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Session:5 Completing the Accounting Cycle

Problem 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

PB 1. 

LO 5.1Identify whether each of the following accounts would be considered a permanent account (yes/no) and which financial statement it would be reported on (Balance Sheet, Income Statement, or Retained Earnings Statement).

  1. Common Stock
  2. Dividends
  3. Dividends Payable
  4. Equipment
  5. Income Tax Expense
  6. Income Tax Payable
  7. Service Revenue
  8. Unearned Service Revenue
  9. Net Income

PB 2. 

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

Accounts receivable $33,200, Prepaid insurance 6,000, Land 48,000, Accounts payable 27,050, Notes payable 65,800, Retained earnings 9,350, Dividends 2,200, Fees earned revenue 70,500, Selling expenses 41,770, Administrative expenses 22,400, Miscellaneous expense 1,835.

PB 3. 

LO 5.1The following selected accounts and normal balances existed at year-end. Notice that expenses exceed revenue in this period. Make the four journal entries required to close the books:

Accounts receivable $85,500, Prepaid insurance 18,000, Land 15,000, Accounts payable 82,350, Notes payable 35,000, Retained earnings 129,650, Dividends 15,000, Fees earned revenue 311,000, Selling expenses 210,000, Administrative expenses 105,000, Miscellaneous expense 8,500.

PB 4. 

LO 5.1Use the following Adjusted Trial Balance to prepare the four journal entries required to close the books:

Adjusted Trial Balance. Cash 75,500 debit. Accounts receivable 15,500 debit. Accounts Payable 4,000 credit. Unearned Revenue 6,000 credit. Common Stock 20,000 credit. Retained Earnings 12,500 credit. Dividends 30,000 debit. Service revenue 355,000 credit. Advertising expense 30,000 debit. Rent expense 36,000 debit. Utilities expense 9,500 debit. Wages expense 201,000 debit. Total debits and total credits each are 397,500.

PB 5. 

LO 5.1Use the following Adjusted Trial Balance to prepare the four journal entries required to close the books:

Adjusted Trial Balance. Cash 8,625 debit. Accounts receivable 11,600 debit. Accounts Payable 8,450 credit. Unearned Revenue 1,500 credit. Common Stock 10,000 credit. Retained Earnings 12,275 credit. Dividends 2,000 debit. Service revenue 97,500 credit. Advertising expense 2,500 debit. Rent expense 18,000 debit. Utilities expense 12,000 debit. Wages expense 75,000 debit. Total debits and total credits each are 129,725.

PB 6. 

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

T-Accounts. Cash debit balance 17,340. Rent Revenue credit balance 240,000. Advertising expense debit balance 12,000. Insurance Expense debit balance 34,500. Salaries Expense debit balance 128,000. Dividends debit balance 22,000. Retained Earnings credit balance 59,500.

PB 7. 

LO 5.1Assume that the first two closing entries have been made and posted. Use the T-accounts provided below to:

  1. complete the closing entries
  2. determine the ending balance in the Retained Earnings account

T-Accounts. Income Summary debit 148,500 and credit 162,200. Retained Earnings credit balance 11,500. Dividends debit balance 4,000.

PB 8. 

LO 5.1Correct any obvious errors in the following closing entries by providing the four corrected closing entries. Assume all accounts held normal account balances in the Adjusted Trial Balance.


  1. Debit Income summary and credit Service Revenue 75,000.

  2. Debit Automobile expense 8,800, Insurance expense 4,800, Salaries expense 45,000, Supplies expense 3,500, and credit Income summary 62,100.

  3. Debit Retained earnings and credit Income summary 45,222.

  4. Debit Dividends and credit Retained earnings 6,000.

PB 9. 

LO 5.2Assuming the following Adjusted Trial Balance, create the Post-Closing Trial Balance that would result after all closing journal entries were made and posted:

Adjusted Trial Balance. Cash 8,625 debit. Accounts receivable 11,600 debit. Accounts payable 8,450 credit. Unearned revenue 1,500 credit. Common stock 10,000 credit. Retained earnings 12,275 credit. Dividends 2,000 debit. Service revenue 97,500 credit. Advertising expense 2,500 debit. Rent expense 18,000 debit. Utilities expense 12,000 debit. Wages expense 75,000 debit. Debit total 129,725, credit total129,725.

PB 10. 

LO 5.2The following Post-Closing Trial Balance contains errors. Prepare a corrected Post-Closing Trial Balance:

Post-Closing Trial Balance. Cash 32,660 credit. Supplies 7,200 debit. Land 25,000 credit. Notes payable 47,700 debit. Common stock 7,000 credit. Retained earnings 10,160 credit. Total debits 54,900, total credits 74,820.

PB 11. 

LO 5.2Assuming the following Adjusted Trial Balance, re-create the Post-Closing Trial Balance that would result after all closing journal entries were made and posted:

Adjusted Trial Balance. Cash 5,450 debit. Accounts receivable 4,700 debit. Supplies 250 debit. Prepaid insurance 1,250. Salaries payable 650 credit. Common stock 5,000 credit. Retained earnings 750 credit. Dividends 1,400 debit. Service fee revenue 17,300 credit. Salaries expense 9,050 debit. Supplies expense 1,000 debit. Insurance expense 600 debit. Debit total 23,700, credit total 23,700.

 

PB 12. 

LO 5.3Use the following Adjusted Trial Balance to prepare a classified Balance Sheet:

Adjusted Trial Balance. Cash $17,000 debit. Accounts receivable 8,500 debit. Supplies 1,500 debit. Prepaid insurance 5,000 debit. Equipment 12,000 debit. Accounts payable 5,000 credit. Unearned fee revenue 4,000 credit. Common stock 15,000 credit. Service fee revenue 32,500 credit. Salaries expense 9,500 debit. Rent expense 3,000 debit. Total debits and total credits 56,500.

PB 13. 

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

  1. working capital
  2. current ratio

Company P and Company Q, respectively: Current assets $88,500, $39,000. Current liabilities 67,430, 18,800.

PB 14. 

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 $10,500, $12,050. Current liabilities 7,500, 10,800.

PB 15. 

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 12,790, 1,530. Accounts receivable 16,330, 2,200. Cash 21,040, 5,550. Prepaid insurance 4,500, 1,200. Salaries payable 6,500, 4,000. Utilities payable 1,200, 550.

PB 16. 

LO 5.4From the following Company S adjusted trial balance, prepare the following:

  1. Income Statement
  2. Retained Earnings Statement
  3. Balance Sheet (simple—unclassified)
  4. Closing journal entries
  5. Post-Closing Trial Balance

Adjusted Trial Balance. Cash 55,200 debit. Accounts receivable 30,200 debit. Prepaid insurance 6,000 debit. Land 30,000 debit. Accounts payable 14,300 credit. Salaries payable 6,100 credit. Common stock 26,000 credit. Retained earnings 38,900 credit. Dividends 16,500 debit. Service Revenue 211,850 credit. Insurance expense 24,000 debit. Salaries expense 128,350 debit. Miscellaneous expense 6,900 debit. Total debits and total credits 297,150.

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