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Chapter 4: 4-19RQ (page 216)

List the steps of the accounting cycle.

Short Answer

Expert verified

The steps in the accounting cycle are as follows:

  • Start with the beginning account balances.
  • Analyze and journalize transactions as they occur.
  • Post journal entries to the accounts.
  • Compute the unadjusted balance in each account, and prepare the unadjusted trial balance.
  • Enter the unadjusted trial balance on the worksheet, and complete the worksheet (optional).
  • Journalize and post adjusting entries.
  • Prepare the adjusted trial balance.
  • Prepare the financial statements.
  • Journalize and post the closing entries.
  • Prepare the post-closing trial balance.

Step by step solution

01

Explanation on Accounting Cycle

Accounting cycle is the process which is used by the companies to prepare the financial statements.

02

Process in Accounting Cycle

Accounting cycle starts with beginning balances of the accounts, then transactions are analyzed and journalized, after this transactions are posted to respective accounts, then unadjusted balance of each account is computed, then unadjusted balances are entered in the worksheet and completed, after this adjusting entries are recorded and posted, then adjusted trial balance is prepared, after this financial statements are prepared, now closing entries are journalized and posted, and finally closing trial balance is prepared.

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Most popular questions from this chapter

Selected accounts for Kebby Photography at December 31, 2018, follow: Salaries Expense 31,800 1,400 2,700 Supplies Expense 7,000 1,500 Depreciation Expense—Building Depreciation Expense—Furniture Dividends 14,000 Service Revenue 33,000 4,500 Retained Earnings 49,000 Requirements 1. Journalize Kebby Photography’s closing entries at December 31, 2018. 2. Determine Kebby Photography’s ending Retained Earnings balance at December 31, 2018.

The unadjusted trial balance and adjustment data of Martha’s Motors at December 31, 2018, follow: Adjustment data at December 31, 2018: a. Depreciation on equipment, \(2,100. b. Accrued Wages Expense, \)1,100. c. Office Supplies on hand, \(500. d. Prepaid Insurance expired during December, \)600. e. Unearned Revenue earned during December, \(4,800. f. Accrued Service Revenue, \)1,300. 2019 transactions: a. On January 4, Martha’s Motors paid wages of \(1,900. Of this, \)1,100 related to the accrued wages recorded on December 31. b. On January 10, Martha’s Motors received \(1,500 for Service Revenue. Of this, \)1,300 is related to the accrued Service Revenue recorded on December 31. Account Title Office Supplies Cash Debit Credit Accounts Receivable Prepaid Insurance Equipment Accumulated Depreciation—Equipment Accounts Payable Wages Payable Unearned Revenue Common Stock Dividends Service Revenue Depreciation Expense—Equipment Wages Expense Insurance Expense Utilities Expense Balance \( 4,200 \) 93,200 \( 93,200 15,000 \) 34,600 52,400 7,900 3,100 18,500 17,200 1,600 27,200 1,000 2,400 1,300 Supplies Expense Total Requirements 1. Journalize adjusting entries. 2. Journalize reversing entries for the appropriate adjusting entries. 3. Refer to the 2019 data. Journalize the cash payment and the cash receipt that occurred in 2019.

Winters Landscape Services accrued \(4,000 of Salaries Expense at December 31. Winters paid the next payroll at January 10 of

\)6,000. This payment included the accrued amount at December 31, plus $2,000 for the first few days of January.

24A. Record the reversing entry.

If a business had a net loss for the year, what would be the closing entry to close Income Summary and transfer the net loss to the Retained Earnings account?

For each account listed, identify the category that it would appear on a classified balance sheet. Use the following categories: Current Assets; Long-term Investments; Property, Plant, and Equipment; Intangible Assets; Current Liabilities; Long-term Liabilities; and Stockholders’ Equity. If the item does not belong on the classified balance sheet, put an X. a. Land (used in operations) b. Accumulated Depreciation—Equipment c. Common Stock d. Service Revenue e. Investment in Starbucks Corporation (to be held long-term) f. Accounts Receivable g. Equipment h. Buildings i. Notes Payable (due in 10 years) j. Unearned Revenue k. Cash l. Accounts Payable m. Prepaid Rent n. Dividends o. Land (held for investment purposes) p. Depreciation Expense.
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