Completing the Accounting Cycle

For each account listed, identify the category in which it would appear on a classified balance sheet. a. Office Supplies b. Interest Payable c. Retained Earnings d. Copyrights e. Land f. Accumulated Depreciation—Furniture g. Land (held for long-term investment purposes) h. Unearned Revenue i. Notes Payable (due in six years)

Answer the following questions: Requirements 1. What type of normal balance does the Retained Earnings account have—debit or credit? 2. Which type of income statement account has the same type of balance as the Retained Earnings account? 3. Which type of income statement account has the opposite type of balance as the Retained Earnings account? 4. What do we call the difference between total debits and total credits on the income statement section of the worksheet?

A partial worksheet for Ramey Law Firm is presented below. Solve for the missing information. Total 6 5 A J K L M 33 34 35 (a) \( 211,325 \) 202,950 (e) 8,375 (d) \( 24,850 \) 24,850 Debit Credit Debit Credit Income Statement Balance Sheet Net (b) (c) Total (f).

A partial worksheet for Aaron Adjusters is presented below. Solve for the missing information. J K L M 33 34 35 \( 61,400 (g) (d) \) 22,400 (b) (e) (a) (f) Debit Credit Debit Credit Income Statement Balance Sheet Net (c) Total $ 61,400.

For each account listed, identify whether the account is a temporary account (T) or a permanent account (P). a. Rent Expense b. Prepaid Rent c. Equipment d. Common Stock e. Salaries Payable f. Dividends g. Service Revenue h. Supplies Expense i. Office Supplies.    

Brett Teddy Enterprises had the following accounts and normal balances listed on its December 31st adjusted trial balance: Service Revenue, \(21,900; Salaries Expense, \)6,000; Rent Expense, \(4,400; Advertising Expense, \)3,100; and Dividends, $6,900. Journalize the closing entries for Teddy Enterprises.

The following balances appear on the books of Sarah Simmons Enterprises: Retained Earnings, \(29,600; Dividends, \)10,500; Income Summary, \(0; Service Revenue, \)24,500; Salaries Expense, \(6,200; Rent Expense, \)3,500; and Advertising Expense, $2,000. All accounts have normal balances. Requirements 1. Open a T-account for each account, and insert its adjusted balance as given (denote as Adj. Bal.) at December 31. 2. Post the closing entries to the accounts, denoting posted amounts as Clos. 3. Compute the ending balance of Retained Earnings.

For each account listed, identify whether the account would be included on a post-closing trial balance. Signify either Yes (Y) or No (N). a. Office Supplies b. Interest Expense c. Retained Earnings d. Dividends e. Service Revenue f. Accumulated Depreciation—Furniture g. Rent Expense h. Unearned Revenue i. Accounts Payable

Review the steps in the accounting cycle, and answer the following questions: 1. What is the first step? 2. Are any steps optional? 3. Which steps are completed throughout the period? 4. Which steps are completed only at the end of the period? 5. What is the last step in the accounting cycle?

End of the Line Montana Refrigeration has these account balances at December 31, 2018: Notes Payable, long-term \( 9,200 Accounts Payable \) 3,600 Prepaid Rent 2,500 Accounts Receivable 6,600 Salaries Payable 2,600 Cash 3,500 Service Revenue 15,600 Depreciation Expense—Equip. 400 Office Supplies 1,300 Equipment 24,000 Accumulated Depreciation—Equip. 4,000 Common Stock 6,000 Advertising Expense 900 Rent Expense 1,800 Requirements 1. Calculate End of the Line Montana Refrigeration’s current ratio. 2. How much in current assets does End of the Line Montana Refrigeration have for every dollar of current liabilities that it owes?

Ocean Breeze Associates accrued \(8,500 of Service Revenue at December 31. Ocean Breeze Associates received \)14,500 on January 15, including the accrued revenue recorded on December 31. Requirements 1. Record the adjusting entry to accrue Service Revenue. 2. Record the reversing entry. 3. Journalize the cash receipt.

The adjusted trial balance for Green Advertising Services is presented below: Account Title Office Supplies Cash Debit Credit Accounts Receivable Building Accumulated Depreciation—Building Furniture Accumulated Depreciation—Furniture Land Salaries Payable Accounts Payable Unearned Revenue Common Stock Retained Earnings Dividends Service Revenue Salaries Expense Supplies Expense Depreciation Expense—Building Balance \( 14,000 \) 195,200 \( 195,200 18,400 14,100 \) 36,100 19,600 7,200 10,600 30,000 31,400 16,000 18,300 49,800 8,400 28,600 2,900 1,300 13,500 15,800 6,500 47,900 Depreciation Expense—Furniture Advertising Expense Total GREEN ADVERTISING SERVICES Adjusted Trial Balance December 31, 2018 Requirements 1. Prepare the income statement for the year ending December 31, 2018. 2. Prepare the statement of retained earnings for the year ending December 31, 2018. 3. Prepare the classified balance sheet as of December 31, 2018. Use the report form

For each account listed, identify the category that it would appear on a classified balance sheet. Use the following categories: Current Assets; Long-term Investments; Property, Plant, and Equipment; Intangible Assets; Current Liabilities; Long-term Liabilities; and Stockholders’ Equity. If the item does not belong on the classified balance sheet, put an X. a. Land (used in operations) b. Accumulated Depreciation—Equipment c. Common Stock d. Service Revenue e. Investment in Starbucks Corporation (to be held long-term) f. Accounts Receivable g. Equipment h. Buildings i. Notes Payable (due in 10 years) j. Unearned Revenue k. Cash l. Accounts Payable m. Prepaid Rent n. Dividends o. Land (held for investment purposes) p. Depreciation Expense.

The adjusted trial balance of Melanie O’Mallie Dance Studio Company follows:MELANIE O'MALLIE DANCE STUDIO COMPANY Trial Balance August 31, 2018 Account Title Prepaid Rent Cash Debit Credit Office Supplies Equipment Accumulated Depreciation—Equipment Accounts Payable Salaries Payable Unearned Revenue Notes Payable (long-term) Dividends Common Stock Retained Earnings Service Revenue Salaries Expense Rent Expense Depreciation Expense—Equipment Supplies Expense Utilities Expense Balance \( 16,000 \) 76,100 \( 76,100 100 \) 5,700 4,800 49,000 5,400 18,100 5,000 18,000 19,000 1,100 1,100 3,600 1,800 1,500 500 400 1,100 Requirements 1. Prepare the classified balance sheet of Melanie O’Mallie Dance Studio Company at August 31, 2018. Use the report form. You must compute the ending balance of Retained Earnings. 2. Compute O’Mallie’s current ratio at August 31, 2018. One year ago, the current ratio was 1.76. Indicate whether O’Mallie’s ability to pay current debts has improved, deteriorated, or remained the same.

The unadjusted trial balance of Data Solution at November 30, 2018, follows: DATA SOLUTION Unadjusted Trial Balance November 30, 2018 Account Title Prepaid Rent Cash Debit Credit Accounts Receivable Office Supplies Equipment Accumulated Depreciation—Equipment Accounts Payable Salaries Payable Common Stock Dividends Service Revenue Depreciation Expense—Equipment Salaries Expense Rent Expense Utilities Expense Supplies Expense Balance \( 4,400 \) 48,300 \( 48,300 5,100 \) 1,500 30,200 32,900 8,800 2,900 2,100 3,100 1,800 3,100 700 Additional information at November 30, 2018: a. Accrued Service Revenue, \(800. b. Depreciation, \)350. c. Accrued Salaries Expense, \(650. d. Prepaid Rent expired, \)700. e. Office Supplies used, $550. Requirements 1. Complete Data Solution’s worksheet for the month ended November 30, 2018. 2. How much was net income for November?

E4-20 Preparing financial statements from the completed worksheet Use your answer from Exercise E4-19 to prepare Data Solution’s financial statements. Requirements 1. Complete the income statement for the month ended November 30, 2018. 2. Complete the statement of retained earnings for the month ended November 30, 2018. Assume beginning Retained Earnings was $0. 3. Complete the classified balance sheet as of November 30, 2018. Use the report form.

The adjusted trial balance of Stone Sign Company follows: Account Title Prepaid Rent Cash Debit Credit Office Supplies Equipment Accumulated Depreciation—Equipment Accounts Payable Salaries Payable Unearned Revenue Notes Payable (long-term) Common Stock Dividends Service Revenue Salaries Expense Rent Expense Depreciation Expense—Equipment Supplies Expense Balance \( 15,400 \) 85,500 \( 85,500 100 \) 7,000 3,800 4,300 4,200 800 48,800 17,300 1,400 3,700 1,500 1,400 60,000 300 400 Utilities Expense 600 Total STONE SIGN COMPANY Adjusted Trial Balance January 31, 2018 Requirements 1. Assume Stone Sign Company has a January 31 year-end. Journalize Stone’s closing entries at January 31. 2. How much net income or net loss did Stone Sign Company earn for the year ended January 31? How can you tell?

Selected accounts for Kebby Photography at December 31, 2018, follow: Salaries Expense 31,800 1,400 2,700 Supplies Expense 7,000 1,500 Depreciation Expense—Building Depreciation Expense—Furniture Dividends 14,000 Service Revenue 33,000 4,500 Retained Earnings 49,000 Requirements 1. Journalize Kebby Photography’s closing entries at December 31, 2018. 2. Determine Kebby Photography’s ending Retained Earnings balance at December 31, 2018.

McGregor Insurance Agency started the year with a beginning Retained Earnings balance of \(27,500. During the year, McGregor Insurance Agency earned \)34,000 of Service Revenue and incurred \(23,500 of various expenses. Dividends of \)12,000 from the business were paid to stockholders. After the closing entries are recorded and posted, what will be the balance of Retained Earnings?

Cynthia Elmer, CPA, had the following partial worksheet:

Requirements

1. Complete the worksheet.

2. Prepare the closing entries for Cynthia Elmer, CPA.

Mark’s Bowling Alley’s adjusted trial balance as of December 31, 2018, is presented below:

Requirements 

1. Prepare the closing entries for Mark’s Bowling Alley. 

2. Prepare a post-closing trial balance. 

3. Compute the current ratio for Mark’s Bowling Alley

Houston Veterinary Hospital completed the following worksheet as of December 31, 2018.

Requirements 

1. Complete the worksheet for Houston Veterinary Hospital. 

2. Prepare the closing entries. 

3. Prepare a post-closing trial balance. 

Lucas Architects recorded the following adjusting entries as of December 31: a. Service Revenue accrued, \(2,600. b. Unearned Revenue that has been earned, \)1,300. c. Office Supplies on hand, \(530. The balance of the Office Supplies account was \)880. d. Salaries owed to employees, \(600. e. One month of Prepaid Rent has expired, \)3,100. f. Depreciation on equipment, $1,075. Journalize any necessary reversing entries for Lucas Architects.

Mountain View Services had the following unadjusted balances at December 31, 2018:

Salaries Payable, \(0; and Salaries Expense, \)1,900. The following transactions havetaken place at the end of 2018 and beginning of 2019:

2018

Dec. 31 Accrued Salaries Expense at December 31, \(8,000.

31 Closed the Salaries Expense account.

2019

Jan. 1 Reversed the accrued salaries. (Requirement 3 only)

4 Paid salaries of \)8,500. This payment included the Salaries Payable amount,

plus $500 for the first few days of January.

Requirements

1. Open T-accounts for Salaries Payable and Salaries Expense using their unadjustedbalances at December 31, 2018.

2. Journalize the entries assuming Mountain View Services does not use reversing entries. Do not record the reversing entry on Jan. 1. Post to the accounts.

3. Open new T-accounts for Salaries Payable and Salaries Expense using their unadjusted balances at December 31, 2018. Journalize the entries assuming Mountain

View Services uses reversing entries. Don’t forget to record the reversing entry on Jan. 1. Post to the accounts. Compare the balances on January 4, 2019 with Requirement 2 balances on January 4, 2019.

The adjusted trial balance of Erickson Real Estate Appraisal at June 30, 2018, follows: 

 Requirements 

1. Prepare the company’s income statement for the year ended June 30, 2018. 

2. Prepare the company’s statement of retained earnings for the year ended June 30, 2018. 

3. Prepare the company’s classified balance sheet in report form at June 30, 2018. 

4. Journalize the closing entries.

5. Open the T-accounts using the balances from the adjusted trial balance, and post the closing entries to the T-accounts. 

6. Prepare the company’s post-closing trial balance at June 30, 2018.

The adjusted trial balance of Boston Irrigation System at December 31, 2018, follows BOSTON IRRIGATION SYSTEM Adjusted Trial Balance December 31, 2018 0 Account Title Office Supplies Cash Debit Credit Accounts Receivable Prepaid Insurance Building Accumulated Depreciation—Building Equipment Accumulated Depreciation—Equipment Accounts Payable Interest Payable Salaries Payable Unearned Revenue Notes Payable (long-term) Common Stock Dividends Retained Earnings Service Revenue Insurance Expense Salaries Expense Supplies Expense Balance \( 11,800 \) 211,900 \( 211,900 28,000 \) 25,000 63,000 32,100 2,600 2,200 2,100 12,000 21,000 46,000 29,500 6,300 7,700 32,700 2,200 74,500 1,100 16,400 1,100 2,200 2,500 1,800 Interest Expense Depreciation Expense—Equipment Depreciation Expense—Building Tota June 30, 2018. : Requirements 1. Prepare the company’s income statement for the year ended December 31, 2018. 2. Prepare the company’s statement of retained earnings for the year ended December 31, 2018. 3. Prepare the company’s classified balance sheet in report form at December 31, 2018. 4. Journalize the closing entries for Boston Irrigation System. 5. Compute the company’s current ratio at December 31, 2018. At December 31, 2017, the current ratio was 2.3. Did the company’s ability to pay current debts improve or deteriorate, or did it remain the same?

The unadjusted trial balance of Farish Investment Advisers at December 31, 2018, follows: Adjustment data at December 31, 2018: a. Unearned Revenue earned during the year, \(800. b. Office Supplies on hand, \)4,500. c. Depreciation for the year, \(4,500. d. Accrued Salaries Expense, \)5,000. e. Accrued Service Revenue, \(6,500. Requirements 1. Prepare a worksheet for Farish Investment Advisers at December 31, 2018. 2. Prepare the income statement, the statement of retained earnings, and the classified balance sheet in account format. 3. Prepare closing entries. Account Title Office Supplies Cash Debit Credit Accounts Receivable Equipment Accumulated Depreciation—Equipment Accounts Payable Salaries Payable Unearned Revenue Common Stock Notes Payable (long-term) Dividends Service Revenue Insurance Expense Salaries Expense Supplies Expense Interest Expense Rent Expense Balance \) 30,000 \( 198,000 \) 198,000 5,500 $ 9,000 13,000 27,000 21,000 93,000 Retained Earnings 29,500 29,000 2,500 40,000 5,500 5,000 51,000 7,000 28,000 Depreciation Expense—Equipment Total FARISH INVESTMENT ADVISERS Unadjusted Trial Balance December 31, 2018

The unadjusted trial balance of Walton Anvils at December 31, 2018, and the data for the adjustments follow: WALTON ANVILS Unadjusted Trial Balance December 31, 2018 Account Title Prepaid Rent Cash Debit Credit Accounts Receivable Office Supplies Equipment Accumulated Depreciation—Equipment Accounts Payable Salaries Payable Unearned Revenue Common Stock Dividends Retained Earnings Service Revenue Salaries Expense Rent Expense Depreciation Expense—Equipment Supplies Expense Balance \( 13,480 \) 62,100 \( 62,100 7,100 \) 1,000 23,000 6,000 4,600 24,000 4,500 19,500 2,500 14,500 2,320 1,700 Total Adjustment data: a. Unearned Revenue still unearned at December 31, \(1,800. b. Prepaid Rent still in force at December 31, \)2,100. c. Office Supplies used, \(1,500. d. Depreciation, \)390. e. Accrued Salaries Expense at December 31, $200. Requirements 1. Open the T-accounts using the balances in the unadjusted trial balance. 2. Complete the worksheet for the year ended December 31, 2018 (optional). 3. Prepare the adjusting entries, and post to the accounts. 4. Prepare an adjusted trial balance. 5. Prepare the income statement, the statement of retained earnings, and the classified balance sheet in report form. 6. Prepare the closing entries, and post to the accounts. 7. Prepare a post-closing trial balance. 8. Calculate the current ratio for the company

On December 1, Bob Waldo began an auto repair shop, Waldo’s Quality Automotive. The following transactions occurred during December: Dec. 1 Waldo contributed \(70,000 cash to the business in exchange for shares of common stock. 1 Purchased \)12,000 of equipment paying cash. 1 Paid \(1,750 for a five-month insurance policy starting on December 1. 9 Paid \)20,000 cash to purchase land to be used in operations. 10 Purchased office supplies on account, \(2,800. 19 Borrowed \)15,000 from the bank for business use. Waldo signed a note payable to the bank in the name of the corporation. The note is due in five years. 22 Paid \(1,300 for advertising expenses. 26 Paid \)900 on account. 28 The business received a bill for utilities to be paid in January, \(280. 31 Revenues earned during the month included \)16,000 cash and \(3,600 on account. 31 Paid employees’ salaries \)3,800 and building rent \(1,200. Record as a compound entry. 31 The business received \)1,440 for auto screening services to be performed next month. 31 Paid cash dividends of \(5,500 to stockholders. The business uses the following accounts: Cash; Accounts Receivable; Office Supplies; Prepaid Insurance; Land; Equipment; Accumulated Depreciation—Equipment; Accounts Payable; Utilities Payable; Interest Payable; Unearned Revenue; Notes Payable; Common Stock; Retained Earnings; Dividends; Income Summary; Service Revenue; Salaries Expense; Rent Expense; Utilities Expense; Advertising Expense; Supplies Expense; Insurance Expense; Interest Expense; and Depreciation Expense—Equipment. Adjustment data: a. Office Supplies used during the month, \)1,800. b. Depreciation for the month, \(200. c. One month insurance has expired. d. Accrued Interest Expense, \)75. Requirements 1. Prepare the journal entries, and post to the T-accounts. 2. Prepare an unadjusted trial balance. 3. Complete the worksheet for the month ended December 31, 2018 (optional). 4. Prepare the adjusting entries, and post to the T-accounts. 5. Prepare an adjusted trial balance.6. Prepare the income statement, the statement of retained earnings, and the classified balance sheet in report form. 7. Prepare the closing entries, and post to the T-accounts. 8. Prepare a post-closing trial balance.

On December 1, Bob Waldo began an auto repair shop, Waldo’s Quality Automotive. The following transactions occurred during December: Dec. 1 Waldo contributed \(70,000 cash to the business in exchange for shares of common stock. 1 Purchased \)12,000 of equipment paying cash. 1 Paid \(1,750 for a five-month insurance policy starting on December 1. 9 Paid \)20,000 cash to purchase land to be used in operations. 10 Purchased office supplies on account, \(2,800. 19 Borrowed \)15,000 from the bank for business use. Waldo signed a note payable to the bank in the name of the corporation. The note is due in five years. 22 Paid \(1,300 for advertising expenses. 26 Paid \)900 on account. 28 The business received a bill for utilities to be paid in January, \(280. 31 Revenues earned during the month included \)16,000 cash and \(3,600 on account. 31 Paid employees’ salaries \)3,800 and building rent \(1,200. Record as a compound entry. 31 The business received \)1,440 for auto screening services to be performed next month. 31 Paid cash dividends of \(5,500 to stockholders. The business uses the following accounts: Cash; Accounts Receivable; Office Supplies; Prepaid Insurance; Land; Equipment; Accumulated Depreciation—Equipment; Accounts Payable; Utilities Payable; Interest Payable; Unearned Revenue; Notes Payable; Common Stock; Retained Earnings; Dividends; Income Summary; Service Revenue; Salaries Expense; Rent Expense; Utilities Expense; Advertising Expense; Supplies Expense; Insurance Expense; Interest Expense; and Depreciation Expense—Equipment. Adjustment data: a. Office Supplies used during the month, \)1,800. b. Depreciation for the month, \(200. c. One month insurance has expired. d. Accrued Interest Expense, \)75. Requirements 1. Prepare the journal entries, and post to the T-accounts. 2. Prepare an unadjusted trial balance. 3. Complete the worksheet for the month ended December 31, 2018 (optional). 4. Prepare the adjusting entries, and post to the T-accounts. 5. Prepare an adjusted trial balance.6. Prepare the income statement, the statement of retained earnings, and the classified balance sheet in report form. 7. Prepare the closing entries, and post to the T-accounts. 8. Prepare a post-closing trial balance.

The unadjusted trial balance and adjustment data of Martha’s Motors at December 31, 2018, follow: Adjustment data at December 31, 2018: a. Depreciation on equipment, \(2,100. b. Accrued Wages Expense, \)1,100. c. Office Supplies on hand, \(500. d. Prepaid Insurance expired during December, \)600. e. Unearned Revenue earned during December, \(4,800. f. Accrued Service Revenue, \)1,300. 2019 transactions: a. On January 4, Martha’s Motors paid wages of \(1,900. Of this, \)1,100 related to the accrued wages recorded on December 31. b. On January 10, Martha’s Motors received \(1,500 for Service Revenue. Of this, \)1,300 is related to the accrued Service Revenue recorded on December 31. Account Title Office Supplies Cash Debit Credit Accounts Receivable Prepaid Insurance Equipment Accumulated Depreciation—Equipment Accounts Payable Wages Payable Unearned Revenue Common Stock Dividends Service Revenue Depreciation Expense—Equipment Wages Expense Insurance Expense Utilities Expense Balance \( 4,200 \) 93,200 \( 93,200 15,000 \) 34,600 52,400 7,900 3,100 18,500 17,200 1,600 27,200 1,000 2,400 1,300 Supplies Expense Total  Requirements 1. Journalize adjusting entries. 2. Journalize reversing entries for the appropriate adjusting entries. 3. Refer to the 2019 data. Journalize the cash payment and the cash receipt that occurred in 2019.

The adjusted trial balance of Rocket Real Estate Appraisal at June 30, 2018, follows: ROCKET REAL ESTATE APPRAISAL Adjusted Trial Balance June 30, 2018Account Title Office Supplies Cash Debit Credit Accounts Receivable Prepaid Insurance Building Accumulated Depreciation—Building Land Accounts Payable Interest Payable Salaries Payable Unearned Revenue Notes Payable (long-term) Common Stock Dividends Retained Earnings Service Revenue Insurance Expense Salaries Expense Supplies Expense Interest Expense Balance \( 5,000 \) 178,100 \( 178,100 12,800 \) 25,200 71,000 8,000 1,000 2,100 37,000 25,800 5,500 1,600 1,700 18,700 5,000 33,000 48,100 4,100 32,000 600 8,000 2,900 7,100 Utilities Expense Depreciation Expense—Building Total . Requirements 1. Prepare the company’s income statement for the year ended June 30, 2018. 2. Prepare the company’s statement of retained earnings for the year ended June 30, 2018. 3. Prepare the company’s classified balance sheet in report form at June 30, 2018. 4. Journalize the closing entries. 5. Open the T-accounts using the balances from the adjusted trial balance, and post the closing entries to the T-accounts. 6. Prepare the company’s post-closing trial balance at June 30, 2018.

The adjusted trial balance of Bradley Irrigation System at December 31, 2018, follows: BRADLEY IRRIGATION SYSTEM Adjusted Trial Balance December 31, 2018   Account Title Office Supplies Cash Debit Credit Accounts Receivable Prepaid Insurance Building Accumulated Depreciation—Building Equipment Accumulated Depreciation—Equipment Accounts Payable Interest Payable Salaries Payable Unearned Revenue Notes Payable (long-term) Common Stock Dividends Retained Earnings Service Revenue Insurance Expense Salaries Expense Supplies Expense Balance \( 12,000 \) 202,100 \( 202,100 21,000 \) 25,300 57,300 40,700 3,500 2,000 1,800 13,000 51,000 28,300 4,700 6,800 21,000 3,200 56,000 32,000 1,200 16,200 1,400 2,000 1,200 2,600 Interest Expense Depreciation Expense—Building Depreciation Expense—Equipment Total  Requirements 1. Prepare the company’s income statement for the year ended December 31, 2018. 2. Prepare the company’s statement of retained earnings for the year ended December 31, 2018. 3. Prepare the company’s classified balance sheet in report form at December 31, 2018. 4. Journalize the closing entries for Bradley Irrigation System. 5. Compute the company’s current ratio at December 31, 2018. At December 31, 2017, the current ratio was 1.7. Did the company’s ability to pay current debts improve or deteriorate, or did it remain the same?

The unadjusted trial balance of Fleming Investment Advisers at December 31, 2018, follows: Adjustment data at December 31, 2018: a. Unearned Revenue earned during the year, \(700. b. Office Supplies on hand, \)3,000. c. Depreciation for the year, \(3,000. d. Accrued Salaries Expense, \)4,500. e. Accrued Service Revenue, \(9,000. Account Title Office Supplies Cash Debit Credit Accounts Receivable Equipment Accumulated Depreciation—Equipment Accounts Payable Salaries Payable Unearned Revenue Notes Payable (long-term) Common Stock Dividends Service Revenue Insurance Expense Salaries Expense Supplies Expense Interest Expense Rent Expense Depreciation Expense—Equipment Total Balance \) 25,000 \( 183,000 \) 183,000 26,000 4,500 15,000 Retained Earnings 5,500 28,000 99,000 51,000 7,500 26,000 $ 19,000 14,000 2,500 33,000 3,000 7,000 FLEMING INVESTMENT ADVISERS Unadjusted Trial Balance December 31, 2018 Requirements 1. Prepare a worksheet for Fleming Investment Advisers at December 31, 2018. 2. Prepare the income statement, the statement of retained earnings, and the classified balance sheet in account format. 3. Prepare closing entries.

The unadjusted trial balance of Watson Anvils at December 31, 2018, and the data for the adjustments follow: WATSON ANVILS Unadjusted Trial Balance December 31, 2018 Account Title Prepaid Rent Cash Debit Credit Accounts Receivable Office Supplies Equiment Accumulated Depreciation—Equipment Accounts Payable Salaries Payable Unearned Revenue Dividends Common Stock Service Revenue Salaries Expense Rent Expense Depreciation Expense—Equipment Supplies Expense Total Balance \( 13,560 \) 72,400 \( 72,400 5,600 4,600 12,000 Retained Earnings 17,600 19,000 17,000 2,140 2,800 \) 11,000 7,200 30,000 2,300.  Adjustment data: a. Unearned Revenue still unearned at December 31, \(3,600. b. Prepaid Rent still in force at December 31, \)2,000. c. Office Supplies used, \(600. d. Depreciation, \)400. e. Accrued Salaries Expense at December 31, $180. Requirements 1. Open the T-accounts using the balances in the unadjusted trial balance. 2. Complete the worksheet for the year ended December 31, 2018 (optional). 3. Prepare the adjusting entries, and post to the accounts. 4. Prepare an adjusted trial balance. 5. Prepare the income statement, the statement of retained earnings, and the classified balance sheet in report form. 6. Prepare the closing entries, and post to the accounts. 7. Prepare a post-closing trial balance. 8. Calculate the current ratio for the company.

On December 1, Curt Wilson began an auto repair shop, Wilson’s Quality Automotive. The following transactions occurred during December: Dec. 1 Wilson contributed \(63,000 cash to the business in exchange for shares of common stock. 1 Purchased \)14,400 of equipment paying cash. 1 Paid \(3,600 for a twelve-month insurance policy starting on December 1. 9 Paid \)15,000 cash to purchase land to be used in operations. 10 Purchased office supplies on account, \(2,200. 19 Borrowed \)24,000 from the bank for business use. Wilson signed a notes payable to the bank in the name of the corporation. The note is due in five years. 22 Paid \(2,000 for advertising expenses. 26 Paid \)1,000 on account. 28 The business received a bill for utilities to be paid in January, \(260. 31 Revenues earned during the month included \)18,500 cash and \(3,800 on account. 31 Paid employees’ salaries \)3,900 and building rent \(800. Record as a compound entry. 31 The business received \)1,380 for auto screening services to be performed next month. 31 Paid cash dividends of \(5,000 to stockholders. The business uses the following accounts: Cash; Accounts Receivable; Office Supplies; Prepaid Insurance; Land; Equipment; Accumulated Depreciation—Equipment; Accounts Payable; Utilities Payable; Interest Payable; Unearned Revenue; Notes Payable; Common Stock; Retained Earnings; Dividends; Income Summary; Service Revenue; Salaries Expense; Rent Expense; Utilities Expense; Advertising Expense; Supplies Expense; Insurance Expense; Interest Expense; and Depreciation Expense—Equipment. Adjustment data: a. Office Supplies used during the month, \)600. b. Depreciation for the month, \(240. c. One month insurance has expired. d. Accrued Interest Expense, \)120. Requirements 1. Prepare the journal entries, and post to the T-accounts. 2. Prepare an unadjusted trial balance. 3. Complete the worksheet for the month ended December 31, 2018 (optional). 4. Prepare the adjusting entries, and post to the T-accounts. 5. Prepare an adjusted trial balance. 6. Prepare the income statement, the statement of retained earnings, and the classified balance sheet in report form. 7. Prepare the closing entries, and post to the T-accounts. 8. Prepare a post-closing trial balance.

The unadjusted trial balance and adjustment data of Myla’s Motors at December 31, 2018, follow: Adjustment data at December 31, 2018: a. Depreciation on equipment, \(1,700. b. Accrued Wages Expense, \)1,300. c. Office Supplies on hand, \(400. d. Prepaid Insurance expired during December, \)250. Learning Objective 7 Appendix 4A Account Title Office Supplies Cash Debit Credit Accounts Receivable Prepaid Insurance Equiment Accumulated Depreciation—Equipment Accounts Payable Wages Payable Unearned Revenue Dividends Common Stock Service Revenue Depreciation Expense—Equipment Wages Expense Insurance Expense Utilities Expense Supplies Expense Total Balance \( 4,500 \) 90,900 5,700 4,300 19,300 17,200 26,100 1,000 1,500 \( 35,000 13,700 50,500 1,200 1,800 MYLA’S MOTORS Unadjusted Trial Balance December 31, 2018 \) 90, e. Unearned Revenue earned during December, \(4,200. f. Accrued Service Revenue, \)1,000. 2019 transactions: a. On January 4, Myla’s Motors paid wages of \(1,900. Of this, \)1,300 related to the accrued wages recorded on December 31. b. On January 10, Myla’s Motors received \(1,700 for Service Revenue. Of this, \)1,000 related to the accrued Service Revenue recorded on December 31. Requirements 1. Journalize adjusting entries. 2. Journalize reversing entries for the appropriate adjusting entries. 3. Refer to the 2019 data. Journalize the cash payment and the cash receipt that occurred in 2019. 

Refer to the Practice Set data provided in Chapters 2 and 3 for Crystal Clear Cleaning.

Requirements

1. Prepare a worksheet (optional) at November 30, 2018. Use the unadjusted trial balance from Chapter 2 and the adjusting entries from Chapter 3.

2. Prepare an income statement and statement of retained earnings for the month ended November 30, 2018. Also prepare a classified balance sheet at November 30, 2018, using the report format. Assume the Notes Payable is long-term. Use the worksheet prepared in Requirement 1 or the adjusted trial balance from Chapter 3.

3. Prepare closing entries at November 30, 2018, and post to the accounts. Open T-accounts for Income Summary and Retained earnings. Determine the ending balance in each account. Denote each closing amount as Clos. and each account balance as Balance.

4. Prepare a post-closing trial balance at November 30, 2018.

This problem continues the Canyon Canoe Company situation from Chapter 3.

Requirements

1. Complete the worksheet at December 31, 2018 (optional). Use the unadjusted trial balance from Chapter 2 and the adjusting entries from Chapter 3.

2. Prepare an income statement for the two months ended December 31, 2018. Use the worksheet prepared in Requirement 1 or the adjusted trial balance from Chapter 3.

3. Prepare a statement of retained earnings for the two months ended December 31, 2018.

4. Prepare a classified balance sheet (report form) at December 31, 2018. Assume the note payable is long-term.

5. Journalize and post the closing entries at December 31, 2018. Open T-accounts for Income Summary and Retained earnings. Determine the ending balance for each account. Denote each closing amount as Clos. and each account balance as Balance.

6. Prepare a post-closing trial balance at December 31, 2018.

Refer to the Practice Set data provided in Chapters 2 and 3 for Crystal Clear Cleaning.

Requirements

1. Prepare a worksheet (optional) at November 30, 2018. Use the unadjusted trial balance from Chapter 2 and the adjusting entries from Chapter 3.

2. Prepare an income statement and statement of retained earnings for the month ended November 30, 2018. Also prepare a classified balance sheet at November 30, 2018, using the report format. Assume the Notes Payable is long-term. Use the worksheet prepared in Requirement 1 or the adjusted trial balance from Chapter 3.

3. Prepare closing entries at November 30, 2018, and post to the accounts. Open T-accounts for Income Summary and Retained earnings. Determine the ending balance in each account. Denote each closing amount as Clos. and each account balance as Balance.

4. Prepare a post-closing trial balance at November 30, 2018.

Question: Refer to the Practice Set data provided in Chapters 2 and 3 for Crystal Clear Cleaning.

Requirements

1. Prepare a worksheet (optional) at November 30, 2018. Use the unadjusted trial balance from Chapter 2 and the adjusting entries from Chapter 3.

2. Prepare an income statement and statement of retained earnings for the month ended November 30, 2018. Also prepare a classified balance sheet at November 30, 2018, using the report format. Assume the Notes Payable is long-term. Use the worksheet prepared in Requirement 1 or the adjusted trial balance from Chapter 3.

3. Prepare closing entries at November 30, 2018, and post to the accounts. Open T-accounts for Income Summary and Retained earnings. Determine the ending balance in each account. Denote each closing amount as Clos. and each account balance as Balance.

4. Prepare a post-closing trial balance at November 30, 2018.

Murphy Delivery Service completed the following transactions during December 2018: Dec. 1 Murphy Delivery Service began operations by receiving \(13,000 cash and a truck with a fair value of \)9,000 from Russ Murphy. The business issued Murphy shares of common stock in exchange for this contribution. 1 Paid \(600 cash for a six-month insurance policy. The policy begins December 1. 4 Paid \)750 cash for office supplies. 12 Performed delivery services for a customer and received \(2,200 cash. 15 Completed a large delivery job, billed the customer, \)3,300, and received a promise to collect the \(3,300 within one week. 18 Paid employee salary, \)800. 20 Received \(7,000 cash for performing delivery services. 22 Collected \)2,200 in advance for delivery service to be performed later. 25 Collected \(3,300 cash from customer on account. 27 Purchased fuel for the truck, paying \)150 on account. (Credit Accounts Payable) 28 Performed delivery services on account, \(1,400. 29 Paid office rent, \)1,400, for the month of December. 30 Paid \(150 on account. 31 Cash dividends of \)2,500 were paid to stockholders. Requirements 

1. Record each transaction in the journal using the following chart of accounts. Explanations are not required. Cash Retained Earnings Accounts Receivable Dividends Office Supplies Income Summary Prepaid Insurance Service Revenue Truck Salaries Expense Accumulated Depreciation—Truck Depreciation Expense—Truck Accounts Payable Insurance Expense Salaries Payable Fuel Expense Unearned Revenue Rent Expense Common Stock Supplies Expense 

2. Post the transactions in the T-accounts. 

3. Prepare an unadjusted trial balance as of December 31, 2018. 

4. Prepare a worksheet as of December 31, 2018 (optional). 

5. Journalize the adjusting entries using the following adjustment data and also by reviewing the journal entries prepared in Requirement 1. Post adjusting entries to the T-accounts. CHAPTER 4 Completing the Accounting Cycle 245 Adjustment data: a. Accrued Salaries Expense, \(800. b. Depreciation was recorded on the truck using the straight-line method. Assume a useful life of five years and a salvage value of \)3,000. c. Prepaid Insurance for the month has expired. d. Office Supplies on hand, \(450. e. Unearned Revenue earned during the month, \)700. f. Accrued Service Revenue, $450. 

6. Prepare an adjusted trial balance as of December 31, 2018.

 7. Prepare Murphy Delivery Service’s income statement and statement of retained earnings for the month ended December 31, 2018, and the classified balance sheet on that date. On the income statement, list expenses in decreasing order by amount—that is, the largest expense first, the smallest expense last. 

8. Journalize the closing entries, and post to the T-accounts. 

9. Prepare a post-closing trial balance as of December 31, 2018.

This comprehensive problem is a continuation of Comprehensive Problem 1. Murphy Delivery Service has completed closing entries and the accounting cycle for 2018. The business is now ready to record January 2019 transactions. Jan. 3 Collected \(200 cash from customer on account. 5 Purchased office supplies on account, \)1,000. 12 Performed delivery services for a customer and received \(3,000 cash. 15 Paid employee salary, including the amount owed on December 31, \)4,100. 18 Performed delivery services on account, \(1,350. 20 Paid \)300 on account. 24 Purchased fuel for the truck, paying \(200 cash. 27 Completed the remaining work due for Unearned Revenue. 28 Paid office rent, \)2,200, for the month of January. 30 Collected \(3,000 in advance for delivery service to be performed later. 31 Cash dividends of \)1,500 were paid to stockholders. Requirements 1. Record each January transaction in the journal. Explanations are not required. 2. Post the transactions in the T-accounts. Don’t forget to use the December 31, 2018, ending balances as appropriate. 3. Prepare an unadjusted trial balance as of January 31, 2019. 4. Prepare a worksheet as of January 31, 2019 (optional). 5. Journalize the adjusting entries using the following adjustment data and also by reviewing the journal entries prepared in Requirement 1. Post adjusting entries to the T-accounts. CHAPTER 4 246 chapter 4 Adjustment data: a. Office Supplies on hand, \(600. b. Accrued Service Revenue, \)1,800. c. Accrued Salaries Expense, $500. d. Prepaid Insurance for the month has expired. e. Depreciation was recorded on the truck for the month. 6. Prepare an adjusted trial balance as of January 31, 2019. 7. Prepare Murphy Delivery Service’s income statement and statement of retained earnings for the month ended January 31, 2019, and the classified balance sheet on that date. On the income statement, list expenses in decreasing order by amount—that is, the largest expense first, the smallest expense last. 8. Calculate the following ratios as of January 31, 2019, for Murphy Delivery Service: return on assets, debt ratio, and current ratio.

Grant Film Productions wishes to expand and has borrowed \(100,000. As a condition for making this loan, the bank requires that the business maintain a current ratio of at least 1.50. Business has been good but not great. Expansion costs have brought the current ratio down to 1.40 on December 15. Rita Grant, owner of the business, is considering what might happen if she reports a current ratio of 1.40 to the bank. One course of action for Grant is to record in December \)10,000 of revenue that the business will earn in January of next year. The contract for this job has been signed. Requirements 1. Journalize the revenue transaction, and indicate how recording this revenue in December would affect the current ratio. 2. Discuss whether it is ethical to record the revenue transaction in December. Identify the accounting principle relevant to this situation, and give the reasons underlying your conclusion.

Kathy Wintz formed a lawn service business as a summer job. To start the corporationon May 1, 2018, she deposited \(1,000 in a new bank account in the name of the business. The \)1,000 consisted of a \(600 loan from Bank One to her company, Wintz Lawn Service, and \)400 of her own money. The company issued \(400 of common stock to Wintz. Wintz rented lawn equipment, purchased supplies, and hired other students to mow and trim customers’ lawns.

At the end of each month, Wintz mailed bills to the customers. On August 31, she was ready to dissolve the corporation and return to college. Because she was so busy, she kept few records other than the checkbook and a list of receivables from customers.

At August 31, the business’s checkbook shows a balance of \)2,000, and customers still owe \(750. During the summer, the business collected \)5,500 from customers. The business checkbook lists payments for supplies totaling \(400, and it still has gasoline, weed trimmer cord, and other supplies that cost a total of \)50.

The business paid employees \(1,800 and still owes them \)300 for the final week of the summer. Wintz rented some equipment from Ludwig’s Machine Shop. On May 1, the business signed a six-month rental agreement on mowers and paid \(600 for the full rental period in advance. Ludwig’s will refund the unused portion of the prepayment if the equipment is returned in good shape. In order to get the refund, Wintz has kept the mowers in excellent condition. In fact, the business had to pay \)300 to repair a mower.To transport employees and equipment to jobs, Wintz used a trailer that the business bought for \(300. The business estimates that the summer’s work used up one-third of the trailer’s service potential. The business checkbook lists a payment of \)500 for cash dividends paid during the summer. The business paid the loan back during August. (For simplicity, ignore any interest expense associated with the loan.)

Requirements

1. As a team, prepare the income statement and the statement of retained earnings of Wintz Lawn Service for the four months May 1 through August 31, 2018.

2. Prepare the classified balance sheet (report form) of Wintz Lawn Service at August 31, 2018.

3. Was Wintz’s summer work successful? Give your team’s reason for your answer.