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CHAPTER 4 Completing the Accounting Cycle ASSIGNMENT CLASSIFICATION TABLE Learning Objectives

Do It!

Exercises

A Problems

*1.

Prepare a worksheet.

1

1, 2, 3, 5, 6

1A, 2A, 3A, 4A, 5A

*2.

Prepare closing entries and a post-closing trial balance.

2

4, 7, 8, 11, 19

1A, 2A, 3A, 4A, 5A

*3.

Explain the steps in the accounting cycle and how to prepare correcting entries.

3

10, 12, 13, 19

6A

*4.

Identify the sections of a classified balance sheet.

4

3, 9, 14, 15, 16, 17

1A, 2A, 3A, 4A, 5A

*5.

Prepare reversing entries.

18, 19

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

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Weygandt, Accounting Principles, 12/e, Solutions Manual

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4-1

ASSIGNMENT CHARACTERISTICS TABLE Problem Number

Description

Difficulty Level

Time Allotted (min.)

Simple

40–50

1A

Prepare worksheet, financial statements, and adjusting and closing entries.

2A

Complete worksheet; prepare financial statements, closing entries, and post-closing trial balance.

Moderate

50–60

3A

Prepare financial statements, closing entries, and postclosing trial balance.

Moderate

40–50

4A

Complete worksheet; prepare classified balance sheet, entries, and post-closing trial balance.

Moderate

50–60

5A

Complete all steps in accounting cycle.

Complex

70–90

6A

Analyze errors and prepare correcting entries and trial balance.

Moderate

40–50

Comprehensive Problem: Chapters 2 to 4

4-2

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Weygandt, Accounting Principles, 12/e, Solutions Manual

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WEYGANDT ACCOUNTING PRINCIPLES 12E CHAPTER 4 COMPLETING THE ACCOUNTING CYCLE Number

LO

BT

Difficulty

Time (min.)

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

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4-3

COMPLETING THE ACCOUNTING CYCLE (Continued) Number EX17

LO

BT

Difficulty

Time (min.)

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

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Learning Objective

Knowledge

Comprehension

*1. Prepare a worksheet. DI4-1 *2. Prepare closing entries and a post-closing trial balance.

Weygandt, Accounting Principles, 12/e, Solutions Manual

*3. Explain the steps in the accounting cycle and how to prepare correcting entries.

E4-10

*4. Identify the sections of a classified balance sheet.

DI4-4 E4-15

*5. Prepare reversing entries.

Broadening Your Perspective

Application

Analysis

E4-1 E4-2 E4-3

P4-2A P4-3A

E4-5 E4-6

DI4-2 E4-4

E4-7 E4-8 E4-11 P4-2A P4-3A

E4-19 P4-1A P4-4A P4-5A

DI4-3

E4-3 E4-9 E4-14

P4-5A E4-12 E4-13

Synthesis

Evaluation

P4-1A P4-4A P4-5A

P4-6A

E4-16 P4-1A E4-17 P4-4A P4-2A P4-5A P4-3A E4-18 E4-19

Communication

All About You Financial Reporting FASB Codification Comparative Analysis Decision Making Across the Organization

Real-World Focus Ethics Case

BLOOM’S TAXONOMY TABLE

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4-5

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

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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 Dec. 31

Income Summary.......................................... Owner’s Capital......................................

41,000

Owner’s Capital............................................ Owner’s Drawings..................................

22,000

41,000 22,000

DO IT! 4-3 1.

2.

3.

4-6

Supplies......................................................... Equipment................................................. Cash..........................................................

650

Cash............................................................... Owner’s Drawings........................................ Salaries & Wages Expense......................

400 500

Accounts Payable......................................... Cash..........................................................

540

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210 440

900 540

Weygandt, Accounting Principles, 12/e, Solutions Manual

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DO IT! 4-4 NA CL CL CA LTL IA

Interest revenue Utilities payable Accounts payable Supplies Bonds payable Goodwill

Copyright © 2015 John Wiley & Sons, Inc.

OE PPE PPE NA LTI CL

Owner’s capital Accumulated depreciation—equipme Equipment Salaries and wages expense Debt investments (long-term) Unearned rent revenue

Weygandt, Accounting Principles, 12/e, Solutions Manual

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4-7

SOLUTIONS TO EXERCISES EXERCISE 4-1 DIXON COMPANY Worksheet For the Month Ended June 30, 2017 Account Titles

Cash

Trial Balance

Adjustments

Dr.

Dr.

Cr.

Cr.

2,320

Adj. Trial Balance Dr.

Cr.

Income Statement Dr.

Cr.

Balance Sheet Dr.

2,320

2,320

2,440

2,440

Cr.

Accounts Receivable Supplies

2,440 1,880

Accounts Payable

(a) 1,380

500

1,120

500 1,120

1,120

Unearned Service Revenue

240 (b)

Owner’s Capital

3,600

Service Revenue

2,400

140 (b)

140

100

100

3,600

3,600

2,540

2,540

Salaries and Wages Expense

560

(c)

210

770

770

Miscellaneous Expense Totals

160 7,360

160

160

1,380

1,380

7,360 (a)

Supplies Expense

1,380

Salaries and Wages Payable Totals

(c) 1,730

Net Income Totals

4-8

210 1,730

210 7,570

7,570

210 2,310

5,260

230 2,540

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2,540

5,030 230

2,540

Weygandt, Accounting Principles, 12/e, Solutions Manual

5,260

5,260

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EXERCISE 4-2 SAVAGLIA COMPANY (Partial) Worksheet For the Month Ended April 30, 2017 Adjusted Trial Balance Account Titles Cash Accounts Receivable Prepaid Rent Equipment Accum. Depreciation — Equipment Notes Payable Accounts Payable Owner’s Capital Owner’s Drawings Service Revenue Salaries and Wages Expense Rent Expense Depreciation Expense Interest Expense Interest Payable Totals Net Income Totals

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

Cr.

Income Statement Dr.

Balance Sheet

Cr.

Dr. 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

Cr.

15,590 10,840 760 650 57

57 59,127

12,307 3,283 15,590

15,590

46,820

15,590

46,820

Weygandt, Accounting Principles, 12/e, Solutions Manual

57 43,537 3,283 46,820

(For Instructor Use Only)

4-9

EXERCISE 4-3 SAVAGLIA COMPANY Income Statement For the Month Ended April 30, 2017 Revenues Service revenue......................................................... Expenses Salaries and wages expense.................................... Rent expense............................................................. Depreciation expense............................................... Interest expense........................................................ Total expenses................................................... Net income........................................................................

$15,590 $10,840 760 650 57 12,307 $ 3,283

SAVAGLIA COMPANY Owner’s Equity Statement For the Month Ended April 30, 2017 Owner’s Capital, April 1............................................................. Add: Net income.......................................................................

$27,960 3,283 31,243 3,650 $27,593

Less: Drawings.......................................................................... Owner’s Capital, April 30...........................................................

SAVAGLIA COMPANY Balance Sheet April 30, 2017 Assets Current assets Cash........................................................................... Accounts receivable................................................. Prepaid rent............................................................... Total current assets........................................... Property, plant, and equipment Equipment.................................................................. 4-10

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$10,000 7,840 2,280 $20,120 23,050

Weygandt, Accounting Principles, 12/e, Solutions Manual

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Less: Accumulated depreciation—equipment...... Total assets........................................................

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Weygandt, Accounting Principles, 12/e, Solutions Manual

4,900

18,150 $38,270

(For Instructor Use Only)

4-11

EXERCISE 4-3 (Continued) SAVAGLIA COMPANY Balance Sheet (Continued) April 30, 2017 Liabilities and Owner’s Equity Current liabilities Notes payable............................................................ Accounts payable..................................................... Interest payable......................................................... Total current liabilities...................................... Owner’s equity Owner’s capital.......................................................... Total liabilities and owner’s equity..................

$5,700 4,920 57 $10,677 27,593 $38,270

EXERCISE 4-4 (a) Apr. 30 30

30 30

Service Revenue....................................... Income Summary...............................

15,590

Income Summary...................................... Salaries and Wages Expense........... Rent Expense..................................... Depreciation Expense....................... Interest Expense................................

12,307

Income Summary...................................... Owner’s Capital.................................

3,283

Owner’s Capital......................................... Owner’s Drawings.............................

3,650

15,590 10,840 760 650 57 3,283 3,650

( b) (2) (3)

4-12

Income Summary 12,307 (1) 15,590 3,283 15,590 15,590

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(4)

Owner’s Capital 3,650 Bal. 27,960 (3) 3,283 Bal. 27,593

Weygandt, Accounting Principles, 12/e, Solutions Manual

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EXERCISE 4-4 (Continued) (c)

SAVAGLIA COMPANY Post-Closing Trial Balance April 30, 2017 Debit $10,000 7,840 2,280 23,050

Cash...................................................................... Accounts Receivable.......................................... Prepaid Rent........................................................ Equipment............................................................ Accumulated Depreciation—Equipment........... Notes Payable...................................................... Accounts Payable................................................ Interest Payable................................................... Owner’s Capital...................................................

$43,170

Credit

$ 4,900 5,700 4,920 57 27,593 $43,170

EXERCISE 4-5 (a) Accounts Receivable.......................................... Service Revenue..........................................

1,100

Insurance Expense.............................................. Prepaid Insurance........................................

300

Depreciation Expense......................................... Accumulated Depreciation—Equipment. . .

900

Salaries and Wages Expense............................. Salaries and Wages Payable.......................

500

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Weygandt, Accounting Principles, 12/e, Solutions Manual

1,100 300 900 500

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4-13

EXERCISE 4-5 (Continued) (b)

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

Cr.

Balance Sheet Dr. X X

Cr.

X X X X X 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.................................................. Service Revenue.................................................

9,000

Insurance Expense..................................................... Prepaid Insurance...............................................

6,000

Supplies Expense....................................................... Supplies...............................................................

4,500

Depreciation Expense................................................ Accumulated Depreciation—Equipment...........

10,000

Salaries and Wages Expense.................................... Salaries and Wages Payable..............................

5,600

4-14

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9,000 6,000 4,500 10,000

Weygandt, Accounting Principles, 12/e, Solutions Manual

5,600

(For Instructor Use Only)

EXERCISE 4-7 (a) Service Revenue..................................................... Income Summary..............................................

4,300