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BRIEF EXERCISES
BE 176
Use the following income statement for the year 2021 for Belle Company to prepare entries to close the revenue and expense accounts for the company.
Service revenue $85, Expenses: Salaries and Wages Expense $40, Rent Expense 12, Advertising Expense 8, Total expenses 61, Net income (loss) $23,
Solution 176
Service Revenue.................................................................................. 85, Income Summary ..................................................................... 85,
Income Summary ................................................................................. 61, Salaries and Wages Expense .................................................. 40, Rent Expense ........................................................................... 12, Advertising Expense ................................................................. 8,
BE 177 Sebastien Company earned net income of $44,000 during 2021. The company paid dividends totalling $20,000 during the period. Prepare the entries to close Income Summary and the Dividends account.
Solution 177
Income Summary ................................................................................. 44, Retained Earnings .................................................................... 44,
Retained Earnings ............................................................................... 20, Dividends ................................................................................. 20,
BE 178
At April 1, 2021 , Spiderland Company reported a balance of $20,000 in the Retained Earnings account. Spiderland Company earned revenues of $50,000 and incurred expenses of $32,000 during April 2021. The company paid dividends of $10,000 during the month. (a) Prepare the entries to close Income Summary and the Dividends acccount at April 30,
- (b) What is the balance in Retained Earnings on the April 30, 2021 post-closing trial balance?
Solution 178
(a) Income Summary .......................................................................... 18, Retained Earnings ........................................................... 18,
Retained Earnings ........................................................................ 10, Dividends ......................................................................... 10,
(b) $20,000 + $18,000 – $10,000 = $28,
BE 179
Identify which of the following are temporary accounts of Sabrina Company. (1) Retained Earnings (2) Dividends (3) Equipment (4) Accumulated Depreciation (5) Depreciation Expense
Solution 179
(2) Dividends, (5) Depreciation Expense
BE 180
Identify which of the following accounts would have balances on a post-closing trial balance. (1) Service Revenue (2) Income Summary (3) Notes Payable (4) Interest Expense (5) Cash
Solution 180
(3) Notes Payable, (5) Cash
BE 181
Prepare the necessary correcting entry for each of the following. a. A payment on account of $840 was debited to Accounts Payable $480 and credited to Cash $480. b. The collection of Accounts Receivable of $680 was recorded as a debit to Cash $680 and a credit to Service Revenue $680.
Solution 181
a. Accounts Payable ........................................................................... 360 Cash ................................................................................... 360
b. Service Revenue ............................................................................ 680 Accounts Receivable........................................................... 680
BE 184
The following items are taken from the adjusted trial balance of Westley Company for the month ending July 31, 2021 :
$ 2, 3, 8, 2, 30, 2, 54, 22, 33,
Accounts payable Accounts receivable Accumulated depreciation – equipment Cash Common stock Depreciation expense Equipment Retained earnings 7/1/ 21 Service revenue Supplies 1,
Prepare the current assets section of Westley’s classified balance sheet.
Solution 184
Current assets: Cash $2, Accounts receivable 3, Supplies 1, Total current assets $7,
BE 185
The following information is available for Elwes Company for the year ended December 31, 2021 :
Accounts payable $ 3, Accumulated depreciation-equipment 4, Common stock 5, Retain earnings 4, Intangible assets 2, Notes payable (due in 5 years) 5, Accounts receivable 1, Cash 2, Short-term investments 1, Equipment 8, Long-term investments 5,
Instructions Use the above information to prepare a classified balance sheet for the year ended December 31, 2021.
Solution 185
ELWES COMPANY Balance Sheet December 31, 2021
Assets Current assets Cash $2, Short-term investments 1, Accounts receivable 1, Total current assets $5, Investments Long-term investments 5, Property, plant, and equipment Equipment 8, Less: Accumulated depreciation-equipment 4,000 4, Intangible assets 2, Total assets $18,
Liabilities and Stockholders’ Equity Current liabilities Accounts payable $3, Long-term liabilities Notes payable 5, Total liabilities $8, Stockholders’ equity Common stock $5, Retained earnings 4,300 9, Total liabilities and stockholders’ equity $18,
BE 186
The following lettered items represent a classification scheme for a balance sheet, and the num- bered items represent accounts found on balance sheets. In the blank next to each account, write the letter indicating to which category it belongs.
A. Current assets E. Current liabilities B. Long-term investments F. Long-term liabilities C. Property, plant, and equipment G. Stockholders’ equity D. Intangible assets H. Not on the balance sheet
_____ 1. Accumulated Depreciation _____ 6. Inventory
_____ 2. Retained Earnings _____ 7. Patents
_____ 3. Interest Expense _____ 8. Prepaid Rent
_____ 4. Salaries and Wages Payable _____ 9. Mortgage Payable
_____ 5. Dividends _____ 10. Land Held for Investment
EXERCISES
Ex. 191
The account balances appearing on the trial balance (below) were taken from the general ledger of Irick's Copy Shop at September 30.
Additional information for the month of September which has not yet been recorded in the accounts is as follows: (a) A physical count of supplies indicates $300 on hand at September 30. (b) The amount of insurance that expired in the month of September was $200. (c) Depreciation on equipment for September was $400. (d) Rent owed on the copy shop for the month of September was $600 but will not be paid until October.
Instructions Using the above information, complete the worksheet on the following page for Irick's Copy Shop for the month of September.
IRICK’S COPY SHOP Worksheet For the Month Ended September 30, 2021
Trial Balance Adjustment s
Adjusted Trial Balance
Income Statement Balance Sheet Account Titles Debit^ Credit^ Debit^ Credit^ Debit^ Credit^ Debit^ Credit^ Debit^ Credit Cash 3, Supplies 1, Prepaid Insurance 2, Equipment 24, Accum. Depreciation— Equipment
Accounts Payable 2, Notes Payable 4, Common Stock 10, Retained Earnings 5, Dividends 2, Service Revenue 6, Utilities Expense 400 Totals 33,100^ 33, Supplies Expense Insurance Expense Depreciation Expense Rent Expense
Rent Payable Totals Net Income Totals
Solution 191 IRICK’S COPY SHOP Worksheet For the Month Ended September 30, 2021
Trial Balance Adjustments
Adjusted Trial Balance
Income Statement Balance Sheet Account Titles Debit^ Credit^ Debit^ Credit^ Debit^ Credit^ Debit^ Credit^ Debit^ Credit Cash 3,000 3,000 3, Supplies 1,100 (a) 800 300 300 Prepaid Insurance 2,200 (b) 200 2,000 2, Equipment 24, 0
Accum. Depreciation— Equipment
4,500 (c) 400 4,900 4,
Accounts Payable 2,400 2,400 2, Notes Payable 4,000 4,000 4, Common Stock 10, 0
Retained Earnings 5,300 5,300 5, Dividends 2,400 2,400 2, Service Revenue 6,900 6,900 6, Utilities Expense 400 400 400 Totals 33,100^ 33, Supplies Expense (a) 800
Insurance Expense (b) 200
Depreciation Expense
(c) 400
Rent Expense (d) 600
Rent Payable (d) (^600 600 ) Totals 2,000 2,000 34,100^ 34,100^ 2,400 6,900 31, 0
Net Income 4, 4, Totals 6,900 6,900 31,700^ 31,
Ex. 193
Selected worksheet data for Patinkin Company are presented below.
Adjusted Account Titles Trial Balance Trial Balance Dr. Cr. Dr. Cr. Accounts Receivable? 31, Prepaid Insurance 24,000 18, Supplies 7,000? Accumulated Depreciation 12,000? Salaries and Wages Payable 0 7, Service Revenue 85,000 100, Insurance Expense? Depreciation Expense 9, Supplies Expense 5, Salaries and Wages Expense? 49,
Instructions
(a) Fill in the missing amounts. (b) Prepare the adjusting entries that were made.
Solution 193
(a) Accounts Receivable—$16,000 ($31,000 – $15,000). Supplies—$1,800 ($7,000 – $5,200). Accumulated Depreciation—$21,000 ($12,000 + $9,000). Salaries and Wages Payable—$0 No liability recorded until adjustments are made. Insurance Expense—$6,000 ($24,000 – $18,000). Salaries and Wages Expense—$41,400 ($49,000 – $7,600).
(b)
Accounts Receivable ................................................................ 15, Service Revenue ................................................................. 15, Insurance Expense ................................................................... 6, Prepaid Insurance ............................................................... 6,
Supplies Expense ..................................................................... 5, Supplies .............................................................................. 5, Depreciation Expense ............................................................... 9, Accumulated Depreciation .................................................. 9,
Salaries and Wages Expense ................................................... 7, Salaries and Wages Payable .............................................. 7,
Ex. 194
These financial statement items are for Rugen Company at year-end, July 31, 2021.
Salaries and wages payable $ 2,980 $ 3, Salaries and wages expense 45,700 5, Utilities expense 21,100 9, Equipment 38,000 6, Accounts payable 4,100 4, Service revenue 57,200 4, Rent revenue 6,500 28, Common stock 20,
Notes payable (long-term) Cash Accounts receivable Accumulated depreciation Dividends Depreciation expense Retained earnings (Aug. 1, 20 20 )
Instructions (a) Prepare an income statement and a retained earnings statement for the year. Stockholders not make any new investments during the year. (b) Prepare a classified balance sheet at July 31.
Solution 194
(a) RUGEN COMPANY Income Statement For the Year Ended July 31, 2021 ——————————————————————————————————————————— Revenues Service revenue .......................................................................... $57, Rent revenue............................................................................... 6, Total revenues ..................................................................... $63, Expenses Salaries and wages expense ....................................................... 45, Utilities expense .......................................................................... 21, Depreciation expense .................................................................. 4, Total expense ...................................................................... 70, Net loss ................................................................................................ $ (7,100)
RUGEN COMPANY
Owner's Equity Statement For the Year Ended July 31, 2021 ——————————————————————————————————————————— Retained Earnings, August 1, 20 20 ...................................................... $28, Less: Net loss ..................................................................................... $7, Dividends .................................................................................... 4,000 11, Retained Earnings, July 31, 20 21 ........................................................ $16,
Cash ................................................................................. 200 Cash ..................................................................................... 2, Accounts Receivable ........................................................ 2,
- Accounts Payable .................................................................. 860 Equipment ........................................................................ 860 Equipment ............................................................................. 680 Accounts Payable ............................................................. 680
Ex. 209
The following items were taken from the financial statements of Buttercup Company. (All dollars are in thousands.)
Mortgage payable $ 2,443 3, Prepaid insurance 880 1, Property, plant, and equipment 11,500 1, 1,100 5, 3,690 8, 1,000 1,
Long-term investments Short-term investments Notes payable in 20 21 Cash 2,
Accumulated depreciation Accounts payable Notes payable after 20 21 Common stock Retained earnings Accounts receivable Inventories 1,
Instructions
Prepare a classified balance sheet in good form as of December 31, 2021.
Solution 209
BUTTERCUP COMPANY Balance Sheet December 31, 2021 (in thousands) ——————————————————————————————————————————— Assets Current assets Cash............................................................................................ $ 2, Short-term investments ............................................................... 3, Accounts receivable .................................................................... 1, Inventories................................................................................... 1, Prepaid insurance ....................................................................... 880 Total current assets .............................................................. $10, Long-term investments ........................................................................ 1, Property, plant, and equipment Property, plant, and equipment ................................................... 11, Less: Accumulated depreciation .................................................. 3,655 7, Total assets .......................................................................... $19,
Liabilities and Stockholders’ Equity Current liabilities Notes payable in 20 21 ................................................................. $ 1, Accounts payable ........................................................................ 1, Total current liabilities ........................................................... $ 2, Long-term liabilities Mortgage payable ........................................................................ 2, Notes payable (after 20 21 ) .......................................................... 1, Total long-term liabilities........................................................ 3, Total liabilities ...................................................................................... 6, Stockholders’ equity Common stock ............................................................................ 5, Retained earnings ....................................................................... 8,480 13, Total liabilities and stockholders’ equity ................................ $19,
