Exam 4: Completing the Accounting Cycle

Wakefield Company discovered the following errors made in January 2016. 1. A payment of salaries expense of $900 was debited to Equipment and credited to Cash both for $900. 2. A collection of $2000 from a client on account was debited to Cash $200 and credited to Service Revenue $200. 3. The purchase of equipment on account for $680 was debited to Equipment $860 and credited to Accounts Payable $860. Instructions Correct the errors by reversing the incorrect entry and preparing the correct entry.

Equipment is classified in the balance sheet as

Cash and supplies are both classified as current assets.

Correcting entries are made any time an error is discovered even though it may not be at the end of an accounting period.

All of the following are owner's equity accounts except

As Mel Smith was doing his year-end accounting he noticed that the bookkeeper had made errors in recording several transactions. The erroneous transactions are as follows: (a) A check for $700 was issued for goods previously purchased on account. The bookkeeper debited Accounts Receivable and credited Cash for $700. (b) A check for $180 was received as payment on account. The bookkeeper debited Accounts Payable for $810 and credited Accounts Receivable for $810. (c) When making the entry to record the year's depreciation expense the bookkeeper debited Accumulated Depreciation-Equipment for $1000 and credited Cash for $1000. (d) When accruing interest on a note payable the bookkeeper debited Interest Receivable for $200 and credited Interest Payable for $200. Instructions Prepare the appropriate correcting entries. (Do not reverse the original entries.)

The income statement of Fezzik's Shoe Repair is as follows: FEZZIK'S SHOE REPAIR Income Statement For the Month Ended April 30, 2016 Revenue Service Revenue \9 ,500 Expenses Salaries and Wages Expense \4 ,200 Depreciation Expense 350 Utilities Expense 400 Rent Expense 600 Supplies Expense 1,050 Total Expenses 6,600 Net Income \2 ,900 On April 1 the Owner's Capital account had a balance of $12900. During April Fezzik withdrew $3000 cash for personal use. Instructions (a) Prepare closing entries at April 30. (b) Prepare an owner's equity statement for the month of April.

A worksheet is an optional working tool used by accountants to facilitate the preparation of financial statements. Consider the steps followed in preparing a worksheet. How does the use of a worksheet assist the accountant? Could financial statements be prepared without a worksheet? Evaluate how the process would differ. Consider factors such as timeliness accuracy and efficiency in your evaluation.

Liabilities are generally classified on a balance sheet as

All of the following are property plant and equipment except

The trial balances of Orton Company follow with the accounts arranged in alphabetic order. Analyze the data and prepare (a) the adjusting entries and (b) the closing entries made by Orton Company. Trial Balances Unadjusted Adjusted Post-Closing Accounts Payable \ 10,000 \ 10,000 \ 10,000 Accounts Receivable 2,200 3,200 3,200 Accumulated Depreciation-Equipment 13,000 17,000 17,000 Advertising Expense 0 16,300 0 Cash 60,000 60,000 60,000 Depreciation Expense 0 4,000 0 Equipment 75,000 75,000 75,000 Owner's Capital 82,200 82,200 102,400 Owner's Drawings 11,000 11,000 0 Prepaid Advertising 17,800 1,500 1,500 Prepaid Rent 15,000 11,000 11,000 Rent Expense 0 4,000 0 Service Revenue 96,000 105,000 0 Supplies 3,200 700 700 Supplies Expense 2,000 4,500 0 Unearned Service Revenue 23,000 15,000 15,000 Salaries and Wages Expense 38,000 45,000 0 Salaries and Wages Payable 0 7,000 7,000

Adjusting entries are prepared from

Transaction and adjustment data for Ortiz Company for the calendar year end is as follows: 1. December 24 (initial salary entry): $15000 of salaries earned between December 1 and December 24 are paid. 2. December 31 (adjusting entry): Salaries earned between December 25 and December 31 are $4500. These will be paid in the January 8 payroll. 3. January 8 (subsequent salary entry): Total salary payroll amounting to $7000 was paid. Instructions Prepare two sets of journal entries as specified below. The first set of journal entries should assume that the company does not use reversing entries and the second set should assume that reversing entries are utilized by the company.

The classified balance sheet is

The following selected account balances appear on the December 31 2016 balance sheet of Gigante Co. Land (location of the corporation's office building) \ 155,000 Land (held for future use) 225,000 Corporate Office Building 850,000 Inventory 300,000 Equipment 674,000 Office Furniture 221,000 Accumulated Depreciation 650,000 What is the total net amount of property plant and equipment that will be reported on the balance sheet?

The final step in the accounting cycle is to prepare

The first step in preparing a worksheet is to prepare a ______________ from the general ledger accounts.

The balance in the income summary account before it is closed will be equal to

Coe Company earned net income of $56000 during 2016. The company had owner drawings totalling $35000 during the period. Prepare the entries to close Income Summary and the Owner's Drawings account.