Net income: 1,452 Completing the Accounting Cycle

Chapter 4 Completing the Accounting Cycle

193 Income Summary June 30 201,400 June 30 180,500 30 20,900 Prepare a retained earnings statement for the year. EX 4-10 Classifying assets OBJ. 2 Identify each of the following as a a current asset or b property, plant, and equipment: 1. Accounts Receivable 2. Building 3. Cash 4. Equipment 5. Prepaid Insurance 6. Supplies EX 4-11 Balance sheet classification OBJ. 2 At the balance sheet date, a business owes a mortgage note payable of 375,000, the terms of which provide for monthly payments of 1,250. Explain how the liability should be classified on the balance sheet. EX 4-12 Balance sheet OBJ. 2 Labrador Weight Loss Co. offers personal weight reduction consulting services to individuals. After all the accounts have been closed on June 30, 2014, the end of the current fiscal year, the balances of selected accounts from the ledger of Labrador Weight Loss Co. are as follows: Accounts Payable 18,500 Prepaid Insurance 19,200 Accounts Receivable 78,250 Prepaid Rent 18,000 Accumulated Depreciation—Equipment 103,300 Retained Earnings 509,000 Capital Stock 100,000 Salaries Payable 8,500 Cash ? Supplies 5,350 Equipment 300,000 Unearned Fees 9,000 Land 290,000 Prepare a classified balance sheet that includes the correct balance for Cash. EX 4-13 Balance sheet OBJ. 2 List the errors you find in the following balance sheet. Prepare a corrected balance sheet. Labyrinth Services Co. Balance Sheet For the Year Ended August 31, 2014 Assets Liabilities Current assets: Current liabilities: Cash . . . . . . . . . . . . . . . . . . . . . 18,500 Accounts receivable . . . . . . . 41,400 Accounts payable . . . . . . . . 31,300 Accum. depr.—building . . . 155,000 Supplies . . . . . . . . . . . . . . . . . 6,500 Accum. depr.—equipment 25,000 Prepaid insurance . . . . . . . . 16,600 Net income . . . . . . . . . . . . . . . 118,200 Land . . . . . . . . . . . . . . . . . . . . . 225,000 Total liabilities . . . . . . . . . . . . . . 339,600 Total current assets . . . . . 297,900 Property, plant, and equipment: Stockholders’ Equity Building . . . . . . . . . . . . . . . . . . 400,000 Wages payable . . . . . . . . . . . . . 6,500 Equipment . . . . . . . . . . . . . . . 97,000 Capital stock . . . . . . . . . . . . . . . . 75,000 Total property, plant, and equipment . . . . . . 635,400 Retained earnings . . . . . . . . . . . Total stockholders’ equity . . . 512,200 593,700 Total assets . . . . . . . . . . . . . . . . 933,300 Total liabilities and stockholders’ equity . . . . . . . 933,300 EX 4-14 Identifying accounts to be closed OBJ. 3 From the list at the top of the next page, identify the accounts that should be closed to Income Summary at the end of the fiscal year: Total assets: 645,000 Corrected balance sheet, total assets: 625,000 Continued Copyright 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook andor eChapters. Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it. 194

Chapter 4 Completing the Accounting Cycle