True False
23. Accrued expenses are ordinarily listed on the balance sheet as current assets.
True False
24. Accrued revenues are ordinarily listed on the balance sheet as current liabilities.
True False
25. The income statement is prepared from the adjusted trial balance or the income statement columns on the
work sheet.
True False
26. Examples of temporary accounts are supplies and prepaid expenses which are in the ledger for just a short
time before they expire.
True False
29. The balance sheet accounts are referred to as real or permanent accounts.
True False
30. Journalizing and posting the adjustments and closing entries updates the ledger for the new accounting
period.
True False
31. The income summary account is closed to the owner's capital account.
True False
32. The accumulated depreciation account is closed to the income summary account.
True False
34. The trial balance prepared after all the closing entries have been posted is called a pre-closing trial balance.
True False
35. Entries required to close the balances of the temporary accounts at the end of the period are called final
entries.
True False
36. Journalizing and posting closing entries must be completed before financial statements can be prepared.
True False
37. During the closing process, some balance sheet accounts are closed and end the period with a zero balance.
True False
39. The post-closing trial balance will generally have fewer accounts than the trial balance.
True False
40. A post-closing trial balance contains only asset and liability accounts.
True False
41. A post-closing trial balance should be prepared before the financial statements are prepared.
True False
42. Assets, liabilities, and owners capital are real accounts and do not get closed at the end of the period.
True False
43. The income summary account is also known as the clearing account.
True False
44. All income statement accounts will be closed at the end of the period.
True False
46. It is not necessary to post the closing entries to the general ledger.
True False
47. Once an account has been closed for the period, inserting a line in the balance columns zeros out the
account, making it ready for the following period.
True False
48. The last step of the accounting cycle is to prepare a post-closing trial balance.
True False
49. The accounting cycle begins with preparing an unadjusted trial balance.
True False
50. Financial statements should be prepared before the closing entries are journalized and posted.
True False
51. The unadjusted, adjusted, and final trial balances are prepared during the accounting cycle of a period.
True False
52. Any twelve-month accounting period adopted by a company is known as its fiscal year.
True False
53. A fiscal year that ends when business activities have reached their lowest point is called the natural business
year.
True False
54. All companies must use a calendar year as their fiscal year.
True False
55. The majority of businesses end their fiscal year on December 31.
True False
56. The balances of the capital accounts from the Adjusted Trial Balance of the work sheet are extended to the
Statement of Owners Equity columns.
True False
57. The work sheet is a working paper that accountants can use to summarize adjusting entries and the account
balances for the financial statements.
True False
58. In a computerized accounting system, a work sheet may not be necessary because the software program
automatically posts entries to the accounts and prepares financial statements.
True False
59. The trial balance may be listed on the work sheet instead of being prepared separately.
True False
60. The totals of the Adjusted Trial Balance columns on a work sheet will always be the sum of the Trial
Balance column totals and the Adjustments column totals.
True False
62. On the work sheet, the capital and drawing account balances are extended to the Balance Sheet columns.
True False
63. After the account balances have been extended from the Adjusted Trial Balance columns on the work sheet,
the difference between the initial totals of the Balance Sheet debit and credit columns is Net Income or Net
Loss.
True False
64. After Net Income or Loss is entered on the work sheet, the debit column total must equal the credit column
total for the Balance Sheet pair of columns.
True False
65. A net loss is shown on the work sheet in the credit columns of both the Income Statement columns and the
Balance Sheet columns.
True False
66. Net income is shown on the work sheet in the Income Statement debit column and the Balance Sheet credit
column.
True False
67. If the totals of the Income Statement debit and credit columns of a work sheet are $27,000 and $29,000,
respectively, after all account balances have been extended, the amount of the net loss is $2,000.
True False
68. The worksheet and the financial statements both require dollar signs.
True False
69.
The balance in the capital account on the worksheet will equal the amount presented in the balance sheet.
True False
70. Since the adjustments are entered on the work sheet, it is not necessary to record them in the journal or post
them to the ledger.
True False
71. The chart of accounts, the journal, and the ledger are essential parts of the accounting system.
True False
73. Accounts reported on the balance sheet that are carried forward from year to year are known as permanent
accounts.
True False
76. During the end-of-period processing which of the following best describes the logical order of this process
A. Preparation of adjustments, adjusted trial balance, financial statements
B. Preparation of Income Statement, adjusted trial balance, Balance Sheet
C. Preparation of adjusted trial balance, cross-referencing, journalizing
D. Preparation of adjustments, adjusted trial balance, posting
77. What is the major difference between the Unadjusted Trial Balance and the Adjusted Trial Balance?
A. The Adjusted Trial Balance will show the net income (loss) as an additional account.
B. Unlike the Adjusted Trial Balance, the Unadjusted Trial Balance will continue with the end-of-period
processing even if it is not in balance.
C. The Adjusted Trial Balance includes the postings of the adjustments for the period in the balance of the
accounts.
D. The Adjusted Trial Balance will be used to record the adjustments for the period.
78. Once the adjusting entries are posted, the Adjusted Trial Balance is prepared to
A. verify that the debits and credits are in balance.
B. verify that the net income correctly flows into the statement of owners equity from the income statement
C. verify that the net income (loss) is correct for the period.
D. verify the correct flow of accounts into the financial statements.
79. When preparing the statement of owner's equity, the beginning capital balance can always be found
A. in the Income Statement columns of the work sheet
B. in the statement of cash flows
C. in the general ledger
D. in the Balance Sheet columns of the work sheet
83. Which one of the fixed asset accounts listed below will not have a related contra asset account?
A. Office Equipment
B. Land
C. Delivery Equipment
D. Building
89. Use the following information in the adjusted trial balance for Stockton Company to answer the following
questions.
Stockton Company
Adjusted Trial Balance
For the Year ended December 31, 20XX
Cash
Accounts Receivable
Prepaid Expenses
Equipment
Accumulated Depreciation
Accounts Payable
Notes Payable
Bob Steely, Capital
Bob Steely, Withdrawals
Fees Earned
Wages Expense
Rent Expense
Utilities Expense
Depreciation Expense
Miscellaneous Expense
Totals
$ 6,530
2,100
700
13,700
$ 1,100
1,900
4,300
12,940
790
9,250
2,500
1,960
775
250
185
$29,490
$29,490
Stockton Company
Adjusted Trial Balance
For the Year ended December 31, 20XX
Cash
Accounts Receivable
Prepaid Expenses
Equipment
Accumulated Depreciation
Accounts Payable
Notes Payable
Bob Steely, Capital
Bob Steely, Withdrawals
Fees Earned
Wages Expense
Rent Expense
Utilities Expense
Depreciation Expense
Miscellaneous Expense
Totals
A. $12,150
B. $15,730
C. $6,480
D. $21,400
$ 6,530
2,100
700
13,700
$ 1,100
1,900
4,300
12,940
790
9,250
2,500
1,960
775
250
185
$29,490
$29,490
91. Use the following information in the adjusted trial balance for Stockton Company to answer the following
questions.
Stockton Company
Adjusted Trial Balance
For the Year ended December 31, 20XX
Cash
Accounts Receivable
Prepaid Expenses
Equipment
Accumulated Depreciation
Accounts Payable
Notes Payable
Bob Steely, Capital
Bob Steely, Withdrawals
Fees Earned
Wages Expense
Rent Expense
Utilities Expense
Depreciation Expense
Miscellaneous Expense
Totals
$ 6,530
2,100
700
13,700
$ 1,100
1,900
4,300
12,940
790
9,250
2,500
1,960
775
250
185
$29,490
$29,490
A. $24,130
B. $15,830
C. $21,930
D. $23,030
92. Use the following information in the adjusted trial balance for Stockton Company to answer the following
questions.
Stockton Company
Adjusted Trial Balance
For the Year ended December 31, 20XX
Cash
Accounts Receivable
Prepaid Expenses
Equipment
Accumulated Depreciation
Accounts Payable
Notes Payable
Bob Steely, Capital
Bob Steely, Withdrawals
Fees Earned
Wages Expense
Rent Expense
Utilities Expense
Depreciation Expense
Miscellaneous Expense
Totals
$ 6,530
2,100
700
13,700
$ 1,100
1,900
4,300
12,940
790
9,250
2,500
1,960
775
250
185
$29,490
$29,490
A. $23,030
B. $9,330
C. $21,930
D. $8,630
93. Use the following information in the adjusted trial balance for Stockton Company to answer the following
questions.
Stockton Company
Adjusted Trial Balance
For the Year ended December 31, 20XX
Cash
Accounts Receivable
Prepaid Expenses
Equipment
Accumulated Depreciation
Accounts Payable
Notes Payable
Bob Steely, Capital
Bob Steely, Withdrawals
Fees Earned
Wages Expense
Rent Expense
Utilities Expense
Depreciation Expense
Miscellaneous Expense
Totals
$ 6,530
2,100
700
13,700
$ 1,100
1,900
4,300
12,940
790
9,250
2,500
1,960
775
250
185
$29,490
A. $1,900
B. $6,200
C. $4,300
D. $20,240
94. The Balance Sheet should be prepared
A. before the income statement and the statement of owners equity
B. before the income statement and after the statement of owners equity
C. after the income statement and the statement of owners equity
D. after the income statement and before the statement of owners equity
$29,490
95. The Statement of Owners Equity begins with the beginning balance followed by
A. plus Net Income (loss) less withdrawals
B. plus Net Income (loss) plus investments
C. plus investments less withdrawals
D. plus investments plus Net Income (loss) less withdrawals
97. The classified Balance Sheet will subsection the assets section as follows
A. Current Assets and Other Assets
B. Current Assets and Property, Plant, and Equipment
C. Current Assets and Short-Term Assets
D. Other Assets and Property, Plant and Equipment
98. The classified Balance Sheet will divide its Liabilities Section as the following subsections
A. Current Liabilities and Long-Term Liabilities
B. Current Liabilities and Other Liabilities
C. Other Liabilities and Long-Term Liabilities
D. Present Liabilities and Tomorrows Liabilities
105. After posting the second closing entry to the income summary account, the balance will be equal to
A. zero.
B. owners equity.
C. revenues for the period
D. the net income or (loss) for the period.
106. What is the last account that should be listed in the Post Closing Trial Balance?
A. Income Summary
B. Capital account
C. Cash
D. Fees Earned
107. Which of the following account groups are all considered nominal accounts?
A. Cash, Owners Equity, Wages Payable
B. Prepaid Insurance, Property, Plant & Equipment, Fees Earned
C. Capital Account, Dividend Account, Income Summary
D. Rent Revenue, Fees Earned, Miscellaneous Expense
108. There are four closing entries. The first one is to close ____, the second one is to close ____, the third one
is to close ____, and the last one is to close ____.
A. Revenues, expenses, income summary, drawing account
B. Expenses, assets, income summary, capital account
C. Capital account, drawing account, income summary, assets
D. Drawing account, income summary, expenses, revenues
111. Which of the accounts below would be closed by posting a debit to the account?
A. Unearned Revenue
B. Fees Earned
C. Josh Morton, Drawing
D. Miscellaneous Expense
112. Which of the following accounts should be closed to Income Summary at the end of the fiscal year?
A. Supplies Expense
B. Accumulated Depreciation
C. Prepaid Insurance
D. Unearned Rent
113. Which of the following accounts will not be closed to Income Summary at the end of the fiscal year?
A. Salaries Expense
B. Fees Earned
C. Unearned Rent
D. Depreciation Expense
114. Which of the following accounts will be closed to the Capital account at the end of the fiscal year?
A. Rent Expense
B. Fees Earned
C. Income Summary
D. Depreciation Expense
115. The entry to close the appropriate insurance account at the end of the accounting period is
A. debit Income Summary; credit Prepaid Insurance
B. debit Prepaid Insurance; credit Income Summary
C. debit Insurance Expense; credit Income Summary
D. debit Income Summary; credit Insurance Expense
116. Which of the following accounts ordinarily appears in the post-closing trial balance?
A. Fees Earned
B. Supplies Expense
C. Zane White, Drawing
D. Unearned Rent
117. The post-closing trial balance differs from the adjusted trial balance in that it
A. does not take into account closing entries
B. does not take into account adjusting entries
C. does not include balance sheet accounts
D. does not include income statement accounts
118. The following accounts were taken from the Adjusted Trial Balance columns of the work sheet:
Accumulated Depreciation
Fees Earned
Depreciation Expense
Insurance Expense
Prepaid Insurance
Supplies
Supplies Expense
$ 3,200
17,400
1,300
200
4,800
900
3,800
A. $3,200
B. $12,100
C. $17,400
D. $8,900
119. A summary of selected ledger accounts appear below for Albertos Plumbing Services for the current
calendar year end.
Alberto, Capital
12/31
8,500
1/1
12/31
6,500
15,000
Alberto, Drawing
6/30
11/30
3,500
5,000
12/31
8,500
Income Summary
12/31
12/31
18,500
15,000
12/31
33,500
A. $13,000
B. $33,500
C. $15,000
D. $18,500
120. Amir Designs purchased a one-year liability insurance policy on March 1st of this year for $7,200 and
recorded it as a prepaid expense. Which of the following amounts would be recorded for insurance expense
during the adjusting process at the end of Amirs first month of operations on March 31st?
A. $7,200
B. $720
C. $600
D. $6,600
121. The journal entry to close the Fees Earned, $750, and Rent Revenue, $175, accounts on December 31st
during the closing process would be:
A. Dec. 31 Fees Earned
750
Rent Revenue
175
Income Summary
925
B. Dec. 31 Income Summary
925
Fees Earned
750
Rent Revenue
175
C. Dec. 31 Revenues
925
Income Summary
925
D. Dec. 31 Income Summary
925
Revenues
925
Account Title
Cash
Accounts Receivable
Supplies
Equipment
Accumulated Depr-Equip
Accounts Payable
Wages Payable
C. Finley, Capital
C. Finley, Drawing
Fees Earned
Wages Expense
Rent Expense
Depreciation Expense
Totals
Net Income (Loss)
Finley Company
Worksheet
For the Year
Ended December
31, 2014
Adjusted Trial Income Statement
Balance
Debit
Credit
48,000
18,000
6,000
57,000
18,000
25,000
6,000
33,000
3,000
155,000
63,000
27,000
15,000
237,000
237,000
Balance Sheet
Debit
Credit
Debit
48,000
18,000
6,000
57,000
Credit
18,000
25,000
6,000
33,000
3,000
155,000
63,000
27,000
15,000
105,000
50,000
155,000
155,000
132,000
155,000
132,000
82,000
50,000
132,000
Account Title
Cash
Accounts Receivable
Supplies
Equipment
Accumulated Depr-Equip
Accounts Payable
Wages Payable
C. Finley, Capital
C. Finley, Drawing
Fees Earned
Wages Expense
Rent Expense
Depreciation Expense
Totals
Net Income (Loss)
Finley Company
Worksheet
For the Year
Ended December
31, 2014
Adjusted Trial Income Statement
Balance
Debit
Credit
48,000
18,000
6,000
57,000
18,000
25,000
6,000
33,000
3,000
155,000
63,000
27,000
15,000
237,000
237,000
Balance Sheet
Debit
Credit
Debit
48,000
18,000
6,000
57,000
Credit
18,000
25,000
6,000
33,000
3,000
155,000
63,000
27,000
15,000
105,000
50,000
155,000
Based on the preceding trial balance, the entry to close expenses would be:
A. Wages Expense
63,000
Rent Expense
27,000
Depreciation Expense 15,000
Income Summary
105,000
B. Expenses
105,000
Income Summary
105,000
C. Wages Expense
63,000
Rent Expense
27,000
Depreciation Expense 15,000
C. Finley, Drawing
105,000
D. Income Summary
105,000
Wages Expense
63,000
Rent Expense
27,000
Depreciation Expense 15,000
124. Use the following worksheet to answer the following questions.
Finley Company
Worksheet
For the Year
Ended December
31, 2014
Adjusted Trial Income Statement Balance Sheet
Balance
155,000
132,000
155,000
132,000
82,000
50,000
132,000
Account Title
Cash
Accounts Receivable
Supplies
Equipment
Accumulated Depr-Equip
Accounts Payable
Wages Payable
C. Finley, Capital
C. Finley, Drawing
Fees Earned
Wages Expense
Rent Expense
Depreciation Expense
Totals
Net Income (Loss)
Debit
48,000
18,000
6,000
57,000
Credit
Debit
Credit
Debit
48,000
18,000
6,000
57,000
18,000
25,000
6,000
33,000
18,000
25,000
6,000
33,000
3,000
3,000
155,000
63,000
27,000
15,000
237,000
Credit
237,000
155,000
63,000
27,000
15,000
105,000
50,000
155,000
155,000
132,000
155,000
132,000
Credit
Debit
48,000
18,000
6,000
57,000
82,000
50,000
132,000
Based on the preceding trial balance, the entry to close income summary would be:
Account Title
Cash
Accounts Receivable
Supplies
Equipment
Accumulated Depr-Equip
Accounts Payable
Wages Payable
C. Finley, Capital
C. Finley, Drawing
Fees Earned
Wages Expense
Rent Expense
Depreciation Expense
Totals
Net Income (Loss)
Finley Company
Worksheet
For the Year
Ended December
31, 2014
Adjusted Trial Income Statement
Balance
Debit
Credit
48,000
18,000
6,000
57,000
18,000
25,000
6,000
33,000
3,000
155,000
63,000
27,000
15,000
237,000
237,000
Balance Sheet
Debit
Credit
18,000
25,000
6,000
33,000
3,000
155,000
63,000
27,000
15,000
105,000
50,000
155,000
155,000
132,000
155,000
132,000
82,000
50,000
132,000
Based on the preceding trial balance, the entry to close C. Finley, Drawing would be:
Account Title
Cash
Accounts Receivable
Supplies
Equipment
Accumulated Depr-Equip
Accounts Payable
Wages Payable
C. Finley, Capital
C. Finley, Drawing
Fees Earned
Wages Expense
Rent Expense
Depreciation Expense
Totals
Net Income (Loss)
Finley Company
Worksheet
For the Year
Ended December
31, 2014
Adjusted Trial Income Statement
Balance
Debit
Credit
48,000
18,000
6,000
57,000
18,000
25,000
6,000
33,000
3,000
155,000
63,000
27,000
15,000
237,000
237,000
Balance Sheet
Debit
Debit
48,000
18,000
6,000
57,000
Credit
18,000
25,000
6,000
33,000
3,000
155,000
63,000
27,000
15,000
105,000
50,000
155,000
Based on the preceding trial balance, the ending balance in C. Finley, Capital is:
A. $33,000
B. $80,000
C. $30,000
D. $83,000
Credit
155,000
132,000
155,000
132,000
82,000
50,000
132,000
128. The following are steps to the accounting cycle. Of the following, which step should be done first?
A. Closing entries are journalized and posted to the ledger.
B. Transactions are posted to the ledger.
C. Adjusting entries are journalized and posted to the ledger.
D. Financial statements are prepared.
129. The following are steps in the accounting cycle. Of the following, which would be prepared last?
A. An adjusted trial balance is prepared.
B. Transactions are posted to the ledger.
C. An unadjusted trial balance is prepared.
D. Adjusting entries are journalized and posted to the ledger.
130. The accounting cycle requires three trial balances be done. In what order should they be prepared?
A. Post-closing, unadjusted, adjusted
B. Unadjusted, post-closing, adjusted
C. Unadjusted, adjusted, post-closing
D. Post-closing, adjusted, unadjusted
135. Which one of the steps below is not aided by the preparation of the work sheet?
A. preparing the adjusted trial balance
B. posting to the general ledger
C. preparing the financial statements
D. preparing the closing entries
137. When a work sheet is complete, the adjustment columns should have
A. total credits greater than total debits if a net income was earned
B. total debits greater than total credits if a net loss was incurred
C. total debits greater than total credits if a net income was earned
D. total debits equal total credits
138. The difference between the totals of the debit and credit columns of the Adjusted Trial Balance columns on
a work sheet
A. is the amount of net income or loss
B. indicates there is an error on the work sheet
C. is the amount of retained earnings
D. is the difference between revenue and expenses
141. After net income is entered on the work sheet, the Balance Sheet debit and credit columns must
A. be the same amount as the total amount of the Income Statement debit and credit columns
B. equal each other
C. be the same amount as the total amount in the Adjusted Trial Balance debit and credit columns
D. not be equal to each other and need not be the same total amounts as any other pair of columns on the work
sheet
142. Which of the statements below indicates that a company earned a net income for the period?
A. The sum of the credits exceeds the sum of the debits in the Balance Sheet columns on the work sheet.
B. The sum of the credits exceeds the sum of the debits in the Income Statement columns on the work sheet.
C. The sum of the debits exceeds the sum of the credits in the Income Statement columns on the work sheet.
D. Cash inflows exceeded cash outflows.
143. Which of the items below would appear in the Income Statement columns of the work sheet?
A. Equipment
B. Unearned Fees
C. Prepaid Expense
D. Net Loss
144. Which of the accounts below would not appear in the balance sheet columns of the worksheet?
A. Chad Daniels, Drawing
B. Rent Earned
C. Unearned Revenue
D. Chad Daniels, Drawing and Unearned Revenue
145. Which of the accounts below would appear in the Balance Sheet columns of the work sheet?
A. Service Revenue
B. Prepaid Rent
C. Supplies Expense
D. None are correct
146. The work sheet at the end of July has $5,950 in the Balance Sheet credit column for Accumulated
Depreciation. The work sheet at the end of August has $7,600 in the Balance Sheet credit column for
Accumulated Depreciation. What was the amount of the depreciation expense adjustment for the month of
August?
A. amount can not be determined
B. $7,600
C. $5,950
D. $1,650
147. Which of the items below does not appear on the work sheet?
A. adjusting entries
B. the unadjusted trial balance
C. closing entries
D. the drawing account
148. An indication that the work sheet columns are in balance and the work sheet is completed is
A. the word "Total" is written at the bottom of each pair of columns
B. each pair of columns is double underlined
C. each pair of columns has the totals circled
D. the final figures are written in ink
149. After all of the account balances have been extended to the Balance Sheet columns of the work sheet, the
totals of the debit and credit columns are $38,755 and $32,735, respectively. What is the amount of net income
or net loss for the period?
A. $6,020 net income
B. $38,755 net loss
C. $6,020 net loss
D. $32,735 net income
150. After all of the account balances have been extended to the Income Statement columns of the work sheet,
the totals of the debit and credit columns are $77,500 and $83,900, respectively. What is the amount of the net
income or net loss for the period?
A. $6,400 net income
B. $6,400 net loss
C. $83,900 net income
D. $77,500 net loss
151. On September 1, the company pays rent for twelve months in advance and debits an asset account. At
year end, the adjusting entry on the work sheet would
A. increase an expense account
B. decrease a liability account
C. increase an asset account
D. decrease an expense account
152. On March 1, a company collects revenue in advance for the next twelve months and credits a liability
account. The adjusting entry at year end on the work sheet would
A. increase a liability account
B. decrease an asset account
C. decrease a revenue account
D. decrease a liability account
153. Which of the following is not an essential part of the accounting records?
A. The journal
B. The ledger
C. The chart of accounts
D. The work sheet
154. After all of the account balances have been extended to the Balance Sheet columns of the work sheet, the
totals of the debit and credit columns show debits of $37,686 and the credits of $41,101. This indicates that
A. neither net income or loss can be calculated because it is found on the income statement
B. the company has a net loss of $3,415 for the period
C. the company has a net income of $3,415 for the period
D. The amounts are out of balance and need to be corrected
155. The income statement columns in the worksheet show that debits are equal to $55,800 and credits are
$67,520. What does this information mean to the accountant?
A. Net income of $11,720
B. Net loss of $11,720
C. The accounts are out of balance, indicating an error has been made.
D. The accounts have not been updated.
156. Bob Evans owns a business, Beachside Realty, that rents condominiums and furnishings. Below is the
adjusted trial balance at December 31, 2014.
Cash
Accounts receivable
Interest receivable
Prepaid insurance
Notes receivable (long-term)
Equipment
Accumulated depreciation
Accounts payable
Accrued expenses payable
Income taxes payable
Unearned rent fees
Bob Evans, Capital
Bob Evans, Drawing
Rent fees earned
Furniture rental revenue
Interest revenue
Wages expense
Depreciation expense
Utilities expense
Insurance expense
Maintenance expense
Income tax expense
Debit
$ 1,500
2,000
100
1,600
2,800
15,000
Credit
$3,000
2,400
3,920
2,700
500
7,700
2,000
37,000
1,200
100
19,000
1,800
320
700
9,000
2,700
$58,520
$58,520
The entry required to close the revenue accounts at the end of the period includes a:
157. Bob Evans owns a business, Beachside Realty, that rents condominiums and furnishings. Below is the
adjusted trial balance at December 31, 2014.
Cash
Accounts receivable
Interest receivable
Prepaid insurance
Notes receivable (long-term)
Equipment
Accumulated depreciation
Accounts payable
Accrued expenses payable
Income taxes payable
Unearned rent fees
Bob Evans, Capital
Bob Evans, Drawing
Rent fees earned
Furniture rental revenue
Interest revenue
Wages expense
Depreciation expense
Utilities expense
Insurance expense
Maintenance expense
Income tax expense
Debit
$ 1,500
2,000
100
1,600
2,800
15,000
Credit
$3,000
2,400
3,920
2,700
500
7,700
2,000
37,000
1,200
100
19,000
1,800
320
700
9,000
2,700
$58,520
$58,520
The entry required to close the expense accounts at the end of the period includes a:
158. The balances for the accounts listed below appear in the Adjusted Trial balance columns of the
end-of-period spreadsheet (work sheet). Indicate whether each balance should be extended to an Income
Statement column or (b) a Balance Sheet column.
1.
2.
3.
4.
5.
6.
7.
8.
Dobson, Capital
Dobson, Drawing
Depreciation Expense
Accumulated Depreciation
Fees earned
Unearned Fees
Supplies
Supplies Expense
159. The end-of-period spreadsheet (work sheet) for the current year for Jamal Company shows Balance Sheet
columns with a debit total of $630,430 and a credit total of $614,210. This is before the amount for net
income or net loss has been included. In preparing the income statement from work sheet, what is the amount
of net income or net loss?
160. Morgan Olsen owns and operates Crystal Pool Service Company. On January 1, 2014, Morgan Olsen,
Capital had a balance of $252,000. During the year Morgan invested an additional $32,000 and withdrew
$52,400. For the year ended December 31, 2014 Crystal Pool Service Company reported a net income of
$73,200. Prepare a Statement of Owners Equity for the year ended December 31, 2014.
161. The following accounts appear in an adjusted trial balance of Brock Pool Service Company. Indicate
whether each account would be reported in the (a) current assets, (b) property, plant, and equipment, (c) current
liabilities, (d) long-term liabilities, or (e) owners equity section of the December 31, 2010, balance sheet of
Brock Pool Service Company.
1.
2.
3.
4.
5.
6.
7.
8.
163. List and describe the purpose of the four closing entries.
164. After the accounts have been adjusted at January 31, 2014, the end of the fiscal year, the following
balances are taken from the ledger of Taylor Pool Service Company:
$349,000
5,000
124,600
29,000
43,000
7,300
5,700
165. Prior to adjustment at August 31, 2014, Salary Expense has a debit balance of $298,500. Salaries owed
but not paid as of the same date total $7,200.
Present
the
entries to
record
the
followin
g:
(1)
Accrued salaries as of August 31.
(2)
Closing of Salary Expense as of August 31.
166. The following are all the steps in the accounting cycle. List them in the order in which they should be
done.
- Closing entries are journalized and posted to the ledger.
- An unadjusted trial balance is prepared.
- An optional end-of-period spreadsheet (work sheet) is prepared.
- A post-closing trial balance is prepared.
- Adjusting entries are journalized and posted to the ledger.
- Transactions are analyzed and recorded in the journal.
- Adjustment data are assembled and analyzed.
- Financial statements are prepared.
- An adjusted trial balance is prepared.
- Transactions are posted to the ledger.
167. If working papers are not considered part of the formal accounting records, then why are they used?
168. Explain how net income or loss is determined by using the work sheet.
169. You evaluate loan requests as part of your job at Beach Front National Bank. One loan request you
received is from Surfer Dude Supplies, a small proprietorship. Tracy Roberts, the owner, is requesting $75,000
and brings you a trial balance (or Statement of Accounts) for his first year of operations ended December 31,
2010.
REQUIRED: While you are willing to work with Tracy, how would you explain to him that a complete set of
financial statements from his accountant would be more useful for evaluating the loan request?
170. You have just accepted your first job out of college, which requires you to evaluate loan requests at Beach
Front National Bank. The first loan request you receive is from Surfer Dude Enterprises, a small
proprietorship. Marty Monroe, the owner, is requesting $75,000 and brings you the following trial balance (or
Statement of Accounts) for his first year of operations ended December 31, 2010.
What three accounts do you think should be relabeled for greater clarity?
2,050
15,070
7,470
26,370
8,090
2,850
23,500
73,650
30,050
7,330
2,400
700
470
100,000
100,000
171. You have just accepted your first job out of college, which requires you to evaluate loan requests at Beach
Front National Bank. The first loan request you receive is from Surfer Dude Enterprises, a small
proprietorship. Marty Monroe, the owner, is requesting $75,000 and brings you the following trial balance (or
Statement of Accounts) for his first year of operations ended December 31, 2010.
Which of the following accounts do you think might need to be adjusted before an accurate set of financial
statements could be prepared?
Cash
Billings Due from Others
Office Supplies
Trucks
Equipment
Amounts Owed to Others
Investment in Business
Service Revenues
Wages Expense
Rent Expense
Insurance Expense
Utilities Expense
Miscellaneous Expenses
100,000
172. Hakik Enterprises offers rug cleaning services to business clients. Below is the trial balance for Hakik
Enterprises, which was prepared on the end of period spreadsheet (work sheet) for the year ended July 31,
2010.
Hakik Enterprises
End of Period Spreadsheet (Work
Sheet)
For the Year Ended July 31, 2010
Cash
Prepaid Insurance
Fees Receivable
Supplies
Equipment
Accum. Depreciation
Unearned Revenue
Accounts Payable
Wages Payable
Ramon Hakik, Capital
Ramon Hakik, Drawings
Service Revenue
Advertising Expense
Wage Expense
Insurance Expense
Supplies Expense
Depreciation Expense
Totals
Debit
Credit
84
4
80
28
20
228
228
REQUIRED: Enter the adjustment data in the work sheet for the transactions shown below and place the balances in the Adjusted Trial Balance
columns.
a) The equipment is estimated to last for 5 years with no salvage value. The asset will be depreciated evenly over its useful life. Record one
months depreciation.
b) Accrued Wages $2.
c) Unused supplies on hand $8.
d) Of the unearned revenue, 75% has been earned.
e) Unexpired insurance remaining at the end of the month, $9.
173. Hakik Enterprises offers rug cleaning services to business clients. Below are the adjustments data for the
year ended July 31, 2010. REQUIRED: Using this information along with the spreadsheet below, record the
adjusting entries in proper general journal form.
Adjustments:
a) The equipment is estimated to last for 5 years with no salvage value. The asset will be depreciated evenly
over its useful life. Please record one months depreciation.
b) Accrued Wages $2.
c) Unused supplies on hand $8.
d) Of the unearned revenue, 75% has been earned.
e) Unexpired insurance remaining at the end of the month, $9.
Hakik Enterprises
End of Period Spreadsheet (Work
Sheet)
For the Year Ended July 31, 2010
Cash
Prepaid Insurance
Fees Receivable
Supplies
Equipment
Accum. Deprec. - Equip
Unearned Revenue
Accounts Payable
Wages Payable
Ramon Hakik, Capital
Ramon Hakik, Drawings
Service Revenue
Advertising Expense
Wage Expense
Insurance Expense
Supplies Expense
Depreciation Expense
Totals
228
228
Credit
Debit
Credit
174. Bob Evans owns a business, Beachside Realty, that rents condominiums and furnishings. Below is the
adjusted trial balance at December 31, 2010.
Cash
Accounts receivable
Interest receivable
Prepaid insurance
Notes receivable (long-term)
Equipment
Accumulated depreciation
Accounts payable
Accrued expenses payable
Income taxes payable
Unearned rent fees
Bob Evans, Capital
Bob Evans, Drawing
Rent fees earned
Furniture rental revenue
Interest revenue
Wages expense
Depreciation expense
Utilities expense
Insurance expense
Maintenance expense
Income tax expense
Total
Debit
$ 1,500
2,000
100
1,600
2,800
15,000
Credit
$3,000
2,400
3,920
2,700
500
7,700
2,000
37,000
1,200
100
19,000
1,800
320
700
9,000
2,700
$ 58,520
Prepare the entry required to close the revenue accounts at the end of the period.
$ 58,520
175. Bob Evans owns a business, Beachside Realty, that rents condominiums and furnishings. Below is the
adjusted trial balance at December 31, 2010.
Cash
Accounts receivable
Interest receivable
Prepaid insurance
Notes receivable (long-term)
Equipment
Accumulated depreciation
Accounts payable
Accrued expenses payable
Income taxes payable
Unearned rent fees
Bob Evans, Capital
Bob Evans, Drawing
Rent fees earned
Furniture rental revenue
Interest revenue
Wages expense
Depreciation expense
Utilities expense
Insurance expense
Maintenance expense
Income tax expense
Debit
$ 1,500
2,000
100
1,600
2,800
15,000
Credit
$3,000
2,400
3,920
2,700
500
7,700
2,000
37,000
1,200
100
19,000
1,800
320
700
9,000
2,700
$ 58,520
Prepare the entry required to close the expense accounts at the end of the period.
$ 58,520
176. Bob Evans owns a business, Beachside Realty, that rents condominiums and furnishings. Below is the
adjusted trial balance at December 31, 2010.
Cash
Accounts receivable
Interest receivable
Prepaid insurance
Notes receivable (long-term)
Equipment
Accumulated depreciation
Accounts payable
Accrued expenses payable
Income taxes payable
Unearned rent fees
Bob Evans, Capital
Bob Evans, Drawing
Rent fees earned
Furniture rental revenue
Interest revenue
Wages expense
Depreciation expense
Utilities expense
Insurance expense
Maintenance expense
Income tax expense
Debit
$ 1,500
2,000
100
1,600
2,800
15,000
Credit
$3,000
2,400
3,920
2,700
500
7,700
2,000
37,000
1,200
100
19,000
1,800
320
700
9,000
2,700
$ 58,520
$ 58,520
Prepare the closing entry required to transfer the income or loss at the end of the period.
177. Bob Evans owns a business, Beachside Realty, that rents condominiums and furnishings. Below is the
adjusted trial balance at December 31, 2010.
Cash
Accounts receivable
Interest receivable
Prepaid insurance
Notes receivable (long-term)
Equipment
Accumulated depreciation
Accounts payable
Accrued expenses payable
Income taxes payable
Unearned rent fees
Bob Evans, Capital
Bob Evans, Drawing
Rent fees earned
Furniture rental revenue
Interest revenue
Wages expense
Depreciation expense
Utilities expense
Insurance expense
Maintenance expense
Income tax expense
Debit
$ 1,500
2,000
100
1,600
2,800
15,000
Credit
$3,000
2,400
3,920
2,700
500
7,700
2,000
41,000
1,200
100
19,000
1,800
320
700
9,000
2,700
$ 58,520
Prepare the entry required to close the Drawing account at the end of the period.
$ 58,520
178. Each of the following transactions for Morrison Company requires an adjusting entry, which if omitted,
will overstate or understate assets, liabilities, owners equity, revenues, expenses, or net income. Indicate the
amount and direction of the misstatement that would result if the end of period adjusting entry suggested by the
transaction was omitted. Place your results in the table following the transactions and use (+) for overstate, (-)
for understate, and (NE) for no effect.
1. Morrison purchased supplies on December 1 for $900. On December 31, $350 of supplies were on hand.
2. Prepaid insurance had a debit balance of $5,400 on December 1, which represented a prepayment for 2 years
of insurance.
3. The unearned rent revenue account has a credit balance of $390 on December 1, which represents 3 months
rent.
Transaction
1.
2.
3.
Assets
Liabilities
Owners Equity
Revenues
Expenses
Net Income
179. The end-of-period spreadsheet (work sheet) for the current year for Jamal Company shows Balance Sheet
columns with a debit total of $614,210 and a credit total of $630,430. This is before the amount for net
income or net loss has been included. In preparing the income statement from work sheet, what is the amount
of net income or net loss?
180. Identify which of the following accounts should be closed with a debit or a credit to Income Summary at
the end of the fiscal year. If it is not closed to Income Summary, mark as n/a.
1. Utilities Payable
2. Utilities Expense
3. Supplies
4. Supplies Expense
5. Fees Earned
6. Unearned Fees
7. Accounts Receivable
8. Jason Hill, Drawing
9. Jason Hill, Capital
10. Accumulated Depreciation - Equipment
11. Depreciation Expense - Equipment
12. Equipment
13. Prepaid Insurance
14. Insurance Expense
181. The balances for the accounts listed below appeared in the Adjusted Trial Balance columns of the work
sheet. Indicate whether each balance should be extended to (a) the Income Statement columns or (b) the
Balance Sheet columns.
(1)
(2)
(3)
(4)
(5)
(6)
Salaries Payable
Fees Earned
Accounts Payable
Felipe Ramos, Capital
Supplies Expense
Unearned Rent
(7)
(8)
(9)
(10)
(11)
(12)
182. Indicate whether each of the following would be reported in the financial statements as a(n) (a) current
asset, (b) current liability, (c) revenue, or (d) expense:
(1)
(2)
(3)
(4)
Supplies
Unearned Fees
Prepaid Advertising
Advertising Expense
(5)
(6)
(7)
(8)
Supplies Expense
Prepaid Insurance
Accounts Payable
Fees Earned
183. The following accounts were taken from the Adjusted Trial Balance columns of the work sheet for April
30, 2010 for Finnegan Co.:
Accumulated Depreciation
Fees Earned
Depreciation Expense
Rent Expense
Prepaid Insurance
Supplies
Supplies Expense
$ 32,000
78,000
7,250
34,000
6,000
400
1,800
184. The following revenue and expense account balances were taken from the Income Statement columns of
the work sheet for Fraser Services Co. for December 31, 2010:
Depreciation Expense
Insurance Expense
Miscellaneous Expense
Rent Expense
Service Revenue
Supplies Expense
Utilities Expense
Wages Expense
$ 4,950
2,900
1,200
24,000
92,500
3,150
5,000
63,750
185. The following data were taken from the Balance Sheet columns of the work sheet for April 30, 2010 for
Mackenzie Company:
Accumulated Depreciation-Trucks
Prepaid Rent
Supplies
Unearned Fees
Trucks
Cash
Mackenzie, Capital
$42,400
6,800
850
7,310
49,300
3,400
?
186. Indicate whether each of the following would be reported in the section of financial statements identified
as (a) current asset, (b) property, plant, and equipment, (c) current liability, (d) revenue, or (e) expense:
(1)
(2)
(3)
(4)
(5)
(6)
(7)
(8)
(9)
Automobile
Accumulated depreciation
Rent expense
Fees earned
Salaries payable
Prepaid rent
Store supplies
Advertising expense
Unearned rent
$ 7,170
7,500
2,590
800
24,000
$ 42,060
Liabilities
Current liabilities:
Accounts receivable
Accum. depr-building
Accum. depr-equipment
Net income
$ 10,000
12,525
7,340
11,500
Total liabilities
$ 41,365
Owner's Equity
Wages payable
Brock Morton, Capital
Total owner's equity
$43,700
29,250
1,500
88,645
$ 90,145
72,950
$131,510
(a) List the errors in the balance sheet above and (b) prepare a corrected balance sheet.
$131,510
188. The following is the adjusted trial balance for Nadia Company.
Nadia Company
Adjusted Trial Balance
December 31, 2014
Cash
Accounts Receivable
Prepaid Expenses
Equipment
Accumulated Depreciation
Accounts Payable
Notes Payable - Due on June 30, 2011
Nadia Porter, Capital
Nadia Porter, Drawing
Fees Earned
Wages Expense
Rent Expense
Utilities Expense
Depreciation Expense
Miscellaneous Expense
Totals
5,130
3,300
420
12,400
2,200
700
3,070
13,000
700
10,930
2,450
1,900
1,475
1,150
975
29,900
29,900
Prepare an Income Statement, Balance Sheet, and Statement of Owners Equity. Assume that the capital account started with a beginning balance of
$10,000.
189. Prepare an income statement and a statement of owners equity, for the month ended August 31, 2014,
from the following T-Accounts of Marley Company.
Prepaid
Insurance
Accou
nts
Receiv
able
1,100
200
Unearned
Revenues
5,400
800
Wages
Payable
1,400
400
480
Marley,
Capital
Marley
,
Drawin
g
6,500
2,800
5,780
Income
Summary
Fees Earned
3,200
3,995
5,780
3,200
9,775
3,200
7,500
2,000
275
9,775
Wages
Expense
Rent
Expens
e
2,200
425
Insurance
Expense
990
Utilities
Expense
285
990
95
285
95
2,625
190. Prepare an income statement and a statement of owners equity for the month ended September 30, 2010
from the T-accounts below of Carson Company.
Prepaid
Insurance
Accou
nts
Receiv
able
1,400
1,600
400
120
Carson,
Capital
Carson
,
Drawin
g
6,800
2,500
610
2,400
Unearned
Revenues
Wages
Payable
1,200
435
4,150
3,300
500
350
200
Income
Summary
Fees Earned
2400
4,760
2,400
610
4,150
Wages
Expense
Rent
Expens
e
3,200
225
Insurance
Expense
1,130
Utilities
Expense
80
1,130
125
80
125
3,425
191. Selected ledger accounts appear below for Fulton Surveying Services for 2014.
Fulton,
Capital
12/31
25,000
Income
Summary
12/31
19,000
12/31
48,000
Fulton,
Drawing
1/1
12/31
12/31
20,000
48,000
67,000
3/31
12/22
12,000
13,000
12/31
25,000
192. On the basis of the following data taken from the Adjusted Trial Balance columns of the work sheet for the
year ended March 31 for Boles Athletic Company, journalize the four closing entries.
Cash
Accounts Receivable
Supplies
Equipment
Accumulated Depreciation
Accounts Payable
Jason Boles, Capital
Jason Boles, Drawing
Fees Earned
Salary Expense
Rent Expense
Depreciation Expense
Supplies Expense
Miscellaneous Expense
$ 30,000
45,200
5,000
169,900
$ 32,000
12,500
71,600
47,000
510,000
244,500
48,000
25,000
9,500
2,000
$626,100
$626,100
193. After all adjustments have been made, but before the accounts have been closed, the following balances
were taken from the ledger of Ramonas Designs:
Accounts Payable
Accounts Receivable
Accumulated Depreciation
Cash
Depreciation Expense
Equipment
Insurance Expense
Prepaid Insurance
$ 27,600
64,500
73,325
17,150
13,500
165,000
2,510
6,275
Rent Expense
Salary Expense
Salaries Payable
Service Revenue
Supplies
Supplies Expense
Ramona Cross, Capital
Ramona Cross, Drawing
$ 32,700
41,390
8,150
186,000
1,500
2,500
99,950
48,000
194. On the basis of the following information taken from the Adjusted Trial Balance columns of the work
sheet for the month ended September 30th, journalize the closing entries for Perez Roofing Company.
Cash
Accounts Receivable
Office Supplies
Repair Parts
Machinery
Accumulated Depreciation
Accounts Payable
Notes Payable
Sam Perez, Capital
Sam Perez, Drawing
Service Revenue
Wages Expense
Office Supplies Expense
Repair Parts Expense
Depreciation Expense
$22,500.00
3,575.00
2,850.00
3,785.00
17,750.00
3,250.00
1,150.00
6,500.00
2,500.00
1,750.00
47,200.00
4,840.00
1,275.00
925.00
1,350.00
$60,600.00
$60,600.00
195. The following adjusted trial balance is the result of the adjustments made at the end of the month of March
for Erik Martin Company. Utilize these adjusted values to perform the closing entries for Erik Martin Company.
Cash
Accounts Receivable
Office Supplies
Store Supplies
Machinery
Accumulated Depreciation
Accounts Payable
Notes Payable
Erik Martin, Capital
Erik Martin, Drawing
Service Revenue
Wages Expense
Office Supplies Expense
Store Supplies Expense
Depreciation Expense
$24,750.00
5,750.00
3,525.00
4,785.00
9,750.00
2,150.00
3,550.00
7,500.00
19,725.00
6,250.00
36,500.00
6,425.00
1,465.00
5,150.00
1, 575.00
$69,425.00
________
$69,425.00
196. The following adjusted trial balance is the result of the adjustments made at the end of the month of July
for Ladonna Douglas Company. Utilize these adjusted values to perform the closing entries for Ladonna
Douglas Company.
Cash
Accounts Receivable
Office Supplies
Store Supplies
Machinery
Accumulated Depreciation
Accounts Payable
Notes Payable
Ladonna Douglas, Capital
Ladonna Douglas, Drawing
Service Revenue
Wages Expense
Rent Expense
Advertising Expense
Office Supplies Expense
Store Supplies Expense
Depreciation Expense
$34,750.00
9,750.00
2,525.00
4,785.00
10,750.00
2,150.00
14,300.00
11,500.00
53,725.00
13,250.00
41,500.00
37,425.00
3,000.00
2,750.00
1,465.00
2,150.00
575.00
$123,175.00
________
$123,175.00
197. Marcus Enterprises was started by Damien Marcus in 2010. During 2010, Damien Marcus invested
$8,000 in the business. Based on the following worksheet, prepare an income statement, statement of owners
equity, and balance sheet for Marcus Enterprises for the year ended December 31, 2010.
Marcus Enterprises
Worksheet
For the Year Ended December 31, 2010
Adjusted Trial
Balance
Account Title
Cash
Accounts Receivable
Supplies
Equipment
Accumulated Depr-Equip
Accounts Payable
Wages Payable
Damien Marcus, Capital
Damien Marcus, Drawing
Fees Earned
Wages Expense
Rent Expense
Depreciation Expense
Totals
Net Income (Loss)
Debit
26,500
7,000
1,000
18,500
Credit
Debit
Credit
Debit
26,500
7,000
1,000
18,500
5,000
11,000
1,000
8,000
5,000
11,000
1,000
8,000
2,000
2,000
59,500
19,000
7,000
3,500
84,500
Credit
84,500
59,500
19,000
7,000
3,500
29,500
30,000
59,500
59,500
55,000
59,500
55,000
25,000
30,000
55,000
Account Title
Cash
Accounts Receivable
Supplies
Equipment
Accumulated Depr-Equip
Accounts Payable
Wages Payable
Lakendra Thomas, Capital
Lakendra Thomas, Drawing
Fees Earned
Wages Expense
Rent Expense
Depreciation Expense
Totals
Net Income (Loss)
Balance Sheet
Debit
Credit
Debit
26,500
7,000
1,000
18,500
Credit
5,000
11,000
1,000
8,000
2,000
59,500
19,000
7,000
3,500
29,500
30,000
59,500
59,500
55,000
59,500
55,000
25,000
30,000
55,000
199. The following is the adjusted trial balance for Sandeep Company.
Sandeep Company
Adjusted Trial Balance
December 31, 2010
Cash
Accounts Receivable
Prepaid Expenses
Equipment
Accumulated Depreciation
Accounts Payable
Notes Payable
Rena Sandeep, Capital
Rena Sandeep, Drawing
Fees Earned
Wages Expense
Rent Expense
Utilities Expense
Depreciation Expense
Miscellaneous Expense
Totals
8,130
3,300
2,750
10,400
2,200
2,700
1,000
11,200
4,870
36,600
12,450
4,900
3,475
2,150
1,275
53,700
53,700
200. Reconstruct the adjusting and closing entries from the following T-Accounts.
Prepaid
Insurance
Accou
nts
Receiv
able.
1,200
6,000
1,500
7,500
200
1,000
Madison
Cox, Capital
Unearned
Revenues
Madis
on
Cox,
Drawi
ng
7,000
5,280
Wages
Payable
1,350
915
Income
Summary
Fees Earned
2,100
4,655
5,280
2,100
2,100
530
530
435
9,935
0
10,180
8,000
1,500
435
9,935
0
Wages
Expense
Rent
Expens
e
2,600
530
Insurance
Expense
1,145
Utilities
Expense
200
1,145
3,130
180
200
180
0
201. Reconstruct adjusting and closing entries for the month ended September 30, 2010 from the T-accounts
below.
Prepaid
Insurance
Accou
nts
Receiv
able.
1,350
130
1,220
Unearned
Revenues
1,250
275
1,525
Wages
Payable
1,050
235
815
385
385
Mai Lui,
Capital
Mai
Lui,
Drawin
g
7,000
Income
Summary
Fees Earned
2,400
6,090
2,400
580
2,400
5,510
580
4,020
Wages
Expense
Insurance
Expense
1,880
Utilities
Expense
130
1,880
3,985
5,510
Rent
Expens
e
3,600
385
5,000
275
235
95
130
95
0
202.
1)
Dana Bowen
Company is
completing its
first year of
operations on
April 30,
2010. Reconstru
ct the entries for
the year ended
April 30, 2010
from the
T-accounts
below. Record
them as follows:
A - L Journal Entries
M- R Adjusting Journal Entries
2)
Balance and
prepare the
Income
Statement,
Statement of
Owners Equity,
and the Balance
Sheet from the
T-Accounts.
3)
4)
Prepare the
Post-Closing
Trial Balance.
Cash
Accou
nts
Receiv
able
6,500
900
Supplies
1,250
385
Prepaid
Insurance
870
1,940
540
725
870
225
400
420
1,940
2,500
50
350
930
Equipment
2,500
Accum
ulated
Deprec
iation
Accounts
Payable
130
Wages
Payable
Unearned
Revenues
Dana
Bowen
,
Capital
930
590
Fees Earned
Wages
Expens
e
900
1,250
2,500
385
590
Insurance
Expense
725
Dana
Bowen,
Drawing
Income
Summary
6,500
2,500
350
Rent
Expense
Supplies
Expense
420
225
Deprec
iation
Expens
e
400
540
Miscellaneo
us Expense
130
50
203. The balances in the ledger of Good Landscape Services as of January 31, 2014 before adjustments, are as
follows:
Cash
Supplies
Prepaid Insurance
Equipment
Accumulated
Depreciation
$ 6,750
3,900
8,400
41,750
9,950
$29,775
3,425
56,300
24,300
6,000
1,500
Adjustment data are as follows: supplies on hand, January 31, $900; insurance expired for January, $1,100; depreciation on equipment for January,
$1,600; salaries accrued, January 31, $1,650.
(a)
(b)
(c)
Prepare a ten-column work sheet for Good Landscape Services for January, 2014.
On the basis of the work sheet in (a), present the following in good order: (1) income statement, (2) statement of owner's equity
(no additional investments were made during the month), and (3) balance sheet.
On the basis of the work sheet in (a), journalize the closing entries as of January 31, 2014.
Account Title
Debit
Cash
Accounts Receivable
Supplies
Equipment
Accumulated Depr-Equip
Accounts Payable
Wages Payable
Tony Danilo, Capital
Tony Danilo, Drawing
Fees Earned
Wages Expense
Rent Expense
Depreciation Expense
Totals
Net Income (Loss)
14,500
7,500
500
20,500
Income Statement B
a
l
a
n
c
e
Credit
15,000
9,500
3,060
18,240
1,000
34,000
18,000
9,300
8,500
79,800
79,800
S
h
e
e
t
DCredit
e
b
i
t
Debit
Credit
1. After analyzing transactions, the next step would be to post the transactions in the ledger.
FALSE
2. The most important output of the accounting cycle is the financial statements.
TRUE
3. The work sheet is not considered a part of the formal accounting records.
TRUE
4. Cross-referencing is useful in assuring that the debits and credits are in balance.
FALSE
5. When accounts do not appear on the unadjusted trial balance but are needed to post adjustments, they are
simply added to the account title column.
TRUE
6. Once the adjusted trial balance is in balance, the flow of accounts will now go into the financial statements.
TRUE
8. Round tripping is a fraudulent scheme where business A artificially inflates revenue by lending money to
customer B who uses that money to buy products from A.
TRUE
9. On the income statement, miscellaneous expenses are usually presented as the last item without regard to the
dollar amount.
TRUE
10. The usual presentation of the statement of owner's equity is (1) Beginning capital, (2) Net income or loss,
(3) Drawing, (4) Owner's contributions, (5) Ending capital.
FALSE
11. The difference between a classified balance sheet and one that is not classified is that the classified one has
subheadings.
TRUE
12. Cash and other assets that may reasonably be expected to be realized in cash, sold, or consumed through the
normal operations of a business, usually longer than one year, are called current assets.
FALSE
15. Liabilities that will be due within one year or less and that are to be paid out of current assets are called
current liabilities.
TRUE
16. The amount of the net income for a period appears on both the income statement and the balance sheet for
that period.
FALSE
17. Accrued taxes payable are generally reported on the balance sheet as a current liability.
TRUE
18. At the end of the fiscal period, prepaid expenses are reported on the income statement as expenses.
FALSE
20. Capital and Drawing are reported in the owner's equity section of the balance sheet.
FALSE
21. Deferred expenses that benefit a relatively short period of time are listed on the balance sheet as current
assets.
TRUE
22. Unearned revenues that will be earned in a relatively short period of time are listed on the balance sheet as
current assets.
FALSE
23. Accrued expenses are ordinarily listed on the balance sheet as current assets.
FALSE
24. Accrued revenues are ordinarily listed on the balance sheet as current liabilities.
FALSE
25. The income statement is prepared from the adjusted trial balance or the income statement columns on the
work sheet.
TRUE
26. Examples of temporary accounts are supplies and prepaid expenses which are in the ledger for just a short
time before they expire.
FALSE
29. The balance sheet accounts are referred to as real or permanent accounts.
TRUE
30. Journalizing and posting the adjustments and closing entries updates the ledger for the new accounting
period.
TRUE
31. The income summary account is closed to the owner's capital account.
TRUE
32. The accumulated depreciation account is closed to the income summary account.
FALSE
34. The trial balance prepared after all the closing entries have been posted is called a pre-closing trial balance.
FALSE
35. Entries required to close the balances of the temporary accounts at the end of the period are called final
entries.
FALSE
36. Journalizing and posting closing entries must be completed before financial statements can be prepared.
FALSE
37. During the closing process, some balance sheet accounts are closed and end the period with a zero balance.
FALSE
39. The post-closing trial balance will generally have fewer accounts than the trial balance.
TRUE
40. A post-closing trial balance contains only asset and liability accounts.
FALSE
41. A post-closing trial balance should be prepared before the financial statements are prepared.
FALSE
42. Assets, liabilities, and owners capital are real accounts and do not get closed at the end of the period.
TRUE
43. The income summary account is also known as the clearing account.
TRUE
44. All income statement accounts will be closed at the end of the period.
TRUE
46. It is not necessary to post the closing entries to the general ledger.
FALSE
47. Once an account has been closed for the period, inserting a line in the balance columns zeros out the
account, making it ready for the following period.
TRUE
48. The last step of the accounting cycle is to prepare a post-closing trial balance.
TRUE
49. The accounting cycle begins with preparing an unadjusted trial balance.
FALSE
50. Financial statements should be prepared before the closing entries are journalized and posted.
TRUE
51. The unadjusted, adjusted, and final trial balances are prepared during the accounting cycle of a period.
FALSE
52. Any twelve-month accounting period adopted by a company is known as its fiscal year.
TRUE
53. A fiscal year that ends when business activities have reached their lowest point is called the natural business
year.
TRUE
54. All companies must use a calendar year as their fiscal year.
FALSE
55. The majority of businesses end their fiscal year on December 31.
TRUE
56. The balances of the capital accounts from the Adjusted Trial Balance of the work sheet are extended to the
Statement of Owners Equity columns.
FALSE
57. The work sheet is a working paper that accountants can use to summarize adjusting entries and the account
balances for the financial statements.
TRUE
58. In a computerized accounting system, a work sheet may not be necessary because the software program
automatically posts entries to the accounts and prepares financial statements.
TRUE
59. The trial balance may be listed on the work sheet instead of being prepared separately.
TRUE
60. The totals of the Adjusted Trial Balance columns on a work sheet will always be the sum of the Trial
Balance column totals and the Adjustments column totals.
FALSE
62. On the work sheet, the capital and drawing account balances are extended to the Balance Sheet columns.
TRUE
63. After the account balances have been extended from the Adjusted Trial Balance columns on the work sheet,
the difference between the initial totals of the Balance Sheet debit and credit columns is Net Income or Net
Loss.
TRUE
64. After Net Income or Loss is entered on the work sheet, the debit column total must equal the credit column
total for the Balance Sheet pair of columns.
TRUE
65. A net loss is shown on the work sheet in the credit columns of both the Income Statement columns and the
Balance Sheet columns.
FALSE
66. Net income is shown on the work sheet in the Income Statement debit column and the Balance Sheet credit
column.
TRUE
67. If the totals of the Income Statement debit and credit columns of a work sheet are $27,000 and $29,000,
respectively, after all account balances have been extended, the amount of the net loss is $2,000.
FALSE
68. The worksheet and the financial statements both require dollar signs.
FALSE
69.
The balance in the capital account on the worksheet will equal the amount presented in the balance sheet.
FALSE
70. Since the adjustments are entered on the work sheet, it is not necessary to record them in the journal or post
them to the ledger.
FALSE
71. The chart of accounts, the journal, and the ledger are essential parts of the accounting system.
TRUE
73. Accounts reported on the balance sheet that are carried forward from year to year are known as permanent
accounts.
TRUE
76. During the end-of-period processing which of the following best describes the logical order of this process
A. Preparation of adjustments, adjusted trial balance, financial statements
B. Preparation of Income Statement, adjusted trial balance, Balance Sheet
C. Preparation of adjusted trial balance, cross-referencing, journalizing
D. Preparation of adjustments, adjusted trial balance, posting
77. What is the major difference between the Unadjusted Trial Balance and the Adjusted Trial Balance?
A. The Adjusted Trial Balance will show the net income (loss) as an additional account.
B. Unlike the Adjusted Trial Balance, the Unadjusted Trial Balance will continue with the end-of-period
processing even if it is not in balance.
C. The Adjusted Trial Balance includes the postings of the adjustments for the period in the balance of the
accounts.
D. The Adjusted Trial Balance will be used to record the adjustments for the period.
78. Once the adjusting entries are posted, the Adjusted Trial Balance is prepared to
A. verify that the debits and credits are in balance.
B. verify that the net income correctly flows into the statement of owners equity from the income statement
C. verify that the net income (loss) is correct for the period.
D. verify the correct flow of accounts into the financial statements.
79. When preparing the statement of owner's equity, the beginning capital balance can always be found
A. in the Income Statement columns of the work sheet
B. in the statement of cash flows
C. in the general ledger
D. in the Balance Sheet columns of the work sheet
83. Which one of the fixed asset accounts listed below will not have a related contra asset account?
A. Office Equipment
B. Land
C. Delivery Equipment
D. Building
89. Use the following information in the adjusted trial balance for Stockton Company to answer the following
questions.
Stockton Company
Adjusted Trial Balance
For the Year ended December 31, 20XX
Cash
Accounts Receivable
Prepaid Expenses
Equipment
Accumulated Depreciation
Accounts Payable
Notes Payable
Bob Steely, Capital
Bob Steely, Withdrawals
Fees Earned
Wages Expense
Rent Expense
Utilities Expense
Depreciation Expense
Miscellaneous Expense
Totals
$ 6,530
2,100
700
13,700
$ 1,100
1,900
4,300
12,940
790
9,250
2,500
1,960
775
250
185
$29,490
$29,490
Stockton Company
Adjusted Trial Balance
For the Year ended December 31, 20XX
Cash
Accounts Receivable
Prepaid Expenses
Equipment
Accumulated Depreciation
Accounts Payable
Notes Payable
Bob Steely, Capital
Bob Steely, Withdrawals
Fees Earned
Wages Expense
Rent Expense
Utilities Expense
Depreciation Expense
Miscellaneous Expense
Totals
A. $12,150
B. $15,730
C. $6,480
D. $21,400
$ 6,530
2,100
700
13,700
$ 1,100
1,900
4,300
12,940
790
9,250
2,500
1,960
775
250
185
$29,490
$29,490
91. Use the following information in the adjusted trial balance for Stockton Company to answer the following
questions.
Stockton Company
Adjusted Trial Balance
For the Year ended December 31, 20XX
Cash
Accounts Receivable
Prepaid Expenses
Equipment
Accumulated Depreciation
Accounts Payable
Notes Payable
Bob Steely, Capital
Bob Steely, Withdrawals
Fees Earned
Wages Expense
Rent Expense
Utilities Expense
Depreciation Expense
Miscellaneous Expense
Totals
$ 6,530
2,100
700
13,700
$ 1,100
1,900
4,300
12,940
790
9,250
2,500
1,960
775
250
185
$29,490
$29,490
A. $24,130
B. $15,830
C. $21,930
D. $23,030
92. Use the following information in the adjusted trial balance for Stockton Company to answer the following
questions.
Stockton Company
Adjusted Trial Balance
For the Year ended December 31, 20XX
Cash
Accounts Receivable
Prepaid Expenses
Equipment
Accumulated Depreciation
Accounts Payable
Notes Payable
Bob Steely, Capital
Bob Steely, Withdrawals
Fees Earned
Wages Expense
Rent Expense
Utilities Expense
Depreciation Expense
Miscellaneous Expense
Totals
$ 6,530
2,100
700
13,700
$ 1,100
1,900
4,300
12,940
790
9,250
2,500
1,960
775
250
185
$29,490
$29,490
A. $23,030
B. $9,330
C. $21,930
D. $8,630
93. Use the following information in the adjusted trial balance for Stockton Company to answer the following
questions.
Stockton Company
Adjusted Trial Balance
For the Year ended December 31, 20XX
Cash
Accounts Receivable
Prepaid Expenses
Equipment
Accumulated Depreciation
Accounts Payable
Notes Payable
Bob Steely, Capital
Bob Steely, Withdrawals
Fees Earned
Wages Expense
Rent Expense
Utilities Expense
Depreciation Expense
Miscellaneous Expense
Totals
$ 6,530
2,100
700
13,700
$ 1,100
1,900
4,300
12,940
790
9,250
2,500
1,960
775
250
185
$29,490
A. $1,900
B. $6,200
C. $4,300
D. $20,240
94. The Balance Sheet should be prepared
A. before the income statement and the statement of owners equity
B. before the income statement and after the statement of owners equity
C. after the income statement and the statement of owners equity
D. after the income statement and before the statement of owners equity
$29,490
95. The Statement of Owners Equity begins with the beginning balance followed by
A. plus Net Income (loss) less withdrawals
B. plus Net Income (loss) plus investments
C. plus investments less withdrawals
D. plus investments plus Net Income (loss) less withdrawals
97. The classified Balance Sheet will subsection the assets section as follows
A. Current Assets and Other Assets
B. Current Assets and Property, Plant, and Equipment
C. Current Assets and Short-Term Assets
D. Other Assets and Property, Plant and Equipment
98. The classified Balance Sheet will divide its Liabilities Section as the following subsections
A. Current Liabilities and Long-Term Liabilities
B. Current Liabilities and Other Liabilities
C. Other Liabilities and Long-Term Liabilities
D. Present Liabilities and Tomorrows Liabilities
105. After posting the second closing entry to the income summary account, the balance will be equal to
A. zero.
B. owners equity.
C. revenues for the period
D. the net income or (loss) for the period.
106. What is the last account that should be listed in the Post Closing Trial Balance?
A. Income Summary
B. Capital account
C. Cash
D. Fees Earned
107. Which of the following account groups are all considered nominal accounts?
A. Cash, Owners Equity, Wages Payable
B. Prepaid Insurance, Property, Plant & Equipment, Fees Earned
C. Capital Account, Dividend Account, Income Summary
D. Rent Revenue, Fees Earned, Miscellaneous Expense
108. There are four closing entries. The first one is to close ____, the second one is to close ____, the third one
is to close ____, and the last one is to close ____.
A. Revenues, expenses, income summary, drawing account
B. Expenses, assets, income summary, capital account
C. Capital account, drawing account, income summary, assets
D. Drawing account, income summary, expenses, revenues
111. Which of the accounts below would be closed by posting a debit to the account?
A. Unearned Revenue
B. Fees Earned
C. Josh Morton, Drawing
D. Miscellaneous Expense
112. Which of the following accounts should be closed to Income Summary at the end of the fiscal year?
A. Supplies Expense
B. Accumulated Depreciation
C. Prepaid Insurance
D. Unearned Rent
113. Which of the following accounts will not be closed to Income Summary at the end of the fiscal year?
A. Salaries Expense
B. Fees Earned
C. Unearned Rent
D. Depreciation Expense
114. Which of the following accounts will be closed to the Capital account at the end of the fiscal year?
A. Rent Expense
B. Fees Earned
C. Income Summary
D. Depreciation Expense
115. The entry to close the appropriate insurance account at the end of the accounting period is
A. debit Income Summary; credit Prepaid Insurance
B. debit Prepaid Insurance; credit Income Summary
C. debit Insurance Expense; credit Income Summary
D. debit Income Summary; credit Insurance Expense
116. Which of the following accounts ordinarily appears in the post-closing trial balance?
A. Fees Earned
B. Supplies Expense
C. Zane White, Drawing
D. Unearned Rent
117. The post-closing trial balance differs from the adjusted trial balance in that it
A. does not take into account closing entries
B. does not take into account adjusting entries
C. does not include balance sheet accounts
D. does not include income statement accounts
118. The following accounts were taken from the Adjusted Trial Balance columns of the work sheet:
Accumulated Depreciation
Fees Earned
Depreciation Expense
Insurance Expense
Prepaid Insurance
Supplies
Supplies Expense
$ 3,200
17,400
1,300
200
4,800
900
3,800
A. $3,200
B. $12,100
C. $17,400
D. $8,900
119. A summary of selected ledger accounts appear below for Albertos Plumbing Services for the current
calendar year end.
Alberto, Capital
12/31
8,500
1/1
12/31
6,500
15,000
Alberto, Drawing
6/30
11/30
3,500
5,000
12/31
8,500
Income Summary
12/31
12/31
18,500
15,000
12/31
33,500
A. $13,000
B. $33,500
C. $15,000
D. $18,500
120. Amir Designs purchased a one-year liability insurance policy on March 1st of this year for $7,200 and
recorded it as a prepaid expense. Which of the following amounts would be recorded for insurance expense
during the adjusting process at the end of Amirs first month of operations on March 31st?
A. $7,200
B. $720
C. $600
D. $6,600
121. The journal entry to close the Fees Earned, $750, and Rent Revenue, $175, accounts on December 31st
during the closing process would be:
A. Dec. 31 Fees Earned
750
Rent Revenue
175
Income Summary
925
B. Dec. 31 Income Summary
925
Fees Earned
750
Rent Revenue
175
C. Dec. 31 Revenues
925
Income Summary
925
D. Dec. 31 Income Summary
925
Revenues
925
Account Title
Cash
Accounts Receivable
Supplies
Equipment
Accumulated Depr-Equip
Accounts Payable
Wages Payable
C. Finley, Capital
C. Finley, Drawing
Fees Earned
Wages Expense
Rent Expense
Depreciation Expense
Totals
Net Income (Loss)
Finley Company
Worksheet
For the Year
Ended December
31, 2014
Adjusted Trial Income Statement
Balance
Debit
Credit
48,000
18,000
6,000
57,000
18,000
25,000
6,000
33,000
3,000
155,000
63,000
27,000
15,000
237,000
237,000
Balance Sheet
Debit
Credit
Debit
48,000
18,000
6,000
57,000
Credit
18,000
25,000
6,000
33,000
3,000
155,000
63,000
27,000
15,000
105,000
50,000
155,000
155,000
132,000
155,000
132,000
82,000
50,000
132,000
Account Title
Cash
Accounts Receivable
Supplies
Equipment
Accumulated Depr-Equip
Accounts Payable
Wages Payable
C. Finley, Capital
C. Finley, Drawing
Fees Earned
Wages Expense
Rent Expense
Depreciation Expense
Totals
Net Income (Loss)
Finley Company
Worksheet
For the Year
Ended December
31, 2014
Adjusted Trial Income Statement
Balance
Debit
Credit
48,000
18,000
6,000
57,000
18,000
25,000
6,000
33,000
3,000
155,000
63,000
27,000
15,000
237,000
237,000
Balance Sheet
Debit
Credit
Debit
48,000
18,000
6,000
57,000
Credit
18,000
25,000
6,000
33,000
3,000
155,000
63,000
27,000
15,000
105,000
50,000
155,000
Based on the preceding trial balance, the entry to close expenses would be:
A. Wages Expense
63,000
Rent Expense
27,000
Depreciation Expense 15,000
Income Summary
105,000
B. Expenses
105,000
Income Summary
105,000
C. Wages Expense
63,000
Rent Expense
27,000
Depreciation Expense 15,000
C. Finley, Drawing
105,000
D. Income Summary
105,000
Wages Expense
63,000
Rent Expense
27,000
Depreciation Expense 15,000
124. Use the following worksheet to answer the following questions.
Finley Company
Worksheet
For the Year
Ended December
31, 2014
Adjusted Trial Income Statement Balance Sheet
Balance
155,000
132,000
155,000
132,000
82,000
50,000
132,000
Account Title
Cash
Accounts Receivable
Supplies
Equipment
Accumulated Depr-Equip
Accounts Payable
Wages Payable
C. Finley, Capital
C. Finley, Drawing
Fees Earned
Wages Expense
Rent Expense
Depreciation Expense
Totals
Net Income (Loss)
Debit
48,000
18,000
6,000
57,000
Credit
Debit
Credit
Debit
48,000
18,000
6,000
57,000
18,000
25,000
6,000
33,000
18,000
25,000
6,000
33,000
3,000
3,000
155,000
63,000
27,000
15,000
237,000
Credit
237,000
155,000
63,000
27,000
15,000
105,000
50,000
155,000
155,000
132,000
155,000
132,000
Credit
Debit
48,000
18,000
6,000
57,000
82,000
50,000
132,000
Based on the preceding trial balance, the entry to close income summary would be:
Account Title
Cash
Accounts Receivable
Supplies
Equipment
Accumulated Depr-Equip
Accounts Payable
Wages Payable
C. Finley, Capital
C. Finley, Drawing
Fees Earned
Wages Expense
Rent Expense
Depreciation Expense
Totals
Net Income (Loss)
Finley Company
Worksheet
For the Year
Ended December
31, 2014
Adjusted Trial Income Statement
Balance
Debit
Credit
48,000
18,000
6,000
57,000
18,000
25,000
6,000
33,000
3,000
155,000
63,000
27,000
15,000
237,000
237,000
Balance Sheet
Debit
Credit
18,000
25,000
6,000
33,000
3,000
155,000
63,000
27,000
15,000
105,000
50,000
155,000
155,000
132,000
155,000
132,000
82,000
50,000
132,000
Based on the preceding trial balance, the entry to close C. Finley, Drawing would be:
Account Title
Cash
Accounts Receivable
Supplies
Equipment
Accumulated Depr-Equip
Accounts Payable
Wages Payable
C. Finley, Capital
C. Finley, Drawing
Fees Earned
Wages Expense
Rent Expense
Depreciation Expense
Totals
Net Income (Loss)
Finley Company
Worksheet
For the Year
Ended December
31, 2014
Adjusted Trial Income Statement
Balance
Debit
Credit
48,000
18,000
6,000
57,000
18,000
25,000
6,000
33,000
3,000
155,000
63,000
27,000
15,000
237,000
237,000
Balance Sheet
Debit
Debit
48,000
18,000
6,000
57,000
Credit
18,000
25,000
6,000
33,000
3,000
155,000
63,000
27,000
15,000
105,000
50,000
155,000
Based on the preceding trial balance, the ending balance in C. Finley, Capital is:
A. $33,000
B. $80,000
C. $30,000
D. $83,000
Credit
155,000
132,000
155,000
132,000
82,000
50,000
132,000
128. The following are steps to the accounting cycle. Of the following, which step should be done first?
A. Closing entries are journalized and posted to the ledger.
B. Transactions are posted to the ledger.
C. Adjusting entries are journalized and posted to the ledger.
D. Financial statements are prepared.
129. The following are steps in the accounting cycle. Of the following, which would be prepared last?
A. An adjusted trial balance is prepared.
B. Transactions are posted to the ledger.
C. An unadjusted trial balance is prepared.
D. Adjusting entries are journalized and posted to the ledger.
130. The accounting cycle requires three trial balances be done. In what order should they be prepared?
A. Post-closing, unadjusted, adjusted
B. Unadjusted, post-closing, adjusted
C. Unadjusted, adjusted, post-closing
D. Post-closing, adjusted, unadjusted
135. Which one of the steps below is not aided by the preparation of the work sheet?
A. preparing the adjusted trial balance
B. posting to the general ledger
C. preparing the financial statements
D. preparing the closing entries
137. When a work sheet is complete, the adjustment columns should have
A. total credits greater than total debits if a net income was earned
B. total debits greater than total credits if a net loss was incurred
C. total debits greater than total credits if a net income was earned
D. total debits equal total credits
138. The difference between the totals of the debit and credit columns of the Adjusted Trial Balance columns on
a work sheet
A. is the amount of net income or loss
B. indicates there is an error on the work sheet
C. is the amount of retained earnings
D. is the difference between revenue and expenses
141. After net income is entered on the work sheet, the Balance Sheet debit and credit columns must
A. be the same amount as the total amount of the Income Statement debit and credit columns
B. equal each other
C. be the same amount as the total amount in the Adjusted Trial Balance debit and credit columns
D. not be equal to each other and need not be the same total amounts as any other pair of columns on the work
sheet
142. Which of the statements below indicates that a company earned a net income for the period?
A. The sum of the credits exceeds the sum of the debits in the Balance Sheet columns on the work sheet.
B. The sum of the credits exceeds the sum of the debits in the Income Statement columns on the work sheet.
C. The sum of the debits exceeds the sum of the credits in the Income Statement columns on the work sheet.
D. Cash inflows exceeded cash outflows.
143. Which of the items below would appear in the Income Statement columns of the work sheet?
A. Equipment
B. Unearned Fees
C. Prepaid Expense
D. Net Loss
144. Which of the accounts below would not appear in the balance sheet columns of the worksheet?
A. Chad Daniels, Drawing
B. Rent Earned
C. Unearned Revenue
D. Chad Daniels, Drawing and Unearned Revenue
145. Which of the accounts below would appear in the Balance Sheet columns of the work sheet?
A. Service Revenue
B. Prepaid Rent
C. Supplies Expense
D. None are correct
146. The work sheet at the end of July has $5,950 in the Balance Sheet credit column for Accumulated
Depreciation. The work sheet at the end of August has $7,600 in the Balance Sheet credit column for
Accumulated Depreciation. What was the amount of the depreciation expense adjustment for the month of
August?
A. amount can not be determined
B. $7,600
C. $5,950
D. $1,650
147. Which of the items below does not appear on the work sheet?
A. adjusting entries
B. the unadjusted trial balance
C. closing entries
D. the drawing account
148. An indication that the work sheet columns are in balance and the work sheet is completed is
A. the word "Total" is written at the bottom of each pair of columns
B. each pair of columns is double underlined
C. each pair of columns has the totals circled
D. the final figures are written in ink
149. After all of the account balances have been extended to the Balance Sheet columns of the work sheet, the
totals of the debit and credit columns are $38,755 and $32,735, respectively. What is the amount of net income
or net loss for the period?
A. $6,020 net income
B. $38,755 net loss
C. $6,020 net loss
D. $32,735 net income
150. After all of the account balances have been extended to the Income Statement columns of the work sheet,
the totals of the debit and credit columns are $77,500 and $83,900, respectively. What is the amount of the net
income or net loss for the period?
A. $6,400 net income
B. $6,400 net loss
C. $83,900 net income
D. $77,500 net loss
151. On September 1, the company pays rent for twelve months in advance and debits an asset account. At
year end, the adjusting entry on the work sheet would
A. increase an expense account
B. decrease a liability account
C. increase an asset account
D. decrease an expense account
152. On March 1, a company collects revenue in advance for the next twelve months and credits a liability
account. The adjusting entry at year end on the work sheet would
A. increase a liability account
B. decrease an asset account
C. decrease a revenue account
D. decrease a liability account
153. Which of the following is not an essential part of the accounting records?
A. The journal
B. The ledger
C. The chart of accounts
D. The work sheet
154. After all of the account balances have been extended to the Balance Sheet columns of the work sheet, the
totals of the debit and credit columns show debits of $37,686 and the credits of $41,101. This indicates that
A. neither net income or loss can be calculated because it is found on the income statement
B. the company has a net loss of $3,415 for the period
C. the company has a net income of $3,415 for the period
D. The amounts are out of balance and need to be corrected
155. The income statement columns in the worksheet show that debits are equal to $55,800 and credits are
$67,520. What does this information mean to the accountant?
A. Net income of $11,720
B. Net loss of $11,720
C. The accounts are out of balance, indicating an error has been made.
D. The accounts have not been updated.
156. Bob Evans owns a business, Beachside Realty, that rents condominiums and furnishings. Below is the
adjusted trial balance at December 31, 2014.
Cash
Accounts receivable
Interest receivable
Prepaid insurance
Notes receivable (long-term)
Equipment
Accumulated depreciation
Accounts payable
Accrued expenses payable
Income taxes payable
Unearned rent fees
Bob Evans, Capital
Bob Evans, Drawing
Rent fees earned
Furniture rental revenue
Interest revenue
Wages expense
Depreciation expense
Utilities expense
Insurance expense
Maintenance expense
Income tax expense
Debit
$ 1,500
2,000
100
1,600
2,800
15,000
Credit
$3,000
2,400
3,920
2,700
500
7,700
2,000
37,000
1,200
100
19,000
1,800
320
700
9,000
2,700
$58,520
$58,520
The entry required to close the revenue accounts at the end of the period includes a:
157. Bob Evans owns a business, Beachside Realty, that rents condominiums and furnishings. Below is the
adjusted trial balance at December 31, 2014.
Cash
Accounts receivable
Interest receivable
Prepaid insurance
Notes receivable (long-term)
Equipment
Accumulated depreciation
Accounts payable
Accrued expenses payable
Income taxes payable
Unearned rent fees
Bob Evans, Capital
Bob Evans, Drawing
Rent fees earned
Furniture rental revenue
Interest revenue
Wages expense
Depreciation expense
Utilities expense
Insurance expense
Maintenance expense
Income tax expense
Debit
$ 1,500
2,000
100
1,600
2,800
15,000
Credit
$3,000
2,400
3,920
2,700
500
7,700
2,000
37,000
1,200
100
19,000
1,800
320
700
9,000
2,700
$58,520
$58,520
The entry required to close the expense accounts at the end of the period includes a:
158. The balances for the accounts listed below appear in the Adjusted Trial balance columns of the
end-of-period spreadsheet (work sheet). Indicate whether each balance should be extended to an Income
Statement column or (b) a Balance Sheet column.
1.
2.
3.
4.
5.
6.
7.
8.
Dobson, Capital
Dobson, Drawing
Depreciation Expense
Accumulated Depreciation
Fees earned
Unearned Fees
Supplies
Supplies Expense
1.
2.
3.
4.
5.
6.
7.
8.
159. The end-of-period spreadsheet (work sheet) for the current year for Jamal Company shows Balance Sheet
columns with a debit total of $630,430 and a credit total of $614,210. This is before the amount for net
income or net loss has been included. In preparing the income statement from work sheet, what is the amount
of net income or net loss?
A net income of $16,220
160. Morgan Olsen owns and operates Crystal Pool Service Company. On January 1, 2014, Morgan Olsen,
Capital had a balance of $252,000. During the year Morgan invested an additional $32,000 and withdrew
$52,400. For the year ended December 31, 2014 Crystal Pool Service Company reported a net income of
$73,200. Prepare a Statement of Owners Equity for the year ended December 31, 2014.
$252,000
32,000
$284,000
$ 73,200
(52,400)
20,800
$304,800
161. The following accounts appear in an adjusted trial balance of Brock Pool Service Company. Indicate
whether each account would be reported in the (a) current assets, (b) property, plant, and equipment, (c) current
liabilities, (d) long-term liabilities, or (e) owners equity section of the December 31, 2010, balance sheet of
Brock Pool Service Company.
1.
2.
3.
4.
5.
6.
7.
8.
1.
2.
3.
4.
5.
6.
7.
8.
163. List and describe the purpose of the four closing entries.
1.
2.
3.
4.
At the beginning of the next period, temporary accounts should have zero balances. To achieve a zero balance,
temporary account balances are transferred to permanent accounts at the end of the accounting period. The
entries that transfer these balances are called closing entries and the transfer process is called the closing
process.
164. After the accounts have been adjusted at January 31, 2014, the end of the fiscal year, the following
balances are taken from the ledger of Taylor Pool Service Company:
$349,000
5,000
124,600
29,000
43,000
7,300
5,700
Fees Earned
124,600
Income Summary
31
Income
Summary
124,600
85,000
Wages Expense
Rent Expense
Supplies Expense
Miscellaneous Expense
31
Income
Summary
29,000
43,000
7,300
5,700
39,600
Hope Taylor,
Capital
39,600
5,000
5,000
165. Prior to adjustment at August 31, 2014, Salary Expense has a debit balance of $298,500. Salaries owed
but not paid as of the same date total $7,200.
Present
the
entries to
record
the
followin
g:
(1)
Accrued salaries as of August 31.
(2)
Closing of Salary Expense as of August 31.
(1)
(2)
Salary Expense
Salaries Payable
7,200
Income Summary
Salary Expense
305,700
7,200
305,700
166. The following are all the steps in the accounting cycle. List them in the order in which they should be
done.
- Closing entries are journalized and posted to the ledger.
- An unadjusted trial balance is prepared.
- An optional end-of-period spreadsheet (work sheet) is prepared.
- A post-closing trial balance is prepared.
- Adjusting entries are journalized and posted to the ledger.
- Transactions are analyzed and recorded in the journal.
- Adjustment data are assembled and analyzed.
- Financial statements are prepared.
- An adjusted trial balance is prepared.
- Transactions are posted to the ledger.
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
167. If working papers are not considered part of the formal accounting records, then why are they used?
Working papers are tools used by accountants to collect and summarize data for for various analysis and
reports.
168. Explain how net income or loss is determined by using the work sheet.
The difference between the debits and credits from the Income Statement columns are compared to the debits
and credits from the Balance Sheet columns. They should be the same amounts but opposite from each
other. If the debits are more than the credits on the income statement columns, signifying a net loss, then the
credits should be higher than the debits on the balance sheet columns by the same amount. If the credits are
more than the debits on the income statement columns, signifying a net income, then the debits should be higher
than the credits on the balance sheet columns by the same amount.
169. You evaluate loan requests as part of your job at Beach Front National Bank. One loan request you
received is from Surfer Dude Supplies, a small proprietorship. Tracy Roberts, the owner, is requesting $75,000
and brings you a trial balance (or Statement of Accounts) for his first year of operations ended December 31,
2010.
REQUIRED: While you are willing to work with Tracy, how would you explain to him that a complete set of
financial statements from his accountant would be more useful for evaluating the loan request?
A set of financial statements provides useful information concerning the economic condition of a company. For
example, the balance sheet describes the financial condition of the company as of a given date and is useful in
assessing the companys financial soundness and liquidity. The income statement describes the results of
operations for a period and indicates the profitability of the company. The statement of owners equity describes
the changes in the owners interest in the company for a period. Each of these statements is useful in evaluating
whether to extend credit to the company.
170. You have just accepted your first job out of college, which requires you to evaluate loan requests at Beach
Front National Bank. The first loan request you receive is from Surfer Dude Enterprises, a small
proprietorship. Marty Monroe, the owner, is requesting $75,000 and brings you the following trial balance (or
Statement of Accounts) for his first year of operations ended December 31, 2010.
What three accounts do you think should be relabeled for greater clarity?
2,050
15,070
7,470
26,370
8,090
2,850
23,500
73,650
30,050
7,330
2,400
700
470
100,000
100,000
171. You have just accepted your first job out of college, which requires you to evaluate loan requests at Beach
Front National Bank. The first loan request you receive is from Surfer Dude Enterprises, a small
proprietorship. Marty Monroe, the owner, is requesting $75,000 and brings you the following trial balance (or
Statement of Accounts) for his first year of operations ended December 31, 2010.
Which of the following accounts do you think might need to be adjusted before an accurate set of financial
statements could be prepared?
Cash
Billings Due from Others
Office Supplies
Trucks
Equipment
Amounts Owed to Others
Investment in Business
Service Revenues
Wages Expense
Rent Expense
Insurance Expense
Utilities Expense
Miscellaneous Expenses
100,000
The following adjustments might be necessary before an accurate set of financial statements could be prepared:
No office supplies expense is shown. The office supplies account should be adjusted for the supplies used during the year.
No depreciation expense is shown for the trucks or equipment accounts. An adjusting entry should be prepared for depreciation
expense on each of these assets.
An inquiry should be made as to whether any accrued expenses, such as wages or utilities, exist at the end of the year.
An inquiry should be made as to whether any prepaid expenses, such as rent or insurance, exist at the end of the year.
An inquiry should be made as to whether any unearned revenue exist at the end of the year.
An inquiry should be made as to whether the owner withdrew any funds from the company during the year. No drawing account is
shown in the Statement of Accounts.
172. Hakik Enterprises offers rug cleaning services to business clients. Below is the trial balance for Hakik
Enterprises, which was prepared on the end of period spreadsheet (work sheet) for the year ended July 31,
2010.
Hakik Enterprises
End of Period Spreadsheet (Work
Sheet)
For the Year Ended July 31, 2010
Cash
Prepaid Insurance
Fees Receivable
Supplies
Equipment
Accum. Depreciation
Unearned Revenue
Accounts Payable
Wages Payable
Ramon Hakik, Capital
Ramon Hakik, Drawings
Service Revenue
Advertising Expense
Wage Expense
Insurance Expense
Supplies Expense
Depreciation Expense
Totals
228
228
Debit
Credit
REQUIRED: Enter the adjustment data in the work sheet for the transactions shown below and place the balances in the Adjusted Trial Balance
columns.
a) The equipment is estimated to last for 5 years with no salvage value. The asset will be depreciated evenly over its useful life. Record one
months depreciation.
b) Accrued Wages $2.
c) Unused supplies on hand $8.
d) Of the unearned revenue, 75% has been earned.
e) Unexpired insurance remaining at the end of the month, $9.
Hakik Enterprises
End of Period Spreadsheet (Work
Sheet)
For the Year Ended July 31, 2010
Trial Balance
Cash
Prepaid Insurance
Fees Receivable
Supplies
Equipment
Accum. Depreciation
Unearned Revenue
Accounts Payable
Wages Payable
Ramon Hakik, Capital
Ramon Hakik, Drawings
Service Revenue
Advertising Expense
Wage Expense
Insurance Expense
Supplies Expense
Depreciation Expense
Totals
Debit
36
12
56
12
60
Adjustments
Credit
Adjusted Trial
Balance
Debit
Credit
(e) 3
(c) 4
12
20
32
Debit
36
9
56
8
60
(a) 1
13
5
32
2
84
(d) 15
(b) 2
84
4
4
80
28
20
228
Credit
228
(d) 15
(b) 2
(e) 3
(c) 4
(a) 1
25
25
95
28
22
3
4
1
231
231
173. Hakik Enterprises offers rug cleaning services to business clients. Below are the adjustments data for the
year ended July 31, 2010. REQUIRED: Using this information along with the spreadsheet below, record the
adjusting entries in proper general journal form.
Adjustments:
a) The equipment is estimated to last for 5 years with no salvage value. The asset will be depreciated evenly
over its useful life. Please record one months depreciation.
b) Accrued Wages $2.
c) Unused supplies on hand $8.
d) Of the unearned revenue, 75% has been earned.
e) Unexpired insurance remaining at the end of the month, $9.
Hakik Enterprises
End of Period Spreadsheet (Work
Sheet)
For the Year Ended July 31, 2010
Cash
Prepaid Insurance
Fees Receivable
Supplies
Equipment
Accum. Deprec. - Equip
Unearned Revenue
Accounts Payable
Wages Payable
Ramon Hakik, Capital
Ramon Hakik, Drawings
Service Revenue
Advertising Expense
Wage Expense
Insurance Expense
Supplies Expense
Depreciation Expense
Totals
228
228
Credit
Debit
Credit
GENERAL
JOURNAL
Page 1
DATE
2010
Description Post.Ref.
(a)
(b)
(c)
(d)
(e)
Debit
Credit
Adjusting Entries
Depreciation Expense
Accum. Deprec. - Equipment
1
1
Wage Expense
Wages Payable
Supplies Expense
Supplies
Unearned Revenue
Service Revenue
15
Insurance Expense
Prepaid Insurance
15
174. Bob Evans owns a business, Beachside Realty, that rents condominiums and furnishings. Below is the
adjusted trial balance at December 31, 2010.
Cash
Accounts receivable
Interest receivable
Prepaid insurance
Notes receivable (long-term)
Equipment
Accumulated depreciation
Accounts payable
Accrued expenses payable
Income taxes payable
Unearned rent fees
Bob Evans, Capital
Bob Evans, Drawing
Rent fees earned
Furniture rental revenue
Interest revenue
Wages expense
Depreciation expense
Utilities expense
Insurance expense
Maintenance expense
Income tax expense
Total
Debit
$ 1,500
2,000
100
1,600
2,800
15,000
Credit
$3,000
2,400
3,920
2,700
500
7,700
2,000
37,000
1,200
100
19,000
1,800
320
700
9,000
2,700
$ 58,520
$ 58,520
Prepare the entry required to close the revenue accounts at the end of the period.
Dec. 31
37,000
1,200
100
38,300
175. Bob Evans owns a business, Beachside Realty, that rents condominiums and furnishings. Below is the
adjusted trial balance at December 31, 2010.
Cash
Accounts receivable
Interest receivable
Prepaid insurance
Notes receivable (long-term)
Equipment
Accumulated depreciation
Accounts payable
Accrued expenses payable
Income taxes payable
Unearned rent fees
Bob Evans, Capital
Bob Evans, Drawing
Rent fees earned
Furniture rental revenue
Interest revenue
Wages expense
Depreciation expense
Utilities expense
Insurance expense
Maintenance expense
Income tax expense
Debit
$ 1,500
2,000
100
1,600
2,800
15,000
Credit
$3,000
2,400
3,920
2,700
500
7,700
2,000
37,000
1,200
100
19,000
1,800
320
700
9,000
2,700
$ 58,520
$ 58,520
Prepare the entry required to close the expense accounts at the end of the period.
Dec 31
Income Summary
Wages expense
Depreciation expense
Utilities expense
Insurance expense
Maintenance expense
Income tax expense
33,520
19,000
1,800
320
700
9,000
2,700
176. Bob Evans owns a business, Beachside Realty, that rents condominiums and furnishings. Below is the
adjusted trial balance at December 31, 2010.
Cash
Accounts receivable
Interest receivable
Prepaid insurance
Notes receivable (long-term)
Equipment
Accumulated depreciation
Accounts payable
Accrued expenses payable
Income taxes payable
Unearned rent fees
Bob Evans, Capital
Bob Evans, Drawing
Rent fees earned
Furniture rental revenue
Interest revenue
Wages expense
Depreciation expense
Utilities expense
Insurance expense
Maintenance expense
Income tax expense
Debit
$ 1,500
2,000
100
1,600
2,800
15,000
Credit
$3,000
2,400
3,920
2,700
500
7,700
2,000
37,000
1,200
100
19,000
1,800
320
700
9,000
2,700
$ 58,520
$ 58,520
Prepare the closing entry required to transfer the income or loss at the end of the period.
Dec 31
Income Summary
Bob Evans, Capital
4,780
4,780
177. Bob Evans owns a business, Beachside Realty, that rents condominiums and furnishings. Below is the
adjusted trial balance at December 31, 2010.
Cash
Accounts receivable
Interest receivable
Prepaid insurance
Notes receivable (long-term)
Equipment
Accumulated depreciation
Accounts payable
Accrued expenses payable
Income taxes payable
Unearned rent fees
Bob Evans, Capital
Bob Evans, Drawing
Rent fees earned
Furniture rental revenue
Interest revenue
Wages expense
Depreciation expense
Utilities expense
Insurance expense
Maintenance expense
Income tax expense
Debit
$ 1,500
2,000
100
1,600
2,800
15,000
Credit
$3,000
2,400
3,920
2,700
500
7,700
2,000
41,000
1,200
100
19,000
1,800
320
700
9,000
2,700
$ 58,520
$ 58,520
Prepare the entry required to close the Drawing account at the end of the period.
Dec 31
2,000
2,000
178. Each of the following transactions for Morrison Company requires an adjusting entry, which if omitted,
will overstate or understate assets, liabilities, owners equity, revenues, expenses, or net income. Indicate the
amount and direction of the misstatement that would result if the end of period adjusting entry suggested by the
transaction was omitted. Place your results in the table following the transactions and use (+) for overstate, (-)
for understate, and (NE) for no effect.
1. Morrison purchased supplies on December 1 for $900. On December 31, $350 of supplies were on hand.
2. Prepaid insurance had a debit balance of $5,400 on December 1, which represented a prepayment for 2 years
of insurance.
3. The unearned rent revenue account has a credit balance of $390 on December 1, which represents 3 months
rent.
Transaction
1.
2.
3.
Assets
Liabilities
Owners Equity
Revenues
Expenses
Net Income
Transaction
1.
2.
3.
Assets
+550
+225
NE
Liabilities
NE
NE
+130
Owners Equity
+550
+225
-130
Revenues
NE
NE
-130
Expenses
-550
-225
NE
Net Income
+550
+225
-130
179. The end-of-period spreadsheet (work sheet) for the current year for Jamal Company shows Balance Sheet
columns with a debit total of $614,210 and a credit total of $630,430. This is before the amount for net
income or net loss has been included. In preparing the income statement from work sheet, what is the amount
of net income or net loss?
Net loss of $16,220
180. Identify which of the following accounts should be closed with a debit or a credit to Income Summary at
the end of the fiscal year. If it is not closed to Income Summary, mark as n/a.
1. Utilities Payable
2. Utilities Expense
3. Supplies
4. Supplies Expense
5. Fees Earned
6. Unearned Fees
7. Accounts Receivable
8. Jason Hill, Drawing
9. Jason Hill, Capital
10. Accumulated Depreciation - Equipment
11. Depreciation Expense - Equipment
12. Equipment
13. Prepaid Insurance
14. Insurance Expense
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
Utilities Payable
Utilities Expense
Supplies
Supplies Expense
Fees Earned
Unearned Fees
Accounts Receivable
Jason Hill, Drawing
Jason Hill, Capital
Accumulated Depreciation - Equipment
Depreciation Expense - Equipment
Equipment
Prepaid Insurance
Insurance Expense
n/a
debit
n/a
debit
credit
n/a
n/a
n/a
n/a
n/a
debit
n/a
n/a
debit
181. The balances for the accounts listed below appeared in the Adjusted Trial Balance columns of the work
sheet. Indicate whether each balance should be extended to (a) the Income Statement columns or (b) the
Balance Sheet columns.
(1)
(2)
(3)
(4)
(5)
(6)
Salaries Payable
Fees Earned
Accounts Payable
Felipe Ramos, Capital
Supplies Expense
Unearned Rent
(7)
(8)
(9)
(10)
(11)
(12)
(a)
(b)
182. Indicate whether each of the following would be reported in the financial statements as a(n) (a) current
asset, (b) current liability, (c) revenue, or (d) expense:
(1)
(2)
(3)
(4)
Supplies
Unearned Fees
Prepaid Advertising
Advertising Expense
(1)
(2)
(3)
(4)
(5)
(6)
(7)
(8)
current asset
current liability
current asset
expense
expense
current asset
current liability
revenue
(5)
(6)
(7)
(8)
Supplies Expense
Prepaid Insurance
Accounts Payable
Fees Earned
183. The following accounts were taken from the Adjusted Trial Balance columns of the work sheet for April
30, 2010 for Finnegan Co.:
Accumulated Depreciation
Fees Earned
Depreciation Expense
Rent Expense
Prepaid Insurance
Supplies
Supplies Expense
$ 32,000
78,000
7,250
34,000
6,000
400
1,800
$78,000
$34,000
7,250
1,800
43,050
$34,950
184. The following revenue and expense account balances were taken from the Income Statement columns of
the work sheet for Fraser Services Co. for December 31, 2010:
Depreciation Expense
Insurance Expense
Miscellaneous Expense
Rent Expense
Service Revenue
Supplies Expense
Utilities Expense
Wages Expense
$ 4,950
2,900
1,200
24,000
92,500
3,150
5,000
63,750
$ 92,500
$63,750
24,000
5,000
4,950
3,150
2,900
1,200
104,950
$ (12,450)
185. The following data were taken from the Balance Sheet columns of the work sheet for April 30, 2010 for
Mackenzie Company:
Accumulated Depreciation-Trucks
Prepaid Rent
Supplies
Unearned Fees
Trucks
Cash
Mackenzie, Capital
$42,400
6,800
850
7,310
49,300
3,400
?
Liabilities
$ 3,400
850
6,800
Current liabilities:
Unearned fees
$ 11,050
$49,300
Less accum.
depreciation
Total property, plant
and equipment
Total assets
Owner's Equity
Mackenzie, Capital
Total liabilities and owner's
equity
$ 7,310
10,640
$17,950
42,400
6,900
$17,950
186. Indicate whether each of the following would be reported in the section of financial statements identified
as (a) current asset, (b) property, plant, and equipment, (c) current liability, (d) revenue, or (e) expense:
(1)
(2)
(3)
(4)
(5)
(6)
(7)
(8)
(9)
Automobile
Accumulated depreciation
Rent expense
Fees earned
Salaries payable
Prepaid rent
Store supplies
Advertising expense
Unearned rent
(1)
(2)
(3)
(4)
(5)
(6)
(7)
(8)
(9)
$ 7,170
7,500
2,590
800
24,000
$ 42,060
Liabilities
Current liabilities:
Accounts receivable
Accum. depr-building
Accum. depr-equipment
Net income
$ 10,000
12,525
7,340
11,500
Total liabilities
$ 41,365
Owner's Equity
Wages payable
Brock Morton, Capital
Total owner's equity
$43,700
29,250
1,500
88,645
$ 90,145
72,950
$131,510
$131,510
(a) List the errors in the balance sheet above and (b) prepare a corrected balance sheet.
(a)
(1)
(2)
(3)
(4)
(5)
(6)
(7)
(8)
Date of statement should be "December 31, 2010" and not "For the Year Ended December 31, 2010."
Accounts payable should be a current liability.
Land is a fixed asset and should be listed as Property, Plant and Equipment.
Accumulated depreciation should be deducted from the related fixed asset in the Property Plant, and Equipment section.
An adding error was made in determining the amount of total assets.
Accounts receivable should be a current asset.
Net income would be reported on the income statement.
Wages payable should be a current liability.
Assets
Curren
t
assets:
Cash
Acco
unts
receiva
ble
Suppl
ies
Prepa
id
insuran
ce
Tota
l
current
assets
Propert
y,
plant,
and
equipm
ent:
Land
Build $43,700
ing
Less 12,525
accum.
depreci
ation
Equi 29,250
pment
Less 7,340
accum.
depreci
ation
Tota
l
propert
y,
plant,
and
equipm
ent
Total
assets
$ 7,1
70
10,00
0
2,590
8
00
$20,560
$24,0
00
31,17
5
21,9
10
77,085
$97,645
Liabilities
Current liabilities:
Accounts payable
Wages payable
Total liabilities
$7,50
0
1,500
$ 9,000
Owner's Equity
Brock Morton, Capital
Total liabilities and owner's equity
88,645
$97,645
188. The following is the adjusted trial balance for Nadia Company.
Nadia Company
Adjusted Trial Balance
December 31, 2014
Cash
Accounts Receivable
Prepaid Expenses
Equipment
Accumulated Depreciation
Accounts Payable
Notes Payable - Due on June 30, 2011
Nadia Porter, Capital
Nadia Porter, Drawing
Fees Earned
Wages Expense
Rent Expense
Utilities Expense
Depreciation Expense
Miscellaneous Expense
Totals
5,130
3,300
420
12,400
2,200
700
3,070
13,000
700
10,930
2,450
1,900
1,475
1,150
975
29,900
29,900
Prepare an Income Statement, Balance Sheet, and Statement of Owners Equity. Assume that the capital account started with a beginning balance of
$10,000.
Nadia Company
Income Statement
For Year Ended December 31, 2014
Fees Earned
Expenses:
Wages Expense
Rent Expense
Utilities Expense
Depreciation Expense
Miscellaneous Expense
Total Expenses
Net Income
$10,930
$2,450
1,900
1,475
1,150
975
7,950
$2,980
Nadia Company
Statement of Owners Equity
For Year Ended December 31, 2014
Nadia Porter, Capital, January 1, 2014
Additional investments during 2014
Total
Net Income
Sub-Total
Less Withdrawals
Nadia Porter, Capital, December 31, 2014
$10,000
3,000
$13,000
2,980
$15,980
700
$15,280
Nadia Company
Balance Sheet
December 31, 2014
Assets
Current Assets
Cash
Accounts Receivable
Prepaid Expenses
Total Current Assets
Liabilities
Current Liabilities
Accounts Payable
Notes Payable
Total Liabilities
$5,130
3,300
420
$ 700
3,070
$3,770
$8,850
$12,400
2,200
Owners Equity
Nadia Porter, Capital
Total Liabilities
and Owners Equity
$10,200
$19,050
$15,280
$19,050
189. Prepare an income statement and a statement of owners equity, for the month ended August 31, 2014,
from the following T-Accounts of Marley Company.
Prepaid
Insurance
Accou
nts
Receiv
able
1,100
5,400
800
200
Marley,
Capital
Marley
,
Drawin
g
6,500
2,800
5,780
3,200
Unearned
Revenues
Wages
Payable
1,400
480
9,775
7,500
2,000
275
400
Income
Summary
Fees Earned
3,200
3,995
5,780
3,200
9,775
Wages
Expense
Rent
Expens
e
2,200
425
Insurance
Expense
990
Utilities
Expense
285
990
95
285
95
2,625
Marley Company
Income Statement
For the Month Ended August 31, 2014
Fees Earned
Expenses:
Wages Expense
Rent Expense
Insurance Expense
Utilities Expense
Total Expenses
Net Income
$9,775
$2,625
990
285
95
$3,995
$5,780
Marley Company
Statement of Owners Equity
For the Month Ended August 31, 2014
Marley, Capital, August 1, 2014
Add: Additional Investments during August, 2014
Sub-total
Add: Net Income Month Ended August 31, 2014
Less: withdrawals
Increase in Owners Equity
Marley, Capital, August 31, 2014
$6,500
2,800
$9,300
$5,780
3,200
2,580
$11,880
190. Prepare an income statement and a statement of owners equity for the month ended September 30, 2010
from the T-accounts below of Carson Company.
Prepaid
Insurance
Accou
nts
Receiv
able
1,400
120
Unearned
Revenues
1,600
400
Wages
Payable
1,200
200
435
Carson,
Capital
Carson
,
Drawin
g
6,800
2,500
Income
Summary
Fees Earned
2400
4,760
2,400
4,150
610
2,400
3,300
500
350
610
4,150
Wages
Expense
Rent
Expens
e
3,200
225
Insurance
Expense
1,130
Utilities
Expense
80
1,130
125
80
125
3,425
Carson Company
Income Statement
For the Month Ended September 30, 2010
Fees Earned
Expenses:
Wages Expense
Rent Expense
Insurance Expense
Utilities Expense
Total Expenses
Net Loss
$4,150
$3,425
1,130
80
125
$4,760
($610)
Carson Company
Statement of Owners Equity
For the Month Ended September 30, 2010
Carson, Capital, September 1, 2010
Add: Additional Investments during September, 2010
Sub-total
Less: Net Loss Month Ended September 30, 2010
Withdrawals
Decrease in Owners Equity
Carson, Capital, September 30, 2010
$6,800
2,500
$9,300
$610
2,400
3,010
$6,290
191. Selected ledger accounts appear below for Fulton Surveying Services for 2014.
Fulton,
Capital
12/31
25,000
Fulton,
Drawing
1/1
12/31
20,000
48,000
3/31
12/22
12,000
13,000
12/31
25,000
Income
Summary
12/31
19,000
12/31
48,000
12/31
67,000
$20,000
$ 48,000
25,000
23,000
$43,000
192. On the basis of the following data taken from the Adjusted Trial Balance columns of the work sheet for the
year ended March 31 for Boles Athletic Company, journalize the four closing entries.
Cash
Accounts Receivable
Supplies
Equipment
Accumulated Depreciation
Accounts Payable
Jason Boles, Capital
Jason Boles, Drawing
Fees Earned
Salary Expense
Rent Expense
Depreciation Expense
Supplies Expense
Miscellaneous Expense
Mar. 31
31
31
31
$ 30,000
45,200
5,000
169,900
$ 32,000
12,500
71,600
47,000
510,000
244,500
48,000
25,000
9,500
2,000
$626,100
Fees Earned
Income Summary
510,000
Income Summary
Salary Expense
Rent Expense
Depreciation Expense
Supplies Expense
Miscellaneous Expense
329,000
Income Summary
Jason Boles, Capital
181,000
47,000
$626,100
510,000
244,500
48,000
25,000
9,500
2,000
181,000
47,000
193. After all adjustments have been made, but before the accounts have been closed, the following balances
were taken from the ledger of Ramonas Designs:
Accounts Payable
Accounts Receivable
Accumulated Depreciation
Cash
Depreciation Expense
Equipment
Insurance Expense
Prepaid Insurance
$ 27,600
64,500
73,325
17,150
13,500
165,000
2,510
6,275
Rent Expense
Salary Expense
Salaries Payable
Service Revenue
Supplies
Supplies Expense
Ramona Cross, Capital
Ramona Cross, Drawing
$ 32,700
41,390
8,150
186,000
1,500
2,500
99,950
48,000
Service Revenue
Income Summary
186,000
Income Summary
Depreciation Expense
Insurance Expense
Rent Expense
Salary Expense
Supplies Expense
92,600
Income Summary
Ramona Cross, Capital
93,400
48,000
186,000
13,500
2,510
32,700
41,390
2,500
93,400
48,000
194. On the basis of the following information taken from the Adjusted Trial Balance columns of the work
sheet for the month ended September 30th, journalize the closing entries for Perez Roofing Company.
Cash
Accounts Receivable
Office Supplies
Repair Parts
Machinery
Accumulated Depreciation
Accounts Payable
Notes Payable
Sam Perez, Capital
Sam Perez, Drawing
Service Revenue
Wages Expense
Office Supplies Expense
Repair Parts Expense
Depreciation Expense
$22,500.00
3,575.00
2,850.00
3,785.00
17,750.00
3,250.00
1,150.00
6,500.00
2,500.00
1,750.00
47,200.00
4,840.00
1,275.00
925.00
1,350.00
$60,600.00
$60,600.00
Sep 30
Service
47,200.00
Revenue
Income
47,200.00
Summary
Closing Entry
- Service
Revenue
Sep 30
Income
8,390.00
Summary
Wages
Expense
Office
Supplies
Expense
Repair Parts
Expense
Depreciation
Expense
Closing
Entry Expenses
4,840.00
1,275.00
925.00
1,350.00
Sep 30
Income
38,810.0
Summary 0
Sam Perez,
38,810.00
Capital
Closing
Entry Income
Summary
Sep 30
195. The following adjusted trial balance is the result of the adjustments made at the end of the month of March
for Erik Martin Company. Utilize these adjusted values to perform the closing entries for Erik Martin Company.
Cash
Accounts Receivable
Office Supplies
Store Supplies
Machinery
Accumulated Depreciation
Accounts Payable
Notes Payable
Erik Martin, Capital
Erik Martin, Drawing
Service Revenue
Wages Expense
Office Supplies Expense
Store Supplies Expense
Depreciation Expense
March 31
March 31
March 31
Service 36,500.00
Revenue
Income
Summary
Closing
Entry Service
Revenue
Income
14,615.00
Summary
Wages
Expense
Office
Supplies
Expense
Store
Supplies
Expense
Depreciation
Expense
Closing
Entry Expenses
Income
21,885.00
Summary
Erik
Martin,
Capital
Closing
Entry Income
Summary
$24,750.00
5,750.00
3,525.00
4,785.00
9,750.00
2,150.00
3,550.00
7,500.00
19,725.00
6,250.00
36,500.00
6,425.00
1,465.00
5,150.00
1, 575.00
$69,425.00
36,500.00
6,425.00
1,465.00
5,150.00
1,575.00
21,885.00
________
$69,425.00
March 31
Erik
Martin,
Capital
Erik
Martin,
Drawing
Closing
Entry Drawing
6,250.00
6,250.00
196. The following adjusted trial balance is the result of the adjustments made at the end of the month of July
for Ladonna Douglas Company. Utilize these adjusted values to perform the closing entries for Ladonna
Douglas Company.
Cash
Accounts Receivable
Office Supplies
Store Supplies
Machinery
Accumulated Depreciation
Accounts Payable
Notes Payable
Ladonna Douglas, Capital
Ladonna Douglas, Drawing
Service Revenue
Wages Expense
Rent Expense
Advertising Expense
Office Supplies Expense
Store Supplies Expense
Depreciation Expense
July 31
Service
41,500.00
Revenue
Income
Summary
Closing
Entry Service
Revenue
$34,750.00
9,750.00
2,525.00
4,785.00
10,750.00
2,150.00
14,300.00
11,500.00
53,725.00
13,250.00
41,500.00
37,425.00
3,000.00
2,750.00
1,465.00
2,150.00
575.00
$123,175.00
41,500.00
________
$123,175.00
July 31
Income
47,365.00
Summary
Wages
37,425.00
Expense
Rent
3,000.00
Expense
Advertising
2,750.00
Expense
Office
1,465.00
Supplies
Expense
Store
2,150.00
Supplies
Expense
Depreciatio
575.00
n Expense
Closing
Entry Expenses
July 31
Ladonna 5,865.00
Douglas,
Capital
Income
Summary
Closing
Entry Income
Summary
July 31
Ladonna
Douglas,
Capital
Ladonna
Douglas,
Drawing
Closing
Entry Drawing
5,865.00
13,250.00
13,250.00
197. Marcus Enterprises was started by Damien Marcus in 2010. During 2010, Damien Marcus invested
$8,000 in the business. Based on the following worksheet, prepare an income statement, statement of owners
equity, and balance sheet for Marcus Enterprises for the year ended December 31, 2010.
Marcus Enterprises
Worksheet
For the Year Ended December 31, 2010
Adjusted Trial
Balance
Account Title
Cash
Accounts Receivable
Supplies
Equipment
Accumulated Depr-Equip
Accounts Payable
Wages Payable
Damien Marcus, Capital
Damien Marcus, Drawing
Fees Earned
Wages Expense
Rent Expense
Depreciation Expense
Totals
Net Income (Loss)
Debit
26,500
7,000
1,000
18,500
Credit
Debit
Credit
Debit
26,500
7,000
1,000
18,500
5,000
11,000
1,000
8,000
5,000
11,000
1,000
8,000
2,000
2,000
59,500
19,000
7,000
3,500
84,500
84,500
59,500
19,000
7,000
3,500
29,500
30,000
59,500
59,500
55,000
59,500
55,000
Marcus Enterprises
Income Statement
For the Year Ended December 31, 2010
Fees Earned
Expenses:
Wages Expense
Rent Expense
Depreciation Expense
Total Expenses
Net Income
Marcus Enterprises
Statement of Owners Equity
For the Year Ended December 31, 2010
Damien Marcus, Capital, January 1, 2010
Investment during the year
Net income for the Year Ended December 31, 2010
Less Withdrawals
Increase in Owners Equity
Damien Marcus, Capital, December 31, 2010
Credit
$ 59,500
$ 19,000
7,000
3,500
29,500
$ 30,000
$ 0
$ 8,000
30,000
$38,000
2,000
36,000
$ 36,000
25,000
30,000
55,000
Marcus Enterprises
Balance Sheet
December 31, 2010
Assets
Current Assets:
Cash
Accounts Receivable
Supplies
Total current assets
Property, Plant and Equipment
Equipment
Less accum depr
Liabilities
Current Liabilities
Accounts Payable
Wages Payable
Total Liabilities
$26,500
7,000
1,000
$ 11,000
1,000
$12,000
$ 34,500
$18,500
5,000
Owners Equity
13,500
$48,000
$36,000
$48,000
Account Title
Cash
Accounts Receivable
Supplies
Equipment
Accumulated Depr-Equip
Accounts Payable
Wages Payable
Lakendra Thomas, Capital
Lakendra Thomas, Drawing
Fees Earned
Wages Expense
Rent Expense
Depreciation Expense
Totals
Net Income (Loss)
Balance Sheet
Debit
Credit
Debit
26,500
7,000
1,000
18,500
Credit
5,000
11,000
1,000
8,000
2,000
59,500
19,000
7,000
3,500
29,500
30,000
59,500
59,500
55,000
59,500
55,000
25,000
30,000
55,000
Journal
Post Ref
Date
Dec 31
Dec 31
Dec 31
Dec 31
Description
Fees Earned
Income Summary
Debit
59,500
Income Summary
Wages Expense
Rent Expense
Depreciation Expense
29,500
Income Summary
Lakendra Thomas, Capital
30,000
2,000
Credit
59,500
19,000
7,000
3,500
30,000
2,000
199. The following is the adjusted trial balance for Sandeep Company.
Sandeep Company
Adjusted Trial Balance
December 31, 2010
Cash
Accounts Receivable
Prepaid Expenses
Equipment
Accumulated Depreciation
Accounts Payable
Notes Payable
Rena Sandeep, Capital
Rena Sandeep, Drawing
Fees Earned
Wages Expense
Rent Expense
Utilities Expense
Depreciation Expense
Miscellaneous Expense
Totals
8,130
3,300
2,750
10,400
2,200
2,700
1,000
11,200
4,870
36,600
12,450
4,900
3,475
2,150
1,275
53,700
53,700
Fees Earned
Income Summary
36,600
Income Summary
Wages Expense
Rent Expense
Utilities Expense
Depreciation Expense
Miscellaneous Expense
24,250
Income Summary
Rena Sandeep, Capital
12,350
4,870
36,600
12,450
4,900
3,475
2,150
1,275
12,350
4,870
Sandeep Company
Post Closing Trial Balance
December 31, 2010
Cash
Accounts Receivable
Prepaid Expenses
Equipment
Accumulated Depreciation
Accounts Payable
Notes Payable
Rena Sandeep, Capital
Total
8,130
3,300
2,750
10,400
$24,580
200. Reconstruct the adjusting and closing entries from the following T-Accounts.
Prepaid
Insurance
Accou
nts
Receiv
able.
1,200
200
1,000
Unearned
Revenues
6,000
1,500
7,500
Wages
Payable
1,350
435
915
530
530
2,200
2,700
1,000
18,680
$24,580
Madison
Cox, Capital
Madis
on
Cox,
Drawi
ng
7,000
5,280
Income
Summary
Fees Earned
2,100
4,655
5,280
2,100
2,100
9,935
0
10,180
8,000
1,500
435
9,935
0
Wages
Expense
Rent
Expens
e
2,600
530
Insurance
Expense
1,145
Utilities
Expense
200
180
1,145
3,130
200
0
Adjusting Entries:
1)
2)
3)
4)
Insuranc 200
e
Expense
Prepaid
Insuranc
e
Account 1,500
s
Receiva
ble
Fees
Earned
Unearne 435
d
Revenue
Fees
Earned
Wages 530
Expense
Wages
Payable
180
0
200
1,500
435
530
Closing Entries:
1)
2)
3)
4)
Fees
Earned
Income
Summar
y
Income
Summar
y
Wages
Expense
Rent
Expense
Insuranc
e
Expense
Utilities
Expense
Income
Summar
y
Madison
Cox,
Capital
Madison
Cox,
Capital
Madison
Cox,
Drawing
9,935
9,935
4,655
3,130
1,145
200
180
5,280
5,280
2,100
2,100
201. Reconstruct adjusting and closing entries for the month ended September 30, 2010 from the T-accounts
below.
Prepaid
Insurance
Accou
nts
Receiv
able.
1,350
1,250
275
1,525
130
1,220
Mai Lui,
Capital
Unearned
Revenues
Mai
Lui,
Drawin
g
7,000
580
2,400
1,050
385
385
235
815
Income
Summary
Fees Earned
2,400
6,090
2,400
0
4,020
Wages
Payable
5,510
5,000
275
235
580
5,510
Wages
Expense
Rent
Expens
e
3,600
385
1,880
Utilities
Expense
130
1,880
3,985
Insurance
Expense
95
130
95
0
Adjusting Entries:
1)
2)
3)
4)
Ins 130
ura
nc
e
Ex
pe
nse
Pre
pai
d
Ins
ura
nc
e
Ac 275
co
unt
s
Re
cei
va
ble
Fe
es
Ea
rne
d
Un 235
ear
ne
d
Re
ve
nu
e
Fe
es
Ea
rne
d
W 385
ag
es
Ex
pe
nse
W
ag
es
Pa
ya
ble
130
275
235
385
Closing Entries:
1)
2)
3)
4)
Fees 5,510
Earne
d
Inco
me
Sum
mary
Inco 6,090
me
Sum
mary
Wage
s
Expe
nse
Rent
Expe
nse
Insura
nce
Expe
nse
Utiliti
es
Expe
nse
Mai 580
Lui,
Capit
al
Inco
me
Sum
mary
Mai 2,400
Lui,
Capit
al
Mai
Lui,
Drawi
ng
5,510
3,985
1,880
130
95
580
2,400
202.
1)
Dana Bowen
Company is
completing its
first year of
operations on
April 30,
2010. Reconstru
ct the entries for
the year ended
April 30, 2010
from the
T-accounts
below. Record
them as follows:
A - L Journal Entries
M- R Adjusting Journal Entries
2)
Balance and
prepare the
Income
Statement,
Statement of
Owners Equity,
and the Balance
Sheet from the
T-Accounts.
3)
4)
Prepare the
Post-Closing
Trial Balance.
Cash
Accou
nts
Receiv
able
6,500
900
Supplies
1,250
385
Prepaid
Insurance
870
1,940
540
725
870
225
400
420
1,940
2,500
50
350
930
Equipment
2,500
Accum
ulated
Deprec
iation
Accounts
Payable
130
Wages
Payable
Unearned
Revenues
Dana
Bowen
,
Capital
930
590
Fees Earned
Wages
Expens
e
900
1,250
2,500
385
590
Insurance
Expense
725
Dana
Bowen,
Drawing
Income
Summary
6,500
2,500
350
Rent
Expense
Supplies
Expense
420
225
Deprec
iation
Expens
e
400
Miscellaneo
us Expense
130
50
540
1)
Journal Entries:
a)
C
a
s
h
6,
5
0
0
Dana Bowen,
Capital
b)
E
q
ui
p
m
e
nt
6,500
2,
5
0
0
Dana Bowen,
Capital
c)
d)
e)
f)
R
e
nt
E
x
p
e
n
s
e
2,500
4
0
0
Cash
400
C 900
a
s
h
Fees Earned 9
0
0
A 1,250
c
c
o
u
nt
s
R
e
c
ei
v
a
bl
e
Fees Earned 1,
2
5
0
S 870
u
p
pl
ie
s
Accounts
8
Payable
7
0
g)
h)
i)
j)
W420
a
g
e
s
E
x
p
e
n
s
e
Cash
P 1,940
re
p
ai
d
I
n
s
u
ra
n
c
e
Cash
4
2
0
1,
9
4
0
C 2,500
a
s
h
Fees Earned 2,
5
0
0
M50
is
c
el
la
n
e
o
u
s
E
x
p
e
n
s
e
Cash
5
0
k)
l)
D 350
a
n
a
B
o
w
e
n,
D
ra
w
in
g
Cash
C 930
a
s
h
Unearned
Revenue
3
5
0
9
3
0
Adjusting Entries:
m)
Supplies
Expense
n)
Accounts
Receivable
o)
Insurance
Expense
p)
Depreciation
Expense
q)
Wages
Expense
r)
Unearned
Revenues
540
Supplies
540
385
Fees Earned
385
725
Prepaid Insurance
725
130
Accumulated Depreciation
130
225
Wages Payable
225
590
Fees Earned
590
2)
Dana Bowen Company
Income Statement
For the Year Ended April 30, 2010
Fees Earned
Expenses:
Wages Expense
Rent Expense
Supplies Expense
Insurance Expense
Depreciation Expense
Miscellaneous Expense
Total Expenses
Net Income
$5,625
$645
400
540
725
130
50
2,490
$3,135
$0
9,000
9,000
$3,135
350
2,785
$11,785
Liabilities:
$7,670
1,635
330
1,215
Accounts Payable
Wages Payable
Unearned Revenues
Total Liabilities
$870
225
340
1,435
Owners Equity
Dana Bowen, Capital
Total Liabilities and
Owners Equity
11,785
$13,220
$10,850
$2,500
130
2,370
$13,220
3)
Closing Entries:
s)
Fees Earned
5,625
Inc
om
e
Su
m
ma
ry
t)
Income
Summary
5,625
2,490
W
ag
es
Ex
pe
nse
Re
nt
Ex
pe
nse
Su
ppl
ies
Ex
pe
nse
Ins
ura
nc
e
Ex
pe
nse
De
pre
cia
tio
n
Ex
pe
nse
Mi
sce
lla
ne
ou
s
Ex
pe
nse
u)
Income
Summary
645
400
540
725
130
50
3,135
Da
na
Bo
we
n,
Ca
pit
al
v)
Dana Bowen,
Capital
3,135
350
Da
na
Bo
we
n,
Dr
aw
ing
350
4)
Dana Bowen Company
Post-Closing Trial Balance
For the Year Ended April 30, 2010
Cash
Accounts Receivable
Supplies
Prepaid Insurance
Equipment
Accumulated Depreciation
Accounts Payable
Wages Payable
Unearned Revenues
Dana Bowen, Capital
Total
$7,670
1,635
330
1,215
2,500
$13,350
$ 130
870
225
340
11,785
$13,350
203. The balances in the ledger of Good Landscape Services as of January 31, 2014 before adjustments, are as
follows:
Cash
Supplies
Prepaid Insurance
Equipment
Accumulated
Depreciation
$ 6,750
3,900
8,400
41,750
9,950
$29,775
3,425
56,300
24,300
6,000
1,500
Adjustment data are as follows: supplies on hand, January 31, $900; insurance expired for January, $1,100; depreciation on equipment for January,
$1,600; salaries accrued, January 31, $1,650.
(a)
(b)
(c)
Prepare a ten-column work sheet for Good Landscape Services for January, 2014.
On the basis of the work sheet in (a), present the following in good order: (1) income statement, (2) statement of owner's equity
(no additional investments were made during the month), and (3) balance sheet.
On the basis of the work sheet in (a), journalize the closing entries as of January 31, 2014.
(a)
)
Good Landscape Services
Work Sheet
For the Month Ended January 31, 2014
)
)
)
)
Trial Balance
Adjustm
ents
Account Title
Dr.
Cr.
Dr.
Cr.
Cash
Supplies
Prepaid Insurance
Equipment
Accumulated Depreciation
Dalton Good, Capital
Dalton Good, Drawing
Service Revenue
Salary Expense
Rent Expense
Miscellaneous Expense
6,750
3,900
8,400
41,750
.....
.....
3,425
.....
24,300
6,000
1,500
96,025
.....
.....
.....
.....
9,950
29,775
.....
63,200
.....
.....
.....
96,025
.....
.....
.....
.....
.....
.....
.....
.....
(d) 1,650
.....
.....
.....
(a) 3,000
(b) 1,100
.....
(c) 1,600
.....
.....
.....
.....
.....
.....
Supplies Expense
Insurance Expense
Depreciation Expense
Salaries Payable
.....
.....
.....
.....
.....
.....
.....
.....
(a) 3,000
(b) 1,100
(c) 1,600
.....
7,350
.....
.....
.....
d) 1,650
7,350
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
Net Income
(
(
(
(
(
(
(
(
(
(
(
(
(
(
(
(
(
(
(
(
(
(
Adjusted
Trial Balance
Dr.
6,750
900
7,300
41,750
.....
.....
3,425
.....
25,950
6,000
1,500
3,000
1,100
1,600
...........
99,275
Income
Stateme
nt
Balance Sheet
Cr.
Dr.
Cr.
Dr.
Cr.
.....
.....
.....
.....
11,550
29,775
.....
56,300
.....
.....
.....
.....
.....
.....
1,650
99,275
.....
.....
.....
.....
.....
.....
.....
.....
25,950
6,000
1,500
3,000
1,100
1,600
...........
39,150
17,150
56,,300
.....
.....
.....
.....
.....
.....
.....
56,300
.....
.....
.....
.....
.....
.....
...........
56,300
...........
56,300
6,750
900
7,300
41,750
.....
.....
3,425
.....
.....
.....
.....
.....
.....
.....
...........
60,125
...........
60,125
.....
.....
.....
.....
11,550
29,275
.....
.....
.....
.....
.....
.....
.....
.....
1,650
43,875
17,150
60,125
(b) (1)
Good Landscape Services
Income Statement
For the Month Ended January 31, 2014
Service revenue
Operating expenses:
Salary expense
Rent expense
Supplies expense
Insurance expense
Depreciation expense
Miscellaneous expense
Total operating expenses
Net income
$56,300
$25,950
6,000
2,100
1,100
2,500
1,500
39,150
$17,150
(b) (2)
Good Landscape Services
Statement of Owner's Equity
For the Month Ended January 31, 2014
Dalton Good, Capital, January 1, 2014
Net income for the month
Less withdrawals
Increase in owner's equity
Dalton Good, Capital, January 31, 2014
(b) (3)
Good Landscape Services
Balance Sheet
January 31, 2014
Assets
Current assets:
Cash
Supplies
Prepaid insurance
Total current assets
Property, plant, and
equipment:
Equipment
Less accumulated
depreciation
Total property, plant,
and equipment
Total assets
$29,775
$17,150
3,425
13,725
$43,500
Liabilities
$ 6,750
1,800
7,300
Current liabilities:
Salaries payable
$15,850
$41,750
12,450
29,300
$45,150
Owner's Equity
Dalton Good, Capital
Total liabilities and
owner's equity
$ 1,650
43,500
$45,150
(c)
Jan. 31
31
31
31
Closing Entries
Service Revenue
Income Summary
56,300
56,300
Income Summary
Salary Expense
Rent Expense
Miscellaneous Expense
Supplies Expense
Insurance Expense
Depreciation Expense
39,150
Income Summary
Dalton Good, Capital
17,150
3,425
25,950
6,000
1,500
2,100
1,100
2,500
17,150
3,425
Account Title
Debit
Cash
Accounts Receivable
Supplies
Equipment
Accumulated Depr-Equip
Accounts Payable
Wages Payable
Tony Danilo, Capital
Tony Danilo, Drawing
Fees Earned
Wages Expense
Rent Expense
Depreciation Expense
Totals
Net Income (Loss)
14,500
7,500
500
20,500
Income Statement B
a
l
a
n
c
e
Credit
15,000
9,500
3,060
18,240
1,000
34,000
18,000
9,300
8,500
79,800
79,800
S
h
e
e
t
DCredit
e
b
i
t
Debit
Credit
Danilo Enterprises
Worksheet
For the Year Ended December 31, 2010
Adjusted Trial
Balance
Account Title
Debit
Cash
Accounts Receivable
Supplies
Equipment
Accumulated Depr-Equip
Accounts Payable
Wages Payable
Tony Danilo, Capital
Tony Danilo, Drawing
Fees Earned
Wages Expense
14,500
7,500
500
20,500
Rent Expense
9,300
Depreciation Expense
8,500
Totals
79,800
Net Loss
Income Statement B
a
l
a
n
c
e
Credit
S
h
e
e
t
DCredit
e
b
i
t
Debit
Credit
14,500
7,500
500
20,500
15,000
9,500
3,060
18,240
15,000
9,500
3,060
18,240
1,000
1,000
34,000
18,000
79,800
34,000
1
8
,
0
0
0
9
,
3
0
0
8
,
5
0
0
334,000
5
,
8
0
0
1,800
335,800
5
,
8
0
0
44,000
45,800
1,800
45,800
45,800