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Exam 4: Completing the Accounting Cycle and Classifying Accounts

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Question 51

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Closing the temporary accounts at the end of each accounting period

A) Serves to transfer the effects of these accounts to the proper equity account on the balance sheet
B) Prepares the withdrawals account for use in the next period
C) Gives the revenue and expense accounts zero balances
D) Gives the withdrawals account a zero balance
E) All of these

F) A) and B)
G) C) and D)

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Question 52

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The Income Summary account is used

A) To adjust and update asset accounts
B) To close the revenue and expense accounts
C) To determine the appropriate withdrawal amount
D) To replace the income statement under certain circumstances
E) To replace the capital account in some businesses

F) C) and E)
G) B) and C)

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Question 53

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Below is the year-end adjusted trial balance for Lucie Accounting. -Using the above reference, prepare an income statement, statement of changes in equity and a classified balance sheet.

Harley Ravidson's current ratio is.9 to 1. The industry average current ratio is 1.2. Harley Davidson does not have a problem in covering its current liabilities because of its strong sales and position in its industry.

The following account balances are taken from the adjusted trial balance of Best of Fun Bowling Lanes at December 31, 2020. -Prepare closing entries at December 31, 2020.

The Unadjusted Trial Balance columns of the work sheet show the balance in the Office Supplies account at $750. The Adjustments columns show that $425 of these supplies were used during the period. The amount shown as Office Supplies in the Balance Sheet columns is

An error is indicated if the following account has a balance appearing on the post-closing trial balance

The Unadjusted Trial Balance columns of a work sheet total $84,000. The Adjustments columns contain entries for the following: (1) Office supplies used during the period, $1,200. (2) Expiration of prepaid rent, $700. (3) Accrued salaries expense, $500. (4) Depreciation expense, $800. (5) Accrued repair service fees receivable, $400. The Adjusted Trial Balance columns total

The purpose of a post-closing trial balance is to verify that (1) total debits equal total credits for temporary accounts and (2) all temporary accounts have zero balances.

The adjusted trial balance of Sara's Photography follows: $~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~$ Sara's Photography TrialBalance $~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~$ December 31,2020 $\begin{array}{|l|r|r|}\hline & \text { Debit } & \text { Credit } \\\hline \text { Cash } & \$ 800 & \\\hline \text { Accounts receivable } & 1,400 & \\\hline \text { Office supplies } & 300 & \\\hline \text { Photography equipment } & 9,000 & \\\hline \text { Accumulated depreciation, photography } & & \\\hline \text { equipment } & & \$ 1,000 \\\hline \text { Accounts payable } & & 7,100 \\\hline \text { Sara Vegara, capital } & & 1,500 \\\hline \text { Sara Vegara, withdrawals } & 1,800& \\\hline \text { Photography revenue } & & 11,000 \\\hline \text { Supplies expense } & 500 \\\hline \text { Cleaning expense } & 100 \\\hline \text { Repairs expense } & 50 \\\hline \text { Developing expense } & 1,850 \\\hline \text { Rental expense } & \underline{2,000} &-\\\hline \text { Total } & \underline{\$ 17,800} & \underline{\$ 17,800} \\\hline\end{array}$ Prepare the necessary closing entries at December 31. What is the balance of Sara's capital account after the bookkeeper posts the closing entries?

The information on a work sheet can be used to prepare

After all closing entries are made and posted, the balance in the owners' capital account in the ledger will be equal to

The Income Summary account is a permanent account that will be carried forward year after year.

The steps in the closing process are (1) close credit balances in revenue accounts to Income Summary; (2) close credit balances in expense accounts to Income Summary; (3) close Income Summary to Owner's Capital; (4) close Withdrawals to Owner's Capital.

The J. Dawson, Capital account has a credit balance of $1,200 before closing entries are made. If total revenues for the year are $65,200, total expenses $49,800, and withdrawals are $2,400, what is the ending balance in the J. Dawson, Capital account after all closing entries have been made?

A classified balance sheet organizes assets and liabilities into important subgroups.

The adjusted trial balance of Richardson Electric at May 31, 2020 is as follows: ${ \begin{array} { c } \text { Richardsan Electric } \\\text { Trial Balance } \\\text { May 31, 2020 }\end{array} }$ $\begin{array} { | l | r | r | } \hline & \text { Debit } & \text { Credit } \\\hline \text { Cash } & \$ 6,000 & \\\hline \text { Prepaid insurance } & 2,000 & \\\hline \text { Equipment } & 18,000 & \\\hline \text { Accurmulated depreciation, equiprnent } & & \$ 20,000 \\\hline \text { Salaries payable } & & 1,000 \\\hline \text { Mitch Richardson, capital } & & 12,700 \\\hline \text { Mitch Richardson, withdrawals } & 6,000 & \\\hline \text { Repair fees eamed } & & 11,800 \\\hline \text { Unearmed repair fees } & & 1,200 \\\hline \text { Insurarce expense } & 3,500 & \\\hline \text { Depreciation experse } & 11,200 & \\\hline \text { Total } & \$ 46,700 & \$ 46,700 \\\hline\end{array}$ Prepare the necessary closing entries at May 31.

The following items appeared on December 31 Excel work sheet. Based on the following information, what is profit for the year?

Adjusting entries are normally entered in the General Journal before they are recorded on the work sheet.

When closing entries are made