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Chapter 4 Homework
1. Flow of Accounts into Financial Statements
The balances for the accounts that follow appear in the Adjusted Trial Balance columns of the end-of-period spreadsheet. Indicate whether each account would flow into the income statement, retained earnings statement, or balance sheet.
| 1. Accumulated Depreciation – Building | |
| 2. Cash | |
| 3. Fees Earned | |
| 4. Insurance Expense | |
| 5. Prepaid Rent | |
| 6. Supplies | |
| 7. Dividends | |
| 8. Wages Expense |
2. Blake Knudson owns and operates Grab Bag Delivery Services. On January 1, 2018, Retained Earnings had a balance of $622,500. During the year, Blake invested an additional $41,000 in exchange for common stock, and $17,000 of dividends were paid. For the year ended December 31, 2018, Grab Bag Delivery Services reported a net income of $94,550.
Prepare a retained earnings statement for the year ended December 31, 2018. If a net loss is incurred or dividends were paid, enter that amount as a negative number using a minus sign. Refer to the list of Labels and Amount Descriptions for the exact wording of the answer choices for text entries. Be sure to complete the heading of the statement.
3. Classified Balance Sheet
The following accounts appear in an adjusted trial balance of Kangaroo Consulting. Indicate whether each account would be reported in the current asset; property, plant, and equipment; current liability; long-term liability; or stockholders’ equity section of the December 31, 2018, balance sheet of Kangaroo Consulting.
| 1. Accounts Payable | |
| 2. Accounts Receivable | |
| 3. Accumulated Depreciation – Building | |
| 4. Cash | |
| 5. Common Stock | |
| 6. Note Payable ( due in ten years) | |
| 7 Supplies | |
| 8. Wages Payable |
4. After the accounts have been adjusted at April 30, the end of the fiscal year, the following balances were taken from the ledger of Nuclear Landscaping Co.:
|
Retained Earnings |
$3,427,000 |
|
Dividends |
40,000 |
|
Fees Earned |
1,161,000 |
|
Wages Expense |
738,300 |
|
Rent Expense |
62,100 |
|
Supplies Expense |
14,850 |
|
Miscellaneous Expense |
8,100 |
Journalize the four entries required to close the accounts. Refer to the Chart of Accounts for exact wording of account titles.
5. Flow of Accounts into Financial Statements
The balances for the accounts that follow appear in the Adjusted Trial Balance columns of the end-of-period spreadsheet. Indicate whether each account would flow into the income statement, retained earnings statement, or balance sheet.
| 1. Accounts Payable | |
| 2. Accounts Receivable | |
| 3. Cash | |
| 4. Dividends | |
| 5. Fees Earned | |
| 6. Supplies | |
| 7. Unearned Rent | |
| 8. Utilities Expense | |
| 9. Wages Expense | |
| 10. Wages Payable |
6. Classifying Accounts
Balances for each of the following accounts appear in an adjusted trial balance. Identify each as an asset, liability, revenue, or expense.
| 1. Accounts Receivable | |
| 2. Equipment | |
| 3. Fees Earned | |
| 4. Insurance Expense | |
| 5. Prepaid Advertising | |
| 6. Prepaid Rent | |
| 7. Rent Revenue | |
| 8. Salary Expense | |
| 9. Salary Payable | |
| 10. Supplies | |
| 11. Supplies Expense | |
| 12. Unearned Rent |
7. Triton Consulting is a consulting firm owned and operated by Jayson Neese. The following end-of-period spreadsheet was prepared for the year ended April 30, 2018:
|
Triton Consulting |
||||||
|
End-of-Period Spreadsheet |
||||||
|
For the Year Ended April 30, 2018 |
||||||
|
Unadjusted Trial Balance |
Adjustments |
Adjusted Trial Balance |
||||
|
Account Title |
Dr. |
Cr. |
Dr. |
Cr. |
Dr. |
Cr. |
|
Cash |
21,500 |
21,500 |
||||
|
Accounts Receivable |
51,150 |
51,150 |
||||
|
Supplies |
2,400 |
1,650 |
750 |
|||
|
Office Equipment |
32,000 |
32,000 |
||||
|
Accumulated Depreciation |
4,500 |
900 |
5400 |
|||
|
Accounts Payable |
3,350 |
3,350 |
||||
|
Salaries Payable |
2,000 |
2,000 |
||||
|
Common Stock |
20,000 |
20,000 |
||||
|
Retained Earnings |
52,200 |
52,200 |
||||
|
Dividends |
10,000 |
10,000 |
||||
|
Fees Earned |
279,000 |
279,000 |
||||
|
Salary Expense |
240,000 |
2000 |
242,000 |
|||
|
Supplies Expense |
1,650 |
1,650 |
||||
|
Depreciation Expense |
900 |
900 |
||||
|
Miscellaneous Expense |
2,000 |
2,000 |
||||
|
359,050 |
359,050 |
4,550 |
4,550 |
361,950 |
361,950 |
|
|
Based on the preceding spreadsheet, prepare an income statement, retained earnings statement, and balance sheet for Triton Consulting. Be sure to read the instructions for each financial statement carefully. |
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8. Classifying Assets
Identify each of the following as a current asset or property, plant, and equipment:
| 1. Accounts Receivable | |
| 2. Building | |
| 3. Cash | |
| 4. Equipment | |
| 5. Prepaid Insurance | |
| 6. Supplies | |
9. Identifying Accounts to be Closed
From the following list, identify the accounts that should be closed to Income Summary at the end of the fiscal year:
| a. Accounts Payable | |
| b. Accumulated Depreciation – Equipment | |
| c. Depreciation Expense – Equipment | |
| d. Equipment | |
| e. Common Stock | |
| f. Dividends | |
| g. Fees Earned | |
| h. Land | |
| i. Supplies | |
| j. Supplies Expense | |
| k. Wages Expense | |
| L. Wages Payable |
10. Identifying Permanent Accounts
Which of the following accounts will usually appear in the post-closing trial balance?
| a. Accounts Payable | |
| b. Accumulated Depreciation | |
| c. Cash | |
| d. Common Stock | |
| e. Dividends | |
| f. Depreciation Expense | |
| g. Fees Earned | |
| h. Office Equipment | |
| i. Salaries Expense | |
| j. Salaries Payable | |
| K. Supplies |
11. An accountant prepared the following post-closing trial balance:
Security Services Co.
POST-CLOSING TRIAL BALANCE
July 31, 2018
|
ACCOUNT TITLE |
DEBIT |
CREDIT |
|
|
1 |
Cash |
47,060.00 |
|
|
2 |
Accounts Receivable |
122,000.00 |
|
|
3 |
Supplies |
|
3,500.00 |
|
4 |
Equipment |
|
126,600.00 |
|
5 |
Accumulated Depreciation-Equipment |
32,400.00 |
|
|
6 |
Accounts Payable |
51,500.00 |
|
|
7 |
Salaries Payable |
|
5,900.00 |
|
8 |
Unearned Rent |
8,000.00 |
|
|
9 |
Common Stock |
40,000.00 |
|
|
10 |
Retained Earnings |
161,360.00 |
|
|
11 |
Totals |
462,320.00 |
136,000.00 |
Prepare a corrected post-closing trial balance. Assume that all accounts have normal balances and that the amounts shown in the instructions are correct.
12.
Lamp Light Company maintains and repairs warning lights, such as those found on radio towers and lighthouses. Lamp Light Company prepared the following end-of-period spreadsheet at December 31, 2018, the end of the fiscal year:
|
Lamp Light Company |
||||||
|
End-of-Period Spreadsheet |
||||||
|
For the Year Ended December 31, 2018 |
||||||
|
Unadjusted Trial Balance |
Adjustments |
Adjusted Trial Balance |
||||
|
Account Title |
Dr. |
Cr. |
Dr. |
Cr. |
Dr. |
Cr. |
|
Cash |
10,800.00 |
10,800.00 |
||||
|
Accounts Receivable |
38,900.00 |
(a) 11,300.00 |
50,200.00 |
|||
|
Prepaid Insurance |
4,200.00 |
(b) 3,000.00 |
1,200.00 |
|||
|
Supplies |
2,730.00 |
(c) 2,250.00 |
480.00 |
|||
|
Land |
98,000.00 |
98,000.00 |
||||
|
Building |
400,000.00 |
400,000.00 |
||||
|
Accumulated Depreciation-Building |
205,300.00 |
(d) 10,100.00 |
215,400.00 |
|||
|
Equipment |
101,000.00 |
101,000.00 |
||||
|
Accumulated Depreciation-Equipment |
85,100.00 |
(e) 6,680.00 |
91,780.00 |
|||
|
Accounts Payable |
15,700.00 |
15,700.00 |
||||
|
Salaries and Wages Payable |
(f) 4,900.00 |
4,900.00 |
||||
|
Unearned Rent |
2,100.00 |
(g) 1,300.00 |
800.00 |
|||
|
Common Stock |
75,000.00 |
75,000.00 |
||||
|
Retained Earnings |
128,100.00 |
128,100.00 |
||||
|
Dividends |
10,000.00 |
10,000.00 |
||||
|
Fees Earned |
363,700.00 |
(a) 11,300.00 |
375,000.00 |
|||
|
Rent Revenue |
(g) 1,300.00 |
1,300.00 |
||||
|
Salaries and Wages Expense |
163,100.00 |
(f) 4,900.00 |
168,000.00 |
|||
|
Advertising Expense |
21,700.00 |
21,700.00 |
||||
|
Utilities Expense |
11,400.00 |
11,400.00 |
||||
|
Depreciation Expense-Building |
(d) 10,100.00 |
10,100.00 |
||||
|
Repairs Expense |
8,850.00 |
8,850.00 |
||||
|
Depreciation Expense-Equipment |
(e) 6,680.00 |
6,680.00 |
||||
|
Insurance Expense |
(b) 3,000.00 |
3,000.00 |
||||
|
Supplies Expense |
(c) 2,250.00 |
2,250.00 |
||||
|
Miscellaneous Expense |
4,320.00 |
4,320.00 |
||||
|
875,000.00 |
875,000.00 |
39,530.00 |
39,530.00 |
907,980.00 |
907,980.00 |
|
Required:
|
1. |
Prepare an income statement for the year ended December 31, 2018. If a net loss has been incurred, enter that amount as a negative number using a minus sign. Be sure to complete the statement heading. Use the list of Labels and Amount Descriptions for the correct wording of text items other than account names. You will not need to enter colons (:) on the income statement. |
|
2. |
Prepare a retained earnings statement for the year ended December 31, 2018. If a net loss is incurred or dividends were paid, enter that amount as a negative number using a minus sign. Be sure to complete the statement heading. Refer to the list of Labels and Amount Descriptions for the exact wording of the answer choices for text entries. Refer to the Chart of Accounts for exact wording of account titles. |
|
3. |
Prepare a balance sheet as of December 31, 2018. Fixed assets must be entered in order according to account number. Be sure to complete the statement heading. Refer to the list of Labels and Amount Descriptions for the exact wording of the answer choices for text entries. Refer to the Chart of Accounts for exact wording of account titles. For those boxes in which you must enter subtracted or negative numbers use a minus sign. |
|
4. |
Based upon the end-of-period spreadsheet, journalize the closing entries. Refer to the Chart of Accounts for exact wording of account titles. |
|
5. |
Prepare a post-closing trial balance. |