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# CHAPTER 4

## Completing the Accounting Cycle

ASSIGNMENT CLASSIFICATION TABLE
Brief
Exercises

Do It!

Exercises

A
Problems

B
Problems

1, 2, 3,
4, 5

1, 2, 3

1, 2, 3, 5,
6, 17

4A, 5A

4B, 5B

## Explain the process

of closing the books.

6, 7, 11,
12

4, 5, 6

4, 7, 8,
11, 19

4A, 5A

4B, 5B

*3.

## Describe the content and

purpose of a post-closing
trial balance.

8, 9

4, 7, 8

2A, 3A,
4A, 5A

2B, 3B,
4B, 5B

*4.

## State the required steps

in the accounting cycle.

10, 11, 12

10, 19

5A

5B

*5.

## Explain the approaches

to preparing correcting
entries.

13

12, 13

6A

*6.

## Identify the sections of a

classified statement of
financial position.

17, 18, 19

10, 11

3, 9, 14, 15,
16, 17

4A, 5A

*7.

## Prepare reversing entries.

10, 20, 21

12

Learning Objectives

Questions

*1.

Prepare a worksheet.

*2.

3, 4

## 1B, 2B, 3B,

4B, 5B

18, 19

*Note: All asterisked Questions, Exercises, and Problems relate to material contained in the appendix *to the
chapter.

Copyright 2013 John Wiley & Sons, Inc. Weygandt Financial, IFRS, 2/e, Solutions Manual (For Instructor Use Only)

4-1

Problem
Number

Description

Difficulty
Level

Time Allotted
(min.)

Simple

4050

1A

## Prepare worksheet, financial statements, and adjusting

and closing entries.

2A

## Complete worksheet; prepare financial statements,

closing entries, and post-closing trial balance.

Moderate

5060

3A

Moderate

4050

4A

## Complete worksheet; prepare classified statement of

financial position, adjusting and closing entries, and
post-closing trial balance.

Moderate

5060

5A

Complex

7090

6A

balance.

Moderate

4050

1B

## Prepare worksheet, financial statements, and adjusting

and closing entries.

Simple

4050

2B

## Complete worksheet; prepare financial statements,

closing entries, and post-closing trial balance.

Moderate

5060

3B

Moderate

4050

4B

## Complete worksheet; prepare classified statement of

financial position, adjusting and closing entries, and
post-closing trial balance.

Moderate

5060

5B

Complex

7090

## Comprehensive Problem: Chapters 2 to 4

4-2

Copyright 2013 John Wiley & Sons, Inc. Weygandt Financial, IFRS, 2/e, Solutions Manual (For Instructor Use Only)

## WEYGANDT FINANCIAL ACCOUNTING, IFRS Version, 2e

CHAPTER 4
COMPLETING THE ACCOUNTING CYCLE
Number

LO

BT

Difficulty

Time (min.)

BE1

Simple

24

BE2

AN

Moderate

68

BE3

Simple

35

BE4

AP

Simple

35

BE5

AP

Simple

46

BE6

AP

Simple

68

BE7

Simple

24

BE8

Simple

35

BE9

AN

Moderate

46

BE10

AP

Simple

46

BE11

Simple

35

BE12

AN

Moderate

46

DI1

Simple

46

DI2

AP

Simple

24

DI3

AP

Simple

68

DI4

Simple

46

EX1

AP

Simple

1215

EX2

AP

Simple

1012

EX3

1, 6

AP

Simple

1215

EX4

2, 3

AP

Simple

1215

EX5

AN

Simple

1012

EX6

AN

Moderate

1215

EX7

2, 3

AP

Simple

810

EX8

2, 3

AP

Simple

1012

EX9

AP

Simple

1215

EX10

Simple

35

EX11

AP

Simple

68

EX12

AN

Moderate

810

EX13

AN

Moderate

46

EX14

AP

Moderate

1012

EX15

Simple

58

EX16

AP

Simple

810

Copyright 2013 John Wiley & Sons, Inc. Weygandt Financial, IFRS, 2/e, Solutions Manual (For Instructor Use Only)

4-3

## COMPLETING THE ACCOUNTING CYCLE (Continued)

Number

LO

BT

Difficulty

Time (min.)

EX17

1, 6

AP

Simple

1215

EX18

AN

Moderate

57

EX19

2, 4, 7

AN

Moderate

1012

P1A

1, 2, 6

AN

Simple

4050

P2A

1-3, 6

AP

Moderate

5060

P3A

1-3, 6

AP

Moderate

4050

P4A

1-3, 6

AN

Moderate

5060

P5A

1-4, 6

AN

Complex

7090

P6A

AN

Moderate

4050

P1B

1, 2, 6

AN

Simple

4050

P2B

1-3, 6

AP

Moderate

5060

P3B

1-3, 6

AP

Moderate

4050

P4B

1-3, 6

AN

Moderate

5060

P5B

1-4, 6

AN

Complex

7090

BYP1

AN

Simple

1012

BYP2

AN

Simple

810

BYP3

Simple

1012

BYP4

AN

Moderate

1520

BYP5

Simple

1520

BYP6

Moderate

1015

4-4

Copyright 2013 John Wiley & Sons, Inc. Weygandt Financial, IFRS, 2/e, Solutions Manual (For Instructor Use Only)

Q4-10
Q4-20
Communication

BE4-3
DI4-1

Q4-17
Q4-18
BE4-11
DI4-4
E4-15

## *6. Identify the sections of

a classified statement of financial
position.

Q4-14
Q4-15
Q4-16

Q4-13

## *5. Explain the approaches to

preparing correcting entries.

Q4-10
E4-10

Q4-11
Q4-12
BE4-8

## *4. State the required steps in

the accounting cycle.

Q4-7

Q4-8
Q4-9
BE4-7

Q4-6
Q4-11
Q4-12

the books.

Q4-1
Q4-2
Q4-3
Q4-4
Q4-5

Comprehension

## *3. Describe the content and

purpose of a post-closing trial
balance.

BE4-1

Knowledge

## *1. Prepare a worksheet.

Learning Objective

Q4-19
BE4-10
DI4-3
E4-3
E4-9
E4-14

E4-4
E4-7
E4-8
P4-2A

BE4-4
BE4-5
BE4-6
DI4-2
E4-4
E4-7

E4-1
E4-2
E4-3
E4-17
P4-2A

E4-16
E4-17
P4-2A
P4-3A
P4-2B
P4-3B

P4-3A
P4-2B
P4-3B

E4-8
E4-11
P4-2A
P4-3A
P4-2B
P4-3B

P4-3A
P4-2B
P4-3B

Application

Copyright 2013 John Wiley & Sons, Inc. Weygandt Financial, IFRS, 2/e, Solutions Manual (For Instructor Use Only)

E4-18
E4-19

P4-4B
P4-5B

P4-5B

P4-5A
P4-1B
P4-4B
P4-5B

Financial Reporting
Comparative
Analysis
Decision Making
Across the
Organization

Q4-21
BE4-12

P4-1A
P4-4A
P4-5A
P4-1B
P4-4B
P4-5B

BE4-9
E4-12
E4-13
P4-6A

E4-19
P4-5A
P4-5B

P4-4A
P4-5A

E4-19
P4-1A
P4-4A
P4-5A
P4-1B
P4-4B

BE4-2
E4-5
E4-6
P4-1A
P4-4A

Analysis

Synthesis

RealWorld
Focus
Ethics Case

Evaluation

Correlation Chart between Blooms Taxonomy, Learning Objectives and End-of-Chapter Exercises and Problems

## BLOOMS TAXONOMY TABLE

4-5

1.

No. A worksheet is not a permanent accounting record. The use of a worksheet is an optional
step in the accounting cycle.

2.

The worksheet is merely a device used to make it easier to prepare adjusting entries and the
financial statements.

3.

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.

4.

The net income of \$12,000 will appear in the income statement debit column and the statement
of financial position credit column. A net loss will appear in the income statement credit column
and the statement of financial position debit column.

5.

Formal financial statements are needed because the columnar data are not properly arranged
and classified for statement purposes. For example, the Dividends account is listed with assets.

6.

(1)
(2)
(3)
(4)

7.

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 net loss, is
then closed to the Retained Earnings account.

8.

The post-closing trial balance contains only statement of financial position accounts. Its purpose
is to prove the equality of the permanent account balances that are carried forward into the next
accounting period.

9.

The accounts that will not appear in the post-closing trial balance are: Depreciation Expense;
Dividends; 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 whenever an error is discovered, and (3) may affect any
combination of accounts.

4-6

Copyright 2013 John Wiley & Sons, Inc. Weygandt Financial, IFRS, 2/e, Solutions Manual (For Instructor Use Only)

## (Dr) Individual revenue accounts and (Cr) Income Summary.

(Dr) Income Summary and (Cr) Individual expense accounts.
(Dr) Income Summary and (Cr) Retained Earnings.
(Dr) Retained Earnings and (Cr) Dividends.

## Questions Chapter 4 (Continued)

*14. The standard classifications used in a statement of financial position are:
Assets
Intangible Assets
Property, Plant, and Equipment
Long-term Investments
Current Assets

## Equity and Liabilities

Equity
Non-current Liabilities
Current Liabilities

*15. 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
reverse order in which they expect to convert them into cash.
*17. Long-term investments are generally investments in shares and bonds of other companies that
are normally held for many years and non-current assets such as land or buildings that a
company is not using in its operating activities. Property, plant, and equipment are assets with
relatively long useful lives that a company is currently using in operating the business.
*18. The two equity accounts and the purpose of each are: (1) Share CapitalOrdinary is used to
record investments of assets in the business by the owners (shareholders) through share
transactions. (2) Retained Earnings is used to record net income retained in the business.
*19.. Samsungs current liabilities at December 31, 2010 and December 31, 2009 were W 39,944,721
million and W 34,204,424 million respectively. Samsungs current liabilities were 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 and Wages Expense ....................................................
Cash ..................................................................................

9,200
9,200

Because of the January 1 reversing entry that credited Salaries and Wages Expense for
\$3,500, Salaries and Wages Expense will have a debit balance of \$5,700 which equals the
expense for the current period.
(b) Jan. 10 Salaries and Wages Payable .....................................................
Salaries and Wages Expense ....................................................
Cash ..................................................................................

3,500
5,700
9,200

Note that Salaries and Wages Expense will again have a debit balance of \$5,700.

Copyright 2013 John Wiley & Sons, Inc. Weygandt Financial, IFRS, 2/e, Solutions Manual (For Instructor Use Only)

4-7

## 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,
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, 2.
The solution to BRIEF EXERCISE 4-2 is on page 4-9.
BRIEF EXERCISE 4-3

Account
Accumulated Depreciation
Depreciation Expense
Share CapitalOrdinary
Dividends
Service Revenue
Supplies
Accounts Payable

Income Statement
Dr.
Cr.

Statement of
Financial Position
Dr.
Cr.
X

X
X
X
X
X
X

Dec. 31
31

31
31

4-8

## Service Revenue ..............................................

Income Summary......................................

47,000

## Income Summary .............................................

Salaries and Wages Expense ..................
Supplies Expense .....................................

32,000

## Income Summary .............................................

Retained Earnings ....................................

15,000

## Retained Earnings ............................................

Dividends ..................................................

2,000

47,000
27,000
5,000
15,000
2,000

Copyright 2013 John Wiley & Sons, Inc. Weygandt Financial, IFRS, 2/e, Solutions Manual (For Instructor Use Only)

Prepaid Insurance
Service Revenue
Salaries and Wages
Expense
Accounts Receivable
Salaries and Wages
Payable
Insurance Expense

Account Titles

25,000

3,000
61,000

Trial Balance
Dr.
Cr.

(a) 1,300

(c) 800
(b) 1,100
(c)

800

(a) 1,300
(b) 1,100

Dr.
Cr.

KEO COMPANY
Worksheet

1,300

25,800
1,100

1,700

800

62,100

Trial Balance
Dr.
Cr.

1,300

25,800

62,100

Income
Statement
Dr.
Cr.

1,100

1,700

800

Statement of
Financial
Position
Dr.
Cr.

## BRIEF EXERCISE 4-2

Copyright 2013 John Wiley & Sons, Inc. Weygandt Financial, IFRS, 2/e, Solutions Manual (For Instructor Use Only)

4-9

## BRIEF EXERCISE 4-5

Salaries and Wages
Expense
Bal. 27,000 (2) 27,000

Supplies Expense
Bal. 5,000 (2) 5,000

Income Summary
(2) 32,000 (1) 47,000
(3) 15,000
47,000
47,000

Service Revenue
(1) 47,000 Bal. 47,000

Retained Earnings
(4)
2,000 Bal. 30,000
(3) 15,000
Bal. 43,000

Dividends
Bal. 2,000 (4) 2,000

July 31

31

Date
7/31
7/31

Date
7/31
7/31

4-10

## Service Revenue ...............................................

Income Summary.......................................

19,200

## Income Summary ..............................................

Salaries and Wages Expense ...................
Maintenance and Repairs Expense .........

11,300

Explanation
Balance
Closing entry

Explanation
Balance
Closing entry

Service Revenue
Ref.
Debit

19,200

8,800
2,500

Credit
19,200

Balance
19,200
0

Credit

Balance
8,800
0

19,200

## Salaries and Wages Expense

Ref.
Debit
8,800

8,800

Copyright 2013 John Wiley & Sons, Inc. Weygandt Financial, IFRS, 2/e, Solutions Manual (For Instructor Use Only)

Date
7/31
7/31

Explanation
Ref.
Debit
Credit
Balance
2,500
Closing entry
2,500

Balance
2,500
0

## BRIEF EXERCISE 4-7

The accounts that will appear in the post-closing trial balance are:
Accumulated Depreciation
Share CapitalOrdinary
Supplies
Accounts Payable

## BRIEF EXERCISE 4-8

The proper sequencing of the required steps in the accounting cycle is as
follows:
1.
2.
3.
4.
5.
6.
7.
8.
9.

Journalize the transactions.
Post to ledger accounts.
Prepare a trial balance.
Prepare financial statements.
Journalize and post closing entries.
Prepare a post-closing trial balance.

## Filling in the blanks, the answers are 4, 2, 8, 7, 5, 3, 9, 6, 1.

Copyright 2013 John Wiley & Sons, Inc. Weygandt Financial, IFRS, 2/e, Solutions Manual (For Instructor Use Only)

4-11

1.

2.

## Service Revenue ..................................................................

Accounts Receivable ...................................................

690

## Accounts Payable (1,850 1,580) ..................................

Supplies ........................................................................

270

690

270

## BRIEF EXERCISE 4-10

KREN COMPANY
Partial Statement of Financial Position
Current assets
Prepaid insurance ...................................................................
Supplies....................................................................................
Accounts receivable ................................................................
Short-term investments ..........................................................
Cash ..........................................................................................
Total current assets .........................................................

3,600
5,200
12,500
4,900
6,700
32,900

## BRIEF EXERCISE 4-11

CL
CA
PPE
PPE
CA
IA

Accounts payable
Accounts receivable
Accum. depreciationbuildings
Buildings
Cash

CL
LTI
PPE
CA
IA
CA

## Income taxes payable

Debt investments (long-term)
Land
Inventory
Patents
Supplies

Nov. 1

## Salaries and Wages Payable ......................................

Salaries and Wages Expense .............................

1,680
1,680

The balances after posting the reversing entry are Salaries and Wages
Expense (Cr.) \$1,680 and Salaries and Wages Payable \$0.

4-12

Copyright 2013 John Wiley & Sons, Inc. Weygandt Financial, IFRS, 2/e, Solutions Manual (For Instructor Use Only)

## SOLUTIONS FOR DO IT! REVIEW EXERCISES

DO IT! 4-1
Income statement debit columnUtilities Expense
Income statement credit columnService Revenue
Statement of financial position debit columnAccounts Receivable
Statement of financial position credit columnNotes Payable;
Accumulated Depreciation; Share CapitalOrdinary

DO IT! 4-2
Dec. 31

Dec. 31

Income Summary..........................................
Retained Earnings ..................................

47,000

## Retained Earnings ........................................

Dividends ................................................

15,000

47,000

15,000

DO IT! 4-3

ZERMATT COMPANY
Partial Statement of Financial Position
December 31, 2014
Property, plant, and equipment
Equipment ...................................................
Less: Accumulated depreciation
equipment................................................
Long-term investments
Investments in ordinary shares .................
Current assets
Inventory......................................................
Accounts receivable ...................................
Short-term investments .............................
Cash .............................................................
Total assets ........................................................

CHF21,700
5,200

CHF16,500
6,500

4,100
4,300
1,200
3,900

13,500
CHF36,500

Copyright 2013 John Wiley & Sons, Inc. Weygandt Financial, IFRS, 2/e, Solutions Manual (For Instructor Use Only)

4-13

DO IT! 4-4
NA
CL
CL
CA
NCL
IA

4-14

Interest revenue
Utilities payable
Accounts payable
Supplies
Bonds payable

E
PPE
PPE
NA
LTI
CL

Share capitalordinary
Accumulated depreciation
equipment
Equipment
Salaries and wages expense
Investment in real estate
Unearned rent revenue

Copyright 2013 John Wiley & Sons, Inc. Weygandt Financial, IFRS, 2/e, Solutions Manual (For Instructor Use Only)

SOLUTIONS TO EXERCISES
EXERCISE 4-1
LIM COMPANY
Worksheet
For the Month Ended June 30, 2014
(in thousands)
Account Titles

Trial Balance
Dr.

Cash

Cr.

Dr.

Cr.

4,020

Dr.

Cr.

Income Statement
Dr.

Statement of
Financial Position

Cr.

Dr.

4,020

4,020

2,440

2,440

500

500

Cr.

Accounts
Receivable
Supplies

2,440
1,900

Accounts Payable

(a) 1,400
1,120

1,120

1,120

100

100

Unearned Service
Revenue

240 (b)

140

Share Capital
Ordinary

5,000

Service Revenue

5,000

3,100

(b)

140

5,000

3,240

3,240

Salaries and
Wages Expense

860

(c)

250

1,110

1,110

240

240

1,400

1,400

Miscellaneous
Expense
Totals
Supplies Expense

240
9,460

9,460
(a) 1,400

Salaries and
Wages Payable
Totals
Net Income
Totals

(c)
1,790

250
1,790

250
9,710

9,710

250
2,750

3,240

6,960

490
3,240

6,470
490

3,240

Copyright 2013 John Wiley & Sons, Inc. Weygandt Financial, IFRS, 2/e, Solutions Manual (For Instructor Use Only)

6,960

6,960

4-15

EXERCISE 4-2
ALBANESE COMPANY
(Partial) Worksheet
For the Month Ended April 30, 2014
Trial Balance
Account Titles
Cash
Accounts Receivable
Prepaid Rent
Equipment
Accum. Depreciation
Equipment
Notes Payable
Accounts Payable
Share Capital
Ordinary
Retained Earnings
Dividends
Service Revenue
Salaries and Wages
Expense
Rent Expense
Depreciation Expense
Interest Expense
Interest Payable
Totals
Net Income
Totals

4-16

Dr.
7,442
7,840
2,280
23,000

Cr.

Income
Statement
Dr.

Cr.

Dr.
7,442
7,840
2,280
23,000

Cr.

4,800
5,700
5,672
22,000

4,800
5,700
5,672
22,000

4,000

4,000

3,000

3,000
12,590

9,840
760
600
57
54,819

Statement of
Financial
Position

12,590
9,840
760
600
57

57
54,819

11,257
1,333
12,590

12,590

43,562

12,590

43,562

57
42,229
1,333
43,562

Copyright 2013 John Wiley & Sons, Inc. Weygandt Financial, IFRS, 2/e, Solutions Manual (For Instructor Use Only)

EXERCISE 4-3
ALBANESE COMPANY
Income Statement
For the Month Ended April 30, 2014
Revenues
Service revenue ........................................................
Expenses
Salaries and wages expense ...................................
Rent expense ............................................................
Depreciation expense ...............................................
Interest expense .......................................................
Total expenses ..................................................
Net income ........................................................................

12,590
9,840
760
600
57
11,257
1,333

ALBANESE COMPANY
Retained Earnings Statement
For the Month Ended April 30, 2014
Retained Earnings, April 1 ........................................................

4,000
1,333
5,333
3,000
2,333

## Less: Dividends ........................................................................

Retained Earnings, April 30 ......................................................

ALBANESE COMPANY
Statement of Financial Position
April 30, 2014
Assets
Property, plant, and equipment
Equipment .................................................................
Less: Accumulated depreciationequipment ......
Current assets
Prepaid rent ...............................................................
Accounts receivable .................................................
Cash ...........................................................................
Total assets .......................................................................

23,000
4,800
2,280
7,840
7,442

Copyright 2013 John Wiley & Sons, Inc. Weygandt Financial, IFRS, 2/e, Solutions Manual (For Instructor Use Only)

18,200

17,562
35,762

4-17

## EXERCISE 4-3 (Continued)

ALBANESE COMPANY
Statement of Financial Position (Continued)
April 30, 2014
Equity and Liabilities
Equity
Share capitalordinary ...........................................
Retained earnings ....................................................
Current liabilities
Notes payable ...........................................................
Accounts payable .....................................................
Interest payable ........................................................
Total equity and liabilities ..............................................

22,000
2,333
5,700
5,672
57

24,333

11,429
35,762

EXERCISE 4-4
(a) Apr. 30

30

30

30

## Service Revenue .......................................

Income Summary ..............................

12,590

## Income Summary ......................................

Salaries and Wages Expense ...........
Rent Expense .....................................
Depreciation Expense .......................
Interest Expense ................................

11,257

## Income Summary ......................................

Retained Earnings .............................

1,333

## Retained Earnings .....................................

Dividends ...........................................

3,000

12,590

9,840
760
600
57

1,333

3,000

(b)
Income Summary
11,257
12,590
1,333
12,590
12,590

4-18

Retained Earnings
3,000 Bal.
4,000
1,333
Bal.
2,333

Copyright 2013 John Wiley & Sons, Inc. Weygandt Financial, IFRS, 2/e, Solutions Manual (For Instructor Use Only)

## EXERCISE 4-4 (Continued)

(c)

ALBANESE COMPANY
Post-Closing Trial Balance
April 30, 2014
Cash .....................................................................
Accounts Receivable ..........................................
Prepaid Rent........................................................
Equipment ...........................................................
Accumulated DepreciationEquipment ..........
Notes Payable .....................................................
Accounts Payable ...............................................
Interest Payable ..................................................
Share CapitalOrdinary ....................................
Retained Earnings ..............................................

Debit
7,442
7,840
2,280
23,000

40,562

Credit

4,800
5,700
5,672
57
22,000
2,333
40,562

EXERCISE 4-5
(a) Accounts Receivable ..........................................
Service Revenue .........................................

600

## Insurance Expense .............................................

Prepaid Insurance .......................................

400

## Depreciation Expense ........................................

Accumulated DepreciationEquipment ...

900

## Salaries and Wages Expense ............................

Salaries and Wages Payable ......................

500

600

400

900

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500

4-19

## EXERCISE 4-5 (Continued)

(b)

Accounts Receivable
Prepaid Insurance
Accum. DepreciationEquip.
Salaries and Wages Payable
Service Revenue
Salaries and Wages
Expense
Insurance Expense
Depreciation Expense

Statement of
Income Statement Financial Position
Dr.
Cr.
Dr.
Cr.
X
X
X
X
X
X
X
X

EXERCISE 4-6
(a) Accounts Receivable27,000 (34,000 7,000).
Supplies2,300 (7,000 4,700).
Accumulated DepreciationEquipment22,000 (12,000 + 10,000).
Salaries and Wages Payable0 No liability recorded until adjustments
Insurance Expense8,000 (26,000 18,000).
Salaries and Wages Expense44,000 (49,000 5,000).
(b) Accounts Receivable .................................................
Service Revenue .................................................

7,000

## Insurance Expense .....................................................

Prepaid Insurance ...............................................

8,000

## Supplies Expense .......................................................

Supplies ...............................................................

4,700

## Depreciation Expense ................................................

Accumulated DepreciationEquipment ..........

10,000

## Salaries and Wages Expense ....................................

Salaries and Wages Payable..............................

5,000

4-20

7,000

8,000

4,700

10,000

5,000

Copyright 2013 John Wiley & Sons, Inc. Weygandt Financial, IFRS, 2/e, Solutions Manual (For Instructor Use Only)

EXERCISE 4-7
(a) Service Revenue .....................................................
Income Summary ..............................................

4,300

## Income Summary ....................................................

Salaries and Wages Expense ..........................
Miscellaneous Expense ...................................
Supplies Expense .............................................

3,424

## Income Summary ....................................................

Retained Earnings ............................................

876

## Retained Earnings ..................................................

Dividends ..........................................................

600

(b)

4,300

1,344
180
1,900

876

600

LANZA COMPANY
Post-Closing Trial Balance
For the Month Ended June 30, 2014
Account Titles
Cash .........................................................................
Accounts Receivable ..............................................
Supplies ...................................................................
Accounts Payable ...................................................
Salaries and Wages Payable .................................
Unearned Service Revenue ...................................
Share CapitalOrdinary ........................................
Retained Earnings ..................................................

Debit
R\$3,712
3,904
480

Credit

R\$1,556
344
160
4,000
2,036
R\$8,096 R\$8,096

Copyright 2013 John Wiley & Sons, Inc. Weygandt Financial, IFRS, 2/e, Solutions Manual (For Instructor Use Only)

4-21

EXERCISE 4-8
(a)
General Journal
Date
Account Titles
July 31 Service Revenue ..................................
Rent Revenue .......................................
Income Summary ........................

Ref.
400
429
350

Debit
64,000
6,500

## 31 Income Summary .................................

Salaries and Wages Expense ....
Utilities Expense .........................
Depreciation Expense ................

350
726
732
711

74,300

## 31 Retained Earnings ...............................

Income Summary ........................

320
350

3,800

## 31 Retained Earnings ...............................

Dividends ....................................

320
332

12,000

J15
Credit

70,500

55,700
14,900
3,700

3,800

12,000

(b)
Retained Earnings
Date
Explanation
Ref.
Debit
July 31 Balance
31 Close net loss
J15
3,800
31 Close dividends
J15
12,000

Income Summary
Date
Explanation
Ref.
Debit
July 31 Close revenue
J15
31 Close expenses
J15
74,300
31 Close net loss
J15

4-22

Credit

Credit
70,500
3,800

No. 320
Balance
20,260
16,460
4,460

No. 350
Balance
70,500
(3,800)
0

Copyright 2013 John Wiley & Sons, Inc. Weygandt Financial, IFRS, 2/e, Solutions Manual (For Instructor Use Only)

## EXERCISE 4-8 (Continued)

(c)

ROTH COMPANY
Post-Closing Trial Balance
July 31, 2014
Cash .....................................................................
Accounts Receivable ..........................................
Equipment ...........................................................
Accumulated DepreciationEquipment ..........
Accounts Payable ...............................................
Unearned Rent Revenue ....................................
Share CapitalOrdinary ....................................
Retained Earnings ..............................................

Debit
\$9,840
8,140
15,900

\$33,880

Credit

\$ 5,400
2,220
3,800
18,000
4,460
\$33,880

EXERCISE 4-9
(a)

ROTH COMPANY
Income Statement
For the Year Ended July 31, 2014
Revenues
Service revenue...........................................
Rent revenue ...............................................
Total revenues .....................................
Expenses
Salaries and wages expense......................
Utilities expense ..........................................
Depreciation expense .................................
Total expenses ....................................
Net loss ................................................................

\$64,000
6,500
\$70,500
55,700
14,900
3,700

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74,300
(\$ 3,800)

4-23

## EXERCISE 4-9 (Continued)

ROTH COMPANY
Retained Earnings Statement
For the Year Ended July 31, 2014
Retained Earnings, August 1, 2013 ...................
Less: Net loss ....................................................
Dividends .................................................
Retained Earnings, July 31, 2014 ......................

(b)

\$20,260
\$ 3,800
12,000

15,800
\$ 4,460

ROTH COMPANY
Statement of Financial Position
July 31, 2014
Assets
Property, plant, and equipment
Equipment ......................................................
Less: Accumulated depreciation
equipment ............................................
Current assets
Accounts receivable ......................................
Cash ................................................................
Total assets ............................................................

\$15,900
5,400
8,140
9,840

\$10,500

17,980
\$28,480

## Equity and Liabilities

Equity
Share capitalordinary.................................
Retained earnings ..........................................
Current liabilities
Accounts payable ..........................................
Unearned rent revenue ..................................
Total equity and liabilities .....................................

4-24

\$18,000
4,460
2,220
3,800

\$22,460

6,020
\$28,480

Copyright 2013 John Wiley & Sons, Inc. Weygandt Financial, IFRS, 2/e, Solutions Manual (For Instructor Use Only)

EXERCISE 4-10
1.

cycle.

2.

## False. Reversing entries are an optional step in the accounting cycle.

3.

True.

4.

True.

5.

True.

6.

False. Steps 13 may occur daily in the accounting cycle. Steps 47 are
performed on a periodic basis. Steps 8 and 9 are usually prepared only
at the end of a companys annual accounting period.

7.

False. The step of journalize the transactions occurs before the step
of post to the ledger accounts.

8.

False. Closing entries are prepared after financial statements are prepared.

EXERCISE 4-11
(a) June 30

30

30

30

## Service Revenue ....................................

Income Summary ...........................

18,100

## Income Summary ...................................

Salaries and Wages Expense ........
Supplies Expense...........................
Rent Expense..................................

12,700

## Income Summary ...................................

Retained Earnings ..........................

5,400

Retained Earnings..................................
Dividends ........................................

2,200

18,100

8,800
900
3,000

5,400

2,200

(b)
Income Summary
June 30 12,700 June 30
June 30
5,400
18,100

18,100
18,100

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4-25

EXERCISE 4-12
(a) 1.

2.

3.

(b) 1.

2.

3.

4-26

Cash ...................................................................
Equipment .................................................

700

## Salaries and Wages Expense ..........................

Cash ..........................................................

700

## Service Revenue ...............................................

Cash ..........................................................

300

Cash ...................................................................
Accounts Receivable ...............................

800

## Accounts Payable ............................................

Equipment ................................................

670

Equipment ........................................................
Accounts Payable ...................................

760

## Salaries and Wages Expense ..........................

Equipment ................................................

700

## Service Revenue ...............................................

Cash ...................................................................
Accounts Receivable ...............................

300
500

Equipment .........................................................
Accounts Payable ....................................

90

700

700

300

800

670

760

700

800

90

Copyright 2013 John Wiley & Sons, Inc. Weygandt Financial, IFRS, 2/e, Solutions Manual (For Instructor Use Only)

EXERCISE 4-13
1.

2.

3.

## Accounts Payable (R\$840 R\$480) ........................

Cash ...................................................................

360

Supplies .....................................................................
Equipment..........................................................
Accounts Payable .............................................

380

Dividends...................................................................
Salaries and Wages Expense...........................

500

360

38
342

500

EXERCISE 4-14
(a)

## REGO BOWLING ALLEY

Statement of Financial Position
December 31, 2014
Assets
Property, plant, and equipment
Land .............................................
Buildings ......................................
Less: Acc. depr.buildings ......
Equipment....................................
Less: Acc. depr.equipment....
Current assets
Prepaid insurance .......................
Accounts receivable ...................
Cash .............................................
Total assets .........................................

\$67,000
\$128,000
42,600
62,400
18,720

85,400
43,680
4,680
7,540
18,040

Copyright 2013 John Wiley & Sons, Inc. Weygandt Financial, IFRS, 2/e, Solutions Manual (For Instructor Use Only)

\$196,080

30,260
\$226,340

4-27

## EXERCISE 4-14 (Continued)

REGO BOWLING ALLEY
Statement of Financial Position (Continued)
December 31, 2014
Equity and Liabilities
Equity
Share capitalordinary...............................
Retained earnings (\$28,000 + \$8,440*) .......
Non-current liabilities
Note payable.................................................
Current liabilities
Current portion of note payable .................
Accounts payable ........................................
Interest payable............................................
Total equity and liabilities ...................................

\$80,000
36,440

\$116,440
80,000

15,000
12,300
2,600

29,900
\$226,340

## *Net income = \$19,180 \$780 \$7,360 \$2,600 = \$8,440

(b) Current assets exceed current liabilities by only \$360 (\$30,260
\$29,900). However, approximately 60% of current assets are in the form
of cash. The companys liquidity appears to be reasonably good, but
some caution is needed.

EXERCISE 4-15
CL
CA
CA
E
IA
CL
CA
LTI

4-28

Accounts payable
Accounts receivable
Cash
Share capitalordinary
Patents
Salaries and wages payable
Inventory
Investments

PPE
PPE
PPE
NCL
CA
PPE
CA

Accumulated depreciation
Buildings
Land
Long-term debt
Supplies
Equipment
Prepaid expenses

Copyright 2013 John Wiley & Sons, Inc. Weygandt Financial, IFRS, 2/e, Solutions Manual (For Instructor Use Only)

EXERCISE 4-16
SEXTON COMPANY
Statement of Financial Position
December 31, 2014
(in thousands)
Assets
Property, plant, and equipment
Equipment....................................................
Less: Accumulated depreciation
equipment ........................................
Long-term investments ......................................
Current assets
Prepaid insurance .......................................
Inventory ......................................................
Accounts receivable ...................................
Short-term investments ..............................
Cash .............................................................
Total assets .........................................................

11,500
(4,125)

680
1,256
1,696
3,619
2,668

7,375
1,200

9,919
18,494

## Equity and Liabilities

Equity
Share capitalordinary ..............................
Retained earnings .......................................
Non-current liabilities
Long-term debt ............................................
Notes payable (due after 2015) ..................
Current liabilities
Notes payable due in 2015 .........................
Accounts payable .......................................
Total equity and liabilities ..................................

10,000
4,750

14,750

1,000
800

1,800

500
1,444

Copyright 2013 John Wiley & Sons, Inc. Weygandt Financial, IFRS, 2/e, Solutions Manual (For Instructor Use Only)

1,944
18,494

4-29

EXERCISE 4-17
(a)
EMJAY COMPANY
Income Statement
For the Year Ended July 31, 2014
Revenues
Service revenue .......................................
Rent revenue ............................................
Total revenues ..................................
Expenses
Salaries and wages expense ..................
Utilities expense.......................................
Depreciation expense ..............................
Total expense ...................................
Net loss.............................................................

\$62,000
8,500
\$70,500
50,700
22,600
2,500
75,800
\$ (5,300)

EMJAY COMPANY
Retained Earnings Statement
For the Year Ended July 31, 2014
Retained Earnings, August 1, 2013 ................
Less: Net loss .................................................
Dividends ..............................................
Retained Earnings, July 31, 2014 ...................

4-30

\$22,700
\$5,300
3,000

8,300
\$14,400

Copyright 2013 John Wiley & Sons, Inc. Weygandt Financial, IFRS, 2/e, Solutions Manual (For Instructor Use Only)

## EXERCISE 4-17 (Continued)

(b)
EMJAY COMPANY.
Statement of Financial Position
July 31, 2014
Assets
Property, plant, and equipment
Equipment........................................................
Less: Accumulated depreciation
equipment .............................................
Current assets
Accounts receivable .......................................
Cash .................................................................
Total assets .............................................................

\$30,000
6,000
9,180
14,200

\$24,000

23,380
\$47,380

## Equity and Liabilities

Equity
Share capitalordinary ..................................
Retained earnings ...........................................
Non-current liabilities
Note payable ....................................................
Current liabilities
Accounts payable ...........................................
Salaries and wages payable...........................
Total equity and liabilities ......................................

\$25,000
14,400

\$39,400
1,800

4,100
2,080

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6,180
\$47,380

4-31

*EXERCISE 4-18
(a) Dec. 31

Jan. 4

(b) Dec. 31

Jan. 1

Jan. 4

## Salaries and Wages Expense

(R\$9,000 X 4/5)......................................
Salaries and Wages Payable ..........

7,200
7,200

## Salaries and Wages Payable..................

Salaries and Wages Expense
(R\$9,000 X 1/5)......................................
Cash .................................................

7,200

## Salaries and Wages Expense ................

Salaries and Wages Payable ..........

7,200

## Salaries and Wages Payable..................

Salaries and Wages Expense .........

7,200

## Salaries and Wages Expense ...............

Cash .................................................

9,000

1,800
9,000

7,200

7,200

9,000

*EXERCISE 4-19
(a) Dec. 31

31

(b) Jan. 1

4-32

## Service Revenue .....................................

Income Summary ............................

93,800

## Income Summary ....................................

Interest Expense .............................

8,300

## Service Revenue .....................................

Accounts Receivable ......................

5,000

## Interest Payable ......................................

Interest Expense .............................

1,300

93,800

8,300

5,000

1,300

Copyright 2013 John Wiley & Sons, Inc. Weygandt Financial, IFRS, 2/e, Solutions Manual (For Instructor Use Only)

## *EXERCISE 4-19 (Continued)

(c) & (e)
Accounts Receivable
Dec. 31 Balance
*19,500
5,000
24,500
Jan. 1 Reversing

5,000

*(\$24,500 \$5,000)

Dec. 31 Closing

Jan. 1

Reversing

Service Revenue
93,800 Dec. 31 Balance
93,800
5,000 Jan. 10

88,800*
5,000
93,800
5,000

*(\$93,800 \$5,000)

Jan. 1

Reversing

Dec. 31 Balance
Jan. 15

Interest Payable
1,300
Interest Expense
*7,000 Dec. 31 Closing
1,300
8,300
3,000 Jan. 1 Reversing

1,300

8,300
8,300
1,300

*(\$8,300 \$1,300)
(d)
Jan. 10

15

(1)
Cash ...............................................................
Service Revenue ....................................

5,000

(2)
Interest Expense ...........................................
Cash........................................................

3,000

5,000

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3,000

4-33

4-34

Account Titles

2,240
1,300
1,200
230
56,550

600

11,410
5,920
1,250
2,400
30,000

56,550

14,200

10,000
12,350
20,000

770
720

300
600
3,470

(a)
(b)

(c)
(d)

(e) 1,080
770
600

(c)

(b)

3,470

300

720

(e) 1,080

(a)
(d)

Cr.

Dr.

Dr.

Cr.

Trial Balance

600
58,650

300

770
720

2,240
1,300
1,200
230

600

11,410
7,000
480
1,800
30,000

Dr.

58,650

300

720

15,280

10,000
12,350
20,000

Cr.

Trial Balance

## HERCULES POIROT, P.I., INC.

Worksheet
For the Quarter Ended March 31, 2014

600
7,360
7,920
15,280

300

770
720

2,240
1,300
1,200
230

Dr.

51,290
51,290

15,280

600

11,410
7,000
480
1,800
30,000

Dr.

43,370
7,920
51,290

300

720

10,000
12,350
20,000

Cr.

Statement of
Financial
Position

15,280

15,280

Cr.

Income
Statement

Key: (a) Supplies Used; (b) Depreciation Expensed; (c) Accrued Interest on note; (d) Insurance Expired; (e) Service Revenue

Cash
Accounts Receivable
Supplies
Prepaid Insurance
Equipment
Notes Payable
Accounts Payable
Share CapitalOrdinary
Dividends
Service Revenue
Salaries and Wages
Expense
Travel Expense
Rent Expense
Miscellaneous Expense
Totals
Supplies Expense
Depreciation Expense
Accumulated
DepreciationEquipment
Interest Expense
Interest Payable
Insurance Expense
Totals
Net Income
Totals

(a)

SOLUTIONS TO PROBLEMS
PROBLEM 4-1A

Copyright 2013 John Wiley & Sons, Inc. Weygandt Financial, IFRS, 2/e, Solutions Manual (For Instructor Use Only)

(b)

## HERCULES POIROT, P.I., INC

Income Statement
For the Quarter Ended March 31, 2014
Revenues
Service revenue...............................................
Expenses
Salaries and wages expense..........................
Travel expense ................................................
Rent expense ...................................................
Depreciation expense .....................................
Insurance expense ..........................................
Supplies expense ............................................
Interest expense ..............................................
Miscellaneous expense ..................................
Total expenses ........................................
Net income ..............................................................

15,280
2,240
1,300
1,200
720
600
770
300
230
7,360
7,920

## HERCULES POIROT, P.I., INC.

Retained Earnings Statement
For the Quarter Ended March 31, 2014
Retained Earnings, January 1 ..........................................
Less: Dividends ................................................................
Retained Earnings, March 31 ............................................

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0
7,920
7,920
600
7,320

4-35

## PROBLEM 4-1A (Continued)

HERCULES POIROT, P.I., INC.
Statement of Financial Position
March 31, 2014
Assets
Property, plant, and equipment
Equipment ......................................................
Less: Accumulated depreciation
equipment ...............................................
Current assets
Prepaid insurance .........................................
Supplies..........................................................
Accounts receivable......................................
Cash ................................................................
Total assets ...........................................................
Equity and Liabilities
Equity
Share capitalordinary ................................
Retained earnings .........................................
Current liabilities
Notes payable ................................................
Accounts payable ..........................................
Interest payable .............................................
Total equity and liabilities ....................................
(c) Mar. 31
31

31
31

4-36

30,000
720
1,800
480
7,000
11,410

20,000
7,320
10,000
12,350
300

## Supplies Expense .................................

Supplies .........................................

770

## Depreciation Expense ..........................

Accumulated Depreciation
Equipment...................................

720

## Interest Expense ...................................

Interest Payable.............................

300

## Insurance Expense ...............................

Prepaid Insurance .........................

600

29,280

20,690
49,970

27,320

22,650
49,970
770

720
300
600

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Mar. 31

(d) Mar. 31

31

31

31

## Accounts Receivable ................................

Service Revenue ................................

1,080

Service Revenue.......................................
Income Summary ..............................

15,280

## Income Summary .....................................

Travel Expense .................................
Salaries and Wages Expense ..........
Rent Expense ....................................
Insurance Expense ...........................
Depreciation Expense ......................
Supplies Expense .............................
Interest Expense ...............................
Miscellaneous Expense ...................

7,360

## Income Summary .....................................

Retained Earnings ............................

7,920

## Retained Earnings ....................................

Dividends ..........................................

600

1,080

15,280

1,300
2,240
1,200
600
720
770
300
230

7,920

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600

4-37

PROBLEM 4-2A

(a)

WATSON COMPANY
Partial Worksheet
For the Year Ended December 31, 2014

Account

Trial Balance
Dr.
Cr.

No. Titles
101
112
126
130
157
158
200
201
212
230
311
320
332
400
610
631
711
722
726
905

4-38

Cash
Accounts Receivable
Supplies
Prepaid Insurance
Equipment
Acc. Depr.Equip.
Notes Payable
Accounts Payable
Salaries and Wages
Payable
Interest Payable
Share CapitalOrdinary
Retained Earnings
Dividends
Service Revenue
Supplies Expense
Depreciation Expense
Insurance Expense
Salaries and Wages
Expense
Interest Expense
Totals
Net Income
Totals

Income
Statement
Dr.
Cr.

17,800
14,400
2,300
4,400
46,000

Statement of
Financial
Position
Dr.
Cr.
17,800
14,400
2,300
4,400
46,000

18,000
20,000
8,000

18,000
20,000
8,000

2,600
1,000
15,000
9,800

2,600
1,000
15,000
9,800

12,000

12,000
86,200

10,000
3,700
6,000
4,000
39,000
1,000
160,600 160,600

86,200
10,000
3,700
6,000
4,000
39,000
1,000
63,700
22,500
86,200

86,200

96,900

86,200

96,900

74,400
22,500
96,900

Copyright 2013 John Wiley & Sons, Inc. Weygandt Financial, IFRS, 2/e, Solutions Manual (For Instructor Use Only)

## PROBLEM 4-2A (Continued)

(b)

WATSON COMPANY
Income Statement
For the Year Ended December 31, 2014
Revenues
Service revenue..............................................
Expenses
Salaries and wages expense.........................
Depreciation expense ....................................
Insurance expense .........................................
Supplies expense ...........................................
Interest expense .............................................
Total expenses .......................................
Net income .............................................................

\$86,200
\$39,000
10,000
6,000
4,000
3,700
1,000
63,700
\$22,500

WATSON COMPANY
Retained Earnings Statement
For the Year Ended December 31, 2014
Retained Earnings, January 1 ................................................
Less: Dividends ......................................................................
Retained Earnings, December 31 ...........................................

Copyright 2013 John Wiley & Sons, Inc. Weygandt Financial, IFRS, 2/e, Solutions Manual (For Instructor Use Only)

\$ 9,800
22,500
32,300
12,000
\$20,300

4-39

## PROBLEM 4-2A (Continued)

WATSON COMPANY
Statement of Financial Position
December 31, 2014
Assets
Property, plant, and equipment
Equipment ......................................................
Less: Accumulated depreciation
equipment ...............................................
Current assets
Prepaid insurance .........................................
Supplies..........................................................
Accounts receivable......................................
Cash ................................................................
Total assets ...........................................................

\$46,000
18,000
4,400
2,300
14,400
17,800

\$28,000

38,900
\$66,900

## Equity and Liabilities

Equity
Share capitalordinary ................................
Retained earnings .........................................
Non-current liabilities
Notes payable (due after 2015) .....................
Current liabilities
Notes payable (due in 2015) .........................
Accounts payable ..........................................
Salaries and wages payable .........................
Interest payable .............................................
Total equity and liabilities ....................................

4-40

\$15,000
20,300

\$35,300
15,000

5,000
8,000
2,600
1,000

16,600
\$66,900

Copyright 2013 John Wiley & Sons, Inc. Weygandt Financial, IFRS, 2/e, Solutions Manual (For Instructor Use Only)

## PROBLEM 4-2A (Continued)

(c)
General Journal
Date
Account Titles
Dec. 31 Service Revenue .................................
Income Summary.......................

Ref.
400
350

Debit
86,200

## 31 Income Summary ................................

Supplies Expense ......................
Depreciation Expense ...............
Insurance Expense ....................
Salaries and Wages Expense ...
Interest Expense ........................

350
610
631
711
722
726
905

63,700

## 31 Income Summary ................................

Retained Earnings .....................

350
320

22,500

31 Retained Earnings...............................
Dividends....................................

320
332

12,000

J14
Credit
86,200

10,000
3,700
6,000
4,000
39,000
1,000

22,500

12,000

(d)
Date

Explanation
Balance
Dec. 31 Closing entry
31 Closing entry

Date
Explanation
Dec. 31 Balance
31 Closing entry

Retained Earnings
Ref.
Debit
J14
J14

Dividends
Ref.
J14

Credit
9,800
22,500

12,000

Debit
12,000

Credit
12,000

Copyright 2013 John Wiley & Sons, Inc. Weygandt Financial, IFRS, 2/e, Solutions Manual (For Instructor Use Only)

No. 320
Balance
9,800
32,300
20,300

No. 332
Balance
12,000
0

4-41

## PROBLEM 4-2A (Continued)

Credit
86,200

No. 350
Balance
86,200
22,500
0

Credit
86,200

86,200

No. 400
Balance
86,200
0

Date
Explanation
Dec. 31 Balance
31 Closing entry

Ref.
Debit
10,000
J14

Credit

No. 610
Balance
10,000
0

Date
Explanation
Dec. 31 Balance
31 Closing entry

Supplies Expense
Ref.
Debit
3,700
J14

Date
Explanation
Dec. 31 Balance
31 Closing entry

Depreciation Expense
Ref.
Debit
6,000
J14

Date
Dec. 31
31
31

Explanation
Closing entry
Closing entry
Closing entry

Date
Explanation
Dec. 31 Balance
31 Closing entry

Date
Dec. 31
31

4-42

Explanation
Balance
Closing entry

Income Summary
Ref.
Debit
J14
J14
63,700
J14
22,500

Service Revenue
Ref.
Debit
J14

Insurance Expense
Ref.
Debit
4,000
J14

10,000

Credit
3,700

Credit
6,000

Credit
4,000

No. 631
Balance
3,700
0

No. 711
Balance
6,000
0

No. 722
Balance
4,000
0

Copyright 2013 John Wiley & Sons, Inc. Weygandt Financial, IFRS, 2/e, Solutions Manual (For Instructor Use Only)

## PROBLEM 4-2A (Continued)

Salaries and Wages Expense
Date
Explanation
Ref.
Debit
Dec. 31 Balance
39,000
31 Closing entry
J14

Date
Explanation
Dec. 31 Balance
31 Closing entry

(e)

Interest Expense
Ref.
Debit
1,000
J14

Credit
39,000

Credit
1,000

No. 726
Balance
39,000
0

No. 905
Balance
1,000
0

WATSON COMPANY
Post-Closing Trial Balance
December 31, 2014
Cash .....................................................................
Accounts Receivable ..........................................
Supplies ...............................................................
Prepaid Insurance ...............................................
Equipment ...........................................................
Accumulated Depreciation
Equipment .......................................................
Notes Payable .....................................................
Accounts Payable ...............................................
Salaries and Wages Payable .............................
Interest Payable ..................................................
Share CapitalOrdinary ....................................
Retained Earnings ..............................................

Debit
\$17,800
14,400
2,300
4,400
46,000

\$84,900

Copyright 2013 John Wiley & Sons, Inc. Weygandt Financial, IFRS, 2/e, Solutions Manual (For Instructor Use Only)

Credit

\$18,000
20,000
8,000
2,600
1,000
15,000
20,300
\$84,900

4-43

PROBLEM 4-3A
(a)

HUBBS COMPANY
Income Statement
For the Year Ended December 31, 2014
Revenues
Service revenue ...........................................
Expenses
Salaries and wages expense ......................
Maintenance and repairs expense .............
Utilities expense ..........................................
Depreciation expense .................................
Insurance expense ......................................
Total expenses .....................................
Net loss ................................................................

\$47,000
\$35,200
4,100
4,000
3,300
2,200
48,800
\$ (1,800)

HUBBS COMPANY
Retained Earnings Statement
For the Year Ended December 31, 2014
Retained Earnings, January 1 ............................
Less: Net loss .....................................................
Dividends ..................................................
Retained Earnings, December 31 ......................

\$9,700
\$1,800
4,000

5,800
\$3,900

HUBBS COMPANY
Statement of Financial Position
December 31, 2014
Assets
Property, plant, and equipment
Equipment ....................................................
Less: Accumulated depreciation
equipment .........................................
Current assets
Prepaid insurance .......................................
Accounts receivable....................................
Cash ..............................................................
Total assets .........................................................

4-44

\$33,000
9,900
1,800
7,500
6,200

\$23,100

15,500
\$38,600

Copyright 2013 John Wiley & Sons, Inc. Weygandt Financial, IFRS, 2/e, Solutions Manual (For Instructor Use Only)

## PROBLEM 4-3A (Continued)

HUBBS COMPANY
Statement of Financial Position (Continued)
December 31, 2014
Equity and Liabilities
Equity
Share capitalordinary ..............................
Retained earnings .......................................
Current liabilities
Accounts payable .......................................
Salaries and wages payable.......................
Total equity and liabilities ..................................

\$20,000
3,900
11,700
3,000

\$23,900
14,700
\$38,600

(b)
General Journal
Date
Account Titles
Dec. 31 Service Revenue .................................
Income Summary .......................
31

31

31

Ref.
400
350

Debit
47,000

## Income Summary ................................

Maintenance and Repairs
Expense ...................................
Depreciation Expense................
Insurance Expense ....................
Salaries and Wages Expense....
Utilities Expense ........................

350

48,800

Retained Earnings...............................
Income Summary .......................

320
350

1,800

Retained Earnings...............................
Dividends ....................................

320
332

4,000

Credit
47,000

4,100
3,300
2,200
35,200
4,000

622
711
722
726
732

1,800

Copyright 2013 John Wiley & Sons, Inc. Weygandt Financial, IFRS, 2/e, Solutions Manual (For Instructor Use Only)

4,000

4-45

(c)
12/31
12/31

12/31 Bal.

12/31

12/31

(d)

## Retained Earnings No. 320

1,800 1/1 Bal.
9,700
4,000
12/31 Bal.
3,900

Dividends
4,000 12/31

Income Summary
48,800 12/31
12/31
48,800

No. 332
4,000

No. 350
47,000
1,800
48,800

Service Revenue
No. 400
47,000 12/31 Bal. 47,000

Expense
12/31 Bal.
4,100 12/31

## Depreciation Expense No. 711

12/31 Bal.
3,300 12/31
3,300

Insurance Expense
12/31 Bal.
2,200 12/31

No. 722
2,200

## Salaries and Wages Expense

12/31 Bal. 35,200 12/31

No. 726
35,200

Utilities Expense
12/31 Bal.
4,000 12/31

No. 732
4,000

HUBBS COMPANY
Post-Closing Trial Balance
December 31, 2014
Cash .....................................................................
Accounts Receivable ..........................................
Prepaid Insurance ...............................................
Equipment ............................................................
Accumulated DepreciationEquipment ...........
Accounts Payable ...............................................
Salaries and Wages Payable ..............................
Share CapitalOrdinary .....................................
Retained Earnings ...............................................
Totals ............................................................

4-46

No. 622
4,100

Debit
\$ 6,200
7,500
1,800
33,000

\$48,500

Credit

\$ 9,900
11,700
3,000
20,000
3,900
\$48,500

Copyright 2013 John Wiley & Sons, Inc. Weygandt Financial, IFRS, 2/e, Solutions Manual (For Instructor Use Only)

Account Titles

Copyright 2013 John Wiley & Sons, Inc. Weygandt Financial, IFRS, 2/e, Solutions Manual (For Instructor Use Only)

277,900

36,200
14,600
3,900
50,000
60,000
36,100

30,500
9,400
16,900
21,000
6,000
478,700 478,700

98,000

14,000

34,400
18,600
29,900
80,000
120,000

49,300

(e)

(f)

3,000
49,300

2,000

2,000
3,000
489,700 489,700

6,000

280,800

Cr.

228,200 280,800
52,600
280,800 280,800

6,000

(b) 19,000
(a) 16,400
6,000

19,000
16,400

19,000
16,400

3,000
2,000

(c)

30,500
9,400
16,900
24,000
8,000

280,800

Dr.

30,500
9,400
16,900
24,000
8,000

14,000

42,200
14,600
1,000
50,000
60,000
36,100

Cr.

Income
Statement

98,000

(d) 2,900

6,000

34,400
2,200
10,900
80,000
120,000

Dr.

Trial Balance

98,000

(e)
(f)

(d) 2,900

(c)

(a) 16,400
(b) 19,000

Cr.

Dr.

Dr.

Cr.

Trial Balance

## TERESINA AMUSEMENT PARK

Worksheet
For the Year Ended September 30, 2014

261,500

261,500

14,000

34,400
2,200
10,900
80,000
120,000

Dr.

3,000
208,900
52,600
261,500

2,000

42,200
14,600
1,000
50,000
60,000
36,100

Cr.

Statement of
Financial Position

Key: (a) Supplies Used; (b) Expired Insurance; (c) Depreciation Expensed; (d) Ticket Revenue Earned; (e) Accrued Property Taxes;
(f) Accrued Interest Payable.

Cash
Supplies
Prepaid Insurance
Land
Equipment
Accumulated Depreciation
Equipment
Accounts Payable
Unearned Ticket Revenue
Mortgage Payable
Share CapitalOrdinary
Retained Earnings
Dividends
Ticket Revenue
Salaries and Wages Expense
Maintenance and Repairs
Expense
Utilities Expense
Property Tax Expense
Interest Expense
Totals
Insurance Expense
Supplies Expense
Interest Payable
Depreciation Expense
Property Taxes Payable
Totals
Net Income
Totals

(a)

PROBLEM 4-4A

4-47

(b)

## TERESINA AMUSEMENT PARK, INC.

Statement of Financial Position
September 30, 2014
Assets
Property, plant, and equipment
Land ..............................................
R\$80,000
Equipment .................................... R\$120,000
Less: Accum. depreciation
equipment ..........................
42,200
77,800 R\$157,800
Current assets
Prepaid insurance .......................
10,900
Supplies........................................
2,200
Cash ..............................................
34,400
47,500
Total assets .........................................
R\$205,300
Equity and Liabilities
Equity
Share capitalordinary ..............
Retained earnings .......................
Non-current liabilities
Mortgage payable
(due after 2015) .......................
Current liabilities
Mortgage payable (due in 2015) .
Accounts payable ........................
Interest payable ...........................
Property taxes payable ...............
Unearned ticket
revenue .....................................
Total equity and liabilities ..................

R\$60,000
74,700* R\$134,700

35,000
15,000
14,600
2,000
3,000
1,000

35,600
R\$205,300

## *R\$36,100 + R\$52,600 R\$14,000

4-48

Copyright 2013 John Wiley & Sons, Inc. Weygandt Financial, IFRS, 2/e, Solutions Manual (For Instructor Use Only)

(c) Sept. 30

30

30

30

30

30

(d) Sept. 30

30

30

30

## Supplies Expense ................................

Supplies ........................................

16,400

## Insurance Expense ..............................

Prepaid Insurance ........................

19,000

## Depreciation Expense .........................

Accumulated Depreciation
Equipment..................................

6,000

## Unearned Ticket Revenue ...................

Ticket Revenue .............................

2,900

## Property Tax Expense .........................

Property Taxes Payable...............

3,000

## Interest Expense ..................................

Interest Payable............................

2,000

## Ticket Revenue ....................................

Income Summary .........................

280,800

## Income Summary .................................

Salaries and Wages Expense......
Maintenance and Repairs
Expense .....................................
Insurance Expense ......................
Property Tax Expense .................
Supplies Expense ........................
Utilities Expense ..........................
Interest Expense ..........................
Depreciation Expense..................

228,200

## Income Summary .................................

Retained Earnings........................

52,600

## Retained Earnings ...............................

Dividends ......................................

14,000

16,400

19,000

6,000

2,900

3,000

2,000

280,800

98,000
30,500
19,000
24,000
16,400
16,900
8,000
9,400
6,000

52,600

Copyright 2013 John Wiley & Sons, Inc. Weygandt Financial, IFRS, 2/e, Solutions Manual (For Instructor Use Only)

14,000
4-49

(e)

## TERESINA AMUSEMENT PARK

Post-Closing Trial Balance
September 30, 2014
Debit
Cash ..................................................................... R\$ 34,400
Supplies ...............................................................
2,200
Prepaid Insurance ...............................................
10,900
Land ......................................................................
80,000
Equipment ............................................................
120,000
Accumulated DepreciationEquipment ...........
Accounts Payable ...............................................
Interest Payable ...................................................
Property Taxes Payable ......................................
Unearned Ticket Revenue ..................................
Mortgage Payable ...............................................
Share CapitalOrdinary .....................................
Retained Earnings ...............................................
R\$247,500

4-50

Credit

R\$ 42,200
14,600
2,000
3,000
1,000
50,000
60,000
74,700
R\$247,500

Copyright 2013 John Wiley & Sons, Inc. Weygandt Financial, IFRS, 2/e, Solutions Manual (For Instructor Use Only)

PROBLEM 4-5A

(a)
Date
Mar. 1

14

18

20

21

28

31

31

General Journal
Account Titles
Cash ....................................................
Share CapitalOrdinary ..........

Ref.
101
311

Debit
14,000

Equipment...........................................
Cash ...........................................
Accounts Payable .....................

157
101
201

8,000

Supplies ..............................................
Accounts Payable .....................

126
201

1,200

## Prepaid Insurance ..............................

Cash ...........................................

130
101

1,800

## Accounts Receivable .........................

Service Revenue .......................

112
400

4,800

## Accounts Payable ..............................

Cash ...........................................

201
101

2,000

## Salaries and Wages Expense............

Cash ...........................................

726
101

1,800

Cash ....................................................
Accounts Receivable ................

101
112

1,600

## Accounts Receivable .........................

Service Revenue .......................

112
400

2,500

## Gasoline Expense ..............................

Cash ...........................................

633
101

320

Dividends ...........................................
Cash ...........................................

332
101

800

J1
Credit
14,000

3,000
5,000

1,200

1,800

4,800

2,000

1,800

1,600

2,500

320

Copyright 2013 John Wiley & Sons, Inc. Weygandt Financial, IFRS, 2/e, Solutions Manual (For Instructor Use Only)

800

4-51

4-52

Account Titles

320
1,800
25,500

800

5,880
5,700
1,200
1,800
8,000

25,500

7,300

4,200
14,000

150
950

(c)
(d)
2,870

300

720

750

(b)

(e)

(a)

(e)

(b)

(a)

(d)
(c)

720
2,870

300

750

950
150

Cr.

Dr.

Dr.

Cr.

Trial Balance

27,270

150
950

300

320
2,520

800

5,880
6,450
250
1,650
8,000

Dr.

720
27,270

300

8,050

4,200
14,000

Cr.

Trial Balance

## FRESH STEP CARPET CLEANERS

Worksheet
For the Month Ended March 31, 2014

4,240
3,810
8,050

150
950

300

320
2,520

Dr.

23,030
23,030

8,050

800

5,880
6,450
250
1,650
8,000

Dr.

720
19,220
3,810
23,030

300

4,200
14,000

Cr.

Statement of
Financial Position

8,050

8,050

Cr.

Income
Statement

Key: (a) Service Revenue Earned; (b) Depreciation Expensed; (c) Insurance Expired; (d) Cleaning Supplies Used; (e) Unpaid Salaries.

Cash
Accounts Receivable
Supplies
Prepaid Insurance
Equipment
Accounts Payable
Share CapitalOrdinary
Dividends
Service Revenue
Gasoline Expense
Salaries and Wages Expense
Totals
Depreciation Expense
Accum. Depr.Equipment
Insurance Expense
Supplies Expense
Salaries and Wages Payable
Totals
Net Income
Totals

(b)&(c)

## PROBLEM 4-5A (Continued)

Copyright 2013 John Wiley & Sons, Inc. Weygandt Financial, IFRS, 2/e, Solutions Manual (For Instructor Use Only)

## PROBLEM 4-5A (Continued)

(a), (e) & (f)

Date
Mar. 1
1
5
18
20
21
31
31

Date
Mar. 14
21
28
31

Date
Mar. 3
31

Date
Mar. 5
31

Date
Mar. 1

Explanation

Explanation

Explanation

Explanation

Explanation

Cash
Ref.
J1
J1
J1
J1
J1
J1
J1
J1

Debit
14,000

3,000
1,800
2,000
1,800
1,600
320
800

Accounts Receivable
Ref.
Debit
J1
4,800
J1
J1
2,500
J2
750

Supplies
Ref.
J1
J2

Debit
1,200

Credit
1,600

Credit
950

Prepaid Insurance
Ref.
Debit
J1
1,800
J2

Equipment
Ref.
J1

Credit

Debit
8,000

Credit
150

Credit

Copyright 2013 John Wiley & Sons, Inc. Weygandt Financial, IFRS, 2/e, Solutions Manual (For Instructor Use Only)

No. 101
Balance
14,000
11,000
9,200
7,200
5,400
7,000
6,680
5,880

No. 112
Balance
4,800
3,200
5,700
6,450

No. 126
Balance
1,200
250

No. 130
Balance
1,800
1,650

No. 157
Balance
8,000

4-53

## PROBLEM 4-5A (Continued)

Date
Mar. 31

Date
Mar. 1
3
18

Date
Mar. 31

Date
Mar. 1

Date
Mar. 1
31
31

Date
Mar. 31
31

Date
Mar. 31
31
31
4-54

Accumulated DepreciationEquipment
Explanation
Ref.
Debit
Credit
J2
300

Explanation

Accounts Payable
Ref.
Debit
J1
J1
J1
2,000

## Salaries and Wages Payable

Explanation
Ref.
Debit
J2

Explanation

Explanation
Closing
Closing

Explanation
Closing

Explanation
Closing
Closing
Closing

Share CapitalOrdinary
Ref.
Debit
J1
Retained Earnings
Ref.
Debit
J3
J3
Dividends
Ref.
J1
J3

Credit
5,000
1,200

Credit
720

Credit
14,000

No. 311
Balance
14,000

Credit

800

Income Summary
Ref.
Debit
J3
J3
4,240
J3
3,810

No. 201
Balance
5,000
6,200
4,200

No. 212
Balance
720

3,810

Debit
800

No. 158
Balance
300

Credit
800

Credit
8,050

No. 320
Balance
0
3,810
3,010
No. 332
Balance
800
0
No. 350
Balance
8,050
3,810
0

Copyright 2013 John Wiley & Sons, Inc. Weygandt Financial, IFRS, 2/e, Solutions Manual (For Instructor Use Only)

## PROBLEM 4-5A (Continued)

Date
Mar. 14
28
31
31

Explanation

Closing

Service Revenue
Ref.
Debit
J1
J1
J2
J3
8,050

Closing

Gasoline Expense
Ref.
Debit
J1
320
J3

Explanation
Closing

Supplies Expense
Ref.
Debit
J2
950
J3

Explanation
Closing

Depreciation Expense
Ref.
Debit
J2
300
J3

Date
Mar. 31
31

Explanation
Closing

Insurance Expense
Ref.
Debit
J2
150
J3

Date
Mar. 20
31
31

## Salaries and Wages Expense

Explanation
Ref.
Debit
J1
1,800
J2
720
Closing
J3

Date
Mar. 31
31

Date
Mar. 31
31

Date
Mar. 31
31

Explanation

Credit
4,800
2,500
750

No. 400
Balance
4,800
7,300
8,050
0

Credit

No. 633
Balance
320
0

320

Credit
950

Credit
300

Credit
150

Credit

2,520

Copyright 2013 John Wiley & Sons, Inc. Weygandt Financial, IFRS, 2/e, Solutions Manual (For Instructor Use Only)

No. 631
Balance
950
0
No. 711
Balance
300
0
No. 722
Balance
150
0
No. 726
Balance
1,800
2,520
0

4-55

(d)

## FRESH STEP CARPET CLEANERS

Income Statement
For the Month Ended March 31, 2014
Revenues
Service revenue .............................................
Expenses
Salaries and wages expense ........................
Supplies expense ..........................................
Depreciation expense ...................................
Gasoline expense ..........................................
Insurance expense ........................................
Total expenses .......................................
Net income .............................................................

\$8,050
\$2,520
950
300
320
150
4,240
\$3,810

## FRESH STEP CARPET CLEANERS

Retained Earnings Statement
For the Month Ended March 31, 2014
Retained Earnings, March 1 .................................

0
3,810
3,810
800
\$3,010

## Less: Dividends ....................................................

Retained Earnings, March 31 ...............................

## FRESH STEP CARPET CLEANERS

Statement of Financial Position
March 31, 2014
Assets
Property, plant, and equipment
Equipment ........................................................
Less: Accumulated depreciation
equipment .................................................

4-56

\$ 8,000
300

\$ 7,700

Copyright 2013 John Wiley & Sons, Inc. Weygandt Financial, IFRS, 2/e, Solutions Manual (For Instructor Use Only)

## PROBLEM 4-5A (Continued)

FRESH STEP CARPET CLEANERS
Statement of Financial Position (Continued)
March 31, 2014
Assets (Continued)
Current assets
Prepaid insurance ...........................................
Supplies ...........................................................
Accounts receivable .......................................
Cash .................................................................
Total assets .............................................................

1,650
250
6,450
5,880

14,230
\$21,930

## Equity and Liabilities

Equity
Share capitalordinary ..................................
Retained earnings ...........................................
Current liabilities
Accounts payable ...........................................
Salaries and wages payable...........................
Total equity and liabilities ......................................

\$14,000
3,010
4,200
720

\$17,010
4,920
\$21,930

(e)
Date
Mar. 31

31

31

31

31

General Journal
Account Titles
Accounts Receivable.........................
Service Revenue .......................

Ref.
112
400

Debit
750

## Depreciation Expense .......................

Accumulated Depreciation
Equipment .............................

711

300

## Insurance Expense ............................

Prepaid Insurance.....................

722
130

150

## Supplies Expense ..............................

Supplies.....................................

631
126

950

## Salaries and Wages Expense ...........

Salaries and Wages Payable ...

726
212

720

J2
Credit
750

158

300

150

950

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720

4-57

## PROBLEM 4-5A (Continued)

(f)
Date
Mar. 31

31

31

31

(g)

General Journal
Account Titles
Service Revenue .................................
Income Summary .......................

Ref.
400
350

Debit
8,050

## Income Summary ................................

Salaries and Wages Expense ...
Depreciation Expense ...............
Insurance Expense ....................
Supplies Expense ......................
Gasoline Expense ......................

350
726
711
722
631
633

4,240

## Income Summary ................................

Retained Earnings .....................

350
320

3,810

## Retained Earnings ..............................

Dividends....................................

320
332

800

8,050

2,520
300
150
950
320

3,810

800

## FRESH STEP CARPET CLEANERS

Post-Closing Trial Balance
March 31, 2014

Cash .....................................................................
Accounts Receivable ..........................................
Supplies ...............................................................
Prepaid Insurance ...............................................
Equipment ............................................................
Accumulated DepreciationEquipment ...........
Accounts Payable ...............................................
Salaries and Wages Payable ..............................
Share CapitalOrdinary .....................................
Retained Earnings ...............................................
000,000

4-58

J3
Credit

Debit
\$ 5,880
6,450
250
1,650
8,000

Credit

\$22,230

300
4,200
720
14,000
3,010
\$22,230

Copyright 2013 John Wiley & Sons, Inc. Weygandt Financial, IFRS, 2/e, Solutions Manual (For Instructor Use Only)

Cash ...................................
Accts. Receivable........

## Misc. Expense ...................

Cash .............................

## Salaries and Wages

Expense ..........................
Cash .............................

Supplies.............................
Accounts Payable .......

Equipment .........................
Cash .............................

2.

3.

4.

5.

1.

(a)

152

310

1,850

75

950

152

310

1,850

75

950

## Maintenance and Repairs

Expense ..........................
Cash .............................

Equipment .........................
Accounts Payable .......

## Salaries and Wages

Expense ..........................
Salaries and Wages
Payable ...........................
Cash .............................

Cash .............................

Cash ...................................
Accts. Receivable ........

125

310

700

1,150

75

590

125

310

1,850

75

590

75

152

## Maintenance and Repairs

Expense ...........................
Cash .................................
Equipment .....................

125
27

310

700

75

360

## Equipment .......................... 310

Supplies ........................

## Salaries and Wages

Payable ............................ 700
Salaries and Wages
Expense......................

Misc. Expense...............

## Accounts Receivable......... 360

Cash...............................

## (3) CORRECTING ENTRY

PROBLEM 4-6A

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4-59

## PROBLEM 4-6A (Continued)

(b)

INFO CABLE
Trial Balance
April 30, 2014
Cash (4,100 360 + 27) ...................................
Accounts Receivable (3,200 + 360) ..................
Supplies (800 310) ..........................................
Equipment (10,600 + 310 152) .....................
Accumulated DepreciationEquipment .............
Accounts Payable .................................................
Salaries and Wages Payable (700 700).........
Unearned Service Revenue ..................................
Share CapitalOrdinary .......................................
Retained Earnings .................................................
Service Revenue ...................................................
Salaries and Wages Expense (3,300 700) ....
Advertising Expense (480 + 75) .......................
Miscellaneous Expense (290 75)...................
Depreciation Expense ...........................................
Maintenance and Repairs Expense .....................

4-60

Debit
3,767
3,560
490
10,758

Credit

1,250
2,100
0
890
10,000
2,880
5,450
2,600
555
215
500
125
22,570

22,570

Copyright 2013 John Wiley & Sons, Inc. Weygandt Financial, IFRS, 2/e, Solutions Manual (For Instructor Use Only)

Account Titles

1,300
280
20,600

1,100

2,720
2,700
1,500
11,000

Dr.

20,600

6,300

1,250
2,500
550
10,000

Cr.

Trial Balance

(a)
(b)

(d)

(c)

950
250

480

260

1,940

Dr.

(d)

480
1,940

260

250

(b)

(c)

950

(a)

Cr.

21,330

950
250

1,780
280

1,100

2,720
2,700
550
11,000

Dr.

480
21,330

6,560

1,500
2,500
290
10,000

Cr.

Trial Balance

FIRMAMENT ROOFING
Worksheet
For the Month Ended March 31, 2014

3,260
3,300
6,560

950
250

1,780
280

Dr.

18,070
18,070

6,560

1,100

2,720
2,700
550
11,000

Dr.

480
14,770
3,300
18,070

1,500
2,500
290
10,000

Cr.

Statement of
Financial Position

6,560

6,560

Cr.

Income
Statement

Key: (a) Supplies Used; (b) Depreciation Expensed; (c) Service Revenue Earned; (d) Salaries Accrued.

Cash
Accounts Receivable
Supplies
Equipment
Accumulated
DepreciationEquipment
Accounts Payable
Unearned Service Revenue
Share CapitalOrdinary
Dividends
Service Revenue
Salaries and Wages
Expense
Miscellaneous Expense
Totals
Supplies Expense
Depreciation Expense
Salaries and Wages
Payable
Totals
Net Income
Totals

(a)

PROBLEM 4-1B

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4-61

## PROBLEM 4-1B (Continued)

(b)

FIRMAMENT ROOFING
Income Statement
For the Month Ended March 31, 2014
Revenues
Service revenue ..................................................
Expenses
Salaries and wages expense .............................
Supplies expense ...............................................
Miscellaneous expense ......................................
Depreciation expense ........................................
Total expenses ............................................
Net income ..................................................................

\$6,560
\$1,780
950
280
250
3,260
\$3,300

FIRMAMENT ROOFING
Retained Earnings Statement
For the Month Ended March 31, 2014
Retained Earnings, March 1 .......................................................
Less: Dividends ..........................................................................
Retained Earnings, March 31 .....................................................

0
3,300
3,300
1,100
\$2,200

FIRMAMENT ROOFING
Statement of Financial Position
March 31, 2014
Assets
Property, plant, and equipment
Equipment ...........................................................
Less: Accum. depreciationequipment .........
Current assets
Supplies...............................................................
Accounts receivable...........................................
Cash .....................................................................
Total assets ................................................................

4-62

\$11,000
1,500
550
2,700
2,720

\$ 9,500

5,970
\$15,470

Copyright 2013 John Wiley & Sons, Inc. Weygandt Financial, IFRS, 2/e, Solutions Manual (For Instructor Use Only)

## PROBLEM 4-1B (Continued)

FIRMAMENT ROOFING
Statement of Financial Position (Continued)
March 31, 2014
Equity and Liabilities
Equity
Share capitalordinary ...................................... \$10,000
Retained earnings ...............................................
2,200
Current liabilities
Accounts payable ...............................................
2,500
Salaries and wages payable...............................
480
Unearned service revenue .................................
290
Total equity and liabilities ...........................................
(c) Mar. 31
31

31
31

(d) Mar. 31
31

31
31

Supplies Expense........................................
Supplies ................................................

950

## Depreciation Expense .................................

Accumulated Depreciation
Equipment .........................................

250

## Unearned Service Revenue ........................

Service Revenue ..................................

260

## Salaries and Wages Expense .....................

Salaries and Wages Payable ..............

480

Service Revenue..........................................
Income Summary .................................

6,560

## Income Summary ........................................

Salaries and Wages Expense .............
Supplies Expense ................................
Depreciation Expense .........................
Miscellaneous Expense ......................

3,260

## Income Summary ........................................

Retained Earnings ...............................

3,300

## Retained Earnings .......................................

Dividends .............................................

1,100

\$12,200

3,270
\$15,470

950

250
260
480

6,560
1,780
950
250
280
3,300

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1,100

4-63

PROBLEM 4-2B

(a)

EAGLE COMPANY
Partial Worksheet
For the Year Ended December 31, 2014
Trial Balance

Account
No.
101
112
126
130
157
158
200
201
212
230
311
320
332
400
610
631
711
722
726
905

4-64

Titles
Cash
Accounts Receivable
Supplies
Prepaid Insurance
Equipment
Acc. Depr.Equip.
Notes Payable
Accounts Payable
Salaries and Wages
Payable
Interest Payable
Share CapitalOrdinary
Retained Earnings
Dividends
Service Revenue
Supplies Expense
Depreciation Expense
Insurance Expense
Salaries and Wages
Expense
Interest Expense
Totals
Net Income
Totals

Dr.
5,300
10,800
1,500
2,000
27,000

Cr.

Income
Statement
Dr.

Cr.

Statement of
Financial Position
Dr.
5,300
10,800
1,500
2,000
27,000

Cr.

5,600
15,000
4,600

5,600
15,000
4,600

2,400
600
10,000
4,200

2,400
600
10,000
4,200

5,000

5,000
59,000

59,000

8,400
4,000
5,600
3,200

8,400
4,000
5,600
3,200

28,000
600
101,400

28,000
600
49,800
9,200
59,000

101,400

59,000

51,600

59,000

51,600

42,400
9,200
51,600

Copyright 2013 John Wiley & Sons, Inc. Weygandt Financial, IFRS, 2/e, Solutions Manual (For Instructor Use Only)

## PROBLEM 4-2B (Continued)

(b)

EAGLE COMPANY
Income Statement
For the Year Ended December 31, 2014
Revenues
Service revenue..............................................
Expenses
Salaries and wages expense.........................
Depreciation expense ....................................
Supplies expense ...........................................
Insurance expense .........................................
Interest expense .............................................
Total expenses .......................................
Net income .............................................................

59,000
28,000
8,400
5,600
4,000
3,200
600
49,800
9,200

EAGLE COMPANY
Retained Earnings Statement
For the Year Ended December 31, 2014
Retained Earnings, January 1 ................................................
Less: Dividends ......................................................................
Retained Earnings, December 31 ...........................................

Copyright 2013 John Wiley & Sons, Inc. Weygandt Financial, IFRS, 2/e, Solutions Manual (For Instructor Use Only)

4,200
9,200
13,400
5,000
8,400

4-65

## PROBLEM 4-2B (Continued)

EAGLE COMPANY
Statement of Financial Position
December 31, 2014
Assets
Property, plant, and equipment
Equipment ......................................................
Less: Accumulated depreciation
equipment ...........................................
Current assets
Prepaid insurance .........................................
Supplies..........................................................
Accounts receivable......................................
Cash ................................................................
Total assets ...........................................................

27,000
5,600
2,000
1,500
10,800
5,300

21,400

19,600
41,000

## Equity and Liabilities

Equity
Share capitalordinary ................................
Retained earnings .........................................
Non-current liabilities
Notes payable (due after 2015) .....................
Current liabilities
Notes payable (due in 2015) .........................
Accounts payable ..........................................
Salaries and wages payable .........................
Interest payable .............................................
Total equity and liabilities ....................................

4-66

10,000
8,400

18,400
12,000

3,000
4,600
2,400
600

10,600
41,000

Copyright 2013 John Wiley & Sons, Inc. Weygandt Financial, IFRS, 2/e, Solutions Manual (For Instructor Use Only)

## PROBLEM 4-2B (Continued)

(c)
General Journal
Date
Account Titles
Dec. 31 Service Revenue .................................
Income Summary.......................

Ref.
400
350

Debit
59,000

## 31 Income Summary ................................

Supplies Expense ......................
Depreciation Expense ...............
Insurance Expense ....................
Salaries and Wages Expense ...
Interest Expense ........................

350
610
631
711
722
726
905

49,800

## 31 Income Summary ................................

Retained Earnings .....................

350
320

9,200

31 Retained Earnings...............................
Dividends....................................

320
332

5,000

J14
Credit
59,000

8,400
4,000
5,600
3,200
28,000
600

9,200

5,000

(d)

Date
Jan. 1
Dec. 31
31

Date

Explanation
Balance
Closing entry
Closing entry

Explanation

Dec. 31 Balance
31 Closing entry

Retained Earnings
Ref.
Debit
J14
J14

Dividends
Ref.

5,000

No. 320
Balance
4,200
13,400
8,400

Debit

Credit

No. 332
Balance

5,000

5,000
0

Credit
4,200
9,200

5,000
J14

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4-67

## PROBLEM 4-2B (Continued)

Date
Dec. 31
31
31

Explanation
Closing entry
Closing entry
Closing entry

Income Summary
Ref.
Debit
J14
J14
49,800
J14
9,200

Service Revenue
Ref.
Debit

Credit
59,000

No. 350
Balance
59,000
9,200
0

Credit
59,000

Date
Dec. 31
31

Explanation
Balance
Closing entry

59,000

No. 400
Balance
59,000
0

Date
Dec. 31
31

Explanation
Ref.
Debit
Balance
8,400
Closing entry
J14

No. 610
Balance
8,400
0

Date
Dec. 31
31

Explanation
Balance
Closing entry

Supplies Expense
Ref.
Debit
4,000
J14

Date
Dec. 31
31

Depreciation Expense
Explanation
Ref.
Debit
Balance
5,600
Closing entry
J14

Date
Dec. 31
31

Explanation
Balance
Closing entry

Insurance Expense
Ref.
Debit
3,200
J14

4-68

Copyright 2013 John Wiley & Sons, Inc. Weygandt Financial, IFRS, 2/e, Solutions Manual (For Instructor Use Only)

J14

Credit
8,400

Credit
4,000

Credit
5,600

Credit
3,200

No. 631
Balance
4,000
0

No. 711
Balance
5,600
0

No. 722
Balance
3,200
0

Date
Dec. 31
31

## Salaries and Wages Expense

Explanation
Ref.
Debit
Balance
28,000
Closing entry
J14

Date
Dec. 31
31

Interest Expense
Ref.
Debit
600
J14

(e)

Explanation
Balance
Closing entry

Credit
28,000

Credit
600

No. 726
Balance
28,000
0

No. 905
Balance
600
0

EAGLE COMPANY
Post-Closing Trial Balance
December 31, 2014
Cash .....................................................................
Accounts Receivable ..........................................
Supplies ...............................................................
Prepaid Insurance ...............................................
Equipment ...........................................................
Accumulated Depreciation
Equipment .......................................................
Notes Payable .....................................................
Accounts Payable ...............................................
Salaries and Wages Payable .............................
Interest Payable ..................................................
Share CapitalOrdinary ....................................
Retained Earnings ..............................................
Totals ...........................................................

Debit
5,300
10,800
1,500
2,000
27,000

46,600

Copyright 2013 John Wiley & Sons, Inc. Weygandt Financial, IFRS, 2/e, Solutions Manual (For Instructor Use Only)

Credit

5,600
15,000
4,600
2,400
600
10,000
8,400
46,600

4-69

PROBLEM 4-3B
(a)

LATHROP COMPANY
Income Statement
For the Year Ended December 31, 2014
Revenues
Service revenue .............................................
Expenses
Salaries and wages expense ........................
Depreciation expense ...................................
Insurance expense ........................................
Maintenance and repairs expense ...............
Utilities expense ............................................
Total expenses .......................................
Net income .............................................................

\$56,000
\$27,000
3,000
1,800
1,600
1,400
34,800
\$21,200

LATHROP COMPANY
Retained Earnings Statement
For the Year Ended December 31, 2014
Retained Earnings, January 1 ...........................................
Less: Dividends .................................................................
Retained Earnings, December 31 .....................................

\$16,400
21,200
37,600
8,000
\$29,600

LATHROP COMPANY
Statement of Financial Position
December 31, 2014
Assets
Property, plant, and equipment
Equipment ......................................................
Less: Accumulated depreciation
equipment ...........................................
Current assets
Prepaid insurance .........................................
Accounts receivable......................................
Cash ................................................................
Total assets ...........................................................

4-70

\$28,000
4,500
2,800
10,800
8,900

\$23,500

22,500
\$46,000

Copyright 2013 John Wiley & Sons, Inc. Weygandt Financial, IFRS, 2/e, Solutions Manual (For Instructor Use Only)

## PROBLEM 4-3B (Continued)

LATHROP COMPANY
Statement of Financial Position (Continued)
December 31, 2014
Equity and Liabilities
Equity
Share capitalordinary .................................. \$12,000
Retained earnings ........................................... 29,600
Current liabilities
Accounts payable ...........................................
2,000
Salaries and wages payable...........................
2,400
Total equity and liabilities ......................................

\$41,600

4,400
\$46,000

(b)
Date
Dec. 31

31

31

31

General Journal
Account Titles
Service Revenue .................................
Income Summary .......................

Ref.
400
350

Debit
56,000

350

34,800

Credit
56,000

## Income Summary ................................

Maintenance and Repairs
Expense ...................................
Depreciation Expense................
Insurance Expense ....................
Salaries and Wages Expense....
Utilities Expense ........................

622
711
722
726
732

## Income Summary ................................

Retained Earnings......................

350
320

21,200

Retained Earnings...............................
Dividends ....................................

320
332

8,000

1,600
3,000
1,800
27,000
1,400

21,200

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8,000

4-71

## PROBLEM 4-3B (Continued)

(c)
12/31

Retained Earnings
No. 320
8,000 1/1 Bal.
16,400
12/31
21,200
12/31 Bal. 29,600

12/31 Bal.

12/31
12/31

12/31

(d)

Dividends
8,000 12/31

No. 332
8,000

Income Summary
34,800 12/31
21,200
56,000

No. 350
56,000
56,000

Expense
No. 622
12/31 Bal.
1,600 12/31
1,600

## Depreciation Expense No. 711

12/31 Bal.
3,000 12/31
3,000

Insurance Expense
12/31 Bal.
1,800 12/31

No. 722
1,800

## Salaries and Wages

Expense
12/31 Bal. 27,000 12/31

No. 726
27,000

Utilities Expense
12/31 Bal.
1,400 12/31

No. 732
1,400

Service Revenue
No. 400
56,000 12/31 Bal. 56,000

LATHROP COMPANY
Post-Closing Trial Balance
December 31, 2014
Cash .....................................................................
Accounts Receivable ..........................................
Prepaid Insurance ...............................................
Equipment ............................................................
Accumulated DepreciationEquipment ...........
Accounts Payable ...............................................
Salaries and Wages Payable ..............................
Share CapitalOrdinary .....................................
Retained Earnings ...............................................
Totals ............................................................

4-72

Debit
\$ 8,900
10,800
2,800
28,000

\$50,500

Credit

\$ 4,500
2,000
2,400
12,000
29,600
\$50,500

Copyright 2013 John Wiley & Sons, Inc. Weygandt Financial, IFRS, 2/e, Solutions Manual (For Instructor Use Only)

Account Titles
Dr.

Cr.

Trial Balance
Dr.

Cr.

Dr.

Cr.

Trial Balance

## CARROLL MANAGEMENT SERVICES INC.

Worksheet
For the Year Ended December 31, 2014

Dr.

Cr.

Income
Statement

Dr.

Cr.

Statement of
Financial Position

13,800
Cash
13,800
13,800
26,300
Accounts Receivable
26,300
26,300
1,800
Prepaid Insurance
(a) 1,800
1,800
3,600
67,000
Land
67,000
67,000
127,000
Buildings
127,000
127,000
59,000
Equipment
59,000
59,000
Accounts Payable
12,500
12,500
12,500
Unearned Rent Revenue
8,000 (c) 4,500
3,500
3,500
Mortgage Payable
120,000
120,000
120,000
Share CapitalOrdinary
80,000
80,000
80,000
Retained Earnings
54,000
54,000
54,000
16,000
16,000
Dividends
16,000
Service Revenue
90,700
90,700
90,700
Rent Revenue
26,000
(c) 4,500
30,500
30,500
Salaries and Wages
42,000
Expense
42,000
42,000
17,500
17,500
17,500
19,000
Utilities Expense
19,000
19,000
391,200
391,200
Totals
1,800
(a) 1,800
Insurance Expense
1,800
6,600
(b) 6,600
Depr. Expense
6,600
3,000
Accum. Depr.Buildings
(b) 3,000
3,000
3,600
Accum. Depr.Equipment
(b) 3,600
3,600
9,600
(d) 9,600
Interest Expense
9,600
9,600
Interest Payable
(d) 9,600
9,600
22,500
22,500 407,400
407,400
96,500
121,200
310,900
286,200
Totals
24,700
24,700
Net Income
121,200
121,200
310,900
310,900
Totals
Key: (a) Expired Insurance; (b) Depreciation ExpenseBuildings and Equipment; (c) Rent Revenue Earned; (d) Accrued Interest Payable.

(a)

PROBLEM 4-4B

4-74
2011
WileyInc.
& Sons,
Inc. Financial,
Weygandt,
Accounting
Principles,
10/e, (For
Solutions
Manual
(For Instructor Use 4-73
2013 John
WileyJohn
& Sons,
Weygandt
IFRS,
2/e, Solutions
Manual
Instructor
Use Only)

(b)

## CARROLL MANAGEMENT SERVICES INC.

Statement of Financial Position
December 31, 2014
Assets
Property, plant, and equipment
Land ...............................................
Buildings .......................................
Less: Accumulated
depreciationbuildings ...
Equipment .....................................
Less: Accumulated
depreciationequipment ..
Current assets
Prepaid insurance ........................
Accounts receivable.....................
Cash ...............................................
Total assets ..........................................

67,000
127,000
3,000
59,000

124,000

3,600

55,400
1,800
26,300
13,800

246,400

41,900
288,300

## Equity and Liabilities

Equity
Share capitalordinary ................................
Retained earnings .........................................
Non-current liabilities
Mortgage payable (due after 2015) ..............
Current liabilities
Mortgage payable (due in 2015) ...................
Accounts payable ..........................................
Interest payable .............................................
Unearned rent revenue .................................
Total equity and liabilities ....................................

80,000
62,700* 142,700
95,000
25,000
12,500
9,600
3,500

50,600
288,300

## *54,000 + 24,700 16,000

4-74

Copyright 2013 John Wiley & Sons, Inc. Weygandt Financial, IFRS, 2/e, Solutions Manual (For Instructor Use Only)

(c) Dec. 31

31

31

31

(d) Dec. 31

31

31

31

## Insurance Expense ...............................

Prepaid Insurance .........................

1,800

Depreciation Expense...........................
Accumulated Depreciation
Buildings ....................................
Accumulated Depreciation
Equipment ..................................

6,600

## Unearned Rent Revenue.......................

Rent Revenue ................................

4,500

## Interest Expense ...................................

Interest Payable .............................

9,600

## Service Revenue ...................................

Rent Revenue ........................................
Income Summary ..........................

90,700
30,500

## Income Summary ..................................

Salaries and Wages Expense .......
Interest Expense ............................
Utilities Expense ............................
Depreciation Expense ...................
Insurance Expense ........................

96,500

## Income Summary ..................................

Retained Earnings .........................

24,700

Retained Earnings.................................
Dividends .......................................

16,000

1,800

3,000
3,600

4,500

9,600

121,200

42,000
17,500
9,600
19,000
6,600
1,800

24,700

Copyright 2013 John Wiley & Sons, Inc. Weygandt Financial, IFRS, 2/e, Solutions Manual (For Instructor Use Only)

16,000

4-75

(e)

## CARROLL MANAGEMENT SERVICES INC.

Post-Closing Trial Balance
December 31, 2014
Cash .................................................................
Accounts Receivable ......................................
Prepaid Insurance ...........................................
Land ..................................................................
Buildings ..........................................................
Accumulated DepreciationBuildings .........
Equipment ........................................................
Accumulated DepreciationEquipment .......
Accounts Payable ...........................................
Interest Payable ...............................................
Unearned Rent Revenue .................................
Mortgage Payable ...........................................
Share CapitalOrdinary .................................
Retained Earnings ...........................................

Debit
13,800
26,300
1,800
67,000
127,000

3,000

59,000

294,900

4-76

Credit

3,600
12,500
9,600
3,500
120,000
80,000
62,700
294,900

Copyright 2013 John Wiley & Sons, Inc. Weygandt Financial, IFRS, 2/e, Solutions Manual (For Instructor Use Only)

PROBLEM 4-5B

(a)
Date
July 1

12

18

20

21

25

31

31

General Journal
Account Titles
Cash .....................................................
Share capitalordinary ............

Ref.
101
311

Equipment ...........................................
Cash ............................................
Accounts Payable ......................

157
101
201

12,000

Supplies ...............................................
Accounts Payable ......................

126
201

2,100

Prepaid Insurance...............................
Cash ............................................

130
101

1,800

Accounts Receivable..........................
Service Revenue ........................

112
400

5,900

## Accounts Payable ...............................

Cash ............................................

201
101

2,900

## Salaries and Wages Expense ............

Cash ............................................

726
101

4,500

Cash .....................................................
Accounts Receivable.................

101
112

4,400

Accounts Receivable..........................
Service Revenue ........................

112
400

8,000

## Gasoline Expense ...............................

Cash ............................................

633
101

350

Dividends .............................................
Cash ............................................

332
101

1,200

Debit
20,000

J1
Credit
20,000

4,000
8,000

2,100

1,800

5,900

2,900

4,500

4,400

8,000

350

Copyright 2013 John Wiley & Sons, Inc. Weygandt Financial, IFRS, 2/e, Solutions Manual (For Instructor Use Only)

1,200

4-77

4-78
350
4,500
41,100

1,200

9,650
9,500
2,100
1,800
12,000

Dr.

41,100

13,900

7,200
20,000

Cr.

Trial Balance

500

7,650

(c)
150
(d) 1,500

(b)

(e) 2,200

(a) 3,300

Dr.

500

(e) 2,200
7,650

(b)

(a) 3,300

(d) 1,500
(c)
150

Cr.

47,100

150
1,500

500

350
6,700

1,200

9,650
12,800
600
1,650
12,000

Dr.

2,200
47,100

500

17,200

7,200
20,000

Cr.

Trial Balance

## BRENNAN'S CLEANING SERVICE

Worksheet
For the Month Ended July 31, 2014

9,200
8,000
17,200

150
1,500

500

350
6,700

Dr.

37,900
37,900

17,200

1,200

9,650
12,800
600
1,650
12,000

Dr.

2,200
29,900
8,000
37,900

500

7,200
20,000

Cr.

Statement of
Financial sheet

17,200

17,200

Cr.

Income
Statement

Key: (a) Service Revenue Earned; (b) Depreciation Expense; (c) Insurance Expired; (d) Cleaning Supplies Used; (e) Unpaid Salaries.

Cash
Accounts Receivable
Supplies
Prepaid Insurance
Equipment
Accounts Payable
Share CapitalOrdinary
Dividends
Service Revenue
Gasoline Expense
Salaries and Wages Expense
Totals
Depreciation Expense
Accum. Depr.Equipment
Insurance Expense
Supplies Expense
Salaries and Wages Payable
Totals
Net Income
Totals

Account Titles

## PROBLEM 4-5B (Continued)

Copyright 2013 John Wiley & Sons, Inc. Weygandt Financial, IFRS, 2/e, Solutions Manual (For Instructor Use Only)

## PROBLEM 4-5B (Continued)

(a), (e) & (f)

Date
Explanation
July 1
1
5
18
20
21
31
31

Date
Explanation
July 12
21
25

Date
July 3
31

Explanation

Date
Explanation
July 5

Date
July 1

Explanation

Cash
Ref.
J1
J1
J1
J1
J1
J1
J1
J1

Debit
20,000

4,000
1,800
2,900
4,500
4,400
350
1,200

Accounts Receivable
Ref.
Debit
J1
5,900
J1
J1
8,000
J2
3,300

Supplies
Ref.
J1
J2

Debit
2,100

Credit
4,400

Credit
1,500

Prepaid Insurance
Ref.
Debit
J1
1,800
J2

Equipment
Ref.
J1

Credit

Debit
12,000

Credit
150

Credit

Copyright 2013 John Wiley & Sons, Inc. Weygandt Financial, IFRS, 2/e, Solutions Manual (For Instructor Use Only)

No. 101
Balance
20,000
16,000
14,200
11,300
6,800
11,200
10,850
9,650

No. 112
Balance
5,900
1,500
9,500
12,800

No. 126
Balance
2,100
600

No. 130
Balance
1,800
1,650

No. 157
Balance
12,000

4-79

## PROBLEM 4-5B (Continued)

Date
July 31

Date
July 1
3
18

Date
July 31

Date
July 1

Date
July 1
31
31

Date
July 31
31

Date
July 31
31
31
4-80

Accumulated DepreciationEquipment
Explanation
Ref.
Debit
Credit
J2
500

Explanation

Accounts Payable
Ref.
Debit
J1
J1
J1
2,900

## Salaries and Wages Payable

Explanation
Ref.
Debit
J2

Explanation

Explanation
Closing
Closing

Explanation
Closing

Explanation
Closing
Closing
Closing

Share CapitalOrdinary
Ref.
Debit
J1
Retained Earnings
Ref.
Debit
J3
J3
Dividends
Ref.
J1
J3

Credit
8,000
2,100

Credit
2,200

Credit
20,000

No. 311
Balance
20,000

Credit

No. 320
Balance

1,200

Income Summary
Ref.
Debit
J3
J3
9,200
J3
8,000

No. 201
Balance
8,000
10,100
7,200

No. 212
Balance
2,200

8,000

Debit
1,200

No. 158
Balance
500

Credit
1,200

Credit
17,200

8,000
6,800
No. 332
Balance
1,200
0
No. 350
Balance
17,200
8,000
0

Copyright 2013 John Wiley & Sons, Inc. Weygandt Financial, IFRS, 2/e, Solutions Manual (For Instructor Use Only)

## PROBLEM 4-5B (Continued)

Date
July 12
25
31
31

Date
July 31
31

Date
July 31
31

Explanation

Closing

Service Revenue
Ref.
Debit
J1
J1
J2
J3
17,200

Closing

Gasoline Expense
Ref.
Debit
J1
350
J3

Explanation
Closing

Supplies Expense
Ref.
Debit
J2
1,500
J3

Explanation

Explanation
Closing

Depreciation Expense
Ref.
Debit
J2
500
J3

Date
July 31
31

Explanation
Closing

Insurance Expense
Ref.
Debit
J2
150
J3

Date
July 20
31
31

## Salaries and Wages Expense

Explanation
Ref.
Debit
J1
4,500
J2
2,200
Closing
J3

Date
July 31
31

Credit
5,900
8,000
3,300

No. 400
Balance
5,900
13,900
17,200
0

Credit

No. 633
Balance
350
0

350

Credit
1,500

Credit
500

Credit
150

Credit

6,700

Copyright 2013 John Wiley & Sons, Inc. Weygandt Financial, IFRS, 2/e, Solutions Manual (For Instructor Use Only)

No. 631
Balance
1,500
0
No. 711
Balance
500
0
No. 722
Balance
150
0
No. 726
Balance
4,500
6,700
0

4-81

(d)

## BRENNAN'S CLEANING SERVICE

Income Statement
For the Month Ended July 31, 2014
Revenues
Service revenue ...............................................
Expenses
Salaries and wages expense ..........................
Supplies expense ............................................
Depreciation expense .....................................
Gasoline expense ............................................
Insurance expense ..........................................
Total expenses .........................................
Net income ...............................................................

\$17,200
\$6,700
1,500
500
350
150
9,200
\$ 8,000

## BRENNAN'S CLEANING SERVICE

Retained Earnings Statement
For the Month Ended July 31, 2014
Retained Earnings, July 1.......................................
Less: Dividends ......................................................
Retained Earnings, July 31.....................................

0
8,000
8,000
1,200
\$ 6,800

## BRENNAN'S CLEANING SERVICE

Statement of Financial Position
July 31, 2014
Assets
Property, plant, and equipment
Equipment ........................................................ \$ 12,000
Less: Accumulated depreciation
equipment ................................................
500

4-82

\$ 11,500

Copyright 2013 John Wiley & Sons, Inc. Weygandt Financial, IFRS, 2/e, Solutions Manual (For Instructor Use Only)

## PROBLEM 4-5B (Continued)

BRENNAN'S CLEANING SERVICE
Statement of Financial Position (Continued)
July 31, 2014
Assets (Continued)
Current assets
Prepaid insurance ...........................................
Supplies ...........................................................
Accounts receivable .......................................
Cash .................................................................
Total assets .............................................................

1,650
600
12,800
9,650

24,700
\$36,200

## Equity and Liabilities

Equity
Share capitalordinary ..................................
Retained earnings ...........................................
Current liabilities
Accounts payable ...........................................
Salaries and wages payable...........................
Total equity and liabilities ......................................

\$20,000
6,800
7,200
2,200

\$26,800
9,400
\$36,200

(e)
Date
July 31

31

31

31

31

General Journal
Account Titles
Accounts Receivable.........................
Service Revenue .......................

Ref.
112
400

Debit
3,300

## Depreciation Expense .......................

Accumulated Depreciation
Equipment .............................

711

500

## Insurance Expense ............................

Prepaid Insurance.....................

722
130

150

## Supplies Expense ..............................

Supplies.....................................

631
126

1,500

## Salaries and Wages Expense ...........

Salaries and Wages Payable ...

726
212

2,200

J2
Credit
3,300

158

500

150

1,500

Copyright 2013 John Wiley & Sons, Inc. Weygandt Financial, IFRS, 2/e, Solutions Manual (For Instructor Use Only)

2,200

4-83

## PROBLEM 4-5B (Continued)

(f)

General Journal

Date
July 31

31

31

31

(g)

Account Titles
Service Revenue .................................
Income Summary.......................

Ref.
400
350

Debit
17,200

## Income Summary ................................

Salaries and Wages Expense ...
Depreciation Expense ...............
Insurance Expense....................
Supplies Expense ......................
Gasoline Expense......................

350
726
711
722
631
633

9,200

## Income Summary ................................

Retained Earnings .....................

350
320

8,000

## Retained Earnings ..............................

Dividends ...................................

320
332

1,200

17,200

6,700
500
150
1,500
350

8,000

1,200

## BRENNAN'S CLEANING SERVICE

Post-Closing Trial Balance
July 31, 2014
Cash .....................................................................
Accounts Receivable ..........................................
Supplies ...............................................................
Prepaid Insurance ...............................................
Equipment ............................................................
Accumulated DepreciationEquipment ...........
Accounts Payable ...............................................
Salaries and Wages Payable ..............................
Share CapitalOrdinary .....................................
Retained Earnings ...............................................

Debit
\$ 9,650
12,800
600
1,650
12,000

Credit

\$36,700

4-84

J3
Credit

500
7,200
2,200
20,000
6,800
\$36,700

Copyright 2013 John Wiley & Sons, Inc. Weygandt Financial, IFRS, 2/e, Solutions Manual (For Instructor Use Only)

## COMPREHENSIVE PROBLEM: CHAPTERS 2 TO 4

(a)
Date
July 1

12

18

20

21

25

31

31

General Journal
Account Titles and Explanation
Cash .....................................................
Share CapitalOrdinary ..........

Ref.
101
311

Debit
15,000

Equipment ...........................................
Cash ...........................................
Accounts Payable.....................

157
101
201

10,000

Supplies ...............................................
Accounts Payable.....................

126
201

1,700

Prepaid Insurance...............................
Cash ...........................................

130
101

1,800

Accounts Receivable..........................
Service Revenue .......................

112
400

4,200

## Accounts Payable ...............................

Cash ...........................................

201
101

1,400

## Salaries and Wages Expense ............

Cash ...........................................

726
101

1,900

Cash .....................................................
Accounts Receivable................

101
112

2,400

Accounts Receivable..........................
Service Revenue .......................

112
400

2,100

## Gasoline Expense ...............................

Cash ...........................................

633
101

400

Dividends .............................................
Cash ...........................................

332
101

500

J1
Credit
15,000

3,000
7,000

1,700

1,800

4,200

1,400

1,900

2,400

2,100

400

Copyright 2013 John Wiley & Sons, Inc. Weygandt Financial, IFRS, 2/e, Solutions Manual (For Instructor Use Only)

500

4-85

4-86
400
1,900
28,600

500

8,400
3,900
1,700
1,800
10,000

Dr.

28,600

6,300

7,300
15,000

Cr.

Trial Balance

200

630

3,700

(c)
150
(d) 1,420

(b)

(e)

(a) 1,300

Dr.

(e)

(b)

630
3,700

200

(a) 1,300

(d) 1,420
(c)
150

Cr.

30,730

150
1,420

200

400
2,530

500

8,400
5,200
280
1,650
10,000

Dr.

630
30,730

200

7,600

7,300
15,000

Cr.

Trial Balance

## MARY'S MAIDS CLEANING SERVICE

Worksheet
For the Month Ended July 31, 2014

4,700
2,900
7,600

150
1,420

200

400
2,530

Dr.

26,030
26,030

7,600

500

8,400
5,200
280
1,650
10,000

Dr.

630
23,130
2,900
26,030

200

7,300
15,000

Cr.

Statement of
Financial Position

7,600

7,600

Cr.

Income
Statement

Key: (a) Service Revenue; (b) Depreciation Expense; (c) Insurance Expired; (d) Cleaning Supplies Used; (e) Unpaid Salaries.

Cash
Accounts Receivable
Supplies
Prepaid Insurance
Equipment
Accounts Payable
Share CapitalOrdinary
Dividends
Service Revenue
Gasoline Expense
Salaries and Wages Expense
Total
Depreciation Expense
Accum. Depr.Equipment
Insurance Expense
Supplies Expense
Salaries and Wages Payable
Totals
Net Income
Totals

Account Titles

## COMPREHENSIVE PROBLEM (Continued)

Copyright 2013 John Wiley & Sons, Inc. Weygandt Financial, IFRS, 2/e, Solutions Manual (For Instructor Use Only)

## COMPREHENSIVE PROBLEM (Continued)

(a), (e) & (f)

Date
July 1
1
5
18
20
21
31
31

Date
July 12
21
25
31

Date
July 3
31

Date
July 5
31

Date
July 1

Explanation

Explanation

Explanation

Explanation

Explanation

Cash
Ref.
J1
J1
J1
J1
J1
J1
J1
J1

Debit
15,000

3,000
1,800
1,400
1,900
2,400
400
500

Accounts Receivable
Ref.
Debit
J1
4,200
J1
J1
2,100
J2
1,300

Supplies
Ref.
J1
J2

Credit

Debit
1,700

Prepaid Insurance
Ref.
Debit
J1
1,800
J2

Equipment
Ref.
Debit
J1
10,000

Credit
2,400

Credit
1,420

Credit
150

Credit

Copyright 2013 John Wiley & Sons, Inc. Weygandt Financial, IFRS, 2/e, Solutions Manual (For Instructor Use Only)

No. 101
Balance
15,000
12,000
10,200
8,800
6,900
9,300
8,900
8,400
No. 112
Balance
4,200
1,800
3,900
5,200

No. 126
Balance
1,700
280

No. 130
Balance
1,800
1,650

No. 157
Balance
10,000

4-87

## COMPREHENSIVE PROBLEM (Continued)

Date
July 31

Date
July 1
3
18

Date
July 31

Date
July 1

Date
July 31
31

Date
July 31
31

Date
July 31
31
31
4-88

Accumulated DepreciationEquipment
Explanation
Ref.
Debit
Credit
J2
200

Explanation

Accounts Payable
Ref.
Debit
J1
J1
J1
1,400

## Salaries and Wages Payable

Explanation
Ref.
Debit
J2

Explanation

Explanation
Closing
Closing

Explanation
Closing

Explanation
Closing
Closing
Closing

Share CapitalOrdinary
Ref.
Debit
J1
Retained Earnings
Ref.
Debit
J3
J3
500
Dividends
Ref.
J1
J3

Debit
500

Income Summary
Ref.
Debit
J3
J3
4,700
J3
2,900

Credit
7,000
1,700

No. 158
Balance
200

No. 201
Balance
7,000
8,700
7,300

Credit
630

No. 212
Balance
630

Credit
15,000

No. 311
Balance
15,000

Credit
2,900

No. 320
Balance
2,900
2,400

Credit

No. 332
Balance
500
0

500

Credit
7,600

No. 350
Balance
7,600
2,900
0

Copyright 2013 John Wiley & Sons, Inc. Weygandt Financial, IFRS, 2/e, Solutions Manual (For Instructor Use Only)

## COMPREHENSIVE PROBLEM (Continued)

Date
July 12
25
31
31

Date
July 31
31

Date
July 31
31

Explanation

Closing

Service Revenue
Ref.
Debit
J1
J1
J2
J3
7,600

Closing

Gasoline Expense
Ref.
Debit
J1
400
J3

Explanation
Closing

Supplies Expense
Ref.
Debit
J2
1,420
J3

Explanation

Explanation
Closing

Depreciation Expense
Ref.
Debit
J2
200
J3

Date
July 31
31

Explanation
Closing

Insurance Expense
Ref.
Debit
J2
150
J3

Date
July 20
31
31

## Salaries and Wages Expense

Explanation
Ref.
Debit
J1
1,900
J2
630
Closing
J3

Date
July 31
31

Credit
4,200
2,100
1,300

No. 400
Balance
4,200
6,300
7,600
0

Credit

No. 633
Balance
400
0

400

Credit
1,420

Credit
200

Credit
150

Credit

2,530

Copyright 2013 John Wiley & Sons, Inc. Weygandt Financial, IFRS, 2/e, Solutions Manual (For Instructor Use Only)

No. 631
Balance
1,420
0
No. 711
Balance
200
0
No. 722
Balance
150
0
No. 726
Balance
1,900
2,530
0

4-89

(d)

## MARY'S MAIDS CLEANING SERVICE

Income Statement
For the Month Ended July 31, 2014
Revenues
Service revenue ...............................................
Expenses
Salaries and wages expense ..........................
Supplies expense ............................................
Gasoline expense ............................................
Depreciation expense .....................................
Insurance expense ..........................................
Total expenses .........................................
Net income ...............................................................

\$7,600
\$2,530
1,420
400
200
150
4,700
\$2,900

## MARY'S MAIDS CLEANING SERVICE

Retained Earnings Statement
For the Month Ended July 31, 2014
Retained Earnings, July 1.....................................................
Less: Dividends ....................................................................
Retained Earnings, July 31...................................................

4-90

0
2,900
2,900
500
\$2,400

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## COMPREHENSIVE PROBLEM (Continued)

MARY'S MAIDS CLEANING SERVICE
Statement of Financial Position
July 31, 2011
Assets
Property, plant, and equipment
Equipment........................................................
Less: Accumulated depreciation
equipment..................................................
Current assets
Prepaid insurance ...........................................
Supplies ...........................................................
Accounts receivable .......................................
Cash .................................................................
Total assets .............................................................

\$10,000
200
1,650
280
5,200
8,400

\$ 9,800

15,530
\$25,330

## Equity and Liabilities

Equity
Share capitalordinary ..................................
Retained earnings ...........................................
Current liabilities
Accounts payable ...........................................
Salaries and wages payable...........................
Total equity and liabilities ......................................

\$15,000
2,400
7,300
630

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\$17,400

7,930
\$25,330

4-91

## COMPREHENSIVE PROBLEM (Continued)

(e)
Date
July 31

31

31

31

31

General Journal
Account Titles
Accounts Receivable .........................
Service Revenue........................

Ref.
112
400

Debit
1,300

## Depreciation Expense ........................

Accumulated Depreciation
Equipment ..............................

711

200

Insurance Expense.............................
Prepaid Insurance .....................

722
130

150

Supplies Expense...............................
Supplies .....................................

631
126

1,420

## Salaries and Wages Expense............

Salaries and Wages Payable ....

726
212

630

J2
Credit
1,300

158

200

150

1,420

630

(f)
Date
July 31

31

31

31

4-92

General Journal
Account Titles
Service Revenue.................................
Income Summary ......................

Ref.
400
350

Debit
7,600

## Income Summary ...............................

Salaries and Wages Expense...
Depreciation Expense...............
Insurance Expense....................
Supplies Expense......................
Gasoline Expense .....................

350
726
711
722
631
633

4,700

## Income Summary ...............................

Retained Earnings .....................

350
320

2,900

## Retained Earnings ..............................

Dividends ...................................

320
332

500

J3
Credit
7,600

2,530
200
150
1,420
400

2,900

500

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(g)

## MARY'S MAIDS CLEANING SERVICE

Post-Closing Trial Balance
July 31, 2014
Cash .....................................................................
Accounts Receivable ..........................................
Supplies ...............................................................
Prepaid Insurance ...............................................
Equipment ...........................................................
Accumulated DepreciationEquipment ..........
Accounts Payable ...............................................
Salaries and Wages Payable .............................
Share CapitalOrdinary ....................................
Retained Earnings ..............................................

Debit
\$ 8,400
5,200
280
1,650
10,000

Credit

\$25,530

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200
7,300
630
15,000
2,400
\$25,530

4-93

CCC4

(a)
Income Statement
For the Two Months Ended December 31, 2014
Revenues
Service revenue .........................................................
Expenses
Supplies expense ......................................................
Salaries and wages expense ....................................
Utilities expense ........................................................
Insurance expense ....................................................
Depreciation expense ...............................................
Interest expense ........................................................
Total expenses ......................................................
Net income .....................................................................

\$4,515
\$1,025
1,006
165
125
110
40
15
2,486
\$2,029

Retained Earnings Statement
For the Two Months Ended December 31, 2014
Retained earnings, November 1 ...................................
Less: Dividends ............................................................
Retained earnings, December 31 .................................

4-94

0
2,029
2,029
500
\$1,529

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CCC4 (Continued)
(a) (Continued)
Statement of Financial Position
December 31, 2014
Assets
Property, plant, and equipment
Equipment ...................................................................
Less: Accumulated depreciationequipment ........
Current assets
Prepaid insurance .......................................................
Supplies .......................................................................
Accounts receivable ...................................................
Cash .............................................................................
Total current assets ...............................................
Total assets ............................................................

\$1,200
40

\$1,160

1,210
350
875
1,180
3,615
\$4,775

## Equity and Liabilities

Equity
Share CapitalOrdinary ...............................
Retained earnings ..........................................
Non-current liabilities
Interest payable .............................................
Notes payable ................................................
Total non-current liabilities ......................
Current liabilities
Accounts payable ..........................................
Salaries and wages payable .........................
Unearned service revenue ............................
Total current liabilities ..............................
Total liabilities .....................................
Total equity and liabilities...................

\$ 800
1,529
\$

\$2,329

15
2,000
2,015
75
56
300
431

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2,446
\$4,775

4-95

CCC4 (Continued)
(b)
Date

GENERAL JOURNAL
Account Titles

2014
Dec. 31 Service Revenue .....................................
Income Summary ...............................

4-96

Debit

J4
Credit

4,515
4,515

## 31 Income Summary ....................................

Salaries and Wages Expense ............
Utilities Expense ................................
Supplies Expense ..............................
Insurance Expense ............................
Depreciation Expense ........................
Interest Expense ................................

2,486

## 31 Income Summary ....................................

Retained Earnings ..............................

2,029

## 31 Retained Earnings ..................................

Dividends ............................................

500

1,006
125
165
1,025
110
40
15

2,029

500

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CCC4 (Continued)
(c)

Post-Closing Trial Balance
December 31, 2014

Account
Cash .........................................................................
Accounts Receivable ..............................................
Supplies ...................................................................
Prepaid Insurance ..................................................
Equipment ...............................................................
Accumulated DepreciationEquipment ................
Accounts Payable ...................................................
Salaries and Wages Payable ..................................
Unearned Service Revenue ....................................
Interest Payable.......................................................
Notes Payable..........................................................
Share CapitalOrdinary.........................................
Retained Earnings...................................................

Debit
\$1,180
875
350
1,210
1,200

Credit

\$4,815

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40
75
56
300
15
2,000
800
1,529
\$4,815

4-97

BYP 4-1

(a)

## Total current assets were W61,402,589 million at December 31, 2010,

and W54,211,297 million at December 31, 2009.

(b)

## No. Current assets are normally listed in reverse order of liquidity.

Samsungs current assets are listed in order of liquidity.

(c)

assets.

(d)

## Cash equivalents are investments with original maturities of 3 months

or less that Samsung does not intend to rollover beyond three
months.

(e)

## Total current liabilities were W39,944,721 million at December 31,

2010, and W34,204,424 million at December 31, 2009.

4-98

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BYP 4-2

(a)

Nestl
(in millions)
1.
2.
3.
4.

## Total current assets

Net property, plant & equipment
Total current liabilities
Total equity

Zetar
(in thousands)

CHF38,997
21,438
30,146
62,598

45,670
16,583
40,474
46,287

(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 companys 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.
Nestls current assets were 29.4% greater than its current liabilities,
while Zetars current assets were 12.8% greater than its current liabilities.
From this information, it appears that Nestl is in a better liquidity
position than Zetar.

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4-99

BYP 4-3

REALWORLD FOCUS

## The solution is dependent upon the companies chosen by the student.

4-100

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BYP 4-4

(a)

## EVERCLEAN JANITORIAL SERVICE

Statement of Financial Position
December 31, 2014
Assets
Property, plant, and equipment
Equipment
(\$22,000 + \$4,000) .......................
Less: Accum. depreciation
equipment
(\$4,000 + \$2,000) .................
Delivery trucks (\$34,000 + \$5,000) ..
Less: Accum. depreciation
delivery trucks
(\$5,000 + \$5,000) .................
Current assets
Prepaid insurance (\$4,800 X 2/3) ......
Supplies
(\$5,200 \$3,100) .........................
Accounts receivable
(\$9,000 + \$3,900) .........................
Cash ................................................
Total assets ............................................

\$26,000

6,000
39,000

\$20,000

10,000

29,000

\$49,000

3,200
2,100
12,900
5,500

23,700
\$72,700

## Equity and Liabilities

Equity
Share capitalordinary ....................................
Retained earnings .............................................
Non-current liabilities
Notes payable, due July 1, 2016 ......................
Current liabilities
Notes payable due within one year .................
Accounts payable (\$1,500 + \$620) ...................
Interest payable (\$25,000 X 10% X 6/12) .........
Total equity and liabilities .........................................

\$30,000
14,330* \$44,330
15,000
10,000
2,120
1,250

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13,370
\$72,700

4-101

## BYP 4-4 (Continued)

EVERCLEAN JANITORIAL SERVICE
Statement of Financial Position (Continued)
December 31, 2014
*Retained earnings 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 .....................................................
Retained earnings balance as adjusted ...............

\$24,000
3,900
27,900
\$3,100
1,600
7,000
620
1,250
13,570
\$14,330

(b) Everclean Janitorial Service met the terms of the bank loan because
current assets exceed current liabilities by \$10,330 (\$23,700 \$13,370)
at December 31, 2014.

4-102

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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:
1.
2.
3.
4.
5.
6.
7.
8.
9.

Journalize the transactions.
Post to ledger accounts.
Prepare a 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 3 above, and it includes steps 4 and 6. 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.

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4-103

BYP 4-6

ETHICS CASE

## (a) The stakeholders in this case are:

f You, as controller.
f Phil McNally, president.
f Users of the companys 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 companys
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 securities regulator. Also stress upon him that you have a
professional obligation to correct the statements or to resign.

4-104

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GAAP EXERCISES
GAAP 4-1
The statement of financial position required under IFRS and the balance
sheet prepared under GAAP usually present the same information
regarding a companys assets, liabilities, and equity at a point in time. IFRS
does not dictate a specific order but most companies list non-current items
before current. Differences in ordering are:
IFRS

GAAP

Statement of Financial
Position presentation
Non-current assets
Current assets
Equity
Non-current liabilities
Current liabilities

Balance Sheet
presentation
Current assets
Non-current assets
Current liabilities
Non-current liabilities
Stockholders equity

Under GAAP, current assets are usually listed in the order of liquidity.
GAAP 4-2
GAAP uses the term balance sheet rather than statement of financial position.
GAAP 4-3
DIAZ COMPANY
Partial Balance Sheet
Current assets
Cash ..........................................................................................
Short-term investments ..........................................................
Accounts receivable ................................................................
Supplies ....................................................................................
Prepaid insurance ....................................................................
Total ..................................................................................

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\$ 15,400

6,700
12,500
5,200
3,600
\$43,400

4-105

GAAP 4-4
ZURICH COMPANY
Partial Balance Sheet
December 31, 2014
Current assets
Cash .............................................................
Short-term investments ..............................
Accounts receivable ...................................
Inventories ...................................................
Long-term investments
Investments in stock...................................
Property, plant and equipment
Equipment ....................................................
Less: Accumulated depreciation
equipment ................................................
Total assets .........................................................

4-106

\$ 13,100
120
4,300
2,700

\$20,220
6,500

21,700
5,700

16,000
\$42,720

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GAAP 4-5
(a)

## REGO BOWLING ALLEY

Balance Sheet
December 31, 2014
Assets

Current assets
Cash ...................................................
Accounts receivable .........................
Prepaid insurance.............................
Property, plant, and equipment
Land ...................................................
Buildings ........................................... \$128,000
Less: Acc. depr.buildings ............
42,600
Equipment .........................................
62,400
Less: Acc. depr.equipment ..........
18,720
Total assets ..............................................

\$18,040
7,540
4 ,680

\$30,260

67,000
85,400
43,680

196,080
\$226,340

## Liabilities and Stockholders Equity

Current liabilities
Current portion of notes payable ............. \$ 13,900
Accounts payable ......................................
12,300
Interest payable .........................................
2,600 \$28,800
Long-term liabilities
Notes payable ...........................................
81,100
Total liabilities ..................................................
\$109,900
Stockholders equity
Common stock .........................................
90,000
Retained earnings (\$22,000 + \$4,440*) ....
26,440 116,440
Total liabilities and stockholders equity .......
\$226,340
*Net income = \$15,180 \$780 \$7,360 \$2,600 = \$4,440
GAAP 4-6
It is possible to compare liquidity and solvency for companies using
different currencies. The ratios that are used to do so, such as the current
ratio and debt to total assets, indicate relative amounts of assets and
liabilities rather than absolute monetary values.

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4-107

## GAAP FINANCIAL REPORTING PROBLEM

GAAP 4-7
(a) Tootsie Rolls total current assets at December 31, 2010 were \$ 237,591
thousand and at December 31, 2009 were \$ 211,878 thousand.
(b) Yes, under GAAP current assets are listed in the order of their
liquidity.
(c) Tootsie Rolls assets are classified as current assets, property, plant
and equipment, and other assets.
(d) Tootsie Rolls total current liabilities at December 31, 2010 were
\$ 58,505 thousand and at December 31, 2009 were \$ 56,066 thousand.

4-108

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