Daniel Aberle

3/9/2017
HW # 4
CH-4
1. Q3 – Accepts legal engagement in March, performs work in April, and is paid in May. With monthly
financial statements financial statements, the firm should recognize revenue in April, because the
revenue recognition principle requires that revenue is recognized in the accounting period in which
the performance obligation is satisfied.
2. Q4 – The firm should deduct all $4700.00 from the month of April, because that is when the expense
made its contribution to revenue, following the expense recognition principle. The $2500.00 would
be Salaries and Wages Expense, and the $2200.00 would be Salaries and Wages Payable.
3. Q10 – Depreciation expense appears as an expense on the income statement like any other
expense, while accumulated depreciation appears on the balance sheet as a contra asset – offset
against an asset account.
4. Q24 – Accrual basis financial statements include information that reveals when a company has
performed a service, even if cash was not received. Also, a company will recognize expenses when
they are incurred even if no cash has been paid.
o Cash based financial statements do not list when a service has been performed, rather, a
revenue is recorded when cash is received and an expense is recorded when cash is paid
out. Because of this, a company might not have revenue reflected in its financial statement
even if it has satisfied its obligation if it has not received cash payment.
5. E4-12

General Journal
Date Account Titles Debit Credit
Adjusting Entries
31-Jul Interest Receivable (20000*.06/12) $ 100.00
Interest Revenue $ 100.00
31-Jul Supplies Expense $ 5,400.00
Supplies $ 5,400.00
31-Jul Rent Expense (3600/4) $ 900.00
Prepaid Rent $ 900.00
31-Jul Salaries and Wages Expense $ 3,100.00
Salaries and Wages Payable $ 3,100.00
31-Jul Depreciation Expense (6000/12) $ 500.00
Acc. Dep. - Building $ 500.00
31-Jul Unearned Service Revenue $ 4,700.00
Service Revenue $ 4,700.00
31-Jul Notes Payable $ 2,300.00
Maintenance Expense $ 2,300.00
6. E4-9

General Journal
Date Account Titles Debit Credit
Adjusting Entries
31-Mar Depreciation Expense (25000/12*3) $ 6,250.00
Acc. Dep. - Equipment $ 6,250.00
31-Mar Unearned Rent Revenue (12400/2) $ 6,200.00
Rent Revenue $ 6,200.00
31-Mar Interest Expense $ 400.00
Interest Payable $ 400.00
31-Mar Supplies Expense $ 2,150.00
Supplies $ 2,150.00
31-Mar Insurance Expense (400*3) $ 1,200.00
Prepaid Insurance $ 1,200.00

7. P4-4A
a)
General Journal
Date Account Titles Debit Credit
Adjusting Entries
30-Sep AR $ 600.00
Service Revenue $ 600.00
30-Sep Supplies Expense $ 1,020.00
Supplies $ 1,020.00
30-Sep Rent Expense $ 900.00
Prepaid Rent $ 900.00
30-Sep Depreciation Expense $ 350.00
Acc. Dep. - Equipment $ 350.00
30-Sep Salaries and Wages Expense $ 600.00
Salaries and Wages Payable $ 600.00
30-Sep Interest Expense $ 50.00
Interest Payable $ 50.00
30-Sep Unearned Rent Revenue $ 200.00
Rent Revenue $ 200.00

b)
 Salt Creek Golf Inc.
Income Statement
For the Quarter Ended September 30, 2017
Revenues
Service Revenues $ 14,700.00
Rent Revenues $ 900.00
Total Revenue $ 15,600.00
Expenses
Salaries and Wages Expense $ 9,400.00
Rent Expense $ 1,800.00
Depreciation Expense $ 350.00
Supplies Expense $ 1,020.00
Utilities Expense $ 470.00
Interest Expense $ 50.00
Total Expenses $ 13,090.00
Net Income $ 2,510.00

Salt Creek Golf Inc.

Retained Earning Statement
For the Quarter Ended September 30, 2017
Retained earnings, July 1 0
Add: Net Income $ 2,510.00
$ 2,510.00
Less: Dividends $ 600.00
Retained Earnings, September 30 $ 1,910.00
 Salt Creek Golf Inc.
Classified Balance Sheet
30-Sep-17
Assets
Current Assets
Cash $ 6,700.00
AR $ 1,000.00
Supplies $ 180.00
Prepaid Rent $ 900.00
Total Current Assets $ 8,780.00
PPE
Equipment $ 15,000.00
Less: Acc. Dep. - Equipment $ 350.00 $ 14,650.00
Total Assets $ 23,430.00
Liabilities and Stockholders' Equity
Current Liabilities
Notes Payable $ 5,000.00
Accounts Payable $ 1,070.00
Salaries and Wages Payable $ 600.00
Unearned Rent Revenue $ 800.00
Interest Payable $ 50.00
Total Current Liabilities $ 7,520.00
Stockholders Equity
Common Stock $ 14,000.00
Retained Earnings $ 1,910.00
Total Stockholders' Equity $ 15,910.00
Total Liabilities and Stockholders Equity $ 23,430.00

c) The accounts that should be closed are

Revenue Account Closings
Rent Revenue
Service Revenue

Expense Account Closings

Salaries and Wages Expense
Rent Expense
Depreciation Expense
Supplies Expense
Utilities Expense
Interest Expense

Dividends Closing
Dividends
d) It has been outstanding for one month.
5000*.12=600
600/12=50