Connect Access Card for Fundamental Accounting Principles
23rd Edition
ISBN: 9781259693878
Author: John J Wild
Publisher: McGraw-Hill Education
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Chapter 4, Problem 2GLP
To determine
The
Income Statement:
The statement which shows the revenues earned and expenses incurred during a particular year is called Income statement.
Statement of Owner’s Equity:
The statement which shows changes in the owners’ equity due to net income or loss and owners’ withdrawal during the accounting period is called statement of owner’s equity.
A financial statement which shows the financial position of a company during specified accounting period is called a balance sheet.
Closing Entries:
The journal entries prepare to close all the temporary accounts at the end of the accounting period is called closing entries.
To determine:
Prepare closing entries, create the income statement and the classified balance sheet, and then indicate which accounts appear on the post-closing
Expert Solution & Answer
Answer to Problem 2GLP
Solution:
Closing Entries
| Date | Accounts | Debit | Credit |
| Apr. 30 | Commissions Earned | $9,750 | |
| Income Summary | $9,750 | ||
| Apr. 30 | Income Summary | $7,553 | |
Equipment |
$500 | ||
| Salaries Expense | $3,620 | ||
| Insurance Expense | $133 | ||
| Rent Expense | $1,800 | ||
| Office Supplies Expense | $400 | ||
| Repairs Expense | $350 | ||
| Telephone Expense | $750 | ||
| Apr. 30 | Income Summary | $2,197 | |
| J. Nozomi, Capital | $2,197 | ||
| Apr. 30 | J. Nozomi, Capital | $1,500 | |
| J. Nozomi, Withdrawals | $1,500 | ||
| ADVENTURE TRAVEL Income Statement April 30, 2017 |
||
| Revenues: | ||
| Storage Fees Earned | $9,750 | |
| Expenses: | ||
| Depreciation Expense – Computer Equipment | $500 | |
| Salaries Expense | $3,620 | |
| Insurance Expense | $133 | |
| Rent Expense | $1,800 | |
| Office Supplies Expense | $400 | |
| Repairs Expense | $350 | |
| Telephone Expense | $750 | |
| Total Expense | $7,553 | |
| Net Income | $2,197 | |
| ADVENTURE TRAVEL Statement of Owner’s Equity April 30, 2017 |
|
| J. Nozomi, Capital, April 1. | $0 |
| Owner’s contribution during the month | $50,000 |
| Net income for the month | $2,197 |
| Subtotal | $52,197 |
| Owner’s withdrawal | ($1,500) |
| J. Nozomi, Capital, April 30. | $50,697 |
| ADVENTURE TRAVEL Balance Sheet April 30, 2017 |
||
| Assets | ||
| Current Asset: | ||
| Cash | $27,000 | |
| Accounts Receivable | $1,750 | |
| Office Supplies | $600 | |
| Prepaid Insurance | $2,267 | |
| Total Current Assets | $31,617 | |
| Plant, Property and Equipment: | ||
| Computer Equipment | $20,000 | |
| $500 | $19,500 | |
| Total Assets | $51,117 | |
| Liabilities | ||
| Current Liabilities: | ||
| Salaries Payable | $420 | |
| Owner’s Equity | ||
| J. Nozomi, Capital | $50,697 | |
| Total Liabilities and Owner’s Equity | $51,117 | |
| ADVENTURE TRAVEL Trial Balance April 30, 2017 |
||||||
| Unadjusted | Adjusted | Post-Closing | ||||
| Debit | Credit | Debit | Credit | Debit | Credit | |
| Cash | $27,000 | $27,000 | $27,000 | |||
| Accounts Receivable | $0 | $1,750 | $1,750 | |||
| Office Supplies | $1,000 | $600 | $600 | |||
| Prepaid Insurance | $2,400 | $2,267 | $2,267 | |||
| Computer Equipment | $20,000 | $20,000 | $20,000 | |||
| Accumulated Depreciation – Computer Equipment | $0 | $500 | $500 | |||
| Salaries Payable | $0 | $420 | $420 | |||
| J. Nozomi, Capital | $50,000 | $50,000 | $50,697 | |||
| J. Nozomi, Withdrawals | $1,500 | $1,500 | ||||
| Storage Fees Earned | $8,000 | $9,750 | ||||
| Depreciation Expense – Computer Equipment | $0 | $500 | ||||
| Salaries Expense | $3,200 | $3,620 | ||||
| Insurance Expense | $0 | $133 | ||||
| Rent Expense | $1,800 | $1,800 | ||||
| Office Supplies Expense | $0 | $400 | ||||
| Repairs Expense | $350 | $350 | ||||
| Telephone Expense | $750 | $750 | ||||
| Income Summary | $0 | $0 | ||||
| Total | $58,000 | $58,000 | $60,670 | $60,670 | $51,617 | $51,617 |
Explanation of Solution
Explanation
Journal entries for April’s transaction
| Date | Accounts | Debit | Credit |
| Apr. 1 | Cash | $30,000 | |
| Computer Equipment | $20,000 | ||
| J. Nozomi, Capital | $50,000 | ||
| 2 | Rent Expense | $1,800 | |
| Cash | $1,800 | ||
| 5 | Office Supplies | $1,000 | |
| Cash | $1,000 | ||
| 10 | Prepaid Insurance | $2,400 | |
| Cash | $2,400 | ||
| 14 | Salaries Expense | $1,600 | |
| Cash | $1,600 | ||
| 24 | Cash | $8,000 | |
| Commissions Earned | $8,000 | ||
| 28 | Salaries Expense | $1,600 | |
| Cash | $1,600 | ||
| 29 | Repair Expense | $350 | |
| Cash | $350 | ||
| 30 | Telephone Expense | $750 | |
| Cash | $750 | ||
| 30 | J. Nozomi, Withdrawals | $1,500 | |
| Cash | $1,500 | ||
Ledgers
| Cash Account No. 101 |
|||
| Date | Debit | Credit | Balance |
| Apr. 1 | $30,000 | $30,000 | |
| 2 | $1,800 | $28,200 | |
| 5 | $1,000 | $27,200 | |
| 10 | $2,400 | $24,800 | |
| 14 | $1,600 | $23,200 | |
| 24 | $8,000 | $31,200 | |
| 28 | $1,600 | $29,600 | |
| 29 | $350 | $29,250 | |
| 30 | $750 | $28,500 | |
| 30 | $1,500 | $27,000 | |
| Accounts Receivable Account No. 106 |
|||
| Date | Debit | Credit | Balance |
| Office Supplies Account No. 124 |
|||
| Date | Debit | Credit | Balance |
| Apr. 5 | $1,000 | $1,000 | |
| Prepaid Insurance Account No. 128 |
|||
| Date | Debit | Credit | Balance |
| Apr. 10 | $2,400 | $2,400 | |
| Computer Equipment Account No. 167 |
|||
| Date | Debit | Credit | Balance |
| Apr. 1 | $20,000 | $20,000 | |
| Accumulated Depreciation – Computer Equipment Account No. 168 |
|||
| Date | Debit | Credit | Balance |
| Salaries Payable Account No. 209 |
|||
| Date | Debit | Credit | Balance |
| J. Nozomi, Capital Account No. 301 |
|||
| Date | Debit | Credit | Balance |
| Apr. 1 | $50,000 | $50,000 | |
| J. Nozomi, Withdrawals Account No. 302 |
|||
| Date | Debit | Credit | Balance |
| Apr. 30 | $1,500 | $1,500 | |
| Commissions Earned Account No. 405 |
|||
| Date | Debit | Credit | Balance |
| Apr. 24 | $8,000 | $8,000 | |
| Depreciation Expense – Computer Equipment Account No. 612 |
|||
| Date | Debit | Credit | Balance |
| Salaries Expense Account No. 622 |
|||
| Date | Debit | Credit | Balance |
| Apr. 14 | $1,600 | $1,600 | |
| 28 | $1,600 | $3,200 | |
| Insurance Expense Account No. 637 |
|||
| Date | Debit | Credit | Balance |
| Rent Expense Account No. 640 |
|||
| Date | Debit | Credit | Balance |
| Apr. 2 | $1,800 | $1,800 | |
| Office Supplies Expense Account No. 650 |
|||
| Date | Debit | Credit | Balance |
| Repairs Expense Account No. 684 |
|||
| Date | Debit | Credit | Balance |
| Apr. 29 | $350 | $350 | |
| Telephone Expense Account No. 688 |
|||
| Date | Debit | Credit | Balance |
| Apr. 30 | $750 | $750 | |
| Income Summary Account No. 901 |
|||
| Date | Debit | Credit | Balance |
Unadjusted Trial Balance
| ADVENTURE TRAVEL Unadjusted Trial Balance April 30, 2017 |
||
| Cash | $27,000 | |
| Accounts Receivable | $0 | |
| Office Supplies | $1,000 | |
| Prepaid Insurance | $2,400 | |
| Computer Equipment | $20,000 | |
| Accumulated Depreciation – Computer Equipment | $0 | |
| Salaries Payable | $0 | |
| J. Nozomi, Capital | $50,000 | |
| J. Nozomi, Withdrawals | $1,500 | |
| Storage Fees Earned | $8,000 | |
| Depreciation Expense – Computer Equipment | $0 | |
| Salaries Expense | $3,200 | |
| Insurance Expense | $0 | |
| Rent Expense | $1,800 | |
| Office Supplies Expense | $0 | |
| Repairs Expense | $350 | |
| Telephone Expense | $750 | |
| Income Summary | $0 | |
| Total | $58,000 | $58,000 |
Adjusting Entries
| Date | Accounts | Debit | Credit |
| Apr. 30 a. | Insurance Expense | $133 | |
| Prepaid Insurance | $133 | ||
| Apr. 30 b. | Office Supplies Expense | $400 | |
| Office Supplies | $400 | ||
| Apr. 30 c. | Depreciation Expense – Computer Equip | $500 | |
| Accumulated Depreciation – Computer Equip. |
$500 | ||
| Apr. 30 d. | Salaries Expense | $420 | |
| Salaries Payable | $420 | ||
| Apr. 30 e. | Accounts Receivable | $1,750 | |
| Commissions Earned | $1,750 | ||
| Cash Account No. 101 |
|||
| Date | Debit | Credit | Balance |
| Apr. 30 | $27,000 | ||
| Accounts Receivable Account No. 106 |
|||
| Date | Debit | Credit | Balance |
| Unadj. Bal. | $0 | ||
| Apr. 30 e. | $1,750 | $1,750 | |
| Office Supplies Account No. 124 |
|||
| Date | Debit | Credit | Balance |
| Unadj. Bal. | $1,000 | ||
| Apr. 30 b. | $400 | $600 | |
| Prepaid Insurance Account No. 128 |
|||
| Date | Debit | Credit | Balance |
| Unadj. Bal. | $2,400 | ||
| Apr. 30 a. | $133 | $2,267 | |
| Computer Equipment Account No. 167 |
|||
| Date | Debit | Credit | Balance |
| Apr. 30 | $20,000 | ||
| Accumulated Depreciation – Computer Equipment Account No. 168 |
|||
| Date | Debit | Credit | Balance |
| Unadj. Bal. | $0 | ||
| Apr. 30 c. | $500 | $500 | |
| Salaries Payable Account No. 209 |
|||
| Date | Debit | Credit | Balance |
| Unadj. Bal. | $0 | ||
| Apr. 30 d. | $420 | $420 | |
| J. Nozomi, Capital Account No. 301 |
|||
| Date | Debit | Credit | Balance |
| Apr. 30 | $50,000 | ||
| J. Nozomi, Withdrawals Account No. 302 |
|||
| Date | Debit | Credit | Balance |
| Apr. 30 | $1,500 | ||
| Commissions Earned Account No. 405 |
|||
| Date | Debit | Credit | Balance |
| Uadj. Bal. | $8,000 | ||
| Apr. 30 e. | $1,750 | $9,750 | |
| Depreciation Expense – Computer Equipment Account No. 612 |
|||
| Date | Debit | Credit | Balance |
| Unadj. Bal. | $0 | ||
| Apr. 30 c. | $500 | $500 | |
| Salaries Expense Account No. 622 |
|||
| Date | Debit | Credit | Balance |
| Apr. 30 | $3,200 | ||
| Apr. 30 d. | $420 | $3,620 | |
| Insurance Expense Account No. 637 |
|||
| Date | Debit | Credit | Balance |
| Unadj. Bal. | $0 | ||
| Apr. 30 a. | $133 | $133 | |
| Rent Expense Account No. 640 |
|||
| Date | Debit | Credit | Balance |
| Apr. 30 | $1,800 | ||
| Office Supplies Expense Account No. 650 |
|||
| Date | Debit | Credit | Balance |
| Unadj. Bal. | $0 | ||
| Apr. 30 b. | $400 | $400 | |
| Repairs Expense Account No. 684 |
|||
| Date | Debit | Credit | Balance |
| Apr. 30 | $350 | ||
| Telephone Expense Account No. 688 |
|||
| Date | Debit | Credit | Balance |
| Apr. 30 | $750 | ||
Adjusted Trial Balance
| ADVENTURE TRAVEL Adjusted Trial Balance April 30, 2017 |
||
| Cash | $27,000 | |
| Accounts Receivable | $1,750 | |
| Office Supplies | $600 | |
| Prepaid Insurance | $2,267 | |
| Computer Equipment | $20,000 | |
| Accumulated Depreciation – Computer Equipment | $500 | |
| Salaries Payable | $420 | |
| J. Nozomi, Capital | $50,000 | |
| J. Nozomi, Withdrawals | $1,500 | |
| Commissions Earned | $9,750 | |
| Depreciation Expense – Computer Equipment | $500 | |
| Salaries Expense | $3,620 | |
| Insurance Expense | $133 | |
| Rent Expense | $1,800 | |
| Office Supplies Expense | $400 | |
| Repairs Expense | $350 | |
| Telephone Expense | $750 | |
| Income Summary | $0 | |
| Total | $60,670 | $60,670 |
Closing Ledgers
| J. Nozomi, Capital Account No. 301 |
|||
| Date | Debit | Credit | Balance |
| Adj. Bal. | $50,000 | ||
| Clos. 3 | $2,197 | $52,197 | |
| Clos. 4 | $1,500 | $50,697 | |
| J. Nozomi, Withdrawals Account No. 302 |
|||
| Date | Debit | Credit | Balance |
| Adj. Bal. | $1,500 | ||
| Clos. 4 | $1,500 | $0 | |
| Commissions Earned Account No. 405 |
|||
| Date | Debit | Credit | Balance |
| Adj. Bal. | $9,750 | ||
| Clos. 1 | $9,750 | $0 | |
| Depreciation Expense – Computer Equipment Account No. 612 |
|||
| Date | Debit | Credit | Balance |
| Adj. Bal. | $500 | ||
| Clos. 2 | $500 | $0 | |
| Salaries Expense Account No. 622 |
|||
| Date | Debit | Credit | Balance |
| Adj. Bal. | $3,620 | ||
| Clos. 2 | $3,620 | $0 | |
| Insurance Expense Account No. 637 |
|||
| Date | Debit | Credit | Balance |
| Adj. Bal. | $133 | ||
| Clos. 2 | $133 | $0 | |
| Rent Expense Account No. 640 |
|||
| Date | Debit | Credit | Balance |
| Adj. Bal. | $1,800 | ||
| Clos. 2 | $1,800 | $0 | |
| Office Supplies Expense Account No. 650 |
|||
| Date | Debit | Credit | Balance |
| Adj. Bal. | $400 | ||
| Clos. 2 | $400 | $0 | |
| Repairs Expense Account No. 684 |
|||
| Date | Debit | Credit | Balance |
| Adj. Bal. | $350 | ||
| Clos. 2 | $350 | $0 | |
| Telephone Expense Account No. 688 |
|||
| Date | Debit | Credit | Balance |
| Adj. Bal. | $750 | ||
| Clos. 2 | $750 | $0 | |
| Income Summary Account No. 901 |
|||
| Date | Debit | Credit | Balance |
| July 31 | $0 | ||
| Clos. 1 | $9,750 | $9,750 | |
| Clos. 2 | $7,553 | $2,197 | |
| Clos. 3 | $2,197 | $0 | |
Post-Closing Trial Balance
| ADVENTURE TRAVEL Post-Closing Trial Balance April 30, 2017 |
||
| Cash | $27,000 | |
| Accounts Receivable | $1,750 | |
| Office Supplies | $600 | |
| Prepaid Insurance | $2,267 | |
| Buildings | $20,000 | |
| Accumulated Depreciation – Buildings | $500 | |
| Salaries Payable | $420 | |
| J. Nozomi, Capital | $50,697 | |
| Total | $51,617 | $51,617 |
Conclusion
Conclusion:
Adventure Travel’s net income for the month ended April 30, 2017 is $2,197 and total assets, liabilities and owner’s equity is $51,117.
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Chapter 4 Solutions
Connect Access Card for Fundamental Accounting Principles
Ch. 4 - Prob. 1DQCh. 4 - Prob. 2DQCh. 4 - Prob. 3DQCh. 4 - Prob. 4DQCh. 4 - Prob. 5DQCh. 4 - Prob. 6DQCh. 4 - 7. Why are the debit and credit entries in the...Ch. 4 - Prob. 8DQCh. 4 - Prob. 9DQCh. 4 - Prob. 10DQ
Ch. 4 - Prob. 11DQCh. 4 - 12. How do reversing entries simplify...Ch. 4 - If a company recorded accrued salaries expense of...Ch. 4 - Prob. 14DQCh. 4 - Prob. 15DQCh. 4 - Prob. 16DQCh. 4 - Prob. 17DQCh. 4 - Prob. 1QSCh. 4 - Prob. 2QSCh. 4 - Prob. 3QSCh. 4 - Prob. 4QSCh. 4 - Prob. 5QSCh. 4 - Prob. 6QSCh. 4 - Prob. 7QSCh. 4 - Prob. 8QSCh. 4 - Prob. 9QSCh. 4 - Prob. 10QSCh. 4 - Prob. 11QSCh. 4 - Prob. 12QSCh. 4 - Exercise 4-1
Extending adjusted account balances...Ch. 4 - Prob. 2ECh. 4 - Prob. 3ECh. 4 - Exercise 4-4 Completing a work sheet Pl The...Ch. 4 - Exercise 4-5 Determining effects of closing...Ch. 4 - Prob. 6ECh. 4 - Exercise 4-7 Preparing a work sheet and recording...Ch. 4 - Prob. 8ECh. 4 - Prob. 9ECh. 4 - Prob. 10ECh. 4 - Prob. 11ECh. 4 - Prob. 12ECh. 4 - Exercise 4-13 Computing the current ratio A1 Use...Ch. 4 - Prob. 14ECh. 4 - Prob. 15ECh. 4 - Prob. 16ECh. 4 - Prob. 17ECh. 4 - Problem 4-1A Applying the accounting cycle C1 C2...Ch. 4 - Prob. 2APSACh. 4 - Prob. 3APSACh. 4 - Prob. 4APSACh. 4 - Problem 4-5A Preparing trial balances, closing...Ch. 4 - Prob. 6APSACh. 4 - Prob. 1BPSBCh. 4 - Prob. 2BPSBCh. 4 - Prob. 3BPSBCh. 4 - Prob. 4BPSBCh. 4 - Prob. 5BPSBCh. 4 - Prob. 6BPSBCh. 4 - Business Solutions P2 P3 (This serial problem...Ch. 4 - Prob. 1GLPCh. 4 - Prob. 2GLPCh. 4 - Prob. 3GLPCh. 4 - Prob. 4GLPCh. 4 - Prob. 5GLPCh. 4 - Prob. 1BTNCh. 4 - Prob. 2BTNCh. 4 - Prob. 3BTNCh. 4 - Prob. 4BTNCh. 4 - Prob. 5BTNCh. 4 - Prob. 6BTNCh. 4 - Prob. 7BTNCh. 4 - Prob. 8BTNCh. 4 - Prob. 9BTN
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