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EXERCISE 3.

3 GUTIERREZ CONSTRUCTION COMPANY General Journal Account Titles Debit Credit Description Cash 120,000 Joe Gutierrez invested cash amounting to 120,000 in Gutierrez, Capital 120,000 Gutierrez Construction Company Land 70,000 Gutierrez Constriction Company bought land for 70,000 Building 58,600 and put up a building for 58,600.; paying with 33,600 Cash 33,600 cash and the rest as notes payable Notes Payable 95,000 Office Equipment 3,200 Gutierrez Construction Company bought Accounts Payable 3,200 office equipment on credit for 3,200 Accounts Payable 480 Gutierrez Construction Company Office Equipment 480 returned 480 worth of office equipment Notes Payable 12,000 Gutierrez Construction Company paid Cash 12,000 12,000 of their notes payable Vehicles 9,400 Gutierrez Construction Company purchased Gutierrez, Capital 9,400 vehicles using its capital for 9,400

Date 1-Nov 8-Nov

15-Nov 21-Nov 25-Nov 30-Nov

EXERCISE 3.4 GUTIERREZ CONSTRUCTION COMPANY Trial Balance Novemeber 30 Cash 74,400 Land 70,000 Building 58,600 Office Equipment 2,720 Vehicles 9,400 Notes Payable 83,000 Accounts Payable 2,720 Gutierrez Capital 129,400 215,120 215120

PROBLEM 3.10 A Entry 1 Debit Credit Professional Fees Earned 273,600 Accumulated Depreciation: Building 25,600 Accounts Payable 86,400 Salaries Payable 9,200 Income Summary 394,800 Only revenues are closed in accounts with credit balances Payables and accumulated depreciations are are not part of closing entries for they are neither an income nor an expense and have to be carried over in next period Entry 2 Income Summary Debit 160,800 Credit 96,400 36,000 12,800 6,400 9,200

Salaries Expense Al Vanderpool drawing Advertising Expense Depreciation Expense: Building Insurance Expense Only expenses are closed in accounts with debit balances Drawing is to be included under closing owners drawing account Entry 3

Debit Credit Al Vanderpool, Capital 234,000 Income Summary 234,000 Only withdrawals of cash or asset are closed in owner's drawing account Income Summary should be closed under income summary account

To close the owner's draw

B Closing Entiries for Revenue Account General Journal Account Title and Explanation Debit Professional Fees Earned 273,600 Income Summary To close the Professional Fees Earned account Closing Entries for Expense Accounts General Journal Account Title and Explanation Income Summary Salaries Expense Advertising Expense Depreciation Expense:Building Insurance Expense To close the expense accounts

Credit 273,600

C Net Income= Revenues- Expenses Revenues 273,600 Expenses 96,400 12,800 6,400 9,200 Net Income -124,800

Debit 124,800

Credit 96,400 12,800 6,400 9,200

Closing the Income Summary Account General Journal Account Title and Explanation Debit Credit Income Summary 148,800 Al Vanderpool, Capital 148,800 To close the Income Summary account by transferring the net income to the owner's capital account Closing the Owner's Drawing Account General Journal Account Title and Explanation Al Vanderpool, Capital Al Vanderpool drawing To close the owner's drawing account

Debit 36,000

Credit 36,000

PROBLEM 4.4 NICK CHARLES INVESTIGATIONS March 31 2001 Trial Balance Adjustments 17,150 37,800 3,900 1,600 400 5,400 1,800 1,050 350 17,100 5,700 285 3,900 1,665 24,000 8,400 45,300 3,200 33,320 12,300 570 285 3,000 1,800 450 350 800 400 1,200 3,400 19,500 1,665 112,220 112,220 16,800 16,800

Cash Fees Receivable Unexpired Insurrance Prepaid Rent Office Supplies Office Equipment Accumulated Depreciation: Office Equipment Accounts Payable Salaries Payable Unearned Retainer Fees Nick Charles, Capital Nick Charles. Drawing Fees Earned Depreciation Expense: Office Equipment Rent Expense Office Supplies Expense Insurance Expense Telephone Expense Travel Expense Salaries Expense TOTAL Net Income

Adjusted Trial Balance 17,150 41,700 1,200 3,600 700 17,100 5,985 3,900 1,665 15,600 45,300 3,200 45,620 855 4,800 800 1,200 1,200 3,400 21,165 118,070 118,070

Income Statement

45,620 855 4,800 800 1,200 1,200 3,400 21,165 33,420 12,200 45,620

45,620 45,620

A a) b)

Depreciation Expense Accumulated Depreciation: Office Equipment Unearned Retainer Fees Fees Earned

285 285 8,400 8,400

B Net Income= Revenues- Expenses Net Income= 45,620 - 33,420 Net Income= 12,200 C

c) d) e) f) g)

Salaries Expense Salaries Payable Rent Expense Prepaid Rent Fees Receivable Fees Earned Office Supplies Expense Office Supplies Insurance Expense Unexpired Insurance

1,665 1,665 1,800 1,800 3,900 3,900 350 350 400 400

Before: Rent Expense (for two months)= 3,000 > 1,000 per month Now: Prepaid Rent (for three months)= 5,400 >1,800 per month Therefore, the rent expense increased.

onths)= 3,000

onths)= 5,400

nse increased.