FUNDAMENTAL ACCT.PRIN.-CONNECT ACCESS
FUNDAMENTAL ACCT.PRIN.-CONNECT ACCESS
24th Edition
ISBN: 9781265497613
Author: Wild
Publisher: MCG
Question
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Chapter 4, Problem 2BPSB
To determine

Accounting work sheet:

An accounting worksheet is an statement used to help book keeper to complete accounting cycle and preparation of year end reports.

Preparation of necessary work sheetstarting with the unadjusted trial balance and including adjustments based on the additional facts.

Expert Solution
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Explanation of Solution

    Company PDAccounting Work SheetFor year ended April,30.
    Unadjusted Trial balanceAdjustmentsAdjustedTrial balanceIncome StatementBalance sheet & Statement of owner's equity
    No.Account TitleDr.Cr.Dr.Cr.Dr.Cr.Dr.Cr.Dr.Cr.
    101Cash7,0007,0007,000
    126Supplies16,0008,1007,9007,900
    128Prepaid Insurance12,60010,6002,0002,000
    167Equipment2,00,0002,00,0002,00,000
    168Accumulated depreciation - equipment14,0007,00021,00021,000
    201Accounts payable6,8008007,6007,600
    203Interest payable0300300300
    208Rent payable03,0003,0003,000
    210Wages payable02,0002,0002,000
    213Property tax payable0550550550
    251Long-term notes payable30,00030,00030,000
    301J. Bonn capital86,90086,90086,900
    302J. Bonn withdrawal12,00012,00012,000
    401Demolition fees earned187,000187,000187,000
    612Depreciation expense − equipment07,0007,0007,000
    623Wages expenses41,4002,00043,40043,400
    633Interest expense3,3003003,6003,600
    637Insurance expense010,60010,60010,600
    640Rent expense13,2003,00016,20016,200
    652Supplies expense08,1008,1008,100
    683Property tax expense9,70055010,25010,250
    684Repairs expense4,70004,7004,700
    690Utilities expense4,8008005,6005,600
To determine

Journal Entries:

A journal entry is the record of the transaction entered into journal. Journal entries records all the financial details of the business and reflects which accounts are affected through the transactions.

Accounting rules for journal entries:

  • To increase balance of the account: Debit assets, expenses, losses and credit all liabilities, capital, revenue and gains.
  • To decrease balance of the account: Credit assets, expenses, losses and debit all liabilities, capital, revenue and gains.

The necessary adjusting journal entries and closing entries forCompany PD for the year ended April 30.

Expert Solution
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Explanation of Solution

Recording of supplies expense:

    DateAccount Title and ExplanationPost Ref.Debit($)Credit($)
    April-30Supplies expense8,100
    Supplies account8,100
    (to record the expense of supplies)
  • Since, supplies is an expense and expense is increased. Hence, supplies expense account is debited.
  • Since, supplies accountis an assetand asset is decreased. Hence, supplies account is credited.

Recording of insurance expense:

    DateAccount Title and ExplanationPost Ref.Debit($)Credit($)
    April-30Insurance expense10,600
    Prepaid insurance10,600
    (to record payment of wages)
  • Since, insurance is an expense and expense is increased. Hence, insurance expense account is debited.
  • Since, prepaid insurance is an asset and asset is decreased. Hence, prepaid insurance account is credited.

Recording of depreciation expense:

    DateAccount Title and ExplanationPost Ref.Debit($)Credit($)
    April-30Depreciation expense-equipment7,000
    Accumulated depreciation−equipment7,000
    (to record depreciation expense)
  • Since, depreciation is an expense and expense is increased. Hence, depreciation expense account is debited.
  • Since, accumulated depreciation is a liability and liability is increased. Hence, accumulated depreciation account is credited.

Purchase of supplies:

    DateAccount Title and ExplanationPost Ref.Debit($)Credit($)
    April-30Utilities expense800
    Accounts payable800
    (to record purchase of supplies)
  • Since, utilities is an expense, and expense is increased. Hence, utilities expense account is debited.
  • Since, accounts payable is a liability and liability is increased. Hence, accounts payable account is credited.

Recording of wages expense:

    DateAccount Title and ExplanationPost Ref.Debit($)Credit($)
    April-30Wages expense2,000
    Wages payable2,000
    (recording of wages expense)
  • Since, wages is an expense and expense is increased. Hence, wages expense account is debited.
  • Since, wages payable is a liability and liability is increased. Hence, wages payable account is credited.

Recording of property tax expense:

    DateAccount Title and ExplanationPost Ref.Debit($)Credit($)
    April-30Property tax expense550
    Property tax payable550
    (recording of property tax expense)
  • Since, property tax is an expense and expense is increased. Hence, property tax expense account is debited.
  • Since, property tax payable is a liability and liability is increased. Hence, property tax payable account is credited.

Recording of interest expense:

    DateAccount Title and ExplanationPost Ref.Debit($)Credit($)
    April-30Interest expense300
    Interest payable300
    (recording of interest expense)
  • Since, interest is an expense and expense is increased. Hence, interest expense account is debited.
  • Since, interest payable is a liability and liability is increased. Hence, interest payable account is credited.

The necessary closing journal entries for the Company PD for the year ended April 30.

Transfer of fees earned to income statement:

    DateAccount Title and ExplanationPost Ref.Debit($)Credit($)
    April-30Demolition fees earned187,000
    Income statement187,000
    (recording of transfer of fees earned to income statement)

Adjustment of expenses against income earned:

    DateAccount Title and ExplanationPost Ref.Debit($)Credit($)
    April-30Income statement109,450
    Depreciation expense-Equipment7,000
    Wages expense43,400
    Insurance expense10,600
    Rent expense16,200
    Supplies expense8,100
    Repairs expense4,700
    Utilities expense5,600
    Interest expense3,600
    Property tax expense10,250
    (adjustment of expenses against income earned)

Income earned is transferred to capital account:

    DateAccount Title and ExplanationPost Ref.Debit($)Credit($)
    April-30Income statement77,550
    J. bonn, capital77,550
    (transferring of income earned to capital account)

Reduction of capital account:

    DateAccount Title and ExplanationPost Ref.Debit($)Credit($)
    April-30J. bonn, capital12,000
    J. bonn, withdrawal12,000
    (recording of withdrawal of capital)
To determine

Income Statement:

An income statement is one of the financial statement of the company which shows the company's profit and loss for a particular period of time.

Statement of Owner'sEquity:

A statement of owner's equity reflects changes in capital balance of a business over a reporting period.

Balance Sheet:

The financial statement in which the worth of assets, liabilities and equity of a company or an entity is shown in a classified form is a balance sheet.

Theincome statement, statement of owner's equity and the balance sheet for Company PD as on year ended April, 30.

Expert Solution
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Explanation of Solution

The income statement ofCompany PD for the year ended April, 30 shows the income of $77,550.

    Company PDIncome Statement,For the year ended, April 30
    Debit($)Credit($)
    Revenues:
    Demolition fees earned187,000
    Total Revenue187,000
    Expenses:
    Depreciation expense-Equipment7,000
    Wages expense43,400
    Insurance expense10,600
    Rent expense16,200
    Supplies expense8,100
    Repairs expense4,700
    Utilities expense5,600
    Interest expense3,600
    Property tax expense10,250
    Total Expense109,450
    Net Income77,550

The statement of owner's equity for Company PD shows the closing balance of $152,450.

    Company PD
    Statement of Owner's Equity
    Amount($)Amount($)
    Owner's Equity opening balance46,900
    Add: Capital introduced by owner40,000
    Add: Net income77,550
    Total:164,450
    Less: Withdrawals(12,000)
    Closing Balance152,450

The balance sheet of Company PD shows a total of $195,900.

    Company PD
    Balance Sheet as at April, 30
    Amount ($)Amount ($)
    Liabilities and Owners Equity
    Accounts payable7,600
    Wages payable2,000
    Rent payable3,000
    Interest Payable300
    Property tax payable550
    Long-term notes payable30,000
    Total Liabilities43,450
    Owners Equity152,450
    Total Liabilities and Owners Equity195,900
    Current Assets, Loans & Advances
    Cash7,000
    Supplies7,900
    Prepaid Insurance2,000
    Total Current Assets, Loans & Advances16,900
    Property, Plant and Equipment
    Equipment179,000
    Total Property, Plant and Equipment179,000
    Total Assets195,900

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Chapter 4 Solutions

FUNDAMENTAL ACCT.PRIN.-CONNECT ACCESS

Ch. 4 - Prob. 11DQCh. 4 - Prob. 12DQCh. 4 - Prob. 13DQCh. 4 - Prob. 14DQCh. 4 - Prob. 15DQCh. 4 - Prob. 16DQCh. 4 - Prob. 17DQCh. 4 - Prob. 1QSCh. 4 - Preparing a work sheet P1 In the blank space...Ch. 4 - Computing ending capital balance using work sheet...Ch. 4 - Preparing a partial work sheet P1 The ledger of...Ch. 4 - Explaining temporary and permanent accounts Choose...Ch. 4 - Preparing closing entries from the ledger P2 The...Ch. 4 - Identifying post-closing accounts P3 Identify...Ch. 4 - Identifying the accounting cycle C2 List the...Ch. 4 - Classifying balance sheet items C3 The following...Ch. 4 - Preparing financial statements C2 Use the...Ch. 4 - Preparing a classified balance sheet C3 Use the...Ch. 4 - Identifying current accounts and computing the...Ch. 4 - Prob. 13QSCh. 4 - Exercise 4-1 Extending adjusted account balances...Ch. 4 - Exercise 4-2 Extending accounts in a work sheet Pl...Ch. 4 - Exercise 4-3 Preparing adjusting entries from a...Ch. 4 - Exercise 4-4 Preparing unadjusted and adjusted...Ch. 4 - Exercise 4-5 Determining effects of closing...Ch. 4 - Exercise 4-6 Completing the income statement...Ch. 4 - Exercise 4-7 Preparing a work sheet and recording...Ch. 4 - Exercise 4-8 Preparing and posting closing...Ch. 4 - Exercise 4-9 Preparing closing entries and a...Ch. 4 - Exercise 4-10 Preparing closing entries and a...Ch. 4 - Prob. 11ECh. 4 - Exercise 4-12 Preparing a classified balance sheet...Ch. 4 - Exercise 4-13 Computing the current ratio A1 Use...Ch. 4 - Exercise 4-14 Preparing closing entries P2...Ch. 4 - Exercise 4-15 Computing and analysing the current...Ch. 4 - Exercise 4.16A Preparing reversing entries P4 Hawk...Ch. 4 - Exercise 4-17APreparing reversing entries P4 The...Ch. 4 - Problem 4-1A Applying the accounting cycle C2 P2...Ch. 4 - Problem 4-2A Preparing a work sheet, adjusting and...Ch. 4 - Problem 4-3A Determining balance sheet...Ch. 4 - Problem 4-4A Preparing closing entries, financial...Ch. 4 - Problem 4-5A Preparing trial balances, closing...Ch. 4 - Problem 4-6AA Preparing adjusting, reversing, and...Ch. 4 - Problem 4-1B Applying the accounting cycle C2 P2...Ch. 4 - Prob. 2BPSBCh. 4 - Problem 4-3B Determining balance sheet...Ch. 4 - Prob. 4BPSBCh. 4 - Problem 4-5B Preparing trial balances, closing...Ch. 4 - Problem 4-6BAPreparing adjusting, reversing, and...Ch. 4 - The December 31. 2019= adjusted trial balance of...Ch. 4 - Transactions from the Fast Forward illustration in...Ch. 4 - Prob. 2GLPCh. 4 - Prob. 3GLPCh. 4 - Based on Problem 4-6ACh. 4 - Prob. 5GLPCh. 4 - Refer to Apple' s financial statements in Appendix...Ch. 4 - Prob. 2AACh. 4 - Prob. 3AACh. 4 - Prob. 1BTNCh. 4 - Prob. 2BTNCh. 4 - Prob. 3BTNCh. 4 - The unadjusted trial balance and information for...Ch. 4 - Prob. 5BTNCh. 4 - Prob. 6BTN
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