Homework_Chapter4

Problem 4-1A

Problem 4-2A

Problem 4-6A

Ex: 4.3, 4.4

Problem 4-1A Determining balance sheet classifications

1. C
2. A
3. C
4. A
5. C
6. C
7. Z
8. A
9. E
10. B
11. Z
12. A
13. A
14. E
15. C
16. F
17. E
18. A
19. G
20. E

Current Assets: Office supplies, Store supplies, Cash, Prepaid rent, Interest receivable, Prepaid
insurance.

Current liabilities:

Problem 4-2A Applying the accounting cycle

1. Use the balance column format to set up each ledger account listed in its chart of accounts.
2. Prepare journal entries to record the transactions for April and post them to the ledger
accounts. The company records prepaid and unearned items in balance sheet accounts.

Cash Account No. 101

Date Explanation PR Debit Credit Balance
April 1, 2011 $20,000 $20,000
April 2, 2011 $1,700 18,300
April 3, 2011 1,100 17,200
April 10, 2011 3,600 13,600
April 14, 2011 1,800 11,800
April 24, 2011 7,900 19,700
April 28, 2011 1,800 17,900
April 29, 2011 250 17,650
April 30, 2011 650 17,000
April 30, 2011 1,500 15,500

Computer Equipment Account No. 167

Date Explanation PR Debit Credit Balance
April 1, 2011 $40,000 $40,000

Rent Expense Account No. 640

Date Explanation PR Debit Credit Balance
April 2, 2011 $1,700 $1,700

Office Supplies Account No. 124

Date Explanation PR Debit Credit Balance
April 3, 2011 $1,100 $1,100

Prepaid Insurance Account No. 128

Date Explanation PR Debit Credit Balance
April 10, 2011 $3,600 $3,600

Salaries Expense Account No. 622

Date Explanation PR Debit Credit Balance
April 14, 2011 $1,800 $1,800
April 28, 2011 1,800 3,600

Commissions Earned Account No. 405

Date Explanation PR Debit Credit Balance
April 24, 2011 $7,900 $7,900

Repairs Expense Account No. 684

Date Explanation PR Debit Credit Balance
April 29, 2011 $250 $250

Telephone Expense Account No. 688

Date Explanation PR Debit Credit Balance
 April 30, 2011 $650 $650

J. Stafford, Withdrawals Account No. 302

Date Explanation PR Debit Credit Balance
April 30, 2011 $1,500 $1,500

J. Stafford, Capital Account No. 301

Date Explanation PR Debit Credit Balance
April 1, 2011 $60,000 $60,000

3. Prepare an unadjusted trial balance as of April 30.

4. Use the following information to journalize and post adjusting entries for the month:

See-It-Now Travel
Trial Balances
April 30, 2011
Unadjusted Adjusted
Trial Balance Adjustments Trial Balance
Dr. Cr. Dr. Cr. Dr. Cr.
Acct. Account Title
No.
101 Cash $15,500 $15,500
106 Accounts Receivable 0 (e) 1,650 1,650
124 Office Supplies 1,100 (b) 400 700
128 Prepaid Insurance 3,600 (a) 200 3,400
167 Computer Equipment 40,000 40,000
168 Accumulated Depreciation — Computer (c) 600 $600
Equip.
209 Salaries Payable (d) 320 320
301 J. Stafford, Capital $60,000 60,000
302 J. Stafford, Withdrawals 1,500 1,500
405 Commissions Earned 7,900 (e) 1,650 9,550
612 Depreciation Expense — Computer (c) 600 600
Equip.
622 Salaries Expense 3,600 (d) 320 3,920
637 Insurance Expense (a) 200 200
640 Rent Expense 1,700 1,700
650 Office Supplies Expense (b) 400 400
684 Repairs Expense 250 250
688 Telephone Expense 650 650
901 Income Summary
Totals $67,900 $67,900 $4,820 $4,820 $70,470 $70,470
 5. Prepare the income statement and the statement of owner’s equity for the month of April and
the balance sheet at April 30, 2011.

See-It-Now Travel
Income Statement
For Month Ended April 30, 2011
Revenues
Commissions Earned 9,550
Total Revenues 9,550
Expenses
Depreciation Expense — Computer Equip. 600
Salaries expense 3,920
Insurance Expense 200
Rent Expense 1,700
Office Supplies Expense 400
Repairs Expense 250
Telephone Expense 650
Total Expenses 7,720
Net Income 1,830

See-It-Now Travel
Statement of Owner’s Equity
For Month Ended April 30, 2011
J. Stafford, Capital, April 1 $0
Plus: Investments by owner $ 60,000
Net income 1,830
61,830
Less: Withdrawals by owner 1,500
J. Stafford, Capital, December 31 $ 60,330

See-It-Now Travel
Balance Sheet
April 30, 2011
Assets
Cash $15,500
Accounts Receivable 1,650
Office Supplies 700
Prepaid Insurance 3,400
Computer Equipment $ 40,000
Less Accumulated Depreciation — Computer Equip. 600 39,400
Total Assets $ 60,650
Liabilities
Salaries payable $320
Total Liabilities $320
Equity
J. Stafford, Capital $ 60,330
Total liabilities and equity $ 60,650

6. Prepare journal entries to close the temporary accounts and post these entries to the ledger.

GENERAL JOURNAL
Apr. 30, 2011 Commissions Earned 9,550
Income Summary 9,550
To close revenue accounts.
Apr. 30, 2011 Income Summary 7,720
Depreciation Expense — Computer Equip. 600
Salaries Expense 3,920
Insurance Expense 200
Rent Expense 1,700
Office Supplies Expense 400
Repairs Expense 250
Telephone Expense 650
To close expense accounts.
Apr. 30, 2011 Income Summary 1,830
J. Stafford, Capital 1,830
To close Income Summary account.
Apr. 30, 2011 J. Stafford, Capital 1,500
C. Taylor, Withdrawals 1,500

7. Prepare a post-closing trial balance.

See-It-Now Travel
Post-Closing Trial Balance
April 30, 2011
Debit Credit
Cash $ 15,500
Accounts Receivable 1,650
Office Supplies 700
Prepaid Insurance 3,400
Computer Equipment $ 40,000
Accumulated Depreciation — Computer Equip. $ 600
Salaries Payable 320
J. Stafford, Capital 60,330
Total $ 61,250 $ 61,250
 Problem 4-6A Preparing adjusting, reversing, and next period entries

BULLSEYE RANGES
Trial Balances
December 31, 2011
Unadjusted Adjusted
Trial Balance Adjustments Trial Balance
Dr. Cr. Dr. Cr. Dr. Cr.
Acct. Account Title
No.
Cash $ 13,000 $ 13,000
Accounts receivable 0 (e) 9,100 9,100
Supplies 5,500 (b) 2,800 2,700
Equipment 130,000 130,000
Accumulated depreciation—Equipment $ 25,000 (f)12,500 37,500
Interest payable 0 (c) 1,250 1,250
Salaries payable 0 (a) 900 900
Unearned member fees 14,000 (d) 8,400 5,600
Notes payable 50,000 50,000
T. Allen, Capital 58,250 58,250
T. Allen, Withdrawals 20,000 20,000
Member fees earned 53,000 (d) 8,400 70,500
(e) 9,100
Depreciation expense—Equipment 0 (f) 12,500 12,500
Salaries expense 28,000 (a) 900 28,900
Interest expense 3,750 (c) 1,250 5,000
Supplies expense 0 (b) 2,800 2,800
Totals $200,250 $200,250 $42,950 $42,950 $224,000 $224,000

2. Prepare journal entries for the adjustments entered in the six-column table for part 1.

3. Prepare journal entries to reverse the effects of the adjusting entries that involve accruals.

Salaries Expense 1,600

Cash 1,600
Salaries Expense
Date Expl. Debit Credit Balance
2012
Jan. 1 $900 $900
Jan. 4 1,600 $700

Salaries Payable
 Date Expl. Debit Credit Balance
2011
Dec. 31, (a) $900
2012
Jan. 1 $900 0

Interest Expense 1,500

Cash 1,500
Interest Expense
Date Expl. Debit Credit Balance
2012
Jan. 1 (c) $1,250 $1,250
Jan. 15 1,500 $250

Interest Payable
Date Expl. Debit Credit Balance
2011
Dec. 31 (a) $1,250

2012
Jan. 1 $1,250 0

4. Prepare journal entries to record the cash payments and cash collections described for
January

Date Account Titles and Explanation PR Debit Credit

Jan. 4 Salaries Expense $ 1,600
Cash $ 1,600
Jan. 15 Interest Expense 1,500
Cash 1,500
Jan. 31 Cash 17,100
Accounts receivable 9,100
Member fees earned 8,000

Exercise 4-3 Preparing closing entries and a post-closing trial balance

GENERAL JOURNAL
Dec. 31, 2011 Services revenue 36,00
0
Income Summary 36,000
To close revenue accounts.
Dec. 31, 2011 Income Summary 28,10
0
Depreciation Expense —Equipment 2,000
Salaries Expense 21,000
 Insurance Expense 1,500
Rent Expense 2,400
Supplies Expense 1,200
To close expense accounts.
Dec. 31, 2011 Income Summary 46,60
0
R. Showers, Capital 46,600
To close Income Summary account.
Dec. 31, 2011 J. Stafford, Capital 6,000
C. Taylor, Withdrawals 6,000

Showers Company
Post-Closing Trial Balance
December 31, 2011
Debit Credit
Cash $18,000
Supplies 12,000
Prepaid Insurance 2,000
Equipment 23,000
Accumulated Depreciation — Computer Equip. $ 6,500
J. Stafford, Capital 48,500
Total $ 55,000 $ 55,000

Exercise 4-4 Preparing the financial statements

Webb Trucking Company

Income Statement
For Month Ended December 31, 2011
Revenues
Trucking fees earned 128,000
Total Revenues 128,000
Expenses
Depreciation expense—Trucks 22,500
Salaries expense 60,000
Office Supplies Expense 7,000
Repairs expense—Trucks 11,000
Total Expenses 100,500
Net Income 27,500

Webb Trucking Company

Statement of Owner’s Equity
For Month Ended December 31, 2011
K. Webb, Capital, April 1 $0
Plus: Investments by owner $ 161,000
Net income 27,500
 188,500
Less: Withdrawals by owner 19,000
K. Webb, Capital, December 31 $ 169,500