Chapter 4 Completing the Accounting Cycle

PROBLEMS: SET B

Prepare worksheet, financial P4-1B Michael Pevnick began operations as a private investigator on January 1, 2014. The
statements, and adjusting trial balance columns of the worksheet for Michael Pevnick, P.I., at March 31 are as follows.
and closing entries.
(LO 1, 2, 3, 6), AN MICHAEL PEVNICK, P.I.
Worksheet
For the Quarter Ended March 31, 2014

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Trial Balance
Account Titles Dr. Cr.
Cash 11,400

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Accounts Receivable 5,620
Supplies 1,050

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Prepaid Insurance 2,400
Equipment 30,000

Trial Balance

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Account Titles Dr. Cr.

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Accounts Payable
Owner’s Capital
10,000
12,350
20,000
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Owner’s Drawings 600
Service Revenue 13,620
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Salaries and Wages Expense 2,200
Travel Expense 1,300
Rent Expense 1,200
Miscellaneous Expense 200
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55,970 55,970
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Other data:
1. Supplies on hand total $480.
2. Depreciation is $800 per quarter.
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3. Interest accrued on 6-month note payable, issued January 1, $300.

4. Insurance expires at the rate of $200 per month.
5. Services performed but unbilled at March 31 total $1,030.
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Instructions
(a) Adjusted trial balance (a) Enter the trial balance on a worksheet and complete the worksheet.
$58,100 (b) Prepare an income statement and owner’s equity statement for the quarter and a
(b) Net income $7,480 classified balance sheet at March 31. M. Pevnick did not make any additional
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Total assets $49,530 investments in the business during the quarter ended March 31, 2014.
(c) Journalize the adjusting entries from the adjustments columns of the worksheet.
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(d) Journalize the closing entries from the financial statement columns of the worksheet.
Complete worksheet; prepare P4-2B The adjusted trial balance columns of the worksheet for Greenwood Company are
financial statements, closing as follows.
entries, and post-closing trial
balance. GREENWOOD COMPANY
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Worksheet
(LO 1, 2, 3, 6), AP
For the Year Ended December 31, 2014

Adjusted
Account Trial Balance
No. Account Titles Dr. Cr.
101 Cash 18,800
112 Accounts Receivable 16,200

P-10

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 Problems: Set B P-11

126 Supplies 2,300

130 Prepaid Insurance 4,400
157 Equipment 46,000
158 Accumulated Depreciation—Equipment 20,000
200 Notes Payable 20,000
201 Accounts Payable 8,000
212 Salaries and Wages Payable 2,600
306 Owner’s Drawings 12,000
400 Service Revenue 87,800
610 Advertising Expense 10,000
631 Supplies Expense 3,700
711 Depreciation Expense 8,000
722 Insurance Expense 4,000
726 Salaries and Wages Expense 39,000

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905 Interest Expense 1,000
Totals 165,400 165,400

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Instructions
(a) Complete the worksheet by extending the balances to the financial statement columns. (a) Net income $22,100

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(b) Prepare an income statement, owner’s equity statement, and a classified balance sheet. (b) Current assets $41,700
(Note: $5,000 of the notes payable become due in 2015.) T. Greenwood did not make Current liabilities $16,600
any additional investments in the business during 2014.
(c) Prepare the closing entries. Use J14 for the journal page.

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(d) Post the closing entries. Use the three-column form of account. Income Summary is
account No. 350. (e) Post-closing trial balance

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(e) Prepare a post-closing trial balance.

P4-3B The completed financial statement columns of the worksheet for Niho Company
$87,700

Prepare financial statements,

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are shown below. closing entries, and post-
closing trial balance.
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(LO 1, 2, 3, 6), AP
NIHO COMPANY
Worksheet
For the Year Ended December 31, 2014
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Account Income Statement Balance Sheet

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No. Account Titles Dr. Cr. Dr. Cr.

101 Cash 6,200
112 Accounts Receivable 7,500
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130 Prepaid Insurance 1,800

157 Equipment 33,000
158 Accumulated Depreciation—Equip. 8,600
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201 Accounts Payable 11,700

212 Salaries and Wages Payable 3,000
301 Owner’s Capital 34,000
306 Owner’s Drawings 7,200
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400 Service Revenue 46,000

622 Maintenance and Repairs Expense 4,400
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711 Depreciation Expense 2,800

722 Insurance Expense 1,200
726 Salaries and Wages Expense 35,200
732 Utilities Expense 4,000
Totals 47,600 46,000 55,700 57,300
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Net Loss 1,600 1,600

47,600 47,600 57,300 57,300

Instructions
(a) Prepare an income statement, owner’s equity statement, and a classified balance sheet. (a) Net loss $1,600
S. Niho made an additional investment in the business of $4,000 during 2014. Ending capital $25,200
(b) Prepare the closing entries. Total assets $39,900

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 P-12 4 Completing the Accounting Cycle

(c) Post the closing entries and underline and balance the accounts. (Use T-accounts.)
(d) Post-closing trial balance Income Summary is account No. 350.
$48,500 (d) Prepare a post-closing trial balance.
Complete worksheet; prepare P4-4B Avalon Amusement Park has a fiscal year ending on September 30. Selected data
classified balance sheet, from the September 30 worksheet are presented below.
entries, and post-closing trial
balance. AVALON AMUSEMENT PARK
(LO 1, 2, 3, 6), AN Worksheet
For the Year Ended September 30, 2014

Adjusted
Trial Balance Trial Balance
Dr. Cr. Dr. Cr.

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Cash 41,400 41,400
Supplies 18,600 2,200
Prepaid Insurance 31,900 10,900

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Land 80,000 80,000
Equipment 120,000 120,000

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Adjusted

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Trial Balance Trial Balance
Dr. Cr. Dr. Cr.

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Accumulated Depreciation—Equip.
Accounts Payable
Unearned Ticket Revenue
36,200
14,600
3,700
42,200
14,600
1,000
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Mortgage Payable 50,000 50,000
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Owner’s Capital 109,700 109,700
Owner’s Drawings 14,000 14,000
Ticket Revenue 277,500 280,200
Salaries and Wages Expense 105,000 105,000
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Maintenance and Repairs Expense 30,500 30,500

Advertising Expense 9,400 9,400
Utilities Expense 16,900 16,900
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Property Tax Expense 18,000 21,000

Interest Expense 6,000 10,000
Totals 491,700 491,700
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Insurance Expense 21,000

Supplies Expense 16,400
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Interest Payable 4,000

Depreciation Expense 6,000
Property Taxes Payable 3,000
Totals 504,700 504,700
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Instructions
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(a) Net income $44,000 (a) Prepare a complete worksheet.

(b) Total current assets (b) Prepare a classified balance sheet. (Note: $15,000 of the mortgage note payable is due
$54,500 for payment in the next fiscal year.)
(c) Journalize the adjusting entries using the worksheet as a basis.
(e) Post-closing trial balance (d) Journalize the closing entries using the worksheet as a basis.
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$254,500 (e) Prepare a post-closing trial balance.

Complete all steps in
accounting cycle. P4-5B Gillian Shaw opened Shaw’s Carpet Cleaners on March 1. During March, the fol-
(LO 1, 2, 3, 4, 6), AN lowing transactions were completed.
Mar. 1 Invested $10,000 cash in the business.
1 Purchased used truck for $6,000, paying $3,000 cash and the balance on account.
3 Purchased cleaning supplies for $1,200 on account.

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 Problems: Set B P-13

5 Paid $1,200 cash on a one-year insurance policy effective March 1.

14 Billed customers $4,800 for cleaning services.
18 Paid $1,500 cash on amount owed on truck and $500 on amount owed on
cleaning supplies.
20 Paid $1,800 cash for employee salaries.
21 Collected $1,400 cash from customers billed on March 14.
28 Billed customers $2,500 for cleaning services.
31 Paid $200 for the monthly gasoline bill for the truck.
31 Withdrew $700 cash for personal use.
The chart of accounts for Shaw’s Carpet Cleaners contains the following accounts: No. 101
Cash, No. 112 Accounts Receivable, No. 126 Supplies, No. 130 Prepaid Insurance, No. 157
Equipment, No. 158 Accumulated Depreciation—Equipment, No. 201 Accounts Payable,
No. 212 Salaries and Wages Payable, No. 301 Owner’s Capital, No. 306 Owner’s Drawings,
No. 350 Income Summary, No. 400 Service Revenue, No. 631 Supplies Expense, No. 633

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Gasoline Expense, No. 711 Depreciation Expense, No. 722 Insurance Expense, and No.
726 Salaries and Wages Expense.

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Instructions
(a) Journalize and post the March transactions. Use page J1 for the journal and the three-
column form of account.

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(b) Prepare a trial balance at March 31 on a worksheet. (b) Trial balance $19,500
(c) Enter the following adjustments on the worksheet and complete the worksheet. (c) Adjusted trial balance
(1) Unbilled revenue for services performed at March 31 was $500. $20,850

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(2) Depreciation on equipment for the month was $300.
(3) One-twelfth of the insurance expired.

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(4) An inventory count shows $250 of cleaning supplies on hand at March 31.
(5) Accrued but unpaid employee salaries were $550.
(d) Prepare the income statement and owner’s equity statement for March and a classified (d) Net income $3,900
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balance sheet at March 31. Total assets $15,950
(e) Journalize and post adjusting entries. Use page J2 for the journal.
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(f) Journalize and post closing entries and complete the closing process. Use page J3 for
the journal. (g) Post-closing trial balance
(g) Prepare a post-closing trial balance at March 31. $16,250
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