Study Guide 8

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Oct 29, 2007 - Identifying the Accounting Cycle for a Service Business .... Chapter 8 Recording Adjusting and Closing Entries for a Service Business • 157. 34.

SECOND REVISED

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Study Guide 8

Perfect Score

Name Identifying Accounting Terms Analyzing Accounts Affected by Adjusting and Closing Entries Analyzing Adjusting and Closing Entries Identifying the Accounting Cycle for a Service Business Total

6 14 9 8

Your Score

Pts. Pts. Pts. Pts.

37 Pts.

Part One—Identifying Accounting Terms Directions: Select the one term in Column I that best fits each definition in Column II. Print the letter identifying your choice in the Answers column.

Column I

Answers

Column II

A. accounting cycle

1. Journal entries recorded to update general ledger accounts at the end of a fiscal period. (p. 202)

1.

B

B. adjusting entries

2. Accounts used to accumulate information from one fiscal period to the next. (p. 206)

2.

D

C. closing entries

3. Accounts used to accumulate information until it is transferred to the owner’s capital account. (p. 206)

3.

F

D. permanent accounts

4. Journal entries used to prepare temporary accounts for a new fiscal period. (p. 206)

4.

C

E. post-closing trial balance

5. A trial balance prepared after the closing entries are posted. (p. 216)

5.

E

F. temporary accounts

6. The series of accounting activities included in recording financial information for a fiscal period. (p. 217)

6.

A

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Part Two—Analyzing Accounts Affected by Adjusting and Closing Entries Directions: Use the partial chart of accounts given below. For each adjusting or closing entry described, decide which accounts are debited and credited. Write the account numbers identifying your choice in the proper Answers column.

Acct. Account Title

No.

Supplies Prepaid Insurance J. Nichols, Capital J. Nichols, Drawing Income Summary Sales Advertising Expense Insurance Expense Supplies Expense

150 160 310 320 330 410 510 520 550

Accounts to Be Debited

Credited

1–2. Adjusting entry for Supplies. (p. 203)

1.

550

2.

150

3–4. Adjusting entry for Prepaid Insurance. (p. 204)

3.

520

4.

160

5–6. Closing entry for Sales. (p. 208)

5.

410

6.

330

7–8. Closing entry for all expense accounts. (p. 209)

7.

330

8. 510,520,550

9.

330

10.

310

11–12. Closing entry for Income Summary with a net loss. (p. 210)

11.

310

12.

330

13–14. Closing entry for owner’s drawing account. (p. 211)

13.

310

14.

320

9–10. Closing entry for Income Summary with a net income. (p. 210)

154 • Working Papers TE

CENTURY 21 ACCOUNTING, 9TH EDITION

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Name

Date

Class

Part Three—Analyzing Adjusting and Closing Entries Directions: For each of the following items, select the choice that best completes the statement. Print the letter identifying your choice in the Answers column.

Answers 1. Which accounting concept applies when a work sheet is prepared at the end of each fiscal cycle to summarize the general ledger information needed to prepare financial statements? (A) Business Entity (B) Accounting Period Cycle (C) Adequate Disclosure (D) Consistent Reporting (p. 202) 2. Which accounting concept applies when expenses are reported in the same fiscal period that they are used to produce revenue? (A) Business Entity (B) Going Concern (C) Matching Expenses with Revenue (D) Adequate Disclosure (p. 202) 3. Information needed for journalizing the adjusting entries is obtained from the (A) general ledger account Balance columns (B) income statement (C) work sheet’s Adjustments columns (D) balance sheet. (p. 204) 4. After adjusting entries are posted, the supplies account balance will be equal to (A) the cost of supplies used during the fiscal period (B) the cost of the supplies on hand at the end of the fiscal period (C) zero (D) none of these. (p. 204) 5. When revenue is greater than total expenses, resulting in a net income, the income summary account has a (A) debit balance (B) credit balance (C) normal debit balance (D) normal credit balance. (p. 207) 6. Information needed for recording the closing entries is obtained from the (A) general ledger accounts’ Debit Balance columns (B) work sheet’s Income Statement and Balance Sheet columns (C) balance sheet (D) income statement. (p. 207) 7. Income Summary is (A) an asset account (B) a liability account (C) a temporary account (D) a permanent account. (p. 207) 8. After the closing entries are posted, the owner’s capital account balance should be the same as (A) shown on the balance sheet for the fiscal period (B) shown in the work sheet’s Balance Sheet Debit column (C) shown in the work sheet’s Balance Sheet Credit column (D) shown in the work sheet’s Income Statement Debit column. (p. 211) 9. The accounts listed on a post-closing trial balance are (A) general ledger accounts with balances after the closing entries are posted (B) all general ledger accounts (C) those that have no balances after adjusting and closing entries (D) those that appear in the work sheet’s Trial Balance columns. (p. 216)

1.

B

2.

C

3.

C

4.

B

5.

B

6.

B

7.

C

8.

A

9.

A

Part Four—Identifying the Accounting Cycle for a Service Business Directions: Arrange the series of accounting activities listed below for the accounting cycle for a service business. Indicate the sequence of the steps by writing a number from 1 to 8 to the left of each activity. (p. 217)

Answers 1.

4

A work sheet, including a trial balance, is prepared from the general ledger.

2.

2

Transactions, from information on source documents, are recorded in a journal.

3.

1

Source documents are checked for accuracy, and transactions are analyzed into debit and credit parts.

4.

7

Adjusting and closing entries are posted to the general ledger.

5.

5

Financial statements are prepared from the work sheet.

6.

6

Adjusting and closing entries are journalized from the work sheet.

7.

8

A post-closing trial balance of the general ledger is prepared.

8.

3

Journal entries are posted to the general ledger.

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Chapter 8

Miscellaneous Expense Supplies Expense

14 15

20 21 22 23

21 22 23

18

5 5 1 1 00 11 0 6 0 00 11 0 6 0 00 5 5 1 1 00

20

17

16

3 3 3 0 00

7 7 3 0 00 3 3 3 0 00

5 5 1 1 00 11 0 6 0 00

Date

19

1 0 1 3 00

15

14

13

12

9

Page 157

19

18

17

Net Income

7 1 3 00

Insurance Expense

13

2 1 8 1 00

3 4 7 00

Advertising Expense

12

1 0 1 3 00

3 0 0 00

Sales

11

16

8 2 1 00

Income Summary

10

2 1 0 0 00

8

7

Name

(a) 7 1 3 00

11

Darlene Wong, Drawing

9

(b) 3 0 0 00

10

Darlene Wong, Capital

8

6 5 4 3 00

2 1 2 00

Accts. Pay.—Grand Uniforms

7

6

5

9 7 5 00

9 0 0 00

Accts. Pay.—Colin Gas

4

3

2

1

6

CREDIT

(b) 3 0 0 00

2 5 0 00

8 8 00

3 7 2 00

7 3 5 0 00

DEBIT

8

Prepaid Insurance

5 5 1 1 00

CREDIT

BALANCE SHEET

5

DEBIT

7

(a) 7 1 3 00

Accts. Rec.—Wyatt Ames

3

6

INCOME STATEMENT

5

8-1 and 8-2

Supplies

Accts. Rec.—Romelle Woods

2

CREDIT

4

5:30 PM

4

Cash

DEBIT

ADJUSTMENTS

y

10/29/07

1

ACCOUNT TITLE

3

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WORK TOGETHER, pp. 205, 212

Recording Adjusting and Closing Entries for a Service Business • 157

158 • Working Papers TE 19 20 21 22 23 24

20

21

22

23

24

17

19

2 1 0 0 00

16

15

18

320

2 1 0 0 00

3 3 3 0 00

18

Darlene Wong, Drawing

310

31 Darlene Wong, Capital

16

17

310

Darlene Wong, Capital

15

14

7 1 3 00

540

Supplies Expense

13

3 3 3 0 00

13

3 4 7 00

530

Miscellaneous Expense 330

12

12

31 Income Summary

11

3 0 0 00

520

Insurance Expense

11

14

10

8 2 1 00

9

8

7

6

5

4

3

2

1

510

2 1 8 1 00

5 5 1 1 00

5

CREDIT

4

Advertising Expense

330

31 Income Summary

9

5 5 1 1 00

CASH

PAGE

10

330

Income Summary

410

8

31 Sales

3 0 0 00

DEBIT

4

Prob. 8-2

Prob. 8-1

5:30 PM

7

Closing Entries

150

Prepaid Insurance

5

3 0 0 00

7 1 3 00

CREDIT

SALES CREDIT

3

10/29/07

6

520

31 Insurance Expense

140

Supplies

3

7 1 3 00

DEBIT

GENERAL

2

8-1 and 8-2

4

540

Adjusting Entries

July 31 Supplies Expense

20 – –

ACCOUNT TITLE

2

1

DATE

DOC. POST. NO. REF.

1

JOURNAL

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Name

Date

8-1 and 8-2

Class

WORK TOGETHER (continued) GENERAL LEDGER

ACCOUNT

Cash

DATE

ACCOUNT NO.

POST. REF.

ITEM

July 31 Balance

ACCOUNT

DEBIT

July 31 Balance

CREDIT DEBIT

POST. REF.

8 8 00

July 31 Balance 31

CREDIT DEBIT

7 1 3 00

2 5 0 00

Prepaid Insurance

ACCOUNT NO.

POST. REF.

July 31 Balance 31

CREDIT DEBIT

3 0 0 00

9 0 0 00

Accounts Payable—Colin Gas

ACCOUNT NO.

POST. REF.



20 – –

July 31 Balance

Chapter 8

CREDIT

1 2 0 0 00

4

ITEM

150

BALANCE DEBIT



20 – –

DATE

CREDIT

9 6 3 00

4

ITEM

140

BALANCE DEBIT



20 – –

DATE

CREDIT

ACCOUNT NO.

ITEM

130

BALANCE DEBIT

Supplies

DATE

CREDIT

3 7 2 00



20 – –

ACCOUNT

CREDIT

ACCOUNT NO.

POST. REF.

ITEM

120

BALANCE DEBIT

Accounts Receivable—Wyatt Ames

DATE

CREDIT

7 3 5 0 00



July 31 Balance

ACCOUNT

DEBIT

ACCOUNT NO.

POST. REF.

ITEM

20 – –

ACCOUNT

CREDIT

Accounts Receivable—Romelle Woods

DATE

ACCOUNT

BALANCE DEBIT



20 – –

110

210

BALANCE DEBIT

CREDIT DEBIT

CREDIT

9 7 5 00

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WORK TOGETHER (continued) GENERAL LEDGER

ACCOUNT

Accounts Payable—Grand Uniforms

DATE

ITEM

July 31 Balance

ITEM

DEBIT

July 31 Balance 31

2 1 2 00

4

DEBIT

July 31 Balance 31

3 3 3 0 00 2 1 0 0 00

7 7 7 3 00 ACCOUNT NO.

POST. REF.

CREDIT DEBIT

20 – –

2 1 0 0 00 2 1 0 0 00

CREDIT DEBIT

4

2 1 8 1 00

31

4

3 3 3 0 00

5 5 1 1 00 3 3 3 0 00

Sales

ACCOUNT NO.

POST. REF.

July 31 Balance 31

4

CREDIT DEBIT

20 – –

July 31 Balance 31

160 • Working Papers TE

CREDIT

5 5 1 1 00 5 5 1 1 00

Advertising Expense ITEM

ACCOUNT NO.

POST. REF.

510

BALANCE DEBIT

CREDIT DEBIT

✔ 4

410

BALANCE DEBIT



20 – –

DATE

CREDIT

5 5 1 1 00

4

ITEM

330

BALANCE DEBIT

July 31 31

DATE

CREDIT

ACCOUNT NO.

POST. REF.

320

BALANCE DEBIT

4

ITEM

ACCOUNT

9 8 7 3 00

Income Summary

DATE

CREDIT

6 5 4 3 00



20 – –

ACCOUNT

CREDIT

Darlene Wong, Drawing ITEM

310

BALANCE DEBIT

4

31

DATE

CREDIT



20 – –

ACCOUNT

CREDIT

ACCOUNT NO.

POST. REF.

220

BALANCE DEBIT

Darlene Wong, Capital

DATE

ACCOUNT

POST. REF.



20 – –

ACCOUNT

ACCOUNT NO.

CREDIT

8 2 1 00 8 2 1 00

COPYRIGHT © SOUTH-WESTERN CENGAGE LEARNING

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Name

Date

8-1 and 8-2

Class

WORK TOGETHER (concluded) GENERAL LEDGER

ACCOUNT

Insurance Expense

DATE

ITEM

20 – –

July 31 31

ACCOUNT

CREDIT DEBIT

3 0 0 00 3 0 0 00

ACCOUNT NO.

POST. REF.

CREDIT DEBIT

3 4 7 00

Supplies Expense

ACCOUNT NO.

20 – –

July 31 31

POST. REF.

4

CREDIT DEBIT

7 1 3 00 7 1 3 00

4

ACCOUNT NO.

ITEM

POST. REF.

BALANCE DEBIT

CREDIT DEBIT

CREDIT

ACCOUNT NO.

ITEM

POST. REF.

BALANCE DEBIT

CREDIT DEBIT

CREDIT

ACCOUNT NO.

ACCOUNT

DATE

CREDIT

7 1 3 00

ACCOUNT

DATE

540

BALANCE DEBIT

ACCOUNT

DATE

CREDIT

3 4 7 00

4

ITEM

530

BALANCE DEBIT



July 31 Balance 31

CREDIT

3 0 0 00

Miscellaneous Expense ITEM

520

BALANCE DEBIT

4

20 – –

DATE

POST. REF.

4

DATE

ACCOUNT

ACCOUNT NO.

ITEM

Chapter 8

POST. REF.

BALANCE DEBIT

CREDIT DEBIT

CREDIT

Recording Adjusting and Closing Entries for a Service Business • 161

162 • Working Papers TE

Miscellaneous Expense Supplies Expense Utilities Expense

14 15 16

21 22

21 22

19

8 4 0 6 00 8 4 0 6 00

3 8 4 7 00

17 18

6 5 0 4 00 1 9 0 2 00 3 8 4 7 00

8 4 0 6 00 1 9 0 2 00

1 9 4 5 00

16

15

14

13

10

20

6 2 7 00

1 2 2 0 00

3 7 7 00

1 0 0 0 00

9

8

7

6

5

20

19

18

Net Income

Insurance Expense

13

3 8 4 7 00

Sales

12

6 2 7 00

Income Summary

11

17

Kelley Cooper, Drawing

10

(a) 3 7 7 00

Kelley Cooper, Capital

9

9 8 00

Accts. Pay.—Midwest Towel

8

2 5 0 00

12

Accts. Pay.—Beauty Supply Co.

7

3 8 4 7 00

11

1 8 2 00

(b) 2 5 0 00

Prepaid Insurance

6

5 9 0 0 00

4 2 2 00

2 2 5 00

(a) 3 7 7 00

Supplies

5

4

8-1 and 8-2

5:30 PM

4 0 0 00

1 4 8 00

Accts. Rec.—Midville Center

10/29/07

3

2

4

1

3 1 7 00

CREDIT

Accts. Rec.—Jodi Ford

6 1 1 6 00

DEBIT

8

3

CREDIT

BALANCE SHEET

2 0 0 00

DEBIT

7

Petty Cash

(b) 2 5 0 00

6

INCOME STATEMENT

5

2

CREDIT

4

Cash

DEBIT

ADJUSTMENTS

1

ACCOUNT TITLE

3

8-1 Journalizing and posting adjusting entries 8-2 Journalizing and posting closing entries

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ON YOUR OWN, pp. 205, 212

COPYRIGHT © SOUTH-WESTERN CENGAGE LEARNING

Chapter 8

20 21 22 23 24

20

21

22

23

24

17

19

1 0 0 0 00

19

320

16

18

Kelley Cooper, Drawing

1 0 0 0 00

15

14

18

17

310

28 Kelley Cooper, Capital

16

1 9 0 2 00

330

28 Income Summary

14

310

13

1 2 2 0 00

540

Utilities Expense

13

Kelley Cooper, Capital

12

3 7 7 00

530

Supplies Expense

12

Prob. 8-2

Prob. 8-1

Name

15

11

9 8 00

520

Miscellaneous Expense

11

1 9 0 2 00

10

2 5 0 00

510

Insurance Expense

9

10

1 9 4 5 00

330

8

28 Income Summary

3 8 4 7 00

7

9

3 8 4 7 00

6

5

4

3

2

1

330

410

5

CREDIT

8

Income Summary

28 Sales

2 5 0 00

CASH

PAGE

8

7

Closing Entries

160

Prepaid Insurance

5

2 5 0 00

DEBIT

4

5:30 PM

6

510

3 7 7 00

CREDIT

SALES CREDIT

3

8-1 and 8-2

28 Insurance Expense

150

Supplies

3

3 7 7 00

DEBIT

GENERAL

2

10/29/07

4

530

20 – –

Feb. 28 Supplies Expense

Adjusting Entries

ACCOUNT TITLE

2

1

DATE

DOC. POST. NO. REF.

1

JOURNAL

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ON YOUR OWN (continued)

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ON YOUR OWN (continued) GENERAL LEDGER

ACCOUNT

Cash

DATE

ACCOUNT NO.

ITEM

Feb. 28 Balance

ITEM

ITEM

CREDIT DEBIT

Feb. 28 Balance

2 0 0 00

ITEM

CREDIT DEBIT

3 1 7 00

Feb. 28 Balance

CREDIT DEBIT

ACCOUNT NO.

ITEM

POST. REF.

Feb. 28 Balance 28

CREDIT DEBIT

3 7 7 00

2 2 5 00

Prepaid Insurance

20 – –

Feb. 28 Balance 28

164 • Working Papers TE

CREDIT

6 0 2 00

8

ITEM

ACCOUNT NO.

POST. REF.

160

BALANCE DEBIT

CREDIT DEBIT

✔ 8

150

BALANCE DEBIT



20 – –

DATE

CREDIT

1 4 8 00

Supplies

DATE

140

BALANCE DEBIT



20 – –

CREDIT

ACCOUNT NO.

POST. REF.

130

BALANCE DEBIT

Accounts Receivable—Midville Center

DATE

CREDIT

ACCOUNT NO.

POST. REF.

120

BALANCE DEBIT



20 – –

ACCOUNT

POST. REF.

Accounts Receivable—Jodi Ford

DATE

CREDIT

6 1 1 6 00



Feb. 28 Balance

ACCOUNT

DEBIT

ACCOUNT NO.

20 – –

ACCOUNT

CREDIT

Petty Cash

DATE

ACCOUNT

BALANCE DEBIT



20 – –

ACCOUNT

POST. REF.

110

CREDIT

6 5 0 00 2 5 0 00

4 0 0 00

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Name

Date

8-1 and 8-2

Class

ON YOUR OWN (continued) GENERAL LEDGER

ACCOUNT

Accounts Payable—Beauty Supply Co.

DATE

POST. REF.

ITEM

Feb. 28 Balance

ITEM

Feb. 28 Balance

ITEM

Feb. 28 Balance 28

POST. REF.

8

DEBIT

CREDIT DEBIT

Feb. 28 Balance 28

5 9 0 0 00 1 9 0 2 00

7 8 0 2 00

1 0 0 0 00

6 8 0 2 00

CREDIT DEBIT

20 – –

CREDIT

1 0 0 0 00 1 0 0 0 00

8

ITEM

ACCOUNT NO.

POST. REF.

CREDIT DEBIT

8

1 9 4 5 00

28

8

1 9 0 2 00

CREDIT

3 8 4 7 00

3 8 4 7 00

8

1 9 0 2 00

Sales

ACCOUNT NO.

POST. REF.

Feb. 28 Balance 28

8

Chapter 8

410

BALANCE DEBIT

CREDIT DEBIT



20 – –

330

BALANCE DEBIT

Feb. 28 28

ITEM

320

BALANCE DEBIT

Income Summary

DATE

CREDIT

ACCOUNT NO.

POST. REF.

310

BALANCE DEBIT



20 – –

DATE

CREDIT

1 8 2 00

Kelley Cooper, Drawing ITEM

ACCOUNT

CREDIT

ACCOUNT NO.

POST. REF.

220

BALANCE DEBIT

8

28

ACCOUNT

ACCOUNT NO.



20 – –

DATE

CREDIT

4 2 2 00

Kelley Cooper, Capital

DATE

ACCOUNT

DEBIT



20 – –

ACCOUNT

CREDIT

Accounts Payable—Midwest Towel

DATE

210

BALANCE DEBIT



20 – –

ACCOUNT

ACCOUNT NO.

CREDIT

3 8 4 7 00 3 8 4 7 00

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ON YOUR OWN (concluded) GENERAL LEDGER

ACCOUNT

Insurance Expense

DATE

ITEM

20 – –

Feb. 28 28

ACCOUNT

CREDIT DEBIT

2 5 0 00 2 5 0 00

ACCOUNT NO.

POST. REF.

CREDIT DEBIT

9 8 00

8

ACCOUNT NO.

ITEM

20 – –

Feb. 28 28

POST. REF.

8

CREDIT DEBIT

3 7 7 00 3 7 7 00

ACCOUNT NO.

POST. REF.

Feb. 28 Balance 28

CREDIT DEBIT

1 2 2 0 00

8

ACCOUNT NO.

ITEM

POST. REF.

BALANCE DEBIT

CREDIT DEBIT

CREDIT

ACCOUNT NO.

ACCOUNT

166 • Working Papers TE

CREDIT

1 2 2 0 00

ACCOUNT

DATE

540

BALANCE DEBIT



20 – –

DATE

CREDIT

3 7 7 00

Utilities Expense ITEM

530

BALANCE DEBIT

8

DATE

CREDIT

9 8 00

Supplies Expense

DATE

520

BALANCE DEBIT



Feb. 28 Balance 28

CREDIT

2 5 0 00

Miscellaneous Expense ITEM

510

BALANCE DEBIT

8

20 – –

ACCOUNT

POST. REF.

8

DATE

ACCOUNT

ACCOUNT NO.

ITEM

POST. REF.

BALANCE DEBIT

CREDIT DEBIT

CREDIT

COPYRIGHT © SOUTH-WESTERN CENGAGE LEARNING

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Name

8-3

Date

Class

WORK TOGETHER, p. 219

Preparing a post-closing trial balance

Darlene’s Delivery Service Post-Closing Trial Balance July 31, 20 – – ACCOUNT TITLE

Cash

DEBIT

CREDIT

7 3 5 0 00

Accounts Receivable—Romelle Woods Accounts Receivable—Wyatt Ames

3 7 2 00 8 8 00

Supplies

2 5 0 00

Prepaid Insurance

9 0 0 00

Accounts Payable—Colin Gas

9 7 5 00

Accounts Payable—Grand Uniforms

2 1 2 00

Darlene Wong, Capital Totals

7 7 7 3 00 8 9 6 0 00

Chapter 8

8 9 6 0 00

Recording Adjusting and Closing Entries for a Service Business • 167

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ON YOUR OWN, p. 219

Preparing a post-closing trial balance

Cuts by Kelley Post-Closing Trial Balance February 28, 20 – – ACCOUNT TITLE

Cash

DEBIT

CREDIT

6 1 1 6 00

Petty Cash

2 0 0 00

Accounts Receivable—Jodi Ford

3 1 7 00

Accounts Receivable—Midville Center

1 4 8 00

Supplies

2 2 5 00

Prepaid Insurance

4 0 0 00

Accounts Payable—Beauty Supply Co.

4 2 2 00

Accounts Payable—Midwest Towel

1 8 2 00

Kelley Cooper, Capital Totals

168 • Working Papers TE

6 8 0 2 00 7 4 0 6 00

7 4 0 6 00

COPYRIGHT © SOUTH-WESTERN CENGAGE LEARNING

Chapter 8

20 21 22

21

22

18

20

1 0 0 0 00

19

320

17

Page 169

19

Leonard Long, Drawing

1 0 0 0 00

16

Prob. 8-2

Date

18

310

30 Leonard Long, Capital

17

2 9 7 3 00

330

30 Income Summary

15

310

14

1 4 9 5 00

550

Utilities Expense

14

Leonard Long, Capital

13

4 5 0 00

540

Supplies Expense

13

16

12

3 1 5 00

530

Miscellaneous Expense

12

Prob. 8-1

Name

15

11

2 0 0 00

520

Insurance Expense

11

2 9 7 3 00

10

8 0 0 00

9

8

7

6

5

4

3

2

1

510

3 2 6 0 00

6 2 3 3 00

2 0 0 00

CREDIT

5

12

Advertising Expense

330

30 Income Summary

9

6 2 3 3 00

2 0 0 00

4 5 0 00

DEBIT

CASH

PAGE

10

330

410

Income Summary

30 Sales

8

7

Closing Entries

160

Prepaid Insurance

5

6

520

30 Insurance Expense

150

Supplies

3

4 5 0 00

CREDIT

4

5:30 PM

4

540

Apr. 30 Supplies Expense

Adjusting Entries

DEBIT

SALES CREDIT

3

8-1 and 8-2

2

20 – –

ACCOUNT TITLE

GENERAL

2

10/29/07

1

DATE

1

JOURNAL DOC. POST. NO. REF.

8-1 Journalizing and posting adjusting entries 8-2 Journalizing and posting closing entries

BTE_Ch08-157-184.qxd

SECOND REVISED

Class

APPLICATION PROBLEMS, p. 221

Recording Adjusting and Closing Entries for a Service Business • 169

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10/29/07

8-1 and 8-2

5:30 PM

SECOND REVISED

Page 170

APPLICATION PROBLEMS (continued) GENERAL LEDGER

ACCOUNT

Cash

DATE

ACCOUNT NO.

ITEM

Apr. 30 Balance

ITEM

Apr. 30 Balance

POST. REF.

ITEM

ACCOUNT NO.

CREDIT DEBIT

Apr. 30 Balance

7 0 0 00

CREDIT DEBIT

4 9 8 00

POST. REF.

Apr. 30 Balance 30

CREDIT DEBIT

4 5 0 00

4 3 1 00

Prepaid Insurance

20 – –

Apr. 30 Balance 30

170 • Working Papers TE

CREDIT

8 8 1 00

12

ITEM

ACCOUNT NO.

POST. REF.

160

BALANCE DEBIT

CREDIT DEBIT

✔ 12

150

BALANCE DEBIT



20 – –

DATE

CREDIT

ACCOUNT NO.

ITEM

140

BALANCE DEBIT

Supplies

DATE

CREDIT

ACCOUNT NO.

POST. REF.

130

BALANCE DEBIT



20 – –

CREDIT

7 6 0 7 00

Accounts Receivable—R. Henry

DATE

ACCOUNT

DEBIT



20 – –

ACCOUNT

CREDIT

Accounts Receivable—Natasha Goodlad

DATE

ACCOUNT

BALANCE DEBIT



20 – –

ACCOUNT

POST. REF.

110

CREDIT

4 0 0 00 2 0 0 00

2 0 0 00

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SECOND REVISED

Page 171

Name

Date

8-1 and 8-2

Class

APPLICATION PROBLEMS (continued) GENERAL LEDGER

ACCOUNT

Accounts Payable—Tri-County Supplies

DATE

ITEM

Apr. 30 Balance

ITEM

Apr. 30 Balance

ITEM

Apr. 30 Balance 30

12

DEBIT

CREDIT DEBIT

Apr. 30 Balance 30

6 5 2 7 00 2 9 7 3 00

9 5 0 0 00

1 0 0 0 00

8 5 0 0 00

CREDIT DEBIT

20 – –

CREDIT

1 0 0 0 00 1 0 0 0 00

12

ITEM

ACCOUNT NO.

POST. REF.

CREDIT DEBIT

12

3 2 6 0 00

30

12

2 9 7 3 00

CREDIT

6 2 3 3 00

6 2 3 3 00

12

2 9 7 3 00

Sales

ACCOUNT NO.

POST. REF.

Apr. 30 Balance 30

12

Chapter 8

410

BALANCE DEBIT

CREDIT DEBIT



20 – –

330

BALANCE DEBIT

Apr. 30 30

ITEM

320

BALANCE DEBIT

Income Summary

DATE

CREDIT

ACCOUNT NO.

POST. REF.

310

BALANCE DEBIT



20 – –

DATE

CREDIT

5 5 5 00

Leonard Long, Drawing ITEM

ACCOUNT

CREDIT

ACCOUNT NO.

POST. REF.

220

BALANCE DEBIT

12

30

ACCOUNT

POST. REF.

ACCOUNT NO.



20 – –

DATE

CREDIT

3 8 1 00

Leonard Long, Capital

DATE

ACCOUNT

DEBIT



20 – –

ACCOUNT

CREDIT

Accounts Payable—West End Supply Co.

DATE

210

BALANCE DEBIT



20 – –

ACCOUNT

POST. REF.

ACCOUNT NO.

CREDIT

6 2 3 3 00 6 2 3 3 00

Recording Adjusting and Closing Entries for a Service Business • 171

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5:30 PM

SECOND REVISED

Page 172

APPLICATION PROBLEMS (concluded) GENERAL LEDGER

ACCOUNT

Advertising Expense

DATE

ITEM

Apr. 30 Balance 30

20 – –

Apr. 30 30

8 0 0 00

POST. REF.

CREDIT DEBIT

2 0 0 00

2 0 0 00 2 0 0 00

CREDIT DEBIT

3 1 5 00

12

ACCOUNT NO.

ITEM

20 – –

Apr. 30 30

POST. REF.

12

CREDIT DEBIT

4 5 0 00 4 5 0 00

ACCOUNT NO.

POST. REF.

Apr. 30 Balance 30

CREDIT DEBIT

CREDIT

1 4 9 5 00 1 4 9 5 00

12

ACCOUNT NO.

ACCOUNT

172 • Working Papers TE

550

BALANCE DEBIT



20 – –

DATE

CREDIT

4 5 0 00

Utilities Expense ITEM

540

BALANCE DEBIT

12

DATE

CREDIT

3 1 5 00

Supplies Expense

DATE

530

BALANCE DEBIT



Apr. 30 Balance 30

CREDIT

ACCOUNT NO.

POST. REF.

520

BALANCE DEBIT

Miscellaneous Expense ITEM

CREDIT

8 0 0 00

12

20 – –

ACCOUNT

DEBIT

ACCOUNT NO.

12

DATE

ACCOUNT

CREDIT

Insurance Expense ITEM

510

BALANCE DEBIT

12

DATE

ACCOUNT

POST. REF.



20 – –

ACCOUNT

ACCOUNT NO.

ITEM

POST. REF.

BALANCE DEBIT

CREDIT DEBIT

CREDIT

COPYRIGHT © SOUTH-WESTERN CENGAGE LEARNING

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5:30 PM

SECOND REVISED

Page 173

Name

8-3

Date

Class

APPLICATION PROBLEM, p. 222

Preparing a post-closing trial balance

Len’s Laundry Post-Closing Trial Balance April 30, 20 – – ACCOUNT TITLE

Cash

DEBIT

CREDIT

7 6 0 7 00

Accounts Receivable—Natasha Goodlad

7 0 0 00

Accounts Receivable—R. Henry

4 9 8 00

Supplies

4 3 1 00

Prepaid Insurance

2 0 0 00

Accounts Payable—Tri-County Supplies

3 8 1 00

Accounts Payable—West End Supply Co.

5 5 5 00

Leonard Long, Capital

8 5 0 0 00

Totals

9 4 3 6 00

Chapter 8

9 4 3 6 00

Recording Adjusting and Closing Entries for a Service Business • 173

174 • Working Papers TE

330 310

Income Summary 31 Ron Rolstad, Capital

16

17

20 21 22

21

22

18

20

6 0 0 00

17

19

6 0 0 00

16

19

320

310

31 Ron Rolstad, Capital

15

Ron Rolstad, Drawing

14

1 6 4 1 00

550

Utilities Expense

14

18

13

1 4 0 0 00

540

Supplies Expense

13

4 6 4 00

12

8 5 00

530

Miscellaneous Expense

12

15

11

1 5 7 00

520

Insurance Expense

11

4 6 4 00

10

9

8

7

6

5

4

3

2

1

4 5 0 00

CREDIT

5

20

510

3 7 3 3 00

3 2 6 9 00

CASH

PAGE

Advertising Expense

330

31 Income Summary

9

3 2 6 9 00

1 5 7 00

DEBIT

4

10

330

410

Income Summary

31 Sales

8

7

Closing Entries

150

Prepaid Insurance

5

1 5 7 00

1 4 0 0 00

CREDIT

SALES CREDIT

3

5:30 PM

6

520

31 Insurance Expense

140

Supplies

3

1 4 0 0 00

DEBIT

GENERAL

2

10/29/07

4

540

Adjusting Entries Oct. 31 Supplies Expense

20 – –

2

1

ACCOUNT TITLE

DOC. POST. NO. REF.

1

JOURNAL

8-4

DATE

1., 2.

Journalizing and posting adjusting and closing entries with a net loss; preparing a post-closing trial balance

BTE_Ch08-157-184.qxd Page 174

SECOND REVISED

MASTERY PROBLEM, p. 222

COPYRIGHT © SOUTH-WESTERN CENGAGE LEARNING

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5:30 PM

SECOND REVISED

Page 175

Name

8-4

Date

Class

MASTERY PROBLEM (continued)

1., 2. ACCOUNT

GENERAL LEDGER

Cash

DATE

ACCOUNT NO.

POST. REF.

ITEM

Oct. 31 Balance

ACCOUNT

POST. REF.

ITEM

ITEM

CREDIT DEBIT

1 5 0 00

Oct. 31 Balance

CREDIT DEBIT

ACCOUNT NO.

ITEM

POST. REF.

Oct. 31 Balance 31

CREDIT DEBIT

1 4 0 0 00

7 8 0 00

Prepaid Insurance

ACCOUNT NO.

POST. REF.

Oct. 31 Balance 31

20

Chapter 8

150

BALANCE DEBIT

CREDIT DEBIT



20 – –

CREDIT

2 1 8 0 00

20

ITEM

140

BALANCE DEBIT



20 – –

DATE

CREDIT

1 9 7 00

Supplies

DATE

130

BALANCE DEBIT



20 – –

CREDIT

ACCOUNT NO.

POST. REF.

120

BALANCE DEBIT

Accounts Receivable—M. Hollerud

DATE

CREDIT

6 9 5 8 00



Oct. 31 Balance

ACCOUNT

DEBIT

ACCOUNT NO.

20 – –

ACCOUNT

CREDIT

Petty Cash

DATE

ACCOUNT

BALANCE DEBIT



20 – –

110

CREDIT

9 5 7 00 1 5 7 00

8 0 0 00

Recording Adjusting and Closing Entries for a Service Business • 175

BTE_Ch08-157-184.qxd

8-4

10/29/07

5:30 PM

SECOND REVISED

Page 176

MASTERY PROBLEM (continued)

1., 2.

GENERAL LEDGER

ACCOUNT

Accounts Payable—Tampa Supply

DATE

ITEM

Oct. 31 Balance

ITEM

Oct. 31 Balance 31 31

ITEM

Oct. 31 Balance 31

CREDIT DEBIT

20

4 6 4 00

8 8 7 3 00

20

6 0 0 00

8 2 7 3 00 ACCOUNT NO.

POST. REF.

CREDIT DEBIT

20 – –

Oct. 31 31

20

31

20

20

6 0 0 00 6 0 0 00

CREDIT DEBIT

Oct. 31 Balance 31

176 • Working Papers TE

CREDIT

3 2 6 9 00

3 2 6 9 00 3 7 3 3 00

4 6 4 00 4 6 4 00 ACCOUNT NO.

ITEM

POST. REF.

410

BALANCE DEBIT

CREDIT DEBIT

✔ 20

330

BALANCE DEBIT

Sales

20 – –

CREDIT

ACCOUNT NO.

POST. REF.

320

BALANCE DEBIT

Income Summary

DATE

CREDIT

9 3 3 7 00

20

ITEM

310

BALANCE DEBIT



20 – –

DATE

CREDIT

6 1 2 00

Ron Rolstad, Drawing

DATE

ACCOUNT

DEBIT



20 – –

ACCOUNT

CREDIT

ACCOUNT NO.

POST. REF.

210

BALANCE DEBIT

Ron Rolstad, Capital

DATE

ACCOUNT

POST. REF.



20 – –

ACCOUNT

ACCOUNT NO.

CREDIT

3 2 6 9 00 3 2 6 9 00

COPYRIGHT © SOUTH-WESTERN CENGAGE LEARNING

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10/29/07

5:30 PM

SECOND REVISED

Page 177

Name

8-4

Date

Class

MASTERY PROBLEM (continued) GENERAL LEDGER

1., 2. ACCOUNT

Advertising Expense

DATE

ITEM

Oct. 31 Balance 31

20 – –

Oct. 31 31

4 5 0 00

POST. REF.

CREDIT DEBIT

1 5 7 00

1 5 7 00 1 5 7 00

CREDIT DEBIT

8 5 00

Supplies Expense

ACCOUNT NO.

ITEM

20 – –

Oct. 31 31

POST. REF.

20

CREDIT DEBIT

1 4 0 0 00 1 4 0 0 00

ACCOUNT NO.

POST. REF.

Oct. 31 Balance 31

550

BALANCE DEBIT

CREDIT DEBIT



20 – –

CREDIT

1 6 4 1 00 1 6 4 1 00

20

ACCOUNT NO.

ACCOUNT

DATE

CREDIT

1 4 0 0 00

Utilities Expense ITEM

540

BALANCE DEBIT

20

DATE

CREDIT

8 5 00

20

DATE

530

BALANCE DEBIT



Oct. 31 Balance 31

CREDIT

ACCOUNT NO.

POST. REF.

520

BALANCE DEBIT

Miscellaneous Expense ITEM

CREDIT

4 5 0 00

20

20 – –

ACCOUNT

DEBIT

ACCOUNT NO.

20

DATE

ACCOUNT

CREDIT

Insurance Expense ITEM

510

BALANCE DEBIT

20

DATE

ACCOUNT

POST. REF.



20 – –

ACCOUNT

ACCOUNT NO.

ITEM

Chapter 8

POST. REF.

BALANCE DEBIT

CREDIT DEBIT

CREDIT

Recording Adjusting and Closing Entries for a Service Business • 177

BTE_Ch08-157-184.qxd

8-4

10/29/07

5:30 PM

SECOND REVISED

Page 178

MASTERY PROBLEM (concluded)

3.

Rolstad Repair Service Post-Closing Trial Balance October 31, 20 – – ACCOUNT TITLE

Cash

DEBIT

6 9 5 8 00

Petty Cash

1 5 0 00

Accounts Receivable—M. Hollerud

1 9 7 00

Supplies

7 8 0 00

Prepaid Insurance

8 0 0 00

Accounts Payable—Tampa Supply

6 1 2 00

Ron Rolstad, Capital Totals

178 • Working Papers TE

CREDIT

8 2 7 3 00 8 8 8 5 00

8 8 8 5 00

COPYRIGHT © SOUTH-WESTERN CENGAGE LEARNING

Chapter 8

2 5 0 0 00

420 330 330

Sales—Shrub Care

Income Summary

30 Income Summary

8

9

10

330 310

Income Summary

30 Ryo Morrison, Capital

21 22

21

22

19 20

1 0 0 00

18

17

16

15

14

13

12

11

10

9

8

7

6

5

4

3

2

1

20

19

18

17

CREDIT

5

18

Date

320

310

30 Ryo Morrison, Capital

CASH

PAGE

Page 179

Ryo Morrison, Drawing

3 2 0 0 00

550

Supplies Expense

15

1 0 0 00

3 3 0 0 00

540

Rent Expense

14

4 4 0 00

5 5 0 00

530

Miscellaneous Expense

13

4 4 0 00

4 0 0 00

520

Insurance Expense

12

DEBIT

4

Name

16

3 9 0 00

510

Advertising Expense

7 4 0 0 00

4 0 0 00

3 2 0 0 00

CREDIT

11

7 8 4 0 00

4 9 0 0 00

410

30 Sales—Lawn Care

4 0 0 00

3 2 0 0 00

DEBIT

7

Closing Entries

140

Prepaid Insurance

5

6

520

130

30 Insurance Expense

Supplies

550

4

3

Adjusting Entries

Sept. 30 Supplies Expense

20 – –

ACCOUNT TITLE

SALES CREDIT

3

5:30 PM

2

1

DATE

GENERAL

2

10/29/07

DOC. POST. NO. REF.

1

8-5

JOURNAL

Journalizing and posting adjusting and closing entries with two revenue accounts and a net loss; preparing a postclosing trial balance 1., 2.

BTE_Ch08-157-184.qxd

SECOND REVISED

Class

CHALLENGE PROBLEM, p. 223

Recording Adjusting and Closing Entries for a Service Business • 179

BTE_Ch08-157-184.qxd

8-5

10/29/07

5:30 PM

CHALLENGE PROBLEM (continued) GENERAL LEDGER

1., 2. ACCOUNT

SECOND REVISED

Page 180

Cash

DATE

ACCOUNT NO.

ITEM

Sept. 30 Balance

ITEM

Sept. 30 Balance

ACCOUNT NO.

POST. REF.

POST. REF.

CREDIT DEBIT

Sept. 30 Balance 30

CREDIT DEBIT

20 – –

Sept. 30 Balance 30

3 2 0 0 00

6 5 0 00

ACCOUNT NO.

POST. REF.

CREDIT DEBIT

20 – –

Sept. 30 Balance

180 • Working Papers TE

CREDIT



1 6 0 0 00

18

4 0 0 00 1 2 0 0 00

ACCOUNT NO.

POST. REF.



140

BALANCE DEBIT

Accounts Payable—Corner Garage ITEM

CREDIT

3 8 5 0 00

18

ITEM

130

BALANCE DEBIT

Prepaid Insurance

DATE

CREDIT

9 5 00



20 – –

120

BALANCE DEBIT

ACCOUNT NO.

ITEM

DATE

CREDIT

1 8 9 8 00

Supplies

DATE

ACCOUNT

DEBIT



20 – –

ACCOUNT

CREDIT

Accounts Receivable—Sandra Rohe

DATE

ACCOUNT

BALANCE DEBIT



20 – –

ACCOUNT

POST. REF.

110

210

BALANCE DEBIT

CREDIT DEBIT

CREDIT

5 8 00

COPYRIGHT © SOUTH-WESTERN CENGAGE LEARNING

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SECOND REVISED

Page 181

Name

Date

8-5

Class

CHALLENGE PROBLEM (continued)

1., 2.

GENERAL LEDGER

ACCOUNT

Accounts Payable—Broadway Gas

DATE

POST. REF.

ITEM

Sept. 30 Balance

ITEM

Sept. 30 Balance

ITEM

Sept. 30 Balance 30 30

POST. REF.

DEBIT

Sept. 30 Balance 30

CREDIT DEBIT

20 – –

18

4 4 0 00

3 5 6 0 00

18

1 0 0 00

3 4 6 0 00 ACCOUNT NO.

POST. REF.

POST. REF.

18

30

18

18

CREDIT DEBIT

1 0 0 00

CREDIT DEBIT

Sept. 30 Balance 30

18

Chapter 8

CREDIT

7 4 0 0 00

7 4 0 0 00 7 8 4 0 00

4 4 0 00 4 4 0 00 ACCOUNT NO.

POST. REF.

330

BALANCE DEBIT

410

BALANCE DEBIT

CREDIT DEBIT



20 – –

CREDIT

1 0 0 00

Sales—Lawn Care ITEM

320

BALANCE DEBIT

ACCOUNT NO.

Sept. 30 30

DATE

CREDIT

4 0 0 0 00

18

ITEM

310

BALANCE DEBIT

Income Summary

DATE

CREDIT

2 1 5 00



20 – –

ACCOUNT

CREDIT

ACCOUNT NO.

POST. REF.

230

BALANCE DEBIT

Ryo Morrison, Drawing ITEM

ACCOUNT

ACCOUNT NO.



20 – –

DATE

CREDIT

1 1 0 00

Ryo Morrison, Capital

DATE

ACCOUNT

DEBIT



20 – –

ACCOUNT

CREDIT

Accounts Payable—Esko Repair

DATE

220

BALANCE DEBIT



20 – –

ACCOUNT

ACCOUNT NO.

CREDIT

4 9 0 0 00 4 9 0 0 00

Recording Adjusting and Closing Entries for a Service Business • 181

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10/29/07

5:30 PM

SECOND REVISED

Page 182

CHALLENGE PROBLEM (continued) GENERAL LEDGER

1., 2. ACCOUNT

Sales—Shrub Care

DATE

ITEM

Sept. 30 Balance 30

18

ITEM

Sept. 30 Balance 30

20 – –

Sept. 30 30

POST. REF.

CREDIT DEBIT

3 9 0 00

CREDIT DEBIT

4 0 0 00

4 0 0 00 4 0 0 00

CREDIT DEBIT

✔ 5 5 0 00

ACCOUNT NO.

POST. REF.

Sept. 30 Balance 30

CREDIT DEBIT

3 3 0 0 00

Supplies Expense

20 – –

Sept. 30 30

182 • Working Papers TE

CREDIT

3 3 0 0 00

18

ACCOUNT NO.

ITEM

POST. REF.

18 18

540

BALANCE DEBIT



20 – –

DATE

CREDIT

5 5 0 00

18

ITEM

530

BALANCE DEBIT

Rent Expense

DATE

CREDIT

ACCOUNT NO.

POST. REF.

520

BALANCE DEBIT

Miscellaneous Expense

Sept. 30 Balance 30

CREDIT

3 9 0 00

18

ITEM

510

BALANCE DEBIT

ACCOUNT NO.

18

20 – –

ACCOUNT

2 5 0 0 00

18

ITEM

DATE

CREDIT

2 5 0 0 00

Insurance Expense

DATE

ACCOUNT

DEBIT



20 – –

ACCOUNT

CREDIT

ACCOUNT NO.

POST. REF.

420

BALANCE DEBIT

Advertising Expense

DATE

ACCOUNT

POST. REF.



20 – –

ACCOUNT

ACCOUNT NO.

550

BALANCE DEBIT

CREDIT DEBIT

3 2 0 0 00

CREDIT

3 2 0 0 00 3 2 0 0 00

COPYRIGHT © SOUTH-WESTERN CENGAGE LEARNING

BTE_Ch08-157-184.qxd

10/29/07

5:30 PM

SECOND REVISED

Page 183

Name

8-5

Date

Class

CHALLENGE PROBLEM (continued)

3.

LawnMow Post-Closing Trial Balance September 30, 20 – – ACCOUNT TITLE

Cash

DEBIT

CREDIT

1 8 9 8 00

Accounts Receivable—Sandra Rohe Supplies

9 5 00 6 5 0 00

Prepaid Insurance

1 2 0 0 00

Accounts Payable—Corner Garage

5 8 00

Accounts Payable—Broadway Gas

1 1 0 00

Accounts Payable—Esko Repair

2 1 5 00

Ryo Morrison, Capital Totals

3 4 6 0 00 3 8 4 3 00

Chapter 8

3 8 4 3 00

Recording Adjusting and Closing Entries for a Service Business • 183

BTE_Ch08-157-184.qxd

8-5

10/29/07

5:30 PM

SECOND REVISED

Page 184

CHALLENGE PROBLEM (concluded)

4.

Ryo Morrison’s expenses exceeded the amount of his sales. One way to improve is to reduce his expenses. In particular, he might investigate if it is normal to spend so much on utilities supplies in one month or whether he could reduce his monthly rent. Another way to improve is to increase his total revenue. There are two ways to increase revenues: (1) increase volume, which means to sell more services, and (2) increase prices. However, Mr. Morrison must be careful if he increases prices. An increase in prices can cause fewer sales, which may decrease overall revenue.

184 • Working Papers TE

COPYRIGHT © SOUTH-WESTERN CENGAGE LEARNING

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