Comprehensive Problem 1 For Chapters 14

Requirements

1. Record each transaction in the journal. Explanations are not required.

2. Post the transactions in the T-accounts using the following chart of accounts.

3. Prepare an unadjusted trial balance as of December 31, 2016.

4. Prepare a worksheet as of December 31, 2016. (optional)

5. Journalize the adjusting entries using the following adjustment data. Post adjusting entries to
the T-accounts.

6. Prepare an adjusted trial balance as of December 31, 2016.

7. Prepare Magness Delivery Services income statement and statement of owner's equity for the
month ended December 31, 2016, and the classified balance sheet on that date. On the
income statement, list expenses in decreasing order by amountthat is, the largest expense
first, the smallest expense last.

8. Journalize the closing entries and post to the T-accounts.

9. Prepare a post- closing trial balance as of December 31, 2016.

Solution:

Requirement 1

Date Accounts and Explanation Debit

December,1 Cash 10,000
Truck 20,000
Magness, Capital
December1 Prepaied Insurance 1,000
Cash
Dec4 Office Supplies 500

Dec12 Cash 2,000

Service Revenue
Dec15 Accounts Recievable 2,500
Service Revenue
Dec18 Salaries Expense 1,000
Cash
Dec20 Cash 15,000
Service Revenue
Dec22 Cash 800
Unearned Revenue
Dec25 Cash 2,500
Accounts Recievable
Dec27 Fuel Expense-Truck 300
Accounts Payable
Dec28 Accounts Recievable 700
Service Revenue
Dec29 Rent Expense 1,600
Cash

Accounts and Explanation

Dec30 Accounts Payable 300
Cash
Dec31 Magness, Withdrawl 3,000
Cash
Requirement 2, 5 and 8

Cash Accounts Paya

10,000 500
2,000 1,000
15,000 300
800 1,600 Bal
2,500 3,000
Salaries Payab
Bal 23,900

Bal

Accounts Receivable Unearned Reve

0

Bal 0

Office Supplies Magness, Capi

Bal

Magness, Withdra

Prepaid Insurance
1,000
Income Summa

Bal 1,000

Truck
20,000
Service Reven
 Bal 20,000

Accumulated DepreciationTruck
0

Bal 0

Salaries Expense Depreciation Expens

1,000

Bal 1,000 Bal

Insurance Expense Fuel Expense

250

Bal 250 Bal

Rent Expense Supplies Expen

1,600

Bal 1600 Bal

Requirement 3

MAGNESS DELIVERY SERVICE

Unadjusted Trial Balance
December 31, 2016
Balance
Account Title Debit
Cash $ 23,600
Accounts Recievable 2,500
Office Supplies 500
Prepaied Insurance 1,000
Truck 20,000
Unearned Revenue
Magness, Capital
Magness, Withdrawl 3,000
Service Revenue
Salaries expense 1,000
Fuel Expense 300
Rent Expense 1,600
Total: $ 51,000

Requirement 4

MAGNESS DELIVERY SERVICE

Worksheet
December 31, 2016
Unadjusted Trial
Adjustments Adjusted Trial Balance
Account Names Balance
Debit Credit Debit Credit Debit
Requirement 5

Date Accounts and Explanation Debit

A Salaries Expense 1,000
Salaries Payable
B Depreciation Expense-Truck 3,000
Accumulated Depreciation-Truck
C Insurance Expense 250
Prepaied Insurance
D Supplies Expense 400
Office Supplies
E Unearned Revenue 300
Service Revenue
F Accounts Recievable 650
Service Revenue

Requirement 6

MAGNESS DELIVERY SERVICE

Adjusted Trial Balance
December 31, 2016
Balance
Account Title Debit
Cash $ 23,600
Accounts Recievable 650
Office Supplies 100
Prepaied Insurance 250
Truck 20,000
Accumulated Depreciation- Truck
Salaries Payable
Unearned Revenue
Magness, Capital
Magness, Withdrawl 3,000
Service Revenue
Salaries expense 1,000
Depreciation Expense- Truck 250
Fuel Expense 300
Rent Expense 1,600
Total: 51,400

Requirement 7

MAGNESS DELIVERY SERVICE

Income Statement
Month Ended December 31, 2016
Revenues:
Service Revenues
Expenses:
Salary Expenses $ 1,000
Depreciation Expense-Truck 250
Insurance Expense 1,000
Supplies Expense 400
Rent Expense 1,600
Fuel Expense 300
Total:

Net Income:
 MAGNESS DELIVERY SERVICE
Statement of Owners Equity
Month Ended December 31, 2016
Magness Capital Jan 1 2016
Net Income:

Owner Withdrawal:
Magness Capital, Jan 31 2016

MAGNESS DELIVERY SERVICE

Balance Sheet
December 31, 2016
Assets
Cash
Accounts Recievable
Office Supplies
Prepaied Insurance
Longterm Assets:
Truck 20,000
(less) Accumulated Depreciation $ (3,000)

Total Assets:

Liabilities
Accounts Payable 0
Salaries Payable $ -
Unearned Revenue 800

Total Liabilites:

Owner's Equity
Magness Capital Dec 31
Total Liabilites and Owners Equity
Requirement 8

Date Accounts and Explanation Debit

Dec31 Service Revenue 20,200
Income Summary
To Close Income Summary
Dec31 Income Summary 3,800
Salary Expenses
Depreciation Expenses-Truck
Insurance Expenses
Supplies Expenses
Rent Expenses
Fuel Expenses
To Close Expenses
Dec31 Income Summary 16,400
Magness Capital
To Close Income summary
Dec31 Magness Capital 3,000
Magness Withdrawl
To Close Withdrawls

Requirement 9

MAGNESS DELIVERY SERVICE

Post-Closing Trial Balance
December 31, 2016
Balance
Account Title Debit
Cash $ 16,000
Accounts Recievable 650
Office Supplies 700
Prepaied Insurance 750
Truck 17,000
Accumulated Depreciation-Truck
Salaries payable
Unearned Revenue
Magness Capital
Total: 34,500
nts.

adjusting entries to

owner's equity for the

at date. On the
the largest expense

Credit

30,000

1,000

500

2,000
 2,500

1,000

15,000

800

2,500

300

700

1600

300

3,000
 Accounts Payable
0

Salaries Payable
0

Unearned Revenue
800

800 Bal

Magness, Capital
30,000

30,000

Magness, Withdrawals
3,000

3,000 Bal

Income Summary

Service Revenue
 2,000
2,500
15,000
700

20,200 Bal

Depreciation ExpenseTruck
0

Fuel Expense
300

300

Supplies Expense
500

500

Balance
Credit
 $ 800
30,000

20,200

$ 51,000

SERVICE

016

Adjusted Trial Balance Income Statement Balance Sheet

Credit Debit Credit Debit Credit

 Credit

1,000

3,000

250

400

300

650

Balance
Credit
$ 3,000
$ 1,000
$ 300
30,000

20,200

54,500

$ 20,200

(4,550)

$ 15,650
$ 30,000
15,650
45,650

(3,000)
$ 42,650

23,600
800
500
1,000

17,000

25,900

(800)

25,100
25,900
 Credit

20,200

1,000
250
250
400
1,600
300

16,400

3,000

Balance
Credit

$ 3,000
$ 1,000
500
30,000
34,500
Comprehensive Problem 2 For Chapters 14

Requirements

1. Record each transaction in the journal. Explanations are not required.

2. Post the transactions in the T-accounts. Dont forget to use the December 31, 2016 ending
balances as appropriate.

3. Prepare an unadjusted trial balance as of January 31, 2017.

4. Prepare a worksheet as of January 31, 2017. (optional)

5. Journalize the adjusting entries using the following adjustment data. Post adjusting entries
to the T-accounts.

6. Prepare an adjusted trial balance as of January 31, 2017.

7. Prepare Magness Delivery Services income statement and statement of owner's equity for
the month ended January 31, 2017, and the classified balance sheet on that date. On the
income statement, list expenses in decreasing order by amount-that is, the largest expense
first, the smallest expense last.

8. Calculate the following ratios as of January 31, 2017 for Magness Delivery Service: return on
assets, debt ratio, and current ratio.

Solution:

Requirement 1

Date Accounts and Explanation Debit

Jan3,2017 Cash 1,000
Accounts Recievable
Jan 5 Office Supplies 600
Accounts Payable
Jan 12 Cash 2,000
Service Revenue
Jan 15 Salaries Expense 2,500
Salaries Payable
 Jan 18 Accounts Recievable 950
Service Revenue
Jan 20 Accounts Payable 200
Cash
Jan 24 Fuel Expense 250
Cash
Jan 27 Unearned Revenue 800
Sales Revenue
Jan 28 Rent Expense 1,600
Cash
Jan 30 Cash 3,200
Unearned Revenue
Jan 31 Magness, Withdrawl 2,000
Cash

Date Accounts and Explanation Debit

Requirement 2, 5

Cash Accounts Payabl

Jan3 1,000 200 Jan20 Jan 5
Jan12 2,000 250 Jan24
Jan 30 3,200 1,600 Jan28
2,000 Jan31

Bal. 2,150 Salaries Payable

Accounts Receivable Unearned Revenu

Jan 18 950 1,000 Jan3 Jan 27

50 Bal

Office Supplies Magness, Capita

Jan 5 600

Bal 600

Prepaid Insurance Magness, Withdraw

Jan 31

Bal

Truck
 Accumulated DepreciationTruck Service Revenue

Salaries Expense Depreciation Expense

Jan 15 2,500

Bal 2,500

Insurance Expense Fuel Expense

Jan 28

Bal

Rent Expense Supplies Expens

Jan 28 1,600 Jan 5

Bal 1,600 Bal

Requirement 3

MAGNESS DELIVERY SERVICE

Unadjusted Trial Balance
January 31, 2017
Balance
Account Title Debit
Cash $ 2,150
Accounts Recievable 50
Office Supplies 600
Prepaied Insurance 500
Truck 20,000
Unearned Revenue
Magness Capital
Magness Withdrawl 2,000
Service Revenue 3,750
Salaries Expense
Fuel Expense
Rent Expense
Total: 29,050

Requirement 4

MAGNESS DELIVERY SERVICE

Worksheet
January 31, 2017
Unadjusted Trial
Adjustments Adjusted Trial Balance
Account Names Balance
Debit Credit Debit Credit Debit
Requirement 5

Date Accounts and Explanation Debit

A Supplies Expense 480
Office Supplies
B Unearned Revenue 800
Service Revenue
C Salaries Payable 1,500
Salaries Expense
D Insurance Expense 1,000
Prepaied Insurance
E Depreciation Expense-Truck 250
Accumulated Depreciation-Truck

Requirement 6

MAGNESS DELIVERY SERVICE

Adjusted Trial Balance
January 31, 2017
Balance
Account Title Debit
Cash $ 2,150
Accounts Recievable 50
Office Supplies 120
Prepaied Insurance -
Truck 20,000
Accumulated Depreciation- Truck 500
Salaries Payable 15,000
Unearned Revenue
Magness, Capital
Magness, Withdrawl 2,000
Service Revenue 4,550
Salaries expense
Depreciation Expense- Truck
Fuel Expense
Rent Expense
Total: 94,320

Requirement 7

MAGNESS DELIVERY SERVICE

Income Statement
Month Ended January 31, 2017
Revenue:
Service Revenue
Expense:
Salaries Expense $ 1,000
Depreciation Expense-Truck 250
Insurance Expense 750
Supplies Expense 480
Rent Expense 1,600
Fuel Expense 250
Total Expense

Net Income

MAGNESS DELIVERY SERVICE

Statement of Owner's Equity
 Month Ended January 31, 2017
Magness Capital, Jan 1
Net Income

Magness Withdrawl
Magness Capital, Jan 31

MAGNESS DELIVERY SERVICE

Balance Sheet
January 31, 2017
Assets
Cash
Accounts Recievable
Office Supplies
Prepaied Insurance
Longeterm Assets:
Truck
(less) Accumulated Depresiation-Truck

Total Assets:

Liabilities
Accounts Payable 400
Salaries Payable $ 1,000
Unearned Revenue 2,400

Total Liabilites

Owner's Equity
Magness Capital Jan 31
Total Liabilites and Owner Equity

Requirement 8
Return on Assets: 1%

Debt Ratio: 19.40%

Current Ratio: 51%

 er 31, 2016 ending

st adjusting entries

of owner's equity for

n that date. On the
the largest expense

ery Service: return on

Credit

1,000

600

2,000

2,500
 950

200

250

800

1,600

3,200

2,000

Credit
 Accounts Payable
200 600 Jan5

400 Bal

Salaries Payable
2,500 Jan15

2,500 Bal

Unearned Revenue
800 3,200 Jan30

2,400 Bal

Magness, Capital
30,000

30,000 Bal

Magness, Withdrawals
2,000

2,000
 Service Revenue
2,000 Jan12
950 Jan18
800 Jan27

3,750 Bal

Depreciation ExpenseTruck

Fuel Expense
250

250

Supplies Expense
600

600

Balance
Credit
 $ 2,400
30,000

2,500
250
1,600
36,500

Y SERVICE

017

Adjusted Trial Balance Income Statement Balance Sheet

Credit Debit Credit Debit Credit

 Credit

480

800

1,500

1,000

250

Balance
Credit
 1,600
30,000

1,000
500
250
1,600
34,950

$ 23,950

4,330

19,620
$ 30,000
19,620
49,620

(2,000)
$ 47,620

2,150
$ 50
126
-

$ 17,000
250

$ 19,576

(3,800)

15,776
$ 19,576