41
Accounting 1A Chapter 4 1 E4-13 Preparing a worksheet & using to calculate net income. The trial balance of Telegraphic Link at November 30, follows: Accounting 1A – 22855 1
E4-13
Preparing a worksheet & using to calculate net income.
The trial balance of Telegraphic Link at November 30, follows:
Req. 1
Telegraphic Link
Worksheet
Month Ended November 30, 2012
ACCOUNT TITLE
TRIAL BALANCE
ADJUSTMENTS
ADJUSTED TRIAL BALANCE
INCOME STATEMENT
BALANCE SHEET
DEBIT
CREDIT
DEBIT
CREDIT
DEBIT
CREDIT
DEBIT
CREDIT
DEBIT
CREDIT
Cash
$4,000
$4,000
$4,000
Accounts receivable
3,200
(a) $600
3,800
3,800
Prepaid rent
1,900
(d) $500
1,400
1,400
Supplies
3,000
(e) 100
2,900
2,900
Equipment
34,800
34,800
34,800
Accumulated depreciation
$1,600
(b) 300
$1,900
$1,900
Accounts payable
5,400
5,400
5,400
Salary payable
(c) 800
800
800
Thomas, capital
35,700
35,700
35,700
Thomas, drawing
2,100
2,100
2,100
Service revenue
8,600
(a) 600
9,200
$9,200
Depreciation expense
(b) 300
300
$300
Salary expense
1,700
(c) 800
2,500
2,500
Rent expense
(d) 500
500
500
Utilities expense
600
600
600
Supplies expense
(e) 100
100
100
$51,300
$51,300
$2,300
$ 2,300
$53,000
$53,000
$4,000
$9,200
$49,000
$43,800
Net income
$5,200
$ 5,200
$9,200
$9,200
$49,000
$49,000
Req. 2The net income for November was $5,200.
E 4-14
Req.1
Telegraphic Link
Balance Sheet
November 30, 2012
ASSETS
LIABILITIES
Cash
$ 4,000
Accounts payable
$ 5,400
Supplies
3,800
Salary payable
800
Prepaid rent
1,400
Total liabilities
6,200
Supplies
2,900
OWNER’S EQUITY
Equipment $ 34,800
Thomas, capital
38,800
Accumulated. depreciation (1,900)
32,900
Total assets
$ 45,000
Total liabilities and
owner’s equity
$ 45,000
Accounting 1AChapter 42
Accounting 1A – 228552
E 4-15
Req.1
Journal
DATE
ACCOUNTS AND EXPLANATIONS
POST.
REF.
DEBIT
CREDIT
Adjusting Entries
Nov
30
Account receivable
600
Service revenue
600
30
Depreciation expense
300
Accumulated depreciation
300
30
Salary expense
800
Salary payable
800
30
Rent expense
500
Prepaid rent
500
30
Supplies expense
100
Supplies
100
Reqs. 1 and 2
Accounts receivable
Prepaid rent
Bal
3,200
Bal
1,900
(d)
500
(a)
600
Bal
1,400
Bal
3,800
Supplies
Accumulated depreciation
Bal
3,000
(e)
100
Bal
1,600
Bal
2,900
(b)
300
Bal
1,900
Salary payable
Thomas, capital
Bal
0
Clo
2,100
Bal
20,000
(c)
800
Clo
5,200
Bal
800
Bal
23,100
Thomas, drawing
Income summary
Bal
2,100
Clo
2,100
Clo
4,000
Clo
9,200
Bal
0
Clo
5,200
Bal
5,200
Bal
0
Service revenue
Depreciation expense
Clo
9,200
Bal
8,600
Bal
0
(a)
600
(b)
300
Clo
300
Bal
0
Bal
0
Salary expense
Rent expense
Bal
1,700
Clo
2,500
Bal
0
Clo
500
(c )
800
(d)
500
Bal
0
Bal
0
Utilities expense
Supplies expense
Bal
600
Clo
600
Bal
(e)
0
100
Clo
100
Bal
0
Bal
0
:
Req. 1
Journal
DATE
ACCOUNTS AND EXPLANATIONS
POST.
REF.
DEBIT
CREDIT
Closing Entries
Jan
31
Service revenue
16,800
Income summary
16,800
31
Income summary
6,200
Salary expense
3,600
Rent expense
1,400
Depreciation expense
400
Supplies expense
200
Utilities expense
600
31
Income summary
10,600
Silver, capital
10,600
31
Silver, capital
800
Silver, drawing
800
Req. 2
Silver had net income of $10,600. We know this because service revenue exceeded total expenses.
E 4-19
Req. 1
Guitars by Peter
Statement of Owner’s Equity
Year Ended December 31, 2012
Peter, capital, January 1, 2012
$152,000
Net income
120,000
272,000
Drawing
(31,000)
Peter, capital, December 31, 2012
$241,000
E4-21
Req. 1
Journal
DATE
ACCOUNTS AND EXPLANATIONS
POST.
REF.
DEBIT
CREDIT
Closing Entries
Dec
31
Service revenue
110,000
Income summary
110,000
31
Income summary
35,500
Salary expense
26,100
Supplies expense
2,400
Depreciation expense—furniture
800
Depreciation expense—building
6,200
31
Income summary
74,500
Klein, capital
74,500
31
Klein, capital
57,000
Klein, drawing
57,000
Req. 2
Klein, capital
Clo
57,000
Beg Bal
47,000
Clo
74,500
End Bal
64,500
E 4-22
Req. 1
Telegraphic Link
Post-closing Trial Balance
November 30, 2012
ACCOUNT
DEBIT
CREDIT
Cash
$ 4,000
Accounts receivable
3,800
Prepaid rent
1,400
Supplies
2,900
Equipment
34,800
Accumulated depreciation
$ 1,900
Accounts payable
5,400
Salary payable
800
Thomas, capital
38,800
Total
$ 46,900
$ 46,900
E 4-23
Req. 1
Beginning capital + Net Income – Drawing = Ending Capital
$36,500 + $12,300 – $1,100 = $47,700
Brian O’Brion Dance Studio Company
Balance Sheet
August 31, 2012
ASSETS
Current assets:
Cash
$ 15,800
Supplies
2,000
Prepaid rent
900
Total current assets
18,700
Plant asset:
Equipment
$ 49,000
Accumulated depreciation
(5,500)
43,500
Total assets
$ 62,200
LIABILITIES
Current liabilities:
Accounts payable
$ 4,500
Salary payable
500
Unearned service revenue
5,100
Total current liabilities
10,100
Long-term liabilities:
Long-term note payable
4,400
Total liabilities
14,500
OWNER’S EQUITY
O’Brion, capital
47,700
Total liabilities and owner’s equity
$ 62,200
Req. 2
20122011
Current Ratio
=
Total current assets
Total current liabilities
=
$18,700
$10,100
=
1.85
1.49
Since the current ratio was 1.49 one year ago, during the current year, Brian O’Brion Dance Studio’s ability to pay its current liabilities has improved.
Debt Ratio
=
Total liabilities
Total assets
=
$14,500
$62,200
=
0.23
0.29
Since the debt ratio was 0.29 one year ago, during the current year, Brian O’Brion Dance Studio’s ability to pay its debt has improved.
P4-26A
Wolf Anvils: Trial Balance
P4-26A
Req. 1
Journal
DATE
ACCOUNTS AND EXPLANATIONS
POST.
REF.
DEBIT
CREDIT
Oct
31
Adjusting Entries
a.
Unearned service revenue
4,200
Service revenue
4,200
b.
Rent expense
200
Prepaid rent
200
c.
Supplies expense
1,000
Supplies
1,000
d.
Depreciation expense
300
Accumulated depreciation
300
e.
Salary expense
200
Salary payable
200
(continued) P 4-26A
Req. 2
Wolfe Anvils
Worksheet
Month Ended October 31, 2012
ACCOUNT TITLE
TRIAL BALANCE
ADJUSTMENTS
ADJUSTED TRIAL BALANCE
DEBIT
CREDIT
DEBIT
CREDIT
DEBIT
CREDIT
Cash
$4,300
$4,300
Accounts receivable
15,000
15,000
Prepaid rent
2,700
(b) $200
2,500
Supplies
1,600
(c) 1,000
600
Equipment
31,200
31,200
Accumulated depreciation
$3,000
(d) 300
$3,300
Accounts payable
6,900
6,900
Salary payable
(e) 200
200
Unearned service revenue
5,400
(a) $4,200
1,200
Wolfe, capital
26,600
26,600
Wolfe, drawing
3,500
3,500
Service revenue
18,900
(a) 4,200
23,100
Salary expense
2,500
(e) 200
2,700
Rent expense
(b) 200
200
Depreciation expense
(d) 300
300
Supplies expense
______
______
(c) 1,000
______
1,000
______
Total
$60,800
$60,800
$5,900
$5,900
$61,300
$61,300
(continued) P 4-26A
Req. 3
Wolfe Anvils
Income Statement
Month Ended October 31, 2012
Revenue:
Service revenue
$ 23,100
Expenses:
Salary expense
$ 2,700
Supplies expense
1,000
Depreciation expense
300
Rent expense
200
Total expenses
4,200
Net income
$ 18,900
Wolfe Anvils
Statement of Owner’s Equity
Month Ended October 31, 2012
Wolfe, capital, October 1, 2012
$ 26,600
Net income
18,900
45,500
Drawing
(3,500)
Wolfe, capital, October 31, 2012
$ 42,000
(continued) P 4-26A
Req. 3
Wolfe Anvils
Balance Sheet
October 31, 2012
ASSETS
Current assets:
Cash
$ 4,300
Accounts receivable
15,000
Prepaid rent
2,500
Supplies
600
Total current assets
22,400
Plant assets:
Equipment
$ 31,200
Accumulated depreciation
(3,300)
27,900
Total assets
$ 50,300
LIABILITIES
Current liabilities:
Accounts payable
$ 6,900
Salary payable
200
Unearned service revenue
1,200
Total current liabilities
8,300
OWNER’S EQUITY
Wolfe, capital
42,000
Total liabilities and owner’s equity
$ 50,300
(continued) P 4-26A
Req. 4
Journal
DATE
ACCOUNTS AND EXPLANATIONS
POST.
REF.
DEBIT
CREDIT
Closing Entries
Oct
31
Service revenue
23,100
Income summary
23,100
31
Income summary
4,200
Salary expense
2,700
Rent expense
200
Depreciation expense
300
Supplies expense
1,000
31
Income summary
18,900
Wolfe, capital
18,900
31
Wolfe, capital
3,500
Wolfe, drawing
3,500
Req. 4
Prepaid rent
Oct 31
2,700
Adj b)
200
Bal
2,500
Supplies
Oct.31
1,600
Adj c)
1,000
Bal
600
Accumulated depreciation
Oct 31
3,000
Adj d)
300
Bal
3,300
Salary payable
Oct 31
0
Adj e)
200
Bal
200
Unearned service revenue
Adj a)
4,200
Oct 31
5,400
Bal
1,200
Wolfe, capital
Wolfe, drawing
Clo
3,500
Oct.31
26,600
Oct 31
3,500
Clo
3,500
Clo
18,900
Bal
0
Bal
42,000
Service revenue
Salary expense
Clo
23,100
Oct. 31
18,900
Oct 31
2,500
Clo
2,700
Adj (a)
4,200
Adj (e)
200
Bal
0
Bal.
0
Rent expense
Income summary
Oct 31
0
Clo
200
Clo
4,200
Clo
23,100
Adj (b)
200
Clo
18,900
Bal
18,900
Bal
0
Bal
0
Depreciation expense
Supplies expense
Oct31
0
Clo
300
Oct31
0
Clo
1,000
Adj (d)
300
Adj (c)
1,000
Bal
0
Bal
0
(continued) P 4-26A
Req. 5
Wolfe Anvils
Post-closing Trial Balance
October 31, 2012
ACCOUNT
DEBIT
CREDIT
Cash
$ 4,300
Accounts receivable
15,000
Prepaid rent
2,500
Supplies
600
Equipment
31,200
Accumulated depreciation
$ 3,300
Accounts payable
6,900
Salary payable
200
Unearned service revenue
1,200
Wolfe, capital
42,000
Total
$ 53,600
$ 53,600
Req. 6
Wolfe’s current ratio at October 31, 2012 is 2.70.
Wolfe’s debt ratio at October 31, 2012 is 0.17.
