Chapter-04 Completing The Accounting Cycle (Maths) [PDF]

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Chapter-4: Completing the Accounting Cycle Exercise list: E4.1, E4.2 P4.1A,P4.2A E4.1



The trial balance columns of the worksheet for Dixon Company at June 30, 2020, are as follows. Trial Balance June 30, 2020 Accounts Title



Debit (Tk.) 2,320 2,440 1,880



Credit(Tk.)



Cash Accounts Receivable Supplies Accounts payable Unearned Service Revenue Capital Service Revenue Salaries and Wages expenses 560 Miscellaneous expense 160 Total 7,360 Adjusting data: i) A physical count reveals Tk.500 of supplies on hand ii) Tk.100 of the unearned revenue is still unearned at month-end. iii) Accrued salaries are Tk.210. Required: a) Enter the trial balance on a work sheet and prepare a ten column worksheet.



Solution: Account Titles



Cash Accounts Receivable Supplies Accounts payable Unearned Service Revenue Capital Service Revenue Salaries and Wages expenses Miscellaneous expense Totals Supplies expenses Salaries and Wages payable Totals Net Income Totals



7,360



Worksheet



Trial Balance Dr.(Tk.) Cr.(Tk.)



Adjustments Dr.(Tk.) Cr.(Tk.)



2,320 2,440



Adjusted T.B Dr.(Tk.) Cr.(Tk.)



Income Statement Dr.(Tk.) Cr.(Tk.)



2,320 2,440



1,880



1,380



240



140



3,600 2,400 560



210



160



500 1,120



1,120



100



100



3,600 2,540



140



Balance Sheet Dr.(Tk.) Cr.(Tk.)



2,320 2,440



500



1,120



7,360



1,120 240 3,600 2,400



3,600 2,540



770



770



160



160



1,380



1,380



7,360 1,380 210 1,730



1,730



210 7,570



210



7,570 230 2,540



2,540



5,260



230 5,260



E4.2



The adjusted trial balance columns of the worksheet for Auburn Company are as follows. Auburn Company



Worksheet (partial) For the month ended April 30, 2020 Account Titles



Adjusted T.B Dr.(Tk.) Cr.(Tk.)



Cash 10,000 Accounts Receivable 7,840 Prepaid rent 2,280 Equipment 23,050 Accu. Dep.-Equipment Notes payable Accounts payable Owner’s capital Owner’s drawings 3,650 Service revenue Salaries and Wages exp. 10,840 Rent expenses 760 Depreciation exp. 650 Interest exp. 57 Interest payable Totals 59,127 Instructions: Complete the worksheet. Solution:



Income Statement Dr.(Tk.) Cr.(Tk.)



Balance Sheet Dr.(Tk.) Cr.(Tk.)



4,900 5,700 4,920 27,960 15,590



57 59,127



Auburn Company



Worksheet (partial) For the month ended April 30, 2020 Account Titles



Cash Accounts Receivable Prepaid rent Equipment Accu. Dep.-Equipment Notes payable Accounts payable Owner’s capital Owner’s drawings Service revenue Salaries and Wages exp. Rent expenses Depreciation exp. Interest exp. Interest payable Totals Net Income Totals



Adjusted T.B Dr.(Tk.) Cr.(Tk.)



Income Statement Dr.(Tk.) Cr.(Tk.)



10,000 7,840 2,280 23,050



Balance Sheet Dr.(Tk.) Cr.(Tk.)



10,000 7,840 2,280 23,050 4,900 5,700 4,920 27,960



4,900 5,700 4,920 27,960



3,650



3,650 15,590



10,840 760 650 57 59,127



15,590 10,840 760 650 57



57 59,127



57 3,283 15,590



15,590



46,820



3,283 46,820



P4.1



The trial balance columns of the worksheet for Warren Roofing at March 31, 2020, are as follows. Warren Roofing Trial Balance March 31, 2020 Accounts Title Cash Accounts Receivable Supplies Equipment Accumulated depreciation-Equipment Accounts payable Unearned Service Revenue Owner’s Capital Owner’s Drawings Service Revenue Salaries and Wages expenses Miscellaneous expense Total



Debit ($) 4,500 3,200 2,000 11,000



Credit($)



1,250 2,500 550 12,900 1,100 6,300 1,300 400 23,500



23,500



Adjusting data: i) A physical count reveals $480 of supplies on hand ii) $260 of the unearned revenue is still unearned at March 31. iii) Accrued salaries are $700. iv) Depreciation for March is $250 Required: a. Enter the trial balance on a work sheet and prepare a ten column worksheet. b. Prepare an income statement and owner’s equity statement for the month of March and a classified statement of financial position at March 31. T. Warren made an additional investment in the business of $10,000 in March. c. Journalize the adjusting entries from the adjustments columns of the worksheet. d. Journalize the closing entries from the financial statement columns of the worksheet.



Solution: Req.a) Worksheet Account Titles



Cash Accounts Receivable Supplies Equipment Accumulated depreciationEquipment Accounts payable Unearned Service Revenue Owner’s Capital Owner’s Drawings Service Revenue Salaries and Wages expenses Miscellaneous expense



Trial Balance Dr.($) Cr.($)



Adjustments Dr.($) Cr.($)



4,500 3,200 2,000 11,000



1,520 1,250



Adjusted T.B Dr.($) Cr.($)



4,500 3,200



480 11,000



480 11,000



250



290



12,900 1,100 6,300



290 700



400 23,500



1,500



1,500



2,500



2,500



260



260



12,900



12,900



1,100



1,300



Balance Sheet Dr.($) Cr.($)



4,500 3,200



2,500 550



Income Statement Dr.($) Cr.($)



1,100 6,590



6,590



2,000



2,000



400



400



1,520



1,520



23,500



Supplies expenses Salaries and Wages payable Depreciation exp. Totals Net Income Totals



1,520 700 250 2,760



700 250



2,760



24,450



700 250



24,450 2,420 6,590



6,590



20,280



Req. b) Income Statement For the month ended March, 31, 2020 Particulars Revenue: Service Revenue Expenses: Salaries and Wages expenses Supplies expenses Depreciation exp. Miscellaneous expense Total expenses Net Income



$



$ 6,590



2,000 1,520 250 400 4,170 2,420



2,420 20,280



Owner’s Equity Statement For the month ended March, 31, 2020 $ 12,900 10,000 2,420 25,320 1,100 24,220



Owner’s capital, March 1, 2020 Add: Additional capital Add: Net income Less: Owner’s drawings Owner’s capital, March 31, 2020 Balance Sheet As at March 31, 2020 $ Assets: Current assets: Cash (4500+10,000) Accounts Receivable Supplies Total current assets Fixed assets: Equipment Less: Accumulated depreciation-equipment Total assets Liabilities and Owner’s equity: Current Liabilities: Accounts payable Unearned service revenue Salaries and wages payable Total current liabilities Owner’s equity Total Liabilities and Owner’s equity



$



14,500 3,200 480 18,180 11,000 1,500



9,500 27,680



2,500 260 700 3,460 24,220 27,680



Req.c)



Date March-31 March-31 March-31 March-31



Adjusting Entries As at March 31, 2020 Particulars Supplies expenses Supplies (2,000-480) Depreciation expenses Accumulated depreciation-equipment Unearned service revenue Service revenue (550-260) Salaries and wages expenses Salaries and wages payable



Ref.



Dr.($.) 1,520



Cr.($) 1,520



250 250 290 290 700 700



Req.d)



Date March-31 March-31



March-31 March-31



Closing Entries As at March 31, 2020 Particulars



Ref.



Service revenue Income Summary Income Summary Salaries and Wages expenses Supplies expenses Depreciation exp. Miscellaneous expense Income Summary Owner’s capital Owner’s capital Owner’s drawings



Dr.($) 6,590



Cr.($) 6,590



4,170 2,000 1,520 250 400 2,420 2,420 1,100 1,100



P4.2 The adjusted trial balance columns of the worksheet for Nguyen Company at the year ended December 31, 2020, are as follows (amounts in thousands):



Acc. No. 101 112 126 130 157 158 200 201 212 230 301 306 400 610 631 711 722 726 905



Trial Balance December 31, 2020 Accounts Title Cash Accounts Receivable Supplies Prepaid insurance Equipment Accumulated depreciationEquipment Notes payable Accounts payable Salaries and Wages payable Interest payable Owner’s Capital Owner’s Drawings Service Revenue Advertising expenses Supplies expense Depreciation expense Insurance expense Salaries and Wages expenses Interest expense Total



Debit (Tk.) 5,300 10,800 1,500 2,000 27,000



Credit(Tk.)



5,600 15,000 6,100 3,600 600 13,000 7.600 61,000 9,000 4,000 5,600 3,500 28,000 600 1,04,900



1,04,900



Required: a. Enter the trial balance on a work sheet and prepare a ten column worksheet. b. Prepare an income statement and owner’s equity statement for the month of March and a classified statement of financial position at December 31. Nguyen did not make any additional investment in the business during the year.



c. Journalize the closing entries from the financial statement columns of the worksheet. d. Post the closing entries. Use three column form of account. Income summary No.350. e. Prepare a post-closing trial balance.



Solution: Req.a) Nguyen Company



Worksheet Account Titles



Cash Accounts Receivable Supplies Prepaid insurance Equipment Accumulated depreciation-Equipment Notes payable Accounts payable Salaries and Wages payable Interest payable Owner’s Capital Owner’s Drawings Service Revenue Advertising expenses Supplies expense Depreciation expense Insurance expense Salaries and Wages expenses Interest expense Total Net Income Totals Req. b)



Adjusted T.B Dr.(Tk.) Cr.(Tk.)



Income Statement Dr.(Tk.) Cr.(Tk.)



5,300 10,800 1,500 2,000 27,000



5,300 10,800 1,500 2,000 27,000 5,600



5,600



15,000 6,100 3,600



15,000 6,100 3,600



600 13,000



600 13,000



7.600



7.600 61,000



9,000 4,000 5,600 3,500 28,000 600 1,04,900



61,000 9,000 4,000 5,600 3,500 28,000 600



1,04,900 10,300 61,000



10,300 54,200



61,000



Nguyen Company Income Statement For the year ended December, 31, 2020 Particulars Revenue: Service Revenue Expenses: Advertising expenses Supplies expense Depreciation expense Insurance expense Salaries and Wages expenses Interest expense Total expenses Net Income



Balance Sheet Dr.(Tk.) Cr.(Tk.)



Tk.



Tk. 61,000



9,000 4,000 5,600 3,500 28,000 600 50,700 10,300



Nguyen Company Owner’s Equity Statement For the year ended December, 31, 2020 Tk. 13,000 10,300 23,300 7,600 15,700



Owner’s capital, January 1, 2020 Add: Net income Less: Owner’s drawings Owner’s capital, December 31, 2020 Nguyen Company Balance Sheet As at December 31, 2020 Tk. Assets: Current assets: Cash Accounts Receivable Supplies Prepaid insurance Total current assets Fixed assets: Equipment Less: Accumulated depreciation-equipment Total assets Liabilities and Owner’s equity: Current Liabilities: Notes payable (15,000-11,000) Accounts payable Interest payable Salaries and wages payable Total current liabilities Long-Term Liabilities: Notes Payable Owner’s equity Total Liabilities and Owner’s equity



Tk.



5,300 10,800 1,500 2,000 19,600 27,000 5,600



21,400 41,000



4,000 6,100 600 3,600 14,300 11,000 15,700 41,000



Req.c)



Date Dec-31 Dec-31



Dec-31



Nguyen Company Closing Entries As at March 31, 2020 Particulars Service revenue Income Summary Income Summary Advertising expenses Supplies expense Depreciation expense Insurance expense Salaries and Wages expenses Interest expense Income Summary Owner’s capital



Ref.



Dr.(Tk.) 61,000



Cr.(Tk.) 61,000



50,700 9,000 4,000 5,600 3,500 28,000 600 10,300 10,300



Dec-31



Owner’s capital Owner’s drawings



7,600 7,600



Req. d)



Date Dec-31 Dec-31 Dec-31



Date Dec-31 Dec-31 Dec-31



Nguyen Company Ledger Accounts (Three-Column Form) Income Summary Explanation Ref. Service revenue Closing all expenses Owner’s capital



Debit



Credit 61,000



Balance 61,000 10,300 0



Credit



Balance 13,000 23,300 15,700



50,700 10,300



Owner’s Capital Explanation Balance b/d Income summary Owner’s Drawings



Ref. √



Debit



10,300 7,600



Req. e)



Account No. 101 112 126 130 157 158 200 201 212 230 301



Nguyen Company Post-closing trial balance December 31, 2020 Accounts Title Cash Accounts Receivable Supplies Prepaid insurance Equipment Accumulated depreciation-Equipment Notes payable Accounts payable Salaries and Wages payable Interest payable Owner’s capital



Ref.



Debit (Tk.) 5,300 10,800 1,500 2,000 27,000



46,600



Credit (Tk.)



5,600 15,000 6,100 3,600 600 15,700 46,600