ACC 331 Answers Ch04 Exercises-1

ACC 331 Answers Ch04 Exercises-1 - Chapter 4 Completing the...

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Chapter 4 Completing the Accounting Cycle Quick Check Answers: 1. d 3. c 5. c 7. d 9. b 2. a 4. c 6. a 8. d 10. d Explanations: 5. c. Supplies expense is $4,000 (unadjusted balance $6,000 – ending supplies $2,000) 10. d. Current ratio is 2.50 [Total current assets / Total current liabilities = ($300 + $800 + $400) / ($500 + $100) = 2.50] Chapter 4 Completing the Accounting Cycle 1
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Short Exercises (10 min.) S 4-1 a. Some of the prepaid rent has expired. b. Some of the unearned service revenue has been earned. c. The business has used some of the supplies. d. The business owes some salary to its employees. e. The furniture has depreciated. (10-15 min.) S 4-2 a. Accounts receivable—amount the business expects to collect in cash b. Cost of the supplies on hand for use c. Amount of rent that was prepaid and is available for use by the business d. Cost of furniture purchased for use e. Portion of the furniture’s cost that has depreciated f. Amount that the business owes creditors g. Amount that the business has collected in advance from customers and owes them in the form of service h. Amount that the business earned during the period i. Used-up portion of the prepaid rent; the cost of obtaining a place to do business. Accounting 7/e Solutions Manual 2
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(5 min.) S 4-3 1. Owner’s Capital—credit balance 2. Income Statement account with a credit balance—Service Revenue 3. Income Statement accounts with a debit balance—expenses 4. Revenues – Expenses = Net income, which is closed into the Owner’s Capital account. Chapter 4 Completing the Accounting Cycle 3
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(10-15 min.) S 4-4 Journal DATE ACCOUNTS AND EXPLANATIONS POST. REF. DEBIT CREDIT Closing entries (all at December 31): a. Brett Kaufman, Capital 6,000 Brett Kaufman, Withdrawals 6,000 b. Service Revenue 22,000 Income Summary 22,000 c. Income Summary 14,000 Salary Expense 7,000 Rent Expense 4,000 Advertising Expense 3,000 d. Income Summary ($22,000 – $14,000) 8,000 Brett Kaufman, Capital 8,000 Accounting 7/e Solutions Manual 4
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(5 min.) S 4-5 1. Brett Kaufman, Capital Brett Kaufman, Withdrawals Income Summary Clo. 6,000 Bal. 25,000 Bal. 6,000 Clo. 6,000 Clo. 14,000 Clo. 22,000 Clo. 8,000 Clo. 8,000 Bal. 8,000 Bal. 27,000 Service Revenue Salary Expense Wage Expense Clo. 22,000 Bal. 22,000 Bal. 7,000 Clo. 7,000 Bal. 4,000 Clo. 4,000 Advertising Expense Bal. 3,000 Clo. 3,000 2. Brett Kaufman, Capital ending balance = $27,000 ($25,000 + $8,000 $6,000) (5 min.) S 4-6 Journal DATE ACCOUNTS AND EXPLANATIONS POST. REF. DEBIT CREDIT CLOSING ENTRIES May 31 Service Revenue 5,000 Income Summary 5,000 31 Income Summary 2,800 Sales and Marketing Expense 2,000 Depreciation Expense 800 Chapter 4 Completing the Accounting Cycle 5
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(5 min.) S 4-7 Service Revenue Sales and Marketing Expense Clo. 5,000 Bal. 5,000 Bal. 2,000 Clo. 2,000 Depreciation Expense Income Summary Bal. 800 Clo. 800 Clo. 2,800 Clo. 5,000 Bal. 2,200 (10 min.) S 4-8 Hueske Electric Company Post-Closing Trial Balance May 31, 2008
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This homework help was uploaded on 04/07/2008 for the course AC 331 taught by Professor Twillit during the Spring '08 term at Cazenovia College.

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ACC 331 Answers Ch04 Exercises-1 - Chapter 4 Completing the...

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