(15-20 min

(15-20 min.) E 4-10

Req. 1

H. B. Fuller Polling Company
Balance Sheet
April 30, 20XX
ASSETS
Current:
Cash		$ 5,200
Supplies ($2,400 ! $400)		2,000
Prepaid rent [$1,100 ! ($1,400 ! $1,200)]		900
Total current assets		8,100
Plant:
Computer equipment	$51,100
Less accumulated depreciation
($6,200 + $300)	(6,500)	44,600
Total assets		$52,700
LIABILITIES
Current:
Accounts payable		$ 4,600
Salary payable ($3,800 ! $3,000)		800
Unearned service revenue
[$4,400 ! ($19,100 ! $14,800)]		100
Total current liabilities		5,500
Long-term note payable		10,000
Total liabilities		15,500
OWNER’S EQUITY
H.B. Fuller, capital
($25,800 + $12,400 ! $1,000)		37,200
Total liabilities and owner’s equity		$52,700

(continued) E 4-10

Req. 2

Current Year

Prior Year

Current

Ratio

=

Total current assets

Total current liabilities

=

$8,100

$5,500

=

1.47

1.20

The ability to pay current liabilities with current assets has improved.

Debt

Ratio

=

Total liabilities

Total assets

=

$15,500

$52,700

=

0.29

0.30

The overall ability to pay total liabilities hasn’t changed much.

(20 min.) E 4-12

Links Resorts
Income Statement
Year Ended December 31, 20X2
Service revenue:
($93,600 + $3,600 + $8,100)		$105,300

Expenses:
Salary expense ($42,700 + $1,400)	$44,100
Depreciation expense	2,900
Supplies expense	600
Insurance expense	1,800
Utilities expense	2,800	52,200
Net income		$ 53,100

T Problems

Group A

The solutions for these problems begin on the next page.

(120-150 min.) P 4-5A

Reqs. 1 and 4 (ledger accounts and posting)

ACCOUNT CASH						ACCOUNT NO. 11
			JRNL.			BALANCE
DATE		ITEM	REF.	DEBIT	CREDIT	DEBIT	CREDIT
20X9
Aug.	31	Bal.				23,800

ACCOUNT ACCOUNTS RECEIVABLE						ACCOUNT NO. 12
			JRNL.			BALANCE
DATE		ITEM	REF.	DEBIT	CREDIT	DEBIT	CREDIT
20X9
Aug.	31	Bal.				15,560

ACCOUNT PREPAID RENT						ACCOUNT NO. 13
			JRNL.			BALANCE
DATE		ITEM	REF.	DEBIT	CREDIT	DEBIT	CREDIT
20X9
Aug.	1	Bal.				1,290
	31	Adj.	J.7		240	1,050

ACCOUNT SUPPLIES						ACCOUNT NO. 14
			JRNL.			BALANCE
DATE		ITEM	REF.	DEBIT	CREDIT	DEBIT	CREDIT
20X9
Aug.	1	Bal.				900
	31	Adj.	J.7		340	560

ACCOUNT EQUIPMENT						ACCOUNT NO. 15
			JRNL.			BALANCE
DATE		ITEM	REF.	DEBIT	CREDIT	DEBIT	CREDIT
20X9
Aug.	1	Bal.				15,350

(continued) P 4-5A

Reqs. 1 and 4

ACCOUNT ACCUMULATED DEPRECIATION-EQUIPMENT						ACCOUNT NO. 16
			JRNL.			BALANCE
DATE		ITEM	REF.	DEBIT	CREDIT	DEBIT	CREDIT
20X9
Aug.	1	Bal.					12,800
	31	Adj.	J.7		370		13,170

ACCOUNT BUILDING						ACCOUNT NO. 17
			JRNL.			BALANCE
DATE		ITEM	REF.	DEBIT	CREDIT	DEBIT	CREDIT
20X9
Aug.	1	Bal.				89,900

ACCOUNT ACCUMULATED DEPRECIATION-BUILDING						ACCOUNT NO. 18
			JRNL.			BALANCE
DATE		ITEM	REF.	DEBIT	CREDIT	DEBIT	CREDIT
20X9
Aug.	1	Bal.					28,600
	31	Adj.	J.7		130		28,730

ACCOUNT ACCOUNTS PAYABLE						ACCOUNT NO. 21
			JRNL.			BALANCE
DATE		ITEM	REF.	DEBIT	CREDIT	DEBIT	CREDIT
20X9
Aug.	31	Bal.					4,240

ACCOUNT SALARY PAYABLE						ACCOUNT NO. 22
			JRNL.			BALANCE
DATE		ITEM	REF.	DEBIT	CREDIT	DEBIT	CREDIT
20X9
Aug.	31	Adj.	J.7		460		460

(continued) P 4-5A

Reqs. 1 and 4

ACCOUNT UNEARNED SERVICE REVENUE						ACCOUNT NO. 23
			JRNL.			BALANCE
DATE		ITEM	REF.	DEBIT	CREDIT	DEBIT	CREDIT
20X9
Aug.	1	Bal.					8,900
	31	Adj.	J.7	2,400			6,500

ACCOUNT LOU KRAFT, CAPITAL						ACCOUNT NO. 31
			JRNL.			BALANCE
DATE		ITEM	REF.	DEBIT	CREDIT	DEBIT	CREDIT
20X9
Aug.	1	Bal.					71,920
	31	Clo.	J.7		26,000		97,920
	31	Clo.	J.7	4,800			93,120

ACCOUNT LOU KRAFT, WITHDRAWALS						ACCOUNT NO. 32
			JRNL.			BALANCE
DATE		ITEM	REF.	DEBIT	CREDIT	DEBIT	CREDIT
20X9
Aug.	31	Bal.				4,800
	31	Clo.	J.7		4,800	—

ACCOUNT INCOME SUMMARY						ACCOUNT NO. 33
			JRNL.			BALANCE
DATE		ITEM	REF.	DEBIT	CREDIT	DEBIT	CREDIT
20X9
Aug.	31	Clo.	J.7		29,700		29,700
	31	Clo.	J.7	3,700			26,000
	31	Clo.	J.7	26,000			—

(continued) P 4-5A

Reqs. 1 and 4

ACCOUNT SERVICE REVENUE						ACCOUNT NO. 41
			JRNL.			BALANCE
DATE		ITEM	REF.	DEBIT	CREDIT	DEBIT	CREDIT
20X9
Aug.	31	Bal.					27,300
	31	Adj.	J.7		2,400		29,700
	31	Clo.	J.7	29,700			—

ACCOUNT SALARY EXPENSE						ACCOUNT NO. 51
			JRNL.			BALANCE
DATE		ITEM	REF.	DEBIT	CREDIT	DEBIT	CREDIT
20X9
Aug.	31	Bal.				1,100
	31	Adj.	J.7	460		1,560
	31	Clo.	J.7		1,560	—

ACCOUNT RENT EXPENSE						ACCOUNT NO. 52
			JRNL.			BALANCE
DATE		ITEM	REF.	DEBIT	CREDIT	DEBIT	CREDIT
20X9
Aug.	31	Adj.	J.7	240		240
	31	Clo.	J.7		240	—

ACCOUNT UTILITIES EXPENSE						ACCOUNT NO. 53
			JRNL.			BALANCE
DATE		ITEM	REF.	DEBIT	CREDIT	DEBIT	CREDIT
20X9
Aug.	31	Bal.				410
	31	Clo.	J.7		410	—

(continued) P 4-5A

Reqs. 1 and 4

ACCOUNT DEPRECIATION EXPENSE - EQUIPMENT						ACCOUNT NO. 54
			JRNL.			BALANCE
DATE		ITEM	REF.	DEBIT	CREDIT	DEBIT	CREDIT
20X9
Aug.	31	Adj.	J.7	370		370
	31	Clo.	J.7		370	—

ACCOUNT DEPRECIATION EXPENSE - BUILDING						ACCOUNT NO. 55
			JRNL.			BALANCE
DATE		ITEM	REF.	DEBIT	CREDIT	DEBIT	CREDIT
20X9
Aug.	31	Adj.	J.7	130		130
	31	Clo.	J.7		130	—

ACCOUNT ADVERTISING EXPENSE						ACCOUNT NO. 56
			JRNL.			BALANCE
DATE		ITEM	REF.	DEBIT	CREDIT	DEBIT	CREDIT
20X9
Aug.	31	Bal.				650
	31	Clo.	J.7		650	—

ACCOUNT SUPPLIES EXPENSE						ACCOUNT NO. 57
			JRNL.			BALANCE
DATE		ITEM	REF.	DEBIT	CREDIT	DEBIT	CREDIT
20X9
Aug.	31	Adj.	J.7	340		340
	31	Clo.	J.7		340	—

(continued) P 4-5A

Req. 2 (work sheet)

Allianz Publishing

Work Sheet

Month Ended August 31, 20X9

ACCOUNT TITLE

TRIAL BALANCE

ADJUSTMENTS

ADJUSTED TRIAL BALANCE

INCOME STATEMENT

BALANCE SHEET

DEBIT

CREDIT

DEBIT

CREDIT

DEBIT

CREDIT

DEBIT

CREDIT

DEBIT

CREDIT

Cash

23,800

23,800

23,800

Accounts receivable

15,560

15,560

15,560

Prepaid rent

1,290

(b) 240

1,050

1,050

Supplies

900

(c) 340

560

560

Equipment

15,350

15,350

15,350

Accum. depr. - equipment

12,800

(d) 370

13,170

13,170

Building

89,900

89,900

89,900

Accum. depr. - building

28,600

(e) 130

28,730

28,730

Accounts payable

4,240

4,240

4,240

Salary payable

(f) 460

460

460

Unearned service revenue

8,900

(a) 2,400

6,500

6,500

Lou Kraft, capital

71,920

71,920

71,920

Lou Kraft, withdrawals

4,800

4,800

4,800

Service revenue

27,300

(a) 2,400

29,700

29,700

Salary expense

1,100

(f) 460

1,560

1,560

Rent expense

(b) 240

240

240

Utilities expense

410

410

410

Depreciation expense -

equipment

(d) 370

370

370

Depreciation expense -

building

(e) 130

130

130

Advertising expense

650

650

650

Supplies expense

______

_______

(c) 340

________

340

_________

340

_______

_______

_______

153,760

153,760

3,940

3,940

154,720

154,720

3,700

29,700

151,020

125,020

Net income

26,000

_______

_______

26,000

29,700

29,700

151,020

151,020

(continued) P 4-5A

Req. 3 (financial statements)

Allianz Publishing
Income Statement
Month Ended August 31, 20X9
Revenues:
Service revenue		$29,700
Expenses:
Salary expense	$1,560
Advertising expense	650
Utilities expense	410
Depreciation expense – equipment	370
Supplies expense	340
Rent expense	240
Depreciation expense – building	130
Total expenses		3,700
Net income		$26,000

Allianz Publishing
Statement of Owner’s Equity
Month Ended August 31, 20X9
Lou Kraft, capital, August 1, 20X9		$71,920
Add: Net income		26,000
		97,920
Less: Withdrawals		(4,800)
Lou Kraft, capital, August 31, 20X9		$93,120

(continued) P 4-5A

Req. 3 (financial statements)

Allianz Publishing
Balance Sheet
August 31, 20X9
ASSETS
Current assets:
Cash		$ 23,800
Accounts receivable		15,560
Prepaid rent		1,050
Supplies		560
Total current assets		40,970
Plant assets:
Equipment	$15,350
Less Accumulated depreciation	(13,170)	2,180
Building	$89,900
Less Accumulated depreciation	(28,730)	61,170
Total assets		$104,320
LIABILITIES
Current liabilities:
Accounts payable		$ 4,240
Salary payable		460
Unearned service revenue		6,500
Total current liabilities		11,200
OWNER’S EQUITY
Lou Kraft, capital		93,120
Total liabilities and owner’s equity		$104,320

(continued) P 4-5A

Req. 4 (adjusting and closing entries)

Journal				Page 7
DATE		ACCOUNTS AND EXPLANATIONS	POST. REF.		DEBIT	CREDIT
		Adjusting Entries
20X9
Aug.	31	Unearned Service Revenue	23		2,400
		Service Revenue	41			2,400

	31	Rent Expense	52		240
		Prepaid Rent	13			240

	31	Supplies Expense	57		340
		Supplies	14			340

	31	Depreciation Expense – Equipment	54		370
		Accumulated Depr. – Equipment	16			370

	31	Depreciation Expense – Building	55		130
		Accumulated Depr. – Building	18			130

	31	Salary Expense	51		460
		Salary Payable	22			460

(continued) P 4-5A

Req. 4 (adjusting and closing entries)

Journal				Page 7
DATE		ACCOUNTS AND EXPLANATIONS	POST. REF.		DEBIT	CREDIT
20X9		Closing Entries
Aug.	31	Service Revenue	41		29,700
		Income Summary	33			29,700

	31	Income Summary	33		3,700
		Salary Expense	51			1,560
		Rent Expense	52			240
		Utilities Expense	53			410
		Depreciation Expense – Equipment	54			370
		Depreciation Expense – Building	55			130
		Advertising Expense	56			650
		Supplies Expense	57			340

	31	Income Summary ($29,700 ! $3,700)	33		26,000
		Lou Kraft, Capital	31			26,000

	31	Lou Kraft, Capital	31		4,800
		Lou Kraft, Withdrawals	32			4,800

(continued) P 4-5A

Req. 5 (postclosing trial balance)

Allianz Publishing
Postclosing Trial Balance
August 31, 20X9
ACCOUNT	DEBIT	CREDIT
Cash	$ 23,800
Accounts receivable	15,560
Prepaid rent	1,050
Supplies	560
Equipment	15,350
Accumulated depreciation – equipment		$ 13,170
Building	89,900
Accumulated depreciation – building		28,730
Accounts payable		4,240
Salary payable		460
Unearned service revenue		6,500
Lou Kraft, capital	_________	93,120
Total	$146,220	$146,220

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							Current Year	Prior Year
Current Ratio	=	Total current assets Total current liabilities		=	$8,100 $5,500	=	1.47	1.20

Allianz Publishing
Work Sheet
Month Ended August 31, 20X9
ACCOUNT TITLE	TRIAL BALANCE		ADJUSTMENTS		ADJUSTED TRIAL BALANCE		INCOME STATEMENT		BALANCE SHEET
ACCOUNT TITLE	DEBIT	CREDIT	DEBIT	CREDIT	DEBIT	CREDIT	DEBIT	CREDIT	DEBIT	CREDIT
Cash	23,800				23,800				23,800
Accounts receivable	15,560				15,560				15,560
Prepaid rent	1,290			(b) 240	1,050				1,050
Supplies	900			(c) 340	560				560
Equipment	15,350				15,350				15,350
Accum. depr. - equipment		12,800		(d) 370		13,170				13,170
Building	89,900				89,900				89,900
Accum. depr. - building		28,600		(e) 130		28,730				28,730
Accounts payable		4,240				4,240				4,240
Salary payable				(f) 460		460				460
Unearned service revenue		8,900	(a) 2,400			6,500				6,500
Lou Kraft, capital		71,920				71,920				71,920
Lou Kraft, withdrawals	4,800				4,800				4,800
Service revenue		27,300		(a) 2,400		29,700		29,700
Salary expense	1,100		(f) 460		1,560		1,560
Rent expense			(b) 240		240		240
Utilities expense	410				410		410
Depreciation expense -
equipment			(d) 370		370		370
Depreciation expense -
building			(e) 130		130		130
Advertising expense	650				650		650
Supplies expense	______	_______	(c) 340	________	340	_________	340	_______	_______	_______
	153,760	153,760	3,940	3,940	154,720	154,720	3,700	29,700	151,020	125,020
Net income							26,000	_______	_______	26,000
							29,700	29,700	151,020	151,020