CH 04

CHAPTER 4
Completing the Accounting Cycle
ASSIGNMENT CLASSIFICATION TABLE
Brief
Learning Objectives Questions Exercises Do It! Exercises Problems
*1. Prepare a worksheet. 1, 2, 3, 4, 5 1, 2, 3 1 1, 2, 3, 1, 2, 3, 4, 5

5, 6
*2. Prepare closing entries and a 6, 7, 8, 9, 11 4, 5, 6, 7 2 4, 7, 8, 11, 1, 2, 3, 4, 5

post-closing trial balance. 19
*3. Explain the steps in the 10, 11, 12, 13 8, 9 3 10, 12, 13 6
accounting cycle and how to
prepare correcting entries.
*4. Identify the sections of a 14, 15, 16, 17, 10, 11 4 3, 9, 14, 15, 1, 2, 3, 4, 5
classified statement of financial 18, 19 16, 17
position.
*5. Prepare reversing entries. 10, 20, 21 12 18, 19
*Note: All asterisked Questions, Exercises, and Problems relate to material contained in the appendix *to the
chapter.
Copyright © 2019 WILEY Weygandt, Financial Accounting, IFRS 4/e, Solutions Manual (For Instructor Use Only) 4-1
ASSIGNMENT CHARACTERISTICS TABLE
Problem Difficulty Time Allotted

Number Description Level (min.)
1 Prepare worksheet, financial statements, and adjusting Simple 40–50

and closing entries.
2 Complete worksheet; prepare financial statements, Moderate 50–60

closing entries, and post-closing trial balance.
3 Prepare financial statements, closing entries, and post- Moderate 40–50

closing trial balance.
4 Complete worksheet; prepare classified statement of Moderate 50–60

financial position, entries, and post-closing trial balance.
5 Complete all steps in accounting cycle. Complex 70–90
6 Analyze errors and prepare correcting entries and trial Moderate 40–50
balance.
Comprehensive Problem: Chapters 2 to 4
4-2 Copyright © 2019 WILEY Weygandt, Financial Accounting, IFRS 4/e, Solutions Manual (For Instructor Use Only)
WEYGANDT FINANCIAL ACCOUNTING IFRS 4E
CHAPTER 4
COMPLETING THE ACCOUNTING CYCLE
Number LO BT Difficulty Time (min.)

BE1 1 K Simple 2–4
BE2 1 AN Moderate 6–8
BE3 1 C Simple 3–5
BE4 2 AP Simple 3–5
BE8 3 K Simple 3–5
DI1 1 C Simple 4–6
DI2 2 AP Simple 2–4
DI3 3 AP Simple 6–8
DI4 4 C Simple 4–6
EX1 1 AP Simple 12–15
EX3 1, 4 AP Simple 12–15
EX5 1 AN Simple 10–12
EX6 1 AN Moderate 12–15
EX10 3 C Simple 3–5
EX14 4 AP Moderate 10–12
EX15 4 C Simple 5–8
COMPLETING THE ACCOUNTING CYCLE (Continued)
Number LO BT Difficulty Time (min.)

*EX18 5 AN Moderate 5–7
*EX19 2, 5 AN Moderate 10–12
P1 1, 2, 4 AN Simple 40–50
P2 1, 2, 4 AP Moderate 50–60
P3 1, 2, 4 AP Moderate 40–50
P4 1, 2, 4 AN Moderate 50–60
P5 1, 2, 4 AN Complex 70–90
P6 3 AN Moderate 40–50
CT1 4 AN Simple 10–12
CT2 4 AN Simple 8–10
CT3 — E Simple 10–12
CT4 4 AN Moderate 15–20
CT5 3 C Simple 15–20
CT6 — E Moderate 10–15
CT7 — E Moderate 15–20
BLOOM’S TAXONOMY TABLE
4-5
Copyright © 2019 WILEY Weygandt, Financial Accounting, IFRS 4/e, Solutions Manual (For Instructor Use Only)
Correlation Chart between Bloom’s Taxonomy, Learning Objectives and End-of-Chapter Exercises and Problems
Learning Objective Knowledge Comprehension Application Analysis Synthesis Evaluation
*1. Prepare a worksheet. BE4-1 Q4-1 BE4-3 E4-1 P4-2 BE4-2 P4-1
Q4-2 DI4-1 E4-2 P4-3 E4-5 P4-4
Q4-3 E4-3 E4-6 P4-5
Q4-4
Q4-5
*2. Prepare closing entries and a Q4-6 Q4-7 BE4-4 E4-7 E4-19
post-closing trial balance. Q4-11 Q4-8 BE4-5 E4-8 P4-1
Q4-9 BE4-6 E4-11 P4-4
BE4-7 DI4-2 P4-2 P4-5
E4-4 P4-3
*3. Explain the steps in the Q4-11 Q4-10 DI4-3 BE4-9

accounting cycle and how to Q4-12 Q4-13 E4-12 P4-6
prepare correcting entries. BE4-8 E4-10 E4-13
*4. Identify the sections of Q4-14 Q4-17 BE4-10 E4-16 P4-1
a classified statement of financial Q4-15 Q4-19 E4-3 E4-17 P4-4
position. Q4-16 BE4-11 E4-9 P4-2 P4-5
Q4-18 DI4-4 E4-14 P4-3
E4-15
*5. Prepare reversing entries. Q4-10 Q4-21 E4-18
Q4-20 BE4-12 E4-19
Expand Your Critical Thinking Communication Financial Reporting Real-World

Comparative Focus
Analysis Ethics Case
Decision Making
Across the
Organization
ANSWERS TO QUESTIONS
1. No. A worksheet is not a permanent accounting record. The use of a worksheet is an optional
step in the accounting cycle.
2. The worksheet is merely a device used to make it easier to prepare adjusting entries and the
financial statements.
3. The amount shown in the adjusted trial balance column for an account equals the account
balance in the ledger after adjusting entries have been journalized and posted.
4. The net income of ¥12,000 will appear in the income statement debit column and the statement
of financial position credit column. A net loss will appear in the income statement credit column
and the statement of financial position debit column.
5. Formal financial statements are needed because the columnar data are not properly arranged
and classified for statement purposes. For example, a drawing account is listed with assets.
6. (1) (Dr) Individual revenue accounts and (Cr) Income Summary.
(2) (Dr) Income Summary and (Cr) Individual expense accounts.
(3) (Dr) Income Summary and (Cr) Retained Earnings (for net income).
(4) (Dr) Retained Earnings and (Cr) Dividends.
7. Income Summary is a temporary account that is used in the closing process. The account is
debited for expenses and credited for revenues. The difference, either net income or net loss, is
then closed to the Retained Earnings account.
8. The post-closing trial balance contains only statement of financial position accounts. Its purpose
is to prove the equality of the permanent account balances that are carried forward into the next
accounting period.
9. The accounts that will not appear in the post-closing trial balance are Depreciation Expense;
Dividends; and Service Revenue.
10. A reversing entry is the exact opposite, both in amount and in account titles, of an adjusting entry
and is made at the beginning of the new accounting period. Reversing entries are an optional
step in the accounting cycle.
11. The steps that involve journalizing are: (1) journalize the transactions, (2) journalize the adjusting
entries, and (3) journalize the closing entries.
12. The three trial balances are the: (1) trial balance, (2) adjusted trial balance, and (3) post-closing
trial balance.
13. Correcting entries differ from adjusting entries because they: (1) are not a required part of the
accounting cycle, (2) may be made at any time, and (3) may affect any combination of accounts.
Questions Chapter 4 (Continued)
*14. The standard classifications in a statement of financial position are:

Assets Equity and Liabilities
Intangible Assets
Property, Plant, and Equipment Equity
Long-term Investments Non-current Liabilities
Current Assets Current Liabilities
*15. The operating cycle of a company is the average time that it takes to purchase inventory, sell it on
account, and then collect cash from customers.
*16. Current assets are assets that a company expects to convert to cash or use up in one year. Some
companies use a period longer than one year to classify assets and liabilities as current because they
have an operating cycle longer than one year. Companies usually list current assets in the
reverse order in which they expect to convert them into cash.
*17. Long-term investments are generally investments in shares and bonds of other companies that
are normally held for many years. Property, plant, and equipment are assets with relatively long
useful lives that a company is currently using in operating the business.
*18. (a) The equity section for a corporation is called shareholders’ equity.
(b) The two accounts and the purpose of each are: (1) Share capital is used to record invest-
ments of assets in the business by the owners (shareholders). (2) Retained earnings is used
to record net income retained in the business.
*19.. TSMC’s current liabilities at December 31, 2016 and December 31, 2015 were NT$318,239,273
and NT$212,228,594 respectively. TSMC’s current liabilities were significantly lower than its current
assets in both years.
*20. After reversing entries have been made, the balances will be Interest Payable, zero balance;
Interest Expense, a credit balance.
*21. (a) Jan. 10 Salaries and Wages Expense.................................................... 8,000

Cash................................................................................. 8,000
Because of the January 1 reversing entry that credited Salaries and Wages Expense for
€3,500, Salaries and Wages Expense will have a debit balance of €4,500 which equals the
expense for the current period.
(b) Jan. 10 Salaries and Wages Payable..................................................... 3,500

Salaries and Wages Expense.................................................... 4,500
Cash................................................................................. 8,000
Note that Salaries and Wages Expense will again have a debit balance of €4,500.
SOLUTIONS TO BRIEF EXERCISES
BRIEF EXERCISE 4.1
The steps in using a worksheet are performed in the following sequence:

(1) prepare a trial balance on the worksheet, (2) enter adjustment data,
(3) enter adjusted balances, (4) extend adjusted balances to appropriate
statement columns and (5) total the statement columns, compute net
income (loss), and complete the worksheet. Filling in the blanks, the
answers are 1, 3, 4, 5, 2.
The solution to BRIEF EXERCISE 4.2 is on page 4.9.
BRIEF EXERCISE 4.3
Statement of
Financial
Income Statement Position
Account Dr. Cr. Dr. Cr.
Accumulated Depreciation X
Depreciation Expense X
Share Capital—Ordinary X
Dividends X
Service Revenue X
Supplies X
Accounts Payable X
BRIEF EXERCISE 4.4
Dec. 31 Service Revenue............................................... 58,000

Income Summary...................................... 58,000
31 Income Summary.............................................. 46,000

Salaries and Wages Expense.................. 39,000
Supplies Expense..................................... 7,000
31 Income Summary.............................................. 12,000

Retained Earnings.................................... 12,000
31 Retained Earnings............................................ 2,000

Dividends................................................... 2,000
BRIEF EXERCISE 4.2
4-9
WALTERS REPAIR SHOP

Worksheet
Adjusted Income Statement of

Trial Balance Adjustments Trial Balance Statement Financial
Position
Account Titles Dr. Cr. Dr. Cr. Dr. Cr. Dr. Cr. Dr. Cr.
Prepaid Insurance 3,000 (a) 1,800 1,200 1,200
Service Revenue 60,000 (b) 1,100 61,100 61,100
Salaries and Wages
Expense 25,000 (c) 900 25,900 25,900
Accounts Receivable (b) 1,100 1,100 1,100
Salaries and Wages
Payable (c) 900 900 900
Insurance Expense (a) 1,800 1,800 1,800
BRIEF EXERCISE 4.5
Salaries and Wages

Expense Income Summary Service Revenue
Bal. 39,000 (2) 39,000 (2) 46,000 (1) 58,000 (1) 58,000 Bal. 58,000
(3) 12,000
58,000 58,000
Supplies Expense Retained Earnings Dividends

Bal. 7,000 (2) 7,000 (4) 2,000 Bal. 30,000 Bal. 2,000 (4) 2,000
(3) 12,000
Bal. 40,000
BRIEF EXERCISE 4.6
July 31 Service Revenue................................................ 17,800

Income Summary....................................... 17,800
31 Income Summary.............................................. 12,100

Salaries and Wages Expense................... 9,600
Maintenance and Repairs Expense.......... 2,500
Service Revenue
Date Explanation Ref. Debit Credit Balance
7/31 Balance 17,800 17,800
7/31 Closing entry 17,800 0
Salaries and Wages Expense

7/31 Balance 9,600 9,600
BRIEF EXERCISE 4.6 (Continued)
Maintenance and Repairs Expense

7/31 Balance 2,500 2,500
BRIEF EXERCISE 4.7
The accounts that will appear in the post-closing trial balance are:
Accumulated Depreciation
Share Capital—Ordinary
Supplies
Accounts Payable
BRIEF EXERCISE 4.8
The proper sequencing of the required steps in the accounting cycle is as

follows:
1. Analyze business transactions.

2. Journalize the transactions.
3. Post to ledger accounts.
4. Prepare a trial balance.
5. Journalize and post adjusting entries.
6. Prepare an adjusted trial balance.
7. Prepare financial statements.
8. Journalize and post closing entries.
9. Prepare a post-closing trial balance.
Filling in the blanks, the answers are 4, 2, 8, 7, 5, 3, 9, 6, 1.
BRIEF EXERCISE 4.9
1. Service Revenue.................................................................. 870

Accounts Receivable................................................... 870
2. Supplies (£1,150 – £1,510)................................................... 360

Accounts Payable........................................................ 360
BRIEF EXERCISE 4.10
JOLIE COMPANY
Partial Statement of Financial Position
Current assets
Prepaid insurance.................................................................... $ 4,500
Supplies..................................................................................... 5,200
Accounts receivable................................................................. 12,500
Debt investments...................................................................... 7,600
Cash........................................................................................... 4,100
Total current assets.......................................................... $33,900
BRIEF EXERCISE 4.11
CL Accounts payable CL Income taxes payable

CA Accounts receivable LTI Debt investments (long-term)
PPE Accum. depreciation—buildings PPE Land
PPE Buildings CA Inventory
CA Cash IA Patents
IA Copyrights CA Supplies
*BRIEF EXERCISE 4.12
Nov.1 Salaries and Wages Payable...................................... 3,300

Salaries and Wages Expense............................. 3,300
The balances after posting the reversing entry are Salaries and Wages
Expense (Cr.) €3,300 and Salaries and Wages Payable €0.
SOLUTIONS FOR DO IT! EXERCISES
DO IT! 4.1
Income statement debit column—Utilities Expense

Income statement credit column—Service Revenue
Statement of financial position debit column—Accounts Receivable
Statement of financial position credit column—Notes Payable;
Statement of financial position credit column—Accumulated Depreciation;
Statement of financial position credit column—Share Capital—Ordinary
DO IT! 4.2
Dec. 31 Service Revenue........................................... 108,000

Income Summary................................... 108,000
Dec. 31 Income Summary.......................................... 72,000

Supplies Expense................................... 6,000
Salaries and Wages Expense................ 40,000
Utilities Expense..................................... 8,000
Rent Expense.......................................... 18,000
Dec. 31 Income Summary.......................................... 36,000

Retained Earnings.................................. 36,000
Dec. 31 Retained Earnings........................................ 22,000

Dividends................................................ 22,000
DO IT! 4.3
1. Supplies......................................................... 650
Equipment................................................. 210
Cash.......................................................... 440
2. Cash............................................................... 400
Dividends....................................................... 500
Salaries & Wages Expense...................... 900
3. Accounts Payable......................................... 540

Cash.......................................................... 540
DO IT! 4.4
NA Interest revenue E Share capital—ordinary

CL Utilities payable PPE Accumulated depreciation—equipment
CL Accounts payable PPE Equipment
CA Supplies NA Salaries and wages expense
NCL Bonds payable LTI Debt investments (long-term)
IA Goodwill CL Unearned rent revenue
SOLUTIONS TO EXERCISES
EXERCISE 4.1
LIM ACUPUNCTURE
Worksheet
For the Month Ended June 30, 2020
Statement of
Financial
Account Titles Trial Balance Adjustments Adj. Trial Balance Income Statement Position
Dr. Cr. Dr. Cr. Dr. Cr. Dr. Cr. Dr. Cr.
Cash 2,320 2,320 2,320
Accounts
Receivable 2,440 2,440 2,440
Supplies 1,880 (a) 1,380 500 500
Accounts Payable 1,120 1,120 1,120
Unearned Service
Revenue 240 (b) 140 100 100
Share Capital—
Ordinary 3,600 3,600 3,600
Service Revenue 2,400 (b) 140 2,540 2,540
Salaries and
Wages Expense 560 (c) 210 770 770
Miscellaneous
Expense 160 160 160
Totals 7,360 7,360
(a)
Supplies Expense 1,380 1,380 1,380
Salaries and
Wages Payable (c) 210 210 210
Totals 1,730 1,730 7,570 7,570 2,310 2,540 5,260 5,030
Net Income 230 230
Totals 2,540 2,540 5,260 5,260
EXERCISE 4.2
TAI INTERIORS
(Partial) Worksheet
For the Month Ended April 30, 2020
Statement of
Adjusted Income Financial
Trial Balance Statement Position
Account Titles Dr. Cr. Dr. Cr. Dr. Cr.
Cash 10,000 10,000
Accounts Receivable 7,840 7,840
Prepaid Rent 2,280 2,280
Equipment 23,050 23,050
Accum. Depreciation
— Equipment 4,900 4,900
Notes Payable 5,700 5,700
Accounts Payable 4,920 4,920
Share Capital
— Ordinary 25,960 25,960
Dividends 3,650 3,650
Service Revenue 17,590 17,590
Salaries and Wages
Expense 10,840 10,840
Rent Expense 760 760
Depreciation Expense 650 650
Interest Expense 57 57
Interest Payable 57 57
Totals 59,127 59,127 12,307 17,590 46,820 41,537
Net Income 5,283 5,283
Totals 17,590 17,590 46,820 46,820
EXERCISE 4.3
TAI INTERIORS
Income Statement
Revenues
Service revenue......................................................... NT$17,590
Expenses
Salaries and wages expense.................................... NT$10,840
Rent expense............................................................. 760
Depreciation expense............................................... 650
Interest expense........................................................ 57
Total expenses.................................................. 12,307
Net income........................................................................ NT$ 5,283
TAI INTERIORS
Retained Earnings Statement
Retained earnings, April 1......................................................... NT$ 0

Add: Net income....................................................................... 5,283
5,283
Less: Dividends......................................................................... 3,650
Retained earnings, April 30....................................................... NT$1,633
TAI INTERIORS
Statement of Financial Position
April 30, 2020
Assets
Property, plant, and equipment
Equipment................................................................... NT$23,050
Less: Accumulated depreciation—equipment........ 4,900 NT$18,150
Current assets
Prepaid rent................................................................. 2,280
Accounts receivable................................................... 7,840
Cash............................................................................. 10,000 20,120
Total assets.......................................................... NT$38,270
EXERCISE 4.3 (Continued)
TAI INTERIORS
Statement of Financial Position (Continued)
April 30, 2020
Equity and Liabilities

Equity
Share capital—ordinary...................................... NT$25,960
Retained earnings.............................................. 1,633 NT$27,593
Current liabilities
Notes payable..................................................... 5,700
Accounts payable.............................................. 4,920
Interest payable.................................................. 57 10,677
Total equity and liabilities ......................... NT$38,270
EXERCISE 4.4
(a) Apr. 30 Service Revenue....................................... 17,590

Income Summary............................... 17,590
30 Income Summary...................................... 12,307

Salaries and Wages Expense........... 10,840
Rent Expense..................................... 760
Depreciation Expense....................... 650
Interest Expense................................ 57
30 Income Summary...................................... 5,283

Retained Earnings............................. 5,283
30 Retained Earnings..................................... 3,650

Dividends........................................... 3,650
(b)
Income Summary Retained Earnings
(2) 12,307 (1) 17,590 (4) 3,650 Bal. 0
(3) 5,283 (3) 5,283
17,590 17,590 Bal. 1,633
(c) TAI INTERIORS

Post-Closing Trial Balance
April 30, 2020
Debit Credit
Cash...................................................................... NT$10,000
Accounts Receivable.......................................... 7,840
Prepaid Rent........................................................ 2,280
Equipment............................................................ 23,050
Accumulated Depreciation—Equipment........... NT$ 4,900
Notes Payable...................................................... 5,700
Accounts Payable................................................ 4,920
Interest Payable................................................... 57
Share Capital—Ordinary...................................... 25,960
Retained Earnings............................................... 1,633
NT$43,170NTNT$43,170
EXERCISE 4.5
(a) Accounts Receivable.......................................... 1,100

Service Revenue.......................................... 1,100
Insurance Expense.............................................. 300

Prepaid Insurance........................................ 300
Depreciation Expense......................................... 900

Accumulated Depreciation—Equipment. . . 900
Salaries and Wages Expense............................. 500

Salaries and Wages Payable....................... 500
(b) Income Statement Statement of

Financial Position
Dr. Cr. Dr. Cr.
Accounts Receivable X
Prepaid Insurance X
Accum. Depreciation—Equip. X
Salaries and Wages Payable X
Service Revenue X
Salaries and Wages Expense X
Insurance Expense X
Depreciation Expense X
EXERCISE 4.6
(a) Accounts Receivable—¥25,000 (¥34,000 – ¥9,000).

Supplies—¥2,500 (¥7,000 – ¥4,500).
Accumulated Depreciation—Equipment—¥22,000 (¥12,000 + ¥10,000).
Salaries and Wages Payable—¥0 No liability recorded until adjustments
are made.
Insurance Expense—¥6,000 (¥26,000 – ¥20,000).
Salaries and Wages Expense—¥43,400 (¥49,000 – ¥5,600).
(b) Accounts Receivable.................................................. 9,000

Service Revenue................................................. 9,000
Insurance Expense..................................................... 6,000

Prepaid Insurance............................................... 6,000
Supplies Expense....................................................... 4,500

Supplies............................................................... 4,500
Depreciation Expense................................................ 10,000

Accumulated Depreciation—Equipment........... 10,000
Salaries and Wages Expense.................................... 5,600

Salaries and Wages Payable.............................. 5,600
EXERCISE 4.7
(a) Service Revenue..................................................... 4,300

Income Summary.............................................. 4,300
Income Summary.................................................... 3,416

Salaries and Wages Expense.......................... 1,260
Miscellaneous Expense................................... 256
Supplies Expense............................................. 1,900
Income Summary.................................................... 884

Retained Earnings............................................ 884
Retained Earnings.................................................. 550

Dividends........................................................... 550
(b) JEJU CONSULTANTS

June 30, 2020
Account Titles Debit Credit

Cash......................................................................... ₩3,712
Accounts Receivable.............................................. 3,904
Supplies................................................................... 480
Accounts Payable................................................... ₩1,382
Salaries and Wages Payable.................................. 460
Unearned Service Revenue.................................... 160
Share Capital—Ordinary........................................ 4,100
Retained Earnings.................................................. 1,994
₩8,096 ₩8,096
EXERCISE 4.8
(a)
General Journal J15
Date Account Titles Ref. Debit Credit
July 31 Service Revenue.................................. 400 64,000
Rent Revenue....................................... 429 6,500
Income Summary........................ 350 70,500
31 Income Summary................................. 350 78,600

Salaries and Wages Expense.... 726 55,700
Utilities Expense......................... 732 14,900
Depreciation Expense................ 711 8,000
31 Retained Earnings............................... 320 8,100

Income Summary........................ 350 8,100

Dividends..................................... 332 16,000
(b)
Retained Earnings No. 320

July 31 Balance ✓ 25,200
31 Close net loss J15 8,100 17,100
31 Close dividends J15 16,000 1,100
Income Summary No. 350

July 31 Close revenue J15 70,500 70,500
31 Close expenses J15 78,600 (8,100)
31 Close net loss J15 8,100 0
(c) HUANG AUTOMOTIVE

July 31, 2020
Debit Credit
Cash...................................................................... NT$9,840
Equipment............................................................ 15,900
Unearned Rent Revenue..................................... 1,800
Share Capital—Ordinary..................................... 20,000
NT$34,520 NT$34,520
EXERCISE 4.9
(a) HUANG AUTOMOTIVE

Income Statement
For the Year Ended July 31, 2020
Revenues
Service revenue........................................... NT$64,000
Rent revenue................................................ __ 6,500
Total revenues...................................... NT$70,500
Expenses
Salaries and wages expense...................... 55,700
Utilities expense.......................................... 14,900
Depreciation expense.................................. __ 8,000
Total expenses..................................... __ _78,600
Net loss................................................................. (NT$ 8,100)
HUANG AUTOMOTIVE
Retained earnings, August 1, 2019.................... NT$25,200

Less: Net loss..................................................... NT$ 8,100
Dividends.................................................. 16,000 __ _24,100
Retained earnings, July 31, 2020....................... NT$1,100
(b) HUANG AUTOMOTIVE

July 31, 2020
Assets
Equipment....................................................... NT$15,900
Less: Accumulated depreciation................ 7,400 NT$8,500
Current assets
Accounts receivable...................................... 8,780
Cash................................................................ 9,840 18,620
Total assets............................................. NT$27,120

Equity
Share capital—ordinary................................. NT$20,000
Retained earnings...................................... 1,100 NT$21,100
Current liabilities
Accounts payable........................................... 4,220
Unearned rent revenue.............................. 1,800 6,020
Total equity and liabilities...................... NT$27,120
EXERCISE 4.10
1. False “Analyze business transactions” is the first step in the accounting

cycle.
2. False. Reversing entries are an optional step in the accounting cycle.
3. True.
4. True.
5. True.
6. False. Steps 1–3 may occur daily in the accounting cycle. Steps 4–7 are
performed on a periodic basis. Steps 8 and 9 are usually prepared only
at the end of a company’s annual accounting period.
7. False. The step of “journalize the transactions” occurs before the step
of “post to the ledger accounts.”
8. False. Closing entries are prepared after financial statements are prepared.
EXERCISE 4.11
(a) June 30 Service Revenue..................................... 18,100

Income Summary............................ 18,100
30 Income Summary................................... 13,100

Salaries and Wages Expense........ 8,800
Rent Expense.................................. 3,000
Supplies Expense........................... 1,300
30 Income Summary................................... 5,000

Retained Earnings.......................... 5,000
30 Retained Earnings.................................. 2,500

Dividends......................................... 2,500
(b)
Income Summary
June 30 13,100 June 30 18,100
June 30 5,000
18,100 18,100
EXERCISE 4.12
(a) 1. Cash................................................................... 700

Equipment................................................. 700
Salaries and Wages Expense.......................... 700

Cash........................................................... 700
2. Service Revenue............................................... 150

Cash........................................................... 150
Cash................................................................... 1,500
Accounts Receivable............................... 1,500
3. Accounts Payable............................................. 760

Equipment................................................. 760
Equipment......................................................... 670
Accounts Payable.................................... 670
(b) 1. Salaries and Wages Expense.......................... 700

Equipment................................................. 700
2. Service Revenue............................................... 150

Cash................................................................... 1,350
Accounts Receivable............................... 1,500
3. Accounts Payable............................................. 90
Equipment................................................. 90
EXERCISE 4.13
1. Accounts Payable ($750 – $570).............................. 180

Cash.................................................................... 180
2. Supplies..................................................................... 560
Equipment.......................................................... 56
Accounts Payable.............................................. 504
3. Dividends.................................................................. 500
Salaries and Wages Expense........................... 500
EXERCISE 4.14
(a) TSAI BOWLING ALLEY

December 31, 2020
Assets
Land.............................................. ¥65,000
Buildings....................................... ¥128,800
Less: Acc. depr.—buildings....... 42,600 86,200
Equipment.................................... 62,400
Less: Acc. depr.—equipment.... 18,720 43,680 ¥194,880
Current assets
Prepaid insurance........................ 4,680
Accounts receivable.................... 14,520
Cash.............................................. 18,040 37,240
Total assets...................... ¥232,120
TSAI BOWLING ALLEY

December 31, 2020

Equity
Share capital—ordinary.................................... ¥100,000
Retained earnings (¥13,000 + ¥5,240*)............ 18,240 ¥118,240
Non-current liabilities
Notes payable.................................................... 67,780
Current liabilities
Notes payable(due 2021).....................¥30,000
Accounts payable...................................12,300
Interest payable.................................. 3,800 ¥46,100
Total liabilities........................................... 113,880
Total equity and liabilities.................... ¥232,120
*Net income = ¥17,180 – ¥780 – ¥7,360 – ¥3,800 = ¥5,240
(b) Current assets are less than current liabilities by ¥8,860 (¥37,240 –
¥46,100). However, approximately 50% of current assets are in the form
of cash. The company’s liquidity appears to be somewhat weak, so
some caution is needed.
EXERCISE 4.15
CL Accounts payable PPE Accumulated depreciation–

equipment
CA Accounts receivable PPE Buildings
CA Cash PPE Land
E Share capital—ordinary NCL Notes payable (due in
2 years)
IA Patents CA Supplies
CL Salaries and wages payable PPE Equipment
CA Inventory CA Prepaid expenses
CA Share investments (to be
sold in 7 months)
EXERCISE 4.16
J. KUNG ENTERPRISES
December 31, 2020
(in thousands)
Assets
Equipment.................................................... HK$11,500
Less: Accumulated depreciation—
equipment......................................... (5,655) 5,845
Long-term investments...................................... 264
Current assets
Prepaid insurance....................................... 650
Inventory...................................................... 1,256
Accounts receivable................................... 1,696
Short-term investments.............................. 3,690
Cash............................................................. 2,668 9,960
Total assets...................................... HK$16,069

Equity
Share capital—ordinary.............................. HK$11,455
Retained earnings........................................ 1,500HK$12,955
Long-term debt................................ 1,000
Notes payable.................................. 400 1,400
Current liabilities
Notes payable (due in 2021)........... 500
Accounts payable.......................... 1,214 1,714
Total liabilities..................................... 3,114
Total equity and liabilities............... HK$16,069
EXERCISE 4.17
(a)
BASTEN TAX SERVICES
Income Statement
Revenues
Service revenue........................................ £63,000
Rent revenue............................................ 8,500
Total revenues.................................. £71,500
Expenses
Salaries and wages expense................... 48,700
Utilities expense....................................... 22,600
Depreciation expense.............................. 4,000
Total expense.................................... 75,300
Net loss............................................................. £ (3,800)
BASTEN TAX SERVICES

Retained earnings, August 1, 2019................ £31,200

Less: Net loss.................................................. £3,800
Dividends............................................... 3,000 6,800
Retained earnings, July 31, 2020.................... £24,400
(b)
BASTEN TAX SERVICES
July 31, 2020
Assets
Equipment........................................................ £34,400
equipment............................................. 6,000 £28,400
Current assets
Accounts receivable....................................... 9,780
Cash................................................................ 14,200 23,980
Total assets ......................................... £52,380

Equity
Share capital—ordinary.................................. £20,000
Retained earnings........................................... 24,400 £44,400
Notes payable.................................................. 1,800
Current liabilities
Accounts payable................................... £4,100
Salaries and wages payable.................. 2,080 6,180
Total liabilities......................................... 7,980
Total equity and liabilities .................. £52,380
*EXERCISE 4.18
(a) Dec. 31 Salaries and Wages Expense

($12,000 X 2/5)....................................... 4,800
Salaries and Wages Payable.......... 4,800
Jan. 6 Salaries and Wages Payable.................. 4,800

($12,000 X 3/5)....................................... 7,200
Cash.................................................. 12,000
(b) Dec.31 Salaries and Wages Expense................. 4,800

Jan. 1 Salaries and Wages Payable.................. 4,800

Salaries and Wages Expense......... 4,800
Jan. 6 Salaries and Wages Expense................ 12,000

Cash.................................................. 12,000
*EXERCISE 4.19
(a) Dec. 31 Service Revenue...................................... 92,500

Income Summary............................. 92,500
31 Income Summary..................................... 7,700

Interest Expense.............................. 7,700
(b) Jan. 1 Service Revenue...................................... 5,000

Accounts Receivable....................... 5,000
1 Interest Payable....................................... 2,200

Interest Expense.............................. 2,200
*EXERCISE 4.19 (Continued)
(c) & (e)

Accounts Receivable
Dec. 31 Balance *19,500
31 Adjusting 5,000
24,500
Jan. 1 Reversing 5,000
*(NT$24,500 – NT$5,000)
Service Revenue
Dec. 31 Closing 92,500 Dec. 31 Balance 87,500*
31 Adjusting 5,000
92,500 92,500
Jan. 1 Reversing 5,000 Jan. 10 5,000
*(NT$92,500 – NT$5,000)
Interest Payable
Dec. 31 Adjusting 2,200
Jan. 1 Reversing 2,200
Interest Expense
Dec. 31 Balance *5,500 Dec. 31 Closing 7,700
31 Adjusting 2,200 .
7,700 7,700
Jan. 15 3,000 Jan. 1 Reversing 2,200
*(NT$7,700 – NT$2,200)
(d) (1)
Jan. 10 Cash................................................................ 5,000
Service Revenue.................................... 5,000
(2)
15 Interest Expense............................................ 3,000
Cash........................................................ 3,000
4-34
(a) WANG ROOFING

Worksheet
For the Month Ended March 31, 2020
Adjusted Income Statement of
Account Titles Trial Balance Adjustments Trial Balance Statement Financial
Position
Cash 4,500 4,500 4,500
Accounts Receivable 3,200 3,200 3,200
Supplies 2,000 (a) 1,520 480 480
Equipment 11,000 11,000 11,000
PROBLEM 4.1
Accumulated
Depreciation—Equipment 1,250 (b) 250 1,500 1,500
Unearned Service Revenue 550 (c) 290 260 260
Share Capital—Ordinary 12,900 12,900 12,900
Dividends 1,100 1,100 1,100
Service Revenue 6,300 (c) 290 6,590 6,590
Salaries and Wages
Expense 1,300 (d) 700 2,000 2,000
Miscellaneous Expense 400 400 400
Totals 23,500 23,500
Supplies Expense (a) 1,520 1,520 1,520
Depreciation Expense (b) 250 250 250
Copyright © 2019 WILEY Weygandt,
Salaries and Wages

Payable (d) 700 700 700
Totals 2,760 2,760 24,450 24,450 4,170 6,590 20,280 17,860
Net Income 2,420 2,420
Totals 6,590 6,590 20,280 20,280
Key: (a) Supplies Used; (b) Depreciation Expensed; (c) Service Revenue Recognized; (d) Salaries Accrued.
n
i
F
PROBLEM 4.1 (Continued)
(b) WANG ROOFING

Income Statement
Revenues
Service revenue.................................................. ¥6,590
Expenses
Salaries and wages expense............................. ¥2,000
Supplies expense................................................ 1,520
Miscellaneous expense...................................... 400
Depreciation expense......................................... 250
Total expenses............................................ 4,170
Net income.................................................................. ¥2,420
WANG ROOFING
Retained earnings, March 1.................................... ¥ 0

Add: Net income.................................................... 2,420
2,420
Less: Dividends...................................................... 1,100
Retained earnings, March 31.................................. ¥1,320
WANG ROOFING
March 31, 2020
Assets
Equipment........................................................... ¥11,000
Less: Accum. depreciation—equipment.......... 1,500 ¥9,500
Current assets
Supplies............................................................... 480
Accounts receivable........................................... 3,200
Cash..................................................................... 4,500 8,180
Total assets.................................................. ¥17,680
WANG ROOFING
March 31, 2020

Equity
Share capital—ordinary........................................ ¥12,900
Retained earnings......................................... 1,320 ¥14,220
Current liabilities
Accounts payable.................................................. 2,500
Salaries and wages payable................................. 700
Unearned service revenue.................................... 260 3,460
Total equity and liabilities ............................ ¥17,680
(c) Mar. 31 Supplies Expense........................................ 1,520
Supplies................................................ 1,520
31 Depreciation Expense................................. 250

Accumulated Depreciation—
Equipment......................................... 250
31 Unearned Service Revenue........................ 290

Service Revenue.................................. 290
31 Salaries and Wages Expense..................... 700

Salaries and Wages Payable............... 700
(d) Mar. 31 Service Revenue.......................................... 6,590
Income Summary................................. 6,590
31 Income Summary......................................... 4,170

Salaries and Wages Expense............. 2,000
Supplies Expense................................ 1,520
Depreciation Expense......................... 250
Miscellaneous Expense....................... 400
31 Income Summary......................................... 2,420

Retained Earnings............................... 2,420
31 Retained Earnings....................................... 1,100

Dividends.............................................. 1,100
PROBLEM 4.2
(a) NGUYEN COMPANY

Partial Worksheet
For the Year Ended December 31, 2020
Statement of
Account Trial Balance Statement Position
No. Titles Dr. Cr. Dr. Cr. Dr. Cr.
101 Cash 5,300 5,300
112 Accounts Receivable 10,800 10,800
126 Supplies 1,500 1,500
130 Prepaid Insurance 2,000 2,000
157 Equipment 27,000 27,000
158 Acc. Depr.—Equip. 5,600 5,600
200 Notes Payable 15,000 15,000
201 Accounts Payable 6,100 6,100
212 Salaries and Wages
Payable 3,600 3,600
230 Interest Payable 600 600
311 Share Capital— 11,000 11,000
Ordinary
320 Retained Earnings 2,000 2,000
332 Dividends 7,600 7,600
400 Service Revenue 61,000 61,000
610 Advertising Expense 9,000 9,000
631 Supplies Expense 4,000 4,000
711 Depreciation Expense 5,600 5,600
722 Insurance Expense 3,500 3,500
726 Salaries and Wages
Expense 28,000 28,000
905 Interest Expense 600 600
Totals 104,900 104,900 50,700 61,000 54,200 43,900
Net Income 10,300 10,300
Totals 61,000 61,000 54,200 54,200
(b) NGUYEN COMPANY

Income Statement
Revenues
Service revenue.............................................. $61,000
Expenses
Salaries and wages expense......................... $28,000
Advertising expense...................................... 9,000
Depreciation expense.................................... 5,600
Supplies expense........................................... 4,000
Insurance expense......................................... 3,500
Interest expense............................................. 600
Total expenses........................................ 50,700
Net income.............................................................. $10,300
NGUYEN COMPANY
Retained earnings, January 1.................................................. $2,000

Add: Net income.................................................................. 10,300
12,300
Less: Dividends................................................................ 7,600
Retained earnings, December 31............................................ $4,700
NGUYEN COMPANY
December 31, 2020
Assets
Equipment....................................................... $27,000
equipment............................................ 5,600 $21,400
Current assets
Prepaid insurance.......................................... 2,000
Supplies.......................................................... 1,500
Cash................................................................. 5,300 19,600
Total assets......................................... $41,000

Equity
Share capital—ordinary................................. $11,000
Retained earnings.......................................... 4,700 $15,700

Notes payable................................................. 11,000
Current liabilities
Notes payable......................................$4,000
Accounts payable …………………. 6,100
Salaries and wages payable …….. 3,600
Interest payable …………………… 600 14,300
Total liabilities......................................... 25,300
Total equity and liabilities.................. $41,000
(c)
General Journal J14
Date Account Titles and Explanation Ref. Debit Credit
Dec. 31 Service Revenue.................................. 400 61,000
Income Summary........................ 350 61,000
31 Income Summary................................. 350 50,700

Advertising Expense.................. 610 9,000
Supplies Expense....................... 631 4,000
Insurance Expense..................... 722 3,500
Interest Expense......................... 905 600
31 Income Summary................................ 350 10,300

Retained Earnings...................... 320 10,300

Dividends..................................... 332 7,600
(d)

Jan. 1 Balance  2,000 2,000
Dec. 31 Closing entry J14 10,300 12,300
31 Closing entry J14 7,600 4,700
Dividends No. 332

Dec. 31 Balance  7,600 7,600
31 Closing entry J14 7,600 0

Dec. 31 Closing entry J14 61,000 61,000
31 Closing entry J14 50,700 10,300
Service Revenue No. 400

Dec. 31 Balance  61,000 61,000
Advertising Expense No. 610

Dec. 31 Balance  9,000 9,000
Supplies Expense No. 631

Dec. 31 Balance  4,000 4,000
Depreciation Expense No. 711

Dec. 31 Balance  5,600 5,600
Insurance Expense No. 722

Dec. 31 Balance  3,500 3,500
Salaries and Wages Expense No. 726

Dec. 31 Balance  28,000 28,000
Interest Expense No. 905

Dec. 31 Balance  600 600
31 Closing entry J14 600 0
(e) NGUYEN COMPANY

December 31, 2020
Debit Credit
Cash...................................................................... $ 5,300
Supplies................................................................ 1,500
Equipment............................................................ 27,000
Equipment........................................................ $ 5,600
Notes Payable...................................................... 15,000
Totals............................................................ $46,600 $46,600
PROBLEM 4.3
(a) BRAY MUSIC

Income Statement
Revenues
Service revenue.............................................. NT$60,000
Expenses
Salaries and wages expense......................... NT$30,000
Depreciation expense.................................... 2,800
Insurance expense......................................... 1,800
Maintenance and repairs expense................ 1,700
Utilities expense............................................. 1,400
Total expenses........................................ 37,700
Net income.............................................................. NT$22,300
BRAY MUSIC
Retained earnings, January 1........................................... NT$ 4,500

Add: Net income............................................................... 22,300
26,800
Less: Dividends................................................................. 11,000
Retained earnings, December 31...................................... NT$15,800
BRAY MUSIC
December 31, 2020
Assets
Equipment....................................................... NT$24,000
equipment............................................ 4,200 NT$19,800
Current assets
Prepaid insurance.......................................... 2,800
Cash........................................................ 8,800 22,400
Total assets............................................. NT$42,200
BRAY MUSIC
Statement of Financial Position(Continued)
December 31, 2020

Equity
Share capital—ordinary..................................NT$15,000
Retained earnings................................... 15,800 NT$30,800
Current liabilities
Accounts payable............................................ 9,000
Salaries and wages payable........................... 2,400 11,400
Total equity and liabilities ...................... NT$42,200
(b)
General Journal

Dec. 31 Service Revenue.................................. 400 60,000
Income Summary........................ 350 60,000
31 Income Summary................................. 350 37,700

Maintenance and Repairs
Expense.................................... 622 1,700
Insurance Expense..................... 722 1,800
Utilities Expense......................... 732 1,400
31 Income Summary................................. 350 22,300

31 Retained Earnings .............................. 320 11,000

Dividends..................................... 332 11,000
(c)
Share Capital—Ordinary No. 311 Maintenance and Repairs

1/1 Bal. 15,000 Expense No. 622
12/31 Bal. 15,000 12/31 Bal. 1,700 12/31 1,700
Retained Earnings No. 320 Depreciation Expense No. 711

12/31 11,000 1/1 Bal. 4,500 12/31 Bal. 2,800 12/31 2,800
12/31 22,300
12/31 Bal. 15,800
12/31 Bal. 1,800 12/31 1,800
Dividends No. 332
12/31 Bal. 11,000 12/31 11,000
Salaries and Wages
Expense No. 726
12/31 Bal. 30,000 12/31 30,000
12/31 37,700 12/31 60,000
12/31 22,300
60,000 60,000
Utilities Expense No. 732
12/31 Bal. 1,400 12/31 1,400
12/31 60,000 12/31 Bal. 60,000
(d) BRAY MUSIC

December 31, 2020
Debit Credit
Cash...................................................................... NT$8,800
Equipment............................................................ 24,000
Totals............................................................ NT$46,400 NT$46,400
Copyright © 2019
4-46
4-74
2011 WILEY Weygandt,
(a) RUSTHE MANAGEMENT SERVICES

Worksheet
John Wiley & Sons, Inc. Weygandt,

Adjusted Income
Account Titles Trial Balance Adjustments Trial Balance Statement Statement of
Financial Position
Cash 13,800 13,800 13,800
Financial Accounting,
Accounts Receivable 28,300 28,300 28,300

Prepaid Insurance 3,600 (a) 1,500 2,100 2,100
Land 67,000 67,000 67,000
Buildings 127,000 127,000 127,000
PROBLEM 4.4
Equipment 59,000 59,000 59,000
Accounting

Unearned Rent Revenue 6,000 (c) 5,000 1,000 1,000
IFRS 4/e,
Mortgage Payable 120,000 120,000 120,000

Principles,
Retained Earnings 14,000 14,000 14,000

Solutions
Dividends 22,000 22,000 22,000

Service Revenue 90,700 90,700 90,700
10/e,
Rent Revenue 29,000 (c) 5,000 34,000 34,000

Manual (For
Salaries and Wages

Solutions Manual (For
Expense 42,000 42,000 42,000

Advertising Expense 20,500 20,500 20,500
Utilities Expense 19,000 19,000 19,000
Totals 402,200 402,200
Instructor UseInstructor
Insurance Expense (a) 1,500 1,500 1,500

Depr. Expense (b) 6,600 6,600 6,600
Accum. Depr.—Buildings (b) 3,000 3,000 3,000
Accum. Depr.—Equipment (b) 3,600 3,600 3,600
Only) Use Only)
Interest Expense (d) 10,000 10,000 10,000

Interest Payable (d) 10,000 10,000 10,000
Totals 23,100 23,100 418,800 418,800 99,600 124,700 319,200 294,100
Net Income 25,100 25,100
Totals 124,700 124,700 319,200 319,200
Key: (a) Expired Insurance; (b) Depreciation Expense—Building and Equipment; (c) Rent Revenue Recognized; (d) Accrued Interest Payable.
(b) RUSTHE MANAGEMENT SERVICES

December 31, 2020
Assets
Land............................................. $67,000
Buildings..................................... $127,000
Less: Accumulated
depreciation—buildings........ 3,000 124,000
Equipment................................... 59,000
Less: Accumulated
depreciation—equipment...... 3,600 55,400 $246,400
Current assets
Prepaid insurance...................... 2,100
Accounts receivable.................. 28,300
Cash............................................. 13,800 44,200
Total assets..................... $290,600

Equity
Share capital—ordinary.................................. $130,000
Retained Earnings......................................... 17,100
($14,000 + $25,100 – $22,000)...................... $147,100
Mortgage payable.......................................... 75,000
Current liabilities
Mortgage payable (due in 2021) ….. $45,000
Accounts payable …………………... 12,500
Interest payable …………………….. 10,000
Unearned rent revenue ……………. 1,000 68,500
Total liabilities........................................ 143,500
Total equity and liabilities................. $290,600
(c) Dec. 31 Insurance Expense................................ 1,500

Prepaid Insurance.......................... 1,500
31 Depreciation Expense........................... 6,600

Buildings..................................... 3,000
Equipment................................... 3,600
31 Unearned Rent Revenue....................... 5,000

Rent Revenue................................. 5,000
31 Interest Expense.................................... 10,000

Interest Payable.............................. 10,000
(d) Dec. 31 Service Revenue.................................... 90,700

Rent Revenue......................................... 34,000
Income Summary........................... 124,700
31 Income Summary................................... 99,600

Salaries and Wages Expense........ 42,000
Advertising Expense...................... 20,500
Utilities Expense............................ 19,000
Interest Expense............................ 10,000
Depreciation Expense.................... 6,600
Insurance Expense........................ 1,500
31 Income Summary................................... 25,100

Retained Earnings.......................... 25,100
31 Retained Earnings................................. 22,000

Dividends........................................ 22,000
(e) RUSTHE MANAGEMENT SERVICES

December 31, 2020
Debit Credit
Cash.................................................................. $ 13,800
Accounts Receivable....................................... 28,300
Prepaid Insurance............................................ 2,100
Land.................................................................. 67,000
Buildings........................................................... 127,000
Accumulated Depreciation—Buildings.......... $ 3,000
Equipment........................................................ 59,000
Accumulated Depreciation—Equipment....... 3,600
Accounts Payable............................................ 12,500
Interest Payable............................................... 10,000
Unearned Rent Revenue................................. 1,000
Mortgage Payable............................................ 120,000
Share Capital—Ordinary................................. 130,000
Retained Earnings........................................... 17,100
$297,200 $297,200
PROBLEM 4.5
(a)
General Journal J1
July 1 Cash..................................................... 101 20,000
Share Capital—Ordinary............ 311 20,000
1 Equipment........................................... 157 12,000

Cash............................................ 101 4,000
Accounts Payable...................... 201 8,000
3 Supplies............................................... 126 2,100

Accounts Payable...................... 201 2,100
5 Prepaid Insurance............................... 130 1,800

Cash............................................ 101 1,800
12 Accounts Receivable.......................... 112 4,500

Service Revenue........................ 400 4,500
18 Accounts Payable............................... 201 2,900

Cash............................................ 101 2,900
20 Salaries and Wages Expense............. 726 2,800

Cash............................................ 101 2,800
21 Cash..................................................... 101 3,400

Accounts Receivable................. 112 3,400
25 Accounts Receivable.......................... 112 6,000

Service Revenue........................ 400 6,000
31 Gasoline Expense............................... 633 350

Cash............................................ 101 350
31 Dividends............................................. 322 5,600

Cash............................................ 101 5,600
4-51
(b) & (c) ANYA’S CLEANING SERVICE

Worksheet
For the Month Ended July 31, 2020
Statement of
Account Titles Trial Balance Adjustments Trial Balance Statement Position
Cash 5,950 5,950 5,950
Accounts Receivable 7,100 (a) 2,700 9,800 9,800
Supplies 2,100 (d) 1,500 600 600
Prepaid Insurance 1,800 (c) 150 1,650 1,650
Equipment 12,000 12,000 12,000
Dividends 5,600 5,600 5,600
Service Revenue 10,500 (a) 2,700 13,200 13,200
Gasoline Expense 350 350 350
Salaries and Wages Expense 2,800 (e) 1,000 3,800 3,800
Totals 37,700 37,700
Depreciation Expense (b) 500 500 500
Accum. Depr.—Equipment (b) 500 500 500
Insurance Expense (c) 150 150 150
Supplies Expense (d) 1,500 1,500 1,500
Salaries and Wages Payable (e) 1,000 1,000 1,000
Totals 5,850 5,850 41,900 6,300 13,200 35,600 28,700
Net Income 41,900 6,900 6,900
Totals 13,200 13,200 35,600 35,600
Key: (a) Service Revenue Accrued; (b) Depreciation Expense; (c) Insurance Expired; (d) Cleaning Supplies Used; (e) Unpaid Salaries.
(a), (e) & (f)
Cash No. 101

July 1 J1 20,000 20,000
1 J1 4,000 16,000
5 J1 1,800 14,200
18 J1 2,900 11,300
20 J1 2,800 8,500
21 J1 3,400 11,900
31 J1 350 11,550
31 J1 5,600 5,950
Accounts Receivable No. 112

July 12 J1 4,500 4,500
21 J1 3,400 1,100
25 J1 6,000 7,100
31 Adjusting J2 2,700 9,800
Supplies No. 126

July 3 J1 2,100 2,100
31 Adjusting J2 1,500 600
Prepaid Insurance No. 130

July 5 J1 1,800 1,800
31 Adjusting J2 150 1,650
Equipment No. 157

July 1 J1 12,000 12,000
Accumulated Depreciation—Equipment No. 158

July 31 Adjusting J2 500 500
Accounts Payable No. 201

July 1 J1 8,000 8,000
3 J1 2,100 10,100
18 J1 2,900 7,200
Salaries and Wages Payable No. 212

July 31 Adjusting J2 1,000 1,000
Share Capital—Ordinary No. 311

July 1 J1 20,000 20,000

31 Closing J3 6,900 6,900
31 Closing J3 5,600 1,300
Dividends No. 322

July 31 J1 5,600 5,600
31 Closing J3 5,600 0

July 31 Closing J3 13,200 13,200
31 Closing J3 6,300 6,900
31 Closing J3 6,900 0

July 12 J1 4,500 4,500
25 J1 6,000 10,500
31 Adjusting J2 2,700 13,200
31 Closing J3 13,200 0
Supplies Expense No. 631

July 31 Adjusting J2 1,500 1,500
31 Closing J3 1,500 0
Gasoline Expense No. 633

July 31 J1 350 350
31 Closing J3 350 0
Depreciation Expense No. 711

31 Closing J3 500 0

31 Closing J3 150 0
Salaries and Wages Expense No. 726

July 20 J1 2,800 2,800
31 Adjusting J2 1,000 3,800
31 Closing J3 3,800 0
(d) ANYA’S CLEANING SERVICE

Income Statement
Revenues
Service revenue............................................... €13,200
Expenses
Salaries and wages expense.......................... €3,800
Supplies expense............................................. 1,500
Depreciation expense...................................... 500
Gasoline expense............................................ 350
Insurance expense........................................... 150
Total expenses......................................... 6,300
Net income............................................................... € 6,900
ANYA’S CLEANING SERVICE

Retained earnings, July 1....................................... € 0

Add: Net income.................................................... 6,900
6,900
Less: Dividends...................................................... 5,600
Retained earnings, July 31..................................... €1,300
ANYA’S CLEANING SERVICE

July 31, 2020
Assets
Equipment........................................................ €12,000
equipment............................................. 500 €11,500
Current assets
Prepaid insurance............................................ 1,650
Supplies............................................................ 600
Accounts receivable........................................ 9,800
Cash.................................................................. 5,950 18,000
Total assets.............................................. €29,500

Equity
Share capital—ordinary.................................. €20,000
Retained earnings........................................... 1,300 €21,300

Current liabilities
Salaries and wages payable........................... 1,000 € 8,200
Total equity and liabilities ...................... €29,500
(e)
General Journal J2
July 31 Accounts Receivable......................... 112 2,700
Service Revenue........................ 400 2,700
31 Depreciation Expense........................ 711 500

Equipment.............................. 158 500
31 Insurance Expense............................. 722 150

Prepaid Insurance..................... 130 150
31 Supplies Expense............................... 631 1,500

Supplies...................................... 126 1,500
31 Salaries and Wages Expense............ 726 1,000

Salaries and Wages Payable.... 212 1,000
(f) General Journal

J3
July 31 Service Revenue.................................. 400 13,200
Income Summary....................... 350 13,200
31 Income Summary................................ 350 6,300

Supplies Expense...................... 631 1,500
Depreciation Expense................ 711 500
Gasoline Expense...................... 633 350
Insurance Expense.................... 722 150
31 Income Summary................................ 350 6,900


Dividends.................................... 322 5,600
(g) ANYA’S CLEANING SERVICE

July 31, 2020
Debit Credit
Cash...................................................................... € 5,950
Supplies................................................................ 600
Equipment............................................................ 12,000
Accumulated Depreciation—Equipment........... € 500
Share Capital—Ordinary………………………… 20,000
Retained Earnings………………………….......... 1,300
€30,000 €30,000
4-59
(a)
(1) INCORRECT ENTRY (2) CORRECT ENTRY (3) CORRECTING ENTRY
1. Cash.................................... 950 Cash.................................... 590 Accounts Receivable......... 360

Accts. Receivable........ 950 Accts. Receivable........ 590 Cash................................ 360
2. Misc. Expense.................... 75 Advertising Expense......... 75 Advertising Expense.......... 75
PROBLEM 4.6
Cash............................... 75 Cash............................... 75 Misc. Expense............... 75
3. Salaries and Wages Salaries and Wages Salaries and Wages

Expense........................... 1,900 Expense........................... 1,200 Payable............................. 700
Cash............................... 1,900 Salaries and Wages Salaries and Wages
Payable............................ 700 Expense....................... 700
Cash............................... 1,900
4. Supplies.............................. 310 Equipment.......................... 310 Equipment........................... 310

Accounts Payable........ 310 Accounts Payable........ 310 Supplies......................... 310
5. Equipment.......................... 69 Maintenance and Repairs Maintenance and Repairs

Cash............................... 69 Expense........................... 96 Expense............................ 96
Cash............................... 96 Cash................................ 27
Equipment...................... 69
(b) PULSAR CABLE

Trial Balance
April 30, 2020
Debit Credit
Cash (£4,100 – £360 – £27).................................... £ 3,713
Accounts Receivable (£3,200 + £360).................. 3,560
Supplies (£800 – £310).......................................... 490
Equipment (£10,800 + £310 – £69)........................ 11,041
Accumulated Depreciation—Equip ..................... £ 1,350
Accounts Payable.................................................. 2,100
Salaries and Wages Payable (£700 – £700)......... 0
Unearned Service Revenue.................................. 890
Share Capital—Ordinary....................................... 10,100
Retained earnings.................................................. 2,800
Service Revenue.................................................... 5,650
Salaries and Wages Expense (£3,300 – £700)..... 2,600
Advertising Expense (£600 + £75)........................ 675
Miscellaneous Expense (£290 – £75)................... 215
Depreciation Expense........................................... 500
Maintenance and Repairs Expense...................... 96
£22,890 £22,890
CR 4.1 ACCOUNTING CYCLE REVIEW
(a)
General Journal
Date Account Titles Debit Credit
July 1 Cash.................................................................... 12,000
Share Capital—Ordinary............................ 12,000
1 Equipment.......................................................... 8,000
Accounts Payable...................................... 6,000
Cash............................................................. 2,000
3 Supplies.............................................................. 900
Accounts Payable...................................... 900
5 Prepaid Insurance.............................................. 1,800

Cash............................................................. 1,800
12 Accounts Receivable......................................... 3,700

Service Revenue......................................... 3,700
18 Accounts Payable.............................................. 1,500

Cash............................................................. 1,500
20 Salaries and Wages Expense............................ 2,000

Cash............................................................. 2,000
21 Cash.................................................................... 1,600
Accounts Receivable................................. 1,600

Service Revenue......................................... 2,500
31 Maintenance and Repairs Expense.................. 290

Cash............................................................. 290
31 Dividends............................................................ 600
Cash............................................................. 600
ACR 4.1 (Continued)
(b), (e) & (h)

Accounts Payable
Cash 7/18 1,500 7/1 6,000
7/1 12,000 7/1 2,000 7/3 900
7/21 1,600 7/5 1,800 7/31 Bal. 5,400
7/18 1,500
7/20 2,000
7/31 290 Salaries and Wages Payable
7/31 600 7/31 400
7/31 Bal. 5,410 7/31 Bal. 400
Accounts Receivable Share Capital—Ordinary

7/12 3,700 7/21 1,600 7/1 12,000
7/25 2,500 7/31 Bal. 12,000
7/31 1,700
7/31 Bal. 6,300
Retained Earnings
7/31 600 7/31 4,300
Supplies 7/31 Bal. 3,700
7/3 900 7/31 580
7/31 Bal. 320
Dividends
7/31 600
Prepaid Insurance 7/31 Bal. 600 7/31 600
7/5 1,800 7/31 150
7/31 Bal. 1,650
Income Summary
7/31 3,600 7/31 7,900
Equipment
7/1 8,000 7/31 4,300 7/31 Bal 4,300
7/31 Bal. 8,000
Service Revenue
Accumulated Depreciation— 7/12 3,700
Equipment 7/25 2,500
7/31 180 7/31 1,700
7/31 Bal. 180 7/31 7,900 7/31 Bal. 7,900
ACR 4.1 (Continued)

Expense
7/31 290
7/31 Bal. 290 7/31 290
Supplies Expense
7/31 580
7/31 Bal. 580 7/31 580
Depreciation Expense
7/31 180 7/31 180
7/31 Bal. 0
Insurance Expense
7/31 150
7/31 Bal. 150 7/31 150

7/20 2,000
7/31 400
7/31 Bal. 2,400 7/31 2,400
ACR 4.1 (Continued)
(c) & (f) KLEENE WINDOW WASHING

Trial Balance
July 31, 2020
Before After
Adjustment Adjustment
Debit Credit Debit Credit

Cash NT$ 5,410 NT$ 5,410
Accounts Receivable.................................... 4,600 6,300
Supplies.........................................................
900 320
Prepaid Insurance.........................................
1,800 1,650
Equipment.....................................................
8,000 8,000
Equipment................................................... NT$ 180
Accounts Payable......................................... NT$ 5,400 5,400
Salaries and Wages Payable....................... 400
Share Capital—Ordinary.............................. 12,000 12,000
Dividends....................................................... 600 600
Service Revenue........................................... 6,200 7,900
Maintenance and Repairs Expense............ 290 290
Supplies Expense......................................... 580
Depreciation Expense.................................. 180
Insurance Expense....................................... 150
Salaries and Wages Expense...................... 2,000 2,400
NT$23,600 NT$23,600 NT$25,880 NT$25,880
ACR 4.1 (Continued)
(d)
General Journal
1. July 31 Accounts Receivable........................................ 1,700
Service Revenue......................................... 1,700
2. 31 Depreciation Expense....................................... 180

Accumulated Depreciation—Equipment.... 180
3. 31 Insurance Expense (NT$1,800 X 1/12)............. 150

Prepaid Insurance....................................... 150
4. 31 Supplies Expense (NT$900 – NT$320)............ 580

Supplies....................................................... 580
5. 31 Salaries and Wages Expense........................... 400

Salaries and Wages Payable...................... 400
(g) KLEENE WINDOW WASHING

Income Statement
Revenues
Service revenue................................................. NT$7,900
Expenses
Salaries and wages expense............................ NT$2,400
Supplies expense.............................................. 580
Maintenance and repairs expense................... 290
Depreciation expense....................................... 180
Insurance expense............................................ 150
Total expenses........................................... 3,600
Net income................................................................. NT$4,300
ACR 4.1 (Continued)
(g) KLEENE WINDOW WASHING

Retained earnings, July 1.................................. NT$ 0

Add: Net income................................................. 4,300
4,300
Less: Dividends..................................................... 600
Retained earnings, July 31.................................... NT$3,700
KLEENE WINDOW WASHING

July 31, 2020
Assets
Equipment........................................................ NT$8,000
Less: Accumulated depreciation................... 180 NT$7,820
Current assets
Supplies............................................................ 320
Cash.................................................................. 5,410 13,680
Total assets.............................................. NT$21,500

Equity
Share capital—ordinary...................................NT$12,000
Retained earnings.................................... 3,700 NT$15,700
Current liabilities
Salaries and wages payable........................... 400 5,800
Total equity and liabilities....................... NT$21,500
ACR 4.1 (Continued)
(h)
General Journal
Date Account Titles and Explanation Debit Credit
July 31 Service Revenue.............................................. 7,900
Income Summary..................................... 7,900
31 Income Summary............................................. 3,600

Salaries and Wages Expense.................. 2,400
Supplies Expense..................................... 580
Depreciation Expense.............................. 290
Maintenance and Repairs Expense........ 180
Depreciation Expense.............................. 150
Insurance Expense...................................
31 Income Summary............................................. 4,300

Retained Earnings.................................... 4,300
31 Retained Earnings........................................... 600

Dividends.................................................. 600
(i) KLEENE WINDOW WASHING

July 31, 2020
Debit Credit
Cash...................................................................... NT$ 5,410
Supplies................................................................ 320
Equipment............................................................ 8,000
Accumulated Depreciation—Equipment........... NT$ 180
Salaries and Wages Payable.............................. 400
NT$21,680 NT$21,680
ACR 4.2
(a)
General Journal
Mar. 1 Cash.................................................................... 15,000
Share Capital—Ordinary............................ 15,000
1 Cash.................................................................... 6,000
Notes Payable............................................. 6,000
1 Equipment.......................................................... 8,000
Cash............................................................. 8,000
2 Prepaid Rent....................................................... 1,500

Cash............................................................. 1,500
3 Prepaid Insurance.............................................. 2,400

Cash............................................................. 2,400
6 Supplies.............................................................. 2,000
Accounts Payable...................................... 2,000

Service Revenue......................................... 3,700
18 Accounts Payable.............................................. 500

Cash............................................................. 500
20 Salaries and Wages Expense............................ 1,750

Cash............................................................. 1,750
21 Cash.................................................................... 1,600
Accounts Receivable................................. 1,600

Service Revenue......................................... 4,200
31 Maintenance and Repairs Expense.................. 350

Cash............................................................. 350
31 Dividends............................................................ 900
Cash............................................................. 900
ACR 4.2 (Continued)
(b), (e) & (h)

Cash Equipment
3/1 15,000 3/1 8,000 3/31 250
3/1 6,000 3/2 1,500 3/31 Bal. 250
3/21 1,600 3/3 2,400
3/18 500
3/20 1,750 Notes Payable
3/31 350 3/1 6,000
3/31 900 3/31 Bal. 6,000
3/31 Bal. 7,200
Accounts Payable
Accounts Receivable 3/18 500 3/6 2,000
3/14 3,700 3/21 1,600 3/31 Bal. 1,500
3/28 4,200
3/31 200 Salaries and Wages Payable
3/31 Bal. 6,500 3/31 1,080
3/31 Bal. 1,080
Supplies
3/6 2,000 3/31 1,720 Interest Payable
3/31 Bal. 280 3/31 30
3/31 Bal. 30
Prepaid Rent
3/2 1,500 3/31 500 Share Capital—Ordinary
3/31 Bal. 1,000 3/1 15,000
3/31 Bal. 15,000
Prepaid Insurance
Retained Earnings
3/3 2,400 3/31 400
3/31 900 3/31 2,020
3/31 Bal. 2,000
3/31 Bal. 1,120
Equipment Dividends
3/1 8,000 3/31 900 3/31 900
3/31 Bal. 8,000 3/31 Bal. 0
ACR 4.2 (Continued)
Income Summary
3/31 6,080 3/31 8,100 Rent Expense
3/31 500
3/31 2,020 3/31 Bal.2,020 3/31 Bal. 500 3/31 500
Interest Expense
Service Revenue
3/31 30
3/14 3,700
3/28 4,200 3/31 Bal. 3 0 3/31 30
3/31 200
3/31 8,100 3/31 Bal. 8,100


Expense
3/31 350
3/31 Bal. 350 3/31 350
Supplies Expense
3/31 1,720
3/31 Bal. 1,720 3/31 1,720
3/31 250 3/31 250
3/31 Bal. 250 3/31 250
Insurance Expense
3/31 400
3/31 Bal. 400 3/31 400


3/20 1,750
3/31 1,080
3/31 Bal. 2,830 3/31 2,830
ACR 4.2 (Continued)
(c) & (f) LARS CLEANERS

Trial Balance
March 31, 2020
Before After
Cash....................................................... € 7,200 € 7,200
Accounts Receivable........................... 6,300 6,500
Supplies................................................ 2,000 280
Prepaid Rent......................................... 1,500 1,000
Prepaid Insurance................................ 2,400 2,000
Equipment............................................. 8,000 8,000
Equipment.......................................... €
Notes Payable....................................... € 6,000 250
Accounts Payable................................ 1,500 6,000
Salaries and Wages Payable............... 1,500
Interest Payable.................................... 1,080
Share Capital—Ordinary...................... 15,000 30
Dividends.............................................. 900 900 15,000
Service Revenue................................... 7,900
Maintenance and Repairs Expense.... 350 350 8,100
Salaries and Wages Expense.............. 1,750 2,830
Depreciation Expense.......................... 250
Insurance Expense............................... 400
Supplies Expense................................. 1,720
Rent Expense........................................ 500
Interest Expense................................... 30
€30,400 €30,400 €31,960
€31,960
ACR 4.2 (Continued)
(d)
General Journal
1. March 31 Accounts Receivable.............................. 200
Service Revenue.............................. 200
2. 31 Depreciation Expense............................. 250

Equipment..................................... 250
3. 31 Insurance Expense................................. 400

Prepaid Insurance
(€2,400 ÷ 6)....................................... 400
4. 31 Supplies Expense................................... 1,720

Supplies (€2,000 – €280)................. 1,720
5. 31 Salaries and Wages Expense................. 1,080

6. 31 Rent Expense.......................................... 500

Prepaid Rent (€1,500 ÷ 3)................ 500
7. 31 Interest Expense..................................... 30
Interest Payable 30
(€6,000 × .06 × 1/12)......................
ACR 4.2 (Continued)
(g) LARS CLEANERS

Income Statement
Revenues
Service revenue................................................. €8,100
Expenses
Salaries and wages expense............................ €2,830
Supplies expense.............................................. 1,720
Rent expense..................................................... 500
Insurance expense............................................ 400
Maintenance and repairs expense................... 350
Depreciation expense....................................... 250
Interest expense................................................ 30
Total expenses........................................... 6,080
Net income................................................................. €2,020
LARS CLEANERS
Retained earnings, March 1.................................... € 0

Add: Net income 2,020
2,020
Less: Dividends........................................................ 900
Retained earnings, March 31.................................. €1,120
ACR 4.2 (Continued)
LARS CLEANERS
March 31, 2020
Assets
Equipment........................................................ € 8,000
equipment......................................... 250 € 7,750
Current assets
Prepaid rent...................................................... 1,000
Supplies............................................................ 280
Cash................................................................ 7,200 16,980
Total assets.............................................. €24,730

Equity
Share capital—ordinary................................... €15,000
Retained earnings...................................... 1,120 €16,120
Current liabilities
Notes payable................................................... 6,000
Salaries and wages payable........................... 1,080
Interest payable................................................ 30 8,610
Total equity and liabilities....................... €24,730
ACR 4.2 (Continued)
(h)
General Journal
Mar. 31 Service Revenue................................................ 8,100
Income Summary....................................... 8,100
31 Income Summary............................................... 6,080

Salaries and Wages Expense.................... 2,830
Supplies Expense....................................... 1,720
Rent Expense.............................................. 500
Insurance Expense..................................... 400
Maintenance and Repairs Expense.......... 350
Depreciation Expense................................ 250
Interest Expense......................................... 30
31 Income Summary............................................... 2,020

Retained Earnings...................................... 2,020
31 Retained Earnings.............................................. 900

Dividends.................................................... 900
ACR 4.2 (Continued)
(i) LARS CLEANERS

March 31, 2020
Debit Credit
Cash...................................................................... € 7,200
Supplies................................................................ 280
Prepaid Rent........................................................ 1,000
Equipment............................................................ 8,000
Accumulated Depreciation—Equipment........... € 250
Notes Payable...................................................... 6,000
.............................................................................. €24,980 €24,980
ACR 4.3
(a), (c) & (e)

Equipment
Cash 8/1 Bal. 10,000
8/1 Bal. 6,040 8/1 400 8/15 2,000
8/5 1,200 8/3 380 8/31 Bal. 12,000
8/12 2,800 8/10 3,120
8/29 780 8/20 2,000
8/25 2,900 Accumulated Depreciation—
8/31 Bal. 2,020 Equipment
8/1 Bal. 600
8/31 320
Accounts Receivable 8/31 Bal. 920
8/1 Bal. 2,910 8/5 1,200
8/27 3,760
8/31 Bal. 5,470 Accounts Payable
8/20 2,000 8/1 Bal. 2,300
8/15 2,000
Notes Receivable 8/22 800
8/1 Bal. 4,000 8/31 Bal. 3,100
8/31 Bal. 4,000
Unearned
Interest Receivable Service Revenue
8/31 20 8/31 800 8/1 Bal. 1,260
8/31 Bal. 20 8/29 780
8/31 Bal. 1,240
Supplies
8/1 Bal. 1,030 8/31 870 Salaries and Wages Payable
8/22 800 8/10 1,420 8/1 Bal. 1,420
8/31 Bal. 960 8/31 1,540
8/31 Bal. 1,540
Prepaid Advertising
8/1 400 8/31 200 Share Capital—Ordinary
8/31 Bal. 200 8/31 8/1 Bal. 16,300
8/31 Bal. 16,300
ACR 4.3 (Continued)
Retained Earnings Depreciation Expense

8/31 530 8/1 Bal. 2,100 8/31 320
8/31 1,570 8/31 Bal. 320 8/31 320
Income Summary Supplies Expense

8/31 7,910 8/31 7,380 8/31 870
8/31 Bal. 870 8/31 870
8/31 Bal. 530 8/31 Bal. 530

Service Revenue 8/10 1,700
8/31 7,360 8/12 2,800 8/25 2,900
8/27 3,760 8/31 1,540
8/31 800 8/31 Bal. 6,140 8/31 6,140
8/31 7,360 8/31 Bal. 7,360
Rent Expense
Interest Revenue 8/3 380
8/31 20 8/31 Bal. 380 8/31 380
8/31 Bal. 20 8/31 20
Advertising Expense
8/31 200
8/31 Bal. 200 8/31 200
ACR 4.3 (Continued)
(b) General Journal

Aug. 1 Prepaid Advertising.......................................... 400
Cash........................................................... 400
3 Rent Expense.................................................... 380

Cash........................................................... 380
5 Cash................................................................... 1,200
Accounts Receivable................................ 1,200
10 Salaries and Wages Payable........................... 1,420

Salaries and Wages Expense.......................... 1,700
Cash........................................................... 3,120
12 Cash................................................................... 2,800
Service Revenue....................................... 2,800
15 Equipment......................................................... 2,000
Accounts Payable..................................... 2,000
20 Accounts Payable............................................. 2,000

Cash........................................................... 2,000
22 Supplies............................................................. 800
Accounts Payable..................................... 800
25 Salaries and Wages Expense.......................... 2,900

Cash........................................................... 2,900
27 Accounts Receivable........................................ 3,760

Service Revenue....................................... 3,760
29 Cash................................................................... 780
Unearned Service Revenue...................... 780
ACR 4.3 (Continued)
(d) & (f) B & B REPAIR SERVICES

Trial Balances
August 31, 2020
Before After
Dr. Cr. Dr. Cr.
Cash............................................. $ 2,020 $ 2,020
Accounts Receivable................. 5,470 5,470
Notes Receivable........................ 4,000 4,000
Interest Receivable..................... 20
Supplies...................................... 1,830 960
Prepaid Advertising................... 400 200
Equipment................................... 12,000 12,000
Accumulated Depr.—
Equipment................................ $ 600 $ 920
Accounts Payable...................... 3,100 3,100
Unearned Service Revenue....... 2,040 1,240
Salaries and Wages Payable..... 1,540
Share Capital—Ordinary............ 16,300 16,300
Retained Earnings...................... 2,100 2,100
Service Revenue......................... 6,560 7,360
Interest Revenue........................ 4,600 6,140 20
Salaries and Wages Expense.... 380 380
Rent Expense.............................. 870
Supplies Expense....................... 320
Depreciation Expense................ 200
Advertising Expense.................. $30,700 $32,580
$30,700 $32,580
ACR 4.3 (Continued)
(e) 1.
Aug. 31 Supplies Expense........................................... 870
Supplies ($1,830 – $960)......................... 870
2.
31 Salaries and Wages Expense......................... 1,540
Salaries and Wages Payable.................. 1,540
3.
31 Depreciation Expense..................................... 320
Accum. Depr.—Equipment..................... 320
4.
31 Unearned Service Revenue............................ 800
Service Revenue...................................... 800
5.
31 Advertising Expense....................................... 200
Prepaid Advertising................................. 200
6.
31 Interest Receivable......................................... 20
Interest Revenue ($4,000 × .06 × 1/12)... 20
ACR 4.3 (Continued)
(g) B & B REPAIR SERVICES

Income Statement
For the Month Ended August 31, 2020
Revenues
Service revenue............................................... ($7,360
Interest revenue............................................... 20
Total revenue............................................ $7,380)
Expenses
Salaries and wages expense.......................... 6,140
Supplies expense............................................. 870
Rent expense.................................................... 380
Depreciation expense...................................... 320
Advertising expense........................................ 200
Total expenses......................................... 7,910)
Net loss..................................................................... ($530)
B & B REPAIR SERVICES

For the Month Ended August 31, 2020
Retained earnings August 1................................... $2,100

Less: Net loss......................................................... 530
Retained earnings August 31................................. $1,570
ACR 4.3 (Continued)
B & B REPAIR SERVICES

August 31, 2020
Assets
Property, plant and equipment
Equipment....................................................... $ 12,000
equipment............................................ 920 $ 11,080
Current assets
Prepaid Advertising....................................... 200
Supplies.......................................................... 960
Interest receivable.......................................... 20
Notes receivable............................................. 4,000
Cash................................................................. 2,020 12,670
Total assets............................................. $23,750

Equity
Share capital—ordinary....................................... $ 16,300
Retained earnings................................................ 1,570 $17,870
Current liabilities
Accounts payable................................................ 3,100
Unearned service revenue.................................. 1,240
Salaries and wages payable............................... 1,540 5,880
Total equity and liabilities........................... $23,750
ACR 4.3 (Continued)
(h)
General Journal
Aug. 31 Service Revenue................................................ 7,360
Interest Revenue................................................ 20
Income Summary....................................... 7,380
31 Income Summary............................................... 7,910

Salaries and Wages Expense.................... 6,140
Supplies Expense....................................... 870
Rent Expense.............................................. 380
Depreciation Expense................................ 320
Advertising Expense.................................. 200
31 Retained Earnings.............................................. 530

Income Summary....................................... 530
(i) B & B REPAIR SERVICES

August 31, 2020
Debit Credit
Cash...................................................................... $ 2,020
Notes Receivable................................................. 4,000
Interest Receivable.............................................. 20
Supplies................................................................ 960
Prepaid Advertising............................................. 200
Equipment............................................................ 12,000
Accumulated Depreciation—Equipment........... $ 920
Unearned Service Revenue................................ 1,240
$24,670 $24,670
ACR 4.4
(b)
July 1 Equipment................................................................. 24,000

Cash.................................................................. 4,000
Notes Payable.................................................. 20,000
2 Cash .......................................................................... 50,000

Share Capital—Ordinary................................. 50,000
3 Prepaid Insurance.................................................... 3,600

Cash.................................................................. 3,600
3 Prepaid Rent............................................................. 8,000

Cash.................................................................. 8,000
6 Supplies..................................................................... 3,800
Cash.................................................................. 3,800
9 No entry required (consulting agreement)
10 Cash........................................................................... 1,200
Accounts Receivable...................................... 1,200
13 Unearned Service Revenue..................................... 1,120

Service Revenue.............................................. 1,120
14 Accounts Payable..................................................... 400

Cash.................................................................. 400
16 Cash........................................................................... 12,000
Unearned Service Revenue............................ 12,000
18 Salaries and Wages Expense.................................. 11,000

Cash.................................................................. 11,000
20 Accounts Receivable .............................................. 28,000

Service Revenue.............................................. 28,000
ACR 4.4 (Continued)
(b) (Continued)
July 20 Advertising Expense................................................ 2,200

Accounts Payable........................................... 2,200
23 Unearned Service Revenue..................................... 10,000

Service Revenue.............................................. 10,000
27 Cash........................................................................... 15,000
Accounts Receivable...................................... 15,000
Adjusting Entries
31 Insurance Expense................................................... 300

Prepaid Insurance........................................... 300
(¥3,600 × 1/12)
31 Rent Expense............................................................ 4,000

Prepaid Rent.................................................... 4,000
31 Supplies Expense..................................................... 1,250

Supplies............................................................ 1,250
31 Depreciation Expense.............................................. 500

Accumulated Depreciation—Equipment...... 500
(¥24,000 ÷ 4 × 1/12)
31 Interest Expense....................................................... 100

Interest Payable............................................... 100
(¥20,000 × 6% × 1/12)
31 Salaries and Wages Expense.................................. 11,000

Salaries and Wages Payable.......................... 11,000
31 Utilities Expense....................................................... 800

Accounts Payable........................................... 800
31 Income Tax Expense................................................ 1,200

Income Taxes Payable.................................... 1,200
ACR 4.4 (Continued)
(a), (c), (e), and (h)
Cash
July 1 Bal. 5,230 July 1 4,000
2 50,000 3 3,600
10 1,200 3 8,000
16 12,000 6 3,800
27 15,000 14 400
18 11,000
July 31 Bal. 52,630
Accounts Receivable
July 1 Bal. 1,200 July 10 1,200
20 28,000 27 15,000
July 31 Bal. 13,000
Prepaid Insurance
July 3 3,600 July 31 300
July 31 Bal. 3,300
Supplies
July 1 Bal. 690 July 31 1,250
6 3,800
July 31 Bal. 3,240
Prepaid Rent
July 3 8,000 July 31 4,000
July 31 Bal. 4,000
ACR 4.4 (Continued)
(a), (c), (e), and (h) (Continued)
Equipment
July 1 24,000
July 31 Bal. 24,000
Accumulated Depreciation—Equipment
July 31 500
July 31 Bal 500
Accounts Payable
July 14 400 July 1 Bal. 400
20 2,200
31 800
July 31 Bal. 3,000
Interest Payable
July 31 100
July 31 Bal. 100
Salaries and Wages Payable

July 31 11,000
July 31 Bal. 11,000
Income Taxes Payable

July 31 1,200
July 31 Bal. 1,200
ACR 4.4 (Continued)
Unearned Service Revenue

July 13 1,120 July 1 Bal. 1,120
23 10,000 16 12,000
July 31 Bal. 2,000
Notes Payable
July 1 20,000
July 31 Bal. 20,000
Share Capital—Ordinary
July 1 Bal. 4,000
July 2 50,000
July 31 Bal. 54,000
Retained Earnings
July 1 Bal. 1,600
31 6,770
July 31 Bal. 8,370
Service Revenue
July 13 1,120
20 28,000
23 10,000
July 31 39,120 July 31 Bal. 39,120
ACR 4.4 (Continued)

July 18 11,000
July 31 11,000
July 31 Bal. 22,000 July 31 22,000
Rent Expense
July 31 4,000
July 31 4,000
July 31 Bal. 4,000 July 31 4,000
Advertising Expense
July 20 2,200
July 31 Bal. 2,200 July 31 2,200
Supplies Expense
July 31 1,250
July 31 Bal. 1,250 July 31 1,250
ACR 4.4 (Continued)
Utilities Expense
July 31 800
July31 Bal. 800 July 31 800
July 31 500
July 31 Bal. 500 July 31 500
Insurance Expense
July 31 300
July 31 Bal. 300 July 31 300
Interest Expense
July 31 100
July 31 Bal. 100 July 31 100
Income Tax Expense

July 31 1,200
July 31 Bal. 1,200 July 31 1,200
Income Summary
July 31 32,350
July 31 39,120
31 6,770 July 31 Bal. 6,770
ACR 4.4 (Continued)
(d) and (f) (Continued)
GREEN RIVER COMPUTER CONSULTANTS

Trial Balances
July 31, 2020
Before Adjustment After Adjustment

Cash ................................................................ ¥ 52,630 ¥ 52,630
Accounts receivable ..................................... 13,000 13,000
Prepaid insurance ......................................... 3,600 3,300
Supplies .......................................................... 4,490 3,240
Prepaid rent..................................................... 8,000 4,000
Equipment ...................................................... 24,000 24,000
Accumulated depreciation—equipment...... ¥ 500
Accounts payable .......................................... ¥ 2,200 3,000
Interest payable ............................................. 100
Salaries and wages payable ......................... 11,000
Income taxes payable ................................... 1,200
Unearned service revenue ........................... 2,000 2,000
Notes payable................................................. 20,000 20,000
Share Capital—ordinary................................ 54,000 54,000
Retained earnings.......................................... 1,600 1,600
Service revenue ............................................. 39,120 39,120
Salaries and wages expense ........................ 11,000 22,000
Rent expense ................................................. 4,000
Advertising expense ..................................... 2,200 2,200
Supplies expense .......................................... 1,250
Utilities expense ............................................ 800
Depreciation expense ................................... 500
Insurance expense ........................................ 300
Interest expense ............................................ 100
Income tax expense ...................................... 1,200
¥118,920 ¥118,920 ¥132,520 ¥132,520
ACR 4.4 (Continued)
(g)
(1)
Income Statement
Revenues
Service revenue.............................................. ¥39,120
Expenses
Salaries and wages expense......................... ¥22,000
Rent expense.................................................. 4,000
Advertising expense...................................... 2,200
Supplies expense........................................... 1,250
Utilities expense............................................. 800
Depreciation expense.................................... 500
Insurance expense......................................... 300
Interest expense............................................. 100
Income tax expense....................................... 1,200
Total expenses...................................... 32,350
Net income............................................................... ¥ 6,770
(2)
Retained earnings, July 1.............................................................

................................................................................ ¥1,600
Add: Net income........................................................................... 6,770
Retained earnings, July 31........................................................... ¥8,370
ACR 4.4 (Continued)
(g) (Continued)
(3)
July 31, 2020
Assets
Equipment.................................................. ¥24,000
Less: Accumulated depreciation............. 500 ¥23,500
Current assets
Supplies..................................................... 3,240
Predpaid insurance................................... 3,300
Prepaid rent............................................... 4,000
Accounts receivable................................. 13,000
Cash............................................................ 52,630 76,170
Total assets...................................... ¥99,670

Equity
Share capital—ordinary............................ ¥ 54,000
Retained earnings..................................... 8,370 ¥62,370
Noncurrent liabilities
Notes payable............................................ 20,000
Current liabilities
Accounts payable..................................... ¥ 3,000
Salaries and wages payable.................... 11,000
Interest payable......................................... 100
Income tax payable................................... 1,200
Unearned service revenue...................... 2,000
Total liabilities....................................... 17,300 37,300
Total equity and liabilities.................... ¥99,670
ACR 4.4 (Continued)
(h)
July 31 Service Revenue....................................................... 39,120

Income Summary............................................ 39,120
31 Income Summary...................................................... 32,350

Salaries and Wages Expense......................... 22,000
Rent Expense................................................... 4,000
Advertising Expense....................................... 2,200
Supplies Expense............................................ 1,250
Utilities Expense.............................................. 800
Depreciation Expense..................................... 500
Insurance Expense.......................................... 300
Interest Expense.............................................. 100
Income Tax Expense....................................... 1,200
31 Income Summary...................................................... 6,770

Retained Earnings........................................... 6,770
(i)
July 31, 2020
Debit Credit
Cash ................................................................ ¥ 52,630
Accounts receivable ..................................... 13,000
Prepaid insurance ......................................... 3,300
Supplies .......................................................... 3,240
Prepaid rent..................................................... 4,000
Equipment ...................................................... 24,000
Accumulated depreciation—equipment...... ¥ 500
Accounts payable .......................................... 3,000
Interest payable ............................................. 100
Salaries and wages payable ......................... 11,000
Income taxes payable ................................... 1,200
Unearned service revenue ........................... 2,000
Notes payable ................................................ 20,000
Share capital—ordinary................................. 54,000
Retained earnings ......................................... 8,370
¥100,170 ¥100,170
CT 4.1 FINANCIAL REPORTING PROBLEM
(a) Total current assets were NT$817,729,126 at December 31, 2016, and
NT$746,743,991 at December 31, 2015.
(b) No. Current assets are normally listed in reverse order of liquidity.
TSMC’s current assets are listed in order of liquidity.
(c) The asset classifications are: (1) current assets, and non-current
assets.
(d) Cash equivalents, for the purpose of meeting short-term cash

commitments, consist of highly liquid time deposits and investments
that are readily convertible to known amounts of cash and which are
subject to an insignificant risk of changes in value.
(e) Total current liabilities were NT$318,239,273 at December 31, 2016,

and NT$212,228,594 at December 31, 2015.
CT 4.2 COMPARATIVE ANALYSIS PROBLEM
(a) Nestlé Delfi Limited

(in millions) (in thousands)
1. Total current assets CHF32,042 US$202,671
2. Net property, plant & equipment 27,554 126,768
3. Total current liabilities 37,517 118,179
4. Total equity 65,981 201,292
(b) Current assets are cash and other resources that are reasonably ex-
pected to be realized in cash or sold or consumed within one year or
the company’s operating cycle, whichever is longer. Current liabilities
are obligations that are reasonably expected to be paid from existing
current assets or through the creation of other current liabilities.
Nestlé’s current liabilities were 17.1% greater than its current assets,
while Delfi Limited current assets were 71.5% greater than its current
liabilities. From this information, it appears that Delfi Limited is in a
much better liquidity position than Nestlé.
CT 4.3 REAL–WORLD FOCUS
The solution is dependent upon the companies chosen by the student.
CT 4.4 DECISION–MAKING ACROSS THE ORGANIZATION
(a) WHITEGLOVES JANITORIAL SERVICE, LTD.

December 31, 2020
Assets
Equipment
(£22,000 + £4,000)........................... £26,000
Less: Accum. depreciation—
equipment
(£4,000 + £2,000).................. 6,000 £20,000
Delivery trucks (£34,000 + £5,000). . . 39,000
Less: Accum. depreciation—
delivery trucks
(£5,000 + £5,000).................. 10,000 29,000 £49,000
Current assets
Prepaid insurance (£4,800 X 2/3)....... 3,200
Supplies
(£5,200 – £2,700)............................. 2,500
Accounts receivable
(£9,000 + £3,700)............................. 12,700
Cash................................................. 5,500 23,900
Total assets.............................. £72,900

Equity
Share capital—ordinary..................................... £41,000
Retained earnings.............................................. 3,650 £44,650
Notes payable, due July 1, 2022....................... 15,000
Current liabilities
Notes payable due within one year £10,000
Accounts payable (£1,500 + £500).................... 2,000
Interest payable.............................................. 1,250* 13,250
Total liabilities ............................................. 28,250
Total equity and liabilities .......................... £72,900
*(£25,000 X 10% X 6/12)
CT.4.4 (Continued)
WHITEGLOVES JANITORIAL SERVICE, LTD.

December 31, 2020
*Retained earnings balance as reported............... £13,000

Add: Earned but unbilled fees............................ 3,700
16,700
Less: Janitorial supplies used............................. £2,700
Insurance expired (£4,800 X 1/3)............... 1,600
Depreciation (£2,000 + £5,000)................... 7,000
Expenses incurred but unpaid.................. 500
Interest accrued.......................................... 1,250
Total...................................................... 13,050
Retained earnings balance as adjusted............... £3,650
(b) Whitegloves Janitorial Service met the terms of the bank loan because
current assets exceed current liabilities by £10,650 (£23,900 – £13,250)
at December 31, 2020.
CT 4.5 COMMUNICATION ACTIVITY
MEMO
To: Accounting Instructor
From: Student
Re: Accounting Cycle
The required steps in the accounting cycle, in the order in which they
should be completed, are:
1. Analyze business transactions.

2. Journalize the transactions.
3. Post to ledger accounts.
4. Prepare a trial balance.
5. Journalize and post adjusting entries.
6. Prepare an adjusted trial balance.
7. Prepare financial statements.
8. Journalize and post closing entries.
9. Prepare a post-closing trial balance.
The optional steps in the accounting cycle include preparing a worksheet

and preparing reversing entries. If a worksheet is prepared, it is done after
step 3 above, and it includes steps 4 and 6. The worksheet is a form used
to make it easier to prepare adjusting entries and financial statements. If re-
versing entries are prepared, they are journalized and posted after step 9,
at the beginning of the next accounting period. A reversing entry is the
exact opposite of a previously recorded adjusting entry and simplifies the
recording of subsequent transactions.
CT 4.6 ETHICS CASE
(a) The stakeholders in this case are:
 You, as controller.
 Fabien LaRue, president.
 Users of the company’s financial statements.
(b) The ethical issue is the continued circulation of significantly misstated

financial statements. As controller, you have just issued misleading
financial statements. You have acted ethically by telling the company’s
president. The president has reacted unethically by allowing the mis-
leading financial statements to continue to circulate.
(c) As controller, you should impress upon the president the consequences
of having those misleading financial statements be detected by some
user or securities regulator. Also stress upon him that you have a
professional obligation to correct the statements or to resign.
CT 4-7 ALL ABOUT YOU
The following is a personal statement of financial position using the

classified presentation. Note that the earnings from the part-time job as
well as the tuition costs are not listed since neither of those items is an
asset, liability, or equity item.
Assets

Automobile........................................................ €7,000
Video and stereo equipment............................ 1,250
Home computer................................................ 800 €9,050
Current assets
Accounts receivable from brother................... € 300
Investment......................................................... 3,000
Savings account balance................................. 1,800
Cash................................................................... 1,200 6,300
Total assets............................................... €15,350
Owner’s Equity and Liabilities
Owner’s equity
Owner’s capital (€15,350 – €12,300)... €3,050
Noncurrent liabilities
Automobile loan.................................. €4,000
Student loan......................................... 5,000
Credit card payable............................. 1,650 €10,650
Current liabilities
Current portion of automobile loan. . . 1,500
Current portion of credit card payable 150 1,650
Total liabilities.............................. 12,300
Total owner’s equity and liabilities €15,350
GAAP EXERCISES
GAAP 4.1
The statement of financial position required under IFRS and the balance
sheet prepared under GAAP usually present the same information
regarding a company’s assets, liabilities, and equity at a point in time. IFRS
does not dictate a specific order but most companies list non-current items
before current. Differences in ordering are:
IFRS GAAP
Statement of Financial Balance Sheet
Position presentation presentation
Non-current assets Current assets
Current assets Long-term investments
Equity Property, plant and equipment
Intangible assets
Current liabilities
Non-current liabilities Long-term liabilities
Current liabilities Stockholders’ equity
Under GAAP, current assets are usually listed in the order of liquidity.
GAAP 4.2
GAAP uses the term balance sheet rather than statement of financial position.
GAAP 4.3
DIAZ COMPANY
Partial Balance Sheet
Current assets
Cash........................................................................................... $ 15,400
Short-term investments........................................................... 6,700
Accounts receivable................................................................. 12,500
Supplies..................................................................................... 5,200
Prepaid insurance.................................................................... 3,600
Total................................................................................... $43,400
GAAP 4.4
ZURICH COMPANY
Partial Balance Sheet
December 31, 2020
Current assets
Cash.............................................................. $ 13,100
Short-term investments.............................. 120
Accounts receivable.................................... 4,300
Inventories................................................... 2,700 $20,220
Long-term investments
Investments in stock................................... 6,500
Property, plant and equipment
Equipment.................................................... 21,700
equipment ................................................ 5,700 16,000
Total assets......................................................... $42,720
GAAP 4.5
(a) REGO BOWLING ALLEY

Balance Sheet
December 31, 2020
Assets
Current assets
Cash................................................... $18,040
Accounts receivable......................... 7,540
Prepaid insurance............................. 4 ,680 $30,260
Land................................................... 67,000
Buildings............................................ $128,000
Less: Acc. depr.—buildings............. 42,600 85,400
Equipment......................................... 62,400
Less: Acc. depr.—equipment.......... 18,720 43,680 196,080
Total assets....................................... $226,340
Liabilities and Stockholders’ Equity

Current liabilities
Current portion of notes payable............. $ 13,900
Accounts payable...................................... 12,300
Interest payable.......................................... 2,600 $28,800
Long-term liabilities
Notes payable............................................. 81,100
Total liabilities............................................ $109,900
Stockholders’ equity
Common stock........................................... 112,000
Retained Earnings..................................... 4,440* 116,440
Total liabilities and stockholders’ equity $226,340
*Net income = $15,180 – $780 – $7,360 – $2,600 = $4,440
GAAP 4.6
It is possible to compare liquidity and solvency for companies using
different currencies. The ratios that are used to do so, such as the current
ratio and debt to total assets, indicate relative amounts of assets and
liabilities rather than absolute monetary values.
GAAP FINANCIAL REPORTING PROBLEM
GAAP 4.7
(a) Total current assets were $106,869 million at September 24, 2016, and
$89,378 million at September 26, 2015.
(b) Current assets are properly listed in the order of liquidity. As you will
learn in the next chapter, inventory is considered to be less liquid
than accounts receivable. Thus, it is listed below accounts receivable
and before prepaid expenses and other current assets.
(c) The asset classifications are similar to the text: (1) current assets,
(2) investments, (3) property, plant, and equipment, and (4) intan-
gible assets.
(d) Total current liabilities were $79,006 million at September 24, 2016,
and $80,610 million at September 26, 2015.

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What are the main sections covered in the chapter?

What are the main sections covered in the chapter?

What are the main steps involved in the accounting cycle?

What are the main steps involved in the accounting cycle?

CHAPTER 4

Completing the Accounting Cycle

ASSIGNMENT CLASSIFICATION TABLE

*1. Prepare a worksheet. 1, 2, 3, 4, 5 1, 2, 3 1 1, 2, 3, 1, 2, 3, 4, 5

*2. Prepare closing entries and a 6, 7, 8, 9, 11 4, 5, 6, 7 2 4, 7, 8, 11, 1, 2, 3, 4, 5

*5. Prepare reversing entries. 10, 20, 21 12 18, 19

Problem Difficulty Time Allotted

1 Prepare worksheet, financial statements, and adjusting Simple 40–50

2 Complete worksheet; prepare financial statements, Moderate 50–60

3 Prepare financial statements, closing entries, and post- Moderate 40–50

4 Complete worksheet; prepare classified statement of Moderate 50–60

5 Complete all steps in accounting cycle. Complex 70–90

Comprehensive Problem: Chapters 2 to 4

Number LO BT Difficulty Time (min.)

Number LO BT Difficulty Time (min.)

Learning Objective Knowledge Comprehension Application Analysis Synthesis Evaluation

*3. Explain the steps in the Q4-11 Q4-10 DI4-3 BE4-9

Expand Your Critical Thinking Communication Financial Reporting Real-World

*14. The standard classifications in a statement of financial position are:

*21. (a) Jan. 10 Salaries and Wages Expense.................................................... 8,000

(b) Jan. 10 Salaries and Wages Payable..................................................... 3,500

The steps in using a worksheet are performed in the following sequence:

The solution to BRIEF EXERCISE 4.2 is on page 4.9.

BRIEF EXERCISE 4.3

BRIEF EXERCISE 4.4

Dec. 31 Service Revenue............................................... 58,000

31 Income Summary.............................................. 46,000

31 Income Summary.............................................. 12,000

31 Retained Earnings............................................ 2,000

WALTERS REPAIR SHOP

Adjusted Income Statement of

Salaries and Wages

Supplies Expense Retained Earnings Dividends

BRIEF EXERCISE 4.6

July 31 Service Revenue................................................ 17,800

31 Income Summary.............................................. 12,100

Salaries and Wages Expense

Maintenance and Repairs Expense

BRIEF EXERCISE 4.7

BRIEF EXERCISE 4.8

The proper sequencing of the required steps in the accounting cycle is as

1. Analyze business transactions.

Filling in the blanks, the answers are 4, 2, 8, 7, 5, 3, 9, 6, 1.

1. Service Revenue.................................................................. 870

2. Supplies (£1,150 – £1,510)................................................... 360

BRIEF EXERCISE 4.10

BRIEF EXERCISE 4.11

CL Accounts payable CL Income taxes payable

*BRIEF EXERCISE 4.12

Nov.1 Salaries and Wages Payable...................................... 3,300

Income statement debit column—Utilities Expense

Dec. 31 Service Revenue........................................... 108,000

Dec. 31 Income Summary.......................................... 72,000

Dec. 31 Income Summary.......................................... 36,000

Dec. 31 Retained Earnings........................................ 22,000