ACCT 201

FA 21
Practice Homework
Chapter 4 (25ed)

QS 4-10 (Algo) Identifying post-closing accounts

For each account, identify whether it is included in a post-closing trial balance.
 
Included in post-closing trial
balance?
a. Repairs Expense No
b. Unearned Ticket Revenue Yes
c. Rent Expense No
d. Accounts Payable Yes
e. Taxes Expense No
f. Commission Revenue No

QS 4-8 (Static) Preparing closing entries

The following is the adjusted trial balance of Sierra Company.
 
Sierra Company
Adjusted Trial Balance
December 31
Account Title Debit Credit
Cash $ 5,000  
Prepaid insurance 500  
Notes receivable (due in 5 years) 4,000  
Buildings 20,000  
Accumulated depreciation—Buildings   $ 12,000
Accounts payable   2,500
Notes payable (due in 3 years)   3,000
L. Sierra, Capital   10,500
L. Sierra, Withdrawals 1,000  
Consulting revenue   9,500
Wages expense 3,500  
Depreciation expense—Buildings 2,000  
Insurance expense 1,500  
 Sierra Company
Totals $ 37,500 $ 37,500

(1) Prepare an income statement for the year ended December 31.

(2) Prepare a statement of owner’s equity for the year ended December 31. The L. Sierra, Capital
account balance was $10,500 on December 31 of the prior year, and there are no owner
investments during the current year.
 
SIERRA COMPANY
Income Statement
For Year Ended December 31
Revenues:
Consulting revenue 9500

Total Revenues
Expenses:
Wages expense 3500
Depreciation expense—Buildings 2000
Insurance expense 1500

Total expenses 7000

Net income 2500

SIERRA COMPANY
Statement of Owner’s Equity
For Year Ended December 31
L. Sierra, Capital, December 31 prior year $10,500
Add: Investments by owner 0
Add: Net income 2500

Less: Withdrawals by owner 1000

L. Sierra, Capital, December 31 current year 12000

QS 4-17 (Static) Preparing a classified balance sheet LO C1
 Use the information in the adjusted trial balance to prepare Sierra Company’s classified balance
sheet as of December 31.

SIERRA COMPANY

Assets
Current assets
Cash 5000
Prepaid 500

Total current assets 5500

Long-term investments
Note receivable 4000

Plant assets
Building 20000
Less accumulated 12000 8000
Total assets 17500
Liabilities
Current liabilities
Account payable 2500

Long-term liabilities
Note payable 3000

Total liabilities 5500

Equity
L. Sierra, Capital 12000

Exercise 4-9 (Static) Preparing closing entries and a post-closing trial

Following are accounts and year-end adjusted balances of Cruz Company as of December 31.
 
Number Account Title Debit Credit
101 Cash $ 19,000  
126 Supplies 13,000  
128 Prepaid insurance 3,000  
167 Equipment 24,000  
168 Accumulated depreciation—Equipment   $ 7,500
301 A. Cruz, Capital   47,600
302 A. Cruz, Withdrawals 7,000  
403 Services revenue   44,000
612 Depreciation expense—Equipment 3,000  
622 Salaries expense 22,000  
637 Insurance expense 2,500  
640 Rent expense 3,400  
652 Supplies expense 2,200  
  Totals $ 99,100 $ 99,100
 
1. Prepare the December 31 closing entries. The account number for Income Summary is 901.