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Income Statement

Income Statement

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   Exercise 9-5 (Part Level Submission) Presented below is information related to Grouper Enterprises. Jan. 31 Feb. 28 Mar. 31 Apr. 30 Inventory at cost $16,500 $16,610 $18,700 $15,400 Inventory at LCNRV 15,950 13,860 17,160 14,630 Purchases for the month 18,700 26,400 29,150 Sales for the month 31,900 38,500 44,000 Collapse question part (a) Partially correct answer. Your answer is partially correct. Try again. From the information, prepare (as far as the data permit) monthly income statements in columnar form for February, March, and April. The inventory is to be shown in the statement at cost; the gain or loss due to market fluctuations is to be shown separately (using a valuation account). (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).)

Income Statement

Income Statement

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The following income statement and information about changes in noncash current assets and current liabilities are reported.

 

SONAD COMPANY

Income Statement

For Year Ended December 31, 2013

Sales                          $ 2,445,000

Cost of goods sold  $1,198,050

Gross profit             $1,246,950

Operating expenses                                                                                        

Salaries expense $334,965

Depreciation expense $58,680

Rent expense $66,015

Amortization expenses–Patent $7,335

Utilities expense $26,895     $493,890

$753,060

Gain on sale of equipment $9,780

Net income                         $ 762,840

Changes in current asset and current liability accounts for the year that relate to operations follow.

Accounts receivable      $45,400 increase

Accounts payable            $8,050   decrease

Merchandise inventory                 $37,250 increase

Salaries payable                $3,400   decrease

 

Required: Prepare only the cash flows from operating activities section of the statement of cash flows using the indirect method. (Amounts to be deducted should be indicated with a minus sign.)

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.

SHOW LIST OF ACCOUNTS

SHOW ANSWER

LINK TO TEXT

 

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 http://edugen.wiley.com/edugen/art2/common/pixel.gif http://edugen.wiley.com/edugen/art2/common/pixel.gif http://edugen.wiley.com/edugen/art2/common/pixel.gif
7/31 Closing entry http://edugen.wiley.com/edugen/art2/common/pixel.gif http://edugen.wiley.com/edugen/art2/common/pixel.gif http://edugen.wiley.com/edugen/art2/common/pixel.gif
Salaries and Wages Expense
Date Explanation Ref Debit Credit Balance
7/31 Balance http://edugen.wiley.com/edugen/art2/common/pixel.gif http://edugen.wiley.com/edugen/art2/common/pixel.gif http://edugen.wiley.com/edugen/art2/common/pixel.gif
7/31 Closing entry http://edugen.wiley.com/edugen/art2/common/pixel.gif http://edugen.wiley.com/edugen/art2/common/pixel.gif http://edugen.wiley.com/edugen/art2/common/pixel.gif
Maintenance and Repairs Expense
Date Explanation Ref Debit Credit Balance
7/31 Balance http://edugen.wiley.com/edugen/art2/common/pixel.gif http://edugen.wiley.com/edugen/art2/common/pixel.gif http://edugen.wiley.com/edugen/art2/common/pixel.gif
7/31 Closing entry http://edugen.wiley.com/edugen/art2/common/pixel.gif http://edugen.wiley.com/edugen/art2/common/pixel.gif http://edugen.wiley.com/edugen/art2/common/pixel.gif

 

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. http://edugen.wiley.com/edugen/art2/common/pixel.gif http://edugen.wiley.com/edugen/art2/common/pixel.gif http://edugen.wiley.com/edugen/art2/common/pixel.gif
http://edugen.wiley.com/edugen/art2/common/pixel.gif http://edugen.wiley.com/edugen/art2/common/pixel.gif http://edugen.wiley.com/edugen/art2/common/pixel.gif
2. http://edugen.wiley.com/edugen/art2/common/pixel.gif http://edugen.wiley.com/edugen/art2/common/pixel.gif http://edugen.wiley.com/edugen/art2/common/pixel.gif
http://edugen.wiley.com/edugen/art2/common/pixel.gif http://edugen.wiley.com/edugen/art2/common/pixel.gif http://edugen.wiley.com/edugen/art2/common/pixel.gif

 

SHOW LIST OF ACCOUNTS

SHOW SOLUTION

TIMEOUT ALERT

 

Brief Exercise 4-11

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

Accounts Balance Sheet Classification
Accounts Payable http://edugen.wiley.com/edugen/art2/common/pixel.gif
Accounts receivable http://edugen.wiley.com/edugen/art2/common/pixel.gif
Accumulated depreciation—buildings http://edugen.wiley.com/edugen/art2/common/pixel.gif
Buildings http://edugen.wiley.com/edugen/art2/common/pixel.gif
Cash http://edugen.wiley.com/edugen/art2/common/pixel.gif
Copyrights http://edugen.wiley.com/edugen/art2/common/pixel.gif
Income taxes payable http://edugen.wiley.com/edugen/art2/common/pixel.gif
Debt investments (long-term) http://edugen.wiley.com/edugen/art2/common/pixel.gif
Land http://edugen.wiley.com/edugen/art2/common/pixel.gif
Inventory http://edugen.wiley.com/edugen/art2/common/pixel.gif
Patents http://edugen.wiley.com/edugen/art2/common/pixel.gif
Supplies http://edugen.wiley.com/edugen/art2/common/pixel.gif
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. http://edugen.wiley.com/edugen/art2/common/pixel.gif http://edugen.wiley.com/edugen/art2/common/pixel.gif http://edugen.wiley.com/edugen/art2/common/pixel.gif
http://edugen.wiley.com/edugen/art2/common/pixel.gif http://edugen.wiley.com/edugen/art2/common/pixel.gif http://edugen.wiley.com/edugen/art2/common/pixel.gif
(To close revenue account.)
2. http://edugen.wiley.com/edugen/art2/common/pixel.gif http://edugen.wiley.com/edugen/art2/common/pixel.gif http://edugen.wiley.com/edugen/art2/common/pixel.gif
http://edugen.wiley.com/edugen/art2/common/pixel.gif http://edugen.wiley.com/edugen/art2/common/pixel.gif http://edugen.wiley.com/edugen/art2/common/pixel.gif
http://edugen.wiley.com/edugen/art2/common/pixel.gif http://edugen.wiley.com/edugen/art2/common/pixel.gif http://edugen.wiley.com/edugen/art2/common/pixel.gif
http://edugen.wiley.com/edugen/art2/common/pixel.gif http://edugen.wiley.com/edugen/art2/common/pixel.gif http://edugen.wiley.com/edugen/art2/common/pixel.gif
(To close expense accounts)
3. http://edugen.wiley.com/edugen/art2/common/pixel.gif http://edugen.wiley.com/edugen/art2/common/pixel.gif http://edugen.wiley.com/edugen/art2/common/pixel.gif
http://edugen.wiley.com/edugen/art2/common/pixel.gif http://edugen.wiley.com/edugen/art2/common/pixel.gif http://edugen.wiley.com/edugen/art2/common/pixel.gif
(To close net income / (loss).)
4. http://edugen.wiley.com/edugen/art2/common/pixel.gif http://edugen.wiley.com/edugen/art2/common/pixel.gif http://edugen.wiley.com/edugen/art2/common/pixel.gif
http://edugen.wiley.com/edugen/art2/common/pixel.gif http://edugen.wiley.com/edugen/art2/common/pixel.gif http://edugen.wiley.com/edugen/art2/common/pixel.gif
(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
http://edugen.wiley.com/edugen/art2/common/pixel.gif $http://edugen.wiley.com/edugen/art2/common/pixel.gif $http://edugen.wiley.com/edugen/art2/common/pixel.gif
http://edugen.wiley.com/edugen/art2/common/pixel.gif http://edugen.wiley.com/edugen/art2/common/pixel.gif http://edugen.wiley.com/edugen/art2/common/pixel.gif
http://edugen.wiley.com/edugen/art2/common/pixel.gif http://edugen.wiley.com/edugen/art2/common/pixel.gif http://edugen.wiley.com/edugen/art2/common/pixel.gif
http://edugen.wiley.com/edugen/art2/common/pixel.gif http://edugen.wiley.com/edugen/art2/common/pixel.gif http://edugen.wiley.com/edugen/art2/common/pixel.gif
http://edugen.wiley.com/edugen/art2/common/pixel.gif http://edugen.wiley.com/edugen/art2/common/pixel.gif http://edugen.wiley.com/edugen/art2/common/pixel.gif
http://edugen.wiley.com/edugen/art2/common/pixel.gif http://edugen.wiley.com/edugen/art2/common/pixel.gif http://edugen.wiley.com/edugen/art2/common/pixel.gif
http://edugen.wiley.com/edugen/art2/common/pixel.gif http://edugen.wiley.com/edugen/art2/common/pixel.gif http://edugen.wiley.com/edugen/art2/common/pixel.gif
 Total $http://edugen.wiley.com/edugen/art2/common/pixel.gif $http://edugen.wiley.com/edugen/art2/common/pixel.gif
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 http://edugen.wiley.com/edugen/art2/common/pixel.gif http://edugen.wiley.com/edugen/art2/common/pixel.gif http://edugen.wiley.com/edugen/art2/common/pixel.gif
http://edugen.wiley.com/edugen/art2/common/pixel.gif http://edugen.wiley.com/edugen/art2/common/pixel.gif http://edugen.wiley.com/edugen/art2/common/pixel.gif
http://edugen.wiley.com/edugen/art2/common/pixel.gif http://edugen.wiley.com/edugen/art2/common/pixel.gif http://edugen.wiley.com/edugen/art2/common/pixel.gif
(To close revenue accounts.)
July 31 http://edugen.wiley.com/edugen/art2/common/pixel.gif http://edugen.wiley.com/edugen/art2/common/pixel.gif http://edugen.wiley.com/edugen/art2/common/pixel.gif
http://edugen.wiley.com/edugen/art2/common/pixel.gif http://edugen.wiley.com/edugen/art2/common/pixel.gif http://edugen.wiley.com/edugen/art2/common/pixel.gif
http://edugen.wiley.com/edugen/art2/common/pixel.gif http://edugen.wiley.com/edugen/art2/common/pixel.gif http://edugen.wiley.com/edugen/art2/common/pixel.gif
http://edugen.wiley.com/edugen/art2/common/pixel.gif http://edugen.wiley.com/edugen/art2/common/pixel.gif http://edugen.wiley.com/edugen/art2/common/pixel.gif
(To close expense accounts.)
July 31 http://edugen.wiley.com/edugen/art2/common/pixel.gif http://edugen.wiley.com/edugen/art2/common/pixel.gif http://edugen.wiley.com/edugen/art2/common/pixel.gif
http://edugen.wiley.com/edugen/art2/common/pixel.gif http://edugen.wiley.com/edugen/art2/common/pixel.gif http://edugen.wiley.com/edugen/art2/common/pixel.gif
(To close net income / ( loss).)
July 31 http://edugen.wiley.com/edugen/art2/common/pixel.gif http://edugen.wiley.com/edugen/art2/common/pixel.gif http://edugen.wiley.com/edugen/art2/common/pixel.gif
http://edugen.wiley.com/edugen/art2/common/pixel.gif http://edugen.wiley.com/edugen/art2/common/pixel.gif http://edugen.wiley.com/edugen/art2/common/pixel.gif
(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 http://edugen.wiley.com/edugen/art2/common/pixel.gif

 

J15 http://edugen.wiley.com/edugen/art2/common/pixel.gif http://edugen.wiley.com/edugen/art2/common/pixel.gif http://edugen.wiley.com/edugen/art2/common/pixel.gif
July 31 http://edugen.wiley.com/edugen/art2/common/pixel.gif

 

J15 http://edugen.wiley.com/edugen/art2/common/pixel.gif http://edugen.wiley.com/edugen/art2/common/pixel.gif http://edugen.wiley.com/edugen/art2/common/pixel.gif
July 31 http://edugen.wiley.com/edugen/art2/common/pixel.gif

 

J15 http://edugen.wiley.com/edugen/art2/common/pixel.gif http://edugen.wiley.com/edugen/art2/common/pixel.gif http://edugen.wiley.com/edugen/art2/common/pixel.gif
Income Summary No. 350
Date Explanation Ref Debit Credit Balance
July 31 http://edugen.wiley.com/edugen/art2/common/pixel.gif

 

J15 http://edugen.wiley.com/edugen/art2/common/pixel.gif http://edugen.wiley.com/edugen/art2/common/pixel.gif http://edugen.wiley.com/edugen/art2/common/pixel.gif
July 31 http://edugen.wiley.com/edugen/art2/common/pixel.gif

 

J15 http://edugen.wiley.com/edugen/art2/common/pixel.gif http://edugen.wiley.com/edugen/art2/common/pixel.gif http://edugen.wiley.com/edugen/art2/common/pixel.gif
July 31 http://edugen.wiley.com/edugen/art2/common/pixel.gif

 

J15 http://edugen.wiley.com/edugen/art2/common/pixel.gif http://edugen.wiley.com/edugen/art2/common/pixel.gif http://edugen.wiley.com/edugen/art2/common/pixel.gif
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
http://edugen.wiley.com/edugen/art2/common/pixel.gif $http://edugen.wiley.com/edugen/art2/common/pixel.gif $http://edugen.wiley.com/edugen/art2/common/pixel.gif
http://edugen.wiley.com/edugen/art2/common/pixel.gif http://edugen.wiley.com/edugen/art2/common/pixel.gif http://edugen.wiley.com/edugen/art2/common/pixel.gif
http://edugen.wiley.com/edugen/art2/common/pixel.gif http://edugen.wiley.com/edugen/art2/common/pixel.gif http://edugen.wiley.com/edugen/art2/common/pixel.gif
http://edugen.wiley.com/edugen/art2/common/pixel.gif http://edugen.wiley.com/edugen/art2/common/pixel.gif http://edugen.wiley.com/edugen/art2/common/pixel.gif
http://edugen.wiley.com/edugen/art2/common/pixel.gif http://edugen.wiley.com/edugen/art2/common/pixel.gif http://edugen.wiley.com/edugen/art2/common/pixel.gif
http://edugen.wiley.com/edugen/art2/common/pixel.gif http://edugen.wiley.com/edugen/art2/common/pixel.gif http://edugen.wiley.com/edugen/art2/common/pixel.gif
http://edugen.wiley.com/edugen/art2/common/pixel.gif http://edugen.wiley.com/edugen/art2/common/pixel.gif http://edugen.wiley.com/edugen/art2/common/pixel.gif
 Total $http://edugen.wiley.com/edugen/art2/common/pixel.gif $http://edugen.wiley.com/edugen/art2/common/pixel.gif
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.

1. “Journalize the transactions” is the first step in the accounting cycle. http://edugen.wiley.com/edugen/art2/common/pixel.gif

 

2. Reversing entries are a required step in the accounting cycle. http://edugen.wiley.com/edugen/art2/common/pixel.gif

 

3. Correcting entries do not have to be part of the accounting cycle. http://edugen.wiley.com/edugen/art2/common/pixel.gif

 

4. If a worksheet is prepared, some steps of the accounting cycle are incorporated into the worksheet. http://edugen.wiley.com/edugen/art2/common/pixel.gif

 

5. The accounting cycle begins with the analysis of business transactions and ends with the preparation of a post-closing trial balance. http://edugen.wiley.com/edugen/art2/common/pixel.gif

 

6. All steps of the accounting cycle occur daily during the accounting period. http://edugen.wiley.com/edugen/art2/common/pixel.gif

 

7. The step of “post to the ledger accounts” occurs before the step of “journalize the transactions.” http://edugen.wiley.com/edugen/art2/common/pixel.gif

 

8. Closing entries must be prepared before financial statements can be prepared. http://edugen.wiley.com/edugen/art2/common/pixel.gif