CHAPTER 4

Completing the Accounting Cycle

ASSIGNMENT CLASSIFICATION TABLE

Brief A
Learning Objectives Questions Exercises Do It! Exercises Problems

*1. Prepare a worksheet. 1, 2, 3, 4, 5 1, 2, 3 1 1, 2, 3, 1A, 2A, 3A,

5, 6 4A, 5A

*2. Prepare closing entries and a 6, 7, 8, 9, 11 4, 5, 6, 7 2 4, 7, 8, 11, 1A, 2A, 3A,

post-closing trial balance. 19 4A, 5A

*3. Explain the steps in the 10, 11, 12, 13 8, 9 3 10, 12, 13, 6A
accounting cycle and how to 19
prepare correcting entries.

*4. Identify the sections of a 14, 15, 16, 17, 10, 11 4 3, 9, 14, 15, 1A, 2A, 3A,
classified balance sheet. 18, 19 16, 17 4A, 5A

*5. Prepare reversing entries. 10, 20, 21 12 18, 19

*Note: All asterisked Questions, Exercises, and Problems relate to material contained in the appendix *to the
chapter.

Copyright © 2015 John Wiley & Sons, Inc. Weygandt, Accounting Principles, 12/e, Solutions Manual (For Instructor Use Only) 4-1
ASSIGNMENT CHARACTERISTICS TABLE

Problem Difficulty Time Allotted

Number Description Level (min.)

1A Prepare worksheet, financial statements, and adjusting Simple 40–50

and closing entries.

2A Complete worksheet; prepare financial statements, Moderate 50–60

closing entries, and post-closing trial balance.

3A Prepare financial statements, closing entries, and post- Moderate 40–50

closing trial balance.

4A Complete worksheet; prepare classified balance sheet, Moderate 50–60

entries, and post-closing trial balance.

5A Complete all steps in accounting cycle. Complex 70–90

6A Analyze errors and prepare correcting entries and trial Moderate 40–50
balance.

Comprehensive Problem: Chapters 2 to 4

4-2 Copyright © 2015 John Wiley & Sons, Inc. Weygandt, Accounting Principles, 12/e, Solutions Manual (For Instructor Use Only)
 WEYGANDT ACCOUNTING PRINCIPLES 12E
CHAPTER 4
COMPLETING THE ACCOUNTING CYCLE

Number LO BT Difficulty Time (min.)

BE1 1 K Simple 2–4
BE2 1 AN Moderate 6–8
BE3 1 C Simple 3–5
BE4 2 AP Simple 3–5
BE5 2 AP Simple 4–6
BE6 2 AP Simple 6–8
BE7 2 C Simple 2–4
BE8 3 K Simple 3–5
BE9 3 AN Moderate 4–6
BE10 4 AP Simple 4–6
BE11 4 C Simple 3–5
BE12 5 AN Moderate 4–6
DI1 1 C Simple 4–6
DI2 2 AP Simple 2–4
DI3 3 AP Simple 6–8
DI4 4 C Simple 4–6
EX1 1 AP Simple 12–15
EX2 1 AP Simple 10–12
EX3 1, 4 AP Simple 12–15
EX4 2 AP Simple 12–15
EX5 1 AN Simple 10–12
EX6 1 AN Moderate 12–15
EX7 2 AP Simple 8–10
EX8 2 AP Simple 10–12
EX9 4 AP Simple 12–15
EX10 3 C Simple 3–5
EX11 2 AP Simple 6–8
EX12 3 AN Moderate 8–10
EX13 3 AN Moderate 4–6
EX14 4 AP Moderate 10–12
EX15 4 C Simple 5–8
EX16 4 AP Simple 8–10

Copyright © 2015 John Wiley & Sons, Inc. Weygandt, Accounting Principles, 12/e, Solutions Manual (For Instructor Use Only) 4-3
COMPLETING THE ACCOUNTING CYCLE (Continued)

Number LO BT Difficulty Time (min.)

EX17 4 AP Simple 12–15
EX18 5 AN Moderate 5–7
EX19 2, 5 AN Moderate 10–12
P1A 1, 2, 4 AN Simple 40–50
P2A 1, 2, 4 AP Moderate 50–60
P3A 1, 2, 4 AP Moderate 40–50
P4A 1, 2, 4 AN Moderate 50–60
P5A 1, 2, 4 AN Complex 70–90
P6A 3 AN Moderate 40–50
BYP1 4 AN Simple 10–12
BYP2 4 AN Simple 8–10
BYP3 4 AN Simple 8–10
BYP4 — E Simple 10–12
BYP5 4 AN Moderate 15–20
BYP6 3 C Simple 15–20
BYP7 — E Moderate 10–15
BYP8 4 AP Moderate 12–16
BYP9 — AP Moderate 10–15

4-4 Copyright © 2015 John Wiley & Sons, Inc. Weygandt, Accounting Principles, 12/e, Solutions Manual (For Instructor Use Only)
 BLOOM’S TAXONOMY TABLE
4-5

Copyright © 2015 John Wiley & Sons, Inc.

Correlation Chart between Bloom’s Taxonomy, Learning Objectives and End-of-Chapter Exercises and Problems

Learning Objective Knowledge Comprehension Application Analysis Synthesis Evaluation

*1. Prepare a worksheet. BE4-1 Q4-1 BE4-3 E4-1 P4-2A BE4-2 P4-1A
Q4-2 DI4-1 E4-2 P4-3A E4-5 P4-4A
Q4-3 E4-3 E4-6 P4-5A
Q4-4
Q4-5
*2. Prepare closing entries and a Q4-6 Q4-7 BE4-4 E4-7 E4-19
post-closing trial balance. Q4-11 Q4-8 BE4-5 E4-8 P4-1A
Q4-9 BE4-6 E4-11 P4-4A
BE4-7 DI4-2 P4-2A P4-5A
E4-4 P4-3A
Weygandt, Accounting Principles, 12/e, Solutions Manual

*3. Explain the steps in the Q4-11 Q4-10 DI4-3 BE4-9 P4-5A
accounting cycle and how to Q4-12 Q4-13 E4-12 P4-6A
prepare correcting entries. BE4-8 E4-10 E4-13
*4. Identify the sections of Q4-14 Q4-17 BE4-10 E4-16 P4-1A
a classified balance sheet. Q4-15 Q4-19 E4-3 E4-17 P4-4A
Q4-16 BE4-11 E4-9 P4-2A P4-5A
Q4-18 DI4-4 E4-14 P4-3A
E4-15
*5. Prepare reversing entries. Q4-10 Q4-21 E4-18
Q4-20 BE4-12 E4-19

Broadening Your Perspective Communication All About You Financial Reporting Real-World
FASB Codification Comparative Focus
Analysis Ethics Case
Decision Making
Across the
Organization
(For Instructor Use Only)
 ANSWERS TO QUESTIONS

1. No. A worksheet is not a permanent accounting record. The use of a worksheet is an optional
step in the accounting cycle.

2. The worksheet is merely a device used to make it easier to prepare adjusting entries and the
financial statements.

3. The amount shown in the adjusted trial balance column for an account equals the account
balance in the ledger after adjusting entries have been journalized and posted.

4. The net income of $12,000 will appear in the income statement debit column and the balance
sheet credit column. A net loss will appear in the income statement credit column and the
balance sheet debit column.

5. Formal financial statements are needed because the columnar data are not properly arranged
and classified for statement purposes. For example, a drawing account is listed with assets.

6. (1) (Dr) Individual revenue accounts and (Cr) Income Summary.

(2) (Dr) Income Summary and (Cr) Individual expense accounts.
(3) (Dr) Income Summary and (Cr) Owner’s Capital (for net income).
(4) (Dr) Owner’s Capital and (Cr) Owner’s Drawings.

7. Income Summary is a temporary account that is used in the closing process. The account is
debited for expenses and credited for revenues. The difference, either net income or net loss, is
then closed to the owner’s capital account.

8. The post-closing trial balance contains only balance sheet accounts. Its purpose is to prove the
equality of the permanent account balances that are carried forward into the next accounting
period.

9. The accounts that will not appear in the post-closing trial balance are Depreciation Expense;
Owner’s Drawing; and Service Revenue.

10. A reversing entry is the exact opposite, both in amount and in account titles, of an adjusting entry
and is made at the beginning of the new accounting period. Reversing entries are an optional
step in the accounting cycle.

11. The steps that involve journalizing are: (1) journalize the transactions, (2) journalize the adjusting
entries, and (3) journalize the closing entries.

12. The three trial balances are the: (1) trial balance, (2) adjusted trial balance, and (3) post-closing
trial balance.

13. Correcting entries differ from adjusting entries because they: (1) are not a required part of the
accounting cycle, (2) may be made at any time, and (3) may affect any combination of accounts.

4-6 Copyright © 2015 John Wiley & Sons, Inc. Weygandt, Accounting Principles, 12/e, Solutions Manual (For Instructor Use Only)
Questions Chapter 4 (Continued)

*14. The standard classifications in a balance sheet are:

Assets Liabilities and Owner’s Equity
Current Assets Current Liabilities
Long-term Investments Long-term Liabilities
Property, Plant, and Equipment Owner’s Equity
Intangible Assets

*15. The operating cycle of a company is the average time that it takes to purchase inventory, sell it on
account, and then collect cash from customers.

*16. Current assets are assets that a company expects to convert to cash or use up in one year. Some
companies use a period longer than one year to classify assets and liabilities as current because they
have an operating cycle longer than one year. Companies usually list current assets in the order
in which they expect to convert them into cash.

*17. Long-term investments are generally investments in stocks and bonds of other companies that
are normally held for many years. Property, plant, and equipment are assets with relatively long
useful lives that a company is currently using in operating the business.

*18. (a) The owner’s equity section for a corporation is called stockholders’ equity.
(b) The two accounts and the purpose of each are: (1) Common stock is used to record invest-
ments of assets in the business by the owners (stockholders). (2) Retained earnings is used
to record net income retained in the business.

*19.. Apple’s current liabilities at September 28, 2013 and September 29, 2012 were $43,658 million
and $38,542 million respectively. Apple’s current liabilities were significantly lower than its current
assets in both years.

*20. After reversing entries have been made, the balances will be Interest Payable, zero balance;
Interest Expense, a credit balance.

*21. (a) Jan. 10 Salaries and Wages Expense..................................................... 8,000

Cash................................................................................... 8,000

Because of the January 1 reversing entry that credited Salaries and Wages Expense for
$3,500, Salaries and Wages Expense will have a debit balance of $4,500 which equals the
expense for the current period.

(b) Jan. 10 Salaries and Wages Payable...................................................... 3,500

Salaries and Wages Expense..................................................... 4,500
Cash................................................................................... 8,000

Note that Salaries and Wages Expense will again have a debit balance of $4,500.

Copyright © 2013 John Wiley & Sons, Inc. Weygandt, Accounting Principles, 11/e, Solutions Manual (For Instructor Use Only) 4-7
 SOLUTIONS TO BRIEF EXERCISES

BRIEF EXERCISE 4-1

The steps in using a worksheet are performed in the following sequence:

(1) prepare a trial balance on the worksheet, (2) enter adjustment data,
(3) enter adjusted balances, (4) extend adjusted balances to appropriate
statement columns and (5) total the statement columns, compute net
income (loss), and complete the worksheet. Filling in the blanks, the
answers are 1, 3, 4, 5, 2.

The solution to BRIEF EXERCISE 4-2 is on page 4-7.

BRIEF EXERCISE 4-3

Income Statement Balance Sheet

Account Dr. Cr. Dr. Cr.
Accumulated Depreciation X
Depreciation Expense X
Owner’s Capital X
Owner’s Drawings X
Service Revenue X
Supplies X
Accounts Payable X

BRIEF EXERCISE 4-4

Dec. 31 Service Revenue............................................... 50,000

Income Summary...................................... 50,000

31 Income Summary.............................................. 36,000

Salaries and Wages Expense.................. 29,000
Supplies Expense..................................... 7,000

31 Income Summary.............................................. 14,000

Owner’s Capital......................................... 14,000

31 Owner’s Capital................................................. 2,000

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 Owner’s Drawings..................................... 2,000

Copyright © 2013 John Wiley & Sons, Inc. Weygandt, Accounting Principles, 11/e, Solutions Manual (For Instructor Use Only) 4-9
 BRIEF EXERCISE 4-2
4-9

Copyright © 2015 John Wiley & Sons, Inc.

LENTZ COMPANY
Worksheet
Weygandt, Accounting Principles, 12/e, Solutions Manual

Adjusted Income Balance

Trial Balance Adjustments Trial Balance Statement Sheet
Account Titles Dr. Cr. Dr. Cr. Dr. Cr. Dr. Cr. Dr. Cr.
Prepaid Insurance 3,000 (a) 1,800 1,200 1,200
Service Revenue 58,000 (b) 1,100 59,100 59,100
Salaries and Wages
Expense 25,000 (c) 800 25,800 25,800
Accounts Receivable (b) 1,100 1,100 1,100
Salaries and Wages
Payable (c) 800 800 800
Insurance Expense (a) 1,800 1,800 1,800
(For Instructor Use Only)

4-10 Copyright © 2015 John Wiley & Sons, Inc. Weygandt, Accounting Principles, 12/e, Solutions Manual (For Instructor Use Only)
BRIEF EXERCISE 4-5

Salaries and Wages

Expense Income Summary Service Revenue
Bal. 29,000 (2) 29,000 (2) 36,000 (1) 50,000 (1) 50,000 Bal. 50,000
(3) 14,000
50,000 50,000

Supplies Expense Owner’s Capital Owner’s Drawings

Bal. 7,000 (2) 7,000 (4) 2,000 Bal. 30,000 Bal. 2,000 (4) 2,000
(3) 14,000
Bal. 42,000

BRIEF EXERCISE 4-6

July 31 Service Revenue................................................ 16,400

Income Summary....................................... 16,400

31 Income Summary.............................................. 10,900

Salaries and Wages Expense................... 8,400
Maintenance and Repairs Expense.......... 2,500

Service Revenue
Date Explanation Ref. Debit Credit Balance
7/31 Balance 16,400 16,400
7/31 Closing entry 16,400 0

Salaries and Wages Expense

Date Explanation Ref. Debit Credit Balance
7/31 Balance 8,400 8,400
7/31 Closing entry 8,400 0

Copyright © 2015 John Wiley & Sons, Inc. Weygandt, Accounting Principles, 12/e, Solutions Manual (For Instructor Use Only) 4-11
BRIEF EXERCISE 4-6 (Continued)

Maintenance and Repairs Expense

Date Explanation Ref. Debit Credit Balance
7/31 Balance 2,500 2,500
7/31 Closing entry 2,500 0

BRIEF EXERCISE 4-7

The accounts that will appear in the post-closing trial balance are:

Accumulated Depreciation
Owner’s Capital
Supplies
Accounts Payable

BRIEF EXERCISE 4-8

The proper sequencing of the required steps in the accounting cycle is as

follows:

1. Analyze business transactions.

2. Journalize the transactions.
3. Post to ledger accounts.
4. Prepare a trial balance.
5. Journalize and post adjusting entries.
6. Prepare an adjusted trial balance.
7. Prepare financial statements.
8. Journalize and post closing entries.
9. Prepare a post-closing trial balance.

Filling in the blanks, the answers are 4, 2, 8, 7, 5, 3, 9, 6, 1.

4-12 Copyright © 2015 John Wiley & Sons, Inc. Weygandt, Accounting Principles, 12/e, Solutions Manual (For Instructor Use Only)
BRIEF EXERCISE 4-9

1. Service Revenue.................................................................. 870

Accounts Receivable................................................... 870

2. Supplies ($1,150 – $1,510)................................................... 360

Accounts Payable........................................................ 360

BRIEF EXERCISE 4-10

MROTET COMPANY
Partial Balance Sheet

Current assets
Cash........................................................................................... $ 4,100
Debt investments...................................................................... 6,700
Accounts receivable................................................................. 12,500
Supplies..................................................................................... 5,200
Prepaid insurance.................................................................... 3,600
Total current assets.......................................................... $32,100

BRIEF EXERCISE 4-11

CL Accounts payable CL Income taxes payable

CA Accounts receivable LTI Debt investments (long-term)
PPE Accum. depreciation—buildings PPE Land
PPE Buildings CA Inventory
CA Cash IA Patents
IA Copyrights CA Supplies

*BRIEF EXERCISE 4-12

Nov.1 Salaries and Wages Payable...................................... 2,100

Salaries and Wages Expense............................. 2,100

The balances after posting the reversing entry are Salaries and Wages
Expense (Cr.) $2,100 and Salaries and Wages Payable $0.

Copyright © 2015 John Wiley & Sons, Inc. Weygandt, Accounting Principles, 12/e, Solutions Manual (For Instructor Use Only) 4-13
 SOLUTIONS FOR DO IT! REVIEW EXERCISES

DO IT! 4-1

Income statement debit column—Utilities Expense

Income statement credit column—Service Revenue
Balance sheet debit column—Accounts Receivable
Balance sheet credit column—Notes Payable; Accumulated Depreciation;
Owner’s Capital

DO IT! 4-2

Dec. 31 Income Summary.......................................... 41,000

Owner’s Capital...................................... 41,000

Dec. 31 Owner’s Capital............................................ 22,000

Owner’s Drawings.................................. 22,000

DO IT! 4-3

1. Supplies......................................................... 650
Equipment................................................. 210
Cash.......................................................... 440

2. Cash............................................................... 400
Owner’s Drawings........................................ 500
Salaries & Wages Expense...................... 900

3. Accounts Payable......................................... 540

Cash.......................................................... 540

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DO IT! 4-4

NA Interest revenue OE Owner’s capital

CL Utilities payable PPE Accumulated depreciation—equipment
CL Accounts payable PPE Equipment
CA Supplies NA Salaries and wages expense
LTL Bonds payable LTI Debt investments (long-term)
IA Goodwill CL Unearned rent revenue

Copyright © 2015 John Wiley & Sons, Inc. Weygandt, Accounting Principles, 12/e, Solutions Manual (For Instructor Use Only) 4-15
 SOLUTIONS TO EXERCISES

EXERCISE 4-1

DIXON COMPANY
Worksheet
For the Month Ended June 30, 2017

Account Titles Trial Balance Adjustments Adj. Trial Balance Income Statement Balance Sheet
Dr. Cr. Dr. Cr. Dr. Cr. Dr. Cr. Dr. Cr.
Cash 2,320 2,320 2,320
Accounts
Receivable 2,440 2,440 2,440
Supplies 1,880 (a) 1,380 500 500
Accounts Payable 1,120 1,120 1,120
Unearned Service
Revenue 240 (b) 140 100 100
Owner’s Capital 3,600 3,600 3,600
Service Revenue 2,400 (b) 140 2,540 2,540
Salaries and
Wages Expense 560 (c) 210 770 770
Miscellaneous
Expense 160 160 160
Totals 7,360 7,360
(a)
Supplies Expense 1,380 1,380 1,380
Salaries and
Wages Payable (c) 210 210 210
Totals 1,730 1,730 7,570 7,570 2,310 2,540 5,260 5,030
Net Income 230 230
Totals 2,540 2,540 5,260 5,260

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EXERCISE 4-2

SAVAGLIA COMPANY
(Partial) Worksheet
For the Month Ended April 30, 2017

Adjusted Income
Trial Balance Statement Balance Sheet
Account Titles Dr. Cr. Dr. Cr. Dr. Cr.
Cash 10,000 10,000
Accounts Receivable 7,840 7,840
Prepaid Rent 2,280 2,280
Equipment 23,050 23,050
Accum. Depreciation
— Equipment 4,900 4,900
Notes Payable 5,700 5,700
Accounts Payable 4,920 4,920
Owner’s Capital 27,960 27,960
Owner’s Drawings 3,650 3,650
Service Revenue 15,590 15,590
Salaries and Wages
Expense 10,840 10,840
Rent Expense 760 760
Depreciation Expense 650 650
Interest Expense 57 57
Interest Payable 57 57
Totals 59,127 59,127 12,307 15,590 46,820 43,537
Net Income 3,283 3,283
Totals 15,590 15,590 46,820 46,820

Copyright © 2015 John Wiley & Sons, Inc. Weygandt, Accounting Principles, 12/e, Solutions Manual (For Instructor Use Only) 4-17
EXERCISE 4-3

SAVAGLIA COMPANY
Income Statement
For the Month Ended April 30, 2017

Revenues
Service revenue......................................................... $15,590
Expenses
Salaries and wages expense.................................... $10,840
Rent expense............................................................. 760
Depreciation expense............................................... 650
Interest expense........................................................ 57
Total expenses.................................................. 12,307
Net income........................................................................ $ 3,283

SAVAGLIA COMPANY
Owner’s Equity Statement
For the Month Ended April 30, 2017

Owner’s Capital, April 1............................................................. $27,960

Add: Net income....................................................................... 3,283
31,243
Less: Drawings.......................................................................... 3,650
Owner’s Capital, April 30........................................................... $27,593

SAVAGLIA COMPANY
Balance Sheet
April 30, 2017

Assets
Current assets
Cash........................................................................... $10,000
Accounts receivable................................................. 7,840
Prepaid rent............................................................... 2,280
Total current assets.......................................... $20,120
Property, plant, and equipment
Equipment.................................................................. 23,050

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 Less: Accumulated depreciation—equipment...... 4,900 18,150
Total assets........................................................ $38,270

Copyright © 2015 John Wiley & Sons, Inc. Weygandt, Accounting Principles, 12/e, Solutions Manual (For Instructor Use Only) 4-19
EXERCISE 4-3 (Continued)
SAVAGLIA COMPANY
Balance Sheet (Continued)
April 30, 2017

Liabilities and Owner’s Equity

Current liabilities
Notes payable............................................................ $5,700
Accounts payable..................................................... 4,920
Interest payable......................................................... 57
Total current liabilities...................................... $10,677
Owner’s equity
Owner’s capital.......................................................... 27,593
Total liabilities and owner’s equity.................. $38,270

EXERCISE 4-4

(a) Apr. 30 Service Revenue....................................... 15,590

Income Summary............................... 15,590

30 Income Summary...................................... 12,307

Salaries and Wages Expense........... 10,840
Rent Expense..................................... 760
Depreciation Expense....................... 650
Interest Expense................................ 57

30 Income Summary...................................... 3,283

Owner’s Capital................................. 3,283

30 Owner’s Capital......................................... 3,650

Owner’s Drawings............................. 3,650

(b)
Income Summary Owner’s Capital
(2) 12,307 (1) 15,590 (4) 3,650 Bal. 27,960
(3) 3,283 (3) 3,283
15,590 15,590 Bal. 27,593

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EXERCISE 4-4 (Continued)

(c) SAVAGLIA COMPANY

Post-Closing Trial Balance
April 30, 2017

Debit Credit
Cash...................................................................... $10,000
Accounts Receivable.......................................... 7,840
Prepaid Rent........................................................ 2,280
Equipment............................................................ 23,050
Accumulated Depreciation—Equipment........... $ 4,900
Notes Payable...................................................... 5,700
Accounts Payable................................................ 4,920
Interest Payable................................................... 57
Owner’s Capital................................................... 27,593
$43,170 $43,170

EXERCISE 4-5

(a) Accounts Receivable.......................................... 1,100

Service Revenue.......................................... 1,100

Insurance Expense.............................................. 300

Prepaid Insurance........................................ 300

Depreciation Expense......................................... 900

Accumulated Depreciation—Equipment. . . 900

Salaries and Wages Expense............................. 500

Salaries and Wages Payable....................... 500

Copyright © 2015 John Wiley & Sons, Inc. Weygandt, Accounting Principles, 12/e, Solutions Manual (For Instructor Use Only) 4-21
EXERCISE 4-5 (Continued)

(b) Income Statement Balance Sheet

Dr. Cr. Dr. Cr.
Accounts Receivable X
Prepaid Insurance X
Accum. Depreciation—Equip. X
Salaries and Wages Payable X
Service Revenue X
Salaries and Wages Expense X
Insurance Expense X
Depreciation Expense X

EXERCISE 4-6

(a) Accounts Receivable—$25,000 ($34,000 – $9,000).

Supplies—$2,500 ($7,000 – $4,500).
Accumulated Depreciation—Equipment—$22,000 ($12,000 + $10,000).
Salaries and Wages Payable—$0 No liability recorded until adjustments
are made.
Insurance Expense—$6,000 ($26,000 – $20,000).
Salaries and Wages Expense—$43,400 ($49,000 – $5,600).

(b) Accounts Receivable.................................................. 9,000

Service Revenue................................................. 9,000

Insurance Expense..................................................... 6,000

Prepaid Insurance............................................... 6,000

Supplies Expense....................................................... 4,500

Supplies............................................................... 4,500

Depreciation Expense................................................ 10,000

Accumulated Depreciation—Equipment........... 10,000

Salaries and Wages Expense.................................... 5,600

Salaries and Wages Payable.............................. 5,600

4-22 Copyright © 2015 John Wiley & Sons, Inc. Weygandt, Accounting Principles, 12/e, Solutions Manual (For Instructor Use Only)
EXERCISE 4-7

(a) Service Revenue..................................................... 4,300

Income Summary.............................................. 4,300

Income Summary.................................................... 3,416

Salaries and Wages Expense.......................... 1,260
Miscellaneous Expense................................... 256
Supplies Expense............................................. 1,900

Income Summary.................................................... 884

Owner’s Capital................................................. 884

Owner’s Capital....................................................... 550

Owner’s Drawings............................................ 550

(b) VICTORIA LEE COMPANY

Post-Closing Trial Balance
June 30, 2017

Account Titles Debit Credit

Cash......................................................................... $3,712
Accounts Receivable.............................................. 3,904
Supplies................................................................... 480
Accounts Payable................................................... $1,382
Salaries and Wages Payable.................................. 460
Unearned Service Revenue.................................... 160
Owner’s Capital....................................................... 6,094
$8,096 $8,096

Copyright © 2015 John Wiley & Sons, Inc. Weygandt, Accounting Principles, 12/e, Solutions Manual (For Instructor Use Only) 4-23
EXERCISE 4-8

(a)
General Journal J15
Date Account Titles Ref. Debit Credit
July 31 Service Revenue.................................. 400 64,000
Rent Revenue....................................... 429 6,500
Income Summary........................ 350 70,500

31 Income Summary................................. 350 78,600

Salaries and Wages Expense.... 726 55,700
Utilities Expense......................... 732 14,900
Depreciation Expense................ 711 8,000

31 Owner’s Capital.................................... 301 8,100

Income Summary........................ 350 8,100

31 Owner’s Capital.................................... 301 16,000

Owner’s Drawings...................... 306 16,000

(b)

Owner’s Capital No. 301

Date Explanation Ref. Debit Credit Balance
July 31 Balance ✓ 45,200
31 Close net loss J15 8,100 37,100
31 Close drawing J15 16,000 21,100

Income Summary No. 350

Date Explanation Ref. Debit Credit Balance
July 31 Close revenue J15 70,500 70,500
31 Close expenses J15 78,600 (8,100)
31 Close net loss J15 8,100 0

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EXERCISE 4-8 (Continued)

(c) OKABE COMPANY

Post-Closing Trial Balance
July 31, 2017

Debit Credit
Cash...................................................................... $9,840
Accounts Receivable.......................................... 8,780
Equipment............................................................ 15,900
Accumulated Depreciation—Equipment........... $ 7,400
Accounts Payable................................................ 4,220
Unearned Rent Revenue..................................... 1,800
Owner’s Capital................................................... 21,100
$34,520 $34,520

EXERCISE 4-9

(a) OKABE COMPANY

Income Statement
For the Year Ended July 31, 2017

Revenues
Service revenue........................................... $64,000
Rent revenue................................................ 6,500
Total revenues...................................... $70,500
Expenses
Salaries and wages expense...................... 55,700
Utilities expense.......................................... 14,900
Depreciation expense.................................. 8,000
Total expenses..................................... 78,600
Net loss................................................................. ($ 8,100)

Copyright © 2015 John Wiley & Sons, Inc. Weygandt, Accounting Principles, 12/e, Solutions Manual (For Instructor Use Only) 4-25
EXERCISE 4-9 (Continued)

OKABE COMPANY
Owner’s Equity Statement
For the Year Ended July 31, 2017

Owner’s Capital, August 1, 2016........................ $45,200

Less: Net loss..................................................... $ 8,100
Drawings................................................... 16,000 24,100
Owner’s Capital, July 31, 2017........................... $21,100

(b) OKABE COMPANY

Balance Sheet
July 31, 2017

Assets
Current assets
Cash................................................................. $9,840
Accounts receivable...................................... 8,780
Total current assets................................ $18,620
Property, plant, and equipment
Equipment....................................................... 15,900
Less: Accumulated depreciation................. 7,400 8,500
Total assets............................................. $27,120

Liabilities and Owner’s Equity

Current liabilities
Accounts payable........................................... $4,220
Unearned rent revenue.................................. 1,800
Total current liabilities........................... $ 6,020
Owner’s equity
Owner’s Capital.............................................. 21,100
Total liabilities and owner’s equity....... $27,120

4-26 Copyright © 2015 John Wiley & Sons, Inc. Weygandt, Accounting Principles, 12/e, Solutions Manual (For Instructor Use Only)
EXERCISE 4-10

1. False “Analyze business transactions” is the first step in the accounting

cycle.
2. False. Reversing entries are an optional step in the accounting cycle.
3. True.
4. True.
5. True.
6. False. Steps 1–3 may occur daily in the accounting cycle. Steps 4–7 are
performed on a periodic basis. Steps 8 and 9 are usually prepared only
at the end of a company’s annual accounting period.
7. False. The step of “journalize the transactions” occurs before the step
of “post to the ledger accounts.”
8. False. Closing entries are prepared after financial statements are prepared.

EXERCISE 4-11

(a) June 30 Service Revenue..................................... 18,100

Income Summary............................ 18,100

30 Income Summary................................... 13,100

Salaries and Wages Expense........ 8,800
Rent Expense.................................. 3,000
Supplies Expense........................... 1,300

30 Income Summary................................... 5,000

Owner’s Capital............................... 5,000

30 Owner’s Capital...................................... 2,100

Owner’s Drawings.......................... 2,100

(b)
Income Summary
June 30 13,100 June 30 18,100
June 30 5,000
18,100 18,100

Copyright © 2015 John Wiley & Sons, Inc. Weygandt, Accounting Principles, 12/e, Solutions Manual (For Instructor Use Only) 4-27
EXERCISE 4-12

(a) 1. Cash................................................................... 700

Equipment................................................. 700

Salaries and Wages Expense.......................... 700

Cash........................................................... 700

2. Service Revenue............................................... 100

Cash........................................................... 100

Cash................................................................... 1,000
Accounts Receivable............................... 1,000

3. Accounts Payable............................................. 670

Equipment................................................. 670

Equipment......................................................... 760
Accounts Payable.................................... 760

(b) 1. Salaries and Wages Expense.......................... 700

Equipment................................................. 700

2. Service Revenue............................................... 100

Cash................................................................... 900
Accounts Receivable............................... 1,000

3. Equipment......................................................... 90
Accounts Payable..................................... 90

4-28 Copyright © 2015 John Wiley & Sons, Inc. Weygandt, Accounting Principles, 12/e, Solutions Manual (For Instructor Use Only)
EXERCISE 4-13

1. Accounts Payable ($750 – $570).............................. 180

Cash.................................................................... 180

2. Supplies..................................................................... 560
Equipment.......................................................... 56
Accounts Payable.............................................. 504

3. Owner’s Drawings.................................................... 500

Salaries and Wages Expense........................... 500

EXERCISE 4-14

(a) MCCOY BOWLING ALLEY

Balance Sheet
December 31, 2017

Assets
Current assets
Cash.............................................. $18,040
Accounts receivable.................... 14,520
Prepaid insurance........................ 4,680
Total current assets............. $ 37,240
Property, plant, and equipment
Land.............................................. 67,000
Buildings....................................... $128,800
Less: Acc. depr.—buildings....... 42,600 86,200
Equipment.................................... 62,400
Less: Acc. depr.—equipment.... 18,720 43,680 196,880
Total assets.......................... $234,120

Copyright © 2015 John Wiley & Sons, Inc. Weygandt, Accounting Principles, 12/e, Solutions Manual (For Instructor Use Only) 4-29
EXERCISE 4-14 (Continued)

MCCOY BOWLING ALLEY

Balance Sheet (Continued)
December 31, 2017

Liabilities and Owner’s Equity

Current liabilities
Notes payable(due 2018).................................. $20,000
Accounts payable.............................................. 12,300
Interest payable................................................. 3,800
Total current liabilities.............................. $ 36,100
Long-term liabilities
Notes payable.................................................... 77,780
Total liabilities........................................... 113,880
Owner’s equity
Owner’s capital ($115,000 + $5,240*)............... 120,240
Total liabilities and owner’s equity.......... $234,120

*Net income = $17,180 – $780 – $7,360 – $3,800 = $5,240

(b) Current assets exceed current liabilities by only $1,140 ($37,240 –

$36,100). However, approximately 50% of current assets are in the form
of cash. The company’s liquidity appears to be reasonably good, but
some caution is needed.

EXERCISE 4-15

CL Accounts payable PPE Accumulated depreciation–

equipment
CA Accounts receivable PPE Buildings
CA Cash PPE Land
OE Owner’s capital LTL Notes payable (due in 2 years)
IA Patents CA Supplies
CL Salaries and wages payable PPE Equipment
CA Inventory CA Prepaid expenses
CA Stock investments

4-30 Copyright © 2015 John Wiley & Sons, Inc. Weygandt, Accounting Principles, 12/e, Solutions Manual (For Instructor Use Only)
EXERCISE 4-16

J. PINEDA COMPANY
Balance Sheet
December 31, 2017
(in thousands)
Assets
Current assets
Cash............................................................. $ 2,668
Short-term investments.............................. 3,690
Accounts receivable................................... 1,696
Inventory...................................................... 1,256
Prepaid insurance....................................... 880
Total current assets............................ $10,190
Long-term investments...................................... 264
Property, plant, and equipment
Equipment.................................................... 11,500
Less: Accumulated depreciation—
equipment......................................... (5,655) 5,845
Total assets.......................................... $16,299

Liabilities and Owner’s Equity

Current liabilities
Notes payable (due in 2018)....................... $ 500
Accounts payable....................................... 1,444
Total current liabilities........................ $ 1,944
Long-term liabilities
Long-term debt............................................ 1,000
Notes payable.............................................. 400
Total long-term liabilities..................... 1,400
Total liabilities..................................................... 3,344
Owner’s equity
Owner’s capital............................................ 12,955
Total liabilities and owner’s equity.... $16,299

Copyright © 2015 John Wiley & Sons, Inc. Weygandt, Accounting Principles, 12/e, Solutions Manual (For Instructor Use Only) 4-31
EXERCISE 4-17

(a)
BASTEN COMPANY
Income Statement
For the Year Ended July 31, 2017

Revenues
Service revenue........................................ $63,000
Rent revenue............................................ 8,500
Total revenues.................................. $71,500
Expenses
Salaries and wages expense................... 48,700
Utilities expense....................................... 22,600
Depreciation expense.............................. 4,000
Total expense.................................... 75,300
Net loss............................................................. $ (3,800)

BASTEN COMPANY
Owner’s Equity Statement
For the Year Ended July 31, 2017

Owner’s Capital, August 1, 2016.................... $51,200

Less: Net loss.................................................. $3,800
Drawings................................................ 3,000 6,800
Owner’s Capital, July 31, 2017........................ $44,400

4-32 Copyright © 2015 John Wiley & Sons, Inc. Weygandt, Accounting Principles, 12/e, Solutions Manual (For Instructor Use Only)
EXERCISE 4-17 (Continued)

(b)
BASTEN COMPANY
Balance Sheet
July 31, 2017

Assets
Current assets
Cash................................................................. $14,200
Accounts receivable....................................... 9,780
Total current assets................................ $23,980
Property, plant, and equipment
Equipment........................................................ 34,400
Less: Accumulated depreciation—
equipment............................................. 6,000 28,400
Total assets ............................................. $52,380

Liabilities and Owner’s Equity

Current liabilities
Accounts payable........................................... $4,100
Salaries and wages payable........................... 2,080
Total current liabilities............................ $ 6,180
Long-term liabilities
Notes payable.................................................. 1,800
Total liabilities......................................... 7,980
Owner’s equity
Owner’s capital................................................ 44,400
Total liabilities and owner’s equity........ $52,380

Copyright © 2015 John Wiley & Sons, Inc. Weygandt, Accounting Principles, 12/e, Solutions Manual (For Instructor Use Only) 4-33
*EXERCISE 4-18

(a) Dec. 31 Salaries and Wages Expense

($12,000 X 2/5)....................................... 4,800
Salaries and Wages Payable.......... 4,800

Jan. 6 Salaries and Wages Payable.................. 4,800

Salaries and Wages Expense
($12,000 X 3/5)....................................... 7,200
Cash.................................................. 12,000

(b) Dec.31 Salaries and Wages Expense................. 4,800

Salaries and Wages Payable.......... 4,800

Jan. 1 Salaries and Wages Payable.................. 4,800

Salaries and Wages Expense......... 4,800

Jan. 6 Salaries and Wages Expense................ 12,000

Cash.................................................. 12,000

*EXERCISE 4-19

(a) Dec. 31 Service Revenue...................................... 92,500

Income Summary............................. 92,500

31 Income Summary..................................... 7,700

Interest Expense.............................. 7,700

(b) Jan. 1 Service Revenue...................................... 5,000

Accounts Receivable....................... 5,000

1 Interest Payable....................................... 2,200

Interest Expense.............................. 2,200

4-34 Copyright © 2015 John Wiley & Sons, Inc. Weygandt, Accounting Principles, 12/e, Solutions Manual (For Instructor Use Only)
*EXERCISE 4-19 (Continued)

(c) & (e)

Accounts Receivable
Dec. 31 Balance *19,500
31 Adjusting 5,000
24,500
Jan. 1 Reversing 5,000

*($24,500 – $5,000)

Service Revenue
Dec. 31 Closing 92,500 Dec. 31 Balance 87,500*
31 Adjusting 5,000
92,500 92,500
Jan. 1 Reversing 5,000 Jan. 10 5,000

*($92,500 – $5,000)

Interest Payable
Dec. 31 Adjusting 2,200
Jan. 1 Reversing 2,200

Interest Expense
Dec. 31 Balance *5,500 Dec. 31 Closing 7,700
31 Adjusting 2,200 .
7,700 7,700
Jan. 15 3,000 Jan. 1 Reversing 2,200

*($7,700 – $2,200)

(d) (1)
Jan. 10 Cash................................................................ 5,000
Service Revenue.................................... 5,000

(2)
15 Interest Expense............................................ 3,000
Cash........................................................ 3,000

Copyright © 2015 John Wiley & Sons, Inc. Weygandt, Accounting Principles, 12/e, Solutions Manual (For Instructor Use Only) 4-35
4-34
Copyright © 2015 John Wiley & Sons, Inc.

(a) WARREN ROOFING

Worksheet
For the Month Ended March 31, 2017
Adjusted Income
Account Titles Trial Balance Adjustments Trial Balance Statement Balance Sheet
Dr. Cr. Dr. Cr. Dr. Cr. Dr. Cr. Dr. Cr.
Cash 4,500 4,500 4,500
Accounts Receivable 3,200 3,200 3,200
Supplies 2,000 (a) 1,520 480 480
Equipment 11,000 11,000 11,000

PROBLEM 4-1A
Accumulated
Weygandt, Accounting Principles, 12/e, Solutions Manual

Depreciation—Equipment 1,250 (b) 250 1,500 1,500

Accounts Payable 2,500 2,500 2,500
Unearned Service Revenue 550 (c) 290 260 260
Owner’s Capital 12,900 12,900 12,900
Owner’s Drawings 1,100 1,100 1,100
Service Revenue 6,300 (c) 290 6,590 6,590
Salaries and Wages
Expense 1,300 (d) 700 2,000 2,000
Miscellaneous Expense 400 400 400
Totals 23,500 23,500
Supplies Expense (a) 1,520 1,520 1,520
Depreciation Expense (b) 250 250 250
Salaries and Wages
Payable (d) 700 700 700
Totals 2,760 2,760 24,450 24,450 4,170 6,590 20,280 17,860
Net Income 2,420 2,420
Totals 6,590 6,590 20,280 20,280
(For Instructor Use Only)

Key: (a) Supplies Used; (b) Depreciation Expensed; (c) Service Revenue Recognized; (d) Salaries Accrued.
PROBLEM 4-1A (Continued)

(b) WARREN ROOFING

Income Statement
For the Month Ended March 31, 2017

Revenues
Service revenue.................................................. $6,590
Expenses
Salaries and wages expense............................. $2,000
Supplies expense................................................ 1,520
Miscellaneous expense...................................... 400
Depreciation expense......................................... 250
Total expenses............................................ 4,170
Net income.................................................................. $2,420

WARREN ROOFING
Owner’s Equity Statement
For the Month Ended March 31, 2017

Owner’s Capital, March 1........................................ $ 2,900

Investments.................................................. 10,000
Add: Net income.................................................... 2,420
12,420
15,320
Less: Drawings....................................................... 1,100
Owner’s Capital, March 31...................................... $14,220

WARREN ROOFING
Balance Sheet
March 31, 2017

Assets
Current assets
Cash..................................................................... $4,500
Accounts receivable........................................... 3,200
Supplies............................................................... 480
Total current assets.................................... $ 8,180
Property, plant, and equipment
Equipment........................................................... 11,000

Copyright © 2015 John Wiley & Sons, Inc. Weygandt, Accounting Principles, 12/e, Solutions Manual (For Instructor Use Only) 4-37
 Less: Accum. depreciation—equipment.......... 1,500 9,500
Total assets.................................................. $17,680

4-38 Copyright © 2015 John Wiley & Sons, Inc. Weygandt, Accounting Principles, 12/e, Solutions Manual (For Instructor Use Only)
PROBLEM 4-1A (Continued)

WARREN ROOFING
Balance Sheet (Continued)
March 31, 2017

Liabilities and Owner’s Equity

Current liabilities
Accounts payable.................................................. $2,500
Salaries and wages payable................................. 700
Unearned service revenue.................................... 260
Total current liabilities.................................. $ 3,460
Owner’s equity
Owner’s capital...................................................... 14,220
Total liabilities and owner’s equity.............. $17,680
(c) Mar. 31 Supplies Expense........................................ 1,520
Supplies................................................ 1,520

31 Depreciation Expense................................. 250

Accumulated Depreciation—
Equipment......................................... 250

31 Unearned Service Revenue........................ 290

Service Revenue.................................. 290

31 Salaries and Wages Expense..................... 700

Salaries and Wages Payable............... 700
(d) Mar. 31 Service Revenue.......................................... 6,590
Income Summary................................. 6,590

31 Income Summary......................................... 4,170

Salaries and Wages Expense............. 2,000
Supplies Expense................................ 1,520
Depreciation Expense......................... 250
Miscellaneous Expense....................... 400

31 Income Summary......................................... 2,420

Owner’s Capital.................................... 2,420

31 Owner’s Capital........................................... 1,100

Owner’s Drawing.................................. 1,100

Copyright © 2015 John Wiley & Sons, Inc. Weygandt, Accounting Principles, 12/e, Solutions Manual (For Instructor Use Only) 4-39
 PROBLEM 4-2A

(a) THAO COMPANY

Partial Worksheet
For the Year Ended December 31, 2017

Adjusted Income Balance

Account Trial Balance Statement Sheet
No. Titles Dr. Cr. Dr. Cr. Dr. Cr.
101 Cash 5,300 5,300
112 Accounts Receivable 10,800 10,800
126 Supplies 1,500 1,500
130 Prepaid Insurance 2,000 2,000
157 Equipment 27,000 27,000
158 Acc. Depr.—Equip. 5,600 5,600
200 Notes Payable 15,000 15,000
201 Accounts Payable 6,100 6,100
212 Salaries and Wages
Payable 2,400 2,400
230 Interest Payable 600 600
301 Owner’s Capital 13,000 13,000
306 Owner’s Drawings 7,000 7,000
400 Service Revenue 61,000 61,000
610 Advertising Expense 8,400 8,400
631 Supplies Expense 4,000 4,000
711 Depreciation Expense 5,600 5,600
722 Insurance Expense 3,500 3,500
726 Salaries and Wages
Expense 28,000 28,000
905 Interest Expense 600 600
Totals 103,700 103,700 50,100 61,000 53,600 42,700
Net Income 10,900 10,900
Totals 61,000 61,000 53,600 53,600

4-40 Copyright © 2015 John Wiley & Sons, Inc. Weygandt, Accounting Principles, 12/e, Solutions Manual (For Instructor Use Only)
PROBLEM 4-2A (Continued)

(b) THAO COMPANY

Income Statement
For the Year Ended December 31, 2017

Revenues
Service revenue.............................................. $61,000
Expenses
Salaries and wages expense......................... $28,000
Advertising expense...................................... 8,400
Depreciation expense.................................... 5,600
Supplies expense........................................... 4,000
Insurance expense......................................... 3,500
Interest expense............................................. 600
Total expenses........................................ 50,100
Net income.............................................................. $10,900

THAO COMPANY
Owner’s Equity Statement
For the Year Ended December 31, 2017

Owner’s Capital, January 1...................................................... $13,000

Add: Net income..................................................................... 10,900
23,900
Less: Drawings........................................................................ 7,000
Owner’s Capital, December 31................................................ $16,900

Copyright © 2015 John Wiley & Sons, Inc. Weygandt, Accounting Principles, 12/e, Solutions Manual (For Instructor Use Only) 4-41
PROBLEM 4-2A (Continued)

THAO COMPANY
Balance Sheet
December 31, 2017

Assets
Current assets
Cash................................................................. $ 5,300
Accounts receivable...................................... 10,800
Supplies.......................................................... 1,500
Prepaid insurance.......................................... 2,000
Total current assets................................ $19,600
Property, plant, and equipment
Equipment....................................................... 27,000
Less: Accumulated depreciation—
equipment............................................ 5,600 21,400
Total assets............................................. $41,000

Liabilities and Owner’s Equity

Current liabilities
Notes payable................................................. $5,000
Accounts payable........................................... 6,100
Salaries and wages payable.......................... 2,400
Interest payable.............................................. 600
Total current liabilities........................... $14,100
Long-term liabilities
Notes payable................................................. 10,000
Total liabilities......................................... 24,100
Owner’s equity
Owner’s capital............................................... 16,900
Total liabilities and owner’s equity....... $41,000

4-42 Copyright © 2015 John Wiley & Sons, Inc. Weygandt, Accounting Principles, 12/e, Solutions Manual (For Instructor Use Only)
PROBLEM 4-2A (Continued)

(c)
General Journal J14
Date Account Titles and Explanation Ref. Debit Credit
Dec. 31 Service Revenue.................................. 400 61,000
Income Summary........................ 350 61,000

31 Income Summary................................. 350 50,100

Advertising Expense.................. 610 8,400
Supplies Expense....................... 631 4,000
Depreciation Expense................ 711 5,600
Insurance Expense..................... 722 3,500
Salaries and Wages Expense.... 726 28,000
Interest Expense......................... 905 600

31 Income Summary................................ 350 10,900

Owner’s Capital........................... 301 10,900

31 Owner’s Capital.................................... 301 7,000

Owner’s Drawings...................... 306 7,000

(d)

Owner’s Capital No. 301

Date Explanation Ref. Debit Credit Balance
Jan. 1 Balance  13,000 13,000
Dec. 31 Closing entry J14 10,900 23,900
31 Closing entry J14 7,000 16,900

Owner’s Drawings No. 306

Date Explanation Ref. Debit Credit Balance
Dec. 31 Balance  7,000 7,000
31 Closing entry J14 7,000 0

Copyright © 2015 John Wiley & Sons, Inc. Weygandt, Accounting Principles, 12/e, Solutions Manual (For Instructor Use Only) 4-43
PROBLEM 4-2A (Continued)

Income Summary No. 350

Date Explanation Ref. Debit Credit Balance
Dec. 31 Closing entry J14 61,000 61,000
31 Closing entry J14 50,100 10,900
31 Closing entry J14 10,900 0

Service Revenue No. 400

Date Explanation Ref. Debit Credit Balance
Dec. 31 Balance  61,000 61,000
31 Closing entry J14 61,000 0

Advertising Expense No. 610

Date Explanation Ref. Debit Credit Balance
Dec. 31 Balance  8,400 8,400
31 Closing entry J14 8,400 0

Supplies Expense No. 631

Date Explanation Ref. Debit Credit Balance
Dec. 31 Balance  4,000 4,000
31 Closing entry J14 4,000 0

Depreciation Expense No. 711

Date Explanation Ref. Debit Credit Balance
Dec. 31 Balance  5,600 5,600
31 Closing entry J14 5,600 0

Insurance Expense No. 722

Date Explanation Ref. Debit Credit Balance
Dec. 31 Balance  3,500 3,500
31 Closing entry J14 3,500 0

4-44 Copyright © 2015 John Wiley & Sons, Inc. Weygandt, Accounting Principles, 12/e, Solutions Manual (For Instructor Use Only)
PROBLEM 4-2A (Continued)

Salaries and Wages Expense No. 726

Date Explanation Ref. Debit Credit Balance
Dec. 31 Balance  28,000 28,000
31 Closing entry J14 28,000 0

Interest Expense No. 905

Date Explanation Ref. Debit Credit Balance
Dec. 31 Balance  600 600
31 Closing entry J14 600 0

(e) THAO COMPANY

Post-Closing Trial Balance
December 31, 2017

Debit Credit
Cash...................................................................... $ 5,300
Accounts Receivable.......................................... 10,800
Supplies................................................................ 1,500
Prepaid Insurance............................................... 2,000
Equipment............................................................ 27,000
Accumulated Depreciation—
Equipment........................................................ $ 5,600
Notes Payable...................................................... 15,000
Accounts Payable................................................ 6,100
Salaries and Wages Payable.............................. 2,400
Interest Payable................................................... 600
Owner’s Capital................................................... 16,900
Totals............................................................ $46,600 $46,600

Copyright © 2015 John Wiley & Sons, Inc. Weygandt, Accounting Principles, 12/e, Solutions Manual (For Instructor Use Only) 4-45
 PROBLEM 4-3A

(a) BRAY COMPANY

Income Statement
For the Year Ended December 31, 2017

Revenues
Service revenue.............................................. $60,000
Expenses
Salaries and wages expense......................... $30,000
Depreciation expense.................................... 2,800
Insurance expense......................................... 1,800
Maintenance and repairs expense................ 1,700
Utilities expense............................................. 1,400
Total expenses........................................ 37,700
Net income.............................................................. $22,300
BRAY COMPANY
Owner’s Equity Statement
For the Year Ended December 31, 2017

Owner’s Capital, January 1............................................... $19,500

Add: Net income............................................................... 22,300
41,800
Less: Drawings.................................................................. 11,000
Owner’s Capital, December 31.......................................... $30,800

BRAY COMPANY
Balance Sheet
December 31, 2017

Assets
Current assets
Cash................................................................. $8,800
Accounts receivable...................................... 10,800
Prepaid insurance.......................................... 2,800
Total current assets................................ $22,400
Property, plant, and equipment
Equipment....................................................... 24,000

4-46 Copyright © 2015 John Wiley & Sons, Inc. Weygandt, Accounting Principles, 12/e, Solutions Manual (For Instructor Use Only)
 Less: Accumulated depreciation—
equipment............................................ 4,200 19,800
Total assets............................................. $42,200

Copyright © 2015 John Wiley & Sons, Inc. Weygandt, Accounting Principles, 12/e, Solutions Manual (For Instructor Use Only) 4-47
PROBLEM 4-3A (Continued)

BRAY COMPANY
Balance Sheet (Continued)
December 31, 2017

Liabilities and Owner’s Equity

Current liabilities
Accounts payable............................................ $9,000
Salaries and wages payable........................... 2,400
Total current liabilities............................ $11,400
Owner’s equity
Owner’s capital................................................ 30,800
Total liabilities and owner’s
equity.................................................... $42,200

(b)
General Journal
Date Account Titles and Explanation Ref. Debit Credit
Dec. 31 Service Revenue.................................. 400 60,000
Income Summary........................ 350 60,000

31 Income Summary................................. 350 37,700

Maintenance and Repairs
Expense.................................... 622 1,700
Depreciation Expense................ 711 2,800
Insurance Expense..................... 722 1,800
Salaries and Wages Expense.... 726 30,000
Utilities Expense......................... 732 1,400

31 Income Summary................................. 350 22,300

Owner’s Capital........................... 301 22,300

31 Owner’s Capital.................................... 301 11,000

Owner’s Drawings....................... 306 11,000

4-48 Copyright © 2015 John Wiley & Sons, Inc. Weygandt, Accounting Principles, 12/e, Solutions Manual (For Instructor Use Only)
PROBLEM 4-3A (Continued)

(c)

Owner’s Capital No. 301 Maintenance and Repairs

12/31 11,000 1/1 Bal. 19,500 Expense No. 622
12/31 22,300 12/31 Bal. 1,700 12/31 1,700
12/31 Bal. 30,800

Depreciation Expense No. 711

Owner’s Drawings No. 306 12/31 Bal. 2,800 12/31 2,800
12/31 Bal. 11,000 12/31 11,000

Insurance Expense No. 722

Income Summary No. 350 12/31 Bal. 1,800 12/31 1,800
12/31 37,700 12/31 60,000
12/31 22,300
60,000 60,000 Salaries and Wages
Expense No. 726
12/31 Bal. 30,000 12/31 30,000
Service Revenue No. 400
12/31 60,000 12/31 Bal. 60,000
Utilities Expense No. 732
12/31 Bal. 1,400 12/31 1,400

(d) BRAY COMPANY

Post-Closing Trial Balance
December 31, 2017

Debit Credit
Cash...................................................................... $8,800
Accounts Receivable.......................................... 10,800
Prepaid Insurance............................................... 2,800
Equipment............................................................ 24,000
Accumulated Depreciation—Equipment........... $ 4,200
Accounts Payable................................................ 9,000
Salaries and Wages Payable.............................. 2,400
Owner’s Capital................................................... 30,800
Totals............................................................ $46,400 $46,400

Copyright © 2015 John Wiley & Sons, Inc. Weygandt, Accounting Principles, 12/e, Solutions Manual (For Instructor Use Only) 4-49
Copyright © 2011 John Wiley & Sons, Inc.

4-74
4-46
Copyright © 2015 John Wiley & Sons, Inc.

(a) VANG MANAGEMENT SERVICES

Worksheet
For the Year Ended December 31, 2017
Adjusted Income
Account Titles Trial Balance Adjustments Trial Balance Statement Balance Sheet
Dr. Cr. Dr. Cr. Dr. Cr. Dr. Cr. Dr. Cr.
Cash 13,800 13,800 13,800
Accounts Receivable 28,300 28,300 28,300
Prepaid Insurance 3,600 (a) 1,200 2,400 2,400
Land 67,000 67,000 67,000
Weygandt, Accounting Principles, 10/e, Solutions Manual

Buildings 127,000 127,000 127,000

PROBLEM 4-4A
Equipment 59,000 59,000 59,000
Accounts Payable 12,500 12,500 12,500
Weygandt, Accounting Principles, 12/e, Solutions Manual

Unearned Rent Revenue 6,000 (c) 4,500 1,500 1,500

Mortgage Payable 120,000 120,000 120,000
Owner’s Capital 144,000 144,000 144,000
Owner’s Drawings 22,000 22,000 22,000
Service Revenue 90,700 90,700 90,700
Rent Revenue 29,000 (c) 4,500 33,500 33,500
Salaries and Wages
Expense 42,000 42,000 42,000
Advertising Expense 20,500 20,500 20,500
Utilities Expense 19,000 19,000 19,000
Totals 402,200 402,200
Insurance Expense (a) 1,200 1,200 1,200
Depr. Expense (b) 6,600 6,600 6,600
Accum. Depr.—Buildings (b) 3,000 3,000 3,000
Accum. Depr.—Equipment (b) 3,600 3,600 3,600
Interest Expense (d) 10,000 10,000 10,000
(For Instructor Use Only)

Interest Payable (d) 10,000 10,000 10,000

Totals 22,300 22,300 418,800 418,800 99,300 124,200 319,500 294,600
Net Income 24,900 24,900
Totals 124,200 124,200 319,500 319,500
(For Instructor Use Only)

Key: (a) Expired Insurance; (b) Depreciation Expense—Building and Equipment; (c) Rent Revenue Recognized; (d) Accrued Interest Payable.
PROBLEM 4-4A (Continued)

(b) VANG MANAGEMENT SERVICES

Balance Sheet
December 31, 2017

Assets
Current assets
Cash............................................. $13,800
Accounts receivable.................. 28,300
Prepaid insurance...................... 2,400
Total current assets............ $ 44,500
Property, plant, and equipment
Land............................................. 67,000
Buildings..................................... $127,000
Less: Accumulated
depreciation—buildings........ 3,000 124,000
Equipment................................... 59,000
Less: Accumulated
depreciation—equipment...... 3,600 55,400 246,400
Total assets......................... $290,900

Liabilities and Owner’s Equity

Current liabilities
Mortgage payable (due in 2018)................... $30,000
Accounts payable.......................................... 12,500
Interest payable............................................. 10,000
Unearned rent revenue................................. 1,500
Total current liabilities........................... $ 54,000
Long-term liabilities
Mortgage payable.......................................... 90,000
Total liabilities........................................ 144,000
Owner’s equity
Owner’s capital
($144,000 + $24,900 – $22,000).................... 146,900
Total liabilities and owner’s equity...... $290,900

Copyright © 2015 John Wiley & Sons, Inc. Weygandt, Accounting Principles, 12/e, Solutions Manual (For Instructor Use Only) 4-51
PROBLEM 4-4A (Continued)

(c) Dec. 31 Insurance Expense................................ 1,200

Prepaid Insurance.......................... 1,200

31 Depreciation Expense........................... 6,600

Accumulated Depreciation—
Buildings..................................... 3,000
Accumulated Depreciation—
Equipment................................... 3,600

31 Unearned Rent Revenue....................... 4,500

Rent Revenue................................. 4,500

31 Interest Expense.................................... 10,000

Interest Payable.............................. 10,000

(d) Dec. 31 Service Revenue.................................... 90,700

Rent Revenue......................................... 33,500
Income Summary........................... 124,200

31 Income Summary................................... 99,300

Salaries and Wages Expense........ 42,000
Advertising Expense...................... 20,500
Utilities Expense............................ 19,000
Interest Expense............................ 10,000
Depreciation Expense.................... 6,600
Insurance Expense........................ 1,200

31 Income Summary................................... 24,900

Owner’s Capital.............................. 24,900

31 Owner’s Capital...................................... 22,000

Owner’s Drawings.......................... 22,000

4-52 Copyright © 2015 John Wiley & Sons, Inc. Weygandt, Accounting Principles, 12/e, Solutions Manual (For Instructor Use Only)
PROBLEM 4-4A (Continued)

(e) VANG MANAGEMENT SERVICES

Post-Closing Trial Balance
December 31, 2017

Debit Credit
Cash.................................................................. $ 13,800
Accounts Receivable....................................... 28,300
Prepaid Insurance............................................ 2,400
Land.................................................................. 67,000
Buildings........................................................... 127,000
Accumulated Depreciation—Buildings.......... $ 3,000
Equipment........................................................ 59,000
Accumulated Depreciation—Equipment....... 3,600
Accounts Payable............................................ 12,500
Interest Payable............................................... 10,000
Unearned Rent Revenue................................. 1,500
Mortgage Payable............................................ 120,000
Owner’s Capital................................................ 146,900
$297,500 $297,500

Copyright © 2015 John Wiley & Sons, Inc. Weygandt, Accounting Principles, 12/e, Solutions Manual (For Instructor Use Only) 4-53
 PROBLEM 4-5A

(a)
General Journal J1
Date Account Titles and Explanation Ref. Debit Credit
July 1 Cash..................................................... 101 20,000
Owner’s Capital.......................... 301 20,000

1 Equipment........................................... 157 12,000

Cash............................................ 101 4,000
Accounts Payable...................... 201 8,000

3 Supplies............................................... 126 2,100

Accounts Payable...................... 201 2,100

5 Prepaid Insurance............................... 130 1,800

Cash............................................ 101 1,800

12 Accounts Receivable.......................... 112 4,500

Service Revenue........................ 400 4,500

18 Accounts Payable............................... 201 2,900

Cash............................................ 101 2,900

20 Salaries and Wages Expense............. 726 2,800

Cash............................................ 101 2,800

21 Cash..................................................... 101 3,400

Accounts Receivable................. 112 3,400

25 Accounts Receivable.......................... 112 6,000

Service Revenue........................ 400 6,000

31 Gasoline Expense............................... 633 350

Cash............................................ 101 350

31 Owner’s Drawings............................... 306 5,600

Cash............................................ 101 5,600

4-54 Copyright © 2015 John Wiley & Sons, Inc. Weygandt, Accounting Principles, 12/e, Solutions Manual (For Instructor Use Only)
 PROBLEM 4-5A (Continued)
Copyright © 2015 John Wiley & Sons, Inc.
Copyright © 2013 John Wiley & Sons, Inc.

(b) & (c) ANYA’S CLEANING SERVICE

Worksheet
For the Month Ended July 31, 2017
Adjusted Income
Account Titles Trial Balance Adjustments Trial Balance Statement Balance Sheet
Dr. Cr. Dr. Cr. Dr. Cr. Dr. Cr. Dr. Cr.
Cash 5,950 5,950 5,950
Weygandt, Accounting Principles, 12/e, Solutions Manual
Weygandt, Accounting Principles, 11/e, Solutions Manual

Accounts Receivable 7,100 (a) 2,700 9,800 9,800

Supplies 2,100 (d) 1,500 600 600
Prepaid Insurance 1,800 (c) 150 1,650 1,650
Equipment 12,000 12,000 12,000
Accounts Payable 7,200 7,200 7,200
Owner’s Capital 20,000 20,000 20,000
Owner’s Drawings 5,600 5,600 5,600
Service Revenue 10,500 (a) 2,700 13,200 13,200
Gasoline Expense 350 350 350
Salaries and Wages Expense 2,800 (e) 1,000 3,800 3,800
Totals 37,700 37,700
Depreciation Expense (b) 500 500 500
Accum. Depr.—Equipment (b) 500 500 500
Insurance Expense (c) 150 150 150
Supplies Expense (d) 1,500 1,500 1,500
Salaries and Wages Payable (e) 1,000 1,000 1,000
Totals 5,850 5,850 41,900 6,300 13,200 35,600 28,700
Net Income 41,900 6,900 6,900
(For Instructor Use Only)
(For Instructor Use Only)

Totals 13,200 13,200 35,600 35,600

Key: (a) Service Revenue Accrued; (b) Depreciation Expense; (c) Insurance Expired; (d) Cleaning Supplies Used; (e) Unpaid Salaries.
4-51
PROBLEM 4-5A (Continued)

(a), (e) & (f)

Cash No. 101

Date Explanation Ref. Debit Credit Balance
July 1 J1 20,000 20,000
1 J1 4,000 16,000
5 J1 1,800 14,200
18 J1 2,900 11,300
20 J1 2,800 8,500
21 J1 3,400 11,900
31 J1 350 11,550
31 J1 5,600 5,950

Accounts Receivable No. 112

Date Explanation Ref. Debit Credit Balance
July 12 J1 4,500 4,500
21 J1 3,400 1,100
25 J1 6,000 7,100
31 Adjusting J2 2,700 9,800

Supplies No. 126

Date Explanation Ref. Debit Credit Balance
July 3 J1 2,100 2,100
31 Adjusting J2 1,500 600

Prepaid Insurance No. 130

Date Explanation Ref. Debit Credit Balance
July 5 J1 1,800 1,800
31 Adjusting J2 150 1,650

Equipment No. 157

Date Explanation Ref. Debit Credit Balance
July 1 J1 12,000 12,000

4-56 Copyright © 2015 John Wiley & Sons, Inc. Weygandt, Accounting Principles, 12/e, Solutions Manual (For Instructor Use Only)
PROBLEM 4-5A (Continued)

Accumulated Depreciation—Equipment No. 158

Date Explanation Ref. Debit Credit Balance
July 31 Adjusting J2 500 500

Accounts Payable No. 201

Date Explanation Ref. Debit Credit Balance
July 1 J1 8,000 8,000
3 J1 2,100 10,100
18 J1 2,900 7,200

Salaries and Wages Payable No. 212

Date Explanation Ref. Debit Credit Balance
July 31 Adjusting J2 1,000 1,000

Owner’s Capital No. 301

Date Explanation Ref. Debit Credit Balance
July 1 J1 20,000 20,000
31 Closing J3 6,900 26,900
31 Closing J3 5,600 21,300

Owner’s Drawings No. 306

Date Explanation Ref. Debit Credit Balance
July 31 J1 5,600 5,600
31 Closing J3 5,600 0

Income Summary No. 350

Date Explanation Ref. Debit Credit Balance
July 31 Closing J3 13,200 13,200
31 Closing J3 6,300 6,900
31 Closing J3 6,900 0

Copyright © 2015 John Wiley & Sons, Inc. Weygandt, Accounting Principles, 12/e, Solutions Manual (For Instructor Use Only) 4-57
PROBLEM 4-5A (Continued)

Service Revenue No. 400

Date Explanation Ref. Debit Credit Balance
July 12 J1 4,500 4,500
25 J1 6,000 10,500
31 Adjusting J2 2,700 13,200
31 Closing J3 13,200 0

Supplies Expense No. 631

Date Explanation Ref. Debit Credit Balance
July 31 Adjusting J2 1,500 1,500
31 Closing J3 1,500 0

Gasoline Expense No. 633

Date Explanation Ref. Debit Credit Balance
July 31 J1 350 350
31 Closing J3 350 0

Depreciation Expense No. 711

Date Explanation Ref. Debit Credit Balance
July 31 Adjusting J2 500 500
31 Closing J3 500 0

Insurance Expense No. 722

Date Explanation Ref. Debit Credit Balance
July 31 Adjusting J2 150 150
31 Closing J3 150 0

Salaries and Wages Expense No. 726

Date Explanation Ref. Debit Credit Balance
July 20 J1 2,800 2,800
31 Adjusting J2 1,000 3,800
31 Closing J3 3,800 0

4-58 Copyright © 2015 John Wiley & Sons, Inc. Weygandt, Accounting Principles, 12/e, Solutions Manual (For Instructor Use Only)
PROBLEM 4-5A (Continued)

(d) ANYA’S CLEANING SERVICE

Income Statement
For the Month Ended July 31, 2017

Revenues
Service revenue............................................... $13,200
Expenses
Salaries and wages expense.......................... $3,800
Supplies expense............................................. 1,500
Depreciation expense...................................... 500
Gasoline expense............................................ 350
Insurance expense........................................... 150
Total expenses......................................... 6,300
Net income............................................................... $ 6,900

ANYA’S CLEANING SERVICE

Owner’s Equity Statement
For the Month Ended July 31, 2017

Owner’s Capital, July 1........................................... $ 0

Add: Investments.................................................. $20,000
Net income.................................................... 6,900 26,900
26,900
Less: Drawings....................................................... 5,600
Owner’s Capital, July 31......................................... $21,300

ANYA’S CLEANING SERVICE

Balance Sheet
July 31, 2017

Assets
Current assets
Cash.................................................................. $5,950
Accounts receivable........................................ 9,800
Supplies............................................................ 600
Prepaid insurance............................................ 1,650
Total current assets................................. $18,000

Copyright © 2015 John Wiley & Sons, Inc. Weygandt, Accounting Principles, 12/e, Solutions Manual (For Instructor Use Only) 4-59
4-60 Copyright © 2015 John Wiley & Sons, Inc. Weygandt, Accounting Principles, 12/e, Solutions Manual (For Instructor Use Only)
PROBLEM 4-5A (Continued)

ANYA’S CLEANING SERVICE

Balance Sheet (Continued)
July 31, 2017

Assets (Continued)
Property, plant, and equipment
Equipment........................................................ $12,000
Less: Accumulated depreciation—
equipment............................................. 500 11,500
Total assets.............................................. $29,500

Liabilities and Owner’s Equity

Current liabilities
Accounts payable............................................ $7,200
Salaries and wages payable........................... 1,000
Total current liabilities............................ $ 8,200
Owner’s equity
Owner’s capital................................................ 21,300
Total liabilities and owner’s equity........ $29,500

(e)
General Journal J2
Date Account Titles and Explanation Ref. Debit Credit
July 31 Accounts Receivable......................... 112 2,700
Service Revenue........................ 400 2,700

31 Depreciation Expense........................ 711 500

Accumulated Depreciation—
Equipment.............................. 158 500

31 Insurance Expense............................. 722 150

Prepaid Insurance..................... 130 150

31 Supplies Expense............................... 631 1,500

Supplies...................................... 126 1,500

31 Salaries and Wages Expense............ 726 1,000

Salaries and Wages Payable.... 212 1,000

Copyright © 2015 John Wiley & Sons, Inc. Weygandt, Accounting Principles, 12/e, Solutions Manual (For Instructor Use Only) 4-61
PROBLEM 4-5A (Continued)

(f) General Journal

J3
Date Account Titles and Explanation Ref. Debit Credit
July 31 Service Revenue.................................. 400 13,200
Income Summary....................... 350 13,200

31 Income Summary................................ 350 6,300

Salaries and Wages Expense.... 726 3,800
Supplies Expense...................... 631 1,500
Depreciation Expense................ 711 500
Gasoline Expense...................... 633 350
Insurance Expense.................... 722 150

31 Income Summary................................ 350 6,900

Owner’s Capital.......................... 301 6,900

31 Owner’s Capital................................... 301 5,600

Owner’s Drawings...................... 306 5,600

(g) ANYA’S CLEANING SERVICE

Post-Closing Trial Balance
July 31, 2017

Debit Credit
Cash...................................................................... $ 5,950
Accounts Receivable.......................................... 9,800
Supplies................................................................ 600
Prepaid Insurance............................................... 1,650
Equipment............................................................ 12,000
Accumulated Depreciation—Equipment........... $ 500
Accounts Payable................................................ 7,200
Salaries and Wages Payable.............................. 1,000
Owner’s Capital................................................... 21,300
$30,000 $30,000

4-62 Copyright © 2015 John Wiley & Sons, Inc. Weygandt, Accounting Principles, 12/e, Solutions Manual (For Instructor Use Only)
4-58
Copyright © 2015 John Wiley & Sons, Inc.

(a)

(1) INCORRECT ENTRY (2) CORRECT ENTRY (3) CORRECTING ENTRY

1. Cash................................... 950 Cash................................... 590 Accounts Receivable......... 360

Accts. Receivable........ 950 Accts. Receivable........ 590 Cash............................... 360

2. Misc. Expense................... 75 Advertising Expense......... 75 Advertising Expense.......... 75

PROBLEM 4-6A
Cash.............................. 75 Cash.............................. 75 Misc. Expense............... 75
Weygandt, Accounting Principles, 12/e, Solutions Manual

3. Salaries and Wages Salaries and Wages Salaries and Wages

Expense.......................... 1,900 Expense.......................... 1,200 Payable............................. 700
Cash.............................. 1,900 Salaries and Wages Salaries and Wages
Payable............................ 700 Expense...................... 700
Cash.............................. 1,900

4. Supplies............................. 310 Equipment.......................... 310 Equipment........................... 310

Accounts Payable........ 310 Accounts Payable........ 310 Supplies......................... 310

5. Equipment.......................... 69 Maintenance and Repairs Maintenance and Repairs

Cash.............................. 69 Expense.......................... 96 Expense........................... 96
Cash.............................. 96 Cash............................... 27
Equipment..................... 69
(For Instructor Use Only)

Copyright © 2015 John Wiley & Sons, Inc. Weygandt, Accounting Principles, 12/e, Solutions Manual (For Instructor Use Only) 4-63
PROBLEM 4-6A (Continued)

(b) GLOBAL CABLE

Trial Balance
April 30, 2017

Debit Credit
Cash ($4,100 – $360 – $27).................................... $ 3,713
Accounts Receivable ($3,200 + $360).................. 3,560
Supplies ($800 – $310).......................................... 490
Equipment ($10,600 + $310 – $69)........................ 10,841
Accumulated Depreciation—Equip. .................... $ 1,350
Accounts Payable.................................................. 2,100
Salaries and Wages Payable ($700 – $700)......... 0
Unearned Service Revenue.................................. 890
Owner’s Capital...................................................... 12,900
Service Revenue.................................................... 5,450
Salaries and Wages Expense ($3,300 – $700)..... 2,600
Advertising Expense ($600 + $75)........................ 675
Miscellaneous Expense ($290 – $75)................... 215
Depreciation Expense........................................... 500
Maintenance and Repairs Expense...................... 96
$22,690 $22,690

4-64 Copyright © 2015 John Wiley & Sons, Inc. Weygandt, Accounting Principles, 12/e, Solutions Manual (For Instructor Use Only)
 COMPREHENSIVE PROBLEM: CHAPTERS 2 TO 4

(a)
General Journal J1
Date Account Titles and Explanation Ref. Debit Credit
July 1 Cash...................................................... 101 14,000
Owner’s Capital......................... 301 14,000

1 Equipment............................................ 157 10,000

Cash............................................ 101 3,000
Accounts Payable...................... 201 7,000

3 Supplies................................................ 126 800

Accounts Payable...................... 201 800

5 Prepaid Insurance................................ 130 2,160

Cash............................................ 101 2,160

12 Accounts Receivable........................... 112 3,800

Service Revenue........................ 400 3,800

18 Accounts Payable................................ 201 1,400

Cash............................................ 101 1,400

20 Salaries and Wages Expense............. 726 1,600

Cash............................................ 101 1,600

21 Cash...................................................... 101 1,400

...............................................................
Accounts Receivable................ 112 1,400

25 Accounts Receivable........................... 112 1,900

Service Revenue........................ 400 1,900

31 Gasoline Expense................................ 633 400

Cash............................................ 101 400

31 Owner’s Drawings............................... 306 700

Cash............................................ 101 700

Copyright © 2015 John Wiley & Sons, Inc. Weygandt, Accounting Principles, 12/e, Solutions Manual (For Instructor Use Only) 4-65
Copyright © 2015 John Wiley & Sons, Inc.

COMPREHENSIVE PROBLEM (Continued)

(b) & (c) ASHLEY’S MAIDS CLEANING SERVICE
Worksheet
For the Month Ended July 31, 2017
Adjusted Income
Account Titles Trial Balance Adjustments Trial Balance Statement Balance Sheet
Dr. Cr. Dr. Cr. Dr. Cr. Dr. Cr. Dr. Cr.
Weygandt, Accounting Principles, 12/e, Solutions Manual

Cash 6,140 6,140 6,140

Accounts Receivable 4,300 (a) 1,300 5,600 5,600
Supplies 800 (d) 700 100 100
Prepaid Insurance 2,160 (c) 180 1,980 1,980
Equipment 10,000 10,000 10,000
Accounts Payable 6,400 6,400 6,400
Owner’s Capital 14,000 14,000 14,000
Owner’s Drawings 700 700 700
Service Revenue 5,700 (a) 1,300 7,000 7,000
Gasoline Expense 400 400 400
Salaries and Wages Expense 1,600 (e) 500 2,100 2,100
Total 26,100 26,100
Depreciation Expense (b) 200 200 200
Accum. Depr.—Equipment (b) 200 200 200
Insurance Expense (c) 180 180 180
Supplies Expense (d) 700 700 700
Salaries and Wages Payable (e) 500 500 500
Totals 2,880 2,880 28,100 28,100 3,580 7,000 24,520 21,100
(For Instructor Use Only)

Net Income 3,420 3,420

Totals 7,000 7,000 24,520 24,520

Key: (a) Service Revenue; (b) Depreciation Expense; (c) Insurance Expired; (d) Supplies Used; (e) Unpaid Salaries.
4-61
COMPREHENSIVE PROBLEM (Continued)

(a), (e) & (f)

Cash No. 101

Date Explanation Ref. Debit Credit Balance
July 1 J1 14,000 14,000
1 J1 3,000 11,000
5 J1 2,160 8,840
18 J1 1,400 7,440
20 J1 1,600 5,840
21 J1 1,400 7,240
31 J1 400 6,840
31 J1 700 6,140

Accounts Receivable No. 112

Date Explanation Ref. Debit Credit Balance
July 12 J1 3,800 3,800
21 J1 1,400 2,400
25 J1 1,900 4,300
31 Adjusting J2 1,300 5,600

Supplies No. 126

Date Explanation Ref. Debit Credit Balance
July 3 J1 800 800
31 Adjusting J2 700 100

Prepaid Insurance No. 130

Date Explanation Ref. Debit Credit Balance
July 5 J1 2,160 2,160
31 Adjusting J2 180 1,980

Equipment No. 157

Date Explanation Ref. Debit Credit Balance
July 1 J1 10,000 10,000

Copyright © 2015 John Wiley & Sons, Inc. Weygandt, Accounting Principles, 12/e, Solutions Manual (For Instructor Use Only) 4-67
COMPREHENSIVE PROBLEM (Continued)

Accumulated Depreciation—Equipment No. 158

Date Explanation Ref. Debit Credit Balance
July 31 Adjusting J2 200 200

Accounts Payable No. 201

Date Explanation Ref. Debit Credit Balance
July 1 J1 7,000 7,000
3 J1 800 7,800
18 J1 1,400 6,400

Salaries and Wages Payable No. 212

Date Explanation Ref. Debit Credit Balance
July 31 Adjusting J2 500 500

Owner’s Capital No. 301

Date Explanation Ref. Debit Credit Balance
July 1 J1 14,000 14,000
31 Closing J3 3,420 17,420
31 Closing J3 700 16,720

Owner’s Drawings No. 306

Date Explanation Ref. Debit Credit Balance
July 31 J1 700 700
31 Closing J3 700 0

Income Summary No. 350

Date Explanation Ref. Debit Credit Balance
July 31 Closing J3 7,000 7,000
31 Closing J3 3,580 3,420
31 Closing J3 3,420 0

4-68 Copyright © 2015 John Wiley & Sons, Inc. Weygandt, Accounting Principles, 12/e, Solutions Manual (For Instructor Use Only)
COMPREHENSIVE PROBLEM (Continued)

Service Revenue No. 400

Date Explanation Ref. Debit Credit Balance
July 12 J1 3,800 3,800
25 J1 1,900 5,700
31 Adjusting J2 1,300 7,000
31 Closing J3 7,000 0

Supplies Expense No. 631

Date Explanation Ref. Debit Credit Balance
July 31 Adjusting J2 700 700
31 Closing J3 700 0

Gasoline Expense No. 633

Date Explanation Ref. Debit Credit Balance
July 31 J1 400 400
31 Closing J3 400 0

Depreciation Expense No. 711

Date Explanation Ref. Debit Credit Balance
July 31 Adjusting J2 200 200
31 Closing J3 200 0

Insurance Expense No. 722

Date Explanation Ref. Debit Credit Balance
July 31 Adjusting J2 180 180
31 Closing J3 180 0

Salaries and Wages Expense No. 726

Date Explanation Ref. Debit Credit Balance
July 20 J1 1,600 1,600
31 Adjusting J2 500 2,100
31 Closing J3 2,100 0

Copyright © 2015 John Wiley & Sons, Inc. Weygandt, Accounting Principles, 12/e, Solutions Manual (For Instructor Use Only) 4-69
COMPREHENSIVE PROBLEM (Continued)

(d) ASHLEY’S MAIDS CLEANING SERVICE

Income Statement
For the Month Ended July 31, 2017

Revenues
Service revenue............................................... $7,000
Expenses
Salaries and wages expense.......................... $2,100
Supplies expense............................................. 700
Gasoline expense............................................ 400
Depreciation expense...................................... 200
Insurance expense........................................... 180
Total expenses......................................... 3,580
Net income............................................................... $3,420

ASHLEY’S MAIDS CLEANING SERVICE

Owner’s Equity Statement
For the Month Ended July 31, 2017

Owner’s Capital, July 1........................................... $ 0

Add: Investments.................................................. $14,000
Net income.................................................... 3,420 17,420
17,420
Less: Drawings....................................................... 700
Owner’s Capital, July 31......................................... $16,720

4-70 Copyright © 2015 John Wiley & Sons, Inc. Weygandt, Accounting Principles, 12/e, Solutions Manual (For Instructor Use Only)
COMPREHENSIVE PROBLEM (Continued)

ASHLEY’S MAIDS CLEANING SERVICE

Balance Sheet
July 31, 2017

Assets
Current assets
Cash.................................................................. $6,140
Accounts receivable........................................ 5,600
Supplies............................................................ 100
Prepaid insurance............................................ 1,980
Total current assets................................. $13,820
Property, plant, and equipment
Equipment........................................................ 10,000
Less: Accumulated depreciation—
equipment............................................. 200 9,800
Total assets.............................................. $23,620

Liabilities and Owner’s Equity

Current liabilities
Accounts payable............................................ $6,400
Salaries and wages payable........................... 500
Total current liabilities............................. $ 6,900
Owner’s equity
Owner’s capital................................................ 16,720
Total liabilities and owner’s equity......... $23,620

Copyright © 2015 John Wiley & Sons, Inc. Weygandt, Accounting Principles, 12/e, Solutions Manual (For Instructor Use Only) 4-71
COMPREHENSIVE PROBLEM (Continued)

(e)
General Journal J2
Date Account Titles and Explanation Ref. Debit Credit
July 31 Accounts Receivable......................... 112 1,300
Service Revenue........................ 400 1,300

31 Depreciation Expense........................ 711 200

Accumulated Depreciation—
Equipment.............................. 158 200

31 Insurance Expense............................. 722 180

Prepaid Insurance..................... 130 180

31 Supplies Expense............................... 631 700

Supplies...................................... 126 700

31 Salaries and Wages Expense............ 726 500

Salaries and Wages Payable.... 212 500

(f)
General Journal J3
Date Account Titles and Explanation Ref. Debit Credit
July 31 Service Revenue................................. 400 7,000
Income Summary....................... 350 7,000

31 Income Summary................................ 350 3,580

Salaries and Wages Expense... 726 2,100
Supplies Expense...................... 631 700
Gasoline Expense...................... 633 400
Depreciation Expense............... 711 200
Insurance Expense.................... 722 180

31 Income Summary................................ 350 3,420

Owner’s Capital......................... 301 3,420

31 Owner’s Capital.................................. 301 700

Owner’s Drawings..................... 306 700

4-72 Copyright © 2015 John Wiley & Sons, Inc. Weygandt, Accounting Principles, 12/e, Solutions Manual (For Instructor Use Only)
COMPREHENSIVE PROBLEM (Continued)

(g) ASHLEY’S MAIDS CLEANING SERVICE

Post-Closing Trial Balance
July 31, 2017

Debit Credit
Cash...................................................................... $ 6,140
Accounts Receivable.......................................... 5,600
Supplies................................................................ 100
Prepaid Insurance............................................... 1,980
Equipment............................................................ 10,000
Accumulated Depreciation—Equipment........... $ 200
Accounts Payable................................................ 6,400
Salaries and Wages Payable.............................. 500
Owner’s Capital................................................... 16,720
$23,820 $23,820

Copyright © 2015 John Wiley & Sons, Inc. Weygandt, Accounting Principles, 12/e, Solutions Manual (For Instructor Use Only) 4-73
CC4 COOKIE CREATIONS

(a)
COOKIE CREATIONS
Income Statement
For the Two Months Ended December 31, 2016

Revenues
Service revenue......................................................... $4,515
Expenses
Supplies expense...................................................... $1,025
Salaries and wages expense.................................... 1,006
Advertising expense.................................................. 165
Utilities expense........................................................ 125
Insurance expense.................................................... 110
Depreciation expense................................................ 40
Interest expense........................................................ 15
Total expenses...................................................... 2,486
Net income...................................................................... $2,029

COOKIE CREATIONS
Owner’s Equity Statement
For the Two Months Ended December 31, 2016

Owner’s Capital, November 1....................................... $ 800

Add: Net income........................................................... 2,029
2,829
Less: Drawings.............................................................. 500
Owner’s Capital, December 31...................................... $2,329

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CC4 (Continued)

(a) (Continued)

COOKIE CREATIONS
Balance Sheet
December 31, 2016

Assets
Current assets
Cash............................................................................. $1,180
Accounts receivable................................................... 875
Supplies....................................................................... 350
Prepaid insurance....................................................... 1,210
Total current assets............................................... $3,615
Property, plant, and equipment
Equipment................................................................... 1,200
Less: Accumulated depreciation—equipment........ 40 1,160
Total assets............................................................. $4,775

Liabilities and Owner’s Equity

Current liabilities
Accounts payable....................................................... 0$ 75
Salaries and wages payable...................................... 56
Unearned service revenue......................................... 300
Total current liabilities........................................... $ 431
Long-term liabilities
Notes payable.............................................................. 2,000
Interest payable........................................................... 15
Total long-term liabilities....................................... 2,015
Total liabilities................................................... 2,446
Owner’s equity
Owner’s capital............................................................ 2,329
Total liabilities and owner’s equity....................... $4,775

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CC4 (Continued)

(b) GENERAL JOURNAL J4

Date Account Titles and Explanation Debit Credit

2016
Dec. 31 Service Revenue...................................... 4,515
Income Summary................................ 4,515

31 Income Summary..................................... 2,486

Supplies Expense............................... 1,025
Salaries and Wages Expense............ 1,006
Advertising Expense.......................... 165
Utilities Expense................................. 125
Insurance Expense............................. 110
Depreciation Expense........................ 40
Interest Expense................................. 15

31 Income Summary..................................... 2,029

Owner’s Capital................................... 2,029

31 Owner’s Capital....................................... 500

Owner’s Drawings.............................. 500

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CC4 (Continued)

(c)
COOKIE CREATIONS
Post-Closing Trial Balance
December 31, 2016

Account Debit Credit

Cash.......................................................................... $1,180
Accounts Receivable.............................................. 875
Supplies................................................................... 350
Prepaid Insurance .................................................. 1,210
Equipment ............................................................... 1,200
Accumulated Depreciation—Equipment............... $ 40
Accounts Payable.................................................... 75
Salaries and Wages Payable.................................. 56
Unearned Service Revenue.................................... 300
Interest Payable....................................................... 15
Notes Payable.......................................................... 2,000
Owner’s Capital....................................................... 2,329
$4,815 $4,815

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 BYP 4-1 FINANCIAL REPORTING PROBLEM

(a) Total current assets were $73,286 million at September 28, 2013, and
$57,653 million at September 29, 2012.

(b) Current assets are properly listed in the order of liquidity. As you will
learn in the next chapter, inventory is considered to be less liquid
than accounts receivable. Thus, it is listed below accounts receivable
and before prepaid expenses and other current assets.

(c) The asset classifications are similar to the text: (1) current assets,
(2) investments, (3) property, plant, and equipment, and (4) intan-
gible assets.

(d) Apple reported $14,259 of cash and cash equivalents at September 28,
2013.

(e) Total current liabilities were $43,658 million at September 28, 2013,
and $38,542 million at September 29, 2012.

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 BYP 4-2 COMPARATIVE ANALYSIS PROBLEM

(a) (in millions) PepsiCo Coca-Cola

1. Total current assets 22,203 31,304
2. Net property, plant & equipment 18,575 14,967
3. Total current liabilities 17,839 27,811
4. Total equity 24,389 33,440

(b) PepsiCo’s current assets were 24% greater than its current liabilities,
while Coca-Cola’s current assets were 13% greater than its current
liabilities. From this information, it appears that PepsiCo is in a better
liquidity position than Coca-Cola.

Coca-Cola’s equity represents a significantly larger percentage of total

assets 37.1% than PepsiCo’s 31.5% . As a result,
Coca-Cola has less debt relative to its total assets than PepsiCo. It
therefore appears that Coca-Cola is less likely to default on a debt
obligation.

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 BYP 4-3 COMPARATIVE ANALYSIS PROBLEM

(a) (in millions) Amazon Wal-Mart

1. Total current assets 24,625 61,185
2. Net property, plant & equipment 10,949 115,364
3. Total current liabilities 22,980 69,345
4. Total stockholders’ (shareholders’) equity 9,746 81,339

(b) Current assets are cash and other resources that are reasonably ex-
pected to be realized in cash or sold or consumed within one year or
the company’s operating cycle, whichever is longer. Current liabilities
are obligations that are reasonably expected to be paid from existing
current assets or through the creation of other current liabilities.

Amazon’s current assets were 7% greater than its current liabilities,

while Wal-Mart’s current assets were 12% less than its current liabilities.
From this information, it appears that Amazon is in a better liquidity
position than Wal-Mart.

Wal-Mart’s stockholders’ equity represents a 63% larger percentage of

total assets 39.7% than Amazon’s 24.3% . As a
result, Wal-Mart has less debt relative to its total assets than Amazon. It
therefore appears that Wal-Mart is less likely to default on a debt
obligation.

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 BYP 4-4 REAL-WORLD FOCUS

The solution is dependent upon the companies chosen by the student.

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 BYP 4-5 DECISION MAKING ACROSS THE ORGANIZATION

(a) WHITEGLOVES JANITORIAL SERVICE

Balance Sheet
December 31, 2017

Assets
Current assets
Cash................................................. $ 6,500
Accounts receivable
($9,000 + $3,700).......................... 12,700
Supplies ($5,200 – $2,700).............. 2,500
Prepaid insurance ($4,800 X 2/3)....... 3,200
Total current assets................ $24,900
Property, plant, and equipment
Equipment ($22,000 + $4,000)....... $26,000
Less: Accum. depreciation—
equipment
($4,000 + $2,000).................. 6,000 $20,000
Delivery trucks
($34,000 + $5,000)........................ 39,000
Less: Accum. depreciation—
delivery trucks
($5,000 + $5,000).................. 10,000 29,000 49,000
Total assets.............................. $73,900

Liabilities and Owner’s Equity

Current liabilities
Notes payable due within one year.................. $10,000
Accounts payable ($2,500 + $500).................... 3,000
Interest payable ($25,000 X 10% X 6/12).......... 1,250
Total current liabilities............................... $14,250
Long-term liabilities
Notes payable, due July 1, 2019....................... 15,000
Total liabilities............................................ 29,250
Owner’s equity
Owner’s capital.................................................. 44,650*
Total liabilities and owner’s equity........... $73,900

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BYP 4-5 (Continued)

WHITEGLOVES JANITORIAL SERVICE

Balance Sheet (Continued)
December 31, 2017

*Capital balance as reported.................................. $54,000

Add: Earned but unbilled fees............................ 3,700
57,700
Less: Janitorial supplies used............................. $2,700
Insurance expired ($4,800 X 1/3)............... 1,600
Depreciation ($2,000 + $5,000)................... 7,000
Expenses incurred but unpaid.................. 500
Interest accrued.......................................... 1,250
Total...................................................... 13,050
Capital balance as adjusted.................................. $44,650

(b) Whitegloves Janitorial Service met the terms of the bank loan because
current assets exceed current liabilities by $10,650 ($24,900 – $14,250)
at December 31, 2017.

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 BYP 4-6 COMMUNICATION ACTIVITY

MEMO

To: Accounting Instructor

From: Student

Re: Accounting Cycle

The required steps in the accounting cycle, in the order in which they
should be completed, are:

1. Analyze business transactions.

2. Journalize the transactions.
3. Post to ledger accounts.
4. Prepare a trial balance.
5. Journalize and post adjusting entries.
6. Prepare an adjusted trial balance.
7. Prepare financial statements.
8. Journalize and post closing entries.
9. Prepare a post-closing trial balance.

The optional steps in the accounting cycle include preparing a worksheet

and preparing reversing entries. If a worksheet is prepared, it is done after
step 3 above, and it includes steps 4 and 6. The worksheet is a form used
to make it easier to prepare adjusting entries and financial statements. If re-
versing entries are prepared, they are journalized and posted after step 9,
at the beginning of the next accounting period. A reversing entry is the
exact opposite of a previously recorded adjusting entry and simplifies the
recording of subsequent transactions.

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 BYP 4-7 ETHICS CASE

(a) The stakeholders in this case are:

 You, as controller.
 Mike Flanary, president.
 Users of the company’s financial statements.

(b) The ethical issue is the continued circulation of significantly misstated

financial statements. As controller, you have just issued misleading
financial statements. You have acted ethically by telling the company’s
president. The president has reacted unethically by allowing the mis-
leading financial statements to continue to circulate.

(c) As controller, you should impress upon the president the consequences
of having those misleading financial statements be detected by some
user or the SEC (if you are a public company). Also stress upon him
that you have a professional obligation to correct the statements or
to resign.

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 BYP 4-8 ALL ABOUT YOU

The following is a personal balance sheet using the classified presentation.

Note that the earnings from the part-time job as well as the tuition costs are
not listed since neither of those items is an asset, liability, or equity item.

Assets

Current assets
Cash................................................................... $1,200
Money market account..................................... 1,800
Certificate of deposit........................................ 3,000
Accounts receivable from brother................... 300
Total current assets.................................. $ 6,300

Property, plant, and equipment

Automobile........................................................ 7,000
Video and stereo equipment............................ 1,250
Home computer................................................ 800 9,050
Total assets............................................... $15,350

Liabilities and Owner’s Equity

Current liabilities
Current portion of automobile loan................ $1,500
Current portion of credit card payable........... 150
Total current liabilities.............................. $ 1,650

Long-term liabilities
Automobile loan................................................ 4,000
Student loan...................................................... 5,000
Credit card payable.......................................... 1,650
Total long-term liabilities.......................... 10,650
Total liabilities..................................... 12,300

Owner’s equity
Owner’s capital ($15,350 – $12,300)................ 3,050
Total liabilities and owner’s equity...... $15,350

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 BYP 4-9 FASB CODIFICATION ACTIVITY

(a) 1. Current assets is used to designate cash and other assets or

resources commonly identified as those that are reasonably ex-
pected to be realized in cash or sold or consumed during the
normal operating cycle of the business.

2. Current liabilities is used principally to designate obligations whose

liquidation is reasonably expected to require the use of existing
resource properly classified as current assets, or the creation of
other current liabilities.

(b) Access FASB Codification 210-20-45

A right of setoff exists when all of the following conditions are met:

1. Each of two parties owes the other determinable amounts.

2. The reporting party has the right to set off the amount owed with
the amount owed by the other party.

3. The reporting party intends to set off.

4. The right of setoff is enforceable at law. As a result, a company may

not offset accounts payable against cash on its balance sheet.

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 IFRS EXERCISES

IFRS 4-1 The statement of financial position required under IFRS and the
balance sheet prepared under GAAP usually present the same information
regarding a company’s assets, liabilities, and stockholders’ equity at a point
in time. IFRS does not dictate a specific order but most companies list
noncurrent items before current. Differences in ordering are

IFRS GAAP
Statement of Financial Balance Sheet
Position presentation presentation
Noncurrent assets Current assets
Current assets Noncurrent assets
Equity Current liabilities
Noncurrent liabilities Noncurrent liabilities
Current liabilities Stockholders’ equity
Under IFRS, current assets are usually listed in the reverse order of liquidity.

IFRS 4-2 IFRS uses the term statement of financial position rather than
balance sheet.

IFRS 4-3

WALLBY COMPANY
Partial Statement of Financial Position

Current assets
Prepaid insurance.................................................................... £ 3,600
Supplies..................................................................................... 5,200
Accounts receivable................................................................. 12,500
Debt investments...................................................................... 6,700
Cash........................................................................................... 15,400
Total................................................................................... £43,400

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IFRS 4-4

SUTTER BOWLING ALLEY

Statement of Financial Position
December 31, 2017

Assets
Property, plant, and equipment
Land................................................ $64,000
Buildings........................................ $128,800
Less: Acc. depr.—buildings......... 42,600 86,200
Equipment...................................... 62,400
Less: Acc. depr.—equipment....... 18,720 43,680 $193,880
Current assets
Prepaid insurance......................... 4,680
Accounts receivable...................... 14,520
Cash................................................ 18,040 37,240
Total assets........................................... $231,120

Equity and Liabilities

Equity
Owner’s capital ($115,000 + $3,440*)......... $118,440
Non-current liabilities
Notes payable.............................................. 83,880
Current liabilities
Current portion of notes payable............... 13,900
Accounts payable........................................ 12,300
Interest payable........................................... 2,600 28,800
Total equity and liabilities.................................. $231,120

*Net income = $14,180 – $780 – $7,360 – $2,600 = $3,440

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 IFRS 4-5 INTERNATIONAL COMPARATIVE ANALYSIS PROBLEM

Differences in the format of the statement of financial position (balance

sheet) used by Louis Vuitton and Apple include the following

Louis Vuitton Apple

1. Non-current assets listed first Current assets listed first
2. Goodwill listed before property, Property, plant, and equipment
plant and equipment listed before goodwill
3. Current assets are shown in Current assets are shown in
reverse order of liquidity with order of liquidity with cash being
cash being last first
4. The equity section uses Share The equity section uses Common
capital and Share premium stock
5. Reporting currency is € (euros) Reporting currency is $ (dollars)

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