To do list:

E4-2 (EXERCISE 4-2)

E4-3 (EXERCISE 4-3)

E4-7(EXERCISE 4-7)

E4-11 (EXERCISE 4-11)

Problem 4-1B

Attached are the working papers. Please fill that out.

Attached is CH4 problems. Please follow along with the assignment there.

Some of the assignment was answered so there is no need to check those over.

Thank you!

ACC-201 (Financial Accounting) Working Papers - Chapter 04 BRIEF EXERCISE 4-2 KEO Company Worksheet Trial Balance Dr Prepaid Insurance Service Revenue Sal. & Wage Exp Insurance Expense Accts Receivable Sal. & Wage Paybl Cr Adjustments Dr 3,000 (a) 1,300 61,000 25,000 Cr Adjusted Trial Balance Dr Dr 62,100 (c) 800 25,800 (b) 1,100 1,100 (c) 800 Balance Sheet Dr Cr 1,700 62,100 25,800 800 1,300 Cr PPD INS (Asset) on the BAL SHT. 1,700 (b) 1,100 (a) 1,300 Cr Income Statement ACC REC (Asset) on the BAL SHT. REV and EXP on the INC ST only. Not on BAL SHT 1,100 1,300 800 A \"worksheet\" is NOT a financial statement ... WHY? Because it is not given to those outside the company. IT IS NOT public knowledge. To complete the worksheet enter data for journal entries into the 2 \"adjustment\" columns. The debit colum should = the credit column. 1st adjustment is to the 3,000 in Prepaid Insurance. Part of the $3,000 was \"used up\" but has not been entered into the accounting records. We need to figure out what the journal entry will be (hence this worksheet). Text says $1,300 \"expiored\" (means it is used up). Therefore, we need to increase (debit) INSURANCE EXP and credit (decrease) PREPAID INSURANCE. 2nd adjustment is to the 61,000 in Revenue. Text says an additional 1,100 was billed but not yet collected. We want to increase ACCT REC (since it is uncollected meaning no cash yet received). To increase the asset ACC REC we debit. The credit is to increase SERVICE REVENUE by the 1,100. 3rd adjustment is for salaries that I owe but they are not yet due to be paid (definition of accrued is owed, not yet paid). (Example: if you worked yesterday - your company has \"accrued salary or wages\" of what they owe you from yesterday. You will get the money on your next paycheck.). The 800 was \"used up\" since the employees already worked the hours so I enter an increase (debit) SAL & WAGES EXP. The credit will increase what I owe SAL & WAGES PAYBL. TOTAL the adjustment columns to make sure the amounts are equal (they \"balance\"). Then, in the \"Adjusted Trial Balance\" columns enter the result of the 4 columns to there left to EITHER the \"Adj T.B.\" debit OR credit column ... (Trial Balance \"Dr\" + Trial Balance \"CR\" + Adjustments \"DR\" + Adjustments \"CR\"). Adjusted Trial Balance columns calculations: PREPAID INS ... TB has a debit of 3,000 to be combined with a credit of 1,300 (3,000-1,300 = 1,700 DR or CR?). SER REVENUE: TB has a credit of 61,000 combined with a credit of 1,100 (61,000 + 1,100 = 62,100 DR or CR?). SAL WAGE EXP: TB has a debit of 25,000 combined with a debit of 800 (25,000 + 800 = 25,800 DR or CR?). INS EXP: TB has zero combined with the debit (from 1 st adj) of 1,300 ( 0 + 1,300 = 1,300 DR or CR?). ACC REC: TB has zero combined with the debit of 1,100 (from 2 nd adj) (0 + 1,100 = 1,100 DR or CR?). SAL WAGE PAYBL: TB is zero combined with credit of 800 (3 rd adj) (0 + 800 = 800 DR or CR?). TOTAL the adjusted Trial Balance columns to make sure they balance (are equal). To complete the worksheet TRANSFER (do not add or subtract) the amounts from the debit OR credit \"Adjusted Trial Balance\" column to EITHER \"Dr\" or \"Cr\" Income Statenment column OR the \"Dr\" or \"Cr\" Balance Sheet column ... (depending on which statement the account appears ... Remember: Rev & Exp on Income Statement ... Everything else is on the Balance sheet) ... (each account total is in ONE of the 4 financial statement columns). Notice that the debit column of the Income Statement does NOT equal the credit column of the Income Statement ... KNOW WHY? (IF only REV and EXP amounts are on the INC ST how much profit or loss would you have if your REV = EXP?... None, Nada, Zip, Break-even, Sucks. (The same thing applies to the 2 Balance Sheet columns because a profit will increase equity while a loss will decrease it.) So these last 4 columns of the worksheet will almost never equal each other. BRIEF EXERCISE 4-3 Income Statement Account Accumulated Depreciation Depreciation Expense Common Stock Dividends Service Revenue Supplies Accounts Payable Dr. Cr. Balance Sheet Dr. X X X X BRIEF EXERCISE 4-4 Accounts Name Dec 31 Debit Service Reveneue Income Summary 47,000 Inome Summary Salaries & Wages Expense Supplies Expense 32,000 Income Summary Retained Earnings Retained Earnings Dividends Credit 47,000 27,000 5,000 15,000 15,000 2,000 2,000 Cr. X X X BRIEF EXERCISE 4-8 The proper sequencing of the required steps in the accounting cycle is as follows: 8 Journalize and post closing entries. 4 Prepare a trial balance. 3 Post to ledger accounts. 6 Prepare an adjusted trial balance. 9 Prepare a post-closing trial balance. 7 Prepare financial statements. 2 Journalize the transactions. 5 Journalize and post adjusting entries. 1 Analyze business transactions BRIEF EXERCISE 4-11 CL CA PPE PPE CA IA Accounts payable Accounts receivable Accum. depreciationbuildings Buildings Cash Copyrights CL LTI PPE CA IA CA Income taxes payable Debt investments (long-term) Land Inventory Patents Supplies Remember that the ADJ. T.B. amounts (below) will go into EITHER the INC ST columns OR the BAL SHT columns ... NOT BOTH. Make sure that if the ADJ. T.B. amount is a debit it goes into the INC ST OR BAL SHT debit column. Same thing for a credit amount, into INC ST OR BAL SHT credit column. EXERCISE 4-2 Adjusted Trial Balance Dr Cash Accounts Receivable Prepaid Rent Equipment Accum Deprec - Equip Notes Payable Accounts Payable Common Stock Retained Eanrings Dividends Service Revenue Salaries & Wage Expense Rent Expense Depreciation Expense Interest Expense Interest Payable Column Totals 7,442 7,840 2,280 23,000 3,000 9,840 760 600 57 54,819 Cr 4,800 5,700 5,672 22,000 4,000 12,590 54,819 Income Statement Dr Cr Balance Sheet Dr Cr Net Income Column Totals 1,333 12,590 43,562 1,333 43,562 The 1,333 is \"plugged into\" the INC ST \"Net Income\" debit column. WHY? Because REVENUES were greater than total EXPENSES ... which means I had a profit. A debit amount is need to make the INC ST columns balance. (With a loss, EXP are bigger than REV so the amount would be in the credit column to make things balance). Basically I am just \"pluggin in\" the number to make the two columns equal. BUT, that \"plug-in\" amount is the profit or loss ... depending on if it is in the debit column (since REV were larger than EXP meaning a profit) or the credit column (since EXP were larger than REV meaning a loss). The nice part is that I don't have to \"know\" that ... I just \"plug-in\" the amount in the columns where it is needed to make the 2 INC ST columns equal (balance). So WHY is the 1,333 \"Net Income\" in the BAL SHT credit column? Think back. What does a credit do to CAPITAL (also called equity)? A credit INCRESASES Capital (equity). What does a profit do for a business? Does a profit increase or decrease your equity (Capital) in the business? A profit INCREASES your equity hence the credit amount. (If you had a loss it would have decreased your equity ... remember that Capital (equity) is decreased by a debit) In Ex 4-3 (below) you are \"copying\" amounts from the Ex 4-2 worksheet (above). For the INC ST (below) you copy the amounts from the (above) INC ST worksheet columns. Same thing for the BAL SHT. EXERCISE 4-3 Revenues: Albanese Company Income Statement For the Month Ended April 30, 2014 Expenses: Total Expenses Net Income 1,333 Albanese Company Retained Earnings Statement For the Month Ended April 30, 2014 Retained Earnings, April 1 ADD: Net Income LESS: Dividends Retained Earnings, April 30 4,000 1,333 5,333 3,000 2,333 Albanese Company Balance Sheet April 30, 2014 Current Assets Total Current Assets Property Plant & Equipment Total Assets Liabilities & Stockholders Equity Liabilities: 35,762 Total Current Liabilities Stockholders Equity Total Stockholders Equity Total Liabilities & Stockholders Equity 35,762 In case you have not yet figured it out, it is called a \"Balance Sheet\" because it presents the \"balances\" of the Asset = Liability + Owners Equity accounts ... AND ... the totals MUST equal (as in \"Balance\"). If Assets do NOT = Liabilities + Owners Equity ... then something is WRONG ! EXERCISE 4-7 Accounts Name Service Revenue Income Summary Debit Credit Income Summary Salaries & Wages Expense Miscellaneous Expense Supplies Expense Income Summary Retained Earnings Retained Earnings Dividends Notice that a post-closing Trial Balance (means \"after\" the closing) should NOT have any amounts for items that is closed. Since ALL REV and EXP are closed any INC ST account should have a zero balance after closing. If there is a balance - then you did not close ALL of the REV and EXP accounts. IF ANY Revenue, Expense or Withdraw (or Dividend if the business is a corporation) account has a balance - and shows up in the Post-Closing Trial Balance ... then your closing was WRONG (you forgot to close an account). After closing ALL Revenue, Expense and Dividend (Withdraw) accounts should have a ZERO Balance. Should the CAPITAL (Equity) account have a balance or are they closed during the closing process. Think it through. If your CAPITAL (which represents your ownership in the business) has a ZERO balance then your investment in the business is gone ... you are out of business. Given the above - KNOW WHY the \"Accumulated Depreciation\" account correctly still has a balance (hint - on which financial statement does it appear? ). Lanza Company Post-Closing Trial Balance For the Month Ended June 30 Cash Accounts Receivable Supplies Accounts Payable Unearned Revenue Common Stock Retained Earnings 8,096 8,096 During the closing process you do NOT close all accounts - only the Revenue, Expense and Dividend (Withdrawal) accounts are closed - NOT ANY OTHERS ! Closing Entries ALWAYS follow these 4 steps ... in this order: 1. Close ALL Revenue accounts to INCOME SUMMARY (The KEY is knowing \"Revenue\" accounts. Cash, Accounts Receivable are NOT Revenue accounts - they are assets. Unearned Revenue is NOT a revenue account - it is a liability). 2. Close ALL Expense accounts to INCOME SUMMARY. (The Income Summary account now has all of the Revenues (credits to Income Summary) AND all of the Expense accounts (debits to Income Summary). If the REV amount is larger than the EXP amount the company has a Net Profit. If the EXP amount is larger than the REV amount then the company has a NET LOSS (The \"balance\" of the Income Summary account is the companies Profit or Loss) 3. Close the INCOME SUMMARY account to RETAINED EARNINGS (called \"Capital\" in a sole prop.) 4. Close the DIVIDEND account to RETAINED EARNINGS (called \"Capital\" in a sole prop.) EXERCISE 4-11 Accounts Name Debit Credit June 30 Income Summary Apr 30 Income Summary Apr 30 Income Summary Apr 30 Retained Earnings (b) Income Summary June 30 June 30 June 30 EXERCISE 4-15 CL CA CA SE IA CL CA LTI Accounts payable Accounts receivable Cash Common stock Patents Salaries and wages payable Inventory Investments Problem 4-1B (page 151) Accumulated depreciation Buildings Land Long-term debt Supplies Equipment Prepaid expenses (See the blue box below for help in completing this worksheet) Trial Balance Cash Accts Receivable Supplies Equipment Acc Deprec - Equip Accounts Payable PPE PPE PPE LTL CA PPE CA 2,720 2,700 1,500 11,000 1,250 2,500 Sherlock Holmes, P.I., Inc. Worksheet For the Quarter Ended March 31, 2014 Adjusted Trial Adjustments Balance 2,720 2,700 950 550 Income Statement Balance Sheet Unearned Svc Rev Common Stock Dividends Service Revenue Sal & Wage Exp Misc Expense Totals Supplies Expense Deprec Expense Sal & Wages Payble Totals Net Income Totals 550 10,000 1,100 6,300 1,300 280 20,600 20,600 950 1,940 1,940 Complete the worksheet (above) as follows: Adjustment columns: Not every line will have an amount. Only the adjusting entry amounts will go on the appropriate line. For example, the 1st adjustment is a debit (an increase) to SUPPLIES EXP and a credit (a decrease) to SUPPLIES. Adjusted Trial Balance columns: For each line (account name) you combine the four columns to its left and place the resulting \"balance\" in EITHER the debit or the credit column - NOT both columns. For example the SUPPLIES account has a debit of 1,500 and a credit of 950. When I combine those two I get 1,500 - 950 = 550 which is placed in the debit column (of the adjusted trial balance columns) since the debit amount is larger. (If both amounts had been debits I would have added them for a total debit amount of 2,450). Income Statement columns: ONLY for the accounts that appear on an income statement, carry over the amounts in the Adjusted Trial Balance columns to the Income Statement columns (copy them from the Adj TB cols to Inc St cols). The debit columns and debit columns will NOT be equal (the totals in the yellow boxes) UNTIL you \"plug-in\" the difference between them (into the pink box) ... which is the Net Income amount (basically REV - EXP = NET INC) (If the debit amounts (expenses) had been larger than the credit amounts (revenues) you would have a \"minus\" net income (NET LOSS) and the \"plug-in\" number would be in the credit column). Balance Sheet columns: ONLY for those accounts that appear on a Balance Sheet, carry over the amounts in the Adjusted Trial Balance columns to the Balance Sheet columns (copy them from the Adj TB cols to BS cols). Once again, the debit columns and debit columns will NOT be equal (the totals in the yellow boxes) UNTIL you \"plug-in\" the difference between them (into the pink box) ... which is the Net Income amount (basically REV - EXP = NET INC). Note: If there is a profit (positive net income), the \"plug-in\" amount will be a debit in the Income Statement columns and a credit in the Balance Sheet columns. If there is a Net Loss (net income is negative) then the \"plug-in\" will be a credit in the Inc St cols and a debit in the Bal Sht cols) Firmament Roofing Income Statement For the Quarter Ended March 31, 2014 Revenues: Service Revenue Expenses: Salaries & Wage Exp Travel Expense Rent Expense Depreciation Expense Total Expense Net Income 3,300 Firmament Roofing Retained Earnings Statement For the Quarter Ended March 31, 2014 Retained Earnings, Mar 1, 2014 Add Net Income Less Dividends Retained Earnings Mar 31, 2014 Firmament Roofing Balance Sheet March 31, 2014 Assets Current Assets 0 3,300 1,100 2,200 Total Current Assets Property, Plant & Equipment Total Assets Liabilities & Stockholders Equity Current Liabilities: 15,470 Total Current Liabilities Stockholders Equity: Total Stockholders Equity Total Liability & Stockholders Equity Accounts Name Adjusting Entries Mar 31 31 31 15,470 Debit Credit 31 Closing Entries 31 31 31 31 Scanned by CamScanner Scanned by CamScanner Scanned by CamScanner Scanned by CamScanner Scanned by CamScanner Scanned by CamScanner Scanned by CamScanner Scanned by CamScanner Scanned by CamScanner Scanned by CamScanner Scanned by CamScanner Scanned by CamScanner Scanned by CamScanner Scanned by CamScanner Scanned by CamScanner Scanned by CamScanner Scanned by CamScanner Scanned by CamScanner Scanned by CamScanner Scanned by CamScanner Scanned by CamScanner Scanned by CamScanner Scanned by CamScanner Scanned by CamScanner Scanned by CamScanner Scanned by CamScanner Scanned by CamScanner Scanned by CamScanner Scanned by CamScanner Scanned by CamScanner Scanned by CamScanner Scanned by CamScanner Scanned by CamScanner Scanned by CamScanner Scanned by CamScanner Scanned by CamScanner Scanned by CamScanner Scanned by CamScanner Scanned by CamScanner Scanned by CamScanner Scanned by CamScanner Scanned by CamScanner Scanned by CamScanner Scanned by CamScanner Scanned by CamScanner Scanned by CamScanner Scanned by CamScanner Scanned by CamScanner Scanned by CamScanner Scanned by CamScanner Scanned by CamScanner Scanned by CamScanner Scanned by CamScanner Scanned by CamScanner Scanned by CamScanner Scanned by CamScanner