Income Statement

Income Statement

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Brief Exercise 4-6

The income statement for Weeping Willow Golf Club for the month ending July 31 shows Service Revenue $16,400, Salaries and Wages Expense $8,200, Maintenance and Repairs Expense $2,500, and Net Income $5,700.

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Post the entries to the revenue and expense accounts, and complete the closing process for these accounts using the three-column form of account.

Service Revenue
Date	Explanation	Ref	Debit	Credit	Balance
7/31	Balance
7/31	Closing entry
Salaries and Wages Expense
Date	Explanation	Ref	Debit	Credit	Balance
7/31	Balance
7/31	Closing entry
Maintenance and Repairs Expense
Date	Explanation	Ref	Debit	Credit	Balance
7/31	Balance
7/31	Closing entry

Brief Exercise 4-9

At Creighton Company, the following errors were discovered after the transactions had been journalized and posted.

1.	A collection on account from a customer for $870 was recorded as a debit to Cash $870 and a credit to Service Revenue $870.
2.	The purchase of store supplies on account for $1,570 was recorded as a debit to Supplies $1,750 and a credit to Accounts Payable $1,750.

Prepare the correcting entries. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)

No.	Account Titles and Explanation	Debit	Credit
1.

2.

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Brief Exercise 4-11

Match each of the following accounts to its proper balance sheet classification.

Accounts

Balance Sheet Classification

Accounts Payable

Accounts receivable

Accumulated depreciation—buildings

Buildings

Cash

Copyrights

Income taxes payable

Debt investments (long-term)

Land

Inventory

Patents

Supplies

Exercise 4-7

Kay Magill Company had the following adjusted trial balance.

KAY MAGILL COMPANY Adjusted Trial Balance For the Month Ended June 30, 2014
Adjusted Trial Balance
Account Titles	Debit	Credit
Cash	$
Accounts Receivable
Supplies
Accounts Payable	$
Unearned Service Revenue
Owner’s Capital
Owner’s Drawings
Service Revenue
Salaries and Wages Expense
Miscellaneous Expense
Supplies Expense
Salaries and Wages Payable
Total	$	$

Condition gt requires numbers instead of “null” and “0”

Prepare closing entries at June 30, 2014. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)

No.	Account Titles and Explanation	Debit	Credit
1.

(To close revenue account.)
2.



(To close expense accounts)
3.

(To close net income / (loss).)
4.

(To close drawings)

Condition gt requires numbers instead of “null” and “0”

Prepare a post-closing trial balance.

KAY MAGILL COMPANY Post-Closing Trial Balance For the Month Ended June 30, 2014
Debit	Credit
	$	$






Total	$	$

Exercise 4-8

Plevin Company ended its fiscal year on July 31, 2014. The company’s adjusted trial balance as of the end of its fiscal year is as shown below.

PLEVIN COMPANY Adjusted Trial Balance July 31, 2014
No.	Account Titles	Debit	Credit
101	Cash	$
112	Accounts Receivable
157	Equipment
158	Accumulated Depreciation—Equip.	$
201	Accounts Payable
208	Unearned Rent Revenue
301	Owner’s Capital
306	Owner’s Drawings
400	Service Revenue
429	Rent Revenue
711	Depreciation Expense
726	Salaries and Wages Expense
732	Utilities Expense
Total	$	$

Condition gt requires numbers instead of “null” and “0”

Prepare the closing entries. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Date	Account Titles and Explanation	Debit	Credit
July 31


(To close revenue accounts.)
July 31



(To close expense accounts.)
July 31

(To close net income / ( loss).)
July 31

(To close drawings.)

Condition gt requires numbers instead of “null” and “0”

Post to Owner’s Capital and Income Summary accounts. (Post entries in the order of journal entries presented in the previous part.)

Owner’s Capital	No. 301
Date	Explanation	Ref	Debit	Credit	Balance
July 31

J15
July 31

J15
July 31

J15
Income Summary	No. 350
Date	Explanation	Ref	Debit	Credit	Balance
July 31

J15
July 31

J15
July 31

J15

Condition gt requires numbers instead of “null” and “0”

Prepare a post-closing trial balance at July 31.

PLEVIN COMPANY Post-Closing Trial Balance July 31, 2014
Debit	Credit
	$	$






Total	$	$

Exercise 4-10

Condition gt requires numbers instead of “null” and “0”

Janis Engle has prepared the following list of statements about the accounting cycle.

Identify each statement as true or false.

“Journalize the transactions” is the first step in the accounting cycle.


2.	Reversing entries are a required step in the accounting cycle.


3.	Correcting entries do not have to be part of the accounting cycle.


4.	If a worksheet is prepared, some steps of the accounting cycle are incorporated into the worksheet.


5.	The accounting cycle begins with the analysis of business transactions and ends with the preparation of a post-closing trial balance.


6.	All steps of the accounting cycle occur daily during the accounting period.


7.	The step of “post to the ledger accounts” occurs before the step of “journalize the transactions.”


8.	Closing entries must be prepared before financial statements can be prepared.

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