SECOND REVISED
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Study Guide 8
Perfect Score
Name Identifying Accounting Terms Analyzing Accounts Affected by Adjusting and Closing Entries Analyzing Adjusting and Closing Entries Identifying the Accounting Cycle for a Service Business Total
6 14 9 8
Your Score
Pts. Pts. Pts. Pts.
37 Pts.
Part One—Identifying Accounting Terms Directions: Select the one term in Column I that best fits each definition in Column II. Print the letter identifying your choice in the Answers column.
Column I
Answers
Column II
A. accounting cycle
1. Journal entries recorded to update general ledger accounts at the end of a fiscal period. (p. 202)
1.
B
B. adjusting entries
2. Accounts used to accumulate information from one fiscal period to the next. (p. 206)
2.
D
C. closing entries
3. Accounts used to accumulate information until it is transferred to the owner’s capital account. (p. 206)
3.
F
D. permanent accounts
4. Journal entries used to prepare temporary accounts for a new fiscal period. (p. 206)
4.
C
E. post-closing trial balance
5. A trial balance prepared after the closing entries are posted. (p. 216)
5.
E
F. temporary accounts
6. The series of accounting activities included in recording financial information for a fiscal period. (p. 217)
6.
A
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Chapter 8 • 153
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Part Two—Analyzing Accounts Affected by Adjusting and Closing Entries Directions: Use the partial chart of accounts given below. For each adjusting or closing entry described, decide which accounts are debited and credited. Write the account numbers identifying your choice in the proper Answers column.
Acct. Account Title
No.
Supplies Prepaid Insurance J. Nichols, Capital J. Nichols, Drawing Income Summary Sales Advertising Expense Insurance Expense Supplies Expense
150 160 310 320 330 410 510 520 550
Accounts to Be Debited
Credited
1–2. Adjusting entry for Supplies. (p. 203)
1.
550
2.
150
3–4. Adjusting entry for Prepaid Insurance. (p. 204)
3.
520
4.
160
5–6. Closing entry for Sales. (p. 208)
5.
410
6.
330
7–8. Closing entry for all expense accounts. (p. 209)
7.
330
8. 510,520,550
9.
330
10.
310
11–12. Closing entry for Income Summary with a net loss. (p. 210)
11.
310
12.
330
13–14. Closing entry for owner’s drawing account. (p. 211)
13.
310
14.
320
9–10. Closing entry for Income Summary with a net income. (p. 210)
154 • Working Papers TE
CENTURY 21 ACCOUNTING, 9TH EDITION
SECOND REVISED
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Name
Date
Class
Part Three—Analyzing Adjusting and Closing Entries Directions: For each of the following items, select the choice that best completes the statement. Print the letter identifying your choice in the Answers column.
Answers 1. Which accounting concept applies when a work sheet is prepared at the end of each fiscal cycle to summarize the general ledger information needed to prepare financial statements? (A) Business Entity (B) Accounting Period Cycle (C) Adequate Disclosure (D) Consistent Reporting (p. 202) 2. Which accounting concept applies when expenses are reported in the same fiscal period that they are used to produce revenue? (A) Business Entity (B) Going Concern (C) Matching Expenses with Revenue (D) Adequate Disclosure (p. 202) 3. Information needed for journalizing the adjusting entries is obtained from the (A) general ledger account Balance columns (B) income statement (C) work sheet’s Adjustments columns (D) balance sheet. (p. 204) 4. After adjusting entries are posted, the supplies account balance will be equal to (A) the cost of supplies used during the fiscal period (B) the cost of the supplies on hand at the end of the fiscal period (C) zero (D) none of these. (p. 204) 5. When revenue is greater than total expenses, resulting in a net income, the income summary account has a (A) debit balance (B) credit balance (C) normal debit balance (D) normal credit balance. (p. 207) 6. Information needed for recording the closing entries is obtained from the (A) general ledger accounts’ Debit Balance columns (B) work sheet’s Income Statement and Balance Sheet columns (C) balance sheet (D) income statement. (p. 207) 7. Income Summary is (A) an asset account (B) a liability account (C) a temporary account (D) a permanent account. (p. 207) 8. After the closing entries are posted, the owner’s capital account balance should be the same as (A) shown on the balance sheet for the fiscal period (B) shown in the work sheet’s Balance Sheet Debit column (C) shown in the work sheet’s Balance Sheet Credit column (D) shown in the work sheet’s Income Statement Debit column. (p. 211) 9. The accounts listed on a post-closing trial balance are (A) general ledger accounts with balances after the closing entries are posted (B) all general ledger accounts (C) those that have no balances after adjusting and closing entries (D) those that appear in the work sheet’s Trial Balance columns. (p. 216)
1.
B
2.
C
3.
C
4.
B
5.
B
6.
B
7.
C
8.
A
9.
A
Part Four—Identifying the Accounting Cycle for a Service Business Directions: Arrange the series of accounting activities listed below for the accounting cycle for a service business. Indicate the sequence of the steps by writing a number from 1 to 8 to the left of each activity. (p. 217)
Answers 1.
4
A work sheet, including a trial balance, is prepared from the general ledger.
2.
2
Transactions, from information on source documents, are recorded in a journal.
3.
1
Source documents are checked for accuracy, and transactions are analyzed into debit and credit parts.
4.
7
Adjusting and closing entries are posted to the general ledger.
5.
5
Financial statements are prepared from the work sheet.
6.
6
Adjusting and closing entries are journalized from the work sheet.
7.
8
A post-closing trial balance of the general ledger is prepared.
8.
3
Journal entries are posted to the general ledger.
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Chapter 8
Miscellaneous Expense Supplies Expense
14 15
20 21 22 23
21 22 23
18
5 5 1 1 00 11 0 6 0 00 11 0 6 0 00 5 5 1 1 00
20
17
16
3 3 3 0 00
7 7 3 0 00 3 3 3 0 00
5 5 1 1 00 11 0 6 0 00
Date
19
1 0 1 3 00
15
14
13
12
9
Page 157
19
18
17
Net Income
7 1 3 00
Insurance Expense
13
2 1 8 1 00
3 4 7 00
Advertising Expense
12
1 0 1 3 00
3 0 0 00
Sales
11
16
8 2 1 00
Income Summary
10
2 1 0 0 00
8
7
Name
(a) 7 1 3 00
11
Darlene Wong, Drawing
9
(b) 3 0 0 00
10
Darlene Wong, Capital
8
6 5 4 3 00
2 1 2 00
Accts. Pay.—Grand Uniforms
7
6
5
9 7 5 00
9 0 0 00
Accts. Pay.—Colin Gas
4
3
2
1
6
CREDIT
(b) 3 0 0 00
2 5 0 00
8 8 00
3 7 2 00
7 3 5 0 00
DEBIT
8
Prepaid Insurance
5 5 1 1 00
CREDIT
BALANCE SHEET
5
DEBIT
7
(a) 7 1 3 00
Accts. Rec.—Wyatt Ames
3
6
INCOME STATEMENT
5
8-1 and 8-2
Supplies
Accts. Rec.—Romelle Woods
2
CREDIT
4
5:30 PM
4
Cash
DEBIT
ADJUSTMENTS
y
10/29/07
1
ACCOUNT TITLE
3
8-1 Journalizing and posting adjusting entries 8-2 Journalizing and posting closing entries
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WORK TOGETHER, pp. 205, 212
Recording Adjusting and Closing Entries for a Service Business • 157
158 • Working Papers TE 19 20 21 22 23 24
20
21
22
23
24
17
19
2 1 0 0 00
16
15
18
320
2 1 0 0 00
3 3 3 0 00
18
Darlene Wong, Drawing
310
31 Darlene Wong, Capital
16
17
310
Darlene Wong, Capital
15
14
7 1 3 00
540
Supplies Expense
13
3 3 3 0 00
13
3 4 7 00
530
Miscellaneous Expense 330
12
12
31 Income Summary
11
3 0 0 00
520
Insurance Expense
11
14
10
8 2 1 00
9
8
7
6
5
4
3
2
1
510
2 1 8 1 00
5 5 1 1 00
5
CREDIT
4
Advertising Expense
330
31 Income Summary
9
5 5 1 1 00
CASH
PAGE
10
330
Income Summary
410
8
31 Sales
3 0 0 00
DEBIT
4
Prob. 8-2
Prob. 8-1
5:30 PM
7
Closing Entries
150
Prepaid Insurance
5
3 0 0 00
7 1 3 00
CREDIT
SALES CREDIT
3
10/29/07
6
520
31 Insurance Expense
140
Supplies
3
7 1 3 00
DEBIT
GENERAL
2
8-1 and 8-2
4
540
Adjusting Entries
July 31 Supplies Expense
20 – –
ACCOUNT TITLE
2
1
DATE
DOC. POST. NO. REF.
1
JOURNAL
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WORK TOGETHER (continued)
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Name
Date
8-1 and 8-2
Class
WORK TOGETHER (continued) GENERAL LEDGER
ACCOUNT
Cash
DATE
ACCOUNT NO.
POST. REF.
ITEM
July 31 Balance
ACCOUNT
DEBIT
July 31 Balance
CREDIT DEBIT
POST. REF.
8 8 00
July 31 Balance 31
CREDIT DEBIT
7 1 3 00
2 5 0 00
Prepaid Insurance
ACCOUNT NO.
POST. REF.
July 31 Balance 31
CREDIT DEBIT
3 0 0 00
9 0 0 00
Accounts Payable—Colin Gas
ACCOUNT NO.
POST. REF.
✔
20 – –
July 31 Balance
Chapter 8
CREDIT
1 2 0 0 00
4
ITEM
150
BALANCE DEBIT
✔
20 – –
DATE
CREDIT
9 6 3 00
4
ITEM
140
BALANCE DEBIT
✔
20 – –
DATE
CREDIT
ACCOUNT NO.
ITEM
130
BALANCE DEBIT
Supplies
DATE
CREDIT
3 7 2 00
✔
20 – –
ACCOUNT
CREDIT
ACCOUNT NO.
POST. REF.
ITEM
120
BALANCE DEBIT
Accounts Receivable—Wyatt Ames
DATE
CREDIT
7 3 5 0 00
✔
July 31 Balance
ACCOUNT
DEBIT
ACCOUNT NO.
POST. REF.
ITEM
20 – –
ACCOUNT
CREDIT
Accounts Receivable—Romelle Woods
DATE
ACCOUNT
BALANCE DEBIT
✔
20 – –
110
210
BALANCE DEBIT
CREDIT DEBIT
CREDIT
9 7 5 00
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WORK TOGETHER (continued) GENERAL LEDGER
ACCOUNT
Accounts Payable—Grand Uniforms
DATE
ITEM
July 31 Balance
ITEM
DEBIT
July 31 Balance 31
2 1 2 00
4
DEBIT
July 31 Balance 31
3 3 3 0 00 2 1 0 0 00
7 7 7 3 00 ACCOUNT NO.
POST. REF.
CREDIT DEBIT
20 – –
2 1 0 0 00 2 1 0 0 00
CREDIT DEBIT
4
2 1 8 1 00
31
4
3 3 3 0 00
5 5 1 1 00 3 3 3 0 00
Sales
ACCOUNT NO.
POST. REF.
July 31 Balance 31
4
CREDIT DEBIT
20 – –
July 31 Balance 31
160 • Working Papers TE
CREDIT
5 5 1 1 00 5 5 1 1 00
Advertising Expense ITEM
ACCOUNT NO.
POST. REF.
510
BALANCE DEBIT
CREDIT DEBIT
✔ 4
410
BALANCE DEBIT
✔
20 – –
DATE
CREDIT
5 5 1 1 00
4
ITEM
330
BALANCE DEBIT
July 31 31
DATE
CREDIT
ACCOUNT NO.
POST. REF.
320
BALANCE DEBIT
4
ITEM
ACCOUNT
9 8 7 3 00
Income Summary
DATE
CREDIT
6 5 4 3 00
✔
20 – –
ACCOUNT
CREDIT
Darlene Wong, Drawing ITEM
310
BALANCE DEBIT
4
31
DATE
CREDIT
✔
20 – –
ACCOUNT
CREDIT
ACCOUNT NO.
POST. REF.
220
BALANCE DEBIT
Darlene Wong, Capital
DATE
ACCOUNT
POST. REF.
✔
20 – –
ACCOUNT
ACCOUNT NO.
CREDIT
8 2 1 00 8 2 1 00
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Name
Date
8-1 and 8-2
Class
WORK TOGETHER (concluded) GENERAL LEDGER
ACCOUNT
Insurance Expense
DATE
ITEM
20 – –
July 31 31
ACCOUNT
CREDIT DEBIT
3 0 0 00 3 0 0 00
ACCOUNT NO.
POST. REF.
CREDIT DEBIT
3 4 7 00
Supplies Expense
ACCOUNT NO.
20 – –
July 31 31
POST. REF.
4
CREDIT DEBIT
7 1 3 00 7 1 3 00
4
ACCOUNT NO.
ITEM
POST. REF.
BALANCE DEBIT
CREDIT DEBIT
CREDIT
ACCOUNT NO.
ITEM
POST. REF.
BALANCE DEBIT
CREDIT DEBIT
CREDIT
ACCOUNT NO.
ACCOUNT
DATE
CREDIT
7 1 3 00
ACCOUNT
DATE
540
BALANCE DEBIT
ACCOUNT
DATE
CREDIT
3 4 7 00
4
ITEM
530
BALANCE DEBIT
✔
July 31 Balance 31
CREDIT
3 0 0 00
Miscellaneous Expense ITEM
520
BALANCE DEBIT
4
20 – –
DATE
POST. REF.
4
DATE
ACCOUNT
ACCOUNT NO.
ITEM
Chapter 8
POST. REF.
BALANCE DEBIT
CREDIT DEBIT
CREDIT
Recording Adjusting and Closing Entries for a Service Business • 161
162 • Working Papers TE
Miscellaneous Expense Supplies Expense Utilities Expense
14 15 16
21 22
21 22
19
8 4 0 6 00 8 4 0 6 00
3 8 4 7 00
17 18
6 5 0 4 00 1 9 0 2 00 3 8 4 7 00
8 4 0 6 00 1 9 0 2 00
1 9 4 5 00
16
15
14
13
10
20
6 2 7 00
1 2 2 0 00
3 7 7 00
1 0 0 0 00
9
8
7
6
5
20
19
18
Net Income
Insurance Expense
13
3 8 4 7 00
Sales
12
6 2 7 00
Income Summary
11
17
Kelley Cooper, Drawing
10
(a) 3 7 7 00
Kelley Cooper, Capital
9
9 8 00
Accts. Pay.—Midwest Towel
8
2 5 0 00
12
Accts. Pay.—Beauty Supply Co.
7
3 8 4 7 00
11
1 8 2 00
(b) 2 5 0 00
Prepaid Insurance
6
5 9 0 0 00
4 2 2 00
2 2 5 00
(a) 3 7 7 00
Supplies
5
4
8-1 and 8-2
5:30 PM
4 0 0 00
1 4 8 00
Accts. Rec.—Midville Center
10/29/07
3
2
4
1
3 1 7 00
CREDIT
Accts. Rec.—Jodi Ford
6 1 1 6 00
DEBIT
8
3
CREDIT
BALANCE SHEET
2 0 0 00
DEBIT
7
Petty Cash
(b) 2 5 0 00
6
INCOME STATEMENT
5
2
CREDIT
4
Cash
DEBIT
ADJUSTMENTS
1
ACCOUNT TITLE
3
8-1 Journalizing and posting adjusting entries 8-2 Journalizing and posting closing entries
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SECOND REVISED
ON YOUR OWN, pp. 205, 212
COPYRIGHT © SOUTH-WESTERN CENGAGE LEARNING
Chapter 8
20 21 22 23 24
20
21
22
23
24
17
19
1 0 0 0 00
19
320
16
18
Kelley Cooper, Drawing
1 0 0 0 00
15
14
18
17
310
28 Kelley Cooper, Capital
16
1 9 0 2 00
330
28 Income Summary
14
310
13
1 2 2 0 00
540
Utilities Expense
13
Kelley Cooper, Capital
12
3 7 7 00
530
Supplies Expense
12
Prob. 8-2
Prob. 8-1
Name
15
11
9 8 00
520
Miscellaneous Expense
11
1 9 0 2 00
10
2 5 0 00
510
Insurance Expense
9
10
1 9 4 5 00
330
8
28 Income Summary
3 8 4 7 00
7
9
3 8 4 7 00
6
5
4
3
2
1
330
410
5
CREDIT
8
Income Summary
28 Sales
2 5 0 00
CASH
PAGE
8
7
Closing Entries
160
Prepaid Insurance
5
2 5 0 00
DEBIT
4
5:30 PM
6
510
3 7 7 00
CREDIT
SALES CREDIT
3
8-1 and 8-2
28 Insurance Expense
150
Supplies
3
3 7 7 00
DEBIT
GENERAL
2
10/29/07
4
530
20 – –
Feb. 28 Supplies Expense
Adjusting Entries
ACCOUNT TITLE
2
1
DATE
DOC. POST. NO. REF.
1
JOURNAL
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Date Class
ON YOUR OWN (continued)
Recording Adjusting and Closing Entries for a Service Business • 163
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ON YOUR OWN (continued) GENERAL LEDGER
ACCOUNT
Cash
DATE
ACCOUNT NO.
ITEM
Feb. 28 Balance
ITEM
ITEM
CREDIT DEBIT
Feb. 28 Balance
2 0 0 00
ITEM
CREDIT DEBIT
3 1 7 00
Feb. 28 Balance
CREDIT DEBIT
ACCOUNT NO.
ITEM
POST. REF.
Feb. 28 Balance 28
CREDIT DEBIT
3 7 7 00
2 2 5 00
Prepaid Insurance
20 – –
Feb. 28 Balance 28
164 • Working Papers TE
CREDIT
6 0 2 00
8
ITEM
ACCOUNT NO.
POST. REF.
160
BALANCE DEBIT
CREDIT DEBIT
✔ 8
150
BALANCE DEBIT
✔
20 – –
DATE
CREDIT
1 4 8 00
Supplies
DATE
140
BALANCE DEBIT
✔
20 – –
CREDIT
ACCOUNT NO.
POST. REF.
130
BALANCE DEBIT
Accounts Receivable—Midville Center
DATE
CREDIT
ACCOUNT NO.
POST. REF.
120
BALANCE DEBIT
✔
20 – –
ACCOUNT
POST. REF.
Accounts Receivable—Jodi Ford
DATE
CREDIT
6 1 1 6 00
✔
Feb. 28 Balance
ACCOUNT
DEBIT
ACCOUNT NO.
20 – –
ACCOUNT
CREDIT
Petty Cash
DATE
ACCOUNT
BALANCE DEBIT
✔
20 – –
ACCOUNT
POST. REF.
110
CREDIT
6 5 0 00 2 5 0 00
4 0 0 00
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Name
Date
8-1 and 8-2
Class
ON YOUR OWN (continued) GENERAL LEDGER
ACCOUNT
Accounts Payable—Beauty Supply Co.
DATE
POST. REF.
ITEM
Feb. 28 Balance
ITEM
Feb. 28 Balance
ITEM
Feb. 28 Balance 28
POST. REF.
8
DEBIT
CREDIT DEBIT
Feb. 28 Balance 28
5 9 0 0 00 1 9 0 2 00
7 8 0 2 00
1 0 0 0 00
6 8 0 2 00
CREDIT DEBIT
20 – –
CREDIT
1 0 0 0 00 1 0 0 0 00
8
ITEM
ACCOUNT NO.
POST. REF.
CREDIT DEBIT
8
1 9 4 5 00
28
8
1 9 0 2 00
CREDIT
3 8 4 7 00
3 8 4 7 00
8
1 9 0 2 00
Sales
ACCOUNT NO.
POST. REF.
Feb. 28 Balance 28
8
Chapter 8
410
BALANCE DEBIT
CREDIT DEBIT
✔
20 – –
330
BALANCE DEBIT
Feb. 28 28
ITEM
320
BALANCE DEBIT
Income Summary
DATE
CREDIT
ACCOUNT NO.
POST. REF.
310
BALANCE DEBIT
✔
20 – –
DATE
CREDIT
1 8 2 00
Kelley Cooper, Drawing ITEM
ACCOUNT
CREDIT
ACCOUNT NO.
POST. REF.
220
BALANCE DEBIT
8
28
ACCOUNT
ACCOUNT NO.
✔
20 – –
DATE
CREDIT
4 2 2 00
Kelley Cooper, Capital
DATE
ACCOUNT
DEBIT
✔
20 – –
ACCOUNT
CREDIT
Accounts Payable—Midwest Towel
DATE
210
BALANCE DEBIT
✔
20 – –
ACCOUNT
ACCOUNT NO.
CREDIT
3 8 4 7 00 3 8 4 7 00
Recording Adjusting and Closing Entries for a Service Business • 165
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ON YOUR OWN (concluded) GENERAL LEDGER
ACCOUNT
Insurance Expense
DATE
ITEM
20 – –
Feb. 28 28
ACCOUNT
CREDIT DEBIT
2 5 0 00 2 5 0 00
ACCOUNT NO.
POST. REF.
CREDIT DEBIT
9 8 00
8
ACCOUNT NO.
ITEM
20 – –
Feb. 28 28
POST. REF.
8
CREDIT DEBIT
3 7 7 00 3 7 7 00
ACCOUNT NO.
POST. REF.
Feb. 28 Balance 28
CREDIT DEBIT
1 2 2 0 00
8
ACCOUNT NO.
ITEM
POST. REF.
BALANCE DEBIT
CREDIT DEBIT
CREDIT
ACCOUNT NO.
ACCOUNT
166 • Working Papers TE
CREDIT
1 2 2 0 00
ACCOUNT
DATE
540
BALANCE DEBIT
✔
20 – –
DATE
CREDIT
3 7 7 00
Utilities Expense ITEM
530
BALANCE DEBIT
8
DATE
CREDIT
9 8 00
Supplies Expense
DATE
520
BALANCE DEBIT
✔
Feb. 28 Balance 28
CREDIT
2 5 0 00
Miscellaneous Expense ITEM
510
BALANCE DEBIT
8
20 – –
ACCOUNT
POST. REF.
8
DATE
ACCOUNT
ACCOUNT NO.
ITEM
POST. REF.
BALANCE DEBIT
CREDIT DEBIT
CREDIT
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Page 167
Name
8-3
Date
Class
WORK TOGETHER, p. 219
Preparing a post-closing trial balance
Darlene’s Delivery Service Post-Closing Trial Balance July 31, 20 – – ACCOUNT TITLE
Cash
DEBIT
CREDIT
7 3 5 0 00
Accounts Receivable—Romelle Woods Accounts Receivable—Wyatt Ames
3 7 2 00 8 8 00
Supplies
2 5 0 00
Prepaid Insurance
9 0 0 00
Accounts Payable—Colin Gas
9 7 5 00
Accounts Payable—Grand Uniforms
2 1 2 00
Darlene Wong, Capital Totals
7 7 7 3 00 8 9 6 0 00
Chapter 8
8 9 6 0 00
Recording Adjusting and Closing Entries for a Service Business • 167
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ON YOUR OWN, p. 219
Preparing a post-closing trial balance
Cuts by Kelley Post-Closing Trial Balance February 28, 20 – – ACCOUNT TITLE
Cash
DEBIT
CREDIT
6 1 1 6 00
Petty Cash
2 0 0 00
Accounts Receivable—Jodi Ford
3 1 7 00
Accounts Receivable—Midville Center
1 4 8 00
Supplies
2 2 5 00
Prepaid Insurance
4 0 0 00
Accounts Payable—Beauty Supply Co.
4 2 2 00
Accounts Payable—Midwest Towel
1 8 2 00
Kelley Cooper, Capital Totals
168 • Working Papers TE
6 8 0 2 00 7 4 0 6 00
7 4 0 6 00
COPYRIGHT © SOUTH-WESTERN CENGAGE LEARNING
Chapter 8
20 21 22
21
22
18
20
1 0 0 0 00
19
320
17
Page 169
19
Leonard Long, Drawing
1 0 0 0 00
16
Prob. 8-2
Date
18
310
30 Leonard Long, Capital
17
2 9 7 3 00
330
30 Income Summary
15
310
14
1 4 9 5 00
550
Utilities Expense
14
Leonard Long, Capital
13
4 5 0 00
540
Supplies Expense
13
16
12
3 1 5 00
530
Miscellaneous Expense
12
Prob. 8-1
Name
15
11
2 0 0 00
520
Insurance Expense
11
2 9 7 3 00
10
8 0 0 00
9
8
7
6
5
4
3
2
1
510
3 2 6 0 00
6 2 3 3 00
2 0 0 00
CREDIT
5
12
Advertising Expense
330
30 Income Summary
9
6 2 3 3 00
2 0 0 00
4 5 0 00
DEBIT
CASH
PAGE
10
330
410
Income Summary
30 Sales
8
7
Closing Entries
160
Prepaid Insurance
5
6
520
30 Insurance Expense
150
Supplies
3
4 5 0 00
CREDIT
4
5:30 PM
4
540
Apr. 30 Supplies Expense
Adjusting Entries
DEBIT
SALES CREDIT
3
8-1 and 8-2
2
20 – –
ACCOUNT TITLE
GENERAL
2
10/29/07
1
DATE
1
JOURNAL DOC. POST. NO. REF.
8-1 Journalizing and posting adjusting entries 8-2 Journalizing and posting closing entries
BTE_Ch08-157-184.qxd
SECOND REVISED
Class
APPLICATION PROBLEMS, p. 221
Recording Adjusting and Closing Entries for a Service Business • 169
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8-1 and 8-2
5:30 PM
SECOND REVISED
Page 170
APPLICATION PROBLEMS (continued) GENERAL LEDGER
ACCOUNT
Cash
DATE
ACCOUNT NO.
ITEM
Apr. 30 Balance
ITEM
Apr. 30 Balance
POST. REF.
ITEM
ACCOUNT NO.
CREDIT DEBIT
Apr. 30 Balance
7 0 0 00
CREDIT DEBIT
4 9 8 00
POST. REF.
Apr. 30 Balance 30
CREDIT DEBIT
4 5 0 00
4 3 1 00
Prepaid Insurance
20 – –
Apr. 30 Balance 30
170 • Working Papers TE
CREDIT
8 8 1 00
12
ITEM
ACCOUNT NO.
POST. REF.
160
BALANCE DEBIT
CREDIT DEBIT
✔ 12
150
BALANCE DEBIT
✔
20 – –
DATE
CREDIT
ACCOUNT NO.
ITEM
140
BALANCE DEBIT
Supplies
DATE
CREDIT
ACCOUNT NO.
POST. REF.
130
BALANCE DEBIT
✔
20 – –
CREDIT
7 6 0 7 00
Accounts Receivable—R. Henry
DATE
ACCOUNT
DEBIT
✔
20 – –
ACCOUNT
CREDIT
Accounts Receivable—Natasha Goodlad
DATE
ACCOUNT
BALANCE DEBIT
✔
20 – –
ACCOUNT
POST. REF.
110
CREDIT
4 0 0 00 2 0 0 00
2 0 0 00
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SECOND REVISED
Page 171
Name
Date
8-1 and 8-2
Class
APPLICATION PROBLEMS (continued) GENERAL LEDGER
ACCOUNT
Accounts Payable—Tri-County Supplies
DATE
ITEM
Apr. 30 Balance
ITEM
Apr. 30 Balance
ITEM
Apr. 30 Balance 30
12
DEBIT
CREDIT DEBIT
Apr. 30 Balance 30
6 5 2 7 00 2 9 7 3 00
9 5 0 0 00
1 0 0 0 00
8 5 0 0 00
CREDIT DEBIT
20 – –
CREDIT
1 0 0 0 00 1 0 0 0 00
12
ITEM
ACCOUNT NO.
POST. REF.
CREDIT DEBIT
12
3 2 6 0 00
30
12
2 9 7 3 00
CREDIT
6 2 3 3 00
6 2 3 3 00
12
2 9 7 3 00
Sales
ACCOUNT NO.
POST. REF.
Apr. 30 Balance 30
12
Chapter 8
410
BALANCE DEBIT
CREDIT DEBIT
✔
20 – –
330
BALANCE DEBIT
Apr. 30 30
ITEM
320
BALANCE DEBIT
Income Summary
DATE
CREDIT
ACCOUNT NO.
POST. REF.
310
BALANCE DEBIT
✔
20 – –
DATE
CREDIT
5 5 5 00
Leonard Long, Drawing ITEM
ACCOUNT
CREDIT
ACCOUNT NO.
POST. REF.
220
BALANCE DEBIT
12
30
ACCOUNT
POST. REF.
ACCOUNT NO.
✔
20 – –
DATE
CREDIT
3 8 1 00
Leonard Long, Capital
DATE
ACCOUNT
DEBIT
✔
20 – –
ACCOUNT
CREDIT
Accounts Payable—West End Supply Co.
DATE
210
BALANCE DEBIT
✔
20 – –
ACCOUNT
POST. REF.
ACCOUNT NO.
CREDIT
6 2 3 3 00 6 2 3 3 00
Recording Adjusting and Closing Entries for a Service Business • 171
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5:30 PM
SECOND REVISED
Page 172
APPLICATION PROBLEMS (concluded) GENERAL LEDGER
ACCOUNT
Advertising Expense
DATE
ITEM
Apr. 30 Balance 30
20 – –
Apr. 30 30
8 0 0 00
POST. REF.
CREDIT DEBIT
2 0 0 00
2 0 0 00 2 0 0 00
CREDIT DEBIT
3 1 5 00
12
ACCOUNT NO.
ITEM
20 – –
Apr. 30 30
POST. REF.
12
CREDIT DEBIT
4 5 0 00 4 5 0 00
ACCOUNT NO.
POST. REF.
Apr. 30 Balance 30
CREDIT DEBIT
CREDIT
1 4 9 5 00 1 4 9 5 00
12
ACCOUNT NO.
ACCOUNT
172 • Working Papers TE
550
BALANCE DEBIT
✔
20 – –
DATE
CREDIT
4 5 0 00
Utilities Expense ITEM
540
BALANCE DEBIT
12
DATE
CREDIT
3 1 5 00
Supplies Expense
DATE
530
BALANCE DEBIT
✔
Apr. 30 Balance 30
CREDIT
ACCOUNT NO.
POST. REF.
520
BALANCE DEBIT
Miscellaneous Expense ITEM
CREDIT
8 0 0 00
12
20 – –
ACCOUNT
DEBIT
ACCOUNT NO.
12
DATE
ACCOUNT
CREDIT
Insurance Expense ITEM
510
BALANCE DEBIT
12
DATE
ACCOUNT
POST. REF.
✔
20 – –
ACCOUNT
ACCOUNT NO.
ITEM
POST. REF.
BALANCE DEBIT
CREDIT DEBIT
CREDIT
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SECOND REVISED
Page 173
Name
8-3
Date
Class
APPLICATION PROBLEM, p. 222
Preparing a post-closing trial balance
Len’s Laundry Post-Closing Trial Balance April 30, 20 – – ACCOUNT TITLE
Cash
DEBIT
CREDIT
7 6 0 7 00
Accounts Receivable—Natasha Goodlad
7 0 0 00
Accounts Receivable—R. Henry
4 9 8 00
Supplies
4 3 1 00
Prepaid Insurance
2 0 0 00
Accounts Payable—Tri-County Supplies
3 8 1 00
Accounts Payable—West End Supply Co.
5 5 5 00
Leonard Long, Capital
8 5 0 0 00
Totals
9 4 3 6 00
Chapter 8
9 4 3 6 00
Recording Adjusting and Closing Entries for a Service Business • 173
174 • Working Papers TE
330 310
Income Summary 31 Ron Rolstad, Capital
16
17
20 21 22
21
22
18
20
6 0 0 00
17
19
6 0 0 00
16
19
320
310
31 Ron Rolstad, Capital
15
Ron Rolstad, Drawing
14
1 6 4 1 00
550
Utilities Expense
14
18
13
1 4 0 0 00
540
Supplies Expense
13
4 6 4 00
12
8 5 00
530
Miscellaneous Expense
12
15
11
1 5 7 00
520
Insurance Expense
11
4 6 4 00
10
9
8
7
6
5
4
3
2
1
4 5 0 00
CREDIT
5
20
510
3 7 3 3 00
3 2 6 9 00
CASH
PAGE
Advertising Expense
330
31 Income Summary
9
3 2 6 9 00
1 5 7 00
DEBIT
4
10
330
410
Income Summary
31 Sales
8
7
Closing Entries
150
Prepaid Insurance
5
1 5 7 00
1 4 0 0 00
CREDIT
SALES CREDIT
3
5:30 PM
6
520
31 Insurance Expense
140
Supplies
3
1 4 0 0 00
DEBIT
GENERAL
2
10/29/07
4
540
Adjusting Entries Oct. 31 Supplies Expense
20 – –
2
1
ACCOUNT TITLE
DOC. POST. NO. REF.
1
JOURNAL
8-4
DATE
1., 2.
Journalizing and posting adjusting and closing entries with a net loss; preparing a post-closing trial balance
BTE_Ch08-157-184.qxd Page 174
SECOND REVISED
MASTERY PROBLEM, p. 222
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SECOND REVISED
Page 175
Name
8-4
Date
Class
MASTERY PROBLEM (continued)
1., 2. ACCOUNT
GENERAL LEDGER
Cash
DATE
ACCOUNT NO.
POST. REF.
ITEM
Oct. 31 Balance
ACCOUNT
POST. REF.
ITEM
ITEM
CREDIT DEBIT
1 5 0 00
Oct. 31 Balance
CREDIT DEBIT
ACCOUNT NO.
ITEM
POST. REF.
Oct. 31 Balance 31
CREDIT DEBIT
1 4 0 0 00
7 8 0 00
Prepaid Insurance
ACCOUNT NO.
POST. REF.
Oct. 31 Balance 31
20
Chapter 8
150
BALANCE DEBIT
CREDIT DEBIT
✔
20 – –
CREDIT
2 1 8 0 00
20
ITEM
140
BALANCE DEBIT
✔
20 – –
DATE
CREDIT
1 9 7 00
Supplies
DATE
130
BALANCE DEBIT
✔
20 – –
CREDIT
ACCOUNT NO.
POST. REF.
120
BALANCE DEBIT
Accounts Receivable—M. Hollerud
DATE
CREDIT
6 9 5 8 00
✔
Oct. 31 Balance
ACCOUNT
DEBIT
ACCOUNT NO.
20 – –
ACCOUNT
CREDIT
Petty Cash
DATE
ACCOUNT
BALANCE DEBIT
✔
20 – –
110
CREDIT
9 5 7 00 1 5 7 00
8 0 0 00
Recording Adjusting and Closing Entries for a Service Business • 175
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5:30 PM
SECOND REVISED
Page 176
MASTERY PROBLEM (continued)
1., 2.
GENERAL LEDGER
ACCOUNT
Accounts Payable—Tampa Supply
DATE
ITEM
Oct. 31 Balance
ITEM
Oct. 31 Balance 31 31
ITEM
Oct. 31 Balance 31
CREDIT DEBIT
20
4 6 4 00
8 8 7 3 00
20
6 0 0 00
8 2 7 3 00 ACCOUNT NO.
POST. REF.
CREDIT DEBIT
20 – –
Oct. 31 31
20
31
20
20
6 0 0 00 6 0 0 00
CREDIT DEBIT
Oct. 31 Balance 31
176 • Working Papers TE
CREDIT
3 2 6 9 00
3 2 6 9 00 3 7 3 3 00
4 6 4 00 4 6 4 00 ACCOUNT NO.
ITEM
POST. REF.
410
BALANCE DEBIT
CREDIT DEBIT
✔ 20
330
BALANCE DEBIT
Sales
20 – –
CREDIT
ACCOUNT NO.
POST. REF.
320
BALANCE DEBIT
Income Summary
DATE
CREDIT
9 3 3 7 00
20
ITEM
310
BALANCE DEBIT
✔
20 – –
DATE
CREDIT
6 1 2 00
Ron Rolstad, Drawing
DATE
ACCOUNT
DEBIT
✔
20 – –
ACCOUNT
CREDIT
ACCOUNT NO.
POST. REF.
210
BALANCE DEBIT
Ron Rolstad, Capital
DATE
ACCOUNT
POST. REF.
✔
20 – –
ACCOUNT
ACCOUNT NO.
CREDIT
3 2 6 9 00 3 2 6 9 00
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SECOND REVISED
Page 177
Name
8-4
Date
Class
MASTERY PROBLEM (continued) GENERAL LEDGER
1., 2. ACCOUNT
Advertising Expense
DATE
ITEM
Oct. 31 Balance 31
20 – –
Oct. 31 31
4 5 0 00
POST. REF.
CREDIT DEBIT
1 5 7 00
1 5 7 00 1 5 7 00
CREDIT DEBIT
8 5 00
Supplies Expense
ACCOUNT NO.
ITEM
20 – –
Oct. 31 31
POST. REF.
20
CREDIT DEBIT
1 4 0 0 00 1 4 0 0 00
ACCOUNT NO.
POST. REF.
Oct. 31 Balance 31
550
BALANCE DEBIT
CREDIT DEBIT
✔
20 – –
CREDIT
1 6 4 1 00 1 6 4 1 00
20
ACCOUNT NO.
ACCOUNT
DATE
CREDIT
1 4 0 0 00
Utilities Expense ITEM
540
BALANCE DEBIT
20
DATE
CREDIT
8 5 00
20
DATE
530
BALANCE DEBIT
✔
Oct. 31 Balance 31
CREDIT
ACCOUNT NO.
POST. REF.
520
BALANCE DEBIT
Miscellaneous Expense ITEM
CREDIT
4 5 0 00
20
20 – –
ACCOUNT
DEBIT
ACCOUNT NO.
20
DATE
ACCOUNT
CREDIT
Insurance Expense ITEM
510
BALANCE DEBIT
20
DATE
ACCOUNT
POST. REF.
✔
20 – –
ACCOUNT
ACCOUNT NO.
ITEM
Chapter 8
POST. REF.
BALANCE DEBIT
CREDIT DEBIT
CREDIT
Recording Adjusting and Closing Entries for a Service Business • 177
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8-4
10/29/07
5:30 PM
SECOND REVISED
Page 178
MASTERY PROBLEM (concluded)
3.
Rolstad Repair Service Post-Closing Trial Balance October 31, 20 – – ACCOUNT TITLE
Cash
DEBIT
6 9 5 8 00
Petty Cash
1 5 0 00
Accounts Receivable—M. Hollerud
1 9 7 00
Supplies
7 8 0 00
Prepaid Insurance
8 0 0 00
Accounts Payable—Tampa Supply
6 1 2 00
Ron Rolstad, Capital Totals
178 • Working Papers TE
CREDIT
8 2 7 3 00 8 8 8 5 00
8 8 8 5 00
COPYRIGHT © SOUTH-WESTERN CENGAGE LEARNING
Chapter 8
2 5 0 0 00
420 330 330
Sales—Shrub Care
Income Summary
30 Income Summary
8
9
10
330 310
Income Summary
30 Ryo Morrison, Capital
21 22
21
22
19 20
1 0 0 00
18
17
16
15
14
13
12
11
10
9
8
7
6
5
4
3
2
1
20
19
18
17
CREDIT
5
18
Date
320
310
30 Ryo Morrison, Capital
CASH
PAGE
Page 179
Ryo Morrison, Drawing
3 2 0 0 00
550
Supplies Expense
15
1 0 0 00
3 3 0 0 00
540
Rent Expense
14
4 4 0 00
5 5 0 00
530
Miscellaneous Expense
13
4 4 0 00
4 0 0 00
520
Insurance Expense
12
DEBIT
4
Name
16
3 9 0 00
510
Advertising Expense
7 4 0 0 00
4 0 0 00
3 2 0 0 00
CREDIT
11
7 8 4 0 00
4 9 0 0 00
410
30 Sales—Lawn Care
4 0 0 00
3 2 0 0 00
DEBIT
7
Closing Entries
140
Prepaid Insurance
5
6
520
130
30 Insurance Expense
Supplies
550
4
3
Adjusting Entries
Sept. 30 Supplies Expense
20 – –
ACCOUNT TITLE
SALES CREDIT
3
5:30 PM
2
1
DATE
GENERAL
2
10/29/07
DOC. POST. NO. REF.
1
8-5
JOURNAL
Journalizing and posting adjusting and closing entries with two revenue accounts and a net loss; preparing a postclosing trial balance 1., 2.
BTE_Ch08-157-184.qxd
SECOND REVISED
Class
CHALLENGE PROBLEM, p. 223
Recording Adjusting and Closing Entries for a Service Business • 179
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CHALLENGE PROBLEM (continued) GENERAL LEDGER
1., 2. ACCOUNT
SECOND REVISED
Page 180
Cash
DATE
ACCOUNT NO.
ITEM
Sept. 30 Balance
ITEM
Sept. 30 Balance
ACCOUNT NO.
POST. REF.
POST. REF.
CREDIT DEBIT
Sept. 30 Balance 30
CREDIT DEBIT
20 – –
Sept. 30 Balance 30
3 2 0 0 00
6 5 0 00
ACCOUNT NO.
POST. REF.
CREDIT DEBIT
20 – –
Sept. 30 Balance
180 • Working Papers TE
CREDIT
✔
1 6 0 0 00
18
4 0 0 00 1 2 0 0 00
ACCOUNT NO.
POST. REF.
✔
140
BALANCE DEBIT
Accounts Payable—Corner Garage ITEM
CREDIT
3 8 5 0 00
18
ITEM
130
BALANCE DEBIT
Prepaid Insurance
DATE
CREDIT
9 5 00
✔
20 – –
120
BALANCE DEBIT
ACCOUNT NO.
ITEM
DATE
CREDIT
1 8 9 8 00
Supplies
DATE
ACCOUNT
DEBIT
✔
20 – –
ACCOUNT
CREDIT
Accounts Receivable—Sandra Rohe
DATE
ACCOUNT
BALANCE DEBIT
✔
20 – –
ACCOUNT
POST. REF.
110
210
BALANCE DEBIT
CREDIT DEBIT
CREDIT
5 8 00
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SECOND REVISED
Page 181
Name
Date
8-5
Class
CHALLENGE PROBLEM (continued)
1., 2.
GENERAL LEDGER
ACCOUNT
Accounts Payable—Broadway Gas
DATE
POST. REF.
ITEM
Sept. 30 Balance
ITEM
Sept. 30 Balance
ITEM
Sept. 30 Balance 30 30
POST. REF.
DEBIT
Sept. 30 Balance 30
CREDIT DEBIT
20 – –
18
4 4 0 00
3 5 6 0 00
18
1 0 0 00
3 4 6 0 00 ACCOUNT NO.
POST. REF.
POST. REF.
18
30
18
18
CREDIT DEBIT
1 0 0 00
CREDIT DEBIT
Sept. 30 Balance 30
18
Chapter 8
CREDIT
7 4 0 0 00
7 4 0 0 00 7 8 4 0 00
4 4 0 00 4 4 0 00 ACCOUNT NO.
POST. REF.
330
BALANCE DEBIT
410
BALANCE DEBIT
CREDIT DEBIT
✔
20 – –
CREDIT
1 0 0 00
Sales—Lawn Care ITEM
320
BALANCE DEBIT
ACCOUNT NO.
Sept. 30 30
DATE
CREDIT
4 0 0 0 00
18
ITEM
310
BALANCE DEBIT
Income Summary
DATE
CREDIT
2 1 5 00
✔
20 – –
ACCOUNT
CREDIT
ACCOUNT NO.
POST. REF.
230
BALANCE DEBIT
Ryo Morrison, Drawing ITEM
ACCOUNT
ACCOUNT NO.
✔
20 – –
DATE
CREDIT
1 1 0 00
Ryo Morrison, Capital
DATE
ACCOUNT
DEBIT
✔
20 – –
ACCOUNT
CREDIT
Accounts Payable—Esko Repair
DATE
220
BALANCE DEBIT
✔
20 – –
ACCOUNT
ACCOUNT NO.
CREDIT
4 9 0 0 00 4 9 0 0 00
Recording Adjusting and Closing Entries for a Service Business • 181
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SECOND REVISED
Page 182
CHALLENGE PROBLEM (continued) GENERAL LEDGER
1., 2. ACCOUNT
Sales—Shrub Care
DATE
ITEM
Sept. 30 Balance 30
18
ITEM
Sept. 30 Balance 30
20 – –
Sept. 30 30
POST. REF.
CREDIT DEBIT
3 9 0 00
CREDIT DEBIT
4 0 0 00
4 0 0 00 4 0 0 00
CREDIT DEBIT
✔ 5 5 0 00
ACCOUNT NO.
POST. REF.
Sept. 30 Balance 30
CREDIT DEBIT
3 3 0 0 00
Supplies Expense
20 – –
Sept. 30 30
182 • Working Papers TE
CREDIT
3 3 0 0 00
18
ACCOUNT NO.
ITEM
POST. REF.
18 18
540
BALANCE DEBIT
✔
20 – –
DATE
CREDIT
5 5 0 00
18
ITEM
530
BALANCE DEBIT
Rent Expense
DATE
CREDIT
ACCOUNT NO.
POST. REF.
520
BALANCE DEBIT
Miscellaneous Expense
Sept. 30 Balance 30
CREDIT
3 9 0 00
18
ITEM
510
BALANCE DEBIT
ACCOUNT NO.
18
20 – –
ACCOUNT
2 5 0 0 00
18
ITEM
DATE
CREDIT
2 5 0 0 00
Insurance Expense
DATE
ACCOUNT
DEBIT
✔
20 – –
ACCOUNT
CREDIT
ACCOUNT NO.
POST. REF.
420
BALANCE DEBIT
Advertising Expense
DATE
ACCOUNT
POST. REF.
✔
20 – –
ACCOUNT
ACCOUNT NO.
550
BALANCE DEBIT
CREDIT DEBIT
3 2 0 0 00
CREDIT
3 2 0 0 00 3 2 0 0 00
COPYRIGHT © SOUTH-WESTERN CENGAGE LEARNING
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SECOND REVISED
Page 183
Name
8-5
Date
Class
CHALLENGE PROBLEM (continued)
3.
LawnMow Post-Closing Trial Balance September 30, 20 – – ACCOUNT TITLE
Cash
DEBIT
CREDIT
1 8 9 8 00
Accounts Receivable—Sandra Rohe Supplies
9 5 00 6 5 0 00
Prepaid Insurance
1 2 0 0 00
Accounts Payable—Corner Garage
5 8 00
Accounts Payable—Broadway Gas
1 1 0 00
Accounts Payable—Esko Repair
2 1 5 00
Ryo Morrison, Capital Totals
3 4 6 0 00 3 8 4 3 00
Chapter 8
3 8 4 3 00
Recording Adjusting and Closing Entries for a Service Business • 183
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10/29/07
5:30 PM
SECOND REVISED
Page 184
CHALLENGE PROBLEM (concluded)
4.
Ryo Morrison’s expenses exceeded the amount of his sales. One way to improve is to reduce his expenses. In particular, he might investigate if it is normal to spend so much on utilities supplies in one month or whether he could reduce his monthly rent. Another way to improve is to increase his total revenue. There are two ways to increase revenues: (1) increase volume, which means to sell more services, and (2) increase prices. However, Mr. Morrison must be careful if he increases prices. An increase in prices can cause fewer sales, which may decrease overall revenue.
184 • Working Papers TE
COPYRIGHT © SOUTH-WESTERN CENGAGE LEARNING
