Completing the Accounting Cycle

 For each account listed, identify the category in which it would appear on a classified balance sheet.

For each account listed, identify the category in which it would appear on a classified balance sheet.

2. Mortgage Payable (due in five years)

For each account listed, identify the category in which it would appear on a classified balance sheet.

3. Land

For each account listed, identify the category in which it would appear on a classified balance sheet.

4. Office Supplies

For each account listed, identify the category in which it would appear on a classified balance sheet.

5. Unearned Revenue

 For each account listed, identify the category in which it would appear on a classified balance sheet.

6. Investments in stock of another company held long-term

For each account listed, identify the category in which it would appear on a classified balance sheet.

7. Accumulated Depreciation—Furniture 

For each account listed, identify whether the account would appear in either the income statement section or the balance sheet section of the worksheet. Assuming normal balances, identify if the account would be recorded in the debit (DR) or credit (CR)

For each account listed, identify whether the account would appear in either the income statement section or the balance sheet section of the worksheet. Assuming normal balances, identify if the account would be recorded in the debit (DR) or credit (CR)

column.

9. Accounts Payable

For each account listed, identify whether the account would appear in either the income statement section or the balance sheet section of the worksheet. Assuming normal balances, identify if the account would be recorded in the debit (DR) or credit (CR)

column.

10. Cash

For each account listed, identify whether the account would appear in either the income statement section or the balance sheet section of the worksheet. Assuming normal balances, identify if the account would be recorded in the debit (DR) or credit (CR)

column.

Depreciation Expense—Building

For each account listed, identify whether the account would appear in either the income statement section or the balance sheet section of the worksheet. Assuming normal balances, identify if the account would be recorded in the debit (DR) or credit (CR) column.

12. Dividends

For each account listed, identify whether the account would appear in either the income statement section or the balance sheet section of the worksheet. Assuming normal balances, identify if the account would be recorded in the debit (DR) or credit (CR) column.

13. Accumulated Depreciation—Building

Benson Auto Repair had the following account balances after adjustments. Assume all accounts had normal balances.

Cash \( 4,000 Common Stock \) 20,000

Accounts Receivable 3,200 Retained Earnings, January 1 15,700

Prepaid Rent 1,900 Dividends 2,100

Office Supplies 3,000 Service Revenue 1,600

Equipment 34,800 Depreciation Expense—Equipment 300

Accumulated Depreciation—Equipment 1,600 Salaries Expense 800

Accounts Payable 5,400 Rent Expense 500

Notes Payable (long-term) 7,000 Utilities Expense 600

Supplies Expense 100

14. Prepare the closing entries for Benson at December 31.

15. What is the balance of Retained Earnings after closing entries have been recorded? (Use a T-account to determine the balance.)

Benson Auto Repair had the following account balances after adjustments. Assume all accounts had normal balances.

Cash \( 4,000 Common Stock \) 20,000

Accounts Receivable 3,200 Retained Earnings, January 1 15,700

Prepaid Rent 1,900 Dividends 2,100

Office Supplies 3,000 Service Revenue 1,600

Equipment 34,800 Depreciation Expense—Equipment 300

Accumulated Depreciation—Equipment 1,600 Salaries Expense 800

Accounts Payable 5,400 Rent Expense 500

Notes Payable (long-term) 7,000 Utilities Expense 600

Supplies Expense 100

14. Prepare the closing entries for Benson at December 31.

15. What is the balance of Retained Earnings after closing entries have been recorded? (Use a T-account to determine the balance.)

For each account listed, identify whether the account would appear on the post-closing trial balance. Indicate either yes or no.

16. Dividends

For each account listed, identify whether the account would appear on the post-closing trial balance. Indicate either yes or no.

17. Service Revenue

For each account listed, identify whether the account would appear on the post-closing trial balance. Indicate either yes or no.

18. Cash

For each account listed, identify whether the account would appear on the post-closing trial balance. Indicate either yes or no.

19. Advertising Expense

For each account listed, identify whether the account would appear on the post-closing trial balance. Indicate either yes or no.

20. Retained Earnings

The steps of the accounting cycle are presented below. Identify the correct order of the steps.

a. Journalize and post the closing entries.

b. Start with the beginning account balances.

c. Prepare the financial statements.

d. Compute the unadjusted balance in each account, and prepare the unadjusted trial balance.

e. Journalize and post adjusting entries.

f. Enter the unadjusted trial balance on the worksheet, and complete the worksheet (optional).

g. Prepare the adjusted trial balance.

h. Analyze and journalize transactions as they occur.

i. Post journal entries to the accounts.

j. Prepare the post-closing trial balance.

Benson Auto Repair has the following account balances at December 31, 2018, from its adjusted trial balance. Compute

Benson Auto Repair’s current ratio.

Cash \( 4,000 Common Stock \) 20,000

Accounts Receivable 3,200 Retained Earnings 15,700

Prepaid Rent 1,900 Dividends 2,100

Office Supplies 3,000 Service Revenue 1,600

Equipment 34,800 Depreciation Expense—Equipment 300

Accumulated Depreciation—Equipment 1,600 Salaries Expense 800

Accounts Payable 5,400 Rent Expense 500

Notes Payable (long-term) 7,000 Utilities Expense 600

Supplies Expense 100

Winters Landscape Services accrued \(4,000 of Salaries Expense at December 31. Winters paid the next payroll at January 10 of

\)6,000. This payment included the accrued amount at December 31, plus $2,000 for the first few days of January.

23A. Record the adjusting entry to accrue Salaries Expense

Winters Landscape Services accrued \(4,000 of Salaries Expense at December 31. Winters paid the next payroll at January 10 of

\)6,000. This payment included the accrued amount at December 31, plus $2,000 for the first few days of January.

24A. Record the reversing entry.

Winters Landscape Services accrued \(4,000 of Salaries Expense at December 31. Winters paid the next payroll at January 10 of

\)6,000. This payment included the accrued amount at December 31, plus $2,000 for the first few days of January.

25A. Journalize the cash payment

What document are financial statements prepared from?

What does the income statement report?

What does the statement of retained earnings show?

If a business had a net loss for the year, what would be the closing entry to close Income Summary and transfer the net loss to the Retained Earnings account?

What types of accounts are listed on the post-closing trial balance?

List the steps of the accounting cycle.

What is the current ratio, and how is it calculated?

What are reversing entries? Are they required by GAAP?

What does the balance sheet report?

Why are financial statements prepared in a specific order? What is that order?

What is a classified balance sheet?

Identify two asset categories on the classified balance sheet, and give examples of each category.

Identify two liability categories on the classified balance sheet, and give examples of each category.

What does liquidity mean?

How could a worksheet help in preparing financial statements?

If a business had a net loss for the year, where would the net loss be reported on the worksheet?

What is the closing process?

What are temporary accounts? Are temporary accounts closed in the closing process?

What are permanent accounts? Are permanent accounts closed in the closing process?

How is the Income Summary account used? Is it a temporary or permanent account?

What are the steps in the closing process?

Dalton Hair Stylists’s adjusted trial balance follows. Prepare Dalton’s income statement for the year ended December 31, 2018. DALTON HAIR STYLISTS Adjusted Trial Balance December 31, 2018 Account Title Office Supplies Cash Debit Credit Accounts Receivable Equipment Accumulated Depreciation—Equipment Accounts Payable Interest Payable Notes Payable Common Stock Dividends Service Revenue Rent Expense Supplies Expense Depreciation Expense—Equipment Interest Expense Balance \( 1,300 \) 36,150 \( 36,150 400 \) 2,200 3,100 500 1,400 16,150 13,800 3,900 850 2,200 2,300 1,500 1,800 20,900 Total.

Refer to the data in Short Exercise S4-1. Prepare Dalton’s statement of retained earnings for the year ended December 31, 2018.

Refer to the data in Short Exercise S4-1. Prepare Dalton’s unclassified balance sheet at December 31, 2018. Use the account form.

Refer to the data in Short Exercise S4-1. Prepare Dalton’s classified balance sheet at December 31, 2018. Assume the Notes Payable is due on December 1, 2025. Use the report form.