To download more slides, ebook, solutions and test bank, visit http://downloadslide.blogspot.com CHAPTER Completing the Accounting Cycle ASSIGNMENT CLASSIFICATION TABLE Brief Exercises Do It! Exercises A Problems B Problems 1, 2, 3, 4, 1, 2, 1, 2, 3, 5, 6, 17 1A, 2A, 3A, 4A, 5A 1B, 2B, 3B, 4B, 5B Explain the process of closing the books 6, 7, 11, 12 4, 5, 4, 7, 8, 11, 19 1A, 2A, 3A, 4A, 5A 1B, 2B, 3B, 4B, 5B *3 Describe the content and purpose of a post-closing trial balance 8, 1, 4, 7, 1A, 2A, 3A, 4A, 5A 1B, 2B, 3B, 4B, 5B *4 State the required steps in the accounting cycle 10, 11, 12 2, 10, 19 5A 5B *5 Explain the approaches to preparing correcting entries 13 12, 13 6A *6 Identify the sections of a classified balance sheet 14, 15, 16, 17, 18, 19 10, 11 3, 9, 14, 15, 16, 17 1A, 2A, 3A, 4A, 5A *7 Prepare reversing entries 10, 20, 21 12 18, 19 Study Objectives Questions *1 Prepare a worksheet *2 1B, 2B, 3B, 4B, 5B *Note: All asterisked Questions, Exercises, and Problems relate to material contained in the appendix *to the chapter Copyright © 2009 John Wiley & Sons, Inc Weygandt, Accounting Principles, 9/e, Solutions Manual (For Instructor Use Only) 4-1 To download more slides, ebook, solutions and test bank, visit http://downloadslide.blogspot.com ASSIGNMENT CHARACTERISTICS TABLE Problem Number Description Difficulty Level Time Allotted (min.) Simple 40–50 1A Prepare worksheet, financial statements, and adjusting and closing entries 2A Complete worksheet; prepare financial statements, closing entries, and post-closing trial balance Moderate 50–60 3A Prepare financial statements, closing entries, and postclosing trial balance Moderate 40–50 4A Complete worksheet; prepare classified balance sheet, entries, and post-closing trial balance Moderate 50–60 5A Complete all steps in accounting cycle Complex 70–90 6A Analyze errors and prepare correcting entries and trial balance Moderate 40–50 1B Prepare worksheet, financial statements, and adjusting and closing entries Simple 40–50 2B Complete worksheet; prepare financial statements, closing entries, and post-closing trial balance Moderate 50–60 3B Prepare financial statements, closing entries, and postclosing trial balance Moderate 40–50 4B Complete worksheet; prepare classified balance sheet, entries, and post-closing trial balance Moderate 50–60 5B Complete all steps in accounting cycle Complex 70–90 Comprehensive Problem: Chapters to 4-2 Copyright © 2009 John Wiley & Sons, Inc Weygandt, Accounting Principles, 9/e, Solutions Manual (For Instructor Use Only) To download more slides, ebook, solutions and test bank, visit http://downloadslide.blogspot.com WEYGANDT ACCOUNTING PRINCIPLES 9E CHAPTER COMPLETING THE ACCOUNTING CYCLE Number SO BT Difficulty Time (min.) BE1 K Simple 2–4 BE2 AN Moderate 6–8 BE3 C Simple 3–5 BE4 AP Simple 3–5 BE5 AP Simple 4–6 BE6 AP Simple 6–8 BE7 C Simple 2–4 BE8 K Simple 3–5 BE9 AN Moderate 4–6 BE10 AP Simple 4–6 BE11 C Simple 3–5 BE12 AN Moderate 4–6 DI1 C Simple 4–6 DI2 AP Simple 2–4 DI3 AP Simple 6–8 DI4 C Simple 4–6 EX1 AP Simple 12–15 EX2 AP Simple 10–12 EX3 1, AP Simple 12–15 EX4 2, AP Simple 12–15 EX5 AN Simple 10–12 EX6 AN Moderate 12–15 EX7 2, AP Simple 8–10 EX8 2, AP Simple 10–12 EX9 AP Simple 12–15 EX10 C Simple 3–5 EX11 AP Simple 6–8 EX12 AN Moderate 8–10 EX13 AN Moderate 4–6 EX14 AP Moderate 10–12 EX15 C Simple 5–8 EX16 AP Simple 8–10 Copyright © 2009 John Wiley & Sons, Inc Weygandt, Accounting Principles, 9/e, Solutions Manual (For Instructor Use Only) 4-3 To download more slides, ebook, solutions and test bank, visit http://downloadslide.blogspot.com COMPLETING THE ACCOUNTING CYCLE (Continued) Number SO BT Difficulty Time (min.) EX17 1, AP Simple 12–15 EX18 AN Moderate 5–7 EX19 2, 4, AN Moderate 10–12 P1A 1-3, AN Simple 40–50 P2A 1-3, AP Moderate 50–60 P3A 1-3, AP Moderate 40–50 P4A 1-3, AN Moderate 50–60 P5A 1-4, AN Complex 70–90 P6A AN Moderate 40–50 P1B 1-3, AN Simple 40–50 P2B 1-3, AP Moderate 50–60 P3B 1-3, AP Moderate 40–50 P4B 1-3, AN Moderate 50–60 P5B 1-4, AN Complex 70–90 BYP1 AN Simple 10–12 BYP2 AN Simple 8–10 BYP3 — E Simple 10–12 BYP4 AN Moderate 15–20 BYP5 C Simple 15–20 BYP6 — E Moderate 10–15 BYP7 AP Moderate 12–16 4-4 Copyright © 2009 John Wiley & Sons, Inc Weygandt, Accounting Principles, 9/e, Solutions Manual (For Instructor Use Only) Copyright © 2009 John Wiley & Sons, Inc Weygandt, Accounting Principles, 9/e, Solutions Manual Explain the approaches to preparing correcting entries Identify the sections of a classified balance sheet *5 *6 Broadening Your Perspective Prepare reversing entries State the required steps in the accounting cycle *4 *7 Describe the content and purpose of a post-closing trial balance Explain the process of closing the books *2 *3 Prepare a worksheet *1 Study Objective Q4-14 Q4-15 Q4-16 Q4-11 Q4-12 BE4-8 Q4-6 Q4-11 Q4-12 BE4-1 Knowledge Communication Q4-10 Q4-20 All About You Q4-19 BE4-10 DI4-3 E4-3 E4-9 E4-14 Q4-17 Q4-18 BE4-11 DI4-4 E4-15 Financial Reporting Comparative Analysis Decision Making Across the Organization E4-18 E4-19 P4-4B P4-5B P4-5B P4-5A P4-1B P4-4B P4-5B Analysis Q4-21 BE4-12 P4-1A P4-4A P4-5A P4-1B P4-4B P4-5B BE4-9 E4-12 E4-13 P4-6A DI4-2 Q4-13 E4-16 E4-17 P4-2A P4-3A P4-2B P4-3B E4-19 P4-5A P4-5B Q4-10 E4-10 P4-3A P4-1A P4-2B P4-4A P4-3B P4-5A P4-1B E4-4 E4-7 E4-8 P4-2A Q4-8 Q4-9 BE4-7 E4-19 P4-1A P4-4A P4-5A P4-1B P4-4B P4-3A BE4-2 P4-2B E4-5 P4-3B E4-6 P4-1A P4-4A E4-11 P4-2A P4-3A P4-2B P4-3B E4-1 E4-2 E4-3 E4-17 P4-2A BE4-4 BE4-5 BE4-6 E4-4 E4-7 E4-8 BE4-3 DI4-1 Application Q4-7 Q4-1 Q4-2 Q4-3 Q4-4 Q4-5 Comprehension Synthesis Exploring the Web Ethics Case Evaluation Correlation Chart between Bloom’s Taxonomy, Study Objectives and End-of-Chapter Exercises and Problems To download more slides, ebook, solutions and test bank, visit http://downloadslide.blogspot.com BLOOM’S TAXONOMY TABLE (For Instructor Use Only) 4-5 To download more slides, ebook, solutions and test bank, visit http://downloadslide.blogspot.com ANSWERS TO QUESTIONS No A worksheet is not a permanent accounting record The use of a worksheet is an optional step in the accounting cycle The worksheet is merely a device used to make it easier to prepare adjusting entries and the financial statements The amount shown in the adjusted trial balance column for an account equals the account balance in the ledger after adjusting entries have been journalized and posted The net income of $12,000 will appear in the income statement debit column and the balance sheet credit column A net loss will appear in the income statement credit column and the balance sheet debit column Formal financial statements are needed because the columnar data are not properly arranged and classified for statement purposes For example, a drawing account is listed with assets (1) (2) (3) (4) Income Summary is a temporary account that is used in the closing process The account is debited for expenses and credited for revenues The difference, either net income or loss, is then closed to the owner’s capital account The post-closing trial balance contains only balance sheet accounts Its purpose is to prove the equality of the permanent account balances that are carried forward into the next accounting period The accounts that will not appear in the post-closing trial balance are Depreciation Expense; Jennifer Shaeffer, Drawing; and Service Revenue 10 A reversing entry is the exact opposite, both in amount and in account titles, of an adjusting entry and is made at the beginning of the new accounting period Reversing entries are an optional step in the accounting cycle 11 The steps that involve journalizing are: (1) journalize the transactions, (2) journalize the adjusting entries, and (3) journalize the closing entries 12 The three trial balances are the: (1) trial balance, (2) adjusted trial balance, and (3) post-closing trial balance 13 Correcting entries differ from adjusting entries because they: (1) are not a required part of the accounting cycle, (2) may be made at any time, and (3) may affect any combination of accounts 4-6 (Dr) Individual revenue accounts and (Cr) Income Summary (Dr) Income Summary and (Cr) Individual expense accounts (Dr) Income Summary and (Cr) Owner’s Capital (for net income) (Dr) Owner’s Capital and (Cr) Owner’s Drawing Copyright © 2009 John Wiley & Sons, Inc Weygandt, Accounting Principles, 9/e, Solutions Manual (For Instructor Use Only) To download more slides, ebook, solutions and test bank, visit http://downloadslide.blogspot.com Questions Chapter (Continued) *14 The standard classifications in a balance sheet are: Assets Current Assets Long-term Investments Property, Plant, and Equipment Intangible Assets Liabilities and Owner’s Equity Current Liabilities Long-term Liabilities Owner’s Equity *15 A company’s operating cycle is the average time required to go from cash to cash in producing revenues The operating cycle of a company is the average time that it takes to purchase inventory, sell it on account, and then collect cash from customers *16 Current assets are assets that a company expects to convert to cash or use up in one year Some companies use a period longer than one year to classify assets and liabilities as current because they have an operating cycle longer than one year Companies usually list current assets in the order in which they expect to convert them into cash *17 Long-term investments are generally investments in stocks and bonds of other companies that are normally held for many years Property, plant, and equipment are assets with relatively long useful lives that a company is currently using in operating the business *18 (a) (b) The owner’s equity section for a corporation is called stockholders’ equity The two accounts and the purpose of each are: (1) Capital stock is used to record investments of assets in the business by the owners (stockholders) (2) Retained earnings is used to record net income retained in the business *19 PepsiCo’s current liabilities at December 29, 2007 and December 30, 2006 were $7,753 million and $6,860 million respectively PepsiCo’s current liabilities were significantly lower than its current assets in both years *20 After reversing entries have been made, the balances will be Interest Payable, zero balance; Interest Expense, a credit balance *21 (a) Jan 10 Salaries Expense Cash 8,000 8,000 Because of the January reversing entry that credited Salaries Expense for $3,500, Salaries Expense will have a debit balance of $4,500 which equals the expense for the current period (b) Jan 10 Salaries Payable Salaries Expense Cash 3,500 4,500 8,000 Note that Salaries Expense will again have a debit balance of $4,500 Copyright © 2009 John Wiley & Sons, Inc Weygandt, Accounting Principles, 9/e, Solutions Manual (For Instructor Use Only) 4-7 To download more slides, ebook, solutions and test bank, visit http://downloadslide.blogspot.com SOLUTIONS TO BRIEF EXERCISES BRIEF EXERCISE 4-1 The steps in using a worksheet are performed in the following sequence: (1) prepare a trial balance on the worksheet, (2) enter adjustment data, (3) enter adjusted balances, (4) extend adjusted balances to appropriate statement columns and (5) total the statement columns, compute net income (loss), and complete the worksheet Filling in the blanks, the answers are 1, 3, 4, 5, The solution to BRIEF EXERCISE 4-2 is on page 4-9 BRIEF EXERCISE 4-3 Account Accumulated Depreciation Depreciation Expense N Batan, Capital N Batan, Drawing Service Revenue Supplies Accounts Payable Income Statement Dr Cr Balance Sheet Dr Cr X X X X X X X BRIEF EXERCISE 4-4 Dec 31 31 31 31 4-8 Service Revenue Income Summary 50,000 Income Summary Salaries Expense Supplies Expense 31,000 Income Summary D Swann, Capital 19,000 D Swann, Capital D Swann, Drawing 2,000 Copyright © 2009 John Wiley & Sons, Inc 50,000 27,000 4,000 19,000 Weygandt, Accounting Principles, 9/e, Solutions Manual 2,000 (For Instructor Use Only) Copyright © 2009 John Wiley & Sons, Inc Prepaid Insurance Service Revenue Salaries Expense Accounts Receivable Salaries Payable Insurance Expense Account Titles 25,000 3,000 Dr 58,000 Cr Trial Balance (a) 1,200 (c) 800 (b) 1,100 Dr (c) 800 1,800 (a) 1,200 (b) 1,100 1,200 25,800 1,100 Dr 800 59,100 Cr Adjusted Trial Balance Cr Adjustments LEY COMPANY Worksheet 1,200 25,800 Dr 59,100 Cr Income Statement 1,100 1,800 Dr 800 Cr Balance Sheet To download more slides, ebook, solutions and test bank, visit http://downloadslide.blogspot.com BRIEF EXERCISE 4-2 Weygandt, Accounting Principles, 9/e, Solutions Manual (For Instructor Use Only) 4-9 To download more slides, ebook, solutions and test bank, visit http://downloadslide.blogspot.com BRIEF EXERCISE 4-5 Salaries Expense Bal 27,000 (2) 27,000 Income Summary (2) 31,000 (1) 50,000 (3) 19,000 50,000 50,000 Service Revenue (1) 50,000 Bal 50,000 Supplies Expense Bal 4,000 (2) 4,000 D Swann, Capital (4) 2,000 Bal 30,000 (3) 19,000 Bal 47,000 D Swann, Drawing Bal 2,000 (4) 2,000 BRIEF EXERCISE 4-6 July 31 31 Date 7/31 7/31 Date 7/31 7/31 4-10 Green Fee Revenue Income Summary 13,600 Income Summary Salaries Expense Maintenance Expense 10,700 Explanation Balance Closing entry Green Fee Revenue Ref Debit Explanation Balance Closing entry Copyright © 2009 John Wiley & Sons, Inc 13,600 8,200 2,500 Credit 13,600 Balance 13,600 Credit Balance 8,200 13,600 Salaries Expense Ref Debit 8,200 8,200 Weygandt, Accounting Principles, 9/e, Solutions Manual (For Instructor Use Only) To download more slides, ebook, solutions and test bank, visit http://downloadslide.blogspot.com COMPREHENSIVE PROBLEM (Continued) Date July 31 Date July 18 Date July 31 Date July 31 31 Date July 31 31 Date July 31 31 31 4-88 Accumulated Depreciation—Equipment Explanation Ref Debit Credit Adjusting J2 200 Explanation Accounts Payable Ref Debit J1 J1 J1 1,400 Salaries Payable Ref Debit J2 Explanation Adjusting Explanation Closing Closing Explanation Closing Explanation Closing Closing Closing Julie Molony, Capital Ref Debit J1 J3 J3 600 Julie Molony, Drawing Ref Debit J1 600 J3 Income Summary Ref Debit J3 J3 3,550 J3 3,050 Copyright © 2009 John Wiley & Sons, Inc Credit 7,000 800 Credit 500 Credit 14,000 3,050 Credit 600 Credit 6,600 Weygandt, Accounting Principles, 9/e, Solutions Manual No 158 Balance 200 No 201 Balance 7,000 7,800 6,400 No 212 Balance 500 No 301 Balance 14,000 17,050 16,450 No 306 Balance 600 No 350 Balance 6,600 3,050 (For Instructor Use Only) To download more slides, ebook, solutions and test bank, visit http://downloadslide.blogspot.com COMPREHENSIVE PROBLEM (Continued) Date July 12 25 31 31 Date July 31 31 Explanation Adjusting Closing Explanation Closing Service Revenue Ref Debit J1 J1 J2 J3 6,600 Gas & Oil Expense Ref Debit J1 400 J3 Date July 31 31 Cleaning Supplies Expense Explanation Ref Debit Adjusting J2 700 Closing J3 Date July 31 31 Explanation Adjusting Closing Depreciation Expense Ref Debit J2 200 J3 Explanation Adjusting Closing Insurance Expense Ref Debit J2 150 J3 Date July 31 31 Date July 20 31 31 Explanation Adjusting Closing Copyright © 2009 John Wiley & Sons, Inc Salaries Expense Ref Debit J1 1,600 J2 500 J3 Weygandt, Accounting Principles, 9/e, Solutions Manual Credit 3,800 1,500 1,300 No 400 Balance 3,800 5,300 6,600 Credit No 633 Balance 400 400 Credit 700 Credit 200 Credit 150 Credit 2,100 No 634 Balance 700 No 711 Balance 200 No 722 Balance 150 No 726 Balance 1,600 2,100 (For Instructor Use Only) 4-89 To download more slides, ebook, solutions and test bank, visit http://downloadslide.blogspot.com COMPREHENSIVE PROBLEM (Continued) (d) JULIE’S MAIDS CLEANING SERVICE Income Statement For the Month Ended July 31, 2010 Revenues Service revenue Expenses Salaries expense Cleaning supplies expense Gas & oil expense Depreciation expense Insurance expense Total expenses Net income $6,600 $2,100 700 400 200 150 3,550 $3,050 JULIE’S MAIDS CLEANING SERVICE Statement of Owner’s Equity For the Month Ended July 31, 2010 Julie Molony, Capital, July Add: Investments Net income $ $14,000 3,050 Less: Drawings Julie Molony, Capital, July 31 4-90 Copyright © 2009 John Wiley & Sons, Inc Weygandt, Accounting Principles, 9/e, Solutions Manual 17,050 17,050 600 $16,450 (For Instructor Use Only) To download more slides, ebook, solutions and test bank, visit http://downloadslide.blogspot.com COMPREHENSIVE PROBLEM (Continued) JULIE’S MAIDS CLEANING SERVICE Balance Sheet July 31, 2010 Assets Current assets Cash Accounts receivable Cleaning supplies Prepaid insurance Total current assets Capital assets Equipment Less: Accumulated depreciation Total assets $6,600 5,200 100 1,650 $13,550 10,000 200 9,800 $23,350 Liabilities and Owner’s Equity Current liabilities Accounts payable Salaries payable Total current liabilities Owner’s equity Julie Molony, Capital Total liabilities and owner’s equity Copyright © 2009 John Wiley & Sons, Inc Weygandt, Accounting Principles, 9/e, Solutions Manual $6,400 500 $ 6,900 16,450 $23,350 (For Instructor Use Only) 4-91 To download more slides, ebook, solutions and test bank, visit http://downloadslide.blogspot.com COMPREHENSIVE PROBLEM (Continued) (e) Date July 31 31 31 31 31 General Journal Account Titles and Explanation Accounts Receivable Service Revenue Ref 112 400 Debit 1,300 Depreciation Expense Accumulated Depreciation— Equipment 711 200 Insurance Expense Prepaid Insurance 722 130 150 Cleaning Supplies Expense Cleaning Supplies 634 128 700 Salaries Expense Salaries Payable 726 212 500 J2 Credit 1,300 158 200 150 700 500 (f) Date July 31 31 31 31 4-92 General Journal Account Titles and Explanation Service Revenue Income Summary Ref 400 350 Debit 6,600 Income Summary Salaries Expense Depreciation Expense Insurance Expense Cleaning Supplies Expense Gas & Oil Expense 350 726 711 722 634 633 3,550 Income Summary Julie Molony, Capital 350 301 3,050 Julie Molony, Capital Julie Molony, Drawing 301 306 600 Copyright © 2009 John Wiley & Sons, Inc J3 Credit 6,600 2,100 200 150 700 400 3,050 Weygandt, Accounting Principles, 9/e, Solutions Manual 600 (For Instructor Use Only) To download more slides, ebook, solutions and test bank, visit http://downloadslide.blogspot.com COMPREHENSIVE PROBLEM (Continued) (g) JULIE’S MAIDS CLEANING SERVICE Post-Closing Trial Balance July 31, 2010 Cash Accounts Receivable Cleaning Supplies Prepaid Insurance Equipment Accumulated Depreciation—Equipment Accounts Payable Salaries Payable Julie Molony, Capital Debit $ 6,600 5,200 100 1,650 10,000 $ $23,550 Copyright © 2009 John Wiley & Sons, Inc Weygandt, Accounting Principles, 9/e, Solutions Manual Credit 200 6,400 500 16,450 $23,550 (For Instructor Use Only) 4-93 To download more slides, ebook, solutions and test bank, visit http://downloadslide.blogspot.com BYP 4-1 FINANCIAL REPORTING PROBLEM (a) Total current assets were $10,151 million at December 29, 2007, and $9,130 million at December 30, 2006 (b) Current assets are properly listed in the order of liquidity As you will learn in the next chapter, inventory is considered to be less liquid than receivables Thus, it is listed below receivables and before prepaid expenses and other current assets (c) The asset classifications are similar to the text: (1) current assets, (2) property, plant, and equipment, (3) intangible assets, and (4) investments (d) Cash equivalents are investments with original maturities of months or less that PepsiCo does not intend to rollover beyond three months (e) Total current liabilities were $7,753 million at December 29, 2007, and $6,860 million at December 30, 2006 4-94 Copyright © 2009 John Wiley & Sons, Inc Weygandt, Accounting Principles, 9/e, Solutions Manual (For Instructor Use Only) To download more slides, ebook, solutions and test bank, visit http://downloadslide.blogspot.com BYP 4-2 (a) COMPARATIVE ANALYSIS PROBLEM (in millions) PepsiCo Coca-Cola Total current assets Net property, plant & equipment Total current liabilities Total stockholders’ (shareholders’) equity 10,151 11,228 7,753 17,234 12,105 8,493 13,225 21,744 (b) Current assets are cash and other resources that are reasonably expected to be realized in cash or sold or consumed within one year or the company’s operating cycle, whichever is longer Current liabilities are obligations that are reasonably expected to be paid from existing current assets or through the creation of other current liabilities PepsiCo’s current assets were 31% greater than its current liabilities, but Coca-Cola’s current assets were 8% less than its current liabilities From this information, it appears that PepsiCo is in a better liquidity position than Coca-Cola Coca-Cola’s stockholders’ equity represents a slightly larger percent    age of total assets 50.3%  $21,744  than PepsiCo’s 49.8%  $17,234  As a  $43,269   $34,628  result, Coca-Cola has less debt relative to its total assets than PepsiCo It therefore appears that Coca-Cola is less likely to default on a debt obligation Copyright © 2009 John Wiley & Sons, Inc Weygandt, Accounting Principles, 9/e, Solutions Manual (For Instructor Use Only) 4-95 To download more slides, ebook, solutions and test bank, visit http://downloadslide.blogspot.com BYP 4-3 EXPLORING THE WEB The solution is dependent upon the companies chosen by the student 4-96 Copyright © 2009 John Wiley & Sons, Inc Weygandt, Accounting Principles, 9/e, Solutions Manual (For Instructor Use Only) To download more slides, ebook, solutions and test bank, visit http://downloadslide.blogspot.com BYP 4-4 (a) DECISION MAKING ACROSS THE ORGANIZATION WHITEGLOVES JANITORIAL SERVICE Balance Sheet December 31, 2010 Assets Current assets Cash Accounts receivable ($9,000 + $3,700) Janitorial supplies ($5,200 – $2,700) Prepaid insurance ($4,800 X 2/3) Total current assets Property, plant, and equipment Cleaning equipment ($22,000 + $4,000) Less: Accum depreciation— cleaning equipment ($4,000 + $2,000) Delivery trucks ($34,000 + $5,000) Less: Accum depreciation— delivery trucks ($5,000 + $5,000) Total assets $ 6,500 12,700 2,500 3,200 $24,900 $26,000 6,000 $20,000 39,000 10,000 29,000 49,000 $73,900 Liabilities and Owner’s Equity Current liabilities Notes payable due within one year $10,000 Accounts payable ($2,500 + $500) 3,000 Interest payable ($25,000 X 10% X 6/12) 1,250 Total current liabilities Long-term liabilities Notes payable, due July 1, 2012 Total liabilities Owner’s equity Nancy Kohl, Capital Total liabilities and owner’s equity Copyright © 2009 John Wiley & Sons, Inc Weygandt, Accounting Principles, 9/e, Solutions Manual $14,250 15,000 29,250 44,650* $73,900 (For Instructor Use Only) 4-97 To download more slides, ebook, solutions and test bank, visit http://downloadslide.blogspot.com BYP 4-4 (Continued) WHITEGLOVES JANITORIAL SERVICE Balance Sheet (Continued) December 31, 2010 *Capital balance as reported Add: Earned but unbilled fees Less: Janitorial supplies used Insurance expired ($4,800 X 1/3) Depreciation ($2,000 + $5,000) Expenses incurred but unpaid Interest accrued Total Capital balance as adjusted $54,000 3,700 57,700 $2,700 1,600 7,000 500 1,250 13,050 $44,650 (b) Whitegloves Janitorial Service met the terms of the bank loan because current assets exceed current liabilities by $10,650 ($24,900 – $14,250) at December 31, 2010 4-98 Copyright © 2009 John Wiley & Sons, Inc Weygandt, Accounting Principles, 9/e, Solutions Manual (For Instructor Use Only) To download more slides, ebook, solutions and test bank, visit http://downloadslide.blogspot.com BYP 4-5 COMMUNICATION ACTIVITY MEMO To: Accounting Instructor From: Student Re: Accounting Cycle The required steps in the accounting cycle, in the order in which they should be completed, are: Analyze business transactions Journalize the transactions Post to ledger accounts Prepare a trial balance Journalize and post adjusting entries Prepare an adjusted trial balance Prepare financial statements Journalize and post closing entries Prepare a post-closing trial balance The optional steps in the accounting cycle include preparing a worksheet and preparing reversing entries If a worksheet is prepared, it is done after step above, and it includes steps and The worksheet is a form used to make it easier to prepare adjusting entries and financial statements If reversing entries are prepared, they are journalized and posted after step 9, at the beginning of the next accounting period A reversing entry is the exact opposite of a previously recorded adjusting entry and simplifies the recording of subsequent transactions Copyright © 2009 John Wiley & Sons, Inc Weygandt, Accounting Principles, 9/e, Solutions Manual (For Instructor Use Only) 4-99 To download more slides, ebook, solutions and test bank, visit http://downloadslide.blogspot.com BYP 4-6 ETHICS CASE (a) The stakeholders in this case are: You, as controller Jerry McNabb, president Users of the company’s financial statements (b) The ethical issue is the continued circulation of significantly misstated financial statements As controller, you have just issued misleading financial statements You have acted ethically by telling the company’s president The president has reacted unethically by allowing the misleading financial statements to continue to circulate (c) As controller, you should impress upon the president the consequences of having those misleading financial statements be detected by some user or the SEC (if you are a public company) Also stress upon him that you have a professional obligation to correct the statements or to resign 4-100 Copyright © 2009 John Wiley & Sons, Inc Weygandt, Accounting Principles, 9/e, Solutions Manual (For Instructor Use Only) To download more slides, ebook, solutions and test bank, visit http://downloadslide.blogspot.com BYP 4-7 ALL ABOUT YOU ACTIVITY The following is a personal balance sheet using the classified presentation Note that the earnings from the part-time job as well as the tuition costs are not listed since neither of those items is an asset, liability, or equity item Assets Current assets Cash Money market account Certificate of deposit Accounts receivable from brother Total current assets $1,200 1,800 3,000 300 Property, plant, and equipment Automobile Video and stereo equipment Home computer Total assets 7,000 1,250 800 $ 6,300 9,050 $15,350 Liabilities and Owner’s Equity Current liabilities Current portion of automobile loan Current portion of credit card payable Total current liabilities Long-term liabilities Automobile loan Student loan Credit card payable Total long-term liabilities Total liabilities Owner’s equity M Y Own, Capital ($15,350 – $12,300) Total liabilities and owner’s equity Copyright © 2009 John Wiley & Sons, Inc Weygandt, Accounting Principles, 9/e, Solutions Manual $1,500 150 $ 1,650 4,000 5,000 1,650 10,650 12,300 3,050 $15,350 (For Instructor Use Only) 4-101 To download more slides, ebook, solutions and test bank, visit http://downloadslide.blogspot.com ... Sons, Inc Weygandt, Accounting Principles, 9/e, Solutions Manual (For Instructor Use Only) Copyright © 2009 John Wiley & Sons, Inc Weygandt, Accounting Principles, 9/e, Solutions Manual Explain the... 50–60 P5B 1-4, AN Complex 70–90 BYP1 AN Simple 10–12 BYP2 AN Simple 8–10 BYP3 — E Simple 10–12 BYP4 AN Moderate 15–20 BYP5 C Simple 15–20 BYP6 — E Moderate 10–15 BYP7 AP Moderate 12–16 4-4 Copyright... Weygandt, Accounting Principles, 9/e, Solutions Manual (For Instructor Use Only) 4-3 To download more slides, ebook, solutions and test bank, visit http://downloadslide.blogspot.com COMPLETING THE ACCOUNTING