Fundamental-Accounting-Principles-(4)

CompletingtheAccountingCycleChapter4PowerPointEditor:BethKane,MBA,CPA1Copyright©2015McGraw-HillEducation.Allrightsreserved.NoreproductionordistributionwithoutthepriorwrittenconsentofMcGraw-HillEducation.04-P1:BenefitsofaWorkSheet2BenefitsofaWorkSheetAidsthepreparationoffinancialstatements.Reducespossibilityoferrors.Linksaccountsandtheiradjustments.Assistsinplanningandorganizinganaudit.Helpsinpreparinginterimfinancialstatements.Showstheeffectsofproposedtransactions.Notarequiredreport.P13NEED-TO-KNOWThefollowing10-columnworksheetcontainstheyear-endunadjustedtrialbalanceforMagicCompanyasofDecember31,20X2.Completetheworksheetbyenteringthenecessaryadjustments,computingtheadjustedaccountbalances,extendingtheadjustedbalancesintotheappropriatefinancialstatementcolumns,andenteringtheamountofnetincomefortheperiod.Note:TheMagic,Capitalaccountbalancewas$75,000atDecember31,20X1.No.Dr.Cr.Dr.Cr.Dr.Cr.Dr.Cr.Dr.Cr.101Cash13,000106Accountsreceivable8,000183Land85,000201Accountspayable10,000251Long-termnotespayable33,000301Magic,Capital75,000302Magic,Withdrawals20,000401Feesearned70,000622Salariesexpense54,000650Officesuppliesexpense8,000Totals188,000188,000UnadjustedTrialBalanceAdjustmentsAdjustedTrialBalanceIncomeStatementBalanceSheetandStatementofOwner'sEquity1.Prepareandcompletetheworksheet,startingwiththeunadjustedtrialbalanceandincludingadjustmentsbasedonthefollowing.a.Thecompanyhasearned$9,000infeesthatwerenotyetrecordedatyear-end.b.Thecompanyincurred$2,000insalaryexpensethatwasnotyetrecordedatyear-end.(Hint:Forsimplicity,assumeitrecordsanysalarynotyetpaidaspartofaccountspayable.)c.Thelong-termnotepayablewasissuedonDecember31thisyear.Thus,nointeresthasyetaccruedonthisloan.P14a.Thecompanyhasearned$9,000infeesthatwerenotyetrecordedatyear-end.b.Thecompanyincurred$2,000insalaryexpensethatwasnotyetrecordedatyear-end.(Hint:Forsimplicity,assumeitrecordsanysalarynotyetpaidaspartofaccountspayable.)c.Thelong-termnotepayablewasissuedonDecember31thisyear.Thus,nointeresthasyetaccruedonthisloan.No.Dr.Cr.Dr.Cr.Dr.Cr.Dr.Cr.Dr.Cr.101Cash13,00013,00013,000106Accountsreceivable8,000(a)9,00017,00017,000183Land85,00085,00085,000201Accountspayable10,000(b)2,00012,00012,000251Long-termnotespayable33,00033,00033,000301Magic,Capital75,00075,00075,000302Magic,Withdrawals20,00020,00020,000401Feesearned70,000(a)9,00079,00079,000622Salariesexpense54,000(b)2,00056,00056,000650Officesuppliesexpense8,0008,0008,000Totals188,000188,00011,00011,000199,000199,00064,00079,000135,000120,000Netincome15,00015,000Totals79,00079,000135,000135,000UnadjustedTrialBalanceAdjustmentsAdjustedTrialBalanceIncomeStatementBalanceSheetandStatementofOwner'sEquityP15No.Dr.Cr.Dr.Cr.Dr.Cr.Dr.Cr.Dr.Cr.101Cash13,00013,00013,000106Accountsreceivable8,000(a)9,00017,00017,000183Land85,00085,00085,000201Accountspayable10,000(b)2,00012,00012,000251Long-termnotespayable33,00033,00033,000301Magic,Capital75,00075,00075,000302Magic,Withdrawals20,00020,00020,000401Feesearned70,000(a)9,00079,00079,000622Salariesexpense54,000(b)2,00056,00056,000650Officesuppliesexpense8,0008,0008,000Totals188,000188,00011,00011,000199,000199,00064,00079,000135,000120,000Netincome15,00015,000Totals79,00079,000135,000135,000UnadjustedTrialBalanceAdjustmentsAdjustedTrialBalanceIncomeStatementBalanceSheetandStatementofOwner'sEquity2.Useinformationfromthecompletedworksheetinpart1toprepareadjustingentries.DateDebitCreditDec.31AccountsReceivable9,000Feesearned9,000Dec.31Salariesexpense2,000Accountspayable2,000Dec.31NojournalentryrequiredGeneralJournalP16DebitCreditCash$13,000Accountsreceivable17,000Land85,000Accountspayable$12,000Long-termnotespayable33,000Magic,Capital75,000Magic,Withdrawals20,000Feesearned79,000Salariesexpense56,000Officesuppliesexpense8,000Totals$199,000$199,000Feesearned$79,000Magic,Capital,Dec.3120X1$75,000ExpensesPlus:Netincome15,000Salariesexpense$56,000Less:Magic,Withdrawals(20,000)Officesuppliesexpense8,000Magic,Capital,Dec.3120X2$70,00064,000Netincome$15,000Cash$13,000Accountspayable$12,000Accountsreceivable17,000Long-termnotespayable33,000Land85,000Totalliabilities45,000Magic,Capital70,000Totalassets$115,000Totalliabilitiesandequity115,000AssetsLiabilitiesEquityForYearEndedDecember31,20X2ForYearEndedDecember31,20X2MagicCompanyBalanceSheetDecember31,20X2MagicCompanyMagicCompanyIncomeStatementStatementofOwner’sEquity3.Preparetheincomestatementandthestatementofowner’sequityfortheyearendedDecember31andtheunclassifiedbalancesheetatDecember31.P1704-C1:ClosingProcess84-9RecordingClosingEntries1.Resetsrevenue,expense,andwithdrawalaccountbalancestozeroattheendoftheperiod.2.Helpssummarizeaperiod’srevenuesandexpensesintheIncomeSummaryaccount.Identifyaccountsforclosing.Recordandpostclosingentries.Preparepost-closingtrialbalance.C194-10TemporaryAccountsRevenuesIncomeSummaryExpensesWithdrawalsPermanentAccountsAssetsLiabilitiesOwner’sCapitalTemporaryandPermanentAccountsTheclosingprocessappliesonlytotemporaryaccounts.C11004-P2:RecordingClosingEntries114-12RecordingClosingEntriesCloseCreditBalancesin