Ch04 WRD25e Instructor
Ch04 WRD25e Instructor
Ch04 WRD25e Instructor
p le ti n
m
Co ing Cy c l e
oun t r 4
Ac c a p t e
C h
c. 2014 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, or posted to a publicly accessible website, in whole or in part.
Learning Objectives
c. 2014 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, or posted to a publicly accessible website, in whole or in part.
FLOW OF ACCOUNTING
INFORMATION
Flow of Accounting Information
c. 2014 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, or posted to a publicly accessible website, in whole or in part.
Income Statement
c. 2014 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, or posted to a publicly accessible website, in whole or in part.
Closing Entries
Step 1
Step 2
Step 3
Step 4
Temporary Account Balances
(continued)
LEDGER
(continued)
LEDGER
(continued)
LEDGER
LEDGER
(concluded)
Post-Closing Trial Balance
c. 2014 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, or posted to a publicly accessible website, in whole or in part.
Accounting Cycle
(continued)
Accounting Cycle
to the
financial
statements
ACCOUNTING
CYCLE
From the adjusted
trial balance
Learn
i ng O
bj e ct
Illust
i ve
rate t
he a c
coun
ting c
ycle f
or on
5
perio e
d.
c. 2014 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, or posted to a publicly accessible website, in whole or in part.
ACCOUNTING
CYCLE
(continued)
ACCOUNTING
CYCLE
(continued)
ACCOUNTING
CYCLE
(concluded)
ACCOUNTING
CYCLE
UNADJUSTED
TRIAL BALANCE
END-OF-PERIOD
SPREADSHEET
ADJUSTING
ENTRIES
ADJUSTED TRIAL
BALANCE
INCOME
STATEMENT
(continued)
STATEMENT OF
OWNER’S EQUITY
(continued)
BALANCE SHEET
(concluded)
CLOSING
ENTRIES
POST-CLOSING
TRIAL BALANCE
LEDGER
(continued)
(continued)
LEDGER
(continued)
LEDGER
(concluded)
Learn
i ng O
Expla bj ectiv
in wh
at i s m
ea n
e 6
and t t by t
he natur he fiscal
al bu
sines year
s yea
r.
c. 2014 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, or posted to a publicly accessible website, in whole or in part.
Accounting Period
c. 2014 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, or posted to a publicly accessible website, in whole or in part.
Working Capital and Current Ratio
Current Assets
Current Ratio =
Current Liabilities
$7,745
=
$1,390
= 5.6 (Rounded)
en d ix:
App
erri odd
--oof - P et
E n d dsshh e
S p
p r e a
c. 2014 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, or posted to a publicly accessible website, in whole or in part.
Unadjusted Adjusted
Trial Balance Adjustments Trial Balance
Account Title Debit Credit Debit Credit Debit Credit
1 Cash 2,065
2 Accounts Receivable 2,220
3 Supplies 2,000
4 Prepaid Insurance 2,400
5 Land 20,000
6 Office Equipment 1,800
7 Accumulated Depr.
8 Accounts Payable 900 The
9 Wages Payable
10 Unearned Rent 360 unadjusted
11 Chris Clark, Capital 25,000
12 Chris Clark, Drawing 4,000 trial balance
13 Fees Earned 16,340 is checked
14 Rent Revenue
15 Wages Expense 4,275 for equality.
16 Rent Expense 1,600
17 Depreciation Expense
18 Utilities Expense 985
19 Supplies Expense 800
20 Insurance Expense
21 Miscellaneous Exp. 455
22 42,600 42,600
23
24
25 81
Unadjusted Adjusted
Trial Balance Adjustments Trial Balance
Account Title Debit Credit Debit Credit Debit Credit
1 Cash 2,065
2 Accounts Receivable 2,220 Supplies
3 Supplies 2,000
4 Prepaid Insurance 2,400
needs
5 Land 20,000 adjusting
6 Office Equipment 1,800
7 Accumulated Depr.
8 Accounts Payable 900
9 Wages Payable
10 Unearned Rent 360
11 Chris Clark, Capital 25,000
12 Chris Clark, Drawing 4,000
13 Fees Earned 16,340
14 Rent Revenue
15 Wages Expense 4,275
16 Rent Expense 1,600
17 Depreciation Expense
18 Utilities Expense 985
19 Supplies Expense 800
20 Insurance Expense
21 Miscellaneous Exp. 455
22 42,600 42,600
23
24
25 82
Unadjusted Adjusted
Trial Balance Adjustments Trial Balance
Account Title Debit Credit Debit Credit Debit Credit
1 Cash 2,065
2 Accounts Receivable 2,220
3 Supplies 2,000 (a) 1,240
4 Prepaid Insurance 2,400
5 Land 20,000
6 Office Equipment 1,800
7 Accumulated Depr. (a) Cost of
8 Accounts Payable 900 supplies on
9 Wages Payable hand at
10 Unearned Rent 360 December 31
11 Chris Clark, Capital 25,000
12 Chris Clark, Drawing 4,000 is $760.
13 Fees Earned 16,340
14 Rent Revenue
15 Wages Expense 4,275
16 Rent Expense 1,600
17 Depreciation Expense
18 Utilities Expense 985
19 Supplies Expense 800 (a) 1,240
20 Insurance Expense
21 Miscellaneous Exp. 455
22 42,600 42,600
23
24
25 83
Unadjusted Adjusted
Trial Balance Adjustments Trial Balance
Account Title Debit Credit Debit Credit Debit Credit
1 Cash 2,065
2 Accounts Receivable 2,220
3 Supplies 2,000 (a) 1,240
4 Prepaid Insurance 2,400 (b) 200
5 Land 20,000
6 Office Equipment 1,800
7 Accumulated Depr. (b) The insurance
8 Accounts Payable 900 expense for
9 Wages Payable December is
10 Unearned Rent 360 $200 ($2,400 ÷
11 Chris Clark, Capital 25,000
12).
12 Chris Clark, Drawing 4,000
13 Fees Earned 16,340
14 Rent Revenue
15 Wages Expense 4,275
16 Rent Expense 1,600
17 Depreciation Expense
18 Utilities Expense 985
19 Supplies Expense 800 (a) 1,240
20 Insurance Expense (b) 200
21 Miscellaneous Exp. 455
22 42,600 42,600
23
24
25 84
Unadjusted Adjusted
Trial Balance Adjustments Trial Balance
Account Title Debit Credit Debit Credit Debit Credit
1 Cash 2,065
2 Accounts Receivable 2,220
3 Supplies 2,000 (a) 1,240
4 Prepaid Insurance 2,400 (b) 200
5 Land 20,000
6 Office Equipment 1,800
7 Accumulated Depr. (c) Rent
8 Accounts Payable 900 revenue
9 Wages Payable earned
10 Unearned Rent 360 (c) 120 during
11 Chris Clark, Capital 25,000
12 Chris Clark, Drawing 4,000 December
13 Fees Earned 16,340 was $120
14 Rent Revenue (c) 120 ($360 ÷ 3).
15 Wages Expense 4,275
16 Rent Expense 1,600
17 Depreciation Expense
18 Utilities Expense 985
19 Supplies Expense 800 (a) 1,240
20 Insurance Expense (b) 200
21 Miscellaneous Exp. 455
22 42,600 42,600
23
24
25 85
Unadjusted Adjusted
Trial Balance Adjustments Trial Balance
Account Title Debit Credit Debit Credit Debit Credit
1 Cash 2,065
2 Accounts Receivable 2,220 (d) 500
3 Supplies 2,000 (a) 1,240
4 Prepaid Insurance 2,400 (b) 200
5 Land 20,000
6 Office Equipment 1,800
7 Accumulated Depr. (d) Fees accrued
8 Accounts Payable 900 at the end of
9 Wages Payable December,
10 Unearned Rent 360 (c) 120 but not
11 Chris Clark, Capital 25,000
12 Chris Clark, Drawing 4,000 recorded,
13 Fees Earned 16,340 (d) 500 totaled $500.
14 Rent Revenue (c) 120
15 Wages Expense 4,275
16 Rent Expense 1,600
17 Depreciation Expense
18 Utilities Expense 985
19 Supplies Expense 800 (a) 1,240
20 Insurance Expense (b) 200
21 Miscellaneous Exp. 455
22 42,600 42,600
23
24
25 86
Unadjusted Adjusted
Trial Balance Adjustments Trial Balance
Account Title Debit Credit Debit Credit Debit Credit
1 Cash 2,065
2 Accounts Receivable 2,220 (d) 500
3 Supplies 2,000 (a) 1,240
4 Prepaid Insurance 2,400 (b) 200
5 Land 20,000
6 Office Equipment 1,800
7 Accumulated Depr. (e) Wages
8 Accounts Payable 900 accrued, but
9 Wages Payable (e) 250 not paid, at
10 Unearned Rent 360 (c) 120 the end of
11 Chris Clark, Capital 25,000
12 Chris Clark, Drawing 4,000 December
13 Fees Earned 16,340 (d) 500 totaled $250.
14 Rent Revenue (c) 120
15 Wages Expense 4,275 (e) 250
16 Rent Expense 1,600
17 Depreciation Expense
18 Utilities Expense 985
19 Supplies Expense 800 (a) 1,240
20 Insurance Expense (b) 200
21 Miscellaneous Exp. 455
22 42,600 42,600
23
24
25 87
Unadjusted Adjusted
Trial Balance Adjustments Trial Balance
Account Title Debit Credit Debit Credit Debit Credit
1 Cash 2,065
2 Accounts Receivable 2,220 (d) 500
3 Supplies 2,000 (a) 1,240
4 Prepaid Insurance 2,400 (b) 200
5 Land 20,000
6 Office Equipment 1,800
7 Accumulated Depr. (f) 50 (f) Depreciation
8 Accounts Payable 900 of office
9 Wages Payable (e) 250
10 Unearned Rent 360 (c) 120 equipment is
11 Chris Clark, Capital 25,000 $50 for
12 Chris Clark, Drawing 4,000 December.
13 Fees Earned 16,340 (d) 500
14 Rent Revenue (c) 120
15 Wages Expense 4,275 (e) 250
16 Rent Expense 1,600
17 Depreciation Expense (f) 50
18 Utilities Expense 985
19 Supplies Expense 800 (a) 1,240
20 Insurance Expense (b) 200
21 Miscellaneous Exp. 455
22 42,600 42,600
23
24
25 88
Unadjusted Adjusted
Trial Balance Adjustments Trial Balance
Account Title Debit Credit Debit Credit Debit Credit
1 Cash 2,065
2 Accounts Receivable 2,220 (d) 500
3 Supplies 2,000 (a) 1,240
4 Prepaid Insurance 2,400 (b) 200
5 Land 20,000
6 Office Equipment 1,800
7 Accumulated Depr. (f) 50
8 Accounts Payable 900
9 Wages Payable (e) 250
10 Unearned Rent 360 (c) 120
11 Chris Clark, Capital 25,000
12 Chris Clark, Drawing 4,000
13 Fees Earned 16,340 (d) 500
14 Rent Revenue (c) 120
15 Wages Expense 4,275 (e) 250
16 Rent Expense 1,600
17 Depreciation Expense (f) 50
18 Utilities Expense 985
19 Supplies Expense 800 (a) 1,240
20 Insurance Expense (b) 200
21 Miscellaneous Exp. 455
22
Summed
42,600 42,600 2,360 2,360
23 and ruled
24
25 89
Add / Subtract Adjustments
Net Income