Exam 4: Completing the Accounting Cycle

The following information is for Central Avenue Real Estate: Central Avenue Real Estate Balance Sheet December 31, 2016 Cash \ 25,000 Prepaid Insurance 40,000 Accounts Receivable 50,000 Inventory 80,000 Land Held for Investme 75,000 Land 120,000 Building \ 110,000 Less Accumulated Depreciation (20,000) 90,000 Trademark 70,000 Total Assets \5 50,000 Accounts Payable \ 60,000 Salaries and Wages Payable 25,000 Mortgage Payable 85,000 Total Liabilities 170,000 Owner's Capital 380,000 Total Liabilities and Owner's Equity \ 550,0000 The total dollar amount of assets to be classified as current assets is

The income statement for the year 2016 of Bugati Co. contains the following information: $\begin{array}{lr}\text { Revenues } &&\$73,000 \\\text { Expenses: } & \\\text { Salaries and Wages Expense } & \$ 43,000 \\\text { Rent Expense } &12,000 \\\text { Advertising Expense } & 11,000 \\\text { Supplies Expense } &6,000 \\\text { Utilities Expense }& 3,500\\\text { Insurance Expense }&4,000 \\\quad \text { Total expenses } &&79,500 \\\text { Net income (loss)} &&\$(6,500)\end{array}$ The entry to close the revenue account includes a

Prepare the necessary correcting entry for each of the following. a. A payment of $5000 for salaries was recorded as a debit to Supplies Expense and a credit to Cash. b. A purchase of supplies on account for $1000 was recorded as a debit to Equipment and a credit to Accounts Payable.

A worksheet is a multiple column form that facilitates the

The post-closing trial balance will contain only owner's equity statement accounts and balance sheet accounts.

Prepare the necessary closing entries based on the following selected accounts. Accumulated Depreciation \1 0,000 Depreciation Expense 6,000 Owner's Capital 20,000 Owner's Drawings 9,000 Salaries and Wages Expense 19,000 Service Revenue 40,000

Selected worksheet data for Mannie Company are presented below. Instructions (a) Fill in the missing amounts. (b) Prepare the adjusting entries that were made.

The following information is available for Sergio Company for the year ended December 31 2016: Accounts payable \ 4,300 Accumulated depreciation-equipment 5,000 Owner's capital 8,300 Intangible assets 2,500 Notes payable (due in 5 years) 6,500 Accounts receivable 1,900 Cash 2,800 Short-term investments 2,500 Equipment 8,700 Lonq-term investments 5,700 Instructions Use the above information to prepare a classified balance sheet for the year ended December 31 2016.

The operating cycle of a company is the average time that is required to go from cash to

An incorrect debit to Accounts Receivable instead of the correct account Notes Receivable does not require a correcting entry because total assets will not be misstated.

The following items are taken from the financial statements of the Freight Service for the year ending December 31 2016: Accounts payable \ 19,000 Accounts receivable 13,000 Accumulated depreciation - equipment 26,000 Advertising expense 21,200 Cash 15,000 Owner's capital (1/1/16) 104,000 Owner's drawings 11,000 Depreciation expense 12,000 Insurance expense 3,800 Note payable, due 6/30/17 72,000 Prepaid insurance (12-month policy) 7,200 Rent expense 16,000 Salaries and wages expense 32,000 Service revenue 135,000 Supplies 5,000 Supplies expense 6,000 Equipment 210,000 The current assets should be listed on Freight Service's balance sheet in the following order:

A post-closing trial balance is prepared

On December 31 2016 the adjusted trial balance of the Yellin Personnel Agency shows the following selected data: Accounts Receivable $8000 Service Revenue $60000 Interest Expense $10500 Interest Payable $3500 Utilities Expense $4800 Accounts Payable $2700 Analysis indicates that adjusting entries were made for (a) $8000 of service revenue earned but not billed (b) $3500 of accrued but unpaid interest and (c) $2700 of utilities expense accrued but not paid. Instructions (a) Prepare the closing entries at December 31 2016. (b) Prepare the reversing entries on January 1 2017. (c) Enter the adjusted trial balance data in T-accounts. Post the entries in (a) and (b) and rule and balance the accounts. (d) Prepare the entries to record (1) the collection of the accrued revenue on January 8 (2) payment of the utility bill on January 10 and (3) payment of all the interest due ($4000) on January 15. (e) Post the entries in (d) to the temporary accounts. (f) What is the interest expense for the month of January 2017?

If a worksheet is used financial statements can be prepared before adjusting entries are journalized.

Intangible assets include each of the following except

You have recently started to work for Thom Hanks manufacturers of cemetery markers and monuments. During your first month at work you inadvertently recorded as revenue about $6000 of prepayments from Ledger Company. The financial statements had been released within the company when you discovered your error. The month-end closing had not been completed however and you were able to correct the accounts without incident. Required: Prepare a short note to accompany the re-released financial statements explaining the mistake.

The amounts appearing on an income statement should agree with the amounts appearing on the post-closing trial balance.

Closing the drawings account to Owner's Capital is not necessary if net income is greater than owner's drawings during the period.

The income statement for the year 2016 of Bugati Co. contains the following information: $\begin{array}{lr}\text { Revenues } &&\$73,000 \\\text { Expenses: } & \\\text { Salaries and Wages Expense } & \$ 43,000 \\\text { Rent Expense } &12,000 \\\text { Advertising Expense } & 11,000 \\\text { Supplies Expense } &6,000 \\\text { Utilities Expense }& 3,500\\\text { Insurance Expense }&4,000 \\\quad \text { Total expenses } &&79,500 \\\text { Net income (loss)} &&\$(6,500)\end{array}$ The entry to close Income Summary to Owner's Capital includes

The balance of the depreciation expense account will appear in the income statement debit column of a worksheet.