Semester Review Answer Key
K/U1.
The nine steps of the accounting cycle are listed below in random order. Number the steps in the
order in which they occur in the accounting cycle.
2
_______
6
_______
7
_______
_______
1
4
_______
9
_______
5
_______
8
_______
3
_______
T2.
Accounting entries are recorded in the journal.
An income statement and a balance sheet are prepared.
Adjusting entries are journalized and posted.
Transactions occur.
The ledger is balanced by means of a trial balance.
A post-closing trial balance is prepared.
A worksheet is prepared.
Closing entries are journalized and posted.
Journal entries are posted to the ledger accounts.
A. Calculate the value of the unexpired insurance on the following policies as of June 30, 20–4.
Company
a. Bristol
b. Maine
c. Ipswich
3
.
Policy Date
July 31, 20–3
October 31, 20–3
January 31, 20–4
Dennison Delivery Service
ACCOUNTS
Bank
Accounts Receivable
Term
1 year
1 year
1 year
Premium Unexpired Insurance
$ 35
$ 420 __________________
$336
$1 080 __________________
$ 576 _________________
$360
Worksheet
Year Ended June 30, 20–4
TRIAL BALANCE
ADJUSTMENTS
Dr
Dr
Cr
Cr
INCOME STATEMENT
Dr
Cr
2 570.00
1 074.00
Prepaid Insurance
1 400.00
Prepaid Licences
1 146.00
Dr
12 419.00
1
280.00 2
4
3
729.00
625.00
1 185.00
215.00
734.00
412.00
Land
17 000.00
17 000.00
Building
50 000.00
50 000.00
Furniture and Equipment
12 970.00
12 970.00
Trucks
48 472.00
Accounts Payable
J. Budd, Drawings
115.25
219.51
115.25
1
140.00
316.25
11 901.32
2 506.00
17 402.94
188 412.27
1
210.20
2 716.20
17 402.94
188 412.27
2
3
729.00
729.00
734.00
734.00
4 1 185.00
1 185.00
3 278.20
Net Income
359.51
316.25
Wages Expense
Insurance Expense
70 721.19
11 901.32
Utilities Expense
Licence Expense
8 900.00
70 721.19
Miscellaneous Expense
Supplies Expense
4 047.60
114 273.68
8 900.00
Bank Charges
Truck Expense
1
630.20
114 273.68
Fees Earned
Telephone Expense
48 472.00
3 417.40
J. Budd, Capital
Cr
2 570.00
12 419.00
Supplies
BALANCE SHEET
3 278.20
35 459.47
70 721.19
153 583.00
118 321.28
70 721.19
153 583.00
153 583.00
35 261.72
70 721.19
35 261.72
B. Prepare the four closing entries for Dennison Delivery Service as of June 30, 20–4.
GENERAL JOURNAL
DATE
Jun. 20-4
PARTICULARS
PAGE _____
P.R.
DEBIT
30 Fees Earned
Income Summary
70 7 2 1
30 Income Summary
Bank Charges
Miscellaneous Expense
Telephone Expense
Truck Expense
Utilities Expense
Wages Expense
Supplies Expense
Licence Expense
Insurance Expense
35 4 5 9
30 Income Summary
J. Budd, Capital
35 2 6 1
CREDIT
19
70 7 2 1
47
5
9
6
1
6
2
9
4
5
25
51
25
32
20
94
—
—
—
35 2 6 1
72
8 9 0 0
—
11
2
17
1
30 J. Budd, Capital
J. Budd, Drawings
8 9 0 0
19
1
3
3
9
7
4
7
7
1
1
5
1
0
1
0
2
3
8
72
—
C. Assuming all entries have been posted, calculate the ending Capital balance for Dennison
Delivery Service as of June 30, 20–4. Use the account provided below.
J. Budd, Capital
ACCOUNT
DATE
PARTICULARS
NO. 301
P.R.
DEBIT
CREDIT
Dr/Cr
BALANCE
Jul. 20–3
1
114
2
7 3
68
Cr
114
2 7
3
68
Jun. 20–4
30
30
35
2
6 1
72
Cr
Cr
149
140
5 3
6 3
5
5
40
40
8 9 0 0
—
D. Prepare a post-closing trial balance for Dennison Delivery Service.
DENNISON DELIVERY SERVICE
POST-CLOSING TRIAL BALANCE
JUNE 30, 20–4
ACCOUNTS
Bank
Accounts Receivable
Supplies
Prepaid Insurance
Prepaid Licences
Land
Building
Furniture and Equipment
Trucks
Accounts Payable
J. Budd, Capital
DEBIT
CREDIT
2 570.00
12 419.00
625.00
215.00
412.00
17 000.00
50 000.00
12 970.00
48 472.00
144 683.00
4 047.60
140 635.40
144 683.00
4. Indicate whether the following accounts would normally have a debit, credit, or nil balance after the
books have been closed, by placing a checkmark (✓)in the appropriate space.
K/U
Accounts
Salaries
Debit
Balance
Credit
Accounts Payable
✓
C. Wilson, Capital
✓
Nil
✓
Fees Earned
✓
Rent Expense
✓
C. Wilson, Drawings
✓
5. A company purchases equipment costing $24 000, which it expects to last 6 years and to have a
salvage value of $3000.
A
A. Prepare a schedule of depreciation for the first five years using the straight-line method.
Year
1
2
3
4
5
A
Straight-line Depreciation
Depreciation
Balance
$24 000
$ 3 500
20 500
3 500
17 000
3 500
13 500
3 500
10 000
3 500
6 500
B. For the same equipment, prepare a schedule of depreciation for the first five years using the true
declining-balance method. Canada Revenue Agency’s prescribed rate for depreciation
is 30%.
Year
1
2
3
4
5
True Declining Balance
Depreciation
Balance
$24 000.00
$ 7 200.00
16 800.00
5 040.00
11 760.00
3 528.00
8 232.00
2 469.60
5 762.40
1 782.72
4 033.68