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Session:5 Completing the Accounting Cycle

Exercise Set B

Principles of Accounting, Volume 1: Financial Accounting | Leadership Development – Micro-Learning Session

Rice University 2020 | Michael Laverty, Colorado State University Global Chris Littel, North Carolina State University| https://openstax.org/details/books/principles-financial-accounting

EB 1. 

LO 5.1Identify whether each of the following accounts are nominal/temporary or real/permanent.

  1. Rent Expense
  2. Unearned Service Fee Revenue
  3. Interest Revenue
  4. Accounts Payable

EB 2. 

LO 5.1For each of the following accounts, identify whether it is nominal/temporary or real/permanent, and whether it is reported on the Balance Sheet or the Income Statement.

  1. Salaries Payable
  2. Sales Revenue
  3. Salaries Expense
  4. Prepaid Insurance

EB 3. 

LO 5.1For each of the following accounts, identify whether it would be closed at year-end (yes or no) and on which financial statement the account would be reported (Balance Sheet, Income Statement, or Retained Earnings Statement).

  1. Retained Earnings
  2. Prepaid Rent
  3. Rent Expense
  4. Rent Revenue
  5. Salaries Expense
  6. Salaries Payable
  7. Supplies Expense
  8. Unearned Rent Revenue

EB 4. 

LO 5.1The following accounts and normal balances existed at year-end. Make the four journal entries required to close the books:

Automobile Expense $9,000, Dividends 6,000, Insurance Expense 7,500, Office Expense 14,000, Sales Revenue 120,000, Wages Expense 60,000.

EB 5. 

LO 5.1The following accounts and normal balances existed at year-end. Make the four journal entries required to close the books:

Retained Earnings 78,500, Dividends 12,500, Fees Earned revenue 195,000, Selling Expenses 101,000, Administrative Expenses 46,500, Miscellaneous Expense 3,600.

EB 6. 

LO 5.1Use the following excerpts from the year-end Adjusted Trial Balance to prepare the four journal entries required to close the books:

Adjusted Trial Balance. Dividends 20,000 debit. Service revenue 225,000 credit. Advertising expense 18,000 debit. Rent expense 30,000 debit. Utilities expense 6,600 debit. Wages expense 148,000 debit.

EB 7. 

LO 5.1Use the following T-accounts to prepare the four journal entries required to close the books:

T-Accounts. Cash debit balance 35,580. Revenue Earned credit balance 146,000. Advertising expense debit balance 24,000. Insurance Expense debit balance 18,000. Salaries Expense debit balance 90,000. Dividends debit balance 5,000. Retained Earnings credit balance 26,580.

EB 8. 

LO 5.1Use the following T-accounts to prepare the four journal entries required to close the books:

T-Accounts. Cash debit balance 25,222. Rent Revenue credit balance 112,000. Advertising expense debit balance 6,000. Insurance Expense debit balance 12,000. Salaries Expense debit balance 75,000. Dividends debit balance 16,000. Retained Earnings credit balance 22,222.

EB 9. 

LO 5.2Identify which of the following accounts would be listed on the company’s Post-Closing Trial Balance.

  1. Accounts Receivable
  2. Accumulated Depreciation
  3. Cash
  4. Office Expense
  5. Note Payable
  6. Rent Revenue
  7. Retained Earnings
  8. Unearned Rent Revenue

EB 10. 

LO 5.2Identify which of the following accounts would not be listed on the company’s Post-Closing Trial Balance.

Accounts payable $19,000, Advertising expense 23,760, Cash 55,332, Common stock 38,000, Dividend 9,000, Fee revenue 60,000, Prepaid insurance 21,466, Land 45,000.

EB 11. 

LO 5.3For each of the following accounts, identify in which section of the classified balance sheet it would be presented: current assets, property, intangibles, other assets, current liabilities, long-term liabilities, or stockholder’s equity.

  1. Building
  2. Cash
  3. Common Stock
  4. Copyright
  5. Prepaid Advertising
  6. Notes Payable (due six months later)
  7. Taxes Payable
  8. Unearned Rent Revenue

EB 12. 

LO 5.3Using the following Balance Sheet summary information, calculate for the two years presented:

  1. working capital
  2. current ratio

12/31/18 and 12/31/19, respectively: Current assets 366,500, 132,000. Current liabilities 120,000, 141,500.

EB 13. 

LO 5.3Using the following account balances, calculate for the two years presented:

  1. working capital
  2. current ratio

12/31/18 and 12/31/19, respectively: Accounts payable 45,000, 12,600. Accounts receivable 52,000, 15,200. Cash 11,500, 19,780. Prepaid insurance 1,060, 2,400. Salaries payable 9,400, 12,800. Utilities payable 3,500, 2,550.

EB 14. 

LO 5.3Using the following Balance Sheet summary information, calculate for the two companies presented:

  1. working capital
  2. current ratio

Then:

  1. evaluate which company’s liquidity position appears stronger, and why.

Company L and Company M, respectively: Current assets 425,000, 215,500. Current liabilities 335,000, 132,700.

EB 15. 

LO 5.3From the following Company B adjusted trial balance, prepare simple financial statements, as follows:

Adjusted Trial Balance. Cash 35,300 debit. Accounts receivable 16,750 debit. Supplies 12,650 debit. Accounts payable 20,850 credit. Tax payable 3,000 credit. Common stock 30,000 credit. Fee earned revenue 92,550 credit. Operating expense 81,700 debit. Total debits and total credits 146,400.

 

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