BAT4M Chapter 4 Questions
Ex. 4 (SO 1)
At March 31, 2008 account balances after adjustments for Maddux Cinema are as
follows:
Account Balances
Accounts
(After Adjustment)
Cash
$ 6,000
Concession supplies
4,000
Theatre equipment
50,000
Accumulated amortization—theatre equipment
12,000
Accounts Payable
5,000
N. Maddux, capital
20,000
N. Maddux, drawings
12,000
Admission ticket revenues
60,000
Popcorn revenues
37,000
Candy revenues
19,000
Advertising expense
12,000
Concession supplies expense
19,000
Amortization expense
4,000
Film rental expense
16,000
Rent expense
12,000
Salaries expense
13,000
Utilities expense
5,000
Instructions
a) Prepare the closing journal entries for Maddux Cinema.
b) Prepare a post-closing trial balance.
Ex. 6 (SO 1)
The income statement of Rebecca's Shoe Repair is as follows:
REBECCA’S SHOE REPAIR
Income Statement
Month Ended April 30, 2008
Revenue
Shoe Repair Revenue .................................................................
Expenses
Salaries Expense.........................................................................
Amortization Expense ..................................................................
Utilities Expense ..........................................................................
Rent Expense ..............................................................................
Supplies Expense ........................................................................
Total Expenses ....................................................................
Net Income...........................................................................................
$17,000
$3,400
350
1,400
600
1,050
6,800
$10,200
On April 1, the balance in Rebecca Weite, Capital was $11,200. During April, Rebecca
withdrew $8,200 cash for personal use.
Instructions
(a) Prepare closing entries at April 30.
(b) Prepare a statement of owner's equity for the month of April.
Ex. 13 (SO 3)
Andrea Zowkewych, CGA, was asked by Jeff Scott to review the accounting records and
prepare the financial statements for his antique shop for the month ended January 31.
Andrea reviewed the records and found three errors.
1. Cash paid on accounts payable for $830 was recorded as a debit to Accounts
Payable $380 and a credit to Cash $380.
2. The purchase of supplies on account for $500 was debited to Equipment $500
and credited to Accounts Payable $500.
3. Jeff withdrew cash for $2,500 and the bookkeeper debited Accounts Receivable
for $250 and credited Cash $250.
Instructions
Prepare an analysis of each error showing the
(a) incorrect entry.
(b) correct entry.
(c) correcting entry.
Ex. 16 (SO 4, 5)
The adjusted trial balance for DVD Concepts at December 31, 2008, as follows:
DVD CONCEPTS
Adjusted Trial Balance
Year Ended December 31, 2008
Accounts
Debit
Cash
$ 8,000
Accounts Receivable
16,000
Supplies
6,000
Prepaid Insurance
8,000
Computer Equipment
210,000
Accumulated Amortization—Computer Equipment
Accounts Payable
Note Payable
Salaries Payable
J. Yan, Capital
J. Yan, Drawings
12,000
DVD Rental Revenue
Advertising Expense
26,000
Amortization Expense
12,000
Insurance Expense
4,000
Rent Expense
15,000
Salaries Expense
38,000
Supplies Expense
6,000
Totals
$361,000
Credit
$ 25,000
20,000
71,000
3,000
109,000
133,000
$361,000
Instructions
(a) Calculate the balance of J. Yan, Capital that would appear on a balance sheet at
(b)
(c)
December 31, 2008.
Prepare a classified balance sheet for DVD Concepts at December 31, 2008
assuming the note payable is payable on November 30, 2010.
Calculate the working capital and current ratio for DVD Concepts.
EX 19 (SO 4, 5)
The following items are taken from the financial statements of Maxon Service for 2007:
Accounts payable
Accounts receivable
Accumulated amortization—equipment
Accumulated amortization—patents
Bonds payable, due 2020
Cash
M. Maxon, capital
Advertising expense
Amortization expense
Drawings
Equipment
Interest expense
Patents
Salaries expense
Sales revenue
Supplies
$18,500
4,000
4,800
10,000
18,000
24,000
41,000
3,000
4,800
5,300
48,000
2,500
17,500
15,200
36,500
4,500
Instructions
(a) Prepare an income statement and a classified balance sheet for Maxon Sales.
(b) Calculate the following ratios and values:
1. Current ratio
2. Working capital
EX 23 (SO 5)
The following data are taken from the financial statements of Prone Company as of the
end of the year 2007. The data are in alphabetical order.
Accounts payable
Accounts receivable
Cash
Net income
$ 28,000
66,000
54,000
48,000
Other current liabilities
Total assets
Total liabilities
Wages payable
17,000
250,000
200,000
5,000
Instructions
(a)
(b)
Calculate Prone Company’s working capital and current ratio.
Explain what additional information you would require in order to use the two
measures to evaluate Prone’s liquidity.
EX 28 (SO 6)
The unadjusted trial balance of Jackson’s Web Services at December 31, 2008 follows
below. Additional data regarding the accounts:
a) Actual supplies on hand are $750.
b) Amortization expense for 2008 has not yet been recorded, but has been
calculated as $1,600.
c) Amounts recorded as Unearned Revenue are for services that were provided in
December. No additional work needs to be done for these customers.
d) Salaries expense of $1,000 for the last week of December has not been paid yet,
and should be recorded as an Account Payable.
Instructions:
a) Complete the worksheet for the month of December, 2008.
b) Calculate net income for the year.
c) Calculate the balance in E. Jackson, Capital at December 31, 2008 after closing
entries are made.
Unadjusted trial
balance
Debit
Cash
5,240
Accounts receivable
1,900
Supplies
2,800
Equipment
Accumulated amortization equipment
8,200
Credit
820
Accounts payable
2,680
Unearned revenue
1,450
E. Jackson, capital
5,010
E. Jackson, drawings
5,500
Service revenue
65,000
Amortization expense
Salaries expense
Supplies expense
Advertising expense
Telephone and internet
expense
40,000
320
6,200
4,800
74,960
74,960
Adjustments
Adjusted trial
balance
Income Statement
Balance Sheet