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Chapter 4: Q24E (page 226)

Cynthia Elmer, CPA, had the following partial worksheet:

Requirements

1. Complete the worksheet.

2. Prepare the closing entries for Cynthia Elmer, CPA.

Short Answer

Expert verified

(1) Worksheet is mentioned in Step 1.

(2) Closing entries are mentioned in Step 2.

Step by step solution

01

Worksheet

(1) Worksheet is shown as follows:

CYNTHIA ELMER, CPA
Worksheet
December 31, 2018

Unadjusted Trial Balance

Adjustments

Adjusted Trial Balance

Income Statement

Balance Sheet

Account Names

Debit

Credit

Debit

Credit

Debit

Credit

Debit

Credit

Debit

Credit

Cash

$46,900

$46,900

$46,900

Accounts Receivable

9,600

(h)

$3,700

13,300

13,300

Office

Supplies

800

$500

(b)

300

300

Prepaid

Rent

8,000

3,300

(a)

4,700

4,700

Land

35,000

35,000

35,000

Building

125,000

125,000

125,000

Accumulated Depreciation—Building

1,150

(c)

$1,150

$1,150

Furniture

28,000

28,000

28,000

Accumulated Depreciation—Furniture

2,000

(d)

2,000

2,000

Accounts Payable

$3,500

3,500

3,500

Utilities Payable

710

710

710

Salaries Payable

4,200

(f)

4,200

4,200

Interest Payable

500

(g)

500

500

Unearned Revenue

5,000

(e)

1,300

3,700

3,700

Notes Payable

15,000

15,000

15,000

Common Stock

118,000

118,000

118,000

Retained Earnings

119,000

118,090

118,090

Dividends

29,000

29,000

29,000

Service Revenue

95,000

5,000

(e,h)

100,000

$100,000

Rent

Expense

20,000

(a)

3,300

23,300

$23,300

Salaries Expense

28,000

(f)

4,200

32,200

32,200

Supplies Expense

(b)

500

500

500

Utilities Expense

25,000

25,000

25,000

Depreciation Expense—Building

(c)

1,150

1,150

1,150

Depreciation Expense—Furniture

(d)

2,000

2,000

2,000

Interest Expense

(g)

500

500

500

Total

$355,300

$355,300

$16,650

$16,650

$366,850

$366,850

$84,650

$100,000

$282,200

$266,850

Net Income

15,350

15,350

Total

$100,000

$100,000

$282,200

$282,200

02

Closing entries

(2) Closing entries are as follows:

Date

Accounts and Explanation

Debit

Credit

Dec. 31

Service Revenue

$100,000

Income Summary

$100,000

To close revenue.

Dec. 31

Income Summary

$49,850

Rent Expense

$23,300

Salaries Expense

$32,200

Supplies Expense

$500

Utilities Expense

$25,000

Depreciation Expense—Building

$1,150

Depreciation Expense—Furniture

$2,000

Interest Expense

$500

To close expenses.

Dec. 31

Income Summary

$15,350

Retained Earnings

$15,350

To close Income Summary

Dec. 31

Retained Earnings

$29,000

Dividends

$29,000

To close Dividends

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Most popular questions from this chapter

Ocean Breeze Associates accrued \(8,500 of Service Revenue at December 31. Ocean Breeze Associates received \)14,500 on January 15, including the accrued revenue recorded on December 31. Requirements 1. Record the adjusting entry to accrue Service Revenue. 2. Record the reversing entry. 3. Journalize the cash receipt.

On December 1, Bob Waldo began an auto repair shop, Waldo’s Quality Automotive. The following transactions occurred during December: Dec. 1 Waldo contributed \(70,000 cash to the business in exchange for shares of common stock. 1 Purchased \)12,000 of equipment paying cash. 1 Paid \(1,750 for a five-month insurance policy starting on December 1. 9 Paid \)20,000 cash to purchase land to be used in operations. 10 Purchased office supplies on account, \(2,800. 19 Borrowed \)15,000 from the bank for business use. Waldo signed a note payable to the bank in the name of the corporation. The note is due in five years. 22 Paid \(1,300 for advertising expenses. 26 Paid \)900 on account. 28 The business received a bill for utilities to be paid in January, \(280. 31 Revenues earned during the month included \)16,000 cash and \(3,600 on account. 31 Paid employees’ salaries \)3,800 and building rent \(1,200. Record as a compound entry. 31 The business received \)1,440 for auto screening services to be performed next month. 31 Paid cash dividends of \(5,500 to stockholders. The business uses the following accounts: Cash; Accounts Receivable; Office Supplies; Prepaid Insurance; Land; Equipment; Accumulated Depreciation—Equipment; Accounts Payable; Utilities Payable; Interest Payable; Unearned Revenue; Notes Payable; Common Stock; Retained Earnings; Dividends; Income Summary; Service Revenue; Salaries Expense; Rent Expense; Utilities Expense; Advertising Expense; Supplies Expense; Insurance Expense; Interest Expense; and Depreciation Expense—Equipment. Adjustment data: a. Office Supplies used during the month, \)1,800. b. Depreciation for the month, \(200. c. One month insurance has expired. d. Accrued Interest Expense, \)75. Requirements 1. Prepare the journal entries, and post to the T-accounts. 2. Prepare an unadjusted trial balance. 3. Complete the worksheet for the month ended December 31, 2018 (optional). 4. Prepare the adjusting entries, and post to the T-accounts. 5. Prepare an adjusted trial balance.6. Prepare the income statement, the statement of retained earnings, and the classified balance sheet in report form. 7. Prepare the closing entries, and post to the T-accounts. 8. Prepare a post-closing trial balance.

McGregor Insurance Agency started the year with a beginning Retained Earnings balance of \(27,500. During the year, McGregor Insurance Agency earned \)34,000 of Service Revenue and incurred \(23,500 of various expenses. Dividends of \)12,000 from the business were paid to stockholders. After the closing entries are recorded and posted, what will be the balance of Retained Earnings?

For each account listed, identify whether the account would appear on the post-closing trial balance. Indicate either yes or no.

18. Cash

For each account listed, identify whether the account would appear in either the income statement section or the balance sheet section of the worksheet. Assuming normal balances, identify if the account would be recorded in the debit (DR) or credit (CR) column.

12. Dividends
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