Assignment 4.1 Handout
1. Explain why the following accounts are being adjusted in the following entries:
2. Explain what the following terms mean:
a. Accounts receivable
b. Supplies
c. Prepaid rent
d. Furniture
e. Accumulated depreciation
f. Accounts payable
g. Unearned service revenue
h. Service revenue
i. Rent expense
3. Answer the following questions:
a. What type of normal balance does the Retained earnings account have—debit or credit?
b. Which Income Statement account has the same type of balance as the Retained earnings
account?
c. Which type of Income Statement account has the opposite type of balance as the Retained
earnings account?
d. What do we call the difference between total debits and total credits on the Income Statement?
Into what account is the difference figure closed at the end of the period?
4. It is December 31 and time for you to close the books.
Requirement
R1. Journalize the closing entries for Brett Kauffman Enterprises:
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5. It is December 31 and time for your business to close the books. The following balances
appear on the books of Cedrick Owens Enterprises.
Requirements
R1. Set up each T-account given and insert its adjusted balance as given (denote as Bal) at
December 31. Also set up a T-account for Retained earnings, $20,300, and for Income summary.
R2. Post the closing entries to the accounts, denoting posted amounts as Clo.
R3. Compute the ending balance of Retained earnings.
6. Lipsky Insurance Agency reported the following items at September 30, 2011:
Requirement
R1. Journalize Lipsky’s closing entries, as needed for these accounts.
7. Kaminsky Insurance Agency reported the following items at June 30:
Requirement
R1. Prepare T-accounts for Kaminsky Insurance Agency. Insert the account balances prior to
closing. Post the closing entries to these accounts, and show each account’s ending balance
after closing. Also show the Income summary T-account. Denote a balance as Bal and a closing
entry amount as Clo.
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8. After closing its accounts at February 28, 2010, Watts Electric Company had the following
account balances:
Requirement
R1. Prepare Watts’ postclosing trial balance at February 28, 2010.
9. Ink Jet Printing reported the following (amounts in thousands):
Requirements
R1. Identify the assets (including contra assets) and liabilities.
R2. Classify each asset and each liability as current or long-term.
10. Examine Ink Jet Printing’s account balances in problem #9.
Requirement
R1. Identify or compute the following amounts for Ink Jet Printing:
a. Total current assets
b. Book value of plant assets
c. Total current liabilities
d. Total long-term liabilities
11. Granite State Telephone and Telegram has these account balances at December 31,
2011:
Requirements
R1. Compute Granite State Telephone and Telegram’s current ratio and debt ratio.
R2. How much in current assets does Granite State Telephone and Telegram have for every
dollar of current liabilities that it owes?
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12. The trial balance of Data Link, Inc., at September 30, follows:
Additional information at September 30, 2011:
Requirements
R1. Complete Data Link’s work sheet for the month ended September 30, 2011.
R2. How much was net income for September?
13. Use your answer from problem #12.
Requirement
R1. Journalize Data Link’s adjusting and closing entries at September 30, 2011.
14. Consider the entries prepared in problem #13.
Requirements
R1. Set up T-accounts for those accounts affected by the adjusting and closing entries in problem
#13.
R2. Post the adjusting and closing entries to the accounts; denote adjustment amounts by Adj,
closing amounts by Clo, and balances by Bal. Double underline the accounts with zero balances
after you close them, and show the ending balance in each account.
