Chapter 4

Completing the Accounting Cycle

PROBLEMS: SET B
Prepare worksheet, financial
statements, and adjusting
and closing entries.

P4-1B Michael Pevnick began operations as a private investigator on January 1, 2014. The
trial balance columns of the worksheet for Michael Pevnick, P.I., at March 31 are as follows.
MICHAEL PEVNICK, P.I.
Worksheet
For the Quarter Ended March 31, 2014

(LO 1, 2, 3, 6), AN

Trial Balance
Account Titles
Cash
Accounts Receivable
Supplies
Prepaid Insurance
Equipment

Dr.

Cr.

11,400
5,620
1,050
2,400
30,000
Trial Balance

Account Titles
Notes Payable
Accounts Payable
Owners Capital
Owners Drawings
Service Revenue
Salaries and Wages Expense
Travel Expense
Rent Expense
Miscellaneous Expense

Dr.

Cr.
10,000
12,350
20,000

600
13,620
2,200
1,300
1,200
200
55,970

55,970

Other data:
1.
2.
3.
4.
5.
(a) Adjusted trial balance
$58,100
(b) Net income $7,480
Total assets $49,530

Complete worksheet; prepare

financial statements, closing
entries, and post-closing trial
balance.

Supplies on hand total $480.

Depreciation is $800 per quarter.
Interest accrued on 6-month note payable, issued January 1, $300.
Insurance expires at the rate of $200 per month.
Services performed but unbilled at March 31 total $1,030.

Instructions
(a) Enter the trial balance on a worksheet and complete the worksheet.
(b) Prepare an income statement and owners equity statement for the quarter and a
classified balance sheet at March 31. M. Pevnick did not make any additional
investments in the business during the quarter ended March 31, 2014.
(c) Journalize the adjusting entries from the adjustments columns of the worksheet.
(d) Journalize the closing entries from the financial statement columns of the worksheet.
P4-2B The adjusted trial balance columns of the worksheet for Greenwood Company are
as follows.
GREENWOOD COMPANY
Worksheet
For the Year Ended December 31, 2014

(LO 1, 2, 3, 6), AP

Account
No.
101
112

P-10

Adjusted
Trial Balance
Account Titles
Cash
Accounts Receivable

Dr.
18,800
16,200

Cr.

Problems: Set B
126
130
157
158
200
201
212
306
400
610
631
711
722
726
905

Supplies
Prepaid Insurance
Equipment
Accumulated DepreciationEquipment
Notes Payable
Accounts Payable
Salaries and Wages Payable
Owners Drawings
Service Revenue
Advertising Expense
Supplies Expense
Depreciation Expense
Insurance Expense
Salaries and Wages Expense
Interest Expense
Totals

P-11

2,300
4,400
46,000
20,000
20,000
8,000
2,600
12,000
87,800
10,000
3,700
8,000
4,000
39,000
1,000
165,400

165,400

Instructions
(a) Complete the worksheet by extending the balances to the financial statement columns.
(b) Prepare an income statement, owners equity statement, and a classified balance sheet.
(Note: $5,000 of the notes payable become due in 2015.) T. Greenwood did not make
any additional investments in the business during 2014.
(c) Prepare the closing entries. Use J14 for the journal page.
(d) Post the closing entries. Use the three-column form of account. Income Summary is
account No. 350.
(e) Prepare a post-closing trial balance.
P4-3B The completed financial statement columns of the worksheet for Niho Company
are shown below.

(a) Net income $22,100

(b) Current assets $41,700
Current liabilities $16,600

(e) Post-closing trial balance

$87,700
Prepare financial statements,
closing entries, and postclosing trial balance.

(LO 1, 2, 3, 6), AP
NIHO COMPANY
Worksheet
For the Year Ended December 31, 2014
Account
No.

Account Titles

101
112
130
157
158
201
212
301
306
400
622
711
722
726
732

Cash
Accounts Receivable
Prepaid Insurance
Equipment
Accumulated DepreciationEquip.
Accounts Payable
Salaries and Wages Payable
Owners Capital
Owners Drawings
Service Revenue
Maintenance and Repairs Expense
Depreciation Expense
Insurance Expense
Salaries and Wages Expense
Utilities Expense
Totals
Net Loss

Income Statement
Dr.
Cr.

Balance Sheet
Dr.
Cr.
6,200
7,500
1,800
33,000
8,600
11,700
3,000
34,000
7,200

46,000
4,400
2,800
1,200
35,200
4,000
47,600

46,000
1,600

55,700
1,600

57,300

47,600

47,600

57,300

57,300

Instructions
(a) Prepare an income statement, owners equity statement, and a classified balance sheet.
S. Niho made an additional investment in the business of $4,000 during 2014.
(b) Prepare the closing entries.

(a) Net loss $1,600

Ending capital $25,200
Total assets $39,900

P-12

4 Completing the Accounting Cycle

(d) Post-closing trial balance

$48,500
Complete worksheet; prepare
classified balance sheet,
entries, and post-closing trial
balance.

(c) Post the closing entries and underline and balance the accounts. (Use T-accounts.)
Income Summary is account No. 350.
(d) Prepare a post-closing trial balance.
P4-4B Avalon Amusement Park has a fiscal year ending on September 30. Selected data
from the September 30 worksheet are presented below.
AVALON AMUSEMENT PARK
Worksheet
For the Year Ended September 30, 2014

(LO 1, 2, 3, 6), AN

Trial Balance
Dr.
Cash
Supplies
Prepaid Insurance
Land
Equipment

Cr.

41,400
18,600
31,900
80,000
120,000

Dr.

Totals

Totals

(a) Net income $44,000

(b) Total current assets
$54,500
(e) Post-closing trial balance
$254,500
Complete all steps in
accounting cycle.

(LO 1, 2, 3, 4, 6), AN

Cr.

Cr.

Adjusted
Trial Balance
Dr.

36,200
14,600
3,700
50,000
109,700
14,000

Cr.
42,200
14,600
1,000
50,000
109,700

14,000
277,500

105,000
30,500
9,400
16,900
18,000
6,000
491,700

Insurance Expense
Supplies Expense
Interest Payable
Depreciation Expense
Property Taxes Payable

Dr.
41,400
2,200
10,900
80,000
120,000

Trial Balance
Accumulated DepreciationEquip.
Accounts Payable
Unearned Ticket Revenue
Mortgage Payable
Owners Capital
Owners Drawings
Ticket Revenue
Salaries and Wages Expense
Maintenance and Repairs Expense
Advertising Expense
Utilities Expense
Property Tax Expense
Interest Expense

Adjusted
Trial Balance

280,200
105,000
30,500
9,400
16,900
21,000
10,000

491,700
21,000
16,400
4,000
6,000
3,000
504,700

504,700

Instructions
(a) Prepare a complete worksheet.
(b) Prepare a classified balance sheet. (Note: $15,000 of the mortgage note payable is due
for payment in the next fiscal year.)
(c) Journalize the adjusting entries using the worksheet as a basis.
(d) Journalize the closing entries using the worksheet as a basis.
(e) Prepare a post-closing trial balance.
P4-5B Gillian Shaw opened Shaws Carpet Cleaners on March 1. During March, the following transactions were completed.
Mar. 1
1
3

Invested $10,000 cash in the business.

Purchased used truck for $6,000, paying $3,000 cash and the balance on account.
Purchased cleaning supplies for $1,200 on account.

Problems: Set B
5
14
18
20
21
28
31
31

P-13

Paid $1,200 cash on a one-year insurance policy effective March 1.

Billed customers $4,800 for cleaning services.
Paid $1,500 cash on amount owed on truck and $500 on amount owed on
cleaning supplies.
Paid $1,800 cash for employee salaries.
Collected $1,400 cash from customers billed on March 14.
Billed customers $2,500 for cleaning services.
Paid $200 for the monthly gasoline bill for the truck.
Withdrew $700 cash for personal use.

The chart of accounts for Shaws Carpet Cleaners contains the following accounts: No. 101
Cash, No. 112 Accounts Receivable, No. 126 Supplies, No. 130 Prepaid Insurance, No. 157
Equipment, No. 158 Accumulated DepreciationEquipment, No. 201 Accounts Payable,
No. 212 Salaries and Wages Payable, No. 301 Owners Capital, No. 306 Owners Drawings,
No. 350 Income Summary, No. 400 Service Revenue, No. 631 Supplies Expense, No. 633
Gasoline Expense, No. 711 Depreciation Expense, No. 722 Insurance Expense, and No.
726 Salaries and Wages Expense.
Instructions
(a) Journalize and post the March transactions. Use page J1 for the journal and the threecolumn form of account.
(b) Prepare a trial balance at March 31 on a worksheet.
(c) Enter the following adjustments on the worksheet and complete the worksheet.
(1) Unbilled revenue for services performed at March 31 was $500.
(2) Depreciation on equipment for the month was $300.
(3) One-twelfth of the insurance expired.
(4) An inventory count shows $250 of cleaning supplies on hand at March 31.
(5) Accrued but unpaid employee salaries were $550.
(d) Prepare the income statement and owners equity statement for March and a classified
balance sheet at March 31.
(e) Journalize and post adjusting entries. Use page J2 for the journal.
(f) Journalize and post closing entries and complete the closing process. Use page J3 for
the journal.
(g) Prepare a post-closing trial balance at March 31.

(b) Trial balance $19,500

(c) Adjusted trial balance
$20,850

(d) Net income $3,900

Total assets $15,950

(g) Post-closing trial balance

$16,250