Chapter 4

Completing the Accounting Cycle

Instruction: Journalize the closing entries.
Brief Exercises:
1- The steps in the accounting cycle are listed in random order below. List the steps in proper
sequence, by placing numbers 1–9 in the blank spaces.
(a) ________ Prepare a trial balance.
(b) ________ Journalize the transactions.
(c) ________ Journalize and post closing entries.
(d) ________ Prepare fi nancial statements.
(e) ________ Journalize and post adjusting entries.
(f) ________ Post to ledger accounts.
(g) ________ Prepare a post-closing trial balance.
(h) ________ Prepare an adjusted trial balance.
(i) ________ Analyze business transactions.

2- At Raymond Company, the following errors were discovered after the transactions had been
journalized and posted. Prepare the correcting entries.
1. A collection on account from a customer for $870 was recorded as a debit to Cash $870 and a
credit to Service Revenue $870.
2. The purchase of store supplies on account for $1,510 was recorded as a debit to Supplies
$1,150 and a credit to Accounts Payable $1,150.
3- You have the following balances:
Owner’s drawings $22,000
Owner’s capital 70,000
Net income 41,000
Prepare the closing entries at December 31 that affect owner’s capital.

4- Hanson Company has an inexperienced accountant. During the first month on the job, the
accountant made the following errors in journalizing transactions. All entries were posted as
made.
1. The purchase of supplies for $650 cash was debited to Equipment $210 and credited to Cash
$210.
2. A $500 withdrawal of cash for B. Hanson’s personal use was debited to Salaries and Wages
Expense $900 and credited to Cash $900.
3. A payment on account of $820 to a creditor was debited to Accounts Payable $280 and
credited to Cash $280.
Prepare the correcting entries.

EXERCISES
E4-7 Victoria Lee Company had the following adjusted trial balance.