Copyright © 2014 Pearson Education, Inc. publishing as Prentice Hall

Chapter 4

Demonstration Problems

Completing the Accounting Cycle

4-1

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The unadjusted trial balance of Elliot Wilson at December 31, 2014, and the data for the adjustments follow:

P4-30D

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P4-30DELLIOT WILSON

Unadjusted Trial BalanceDecember 31, 2014

Account Title Balance  Debit CreditCash $18,000  Accounts Receivable 20,000  Prepaid Rent 5,000  Office Supplies 3,000  Equipment 42,000  Accumulated Depreciation—Equipment   $6,500 Accounts Payable   15,000 Salaries PayableUnearned Revenue   12,000 Common Stock   30,000 Retained Earnings 10,000Dividends 7,100  Service Revenue   27,100 Salaries Expense 5,500  Rent ExpenseDepreciation Expense—EquipmentSupplies ExpenseTotal $100,600 $100,600      

Copyright © 2014 Pearson Education, Inc. publishing as Prentice Hall 4-4

P4-30D

Adjustment Data:

a. Unearned Revenue still unearned at December 31, $4,000.

b. Prepaid Rent still in force at December 31, $3,000.

c. Office Supplies used, $2,000.

d. Depreciation, $500.

e. Accrued Salaries Expense at December 31, $900.

Copyright © 2014 Pearson Education, Inc. publishing as Prentice Hall 4-5

P4-30D

Requirements

1. Open the T-accounts using the balances in the unadjusted trial balance.

2. Prepare the adjusting entries and post to the accounts.

3. Prepare an adjusted trial balance.

4. Complete the worksheet for the year ended December 31, 2014.

5. Prepare the income statement, the statement of retained earnings, and the classified balance sheet in report form.

6. Prepare the closing entries and post to the accounts.

7. Prepare a post-closing trial balance.

8. Calculate the current ratio for the company.

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P4-30D—Req. 1

Cash

Bal. 18,000

Accounts Receivable

Bal. 20,000

Prepaid Rent

Bal. 5,000

Office Supplies

Bal. 3,000

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Equipment

Bal. 42,000

Accumulated Depreciation—Equip

6,500 Bal.

Accounts Payable

15,000 Bal.

Salaries Payable

0 Bal.

P4-30D—Req. 1

Copyright © 2014 Pearson Education, Inc. publishing as Prentice Hall 4-8

Unearned Revenue

12,000 Bal.

Common Stock

30,000 Bal.

Retained Earnings

10,000 Bal.

Dividends

Bal. 7,100

P4-30D—Req. 1

Copyright © 2014 Pearson Education, Inc. publishing as Prentice Hall 4-9

Income Summary Service Revenue

27,100 Bal.

Salaries Expense

Bal. 5,500

Rent Expense

Bal. 0

P4-30D—Req. 1

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Depreciation Expense—Equip

Bal. 0

Supplies Expense

Bal. 0

P4-30D—Req. 1

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a. Unearned Revenue still unearned at December 31, $4,000.

Date Accounts and Explanation Debit Credit

Dec. 31 Unearned Revenue 8,000

Service Revenue 8,000

To adjust revenue earned.

Unearned Revenue

12,000 Bal.

Adj. 8,000

Service Revenue

27,100 Bal.

8,000 Adj.

35,100 Bal.

P4-30D—Req. 2

Copyright © 2014 Pearson Education, Inc. publishing as Prentice Hall 4-12

b. Prepaid Rent still in force at December 31, $3,000.

Date Accounts and Explanation Debit Credit

Dec. 31 Rent Expense 2,000

Prepaid Rent 2,000

To adjust rent expense.

Rent Expense

Bal. 0

Adj. 2,000

Bal. 2,000

Prepaid Rent

Bal. 5,000 2,000 Adj.

Bal. 3,000

P4-30D—Req. 2

Copyright © 2014 Pearson Education, Inc. publishing as Prentice Hall 4-13

c. Office Supplies used, $2,000.

Date Accounts and Explanation Debit Credit

Dec. 31 Supplies Expense 2,000

Office Supplies 2,000

To adjust office supplies.

Supplies Expense

Bal. 0

Adj. 2,000

Bal. 2,000

Office Supplies

Bal. 3,000 2,000 Adj.

Bal. 1,000

P4-30D—Req. 2

Copyright © 2014 Pearson Education, Inc. publishing as Prentice Hall 4-14

d. Depreciation, $500.

Date Accounts and Explanation Debit Credit

Dec. 31 Depreciation Expense—Equipment 500

Accumulated Depreciation—Equipment

500

To adjust depreciation.

Depreciation Expense—Equip.

Bal. 0

Adj. 500

Bal. 500

Accumulated Depreciation—Equip

6,500 Bal.

500 Adj.

7,000 Bal.

P4-30D—Req. 2

Copyright © 2014 Pearson Education, Inc. publishing as Prentice Hall 4-15

e. Accrued Salaries Expense at December 31, $900.

Date Accounts and Explanation Debit Credit

Dec. 31 Salaries Expense 900

Salaries Payable 900

To adjust accrued salaries.

Salaries Expense

Bal. 5,500

Adj. 900

Bal. 6,400

Salaries Payable

0 Bal.

900 Adj.

900 Bal.

P4-30D—Req. 2

Copyright © 2014 Pearson Education, Inc. publishing as Prentice Hall 4-16

ELLIOT WILSONAdjusted Trial Balance

December 31, 2014Account Title Balance  Debit CreditCash $18,000  Accounts Receivable 20,000  Prepaid Rent 3,000  Office Supplies 1,000  Equipment 42,000  Accumulated Depreciation—Equipment   $ 7,000Accounts Payable   15,000 Salaries Payable   900Unearned Revenue   4,000 Common Stock   30,000 Retained Earnings 10,000Dividends 7,100  Service Revenue   35,100Salaries Expense 6,400  Rent Expense 2,000  Depreciation Expense—Equipment 500  Supplies Expense 2,000  Total $102,000 $102,000      

P4-30D—Req. 3

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P4-30D—Req. 4

ELLIOT WILSONWorksheet

December 31, 2014

Account NamesUnadjusted Trial

Balance AdjustmentsAdjusted Trial

Balance             

  Debit Credit Debit Credit Debit Credit Cash $18,000       $18,000   Accounts Receivable 20,000       20,000   Prepaid Rent 5,000     $2,000 3,000   Office Supplies 3,000     2,000 1,000   Equipment 42,000       42,000   Acc. Depreciation   $6,500   500   $7,000 Accounts Payable   15,000       15,000 Salaries Payable   0   900   900 Unearned Revenue   12,000 $8,000   4,000 Common Stock   30,000       30,000 Retained Earnings 10,000 10,000 Dividends 7,100       7,100   Service Revenue   27,100   8,000   35,100 Salaries Expense 5,500   900   6,400   Rent Expense 0   2,000   2,000   Dep. Expense 0   500   500   Supplies Expense 0   2,000   2,000    Total $100,600 $100,600 $13,400 $13,400 $102,000 $102,000  

Copyright © 2014 Pearson Education, Inc. publishing as Prentice Hall 4-18

P4-30D—Req. 4

ELLIOT WILSONWorksheet

December 31, 2014

Account NamesUnadjusted Trial

Balance AdjustmentsAdjusted Trial

Balance Income Statement                 

  Debit Credit Debit Credit Debit Credit Debit Credit Cash $18,000       $18,000     Accounts Receivable 20,000       20,000     Prepaid Rent 5,000     $2,000 3,000     Office Supplies 3,000     2,000 1,000     Equipment 42,000       42,000     Acc. Depreciation   $6,500   500   $7,000   Accounts Payable   15,000       15,000   Salaries Payable   0   900   900   Unearned Revenue   12,000 $8,000   4,000   Common Stock   30,000       30,000   Retained Earnings 10,000 10,000 Dividends 7,100       7,100     Service Revenue   27,100   8,000   35,100 $35,100 Salaries Expense 5,500   900   6,400   $6,400   Rent Expense 0   2,000   2,000   2,000   Dep. Expense 0   500   500   500   Supplies Expense 0   2,000   2,000   2,000    Total $100,600 $100,600 $13,400 $13,400 $102,000 $102,000 $10,900 $35,100  Net Income 24,200    Total $35,100 $35,100

Copyright © 2014 Pearson Education, Inc. publishing as Prentice Hall 4-19

P4-30D—Req. 4

ELLIOT WILSONWorksheet

December 31, 2014

Account NamesUnadjusted Trial

Balance AdjustmentsAdjusted Trial

Balance Income Statement Balance Sheet                     

  Debit Credit Debit Credit Debit Credit Debit Credit Debit Credit Cash $18,000       $18,000     $18,000   Accounts Receivable 20,000       20,000     20,000   Prepaid Rent 5,000     $2,000 3,000     3,000   Office Supplies 3,000     2,000 1,000     1,000   Equipment 42,000       42,000     42,000   Acc. Depreciation   $6,500   500   $7,000   $7,000 Accounts Payable   15,000       15,000   15,000 Salaries Payable   0   900   900     900 Unearned Revenue   12,000 $8,000   4,000     4,000 Common Stock   30,000       30,000     30,000 Retained Earnings 10,000 10,000 10,000 Dividends 7,100       7,100     7,100   Service Revenue   27,100   8,000   35,100 $35,100     Salaries Expense 5,500   900   6,400   $6,400       Rent Expense 0   2,000   2,000   2,000       Dep. Expense 0   500   500   500       Supplies Expense 0   2,000   2,000   2,000        Total $100,600 $100,600 $13,400 $13,400 $102,000 $102,000 $10,900 $35,100 $91,100 $66,900  Net Income 24,200     24,200  Total $35,100 $35,100 $91,100 $91,100

Copyright © 2014 Pearson Education, Inc. publishing as Prentice Hall 4-20

P4-30D—Req. 5

ELLIOT WILSONIncome Statement

Year Ended December 31, 2014Revenues:   Service Revenue    $35,100

Service Revenue $35,100Salaries Expense 6,400Rent Expense 2,000Depreciation Expense—Equipment 500Supplies Expense 2,000

Copyright © 2014 Pearson Education, Inc. publishing as Prentice Hall 4-21

P4-30D—Req. 5

ELLIOT WILSONIncome Statement

Year Ended December 31, 2014Revenues:   Service Revenue    $35,100Expenses:     Salaries Expense $6,400 

Service Revenue $35,100Salaries Expense 6,400Rent Expense 2,000Depreciation Expense—Equipment 500Supplies Expense 2,000

Copyright © 2014 Pearson Education, Inc. publishing as Prentice Hall 4-22

P4-30D—Req. 5

ELLIOT WILSONIncome Statement

Year Ended December 31, 2014Revenues:   Service Revenue    $35,100Expenses:     Salaries Expense $6,400  Rent Expense 2,000 

Service Revenue $35,100Salaries Expense 6,400Rent Expense 2,000Depreciation Expense—Equipment 500Supplies Expense 2,000

Copyright © 2014 Pearson Education, Inc. publishing as Prentice Hall 4-23

P4-30D—Req. 5

ELLIOT WILSONIncome Statement

Year Ended December 31, 2014Revenues:   Service Revenue    $35,100Expenses:     Salaries Expense $6,400  Rent Expense 2,000  Depreciation Expense—Equipment 500 

Service Revenue $35,100Salaries Expense 6,400Rent Expense 2,000Depreciation Expense—Equipment 500Supplies Expense 2,000

Copyright © 2014 Pearson Education, Inc. publishing as Prentice Hall 4-24

P4-30D—Req. 5

ELLIOT WILSONIncome Statement

Year Ended December 31, 2014Revenues:   Service Revenue    $35,100Expenses:     Salaries Expense $6,400  Rent Expense 2,000  Depreciation Expense—Equipment 500  Supplies Expense 2,000 

Service Revenue $35,100Salaries Expense 6,400Rent Expense 2,000Depreciation Expense—Equipment 500Supplies Expense 2,000

Copyright © 2014 Pearson Education, Inc. publishing as Prentice Hall 4-25

P4-30D—Req. 5

ELLIOT WILSONIncome Statement

Year Ended December 31, 2014Revenues:   Service Revenue    $35,100Expenses:     Salaries Expense $6,400  Rent Expense 2,000  Depreciation Expense—Equipment 500  Supplies Expense 2,000  Total Expenses   10,900

Service Revenue $35,100Salaries Expense 6,400Rent Expense 2,000Depreciation Expense—Equipment 500Supplies Expense 2,000

Copyright © 2014 Pearson Education, Inc. publishing as Prentice Hall 4-26

P4-30D—Req. 5

Service Revenue $35,100Salaries Expense 6,400Rent Expense 2,000Depreciation Expense—Equipment 500Supplies Expense 2,000

ELLIOT WILSONIncome Statement

Year Ended December 31, 2014Revenues:   Service Revenue    $35,100Expenses:     Salaries Expense $6,400  Rent Expense 2,000  Depreciation Expense—Equipment 500  Supplies Expense 2,000  Total Expenses   10,900Net Income   $24,200

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P4-30D—Req. 5

ELLIOT WILSONStatement of Retained EarningsYear Ended December 31, 2014

Retained Earnings, January 1, 2014 $10,000

Retained Earnings, January 1, 2014 $10,000Net income for the year 24,200Dividends 7,100

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P4-30D—Req. 5

ELLIOT WILSONStatement of Retained EarningsYear Ended December 31, 2014

Retained Earnings, January 1, 2014 $10,000Net income for the year 24,200

Retained Earnings, January 1, 2014 $10,000Net income for the year 24,200Dividends 7,100

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P4-30D—Req. 5

ELLIOT WILSONStatement of Retained EarningsYear Ended December 31, 2014

Retained Earnings, January 1, 2014 $10,000Net income for the year 24,200    34,200

Retained Earnings, January 1, 2014 $10,000Net income for the year 24,200Dividends 7,100

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P4-30D—Req. 5

ELLIOT WILSONStatement of Retained EarningsYear Ended December 31, 2014

Retained Earnings, January 1, 2014 $10,000Net income for the year 24,200    34,200Dividends (7,100)

   

Retained Earnings, January 1, 2014 $10,000Net income for the year 24,200Dividends 7,100

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P4-30D—Req. 5

ELLIOT WILSONStatement of Retained EarningsYear Ended December 31, 2014

Retained Earnings, January 1, 2014 $10,000Net income for the year 24,200    34,200Dividends (7,100)

Retained Earnings, December 31, 2014 $27,100   

Retained Earnings, January 1, 2014 $10,000Net income for the year 24,200Dividends 7,100

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P4-30D—Req. 5

ELLIOT WILSONBalance Sheet

December 31, 2014Assets

Current Assets: Cash $18,000   Accounts Receivable 20,000   Prepaid Rent 3,000   Office Supplies 1,000  

Cash $18,000 Accumulated Depreciation-Eq. $7,000Accounts Receivable 20,000 Accounts Payable 15,000

Prepaid Rent 3,000 Salaries Payable 900Office Supplies 1,000 Unearned Revenue 4,000Equipment 42,000 Common Stock 30,000

Retained Earnings 27,100

Copyright © 2014 Pearson Education, Inc. publishing as Prentice Hall 4-33

P4-30D—Req. 5

ELLIOT WILSONBalance Sheet

December 31, 2014Assets

Current Assets: Cash $18,000   Accounts Receivable 20,000   Prepaid Rent 3,000   Office Supplies 1,000  

Total Current Assets   $42,000

Cash $18,000 Accumulated Depreciation-Eq. $7,000Accounts Receivable 20,000 Accounts Payable 15,000

Prepaid Rent 3,000 Salaries Payable 900Office Supplies 1,000 Unearned Revenue 4,000Equipment 42,000 Common Stock 30,000

Retained Earnings 27,100

Copyright © 2014 Pearson Education, Inc. publishing as Prentice Hall 4-34

P4-30D—Req. 5

ELLIOT WILSONBalance Sheet

December 31, 2014Assets

Current Assets: Cash $18,000   Accounts Receivable 20,000   Prepaid Rent 3,000   Office Supplies 1,000  

Total Current Assets   $42,000Plant Assets:    

Equipment 42,000   Less: Accumulated Depreciation—Equipment 7,000   Total Plant Assets   35,000

Cash $18,000 Accumulated Depreciation-Eq. $7,000Accounts Receivable 20,000 Accounts Payable 15,000

Prepaid Rent 3,000 Salaries Payable 900Office Supplies 1,000 Unearned Revenue 4,000Equipment 42,000 Common Stock 30,000

Retained Earnings 27,100

Copyright © 2014 Pearson Education, Inc. publishing as Prentice Hall 4-35

P4-30D—Req. 5

ELLIOT WILSONBalance Sheet

December 31, 2014Assets

Current Assets: Cash $18,000   Accounts Receivable 20,000   Prepaid Rent 3,000   Office Supplies 1,000  

Total Current Assets   $42,000Plant Assets:    

Equipment 42,000   Less: Accumulated Depreciation—Equipment 7,000   Total Plant Assets   35,000Total Assets   $77,000

Cash $18,000 Accumulated Depreciation-Eq. $7,000Accounts Receivable 20,000 Accounts Payable 15,000

Prepaid Rent 3,000 Salaries Payable 900Office Supplies 1,000 Unearned Revenue 4,000Equipment 42,000 Common Stock 30,000

Retained Earnings 27,100

Copyright © 2014 Pearson Education, Inc. publishing as Prentice Hall 4-36

P4-30D—Req. 5

ELLIOT WILSONBalance Sheet

December 31, 2014Assets

Current Assets: Cash $18,000   Accounts Receivable 20,000   Prepaid Rent 3,000   Office Supplies 1,000  

Total Current Assets   $42,000Plant Assets:    

Equipment 42,000   Less: Accumulated Depreciation—Equipment 7,000   Total Plant Assets   35,000Total Assets   $77,000

Liabilities Current Liabilities:     Accounts Payable $15,000   Salaries Payable 900   Unearned Revenue 4,000   Total Current Liabilities   $19,900

Cash $18,000 Accumulated Depreciation-Eq. $7,000Accounts Receivable 20,000 Accounts Payable 15,000

Prepaid Rent 3,000 Salaries Payable 900Office Supplies 1,000 Unearned Revenue 4,000Equipment 42,000 Common Stock 30,000

Retained Earnings 27,100

Copyright © 2014 Pearson Education, Inc. publishing as Prentice Hall 4-37

P4-30D—Req. 5

ELLIOT WILSONBalance Sheet

December 31, 2014Assets

Current Assets: Cash $18,000   Accounts Receivable 20,000   Prepaid Rent 3,000   Office Supplies 1,000  

Total Current Assets   $42,000Plant Assets:    

Equipment 42,000   Less: Accumulated Depreciation—Equipment 7,000   Total Plant Assets   35,000Total Assets   $77,000

Liabilities Current Liabilities:     Accounts Payable $15,000   Salaries Payable 900   Unearned Revenue 4,000   Total Current Liabilities   $19,900Total Liabilities   19,900

Cash $18,000 Accumulated Depreciation-Eq. $7,000Accounts Receivable 20,000 Accounts Payable 15,000

Prepaid Rent 3,000 Salaries Payable 900Office Supplies 1,000 Unearned Revenue 4,000Equipment 42,000 Common Stock 30,000

Retained Earnings 27,100

Copyright © 2014 Pearson Education, Inc. publishing as Prentice Hall 4-38

P4-30D—Req. 5

ELLIOT WILSONBalance Sheet

December 31, 2014Assets

Current Assets: Cash $18,000   Accounts Receivable 20,000   Prepaid Rent 3,000   Office Supplies 1,000  

Total Current Assets   $42,000Plant Assets:    

Equipment 42,000   Less: Accumulated Depreciation—Equipment 7,000   Total Plant Assets   35,000Total Assets   $77,000

Liabilities Current Liabilities:     Accounts Payable $15,000   Salaries Payable 900   Unearned Revenue 4,000   Total Current Liabilities   $19,900Total Liabilities   19,900

Stockholders’ EquityCommon Stock   30,000Retained Earnings 27,100

Cash $18,000 Accumulated Depreciation-Eq. $7,000Accounts Receivable 20,000 Accounts Payable 15,000

Prepaid Rent 3,000 Salaries Payable 900Office Supplies 1,000 Unearned Revenue 4,000Equipment 42,000 Common Stock 30,000

Retained Earnings 27,100

Copyright © 2014 Pearson Education, Inc. publishing as Prentice Hall 4-39

P4-30D—Req. 5

ELLIOT WILSONBalance Sheet

December 31, 2014Assets

Current Assets: Cash $18,000   Accounts Receivable 20,000   Prepaid Rent 3,000   Office Supplies 1,000  

Total Current Assets   $42,000Plant Assets:    

Equipment 42,000   Less: Accumulated Depreciation—Equipment 7,000   Total Plant Assets   35,000Total Assets   $77,000

Liabilities Current Liabilities:     Accounts Payable $15,000   Salaries Payable 900   Unearned Revenue 4,000   Total Current Liabilities   $19,900Total Liabilities   19,900

Stockholders’ EquityCommon Stock   30,000Retained Earnings 27,100Total Stockholders’ Equity 57,100

 

Cash $18,000 Accumulated Depreciation-Eq. $7,000Accounts Receivable 20,000 Accounts Payable 15,000

Prepaid Rent 3,000 Salaries Payable 900Office Supplies 1,000 Unearned Revenue 4,000Equipment 42,000 Common Stock 30,000

Retained Earnings 27,100

Copyright © 2014 Pearson Education, Inc. publishing as Prentice Hall 4-40

P4-30D—Req. 5

ELLIOT WILSONBalance Sheet

December 31, 2014Assets

Current Assets: Cash $18,000   Accounts Receivable 20,000   Prepaid Rent 3,000   Office Supplies 1,000  

Total Current Assets   $42,000Plant Assets:    

Equipment 42,000   Less: Accumulated Depreciation—Equipment 7,000   Total Plant Assets   35,000Total Assets   $77,000

Liabilities Current Liabilities:     Accounts Payable $15,000   Salaries Payable 900   Unearned Revenue 4,000   Total Current Liabilities   $19,900Total Liabilities   19,900

Stockholders’ EquityCommon Stock   30,000Retained Earnings 27,100Total Stockholders’ Equity 57,100Total Liabilities and Stockholders’ Equity   $77,000

Cash $18,000 Accumulated Depreciation-Eq. $7,000Accounts Receivable 20,000 Accounts Payable 15,000

Prepaid Rent 3,000 Salaries Payable 900Office Supplies 1,000 Unearned Revenue 4,000Equipment 42,000 Common Stock 30,000

Retained Earnings 27,100

Copyright © 2014 Pearson Education, Inc. publishing as Prentice Hall 4-41

P4-30D—Req. 6

Date Accounts and Explanation Debit Credit

Dec. 31 Service Revenue 35,100

Income Summary 35,100

To close revenue.

Service Revenue

27,100 Bal.

8,000 Adj.

Clos. 35,100 35,100 Bal.

0 Bal.

Income Summary

35,100 Clos.

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P4-30D—Req. 6

Date Accounts and Explanation Debit Credit

Dec. 31 Income Summary 10,900

Salaries Expense 6,400

Rent Expense 2,000

Depreciation Expense—Equipment 500

Supplies Expense 2,000

To close expenses.

Income Summary

Clos. 10,900 35,100 Clos.

24,200 Bal.

Copyright © 2014 Pearson Education, Inc. publishing as Prentice Hall 4-43

P4-30D—Req. 6

Salaries Expense

Bal. 5,500

Adj. 900

Bal. 6,400 6,400 Clos.

Bal. 0

Rent Expense

Bal. 0

Adj. 2,000

Bal. 2,000 2,000 Clos.

Bal. 0

Depreciation Expense—Equip.

Bal. 0

Adj. 500

Bal. 500 500 Clos.

Bal. 0

Supplies Expense

Bal. 0

Adj. 2,000

Bal. 2,000 2,000 Clos.

Bal. 0

Copyright © 2014 Pearson Education, Inc. publishing as Prentice Hall 4-44

P4-30D—Req. 6

Date Accounts and Explanation Debit Credit

Dec. 31 Income Summary 24,200

Retained Earnings 24,200

To close Income Summary.

Income Summary

Clos. 10,900 35,100 Clos.

Clos. 24,200 24,200 Bal.

0 Bal.

Retained Earnings

10,000 Bal.

24,200 Clos.

Copyright © 2014 Pearson Education, Inc. publishing as Prentice Hall 4-45

P4-30D—Req. 6

Date Accounts and Explanation Debit Credit

Dec. 31 Retained Earnings 7,100

Dividends 7,100

To close dividends.

Dividends

Bal. 7,100

7,100 Clos.

Bal. 0

Retained Earnings

10,000 Bal.

Clos. 7,100 24,200 Clos.

27,100 Bal.

Copyright © 2014 Pearson Education, Inc. publishing as Prentice Hall 4-46

P4-30D—Req. 7

ELLIOT WILSONPost-Closing Trial Balance

December 31, 2014Account Title Balance  Debit CreditCash $18,000  Accounts Receivable 20,000  Prepaid Rent 3,000  Office Supplies 1,000  Equipment 42,000  

Cash $18,000 Accumulated Depreciation—Eq. $7,000 Accounts Receivable 20,000 Accounts Payable 15,000 Prepaid Rent 3,000 Salaries Payable 900 Office Supplies 1,000 Unearned Revenue 4,000 Equipment 42,000 Common Stock 30,000

Retained Earnings 27,100

Copyright © 2014 Pearson Education, Inc. publishing as Prentice Hall 4-47

P4-30D—Req. 7

ELLIOT WILSONPost-Closing Trial Balance

December 31, 2014Account Title Balance  Debit CreditCash $18,000  Accounts Receivable 20,000  Prepaid Rent 3,000  Office Supplies 1,000  Equipment 42,000  Accumulated Depreciation—Equipment $7,000 Accounts Payable   15,000 Salaries Payable   900 Unearned Revenue   4,000 Common Stock   30,000 Retained Earnings 27,100

Cash $18,000 Accumulated Depreciation—Eq. $7,000 Accounts Receivable 20,000 Accounts Payable 15,000 Prepaid Rent 3,000 Salaries Payable 900 Office Supplies 1,000 Unearned Revenue 4,000 Equipment 42,000 Common Stock 30,000

Retained Earnings 27,100

Copyright © 2014 Pearson Education, Inc. publishing as Prentice Hall 4-48

P4-30D—Req. 7

ELLIOT WILSONPost-Closing Trial Balance

December 31, 2014Account Title Balance  Debit CreditCash $18,000  Accounts Receivable 20,000  Prepaid Rent 3,000  Office Supplies 1,000  Equipment 42,000  Accumulated Depreciation—Equipment $7,000 Accounts Payable   15,000 Salaries Payable   900 Unearned Revenue   4,000 Common Stock   30,000 Retained Earnings 27,100Total $84,000 $84,000

Cash $18,000 Accumulated Depreciation—Eq. $7,000 Accounts Receivable 20,000 Accounts Payable 15,000 Prepaid Rent 3,000 Salaries Payable 900 Office Supplies 1,000 Unearned Revenue 4,000 Equipment 42,000 Common Stock 30,000

Retained Earnings 27,100

Copyright © 2014 Pearson Education, Inc. publishing as Prentice Hall 4-49

P4-30D—Req. 8Cash $18,000 Accumulated Depreciation—Eq. $7,000 Accounts Receivable 20,000 Accounts Payable 15,000 Prepaid Rent 3,000 Salaries Payable 900 Office Supplies 1,000 Unearned Revenue 4,000 Equipment 42,000

Current Ratio ═ Total current assets l Total current liabilities

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P4-30D—Req. 8Cash $18,000 Accumulated Depreciation—Eq. $7,000 Accounts Receivable 20,000 Accounts Payable 15,000 Prepaid Rent 3,000 Salaries Payable 900 Office Supplies 1,000 Unearned Revenue 4,000 Equipment 42,000

Current Ratio ═ Total current assets l Total current liabilities

═ ($18,000 + $20,000 + $3,000 + $1,000)($15,000 + $900 + $4,000)

Copyright © 2014 Pearson Education, Inc. publishing as Prentice Hall 4-51

P4-30D—Req. 8Cash $18,000 Accumulated Depreciation—Eq. $7,000 Accounts Receivable 20,000 Accounts Payable 15,000 Prepaid Rent 3,000 Salaries Payable 900 Office Supplies 1,000 Unearned Revenue 4,000 Equipment 42,000

Current Ratio ═ Total current assets l Total current liabilities

═ ($18,000 + $20,000 + $3,000 + $1,000)($15,000 + $900 + $4,000)

═ $42,000$19,900

Copyright © 2014 Pearson Education, Inc. publishing as Prentice Hall 4-52

P4-30D—Req. 8

Current Ratio ═ Total current assets l Total current liabilities

═ ($18,000 + $20,000 + $3,000 + $1,000)($15,000 + $900 + $4,000)

═ $42,000$19,900

═ 2.1*

*rounded

Cash $18,000 Accumulated Depreciation—Eq. $7,000 Accounts Receivable 20,000 Accounts Payable 15,000 Prepaid Rent 3,000 Salaries Payable 900 Office Supplies 1,000 Unearned Revenue 4,000 Equipment 42,000

End of Chapter 4

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