CHAPTER 4
Completing the Accounting Cycle
ASSIGNMENT CLASSIFICATION TABLE
Brief
Exercises
Do It!
Exercises
A
Problems
B
Problems
1, 2, 3,
4, 5
1, 2, 3
1
1, 2, 3, 5,
6, 17
1A, 2A, 3A,
4A, 5A
1B, 2B, 3B,
4B, 5B
Explain the process
of closing the books.
6, 7, 11,
12
4, 5, 6
2
4, 7, 8,
11, 19
1A, 2A, 3A,
4A, 5A
1B, 2B, 3B,
4B, 5B
*3.
Describe the content and
purpose of a post-closing
trial balance.
8, 9
7
4, 7, 8
2A, 3A,
4A, 5A
2B, 3B,
4B, 5B
*4.
State the required steps
in the accounting cycle.
10, 11, 12
8
10, 19
5A
5B
*5.
Explain the approaches
to preparing correcting
entries.
13
9
12, 13
6A
*6.
Identify the sections of a
classified statement of
financial position.
14, 15, 16,
17, 18, 19
10, 11
3, 9, 14, 15,
16, 17
1A, 2A, 3A,
4A, 5A
*7.
Prepare reversing entries.
10, 20, 21
12
Learning Objectives
Questions
*1.
Prepare a worksheet.
*2.
3, 4
1B, 2B, 3B,
4B, 5B
18, 19
*Note: All asterisked Questions, Exercises, and Problems relate to material contained in the appendix *to the
chapter.
Copyright © 2013 John Wiley & Sons, Inc. Weygandt Financial, IFRS, 2/e, Solution’s Manual (For Instructor Use Only)
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 statement of
financial position, adjusting and closing 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
1B
Prepare worksheet, financial statements, and adjusting
and closing entries.
Simple
40–50
2B
Complete worksheet; prepare financial statements,
closing entries, and post-closing trial balance.
Moderate
50–60
3B
Prepare financial statements, closing entries, and postclosing trial balance.
Moderate
40–50
4B
Complete worksheet; prepare classified statement of
financial position, adjusting and closing entries, and
post-closing trial balance.
Moderate
50–60
5B
Complete all steps in accounting cycle.
Complex
70–90
Comprehensive Problem: Chapters 2 to 4
4-2
Copyright © 2013 John Wiley & Sons, Inc. Weygandt Financial, IFRS, 2/e, Solution’s Manual (For Instructor Use Only)
WEYGANDT FINANCIAL ACCOUNTING, IFRS Version, 2e
CHAPTER 4
COMPLETING THE ACCOUNTING CYCLE
Number
LO
BT
Difficulty
Time (min.)
BE1
1
K
Simple
2–4
BE2
1
AN
Moderate
6–8
BE3
1
C
Simple
3–5
BE4
2
AP
Simple
3–5
BE5
2
AP
Simple
4–6
BE6
2
AP
Simple
6–8
BE7
3
C
Simple
2–4
BE8
4
K
Simple
3–5
BE9
5
AN
Moderate
4–6
BE10
6
AP
Simple
4–6
BE11
6
C
Simple
3–5
BE12
7
AN
Moderate
4–6
DI1
1
C
Simple
4–6
DI2
2
AP
Simple
2–4
DI3
6
AP
Simple
6–8
DI4
6
C
Simple
4–6
EX1
1
AP
Simple
12–15
EX2
1
AP
Simple
10–12
EX3
1, 6
AP
Simple
12–15
EX4
2, 3
AP
Simple
12–15
EX5
1
AN
Simple
10–12
EX6
1
AN
Moderate
12–15
EX7
2, 3
AP
Simple
8–10
EX8
2, 3
AP
Simple
10–12
EX9
6
AP
Simple
12–15
EX10
4
C
Simple
3–5
EX11
2
AP
Simple
6–8
EX12
5
AN
Moderate
8–10
EX13
5
AN
Moderate
4–6
EX14
6
AP
Moderate
10–12
EX15
6
C
Simple
5–8
EX16
6
AP
Simple
8–10
Copyright © 2013 John Wiley & Sons, Inc. Weygandt Financial, IFRS, 2/e, Solution’s Manual (For Instructor Use Only)
4-3
COMPLETING THE ACCOUNTING CYCLE (Continued)
Number
LO
BT
Difficulty
Time (min.)
EX17
1, 6
AP
Simple
12–15
EX18
7
AN
Moderate
5–7
EX19
2, 4, 7
AN
Moderate
10–12
P1A
1, 2, 6
AN
Simple
40–50
P2A
1-3, 6
AP
Moderate
50–60
P3A
1-3, 6
AP
Moderate
40–50
P4A
1-3, 6
AN
Moderate
50–60
P5A
1-4, 6
AN
Complex
70–90
P6A
5
AN
Moderate
40–50
P1B
1, 2, 6
AN
Simple
40–50
P2B
1-3, 6
AP
Moderate
50–60
P3B
1-3, 6
AP
Moderate
40–50
P4B
1-3, 6
AN
Moderate
50–60
P5B
1-4, 6
AN
Complex
70–90
BYP1
6
AN
Simple
10–12
BYP2
6
AN
Simple
8–10
BYP3
—
E
Simple
10–12
BYP4
6
AN
Moderate
15–20
BYP5
4
C
Simple
15–20
BYP6
—
E
Moderate
10–15
4-4
Copyright © 2013 John Wiley & Sons, Inc. Weygandt Financial, IFRS, 2/e, Solution’s Manual (For Instructor Use Only)
Q4-10
Q4-20
Communication
Broadening Your Perspective
BE4-3
DI4-1
*7. Prepare reversing entries.
Q4-17
Q4-18
BE4-11
DI4-4
E4-15
*6. Identify the sections of
a classified statement of financial
position.
Q4-14
Q4-15
Q4-16
Q4-13
*5. Explain the approaches to
preparing correcting entries.
Q4-10
E4-10
Q4-11
Q4-12
BE4-8
*4. State the required steps in
the accounting cycle.
Q4-7
Q4-8
Q4-9
BE4-7
Q4-6
Q4-11
Q4-12
*2. Explain the process of closing
the books.
Q4-1
Q4-2
Q4-3
Q4-4
Q4-5
Comprehension
*3. Describe the content and
purpose of a post-closing trial
balance.
BE4-1
Knowledge
*1. Prepare a worksheet.
Learning Objective
Q4-19
BE4-10
DI4-3
E4-3
E4-9
E4-14
E4-4
E4-7
E4-8
P4-2A
BE4-4
BE4-5
BE4-6
DI4-2
E4-4
E4-7
E4-1
E4-2
E4-3
E4-17
P4-2A
E4-16
E4-17
P4-2A
P4-3A
P4-2B
P4-3B
P4-3A
P4-2B
P4-3B
E4-8
E4-11
P4-2A
P4-3A
P4-2B
P4-3B
P4-3A
P4-2B
P4-3B
Application
Copyright © 2013 John Wiley & Sons, Inc. Weygandt Financial, IFRS, 2/e, Solution’s Manual (For Instructor Use Only)
E4-18
E4-19
P4-4B
P4-5B
P4-5B
P4-5A
P4-1B
P4-4B
P4-5B
Financial Reporting
Comparative
Analysis
Decision Making
Across the
Organization
Q4-21
BE4-12
P4-1A
P4-4A
P4-5A
P4-1B
P4-4B
P4-5B
BE4-9
E4-12
E4-13
P4-6A
E4-19
P4-5A
P4-5B
P4-4A
P4-5A
E4-19
P4-1A
P4-4A
P4-5A
P4-1B
P4-4B
BE4-2
E4-5
E4-6
P4-1A
P4-4A
Analysis
Synthesis
Real–World
Focus
Ethics Case
Evaluation
Correlation Chart between Bloom’s Taxonomy, Learning Objectives and End-of-Chapter Exercises and Problems
BLOOM’S TAXONOMY TABLE
4-5
ANSWERS TO QUESTIONS
1.
No. A worksheet is not a permanent accounting record. The use of a worksheet is an optional
step in the accounting cycle.
2.
The worksheet is merely a device used to make it easier to prepare adjusting entries and the
financial statements.
3.
The amount shown in the adjusted trial balance column for an account equals the account
balance in the ledger after adjusting entries have been journalized and posted.
4.
The net income of $12,000 will appear in the income statement debit column and the statement
of financial position credit column. A net loss will appear in the income statement credit column
and the statement of financial position debit column.
5.
Formal financial statements are needed because the columnar data are not properly arranged
and classified for statement purposes. For example, the Dividends account is listed with assets.
6.
(1)
(2)
(3)
(4)
7.
Income Summary is a temporary account that is used in the closing process. The account is
debited for expenses and credited for revenues. The difference, either net income or net loss, is
then closed to the Retained Earnings account.
8.
The post-closing trial balance contains only statement of financial position accounts. Its purpose
is to prove the equality of the permanent account balances that are carried forward into the next
accounting period.
9.
The accounts that will not appear in the post-closing trial balance are: Depreciation Expense;
Dividends; and Service Revenue.
10.
A reversing entry is the exact opposite, both in amount and in account titles, of an adjusting entry
and is made at the beginning of the new accounting period. Reversing entries are an optional
step in the accounting cycle.
11.
The steps that involve journalizing are: (1) journalize the transactions, (2) journalize the adjusting
entries, and (3) journalize the closing entries.
12.
The three trial balances are the: (1) trial balance, (2) adjusted trial balance, and (3) post-closing
trial balance.
13.
Correcting entries differ from adjusting entries because they: (1) are not a required part of the
accounting cycle, (2) may be made whenever an error is discovered, and (3) may affect any
combination of accounts.
4-6
Copyright © 2013 John Wiley & Sons, Inc. Weygandt Financial, IFRS, 2/e, Solution’s Manual (For Instructor Use Only)
(Dr) Individual revenue accounts and (Cr) Income Summary.
(Dr) Income Summary and (Cr) Individual expense accounts.
(Dr) Income Summary and (Cr) Retained Earnings.
(Dr) Retained Earnings and (Cr) Dividends.
Questions Chapter 4 (Continued)
*14. The standard classifications used in a statement of financial position are:
Assets
Intangible Assets
Property, Plant, and Equipment
Long-term Investments
Current Assets
Equity and Liabilities
Equity
Non-current Liabilities
Current Liabilities
*15. The operating cycle of a company is the average time that it takes to purchase inventory, sell it on
account, and then collect cash from customers.
*16. Current assets are assets that a company expects to convert to cash or use up in one year. Some
companies use a period longer than one year to classify assets and liabilities as current because they
have an operating cycle longer than one year. Companies usually list current assets in the
reverse order in which they expect to convert them into cash.
*17. Long-term investments are generally investments in shares and bonds of other companies that
are normally held for many years and non-current assets such as land or buildings that a
company is not using in its operating activities. Property, plant, and equipment are assets with
relatively long useful lives that a company is currently using in operating the business.
*18. The two equity accounts and the purpose of each are: (1) Share Capital—Ordinary is used to
record investments of assets in the business by the owners (shareholders) through share
transactions. (2) Retained Earnings is used to record net income retained in the business.
*19.. Samsung’s current liabilities at December 31, 2010 and December 31, 2009 were W 39,944,721
million and W 34,204,424 million respectively. Samsung’s current liabilities were lower than its
current assets in both years.
*20. After reversing entries have been made, the balances will be Interest Payable, zero balance;
Interest Expense, a credit balance.
*21. (a) Jan. 10 Salaries and Wages Expense ....................................................
Cash ..................................................................................
9,200
9,200
Because of the January 1 reversing entry that credited Salaries and Wages Expense for
$3,500, Salaries and Wages Expense will have a debit balance of $5,700 which equals the
expense for the current period.
(b) Jan. 10 Salaries and Wages Payable .....................................................
Salaries and Wages Expense ....................................................
Cash ..................................................................................
3,500
5,700
9,200
Note that Salaries and Wages Expense will again have a debit balance of $5,700.
Copyright © 2013 John Wiley & Sons, Inc. Weygandt Financial, IFRS, 2/e, Solution’s Manual (For Instructor Use Only)
4-7
SOLUTIONS TO BRIEF EXERCISES
BRIEF EXERCISE 4-1
The steps in using a worksheet are performed in the following sequence:
(1) prepare a trial balance on the worksheet, (2) enter adjustment data,
(3) enter adjusted balances, (4) extend adjusted balances to appropriate
statement columns and (5) total the statement columns, compute net
income (loss), and complete the worksheet. Filling in the blanks, the
answers are 1, 3, 4, 5, 2.
The solution to BRIEF EXERCISE 4-2 is on page 4-9.
BRIEF EXERCISE 4-3
Account
Accumulated Depreciation
Depreciation Expense
Share Capital—Ordinary
Dividends
Service Revenue
Supplies
Accounts Payable
Income Statement
Dr.
Cr.
Statement of
Financial Position
Dr.
Cr.
X
X
X
X
X
X
X
BRIEF EXERCISE 4-4
Dec. 31
31
31
31
4-8
Service Revenue ..............................................
Income Summary......................................
47,000
Income Summary .............................................
Salaries and Wages Expense ..................
Supplies Expense .....................................
32,000
Income Summary .............................................
Retained Earnings ....................................
15,000
Retained Earnings ............................................
Dividends ..................................................
2,000
47,000
27,000
5,000
15,000
2,000
Copyright © 2013 John Wiley & Sons, Inc. Weygandt Financial, IFRS, 2/e, Solution’s Manual (For Instructor Use Only)
Prepaid Insurance
Service Revenue
Salaries and Wages
Expense
Accounts Receivable
Salaries and Wages
Payable
Insurance Expense
Account Titles
25,000
3,000
61,000
Trial Balance
Dr.
Cr.
(a) 1,300
(c) 800
(b) 1,100
(c)
800
(a) 1,300
(b) 1,100
Adjustments
Dr.
Cr.
KEO COMPANY
Worksheet
1,300
25,800
1,100
1,700
800
62,100
Adjusted
Trial Balance
Dr.
Cr.
1,300
25,800
62,100
Income
Statement
Dr.
Cr.
1,100
1,700
800
Statement of
Financial
Position
Dr.
Cr.
BRIEF EXERCISE 4-2
Copyright © 2013 John Wiley & Sons, Inc. Weygandt Financial, IFRS, 2/e, Solution’s Manual (For Instructor Use Only)
4-9
BRIEF EXERCISE 4-5
Salaries and Wages
Expense
Bal. 27,000 (2) 27,000
Supplies Expense
Bal. 5,000 (2) 5,000
Income Summary
(2) 32,000 (1) 47,000
(3) 15,000
47,000
47,000
Service Revenue
(1) 47,000 Bal. 47,000
Retained Earnings
(4)
2,000 Bal. 30,000
(3) 15,000
Bal. 43,000
Dividends
Bal. 2,000 (4) 2,000
BRIEF EXERCISE 4-6
July 31
31
Date
7/31
7/31
Date
7/31
7/31
4-10
Service Revenue ...............................................
Income Summary.......................................
19,200
Income Summary ..............................................
Salaries and Wages Expense ...................
Maintenance and Repairs Expense .........
11,300
Explanation
Balance
Closing entry
Explanation
Balance
Closing entry
Service Revenue
Ref.
Debit
19,200
8,800
2,500
Credit
19,200
Balance
19,200
0
Credit
Balance
8,800
0
19,200
Salaries and Wages Expense
Ref.
Debit
8,800
8,800
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BRIEF EXERCISE 4-6 (Continued)
Date
7/31
7/31
Maintenance and Repairs Expense
Explanation
Ref.
Debit
Credit
Balance
2,500
Closing entry
2,500
Balance
2,500
0
BRIEF EXERCISE 4-7
The accounts that will appear in the post-closing trial balance are:
Accumulated Depreciation
Share Capital—Ordinary
Supplies
Accounts Payable
BRIEF EXERCISE 4-8
The proper sequencing of the required steps in the accounting cycle is as
follows:
1.
2.
3.
4.
5.
6.
7.
8.
9.
Analyze business transactions.
Journalize the transactions.
Post to ledger accounts.
Prepare a trial balance.
Journalize and post adjusting entries.
Prepare an adjusted trial balance.
Prepare financial statements.
Journalize and post closing entries.
Prepare a post-closing trial balance.
Filling in the blanks, the answers are 4, 2, 8, 7, 5, 3, 9, 6, 1.
Copyright © 2013 John Wiley & Sons, Inc. Weygandt Financial, IFRS, 2/e, Solution’s Manual (For Instructor Use Only)
4-11
BRIEF EXERCISE 4-9
1.
2.
Service Revenue ..................................................................
Accounts Receivable ...................................................
690
Accounts Payable (€1,850 – €1,580) ..................................
Supplies ........................................................................
270
690
270
BRIEF EXERCISE 4-10
KREN COMPANY
Partial Statement of Financial Position
Current assets
Prepaid insurance ...................................................................
Supplies....................................................................................
Accounts receivable ................................................................
Short-term investments ..........................................................
Cash ..........................................................................................
Total current assets .........................................................
£ 3,600
5,200
12,500
4,900
6,700
£32,900
BRIEF EXERCISE 4-11
CL
CA
PPE
PPE
CA
IA
Accounts payable
Accounts receivable
Accum. depreciation—buildings
Buildings
Cash
Copyrights
CL
LTI
PPE
CA
IA
CA
Income taxes payable
Debt investments (long-term)
Land
Inventory
Patents
Supplies
*BRIEF EXERCISE 4-12
Nov. 1
Salaries and Wages Payable ......................................
Salaries and Wages Expense .............................
1,680
1,680
The balances after posting the reversing entry are Salaries and Wages
Expense (Cr.) $1,680 and Salaries and Wages Payable $0.
4-12
Copyright © 2013 John Wiley & Sons, Inc. Weygandt Financial, IFRS, 2/e, Solution’s Manual (For Instructor Use Only)
SOLUTIONS FOR DO IT! REVIEW EXERCISES
DO IT! 4-1
Income statement debit column—Utilities Expense
Income statement credit column—Service Revenue
Statement of financial position debit column—Accounts Receivable
Statement of financial position credit column—Notes Payable;
Accumulated Depreciation; Share Capital—Ordinary
DO IT! 4-2
Dec. 31
Dec. 31
Income Summary..........................................
Retained Earnings ..................................
47,000
Retained Earnings ........................................
Dividends ................................................
15,000
47,000
15,000
DO IT! 4-3
ZERMATT COMPANY
Partial Statement of Financial Position
December 31, 2014
Property, plant, and equipment
Equipment ...................................................
Less: Accumulated depreciation—
equipment................................................
Long-term investments
Investments in ordinary shares .................
Current assets
Inventory......................................................
Accounts receivable ...................................
Short-term investments .............................
Cash .............................................................
Total assets ........................................................
CHF21,700
5,200
CHF16,500
6,500
4,100
4,300
1,200
3,900
13,500
CHF36,500
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4-13
DO IT! 4-4
NA
CL
CL
CA
NCL
IA
4-14
Interest revenue
Utilities payable
Accounts payable
Supplies
Bonds payable
Trademarks
E
PPE
PPE
NA
LTI
CL
Share capital—ordinary
Accumulated depreciation–
equipment
Equipment
Salaries and wages expense
Investment in real estate
Unearned rent revenue
Copyright © 2013 John Wiley & Sons, Inc. Weygandt Financial, IFRS, 2/e, Solution’s Manual (For Instructor Use Only)
SOLUTIONS TO EXERCISES
EXERCISE 4-1
LIM COMPANY
Worksheet
For the Month Ended June 30, 2014
(in thousands)
Account Titles
Trial Balance
Dr.
Cash
Adjustments
Cr.
Dr.
Cr.
4,020
Adj. Trial Balance
Dr.
Cr.
Income Statement
Dr.
Statement of
Financial Position
Cr.
Dr.
4,020
4,020
2,440
2,440
500
500
Cr.
Accounts
Receivable
Supplies
2,440
1,900
Accounts Payable
(a) 1,400
1,120
1,120
1,120
100
100
Unearned Service
Revenue
240 (b)
140
Share Capital—
Ordinary
5,000
Service Revenue
5,000
3,100
(b)
140
5,000
3,240
3,240
Salaries and
Wages Expense
860
(c)
250
1,110
1,110
240
240
1,400
1,400
Miscellaneous
Expense
Totals
Supplies Expense
240
9,460
9,460
(a) 1,400
Salaries and
Wages Payable
Totals
Net Income
Totals
(c)
1,790
250
1,790
250
9,710
9,710
250
2,750
3,240
6,960
490
3,240
6,470
490
3,240
Copyright © 2013 John Wiley & Sons, Inc. Weygandt Financial, IFRS, 2/e, Solution’s Manual (For Instructor Use Only)
6,960
6,960
4-15
EXERCISE 4-2
ALBANESE COMPANY
(Partial) Worksheet
For the Month Ended April 30, 2014
Adjusted
Trial Balance
Account Titles
Cash
Accounts Receivable
Prepaid Rent
Equipment
Accum. Depreciation—
Equipment
Notes Payable
Accounts Payable
Share Capital—
Ordinary
Retained Earnings
Dividends
Service Revenue
Salaries and Wages
Expense
Rent Expense
Depreciation Expense
Interest Expense
Interest Payable
Totals
Net Income
Totals
4-16
Dr.
7,442
7,840
2,280
23,000
Cr.
Income
Statement
Dr.
Cr.
Dr.
7,442
7,840
2,280
23,000
Cr.
4,800
5,700
5,672
22,000
4,800
5,700
5,672
22,000
4,000
4,000
3,000
3,000
12,590
9,840
760
600
57
54,819
Statement of
Financial
Position
12,590
9,840
760
600
57
57
54,819
11,257
1,333
12,590
12,590
43,562
12,590
43,562
57
42,229
1,333
43,562
Copyright © 2013 John Wiley & Sons, Inc. Weygandt Financial, IFRS, 2/e, Solution’s Manual (For Instructor Use Only)
EXERCISE 4-3
ALBANESE COMPANY
Income Statement
For the Month Ended April 30, 2014
Revenues
Service revenue ........................................................
Expenses
Salaries and wages expense ...................................
Rent expense ............................................................
Depreciation expense ...............................................
Interest expense .......................................................
Total expenses ..................................................
Net income ........................................................................
€12,590
€ 9,840
760
600
57
11,257
€ 1,333
ALBANESE COMPANY
Retained Earnings Statement
For the Month Ended April 30, 2014
Retained Earnings, April 1 ........................................................
Add: Net income ......................................................................
€4,000
1,333
5,333
3,000
€2,333
Less: Dividends ........................................................................
Retained Earnings, April 30 ......................................................
ALBANESE COMPANY
Statement of Financial Position
April 30, 2014
Assets
Property, plant, and equipment
Equipment .................................................................
Less: Accumulated depreciation—equipment ......
Current assets
Prepaid rent ...............................................................
Accounts receivable .................................................
Cash ...........................................................................
Total assets .......................................................................
€23,000
4,800
2,280
7,840
7,442
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€18,200
17,562
€35,762
4-17
EXERCISE 4-3 (Continued)
ALBANESE COMPANY
Statement of Financial Position (Continued)
April 30, 2014
Equity and Liabilities
Equity
Share capital—ordinary ...........................................
Retained earnings ....................................................
Current liabilities
Notes payable ...........................................................
Accounts payable .....................................................
Interest payable ........................................................
Total equity and liabilities ..............................................
€22,000
2,333
5,700
5,672
57
€24,333
11,429
€35,762
EXERCISE 4-4
(a) Apr. 30
30
30
30
Service Revenue .......................................
Income Summary ..............................
12,590
Income Summary ......................................
Salaries and Wages Expense ...........
Rent Expense .....................................
Depreciation Expense .......................
Interest Expense ................................
11,257
Income Summary ......................................
Retained Earnings .............................
1,333
Retained Earnings .....................................
Dividends ...........................................
3,000
12,590
9,840
760
600
57
1,333
3,000
(b)
Income Summary
11,257
12,590
1,333
12,590
12,590
4-18
Retained Earnings
3,000 Bal.
4,000
1,333
Bal.
2,333
Copyright © 2013 John Wiley & Sons, Inc. Weygandt Financial, IFRS, 2/e, Solution’s Manual (For Instructor Use Only)
EXERCISE 4-4 (Continued)
(c)
ALBANESE COMPANY
Post-Closing Trial Balance
April 30, 2014
Cash .....................................................................
Accounts Receivable ..........................................
Prepaid Rent........................................................
Equipment ...........................................................
Accumulated Depreciation—Equipment ..........
Notes Payable .....................................................
Accounts Payable ...............................................
Interest Payable ..................................................
Share Capital—Ordinary ....................................
Retained Earnings ..............................................
Debit
€7,442
7,840
2,280
23,000
€40,562
Credit
€ 4,800
5,700
5,672
57
22,000
2,333
€40,562
EXERCISE 4-5
(a) Accounts Receivable ..........................................
Service Revenue .........................................
600
Insurance Expense .............................................
Prepaid Insurance .......................................
400
Depreciation Expense ........................................
Accumulated Depreciation—Equipment ...
900
Salaries and Wages Expense ............................
Salaries and Wages Payable ......................
500
600
400
900
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500
4-19
EXERCISE 4-5 (Continued)
(b)
Accounts Receivable
Prepaid Insurance
Accum. Depreciation—Equip.
Salaries and Wages Payable
Service Revenue
Salaries and Wages
Expense
Insurance Expense
Depreciation Expense
Statement of
Income Statement Financial Position
Dr.
Cr.
Dr.
Cr.
X
X
X
X
X
X
X
X
EXERCISE 4-6
(a) Accounts Receivable—27,000 (34,000 – 7,000).
Supplies—2,300 (7,000 – 4,700).
Accumulated Depreciation—Equipment—22,000 (12,000 + 10,000).
Salaries and Wages Payable—0 No liability recorded until adjustments
are made.
Insurance Expense—8,000 (26,000 – 18,000).
Salaries and Wages Expense—44,000 (49,000 – 5,000).
(b) Accounts Receivable .................................................
Service Revenue .................................................
7,000
Insurance Expense .....................................................
Prepaid Insurance ...............................................
8,000
Supplies Expense .......................................................
Supplies ...............................................................
4,700
Depreciation Expense ................................................
Accumulated Depreciation—Equipment ..........
10,000
Salaries and Wages Expense ....................................
Salaries and Wages Payable..............................
5,000
4-20
7,000
8,000
4,700
10,000
5,000
Copyright © 2013 John Wiley & Sons, Inc. Weygandt Financial, IFRS, 2/e, Solution’s Manual (For Instructor Use Only)
EXERCISE 4-7
(a) Service Revenue .....................................................
Income Summary ..............................................
4,300
Income Summary ....................................................
Salaries and Wages Expense ..........................
Miscellaneous Expense ...................................
Supplies Expense .............................................
3,424
Income Summary ....................................................
Retained Earnings ............................................
876
Retained Earnings ..................................................
Dividends ..........................................................
600
(b)
4,300
1,344
180
1,900
876
600
LANZA COMPANY
Post-Closing Trial Balance
For the Month Ended June 30, 2014
Account Titles
Cash .........................................................................
Accounts Receivable ..............................................
Supplies ...................................................................
Accounts Payable ...................................................
Salaries and Wages Payable .................................
Unearned Service Revenue ...................................
Share Capital—Ordinary ........................................
Retained Earnings ..................................................
Debit
R$3,712
3,904
480
Credit
R$1,556
344
160
4,000
2,036
R$8,096 R$8,096
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4-21
EXERCISE 4-8
(a)
General Journal
Date
Account Titles
July 31 Service Revenue ..................................
Rent Revenue .......................................
Income Summary ........................
Ref.
400
429
350
Debit
64,000
6,500
31 Income Summary .................................
Salaries and Wages Expense ....
Utilities Expense .........................
Depreciation Expense ................
350
726
732
711
74,300
31 Retained Earnings ...............................
Income Summary ........................
320
350
3,800
31 Retained Earnings ...............................
Dividends ....................................
320
332
12,000
J15
Credit
70,500
55,700
14,900
3,700
3,800
12,000
(b)
Retained Earnings
Date
Explanation
Ref.
Debit
July 31 Balance
31 Close net loss
J15
3,800
31 Close dividends
J15
12,000
Income Summary
Date
Explanation
Ref.
Debit
July 31 Close revenue
J15
31 Close expenses
J15
74,300
31 Close net loss
J15
4-22
Credit
Credit
70,500
3,800
No. 320
Balance
20,260
16,460
4,460
No. 350
Balance
70,500
(3,800)
0
Copyright © 2013 John Wiley & Sons, Inc. Weygandt Financial, IFRS, 2/e, Solution’s Manual (For Instructor Use Only)
EXERCISE 4-8 (Continued)
(c)
ROTH COMPANY
Post-Closing Trial Balance
July 31, 2014
Cash .....................................................................
Accounts Receivable ..........................................
Equipment ...........................................................
Accumulated Depreciation—Equipment ..........
Accounts Payable ...............................................
Unearned Rent Revenue ....................................
Share Capital—Ordinary ....................................
Retained Earnings ..............................................
Debit
$9,840
8,140
15,900
$33,880
Credit
$ 5,400
2,220
3,800
18,000
4,460
$33,880
EXERCISE 4-9
(a)
ROTH COMPANY
Income Statement
For the Year Ended July 31, 2014
Revenues
Service revenue...........................................
Rent revenue ...............................................
Total revenues .....................................
Expenses
Salaries and wages expense......................
Utilities expense ..........................................
Depreciation expense .................................
Total expenses ....................................
Net loss ................................................................
$64,000
6,500
$70,500
55,700
14,900
3,700
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74,300
($ 3,800)
4-23
EXERCISE 4-9 (Continued)
ROTH COMPANY
Retained Earnings Statement
For the Year Ended July 31, 2014
Retained Earnings, August 1, 2013 ...................
Less: Net loss ....................................................
Dividends .................................................
Retained Earnings, July 31, 2014 ......................
(b)
$20,260
$ 3,800
12,000
15,800
$ 4,460
ROTH COMPANY
Statement of Financial Position
July 31, 2014
Assets
Property, plant, and equipment
Equipment ......................................................
Less: Accumulated depreciation—
equipment ............................................
Current assets
Accounts receivable ......................................
Cash ................................................................
Total assets ............................................................
$15,900
5,400
8,140
9,840
$10,500
17,980
$28,480
Equity and Liabilities
Equity
Share capital—ordinary.................................
Retained earnings ..........................................
Current liabilities
Accounts payable ..........................................
Unearned rent revenue ..................................
Total equity and liabilities .....................................
4-24
$18,000
4,460
2,220
3,800
$22,460
6,020
$28,480
Copyright © 2013 John Wiley & Sons, Inc. Weygandt Financial, IFRS, 2/e, Solution’s Manual (For Instructor Use Only)
EXERCISE 4-10
1.
False. “Analyze business transactions” is the first step in the accounting
cycle.
2.
False. Reversing entries are an optional step in the accounting cycle.
3.
True.
4.
True.
5.
True.
6.
False. Steps 1–3 may occur daily in the accounting cycle. Steps 4–7 are
performed on a periodic basis. Steps 8 and 9 are usually prepared only
at the end of a company’s annual accounting period.
7.
False. The step of “journalize the transactions” occurs before the step
of “post to the ledger accounts.”
8.
False. Closing entries are prepared after financial statements are prepared.
EXERCISE 4-11
(a) June 30
30
30
30
Service Revenue ....................................
Income Summary ...........................
18,100
Income Summary ...................................
Salaries and Wages Expense ........
Supplies Expense...........................
Rent Expense..................................
12,700
Income Summary ...................................
Retained Earnings ..........................
5,400
Retained Earnings..................................
Dividends ........................................
2,200
18,100
8,800
900
3,000
5,400
2,200
(b)
Income Summary
June 30 12,700 June 30
June 30
5,400
18,100
18,100
18,100
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4-25
EXERCISE 4-12
(a) 1.
2.
3.
(b) 1.
2.
3.
4-26
Cash ...................................................................
Equipment .................................................
700
Salaries and Wages Expense ..........................
Cash ..........................................................
700
Service Revenue ...............................................
Cash ..........................................................
300
Cash ...................................................................
Accounts Receivable ...............................
800
Accounts Payable ............................................
Equipment ................................................
670
Equipment ........................................................
Accounts Payable ...................................
760
Salaries and Wages Expense ..........................
Equipment ................................................
700
Service Revenue ...............................................
Cash ...................................................................
Accounts Receivable ...............................
300
500
Equipment .........................................................
Accounts Payable ....................................
90
700
700
300
800
670
760
700
800
90
Copyright © 2013 John Wiley & Sons, Inc. Weygandt Financial, IFRS, 2/e, Solution’s Manual (For Instructor Use Only)
EXERCISE 4-13
1.
2.
3.
Accounts Payable (R$840 – R$480) ........................
Cash ...................................................................
360
Supplies .....................................................................
Equipment..........................................................
Accounts Payable .............................................
380
Dividends...................................................................
Salaries and Wages Expense...........................
500
360
38
342
500
EXERCISE 4-14
(a)
REGO BOWLING ALLEY
Statement of Financial Position
December 31, 2014
Assets
Property, plant, and equipment
Land .............................................
Buildings ......................................
Less: Acc. depr.—buildings ......
Equipment....................................
Less: Acc. depr.—equipment....
Current assets
Prepaid insurance .......................
Accounts receivable ...................
Cash .............................................
Total assets .........................................
$67,000
$128,000
42,600
62,400
18,720
85,400
43,680
4,680
7,540
18,040
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$196,080
30,260
$226,340
4-27
EXERCISE 4-14 (Continued)
REGO BOWLING ALLEY
Statement of Financial Position (Continued)
December 31, 2014
Equity and Liabilities
Equity
Share capital—ordinary...............................
Retained earnings ($28,000 + $8,440*) .......
Non-current liabilities
Note payable.................................................
Current liabilities
Current portion of note payable .................
Accounts payable ........................................
Interest payable............................................
Total equity and liabilities ...................................
$80,000
36,440
$116,440
80,000
15,000
12,300
2,600
29,900
$226,340
*Net income = $19,180 – $780 – $7,360 – $2,600 = $8,440
(b) Current assets exceed current liabilities by only $360 ($30,260 –
$29,900). However, approximately 60% of current assets are in the form
of cash. The company’s liquidity appears to be reasonably good, but
some caution is needed.
EXERCISE 4-15
CL
CA
CA
E
IA
CL
CA
LTI
4-28
Accounts payable
Accounts receivable
Cash
Share capital—ordinary
Patents
Salaries and wages payable
Inventory
Investments
PPE
PPE
PPE
NCL
CA
PPE
CA
Accumulated depreciation
Buildings
Land
Long-term debt
Supplies
Equipment
Prepaid expenses
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EXERCISE 4-16
SEXTON COMPANY
Statement of Financial Position
December 31, 2014
(in thousands)
Assets
Property, plant, and equipment
Equipment....................................................
Less: Accumulated depreciation—
equipment ........................................
Long-term investments ......................................
Current assets
Prepaid insurance .......................................
Inventory ......................................................
Accounts receivable ...................................
Short-term investments ..............................
Cash .............................................................
Total assets .........................................................
£11,500
(4,125)
680
1,256
1,696
3,619
2,668
£ 7,375
1,200
9,919
£18,494
Equity and Liabilities
Equity
Share capital—ordinary ..............................
Retained earnings .......................................
Non-current liabilities
Long-term debt ............................................
Notes payable (due after 2015) ..................
Current liabilities
Notes payable due in 2015 .........................
Accounts payable .......................................
Total equity and liabilities ..................................
£10,000
4,750
£14,750
1,000
800
1,800
500
1,444
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1,944
£18,494
4-29
EXERCISE 4-17
(a)
EMJAY COMPANY
Income Statement
For the Year Ended July 31, 2014
Revenues
Service revenue .......................................
Rent revenue ............................................
Total revenues ..................................
Expenses
Salaries and wages expense ..................
Utilities expense.......................................
Depreciation expense ..............................
Total expense ...................................
Net loss.............................................................
$62,000
8,500
$70,500
50,700
22,600
2,500
75,800
$ (5,300)
EMJAY COMPANY
Retained Earnings Statement
For the Year Ended July 31, 2014
Retained Earnings, August 1, 2013 ................
Less: Net loss .................................................
Dividends ..............................................
Retained Earnings, July 31, 2014 ...................
4-30
$22,700
$5,300
3,000
8,300
$14,400
Copyright © 2013 John Wiley & Sons, Inc. Weygandt Financial, IFRS, 2/e, Solution’s Manual (For Instructor Use Only)
EXERCISE 4-17 (Continued)
(b)
EMJAY COMPANY.
Statement of Financial Position
July 31, 2014
Assets
Property, plant, and equipment
Equipment........................................................
Less: Accumulated depreciation—
equipment .............................................
Current assets
Accounts receivable .......................................
Cash .................................................................
Total assets .............................................................
$30,000
6,000
9,180
14,200
$24,000
23,380
$47,380
Equity and Liabilities
Equity
Share capital—ordinary ..................................
Retained earnings ...........................................
Non-current liabilities
Note payable ....................................................
Current liabilities
Accounts payable ...........................................
Salaries and wages payable...........................
Total equity and liabilities ......................................
$25,000
14,400
$39,400
1,800
4,100
2,080
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6,180
$47,380
4-31
*EXERCISE 4-18
(a) Dec. 31
Jan. 4
(b) Dec. 31
Jan. 1
Jan. 4
Salaries and Wages Expense
(R$9,000 X 4/5)......................................
Salaries and Wages Payable ..........
7,200
7,200
Salaries and Wages Payable..................
Salaries and Wages Expense
(R$9,000 X 1/5)......................................
Cash .................................................
7,200
Salaries and Wages Expense ................
Salaries and Wages Payable ..........
7,200
Salaries and Wages Payable..................
Salaries and Wages Expense .........
7,200
Salaries and Wages Expense ...............
Cash .................................................
9,000
1,800
9,000
7,200
7,200
9,000
*EXERCISE 4-19
(a) Dec. 31
31
(b) Jan. 1
1
4-32
Service Revenue .....................................
Income Summary ............................
93,800
Income Summary ....................................
Interest Expense .............................
8,300
Service Revenue .....................................
Accounts Receivable ......................
5,000
Interest Payable ......................................
Interest Expense .............................
1,300
93,800
8,300
5,000
1,300
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*EXERCISE 4-19 (Continued)
(c) & (e)
Accounts Receivable
Dec. 31 Balance
*19,500
31 Adjusting
5,000
24,500
Jan. 1 Reversing
5,000
*($24,500 – $5,000)
Dec. 31 Closing
Jan. 1
Reversing
Service Revenue
93,800 Dec. 31 Balance
31 Adjusting
93,800
5,000 Jan. 10
88,800*
5,000
93,800
5,000
*($93,800 – $5,000)
Jan. 1
Reversing
Dec. 31 Balance
31 Adjusting
Jan. 15
Interest Payable
Dec. 31 Adjusting
1,300
Interest Expense
*7,000 Dec. 31 Closing
1,300
8,300
3,000 Jan. 1 Reversing
1,300
8,300
8,300
1,300
*($8,300 – $1,300)
(d)
Jan. 10
15
(1)
Cash ...............................................................
Service Revenue ....................................
5,000
(2)
Interest Expense ...........................................
Cash........................................................
3,000
5,000
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3,000
4-33
4-34
Account Titles
2,240
1,300
1,200
230
56,550
600
11,410
5,920
1,250
2,400
30,000
56,550
14,200
10,000
12,350
20,000
770
720
300
600
3,470
(a)
(b)
(c)
(d)
(e) 1,080
770
600
(c)
(b)
3,470
300
720
(e) 1,080
(a)
(d)
Cr.
Dr.
Dr.
Cr.
Adjustments
Trial Balance
600
58,650
300
770
720
2,240
1,300
1,200
230
600
11,410
7,000
480
1,800
30,000
Dr.
58,650
300
720
15,280
10,000
12,350
20,000
Cr.
Adjusted
Trial Balance
HERCULES POIROT, P.I., INC.
Worksheet
For the Quarter Ended March 31, 2014
600
7,360
7,920
15,280
300
770
720
2,240
1,300
1,200
230
Dr.
51,290
51,290
15,280
600
11,410
7,000
480
1,800
30,000
Dr.
43,370
7,920
51,290
300
720
10,000
12,350
20,000
Cr.
Statement of
Financial
Position
15,280
15,280
Cr.
Income
Statement
Key: (a) Supplies Used; (b) Depreciation Expensed; (c) Accrued Interest on note; (d) Insurance Expired; (e) Service Revenue
Cash
Accounts Receivable
Supplies
Prepaid Insurance
Equipment
Notes Payable
Accounts Payable
Share Capital—Ordinary
Dividends
Service Revenue
Salaries and Wages
Expense
Travel Expense
Rent Expense
Miscellaneous Expense
Totals
Supplies Expense
Depreciation Expense
Accumulated
Depreciation—Equipment
Interest Expense
Interest Payable
Insurance Expense
Totals
Net Income
Totals
(a)
SOLUTIONS TO PROBLEMS
PROBLEM 4-1A
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PROBLEM 4-1A (Continued)
(b)
HERCULES POIROT, P.I., INC
Income Statement
For the Quarter Ended March 31, 2014
Revenues
Service revenue...............................................
Expenses
Salaries and wages expense..........................
Travel expense ................................................
Rent expense ...................................................
Depreciation expense .....................................
Insurance expense ..........................................
Supplies expense ............................................
Interest expense ..............................................
Miscellaneous expense ..................................
Total expenses ........................................
Net income ..............................................................
€15,280
€2,240
1,300
1,200
720
600
770
300
230
7,360
€ 7,920
HERCULES POIROT, P.I., INC.
Retained Earnings Statement
For the Quarter Ended March 31, 2014
Retained Earnings, January 1 ..........................................
Add: Net income..............................................................
Less: Dividends ................................................................
Retained Earnings, March 31 ............................................
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€
0
7,920
7,920
600
€7,320
4-35
PROBLEM 4-1A (Continued)
HERCULES POIROT, P.I., INC.
Statement of Financial Position
March 31, 2014
Assets
Property, plant, and equipment
Equipment ......................................................
Less: Accumulated depreciation—
equipment ...............................................
Current assets
Prepaid insurance .........................................
Supplies..........................................................
Accounts receivable......................................
Cash ................................................................
Total assets ...........................................................
Equity and Liabilities
Equity
Share capital—ordinary ................................
Retained earnings .........................................
Current liabilities
Notes payable ................................................
Accounts payable ..........................................
Interest payable .............................................
Total equity and liabilities ....................................
(c) Mar. 31
31
31
31
4-36
€30,000
720
1,800
480
7,000
11,410
€20,000
7,320
10,000
12,350
300
Supplies Expense .................................
Supplies .........................................
770
Depreciation Expense ..........................
Accumulated Depreciation—
Equipment...................................
720
Interest Expense ...................................
Interest Payable.............................
300
Insurance Expense ...............................
Prepaid Insurance .........................
600
€29,280
20,690
€49,970
€27,320
22,650
€49,970
770
720
300
600
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PROBLEM 4-1A (Continued)
Mar. 31
(d) Mar. 31
31
31
31
Accounts Receivable ................................
Service Revenue ................................
1,080
Service Revenue.......................................
Income Summary ..............................
15,280
Income Summary .....................................
Travel Expense .................................
Salaries and Wages Expense ..........
Rent Expense ....................................
Insurance Expense ...........................
Depreciation Expense ......................
Supplies Expense .............................
Interest Expense ...............................
Miscellaneous Expense ...................
7,360
Income Summary .....................................
Retained Earnings ............................
7,920
Retained Earnings ....................................
Dividends ..........................................
600
1,080
15,280
1,300
2,240
1,200
600
720
770
300
230
7,920
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600
4-37
PROBLEM 4-2A
(a)
WATSON COMPANY
Partial Worksheet
For the Year Ended December 31, 2014
Account
Adjusted
Trial Balance
Dr.
Cr.
No. Titles
101
112
126
130
157
158
200
201
212
230
311
320
332
400
610
631
711
722
726
905
4-38
Cash
Accounts Receivable
Supplies
Prepaid Insurance
Equipment
Acc. Depr.—Equip.
Notes Payable
Accounts Payable
Salaries and Wages
Payable
Interest Payable
Share Capital—Ordinary
Retained Earnings
Dividends
Service Revenue
Advertising Expense
Supplies Expense
Depreciation Expense
Insurance Expense
Salaries and Wages
Expense
Interest Expense
Totals
Net Income
Totals
Income
Statement
Dr.
Cr.
17,800
14,400
2,300
4,400
46,000
Statement of
Financial
Position
Dr.
Cr.
17,800
14,400
2,300
4,400
46,000
18,000
20,000
8,000
18,000
20,000
8,000
2,600
1,000
15,000
9,800
2,600
1,000
15,000
9,800
12,000
12,000
86,200
10,000
3,700
6,000
4,000
39,000
1,000
160,600 160,600
86,200
10,000
3,700
6,000
4,000
39,000
1,000
63,700
22,500
86,200
86,200
96,900
86,200
96,900
74,400
22,500
96,900
Copyright © 2013 John Wiley & Sons, Inc. Weygandt Financial, IFRS, 2/e, Solution’s Manual (For Instructor Use Only)
PROBLEM 4-2A (Continued)
(b)
WATSON COMPANY
Income Statement
For the Year Ended December 31, 2014
Revenues
Service revenue..............................................
Expenses
Salaries and wages expense.........................
Advertising expense ......................................
Depreciation expense ....................................
Insurance expense .........................................
Supplies expense ...........................................
Interest expense .............................................
Total expenses .......................................
Net income .............................................................
$86,200
$39,000
10,000
6,000
4,000
3,700
1,000
63,700
$22,500
WATSON COMPANY
Retained Earnings Statement
For the Year Ended December 31, 2014
Retained Earnings, January 1 ................................................
Add: Net income ....................................................................
Less: Dividends ......................................................................
Retained Earnings, December 31 ...........................................
Copyright © 2013 John Wiley & Sons, Inc. Weygandt Financial, IFRS, 2/e, Solution’s Manual (For Instructor Use Only)
$ 9,800
22,500
32,300
12,000
$20,300
4-39
PROBLEM 4-2A (Continued)
WATSON COMPANY
Statement of Financial Position
December 31, 2014
Assets
Property, plant, and equipment
Equipment ......................................................
Less: Accumulated depreciation—
equipment ...............................................
Current assets
Prepaid insurance .........................................
Supplies..........................................................
Accounts receivable......................................
Cash ................................................................
Total assets ...........................................................
$46,000
18,000
4,400
2,300
14,400
17,800
$28,000
38,900
$66,900
Equity and Liabilities
Equity
Share capital—ordinary ................................
Retained earnings .........................................
Non-current liabilities
Notes payable (due after 2015) .....................
Current liabilities
Notes payable (due in 2015) .........................
Accounts payable ..........................................
Salaries and wages payable .........................
Interest payable .............................................
Total equity and liabilities ....................................
4-40
$15,000
20,300
$35,300
15,000
5,000
8,000
2,600
1,000
16,600
$66,900
Copyright © 2013 John Wiley & Sons, Inc. Weygandt Financial, IFRS, 2/e, Solution’s Manual (For Instructor Use Only)
PROBLEM 4-2A (Continued)
(c)
General Journal
Date
Account Titles
Dec. 31 Service Revenue .................................
Income Summary.......................
Ref.
400
350
Debit
86,200
31 Income Summary ................................
Advertising Expense .................
Supplies Expense ......................
Depreciation Expense ...............
Insurance Expense ....................
Salaries and Wages Expense ...
Interest Expense ........................
350
610
631
711
722
726
905
63,700
31 Income Summary ................................
Retained Earnings .....................
350
320
22,500
31 Retained Earnings...............................
Dividends....................................
320
332
12,000
J14
Credit
86,200
10,000
3,700
6,000
4,000
39,000
1,000
22,500
12,000
(d)
Date
Explanation
Balance
Dec. 31 Closing entry
31 Closing entry
Date
Explanation
Dec. 31 Balance
31 Closing entry
Retained Earnings
Ref.
Debit
J14
J14
Dividends
Ref.
J14
Credit
9,800
22,500
12,000
Debit
12,000
Credit
12,000
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No. 320
Balance
9,800
32,300
20,300
No. 332
Balance
12,000
0
4-41
PROBLEM 4-2A (Continued)
Credit
86,200
No. 350
Balance
86,200
22,500
0
Credit
86,200
86,200
No. 400
Balance
86,200
0
Date
Explanation
Dec. 31 Balance
31 Closing entry
Advertising Expense
Ref.
Debit
10,000
J14
Credit
No. 610
Balance
10,000
0
Date
Explanation
Dec. 31 Balance
31 Closing entry
Supplies Expense
Ref.
Debit
3,700
J14
Date
Explanation
Dec. 31 Balance
31 Closing entry
Depreciation Expense
Ref.
Debit
6,000
J14
Date
Dec. 31
31
31
Explanation
Closing entry
Closing entry
Closing entry
Date
Explanation
Dec. 31 Balance
31 Closing entry
Date
Dec. 31
31
4-42
Explanation
Balance
Closing entry
Income Summary
Ref.
Debit
J14
J14
63,700
J14
22,500
Service Revenue
Ref.
Debit
J14
Insurance Expense
Ref.
Debit
4,000
J14
10,000
Credit
3,700
Credit
6,000
Credit
4,000
No. 631
Balance
3,700
0
No. 711
Balance
6,000
0
No. 722
Balance
4,000
0
Copyright © 2013 John Wiley & Sons, Inc. Weygandt Financial, IFRS, 2/e, Solution’s Manual (For Instructor Use Only)
PROBLEM 4-2A (Continued)
Salaries and Wages Expense
Date
Explanation
Ref.
Debit
Dec. 31 Balance
39,000
31 Closing entry
J14
Date
Explanation
Dec. 31 Balance
31 Closing entry
(e)
Interest Expense
Ref.
Debit
1,000
J14
Credit
39,000
Credit
1,000
No. 726
Balance
39,000
0
No. 905
Balance
1,000
0
WATSON COMPANY
Post-Closing Trial Balance
December 31, 2014
Cash .....................................................................
Accounts Receivable ..........................................
Supplies ...............................................................
Prepaid Insurance ...............................................
Equipment ...........................................................
Accumulated Depreciation—
Equipment .......................................................
Notes Payable .....................................................
Accounts Payable ...............................................
Salaries and Wages Payable .............................
Interest Payable ..................................................
Share Capital—Ordinary ....................................
Retained Earnings ..............................................
Debit
$17,800
14,400
2,300
4,400
46,000
$84,900
Copyright © 2013 John Wiley & Sons, Inc. Weygandt Financial, IFRS, 2/e, Solution’s Manual (For Instructor Use Only)
Credit
$18,000
20,000
8,000
2,600
1,000
15,000
20,300
$84,900
4-43
PROBLEM 4-3A
(a)
HUBBS COMPANY
Income Statement
For the Year Ended December 31, 2014
Revenues
Service revenue ...........................................
Expenses
Salaries and wages expense ......................
Maintenance and repairs expense .............
Utilities expense ..........................................
Depreciation expense .................................
Insurance expense ......................................
Total expenses .....................................
Net loss ................................................................
$47,000
$35,200
4,100
4,000
3,300
2,200
48,800
$ (1,800)
HUBBS COMPANY
Retained Earnings Statement
For the Year Ended December 31, 2014
Retained Earnings, January 1 ............................
Less: Net loss .....................................................
Dividends ..................................................
Retained Earnings, December 31 ......................
$9,700
$1,800
4,000
5,800
$3,900
HUBBS COMPANY
Statement of Financial Position
December 31, 2014
Assets
Property, plant, and equipment
Equipment ....................................................
Less: Accumulated depreciation—
equipment .........................................
Current assets
Prepaid insurance .......................................
Accounts receivable....................................
Cash ..............................................................
Total assets .........................................................
4-44
$33,000
9,900
1,800
7,500
6,200
$23,100
15,500
$38,600
Copyright © 2013 John Wiley & Sons, Inc. Weygandt Financial, IFRS, 2/e, Solution’s Manual (For Instructor Use Only)
PROBLEM 4-3A (Continued)
HUBBS COMPANY
Statement of Financial Position (Continued)
December 31, 2014
Equity and Liabilities
Equity
Share capital—ordinary ..............................
Retained earnings .......................................
Current liabilities
Accounts payable .......................................
Salaries and wages payable.......................
Total equity and liabilities ..................................
$20,000
3,900
11,700
3,000
$23,900
14,700
$38,600
(b)
General Journal
Date
Account Titles
Dec. 31 Service Revenue .................................
Income Summary .......................
31
31
31
Ref.
400
350
Debit
47,000
Income Summary ................................
Maintenance and Repairs
Expense ...................................
Depreciation Expense................
Insurance Expense ....................
Salaries and Wages Expense....
Utilities Expense ........................
350
48,800
Retained Earnings...............................
Income Summary .......................
320
350
1,800
Retained Earnings...............................
Dividends ....................................
320
332
4,000
Credit
47,000
4,100
3,300
2,200
35,200
4,000
622
711
722
726
732
1,800
Copyright © 2013 John Wiley & Sons, Inc. Weygandt Financial, IFRS, 2/e, Solution’s Manual (For Instructor Use Only)
4,000
4-45
PROBLEM 4-3A (Continued)
(c)
12/31
12/31
12/31 Bal.
12/31
12/31
(d)
Retained Earnings No. 320
1,800 1/1 Bal.
9,700
4,000
12/31 Bal.
3,900
Dividends
4,000 12/31
Income Summary
48,800 12/31
12/31
48,800
No. 332
4,000
No. 350
47,000
1,800
48,800
Service Revenue
No. 400
47,000 12/31 Bal. 47,000
Maintenance and Repairs
Expense
12/31 Bal.
4,100 12/31
Depreciation Expense No. 711
12/31 Bal.
3,300 12/31
3,300
Insurance Expense
12/31 Bal.
2,200 12/31
No. 722
2,200
Salaries and Wages Expense
12/31 Bal. 35,200 12/31
No. 726
35,200
Utilities Expense
12/31 Bal.
4,000 12/31
No. 732
4,000
HUBBS COMPANY
Post-Closing Trial Balance
December 31, 2014
Cash .....................................................................
Accounts Receivable ..........................................
Prepaid Insurance ...............................................
Equipment ............................................................
Accumulated Depreciation—Equipment ...........
Accounts Payable ...............................................
Salaries and Wages Payable ..............................
Share Capital—Ordinary .....................................
Retained Earnings ...............................................
Totals ............................................................
4-46
No. 622
4,100
Debit
$ 6,200
7,500
1,800
33,000
$48,500
Credit
$ 9,900
11,700
3,000
20,000
3,900
$48,500
Copyright © 2013 John Wiley & Sons, Inc. Weygandt Financial, IFRS, 2/e, Solution’s Manual (For Instructor Use Only)
Account Titles
Copyright © 2013 John Wiley & Sons, Inc. Weygandt Financial, IFRS, 2/e, Solution’s Manual (For Instructor Use Only)
277,900
36,200
14,600
3,900
50,000
60,000
36,100
30,500
9,400
16,900
21,000
6,000
478,700 478,700
98,000
14,000
34,400
18,600
29,900
80,000
120,000
49,300
(e)
(f)
3,000
49,300
2,000
2,000
3,000
489,700 489,700
6,000
280,800
Cr.
228,200 280,800
52,600
280,800 280,800
6,000
(b) 19,000
(a) 16,400
6,000
19,000
16,400
19,000
16,400
3,000
2,000
(c)
30,500
9,400
16,900
24,000
8,000
280,800
Dr.
30,500
9,400
16,900
24,000
8,000
14,000
42,200
14,600
1,000
50,000
60,000
36,100
Cr.
Income
Statement
98,000
(d) 2,900
6,000
34,400
2,200
10,900
80,000
120,000
Dr.
Adjusted
Trial Balance
98,000
(e)
(f)
(d) 2,900
(c)
(a) 16,400
(b) 19,000
Cr.
Dr.
Dr.
Cr.
Adjustments
Trial Balance
TERESINA AMUSEMENT PARK
Worksheet
For the Year Ended September 30, 2014
261,500
261,500
14,000
34,400
2,200
10,900
80,000
120,000
Dr.
3,000
208,900
52,600
261,500
2,000
42,200
14,600
1,000
50,000
60,000
36,100
Cr.
Statement of
Financial Position
Key: (a) Supplies Used; (b) Expired Insurance; (c) Depreciation Expensed; (d) Ticket Revenue Earned; (e) Accrued Property Taxes;
(f) Accrued Interest Payable.
Cash
Supplies
Prepaid Insurance
Land
Equipment
Accumulated Depreciation—
Equipment
Accounts Payable
Unearned Ticket Revenue
Mortgage Payable
Share Capital—Ordinary
Retained Earnings
Dividends
Ticket Revenue
Salaries and Wages Expense
Maintenance and Repairs
Expense
Advertising Expense
Utilities Expense
Property Tax Expense
Interest Expense
Totals
Insurance Expense
Supplies Expense
Interest Payable
Depreciation Expense
Property Taxes Payable
Totals
Net Income
Totals
(a)
PROBLEM 4-4A
4-47
PROBLEM 4-4A (Continued)
(b)
TERESINA AMUSEMENT PARK, INC.
Statement of Financial Position
September 30, 2014
Assets
Property, plant, and equipment
Land ..............................................
R$80,000
Equipment .................................... R$120,000
Less: Accum. depreciation—
equipment ..........................
42,200
77,800 R$157,800
Current assets
Prepaid insurance .......................
10,900
Supplies........................................
2,200
Cash ..............................................
34,400
47,500
Total assets .........................................
R$205,300
Equity and Liabilities
Equity
Share capital—ordinary ..............
Retained earnings .......................
Non-current liabilities
Mortgage payable
(due after 2015) .......................
Current liabilities
Mortgage payable (due in 2015) .
Accounts payable ........................
Interest payable ...........................
Property taxes payable ...............
Unearned ticket
revenue .....................................
Total equity and liabilities ..................
R$60,000
74,700* R$134,700
35,000
15,000
14,600
2,000
3,000
1,000
35,600
R$205,300
*R$36,100 + R$52,600 – R$14,000
4-48
Copyright © 2013 John Wiley & Sons, Inc. Weygandt Financial, IFRS, 2/e, Solution’s Manual (For Instructor Use Only)
PROBLEM 4-4A (Continued)
(c) Sept. 30
30
30
30
30
30
(d) Sept. 30
30
30
30
Supplies Expense ................................
Supplies ........................................
16,400
Insurance Expense ..............................
Prepaid Insurance ........................
19,000
Depreciation Expense .........................
Accumulated Depreciation—
Equipment..................................
6,000
Unearned Ticket Revenue ...................
Ticket Revenue .............................
2,900
Property Tax Expense .........................
Property Taxes Payable...............
3,000
Interest Expense ..................................
Interest Payable............................
2,000
Ticket Revenue ....................................
Income Summary .........................
280,800
Income Summary .................................
Salaries and Wages Expense......
Maintenance and Repairs
Expense .....................................
Insurance Expense ......................
Property Tax Expense .................
Supplies Expense ........................
Utilities Expense ..........................
Interest Expense ..........................
Advertising Expense....................
Depreciation Expense..................
228,200
Income Summary .................................
Retained Earnings........................
52,600
Retained Earnings ...............................
Dividends ......................................
14,000
16,400
19,000
6,000
2,900
3,000
2,000
280,800
98,000
30,500
19,000
24,000
16,400
16,900
8,000
9,400
6,000
52,600
Copyright © 2013 John Wiley & Sons, Inc. Weygandt Financial, IFRS, 2/e, Solution’s Manual (For Instructor Use Only)
14,000
4-49
PROBLEM 4-4A (Continued)
(e)
TERESINA AMUSEMENT PARK
Post-Closing Trial Balance
September 30, 2014
Debit
Cash ..................................................................... R$ 34,400
Supplies ...............................................................
2,200
Prepaid Insurance ...............................................
10,900
Land ......................................................................
80,000
Equipment ............................................................
120,000
Accumulated Depreciation—Equipment ...........
Accounts Payable ...............................................
Interest Payable ...................................................
Property Taxes Payable ......................................
Unearned Ticket Revenue ..................................
Mortgage Payable ...............................................
Share Capital—Ordinary .....................................
Retained Earnings ...............................................
R$247,500
4-50
Credit
R$ 42,200
14,600
2,000
3,000
1,000
50,000
60,000
74,700
R$247,500
Copyright © 2013 John Wiley & Sons, Inc. Weygandt Financial, IFRS, 2/e, Solution’s Manual (For Instructor Use Only)
PROBLEM 4-5A
(a)
Date
Mar. 1
1
3
5
14
18
20
21
28
31
31
General Journal
Account Titles
Cash ....................................................
Share Capital—Ordinary ..........
Ref.
101
311
Debit
14,000
Equipment...........................................
Cash ...........................................
Accounts Payable .....................
157
101
201
8,000
Supplies ..............................................
Accounts Payable .....................
126
201
1,200
Prepaid Insurance ..............................
Cash ...........................................
130
101
1,800
Accounts Receivable .........................
Service Revenue .......................
112
400
4,800
Accounts Payable ..............................
Cash ...........................................
201
101
2,000
Salaries and Wages Expense............
Cash ...........................................
726
101
1,800
Cash ....................................................
Accounts Receivable ................
101
112
1,600
Accounts Receivable .........................
Service Revenue .......................
112
400
2,500
Gasoline Expense ..............................
Cash ...........................................
633
101
320
Dividends ...........................................
Cash ...........................................
332
101
800
J1
Credit
14,000
3,000
5,000
1,200
1,800
4,800
2,000
1,800
1,600
2,500
320
Copyright © 2013 John Wiley & Sons, Inc. Weygandt Financial, IFRS, 2/e, Solution’s Manual (For Instructor Use Only)
800
4-51
4-52
Account Titles
320
1,800
25,500
800
5,880
5,700
1,200
1,800
8,000
25,500
7,300
4,200
14,000
150
950
(c)
(d)
2,870
300
720
750
(b)
(e)
(a)
(e)
(b)
(a)
(d)
(c)
720
2,870
300
750
950
150
Cr.
Dr.
Dr.
Cr.
Adjustments
Trial Balance
27,270
150
950
300
320
2,520
800
5,880
6,450
250
1,650
8,000
Dr.
720
27,270
300
8,050
4,200
14,000
Cr.
Adjusted
Trial Balance
FRESH STEP CARPET CLEANERS
Worksheet
For the Month Ended March 31, 2014
4,240
3,810
8,050
150
950
300
320
2,520
Dr.
23,030
23,030
8,050
800
5,880
6,450
250
1,650
8,000
Dr.
720
19,220
3,810
23,030
300
4,200
14,000
Cr.
Statement of
Financial Position
8,050
8,050
Cr.
Income
Statement
Key: (a) Service Revenue Earned; (b) Depreciation Expensed; (c) Insurance Expired; (d) Cleaning Supplies Used; (e) Unpaid Salaries.
Cash
Accounts Receivable
Supplies
Prepaid Insurance
Equipment
Accounts Payable
Share Capital—Ordinary
Dividends
Service Revenue
Gasoline Expense
Salaries and Wages Expense
Totals
Depreciation Expense
Accum. Depr.—Equipment
Insurance Expense
Supplies Expense
Salaries and Wages Payable
Totals
Net Income
Totals
(b)&(c)
PROBLEM 4-5A (Continued)
Copyright © 2013 John Wiley & Sons, Inc. Weygandt Financial, IFRS, 2/e, Solution’s Manual (For Instructor Use Only)
PROBLEM 4-5A (Continued)
(a), (e) & (f)
Date
Mar. 1
1
5
18
20
21
31
31
Date
Mar. 14
21
28
31
Date
Mar. 3
31
Date
Mar. 5
31
Date
Mar. 1
Explanation
Explanation
Adjusting
Explanation
Adjusting
Explanation
Adjusting
Explanation
Cash
Ref.
J1
J1
J1
J1
J1
J1
J1
J1
Debit
14,000
3,000
1,800
2,000
1,800
1,600
320
800
Accounts Receivable
Ref.
Debit
J1
4,800
J1
J1
2,500
J2
750
Supplies
Ref.
J1
J2
Debit
1,200
Credit
1,600
Credit
950
Prepaid Insurance
Ref.
Debit
J1
1,800
J2
Equipment
Ref.
J1
Credit
Debit
8,000
Credit
150
Credit
Copyright © 2013 John Wiley & Sons, Inc. Weygandt Financial, IFRS, 2/e, Solution’s Manual (For Instructor Use Only)
No. 101
Balance
14,000
11,000
9,200
7,200
5,400
7,000
6,680
5,880
No. 112
Balance
4,800
3,200
5,700
6,450
No. 126
Balance
1,200
250
No. 130
Balance
1,800
1,650
No. 157
Balance
8,000
4-53
PROBLEM 4-5A (Continued)
Date
Mar. 31
Date
Mar. 1
3
18
Date
Mar. 31
Date
Mar. 1
Date
Mar. 1
31
31
Date
Mar. 31
31
Date
Mar. 31
31
31
4-54
Accumulated Depreciation—Equipment
Explanation
Ref.
Debit
Credit
Adjusting
J2
300
Explanation
Accounts Payable
Ref.
Debit
J1
J1
J1
2,000
Salaries and Wages Payable
Explanation
Ref.
Debit
Adjusting
J2
Explanation
Explanation
Closing
Closing
Explanation
Closing
Explanation
Closing
Closing
Closing
Share Capital—Ordinary
Ref.
Debit
J1
Retained Earnings
Ref.
Debit
J3
J3
Dividends
Ref.
J1
J3
Credit
5,000
1,200
Credit
720
Credit
14,000
No. 311
Balance
14,000
Credit
800
Income Summary
Ref.
Debit
J3
J3
4,240
J3
3,810
No. 201
Balance
5,000
6,200
4,200
No. 212
Balance
720
3,810
Debit
800
No. 158
Balance
300
Credit
800
Credit
8,050
No. 320
Balance
0
3,810
3,010
No. 332
Balance
800
0
No. 350
Balance
8,050
3,810
0
Copyright © 2013 John Wiley & Sons, Inc. Weygandt Financial, IFRS, 2/e, Solution’s Manual (For Instructor Use Only)
PROBLEM 4-5A (Continued)
Date
Mar. 14
28
31
31
Explanation
Adjusting
Closing
Service Revenue
Ref.
Debit
J1
J1
J2
J3
8,050
Closing
Gasoline Expense
Ref.
Debit
J1
320
J3
Explanation
Adjusting
Closing
Supplies Expense
Ref.
Debit
J2
950
J3
Explanation
Adjusting
Closing
Depreciation Expense
Ref.
Debit
J2
300
J3
Date
Mar. 31
31
Explanation
Adjusting
Closing
Insurance Expense
Ref.
Debit
J2
150
J3
Date
Mar. 20
31
31
Salaries and Wages Expense
Explanation
Ref.
Debit
J1
1,800
Adjusting
J2
720
Closing
J3
Date
Mar. 31
31
Date
Mar. 31
31
Date
Mar. 31
31
Explanation
Credit
4,800
2,500
750
No. 400
Balance
4,800
7,300
8,050
0
Credit
No. 633
Balance
320
0
320
Credit
950
Credit
300
Credit
150
Credit
2,520
Copyright © 2013 John Wiley & Sons, Inc. Weygandt Financial, IFRS, 2/e, Solution’s Manual (For Instructor Use Only)
No. 631
Balance
950
0
No. 711
Balance
300
0
No. 722
Balance
150
0
No. 726
Balance
1,800
2,520
0
4-55
PROBLEM 4-5A (Continued)
(d)
FRESH STEP CARPET CLEANERS
Income Statement
For the Month Ended March 31, 2014
Revenues
Service revenue .............................................
Expenses
Salaries and wages expense ........................
Supplies expense ..........................................
Depreciation expense ...................................
Gasoline expense ..........................................
Insurance expense ........................................
Total expenses .......................................
Net income .............................................................
$8,050
$2,520
950
300
320
150
4,240
$3,810
FRESH STEP CARPET CLEANERS
Retained Earnings Statement
For the Month Ended March 31, 2014
Retained Earnings, March 1 .................................
Add: Net income ..................................................
$
0
3,810
3,810
800
$3,010
Less: Dividends ....................................................
Retained Earnings, March 31 ...............................
FRESH STEP CARPET CLEANERS
Statement of Financial Position
March 31, 2014
Assets
Property, plant, and equipment
Equipment ........................................................
Less: Accumulated depreciation—
equipment .................................................
4-56
$ 8,000
300
$ 7,700
Copyright © 2013 John Wiley & Sons, Inc. Weygandt Financial, IFRS, 2/e, Solution’s Manual (For Instructor Use Only)
PROBLEM 4-5A (Continued)
FRESH STEP CARPET CLEANERS
Statement of Financial Position (Continued)
March 31, 2014
Assets (Continued)
Current assets
Prepaid insurance ...........................................
Supplies ...........................................................
Accounts receivable .......................................
Cash .................................................................
Total assets .............................................................
1,650
250
6,450
5,880
14,230
$21,930
Equity and Liabilities
Equity
Share capital—ordinary ..................................
Retained earnings ...........................................
Current liabilities
Accounts payable ...........................................
Salaries and wages payable...........................
Total equity and liabilities ......................................
$14,000
3,010
4,200
720
$17,010
4,920
$21,930
(e)
Date
Mar. 31
31
31
31
31
General Journal
Account Titles
Accounts Receivable.........................
Service Revenue .......................
Ref.
112
400
Debit
750
Depreciation Expense .......................
Accumulated Depreciation—
Equipment .............................
711
300
Insurance Expense ............................
Prepaid Insurance.....................
722
130
150
Supplies Expense ..............................
Supplies.....................................
631
126
950
Salaries and Wages Expense ...........
Salaries and Wages Payable ...
726
212
720
J2
Credit
750
158
300
150
950
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720
4-57
PROBLEM 4-5A (Continued)
(f)
Date
Mar. 31
31
31
31
(g)
General Journal
Account Titles
Service Revenue .................................
Income Summary .......................
Ref.
400
350
Debit
8,050
Income Summary ................................
Salaries and Wages Expense ...
Depreciation Expense ...............
Insurance Expense ....................
Supplies Expense ......................
Gasoline Expense ......................
350
726
711
722
631
633
4,240
Income Summary ................................
Retained Earnings .....................
350
320
3,810
Retained Earnings ..............................
Dividends....................................
320
332
800
8,050
2,520
300
150
950
320
3,810
800
FRESH STEP CARPET CLEANERS
Post-Closing Trial Balance
March 31, 2014
Cash .....................................................................
Accounts Receivable ..........................................
Supplies ...............................................................
Prepaid Insurance ...............................................
Equipment ............................................................
Accumulated Depreciation—Equipment ...........
Accounts Payable ...............................................
Salaries and Wages Payable ..............................
Share Capital—Ordinary .....................................
Retained Earnings ...............................................
000,000
4-58
J3
Credit
Debit
$ 5,880
6,450
250
1,650
8,000
Credit
$
$22,230
300
4,200
720
14,000
3,010
$22,230
Copyright © 2013 John Wiley & Sons, Inc. Weygandt Financial, IFRS, 2/e, Solution’s Manual (For Instructor Use Only)
Cash ...................................
Accts. Receivable........
Misc. Expense ...................
Cash .............................
Salaries and Wages
Expense ..........................
Cash .............................
Supplies.............................
Accounts Payable .......
Equipment .........................
Cash .............................
2.
3.
4.
5.
(1) INCORRECT ENTRY
1.
(a)
152
310
1,850
75
950
152
310
1,850
75
950
Maintenance and Repairs
Expense ..........................
Cash .............................
Equipment .........................
Accounts Payable .......
Salaries and Wages
Expense ..........................
Salaries and Wages
Payable ...........................
Cash .............................
Advertising Expense ........
Cash .............................
Cash ...................................
Accts. Receivable ........
(2) CORRECT ENTRY
125
310
700
1,150
75
590
125
310
1,850
75
590
75
152
Maintenance and Repairs
Expense ...........................
Cash .................................
Equipment .....................
125
27
310
700
75
360
Equipment .......................... 310
Supplies ........................
Salaries and Wages
Payable ............................ 700
Salaries and Wages
Expense......................
Advertising Expense .........
Misc. Expense...............
Accounts Receivable......... 360
Cash...............................
(3) CORRECTING ENTRY
PROBLEM 4-6A
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4-59
PROBLEM 4-6A (Continued)
(b)
INFO CABLE
Trial Balance
April 30, 2014
Cash (£4,100 – £360 + £27) ...................................
Accounts Receivable (£3,200 + £360) ..................
Supplies (£800 – £310) ..........................................
Equipment (£10,600 + £310 – £152) .....................
Accumulated Depreciation—Equipment .............
Accounts Payable .................................................
Salaries and Wages Payable (£700 – £700).........
Unearned Service Revenue ..................................
Share Capital—Ordinary .......................................
Retained Earnings .................................................
Service Revenue ...................................................
Salaries and Wages Expense (£3,300 – £700) ....
Advertising Expense (£480 + £75) .......................
Miscellaneous Expense (£290 – £75)...................
Depreciation Expense ...........................................
Maintenance and Repairs Expense .....................
4-60
Debit
£ 3,767
3,560
490
10,758
Credit
£ 1,250
2,100
0
890
10,000
2,880
5,450
2,600
555
215
500
125
£22,570
£22,570
Copyright © 2013 John Wiley & Sons, Inc. Weygandt Financial, IFRS, 2/e, Solution’s Manual (For Instructor Use Only)
Account Titles
1,300
280
20,600
1,100
2,720
2,700
1,500
11,000
Dr.
20,600
6,300
1,250
2,500
550
10,000
Cr.
Trial Balance
(a)
(b)
(d)
(c)
950
250
480
260
1,940
Dr.
(d)
480
1,940
260
250
(b)
(c)
950
(a)
Cr.
Adjustments
21,330
950
250
1,780
280
1,100
2,720
2,700
550
11,000
Dr.
480
21,330
6,560
1,500
2,500
290
10,000
Cr.
Adjusted
Trial Balance
FIRMAMENT ROOFING
Worksheet
For the Month Ended March 31, 2014
3,260
3,300
6,560
950
250
1,780
280
Dr.
18,070
18,070
6,560
1,100
2,720
2,700
550
11,000
Dr.
480
14,770
3,300
18,070
1,500
2,500
290
10,000
Cr.
Statement of
Financial Position
6,560
6,560
Cr.
Income
Statement
Key: (a) Supplies Used; (b) Depreciation Expensed; (c) Service Revenue Earned; (d) Salaries Accrued.
Cash
Accounts Receivable
Supplies
Equipment
Accumulated
Depreciation—Equipment
Accounts Payable
Unearned Service Revenue
Share Capital—Ordinary
Dividends
Service Revenue
Salaries and Wages
Expense
Miscellaneous Expense
Totals
Supplies Expense
Depreciation Expense
Salaries and Wages
Payable
Totals
Net Income
Totals
(a)
PROBLEM 4-1B
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4-61
PROBLEM 4-1B (Continued)
(b)
FIRMAMENT ROOFING
Income Statement
For the Month Ended March 31, 2014
Revenues
Service revenue ..................................................
Expenses
Salaries and wages expense .............................
Supplies expense ...............................................
Miscellaneous expense ......................................
Depreciation expense ........................................
Total expenses ............................................
Net income ..................................................................
$6,560
$1,780
950
280
250
3,260
$3,300
FIRMAMENT ROOFING
Retained Earnings Statement
For the Month Ended March 31, 2014
Retained Earnings, March 1 .......................................................
Add: Net income ........................................................................
Less: Dividends ..........................................................................
Retained Earnings, March 31 .....................................................
$
0
3,300
3,300
1,100
$2,200
FIRMAMENT ROOFING
Statement of Financial Position
March 31, 2014
Assets
Property, plant, and equipment
Equipment ...........................................................
Less: Accum. depreciation—equipment .........
Current assets
Supplies...............................................................
Accounts receivable...........................................
Cash .....................................................................
Total assets ................................................................
4-62
$11,000
1,500
550
2,700
2,720
$ 9,500
5,970
$15,470
Copyright © 2013 John Wiley & Sons, Inc. Weygandt Financial, IFRS, 2/e, Solution’s Manual (For Instructor Use Only)
PROBLEM 4-1B (Continued)
FIRMAMENT ROOFING
Statement of Financial Position (Continued)
March 31, 2014
Equity and Liabilities
Equity
Share capital—ordinary ...................................... $10,000
Retained earnings ...............................................
2,200
Current liabilities
Accounts payable ...............................................
2,500
Salaries and wages payable...............................
480
Unearned service revenue .................................
290
Total equity and liabilities ...........................................
(c) Mar. 31
31
31
31
(d) Mar. 31
31
31
31
Supplies Expense........................................
Supplies ................................................
950
Depreciation Expense .................................
Accumulated Depreciation—
Equipment .........................................
250
Unearned Service Revenue ........................
Service Revenue ..................................
260
Salaries and Wages Expense .....................
Salaries and Wages Payable ..............
480
Service Revenue..........................................
Income Summary .................................
6,560
Income Summary ........................................
Salaries and Wages Expense .............
Supplies Expense ................................
Depreciation Expense .........................
Miscellaneous Expense ......................
3,260
Income Summary ........................................
Retained Earnings ...............................
3,300
Retained Earnings .......................................
Dividends .............................................
1,100
$12,200
3,270
$15,470
950
250
260
480
6,560
1,780
950
250
280
3,300
Copyright © 2013 John Wiley & Sons, Inc. Weygandt Financial, IFRS, 2/e, Solution’s Manual (For Instructor Use Only)
1,100
4-63
PROBLEM 4-2B
(a)
EAGLE COMPANY
Partial Worksheet
For the Year Ended December 31, 2014
Adjusted
Trial Balance
Account
No.
101
112
126
130
157
158
200
201
212
230
311
320
332
400
610
631
711
722
726
905
4-64
Titles
Cash
Accounts Receivable
Supplies
Prepaid Insurance
Equipment
Acc. Depr.—Equip.
Notes Payable
Accounts Payable
Salaries and Wages
Payable
Interest Payable
Share Capital—Ordinary
Retained Earnings
Dividends
Service Revenue
Advertising Expense
Supplies Expense
Depreciation Expense
Insurance Expense
Salaries and Wages
Expense
Interest Expense
Totals
Net Income
Totals
Dr.
5,300
10,800
1,500
2,000
27,000
Cr.
Income
Statement
Dr.
Cr.
Statement of
Financial Position
Dr.
5,300
10,800
1,500
2,000
27,000
Cr.
5,600
15,000
4,600
5,600
15,000
4,600
2,400
600
10,000
4,200
2,400
600
10,000
4,200
5,000
5,000
59,000
59,000
8,400
4,000
5,600
3,200
8,400
4,000
5,600
3,200
28,000
600
101,400
28,000
600
49,800
9,200
59,000
101,400
59,000
51,600
59,000
51,600
42,400
9,200
51,600
Copyright © 2013 John Wiley & Sons, Inc. Weygandt Financial, IFRS, 2/e, Solution’s Manual (For Instructor Use Only)
PROBLEM 4-2B (Continued)
(b)
EAGLE COMPANY
Income Statement
For the Year Ended December 31, 2014
Revenues
Service revenue..............................................
Expenses
Salaries and wages expense.........................
Advertising expense ......................................
Depreciation expense ....................................
Supplies expense ...........................................
Insurance expense .........................................
Interest expense .............................................
Total expenses .......................................
Net income .............................................................
£59,000
£28,000
8,400
5,600
4,000
3,200
600
49,800
£ 9,200
EAGLE COMPANY
Retained Earnings Statement
For the Year Ended December 31, 2014
Retained Earnings, January 1 ................................................
Add: Net income ....................................................................
Less: Dividends ......................................................................
Retained Earnings, December 31 ...........................................
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£4,200
9,200
13,400
5,000
£8,400
4-65
PROBLEM 4-2B (Continued)
EAGLE COMPANY
Statement of Financial Position
December 31, 2014
Assets
Property, plant, and equipment
Equipment ......................................................
Less: Accumulated depreciation—
equipment ...........................................
Current assets
Prepaid insurance .........................................
Supplies..........................................................
Accounts receivable......................................
Cash ................................................................
Total assets ...........................................................
£27,000
5,600
2,000
1,500
10,800
5,300
£21,400
19,600
£41,000
Equity and Liabilities
Equity
Share capital—ordinary ................................
Retained earnings .........................................
Non-current liabilities
Notes payable (due after 2015) .....................
Current liabilities
Notes payable (due in 2015) .........................
Accounts payable ..........................................
Salaries and wages payable .........................
Interest payable .............................................
Total equity and liabilities ....................................
4-66
£10,000
8,400
£18,400
12,000
3,000
4,600
2,400
600
10,600
£41,000
Copyright © 2013 John Wiley & Sons, Inc. Weygandt Financial, IFRS, 2/e, Solution’s Manual (For Instructor Use Only)
PROBLEM 4-2B (Continued)
(c)
General Journal
Date
Account Titles
Dec. 31 Service Revenue .................................
Income Summary.......................
Ref.
400
350
Debit
59,000
31 Income Summary ................................
Advertising Expense .................
Supplies Expense ......................
Depreciation Expense ...............
Insurance Expense ....................
Salaries and Wages Expense ...
Interest Expense ........................
350
610
631
711
722
726
905
49,800
31 Income Summary ................................
Retained Earnings .....................
350
320
9,200
31 Retained Earnings...............................
Dividends....................................
320
332
5,000
J14
Credit
59,000
8,400
4,000
5,600
3,200
28,000
600
9,200
5,000
(d)
Date
Jan. 1
Dec. 31
31
Date
Explanation
Balance
Closing entry
Closing entry
Explanation
Dec. 31 Balance
31 Closing entry
Retained Earnings
Ref.
Debit
J14
J14
Dividends
Ref.
5,000
No. 320
Balance
4,200
13,400
8,400
Debit
Credit
No. 332
Balance
5,000
5,000
0
Credit
4,200
9,200
5,000
J14
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4-67
PROBLEM 4-2B (Continued)
Date
Dec. 31
31
31
Explanation
Closing entry
Closing entry
Closing entry
Income Summary
Ref.
Debit
J14
J14
49,800
J14
9,200
Service Revenue
Ref.
Debit
Credit
59,000
No. 350
Balance
59,000
9,200
0
Credit
59,000
Date
Dec. 31
31
Explanation
Balance
Closing entry
59,000
No. 400
Balance
59,000
0
Date
Dec. 31
31
Advertising Expense
Explanation
Ref.
Debit
Balance
8,400
Closing entry
J14
No. 610
Balance
8,400
0
Date
Dec. 31
31
Explanation
Balance
Closing entry
Supplies Expense
Ref.
Debit
4,000
J14
Date
Dec. 31
31
Depreciation Expense
Explanation
Ref.
Debit
Balance
5,600
Closing entry
J14
Date
Dec. 31
31
Explanation
Balance
Closing entry
Insurance Expense
Ref.
Debit
3,200
J14
4-68
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J14
Credit
8,400
Credit
4,000
Credit
5,600
Credit
3,200
No. 631
Balance
4,000
0
No. 711
Balance
5,600
0
No. 722
Balance
3,200
0
PROBLEM 4-2B (Continued)
Date
Dec. 31
31
Salaries and Wages Expense
Explanation
Ref.
Debit
Balance
28,000
Closing entry
J14
Date
Dec. 31
31
Interest Expense
Ref.
Debit
600
J14
(e)
Explanation
Balance
Closing entry
Credit
28,000
Credit
600
No. 726
Balance
28,000
0
No. 905
Balance
600
0
EAGLE COMPANY
Post-Closing Trial Balance
December 31, 2014
Cash .....................................................................
Accounts Receivable ..........................................
Supplies ...............................................................
Prepaid Insurance ...............................................
Equipment ...........................................................
Accumulated Depreciation—
Equipment .......................................................
Notes Payable .....................................................
Accounts Payable ...............................................
Salaries and Wages Payable .............................
Interest Payable ..................................................
Share Capital—Ordinary ....................................
Retained Earnings ..............................................
Totals ...........................................................
Debit
£ 5,300
10,800
1,500
2,000
27,000
£46,600
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Credit
£ 5,600
15,000
4,600
2,400
600
10,000
8,400
£46,600
4-69
PROBLEM 4-3B
(a)
LATHROP COMPANY
Income Statement
For the Year Ended December 31, 2014
Revenues
Service revenue .............................................
Expenses
Salaries and wages expense ........................
Depreciation expense ...................................
Insurance expense ........................................
Maintenance and repairs expense ...............
Utilities expense ............................................
Total expenses .......................................
Net income .............................................................
$56,000
$27,000
3,000
1,800
1,600
1,400
34,800
$21,200
LATHROP COMPANY
Retained Earnings Statement
For the Year Ended December 31, 2014
Retained Earnings, January 1 ...........................................
Add: Net income ...............................................................
Less: Dividends .................................................................
Retained Earnings, December 31 .....................................
$16,400
21,200
37,600
8,000
$29,600
LATHROP COMPANY
Statement of Financial Position
December 31, 2014
Assets
Property, plant, and equipment
Equipment ......................................................
Less: Accumulated depreciation—
equipment ...........................................
Current assets
Prepaid insurance .........................................
Accounts receivable......................................
Cash ................................................................
Total assets ...........................................................
4-70
$28,000
4,500
2,800
10,800
8,900
$23,500
22,500
$46,000
Copyright © 2013 John Wiley & Sons, Inc. Weygandt Financial, IFRS, 2/e, Solution’s Manual (For Instructor Use Only)
PROBLEM 4-3B (Continued)
LATHROP COMPANY
Statement of Financial Position (Continued)
December 31, 2014
Equity and Liabilities
Equity
Share capital—ordinary .................................. $12,000
Retained earnings ........................................... 29,600
Current liabilities
Accounts payable ...........................................
2,000
Salaries and wages payable...........................
2,400
Total equity and liabilities ......................................
$41,600
4,400
$46,000
(b)
Date
Dec. 31
31
31
31
General Journal
Account Titles
Service Revenue .................................
Income Summary .......................
Ref.
400
350
Debit
56,000
350
34,800
Credit
56,000
Income Summary ................................
Maintenance and Repairs
Expense ...................................
Depreciation Expense................
Insurance Expense ....................
Salaries and Wages Expense....
Utilities Expense ........................
622
711
722
726
732
Income Summary ................................
Retained Earnings......................
350
320
21,200
Retained Earnings...............................
Dividends ....................................
320
332
8,000
1,600
3,000
1,800
27,000
1,400
21,200
Copyright © 2013 John Wiley & Sons, Inc. Weygandt Financial, IFRS, 2/e, Solution’s Manual (For Instructor Use Only)
8,000
4-71
PROBLEM 4-3B (Continued)
(c)
12/31
Retained Earnings
No. 320
8,000 1/1 Bal.
16,400
12/31
21,200
12/31 Bal. 29,600
12/31 Bal.
12/31
12/31
12/31
(d)
Dividends
8,000 12/31
No. 332
8,000
Income Summary
34,800 12/31
21,200
56,000
No. 350
56,000
56,000
Maintenance and Repairs
Expense
No. 622
12/31 Bal.
1,600 12/31
1,600
Depreciation Expense No. 711
12/31 Bal.
3,000 12/31
3,000
Insurance Expense
12/31 Bal.
1,800 12/31
No. 722
1,800
Salaries and Wages
Expense
12/31 Bal. 27,000 12/31
No. 726
27,000
Utilities Expense
12/31 Bal.
1,400 12/31
No. 732
1,400
Service Revenue
No. 400
56,000 12/31 Bal. 56,000
LATHROP COMPANY
Post-Closing Trial Balance
December 31, 2014
Cash .....................................................................
Accounts Receivable ..........................................
Prepaid Insurance ...............................................
Equipment ............................................................
Accumulated Depreciation—Equipment ...........
Accounts Payable ...............................................
Salaries and Wages Payable ..............................
Share Capital—Ordinary .....................................
Retained Earnings ...............................................
Totals ............................................................
4-72
Debit
$ 8,900
10,800
2,800
28,000
$50,500
Credit
$ 4,500
2,000
2,400
12,000
29,600
$50,500
Copyright © 2013 John Wiley & Sons, Inc. Weygandt Financial, IFRS, 2/e, Solution’s Manual (For Instructor Use Only)
Account Titles
Dr.
Cr.
Trial Balance
Dr.
Cr.
Adjustments
Dr.
Cr.
Adjusted
Trial Balance
CARROLL MANAGEMENT SERVICES INC.
Worksheet
For the Year Ended December 31, 2014
Dr.
Cr.
Income
Statement
Dr.
Cr.
Statement of
Financial Position
13,800
Cash
13,800
13,800
26,300
Accounts Receivable
26,300
26,300
1,800
Prepaid Insurance
(a) 1,800
1,800
3,600
67,000
Land
67,000
67,000
127,000
Buildings
127,000
127,000
59,000
Equipment
59,000
59,000
Accounts Payable
12,500
12,500
12,500
Unearned Rent Revenue
8,000 (c) 4,500
3,500
3,500
Mortgage Payable
120,000
120,000
120,000
Share Capital—Ordinary
80,000
80,000
80,000
Retained Earnings
54,000
54,000
54,000
16,000
16,000
Dividends
16,000
Service Revenue
90,700
90,700
90,700
Rent Revenue
26,000
(c) 4,500
30,500
30,500
Salaries and Wages
42,000
Expense
42,000
42,000
17,500
Advertising Expense
17,500
17,500
19,000
Utilities Expense
19,000
19,000
391,200
391,200
Totals
1,800
(a) 1,800
Insurance Expense
1,800
6,600
(b) 6,600
Depr. Expense
6,600
3,000
Accum. Depr.—Buildings
(b) 3,000
3,000
3,600
Accum. Depr.—Equipment
(b) 3,600
3,600
9,600
(d) 9,600
Interest Expense
9,600
9,600
Interest Payable
(d) 9,600
9,600
22,500
22,500 407,400
407,400
96,500
121,200
310,900
286,200
Totals
24,700
24,700
Net Income
121,200
121,200
310,900
310,900
Totals
Key: (a) Expired Insurance; (b) Depreciation Expense—Buildings and Equipment; (c) Rent Revenue Earned; (d) Accrued Interest Payable.
(a)
PROBLEM 4-4B
4-74
Copyright
© 2011
WileyInc.
& Sons,
Inc. Financial,
Weygandt,
Accounting
Principles,
10/e, (For
Solutions
Manual
(For Instructor Use 4-73
Copyright
© 2013 John
WileyJohn
& Sons,
Weygandt
IFRS,
2/e, Solution’s
Manual
Instructor
Use Only)
PROBLEM 4-4B (Continued)
(b)
CARROLL MANAGEMENT SERVICES INC.
Statement of Financial Position
December 31, 2014
Assets
Property, plant, and equipment
Land ...............................................
Buildings .......................................
Less: Accumulated
depreciation—buildings ...
Equipment .....................................
Less: Accumulated
depreciation—equipment ..
Current assets
Prepaid insurance ........................
Accounts receivable.....................
Cash ...............................................
Total assets ..........................................
£ 67,000
£127,000
3,000
59,000
124,000
3,600
55,400
1,800
26,300
13,800
£246,400
41,900
£288,300
Equity and Liabilities
Equity
Share capital—ordinary ................................
Retained earnings .........................................
Non-current liabilities
Mortgage payable (due after 2015) ..............
Current liabilities
Mortgage payable (due in 2015) ...................
Accounts payable ..........................................
Interest payable .............................................
Unearned rent revenue .................................
Total equity and liabilities ....................................
£80,000
62,700* £142,700
95,000
25,000
12,500
9,600
3,500
50,600
£288,300
*£54,000 + £24,700 – £16,000
4-74
Copyright © 2013 John Wiley & Sons, Inc. Weygandt Financial, IFRS, 2/e, Solution’s Manual (For Instructor Use Only)
PROBLEM 4-4B (Continued)
(c) Dec. 31
31
31
31
(d) Dec. 31
31
31
31
Insurance Expense ...............................
Prepaid Insurance .........................
1,800
Depreciation Expense...........................
Accumulated Depreciation—
Buildings ....................................
Accumulated Depreciation—
Equipment ..................................
6,600
Unearned Rent Revenue.......................
Rent Revenue ................................
4,500
Interest Expense ...................................
Interest Payable .............................
9,600
Service Revenue ...................................
Rent Revenue ........................................
Income Summary ..........................
90,700
30,500
Income Summary ..................................
Salaries and Wages Expense .......
Advertising Expense .....................
Interest Expense ............................
Utilities Expense ............................
Depreciation Expense ...................
Insurance Expense ........................
96,500
Income Summary ..................................
Retained Earnings .........................
24,700
Retained Earnings.................................
Dividends .......................................
16,000
1,800
3,000
3,600
4,500
9,600
121,200
42,000
17,500
9,600
19,000
6,600
1,800
24,700
Copyright © 2013 John Wiley & Sons, Inc. Weygandt Financial, IFRS, 2/e, Solution’s Manual (For Instructor Use Only)
16,000
4-75
PROBLEM 4-4B (Continued)
(e)
CARROLL MANAGEMENT SERVICES INC.
Post-Closing Trial Balance
December 31, 2014
Cash .................................................................
Accounts Receivable ......................................
Prepaid Insurance ...........................................
Land ..................................................................
Buildings ..........................................................
Accumulated Depreciation—Buildings .........
Equipment ........................................................
Accumulated Depreciation—Equipment .......
Accounts Payable ...........................................
Interest Payable ...............................................
Unearned Rent Revenue .................................
Mortgage Payable ...........................................
Share Capital—Ordinary .................................
Retained Earnings ...........................................
Debit
£ 13,800
26,300
1,800
67,000
127,000
£
3,000
59,000
£294,900
4-76
Credit
3,600
12,500
9,600
3,500
120,000
80,000
62,700
£294,900
Copyright © 2013 John Wiley & Sons, Inc. Weygandt Financial, IFRS, 2/e, Solution’s Manual (For Instructor Use Only)
PROBLEM 4-5B
(a)
Date
July 1
1
3
5
12
18
20
21
25
31
31
General Journal
Account Titles
Cash .....................................................
Share capital—ordinary ............
Ref.
101
311
Equipment ...........................................
Cash ............................................
Accounts Payable ......................
157
101
201
12,000
Supplies ...............................................
Accounts Payable ......................
126
201
2,100
Prepaid Insurance...............................
Cash ............................................
130
101
1,800
Accounts Receivable..........................
Service Revenue ........................
112
400
5,900
Accounts Payable ...............................
Cash ............................................
201
101
2,900
Salaries and Wages Expense ............
Cash ............................................
726
101
4,500
Cash .....................................................
Accounts Receivable.................
101
112
4,400
Accounts Receivable..........................
Service Revenue ........................
112
400
8,000
Gasoline Expense ...............................
Cash ............................................
633
101
350
Dividends .............................................
Cash ............................................
332
101
1,200
Debit
20,000
J1
Credit
20,000
4,000
8,000
2,100
1,800
5,900
2,900
4,500
4,400
8,000
350
Copyright © 2013 John Wiley & Sons, Inc. Weygandt Financial, IFRS, 2/e, Solution’s Manual (For Instructor Use Only)
1,200
4-77
4-78
350
4,500
41,100
1,200
9,650
9,500
2,100
1,800
12,000
Dr.
41,100
13,900
7,200
20,000
Cr.
Trial Balance
500
7,650
(c)
150
(d) 1,500
(b)
(e) 2,200
(a) 3,300
Dr.
500
(e) 2,200
7,650
(b)
(a) 3,300
(d) 1,500
(c)
150
Cr.
Adjustments
47,100
150
1,500
500
350
6,700
1,200
9,650
12,800
600
1,650
12,000
Dr.
2,200
47,100
500
17,200
7,200
20,000
Cr.
Adjusted
Trial Balance
BRENNAN'S CLEANING SERVICE
Worksheet
For the Month Ended July 31, 2014
9,200
8,000
17,200
150
1,500
500
350
6,700
Dr.
37,900
37,900
17,200
1,200
9,650
12,800
600
1,650
12,000
Dr.
2,200
29,900
8,000
37,900
500
7,200
20,000
Cr.
Statement of
Financial sheet
17,200
17,200
Cr.
Income
Statement
Key: (a) Service Revenue Earned; (b) Depreciation Expense; (c) Insurance Expired; (d) Cleaning Supplies Used; (e) Unpaid Salaries.
Cash
Accounts Receivable
Supplies
Prepaid Insurance
Equipment
Accounts Payable
Share Capital—Ordinary
Dividends
Service Revenue
Gasoline Expense
Salaries and Wages Expense
Totals
Depreciation Expense
Accum. Depr.—Equipment
Insurance Expense
Supplies Expense
Salaries and Wages Payable
Totals
Net Income
Totals
Account Titles
(b) & (c)
PROBLEM 4-5B (Continued)
Copyright © 2013 John Wiley & Sons, Inc. Weygandt Financial, IFRS, 2/e, Solution’s Manual (For Instructor Use Only)
PROBLEM 4-5B (Continued)
(a), (e) & (f)
Date
Explanation
July 1
1
5
18
20
21
31
31
Date
Explanation
July 12
21
25
31 Adjusting
Date
July 3
31
Explanation
Adjusting
Date
Explanation
July 5
31 Adjusting
Date
July 1
Explanation
Cash
Ref.
J1
J1
J1
J1
J1
J1
J1
J1
Debit
20,000
4,000
1,800
2,900
4,500
4,400
350
1,200
Accounts Receivable
Ref.
Debit
J1
5,900
J1
J1
8,000
J2
3,300
Supplies
Ref.
J1
J2
Debit
2,100
Credit
4,400
Credit
1,500
Prepaid Insurance
Ref.
Debit
J1
1,800
J2
Equipment
Ref.
J1
Credit
Debit
12,000
Credit
150
Credit
Copyright © 2013 John Wiley & Sons, Inc. Weygandt Financial, IFRS, 2/e, Solution’s Manual (For Instructor Use Only)
No. 101
Balance
20,000
16,000
14,200
11,300
6,800
11,200
10,850
9,650
No. 112
Balance
5,900
1,500
9,500
12,800
No. 126
Balance
2,100
600
No. 130
Balance
1,800
1,650
No. 157
Balance
12,000
4-79
PROBLEM 4-5B (Continued)
Date
July 31
Date
July 1
3
18
Date
July 31
Date
July 1
Date
July 1
31
31
Date
July 31
31
Date
July 31
31
31
4-80
Accumulated Depreciation—Equipment
Explanation
Ref.
Debit
Credit
Adjusting
J2
500
Explanation
Accounts Payable
Ref.
Debit
J1
J1
J1
2,900
Salaries and Wages Payable
Explanation
Ref.
Debit
Adjusting
J2
Explanation
Explanation
Closing
Closing
Explanation
Closing
Explanation
Closing
Closing
Closing
Share Capital—Ordinary
Ref.
Debit
J1
Retained Earnings
Ref.
Debit
J3
J3
Dividends
Ref.
J1
J3
Credit
8,000
2,100
Credit
2,200
Credit
20,000
No. 311
Balance
20,000
Credit
No. 320
Balance
1,200
Income Summary
Ref.
Debit
J3
J3
9,200
J3
8,000
No. 201
Balance
8,000
10,100
7,200
No. 212
Balance
2,200
8,000
Debit
1,200
No. 158
Balance
500
Credit
1,200
Credit
17,200
8,000
6,800
No. 332
Balance
1,200
0
No. 350
Balance
17,200
8,000
0
Copyright © 2013 John Wiley & Sons, Inc. Weygandt Financial, IFRS, 2/e, Solution’s Manual (For Instructor Use Only)
PROBLEM 4-5B (Continued)
Date
July 12
25
31
31
Date
July 31
31
Date
July 31
31
Explanation
Adjusting
Closing
Service Revenue
Ref.
Debit
J1
J1
J2
J3
17,200
Closing
Gasoline Expense
Ref.
Debit
J1
350
J3
Explanation
Adjusting
Closing
Supplies Expense
Ref.
Debit
J2
1,500
J3
Explanation
Explanation
Adjusting
Closing
Depreciation Expense
Ref.
Debit
J2
500
J3
Date
July 31
31
Explanation
Adjusting
Closing
Insurance Expense
Ref.
Debit
J2
150
J3
Date
July 20
31
31
Salaries and Wages Expense
Explanation
Ref.
Debit
J1
4,500
Adjusting
J2
2,200
Closing
J3
Date
July 31
31
Credit
5,900
8,000
3,300
No. 400
Balance
5,900
13,900
17,200
0
Credit
No. 633
Balance
350
0
350
Credit
1,500
Credit
500
Credit
150
Credit
6,700
Copyright © 2013 John Wiley & Sons, Inc. Weygandt Financial, IFRS, 2/e, Solution’s Manual (For Instructor Use Only)
No. 631
Balance
1,500
0
No. 711
Balance
500
0
No. 722
Balance
150
0
No. 726
Balance
4,500
6,700
0
4-81
PROBLEM 4-5B (Continued)
(d)
BRENNAN'S CLEANING SERVICE
Income Statement
For the Month Ended July 31, 2014
Revenues
Service revenue ...............................................
Expenses
Salaries and wages expense ..........................
Supplies expense ............................................
Depreciation expense .....................................
Gasoline expense ............................................
Insurance expense ..........................................
Total expenses .........................................
Net income ...............................................................
$17,200
$6,700
1,500
500
350
150
9,200
$ 8,000
BRENNAN'S CLEANING SERVICE
Retained Earnings Statement
For the Month Ended July 31, 2014
Retained Earnings, July 1.......................................
Add: Net income ....................................................
Less: Dividends ......................................................
Retained Earnings, July 31.....................................
$
0
8,000
8,000
1,200
$ 6,800
BRENNAN'S CLEANING SERVICE
Statement of Financial Position
July 31, 2014
Assets
Property, plant, and equipment
Equipment ........................................................ $ 12,000
Less: Accumulated depreciation—
equipment ................................................
500
4-82
$ 11,500
Copyright © 2013 John Wiley & Sons, Inc. Weygandt Financial, IFRS, 2/e, Solution’s Manual (For Instructor Use Only)
PROBLEM 4-5B (Continued)
BRENNAN'S CLEANING SERVICE
Statement of Financial Position (Continued)
July 31, 2014
Assets (Continued)
Current assets
Prepaid insurance ...........................................
Supplies ...........................................................
Accounts receivable .......................................
Cash .................................................................
Total assets .............................................................
1,650
600
12,800
9,650
24,700
$36,200
Equity and Liabilities
Equity
Share capital—ordinary ..................................
Retained earnings ...........................................
Current liabilities
Accounts payable ...........................................
Salaries and wages payable...........................
Total equity and liabilities ......................................
$20,000
6,800
7,200
2,200
$26,800
9,400
$36,200
(e)
Date
July 31
31
31
31
31
General Journal
Account Titles
Accounts Receivable.........................
Service Revenue .......................
Ref.
112
400
Debit
3,300
Depreciation Expense .......................
Accumulated Depreciation—
Equipment .............................
711
500
Insurance Expense ............................
Prepaid Insurance.....................
722
130
150
Supplies Expense ..............................
Supplies.....................................
631
126
1,500
Salaries and Wages Expense ...........
Salaries and Wages Payable ...
726
212
2,200
J2
Credit
3,300
158
500
150
1,500
Copyright © 2013 John Wiley & Sons, Inc. Weygandt Financial, IFRS, 2/e, Solution’s Manual (For Instructor Use Only)
2,200
4-83
PROBLEM 4-5B (Continued)
(f)
General Journal
Date
July 31
31
31
31
(g)
Account Titles
Service Revenue .................................
Income Summary.......................
Ref.
400
350
Debit
17,200
Income Summary ................................
Salaries and Wages Expense ...
Depreciation Expense ...............
Insurance Expense....................
Supplies Expense ......................
Gasoline Expense......................
350
726
711
722
631
633
9,200
Income Summary ................................
Retained Earnings .....................
350
320
8,000
Retained Earnings ..............................
Dividends ...................................
320
332
1,200
17,200
6,700
500
150
1,500
350
8,000
1,200
BRENNAN'S CLEANING SERVICE
Post-Closing Trial Balance
July 31, 2014
Cash .....................................................................
Accounts Receivable ..........................................
Supplies ...............................................................
Prepaid Insurance ...............................................
Equipment ............................................................
Accumulated Depreciation—Equipment ...........
Accounts Payable ...............................................
Salaries and Wages Payable ..............................
Share Capital—Ordinary .....................................
Retained Earnings ...............................................
Debit
$ 9,650
12,800
600
1,650
12,000
Credit
$
$36,700
4-84
J3
Credit
500
7,200
2,200
20,000
6,800
$36,700
Copyright © 2013 John Wiley & Sons, Inc. Weygandt Financial, IFRS, 2/e, Solution’s Manual (For Instructor Use Only)
COMPREHENSIVE PROBLEM: CHAPTERS 2 TO 4
(a)
Date
July 1
1
3
5
12
18
20
21
25
31
31
General Journal
Account Titles and Explanation
Cash .....................................................
Share Capital—Ordinary ..........
Ref.
101
311
Debit
15,000
Equipment ...........................................
Cash ...........................................
Accounts Payable.....................
157
101
201
10,000
Supplies ...............................................
Accounts Payable.....................
126
201
1,700
Prepaid Insurance...............................
Cash ...........................................
130
101
1,800
Accounts Receivable..........................
Service Revenue .......................
112
400
4,200
Accounts Payable ...............................
Cash ...........................................
201
101
1,400
Salaries and Wages Expense ............
Cash ...........................................
726
101
1,900
Cash .....................................................
Accounts Receivable................
101
112
2,400
Accounts Receivable..........................
Service Revenue .......................
112
400
2,100
Gasoline Expense ...............................
Cash ...........................................
633
101
400
Dividends .............................................
Cash ...........................................
332
101
500
J1
Credit
15,000
3,000
7,000
1,700
1,800
4,200
1,400
1,900
2,400
2,100
400
Copyright © 2013 John Wiley & Sons, Inc. Weygandt Financial, IFRS, 2/e, Solution’s Manual (For Instructor Use Only)
500
4-85
4-86
400
1,900
28,600
500
8,400
3,900
1,700
1,800
10,000
Dr.
28,600
6,300
7,300
15,000
Cr.
Trial Balance
200
630
3,700
(c)
150
(d) 1,420
(b)
(e)
(a) 1,300
Dr.
(e)
(b)
630
3,700
200
(a) 1,300
(d) 1,420
(c)
150
Cr.
Adjustments
30,730
150
1,420
200
400
2,530
500
8,400
5,200
280
1,650
10,000
Dr.
630
30,730
200
7,600
7,300
15,000
Cr.
Adjusted
Trial Balance
MARY'S MAIDS CLEANING SERVICE
Worksheet
For the Month Ended July 31, 2014
4,700
2,900
7,600
150
1,420
200
400
2,530
Dr.
26,030
26,030
7,600
500
8,400
5,200
280
1,650
10,000
Dr.
630
23,130
2,900
26,030
200
7,300
15,000
Cr.
Statement of
Financial Position
7,600
7,600
Cr.
Income
Statement
Key: (a) Service Revenue; (b) Depreciation Expense; (c) Insurance Expired; (d) Cleaning Supplies Used; (e) Unpaid Salaries.
Cash
Accounts Receivable
Supplies
Prepaid Insurance
Equipment
Accounts Payable
Share Capital—Ordinary
Dividends
Service Revenue
Gasoline Expense
Salaries and Wages Expense
Total
Depreciation Expense
Accum. Depr.—Equipment
Insurance Expense
Supplies Expense
Salaries and Wages Payable
Totals
Net Income
Totals
Account Titles
(b) & (c)
COMPREHENSIVE PROBLEM (Continued)
Copyright © 2013 John Wiley & Sons, Inc. Weygandt Financial, IFRS, 2/e, Solution’s Manual (For Instructor Use Only)
COMPREHENSIVE PROBLEM (Continued)
(a), (e) & (f)
Date
July 1
1
5
18
20
21
31
31
Date
July 12
21
25
31
Date
July 3
31
Date
July 5
31
Date
July 1
Explanation
Explanation
Adjusting
Explanation
Adjusting
Explanation
Adjusting
Explanation
Cash
Ref.
J1
J1
J1
J1
J1
J1
J1
J1
Debit
15,000
3,000
1,800
1,400
1,900
2,400
400
500
Accounts Receivable
Ref.
Debit
J1
4,200
J1
J1
2,100
J2
1,300
Supplies
Ref.
J1
J2
Credit
Debit
1,700
Prepaid Insurance
Ref.
Debit
J1
1,800
J2
Equipment
Ref.
Debit
J1
10,000
Credit
2,400
Credit
1,420
Credit
150
Credit
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No. 101
Balance
15,000
12,000
10,200
8,800
6,900
9,300
8,900
8,400
No. 112
Balance
4,200
1,800
3,900
5,200
No. 126
Balance
1,700
280
No. 130
Balance
1,800
1,650
No. 157
Balance
10,000
4-87
COMPREHENSIVE PROBLEM (Continued)
Date
July 31
Date
July 1
3
18
Date
July 31
Date
July 1
Date
July 31
31
Date
July 31
31
Date
July 31
31
31
4-88
Accumulated Depreciation—Equipment
Explanation
Ref.
Debit
Credit
Adjusting
J2
200
Explanation
Accounts Payable
Ref.
Debit
J1
J1
J1
1,400
Salaries and Wages Payable
Explanation
Ref.
Debit
Adjusting
J2
Explanation
Explanation
Closing
Closing
Explanation
Closing
Explanation
Closing
Closing
Closing
Share Capital—Ordinary
Ref.
Debit
J1
Retained Earnings
Ref.
Debit
J3
J3
500
Dividends
Ref.
J1
J3
Debit
500
Income Summary
Ref.
Debit
J3
J3
4,700
J3
2,900
Credit
7,000
1,700
No. 158
Balance
200
No. 201
Balance
7,000
8,700
7,300
Credit
630
No. 212
Balance
630
Credit
15,000
No. 311
Balance
15,000
Credit
2,900
No. 320
Balance
2,900
2,400
Credit
No. 332
Balance
500
0
500
Credit
7,600
No. 350
Balance
7,600
2,900
0
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COMPREHENSIVE PROBLEM (Continued)
Date
July 12
25
31
31
Date
July 31
31
Date
July 31
31
Explanation
Adjusting
Closing
Service Revenue
Ref.
Debit
J1
J1
J2
J3
7,600
Closing
Gasoline Expense
Ref.
Debit
J1
400
J3
Explanation
Adjusting
Closing
Supplies Expense
Ref.
Debit
J2
1,420
J3
Explanation
Explanation
Adjusting
Closing
Depreciation Expense
Ref.
Debit
J2
200
J3
Date
July 31
31
Explanation
Adjusting
Closing
Insurance Expense
Ref.
Debit
J2
150
J3
Date
July 20
31
31
Salaries and Wages Expense
Explanation
Ref.
Debit
J1
1,900
Adjusting
J2
630
Closing
J3
Date
July 31
31
Credit
4,200
2,100
1,300
No. 400
Balance
4,200
6,300
7,600
0
Credit
No. 633
Balance
400
0
400
Credit
1,420
Credit
200
Credit
150
Credit
2,530
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No. 631
Balance
1,420
0
No. 711
Balance
200
0
No. 722
Balance
150
0
No. 726
Balance
1,900
2,530
0
4-89
COMPREHENSIVE PROBLEM (Continued)
(d)
MARY'S MAIDS CLEANING SERVICE
Income Statement
For the Month Ended July 31, 2014
Revenues
Service revenue ...............................................
Expenses
Salaries and wages expense ..........................
Supplies expense ............................................
Gasoline expense ............................................
Depreciation expense .....................................
Insurance expense ..........................................
Total expenses .........................................
Net income ...............................................................
$7,600
$2,530
1,420
400
200
150
4,700
$2,900
MARY'S MAIDS CLEANING SERVICE
Retained Earnings Statement
For the Month Ended July 31, 2014
Retained Earnings, July 1.....................................................
Add: Net income ..................................................................
Less: Dividends ....................................................................
Retained Earnings, July 31...................................................
4-90
$
0
2,900
2,900
500
$2,400
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COMPREHENSIVE PROBLEM (Continued)
MARY'S MAIDS CLEANING SERVICE
Statement of Financial Position
July 31, 2011
Assets
Property, plant, and equipment
Equipment........................................................
Less: Accumulated depreciation—
equipment..................................................
Current assets
Prepaid insurance ...........................................
Supplies ...........................................................
Accounts receivable .......................................
Cash .................................................................
Total assets .............................................................
$10,000
200
1,650
280
5,200
8,400
$ 9,800
15,530
$25,330
Equity and Liabilities
Equity
Share capital—ordinary ..................................
Retained earnings ...........................................
Current liabilities
Accounts payable ...........................................
Salaries and wages payable...........................
Total equity and liabilities ......................................
$15,000
2,400
7,300
630
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$17,400
7,930
$25,330
4-91
COMPREHENSIVE PROBLEM (Continued)
(e)
Date
July 31
31
31
31
31
General Journal
Account Titles
Accounts Receivable .........................
Service Revenue........................
Ref.
112
400
Debit
1,300
Depreciation Expense ........................
Accumulated Depreciation—
Equipment ..............................
711
200
Insurance Expense.............................
Prepaid Insurance .....................
722
130
150
Supplies Expense...............................
Supplies .....................................
631
126
1,420
Salaries and Wages Expense............
Salaries and Wages Payable ....
726
212
630
J2
Credit
1,300
158
200
150
1,420
630
(f)
Date
July 31
31
31
31
4-92
General Journal
Account Titles
Service Revenue.................................
Income Summary ......................
Ref.
400
350
Debit
7,600
Income Summary ...............................
Salaries and Wages Expense...
Depreciation Expense...............
Insurance Expense....................
Supplies Expense......................
Gasoline Expense .....................
350
726
711
722
631
633
4,700
Income Summary ...............................
Retained Earnings .....................
350
320
2,900
Retained Earnings ..............................
Dividends ...................................
320
332
500
J3
Credit
7,600
2,530
200
150
1,420
400
2,900
500
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COMPREHENSIVE PROBLEM (Continued)
(g)
MARY'S MAIDS CLEANING SERVICE
Post-Closing Trial Balance
July 31, 2014
Cash .....................................................................
Accounts Receivable ..........................................
Supplies ...............................................................
Prepaid Insurance ...............................................
Equipment ...........................................................
Accumulated Depreciation—Equipment ..........
Accounts Payable ...............................................
Salaries and Wages Payable .............................
Share Capital—Ordinary ....................................
Retained Earnings ..............................................
Debit
$ 8,400
5,200
280
1,650
10,000
Credit
$
$25,530
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200
7,300
630
15,000
2,400
$25,530
4-93
CCC4
CONTINUING COOKIE CHRONICLE
(a)
COOKIE CREATIONS
Income Statement
For the Two Months Ended December 31, 2014
Revenues
Service revenue .........................................................
Expenses
Supplies expense ......................................................
Salaries and wages expense ....................................
Advertising expense .................................................
Utilities expense ........................................................
Insurance expense ....................................................
Depreciation expense ...............................................
Interest expense ........................................................
Total expenses ......................................................
Net income .....................................................................
$4,515
$1,025
1,006
165
125
110
40
15
2,486
$2,029
COOKIE CREATIONS
Retained Earnings Statement
For the Two Months Ended December 31, 2014
Retained earnings, November 1 ...................................
Add: Net income ..........................................................
Less: Dividends ............................................................
Retained earnings, December 31 .................................
4-94
$
0
2,029
2,029
500
$1,529
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CCC4 (Continued)
(a) (Continued)
COOKIE CREATIONS
Statement of Financial Position
December 31, 2014
Assets
Property, plant, and equipment
Equipment ...................................................................
Less: Accumulated depreciation—equipment ........
Current assets
Prepaid insurance .......................................................
Supplies .......................................................................
Accounts receivable ...................................................
Cash .............................................................................
Total current assets ...............................................
Total assets ............................................................
$1,200
40
$1,160
1,210
350
875
1,180
3,615
$4,775
Equity and Liabilities
Equity
Share Capital—Ordinary ...............................
Retained earnings ..........................................
Non-current liabilities
Interest payable .............................................
Notes payable ................................................
Total non-current liabilities ......................
Current liabilities
Accounts payable ..........................................
Salaries and wages payable .........................
Unearned service revenue ............................
Total current liabilities ..............................
Total liabilities .....................................
Total equity and liabilities...................
$ 800
1,529
$
$2,329
15
2,000
2,015
75
56
300
431
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2,446
$4,775
4-95
CCC4 (Continued)
(b)
Date
GENERAL JOURNAL
Account Titles
2014
Dec. 31 Service Revenue .....................................
Income Summary ...............................
4-96
Debit
J4
Credit
4,515
4,515
31 Income Summary ....................................
Salaries and Wages Expense ............
Utilities Expense ................................
Advertising Expense ..........................
Supplies Expense ..............................
Insurance Expense ............................
Depreciation Expense ........................
Interest Expense ................................
2,486
31 Income Summary ....................................
Retained Earnings ..............................
2,029
31 Retained Earnings ..................................
Dividends ............................................
500
1,006
125
165
1,025
110
40
15
2,029
500
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CCC4 (Continued)
(c)
COOKIE CREATIONS
Post-Closing Trial Balance
December 31, 2014
Account
Cash .........................................................................
Accounts Receivable ..............................................
Supplies ...................................................................
Prepaid Insurance ..................................................
Equipment ...............................................................
Accumulated Depreciation–Equipment ................
Accounts Payable ...................................................
Salaries and Wages Payable ..................................
Unearned Service Revenue ....................................
Interest Payable.......................................................
Notes Payable..........................................................
Share Capital—Ordinary.........................................
Retained Earnings...................................................
Debit
$1,180
875
350
1,210
1,200
Credit
$
$4,815
Copyright © 2013 John Wiley & Sons, Inc. Weygandt Financial, IFRS, 2/e, Solution’s Manual (For Instructor Use Only)
40
75
56
300
15
2,000
800
1,529
$4,815
4-97
BYP 4-1
FINANCIAL REPORTING PROBLEM
(a)
Total current assets were W61,402,589 million at December 31, 2010,
and W54,211,297 million at December 31, 2009.
(b)
No. Current assets are normally listed in reverse order of liquidity.
Samsung’s current assets are listed in order of liquidity.
(c)
The asset classifications are: (1) current assets, and non-current
assets.
(d)
Cash equivalents are investments with original maturities of 3 months
or less that Samsung does not intend to rollover beyond three
months.
(e)
Total current liabilities were W39,944,721 million at December 31,
2010, and W34,204,424 million at December 31, 2009.
4-98
Copyright © 2013 John Wiley & Sons, Inc. Weygandt Financial, IFRS, 2/e, Solution’s Manual (For Instructor Use Only)
BYP 4-2
COMPARATIVE ANALYSIS PROBLEM
(a)
Nestlé
(in millions)
1.
2.
3.
4.
Total current assets
Net property, plant & equipment
Total current liabilities
Total equity
Zetar
(in thousands)
CHF38,997
21,438
30,146
62,598
£45,670
16,583
40,474
46,287
(b) Current assets are cash and other resources that are reasonably expected to be realized in cash or sold or consumed within one year or
the company’s operating cycle, whichever is longer. Current liabilities
are obligations that are reasonably expected to be paid from existing
current assets or through the creation of other current liabilities.
Nestlé’s current assets were 29.4% greater than its current liabilities,
while Zetar’s current assets were 12.8% greater than its current liabilities.
From this information, it appears that Nestlé is in a better liquidity
position than Zetar.
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4-99
BYP 4-3
REAL–WORLD FOCUS
The solution is dependent upon the companies chosen by the student.
4-100
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BYP 4-4
(a)
DECISION–MAKING ACROSS THE ORGANIZATION
EVERCLEAN JANITORIAL SERVICE
Statement of Financial Position
December 31, 2014
Assets
Property, plant, and equipment
Equipment
($22,000 + $4,000) .......................
Less: Accum. depreciation—
equipment
($4,000 + $2,000) .................
Delivery trucks ($34,000 + $5,000) ..
Less: Accum. depreciation—
delivery trucks
($5,000 + $5,000) .................
Current assets
Prepaid insurance ($4,800 X 2/3) ......
Supplies
($5,200 – $3,100) .........................
Accounts receivable
($9,000 + $3,900) .........................
Cash ................................................
Total assets ............................................
$26,000
6,000
39,000
$20,000
10,000
29,000
$49,000
3,200
2,100
12,900
5,500
23,700
$72,700
Equity and Liabilities
Equity
Share capital—ordinary ....................................
Retained earnings .............................................
Non-current liabilities
Notes payable, due July 1, 2016 ......................
Current liabilities
Notes payable due within one year .................
Accounts payable ($1,500 + $620) ...................
Interest payable ($25,000 X 10% X 6/12) .........
Total equity and liabilities .........................................
$30,000
14,330* $44,330
15,000
10,000
2,120
1,250
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13,370
$72,700
4-101
BYP 4-4 (Continued)
EVERCLEAN JANITORIAL SERVICE
Statement of Financial Position (Continued)
December 31, 2014
*Retained earnings balance as reported ...............
Add: Earned but unbilled fees ............................
Less: Janitorial supplies used .............................
Insurance expired ($4,800 X 1/3) ...............
Depreciation ($2,000 + $5,000) ..................
Expenses incurred but unpaid ..................
Interest accrued ..........................................
Total .....................................................
Retained earnings balance as adjusted ...............
$24,000
3,900
27,900
$3,100
1,600
7,000
620
1,250
13,570
$14,330
(b) Everclean Janitorial Service met the terms of the bank loan because
current assets exceed current liabilities by $10,330 ($23,700 – $13,370)
at December 31, 2014.
4-102
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BYP 4-5
COMMUNICATION ACTIVITY
MEMO
To:
Accounting Instructor
From:
Student
Re:
Accounting Cycle
The required steps in the accounting cycle, in the order in which they
should be completed, are:
1.
2.
3.
4.
5.
6.
7.
8.
9.
Analyze business transactions.
Journalize the transactions.
Post to ledger accounts.
Prepare a trial balance.
Journalize and post adjusting entries.
Prepare an adjusted trial balance.
Prepare financial statements.
Journalize and post closing entries.
Prepare a post-closing trial balance.
The optional steps in the accounting cycle include preparing a worksheet
and preparing reversing entries. If a worksheet is prepared, it is done after
step 3 above, and it includes steps 4 and 6. The worksheet is a form used
to make it easier to prepare adjusting entries and financial statements. If reversing entries are prepared, they are journalized and posted after step 9,
at the beginning of the next accounting period. A reversing entry is the
exact opposite of a previously recorded adjusting entry and simplifies the
recording of subsequent transactions.
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4-103
BYP 4-6
ETHICS CASE
(a) The stakeholders in this case are:
f You, as controller.
f Phil McNally, president.
f Users of the company’s financial statements.
(b) The ethical issue is the continued circulation of significantly misstated
financial statements. As controller, you have just issued misleading
financial statements. You have acted ethically by telling the company’s
president. The president has reacted unethically by allowing the misleading financial statements to continue to circulate.
(c) As controller, you should impress upon the president the consequences
of having those misleading financial statements be detected by some
user or securities regulator. Also stress upon him that you have a
professional obligation to correct the statements or to resign.
4-104
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GAAP EXERCISES
GAAP 4-1
The statement of financial position required under IFRS and the balance
sheet prepared under GAAP usually present the same information
regarding a company’s assets, liabilities, and equity at a point in time. IFRS
does not dictate a specific order but most companies list non-current items
before current. Differences in ordering are:
IFRS
GAAP
Statement of Financial
Position presentation
Non-current assets
Current assets
Equity
Non-current liabilities
Current liabilities
Balance Sheet
presentation
Current assets
Non-current assets
Current liabilities
Non-current liabilities
Stockholders’ equity
Under GAAP, current assets are usually listed in the order of liquidity.
GAAP 4-2
GAAP uses the term balance sheet rather than statement of financial position.
GAAP 4-3
DIAZ COMPANY
Partial Balance Sheet
Current assets
Cash ..........................................................................................
Short-term investments ..........................................................
Accounts receivable ................................................................
Supplies ....................................................................................
Prepaid insurance ....................................................................
Total ..................................................................................
Copyright © 2013 John Wiley & Sons, Inc. Weygandt Financial, IFRS, 2/e, Solution’s Manual (For Instructor Use Only)
$ 15,400
6,700
12,500
5,200
3,600
$43,400
4-105
GAAP 4-4
ZURICH COMPANY
Partial Balance Sheet
December 31, 2014
Current assets
Cash .............................................................
Short-term investments ..............................
Accounts receivable ...................................
Inventories ...................................................
Long-term investments
Investments in stock...................................
Property, plant and equipment
Equipment ....................................................
Less: Accumulated depreciation—
equipment ................................................
Total assets .........................................................
4-106
$ 13,100
120
4,300
2,700
$20,220
6,500
21,700
5,700
16,000
$42,720
Copyright © 2013 John Wiley & Sons, Inc. Weygandt Financial, IFRS, 2/e, Solution’s Manual (For Instructor Use Only)
GAAP 4-5
(a)
REGO BOWLING ALLEY
Balance Sheet
December 31, 2014
Assets
Current assets
Cash ...................................................
Accounts receivable .........................
Prepaid insurance.............................
Property, plant, and equipment
Land ...................................................
Buildings ........................................... $128,000
Less: Acc. depr.—buildings ............
42,600
Equipment .........................................
62,400
Less: Acc. depr.—equipment ..........
18,720
Total assets ..............................................
$18,040
7,540
4 ,680
$30,260
67,000
85,400
43,680
196,080
$226,340
Liabilities and Stockholders’ Equity
Current liabilities
Current portion of notes payable ............. $ 13,900
Accounts payable ......................................
12,300
Interest payable .........................................
2,600 $28,800
Long-term liabilities
Notes payable ...........................................
81,100
Total liabilities ..................................................
$109,900
Stockholders’ equity
Common stock .........................................
90,000
Retained earnings ($22,000 + $4,440*) ....
26,440 116,440
Total liabilities and stockholders’ equity .......
$226,340
*Net income = $15,180 – $780 – $7,360 – $2,600 = $4,440
GAAP 4-6
It is possible to compare liquidity and solvency for companies using
different currencies. The ratios that are used to do so, such as the current
ratio and debt to total assets, indicate relative amounts of assets and
liabilities rather than absolute monetary values.
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4-107
GAAP FINANCIAL REPORTING PROBLEM
GAAP 4-7
(a) Tootsie Roll’s total current assets at December 31, 2010 were $ 237,591
thousand and at December 31, 2009 were $ 211,878 thousand.
(b) Yes, under GAAP current assets are listed in the order of their
liquidity.
(c) Tootsie Roll’s assets are classified as current assets, property, plant
and equipment, and other assets.
(d) Tootsie Roll’s total current liabilities at December 31, 2010 were
$ 58,505 thousand and at December 31, 2009 were $ 56,066 thousand.
4-108
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