Comprehensive Problem 1

The Accounting Cycle

Bob Night opened "The General's Favorite Fishing Hole." The fishing camp is open
from April through September and attracts many famous college basketball
coaches during the off-season. Guests typically register for one week, arriving on
Sunday afternoon and returning home the following Saturday afternoon. The
registration fee includes room and board, the use of fishing boats, and professional
instruction in fishing techniques. The chart of accounts for the camping operations
is provided below.
The General's Favorite Fishing Hole
Chart of Accounts
Assets
Revenues
101 Cash
401 Registration Fees
142 Office Supplies
144 Food Supplies
Expenses
145 Prepaid Insurance
511 Wages Expense
181 Fishing Boats
521 Rent Expense
181.1 Accum. Depr. -- Fishing Boats
523 Office Supplies Expense
524 Food Supplies Expense
Liabilities
525 Telephone Expense
202 Accounts Payable
533 Utilities Expense
219 Wages Payable
535 Insurance Expense
536 Miscellaneous Expense
Owner's Equity
542 Depr. Exp. -- Fishing Boats
311 Bob Night, Capital
312 Bob Night, Drawing
313 Income Summary
The following transactions took place during April 20-Apr. 1
Night invested cash in business, $90,000
1 Paid insurance premium for six-month camping season, $9,000
2 Paid rent for lodge and campgrounds for the month of April, $40,000
2 Deposited registration fees, $35,000
2 Purchased 10 fishing boats on account for $60,000. The boats have
estimated useful lives of fives years, at which time they will be donated
to a local day camp. Arrangements were made to pay for the boats in July
3 Purchased food supplies from Acme Super Market on account, $7,000
5 Purchased office supplies from Gordon Office Supplies on account, $500
7 Deposited registration fees, $38,600
10 Purchased food supplies from Acme Super Market on account, $8,200
10 Paid wages to fishing guides, $10,000
14 Deposited registration fees, $30,500

16 Purchased food supplies from Acme Super Market on account, $9,000

17 Paid wages to fishing guides, $10,000
18 Paid miscellaneous Expense, $150
21 Deposited registration fees, $35,600
24 Purchased food supplies from Acme Super Market on account, $8,500
24 Paid wages to fishing guides, $10,000
28 Deposited registration fees, $32,000
29 Paid wages to fishing guides, $10,000
30 Purchased food supplies from Acme Super Market on account, $6,000
30 Paid Acme Super Market on account, $32,700
30 Paid utilities bill, $2,000
30 Paid telephone bill, $1,200
30 Bob Night withdrew cash for personal use, $6,000
Adjustment information for the end of April is provided below.
(a)
Office supplies remaining on hand, $100
(b)
Food supplies remaining on hand, $8,000
(c)
Insurance expired during the month of April, $1,500
(d)
Depreciation on the fishing boats for the month of April, $1,000
(e)
Wages earned, but not yet paid, at the end of April, $500
Required
1 Enter the transactions in a general journal. Enter transactions from April 1-5
on page 1, April 7-18 on page 2, April 21-29 and the first two enters from
April 30 on page 3, and the remaining entries from April 30 on page 4.
2 Post the entries to the general ledger.
3 Prepare a trial balance on a work sheet
(page 13-14)
4 Complete the work sheet (In chapter 4, page 143, is an explanation of the work
sheet process and a template example)
5 Journalize the adjusting entries to the general ledger (page 17)
6 Post the adjusting entries to the general ledger
7 Prepare the income statement
(page 15)
8 Prepare the statement of owner's equity
(page 15)
9 Prepare the balance sheet
(page 16)
10 Journalize the closing entries
(page 17)
11 Post the closing entries to the general ledger
12 Prepare a post closing trial balance
(page 18)

Page 1

m April 1-5

n of the work

Page 2

General Journal: 1
Date
1 April
2
3
4 April
5
6
7 April
8
9
10
11 April
12
13
14
15 April
16
17
18
19 April
20
21
22
23 April
24
25
26
27
28
29
30
31
32
33
34
35
36

Description

Post. Ref

Debit

1 Cash
Night Capital
cash investment

101 $ 90,000.00
311

1 Prepaid Insurance
Cash
paid insurance premium
2 Rent Expense
Cash
payed rent for lodge and campground

145 $
101

2 Cash
Registration Fees
deposited registration fees

101 $ 35,000.00
401

2 Fishing Boats
Accounts Payable
purchased fishing boats on account

181 $ 60,000.00
202

3 Food Supplies
Accounts Payable
purchased food supplies on account

144 $
202

7,000.00

5 Office Supplies
Accounts Payable
purchased office supplies on account

142 $
202

500.00

9,000.00

521 $ 40,000.00
101

Credit
$ 90,000.00

9,000.00

$ 40,000.00

$ 35,000.00

$ 60,000.00

7,000.00

500.00

Page 3

General Journal: 2
Date
1 April
2
3
4
5 April
6
7
8
9 April
10
11
12
13 April
14
15
16
17 April
18
19
20
21 April
22
23
24
25 April
26
27
28
29
30
31
32
33
34
35
36

Description
7 Cash
Registration Fees
deposited registration fees

Post. Ref

Debit

101 $ 38,600.00
401

10 Food Supplies
Accounts Payable
purchased food supplies on account

144 $
202

8,200.00

10 Wages Expense
Cash
payed wages expense

511 $ 10,000.00
101

14 Cash
Registration Fees
deposited registration fees

101 $ 30,500.00
401

16 Food Supplies
Accounts Payable
purchased food supplies on account

144 $
202

17 Wages Expense
Cash
payed wages expense

511 $ 10,000.00
101

18 Miscellaneous Expense
Cash
payed miscellaneous expense

536 $
101

9,000.00

150.00

Credit
$ 38,600.00

8,200.00

$ 10,000.00

$ 30,500.00

9,000.00

$ 10,000.00

150.00

Page 4

General Journal: 3
Date
1 April
2
3
4
5 April
6
7
8
9 April
10
11
12
13 April
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36

Description

Post. Ref

Debit

21 Cash
Registration Fees
deposited registration fees

101 $ 35,600.00
401

24 Food Supplies
Accounts Payable
purchased food supplies on account

144 $
202

28 Cash
Registration Fees
deposited registration fees

101 $ 32,000.00
401

29 Wages Expense
Cash
payed wages expense

511 $ 10,000.00
101

8,500.00

Credit
$ 35,600.00

8,500.00

$ 32,000.00

$ 10,000.00

Page 5

General Journal: 4
Date
1 April
2
3
4
5 April
6
7
8
9 April
10
11
12
13 April
14
15
16
17 April
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36

Description

Post. Ref

Debit

30 Food Supplies
Accounts Payable
purchased food supplies on account

144 $
202

6,000.00

30 Accounts Payable
Cash
payed food supplies bill

202 $ 32,700.00
101

30 Utilities Expense
Cash
payed utilities bill

533 $
101

2,000.00

30 Telephone Expense
Cash
payed telephone bill

525 $
101

1,200.00

30 Night, Drawing
Cash
withdrew from the company

312 $
101

6,000.00

Credit
$

6,000.00

$ 32,700.00

2,000.00

1,200.00

6,000.00

Page 6

General Ledger
Account: Cash
Date

Item

Post.
Ref
J1

Debit

Apr.

April
April
April

2
2
7

April
April
April
April
April

10
14
17
18
21

$ 38,600.00

April
April

24
28

$ 35,600.00

April
April
April
April
April

29
30
30
30
30

$ 32,000.00

April

30

Credit

$ 90,000.00

Account No. 101

Balance
Debit
$

90,000.00

$
$
$

81,000.00
41,000.00
76,000.00

$ 10,000.00
$
150.00

$
$
$
$
$

114,600.00
104,600.00
135,100.00
125,100.00
124,950.00

$ 10,000.00

$ 160,550.00
$ 150,550.00

$ 10,000.00
$ 32,700.00
$ 2,000.00
$ 1,200.00

$
$
$
$
$

$ 130,650.00

$ 9,000.00
$ 40,000.00
$ 35,000.00
$ 10,000.00
$ 30,500.00

6,000.00

182,550.00
172,550.00
139,850.00
137,850.00
136,650.00

General Ledger
Account: Office Supplies
Post.
Item
Ref

Date
April

Debit
$

Credit

500.00

Account No. 142

Balance
Debit
$

500.00

General Ledger
Account: Food Supplies
Post.
Item
Ref

Date

Debit

April
April
April
April

3
10
16
24

$
$
$
$

7,000.00
8,200.00
9,000.00
8,500.00

April

30

6,000.00

Credit

Account No. 144

Balance
Debit
$
7,000.00
$ 15,200.00
$ 24,200.00
$ 32,700.00
$

38,700.00

General Ledger
Account: Prepaid Insurance
Post.
Item
Ref

Date
April

Debit
$

Account No. 145

Balance
Debit

Credit

9,000.00

9,000.00

General Ledger
Account: Fishing Boats
Post.
Item
Ref

Date
April

Date

Debit

Account No. 181

Balance
Debit

Credit

$ 60,000.00

General Ledger
Account: Accum. Depr.-- Fishing Boats
Post.
Item
Debit
Ref

Credit
$

60,000.00

Account No. 181.1

Balance
Debit

1,000.00

General Ledger
Account: Accounts Payable
Post.
Item
Ref

Date
April
April
April
April
April
April
April

2
3
5
10
16
24
30

April

30

Debit

Credit
$ 60,000.00
$ 7,000.00
$
500.00
$ 8,200.00
$ 9,000.00
$ 8,500.00
$ 6,000.00

$ 32,700.00

Account No. 202

Balance
Debit

General Ledger

nt No. 101
Balance

Account: Wages Payable

Post.
Item
Ref

Date

Credit

Debit

General Ledger
Account: Bob Night, Capital
Post.
Item
Ref

Date
April

Debit

General Ledger
Account: Bob Night, Drawing
Date
April

Item

Post.
Ref

Debit
$

6,000.00

nt No. 142
Balance
Credit
General Ledger
Account: Income Summary
Date

nt No. 144
Balance

Item

Post.
Ref

Debit
$ 117,450.00
$ 138,250.00

Credit

Page 7

nt No. 145
Balance
Credit

nt No. 181
Balance
Credit

No. 181.1
Balance
Credit
$

1,000.00

nt No. 202
Balance
Credit
$
$
$
$
$
$
$

60,000.00
67,000.00
67,500.00
75,700.00
84,700.00
93,200.00
99,200.00

$ 66,500.00

Page 8

ral Ledger
Credit
$

Account No. 219

Balance
Debit
Credit

500.00

500.00

Account: Registration Fees

Date
April

April
April
April

7
14
21

April

28

ral Ledger
Credit
$

Account No. 311

Balance
Debit
Credit

90,000.00

90,000.00

Account: Wages Expense

Date

ral Ledger
Account No. 312
Balance

Credit

Debit
$

Credit

6,000.00

April

10

April
April

17
24

April

29

ral Ledger

Account: Rent Expense

Account No. 313
Balance
Credit
Debit
Credit
$ 171,700.00
$ 171,700.00
$ 54,250.00
$ 84,000.00

Date
April

Account: Office Supplies Expe

Date
a

Page 9

Account: Food Supplies Expen

Date
b

Account: Telephone Expense

Date
April

30

Account: Utilities Expense

Date
April

30

Account: Insurance Expens

Date
c

General Ledger
Account: Registration Fees
Post.
Item
Ref

Debit

Credit

Account No. 401

Balance
Debit

$ 35,000.00
$ 38,600.00
$ 30,500.00
$ 35,600.00
$ 32,000.00

General Ledger
Account: Wages Expense
Post.
Item
Ref

Debit

Credit

Account No. 511

Balance
Debit
###

10,000.00

$
$

10,000.00
10,000.00

$ 20,000.00
$ 30,000.00

10,000.00

$ 40,000.00

General Ledger
Account: Rent Expense
Post.
Item
Ref

Debit
$

40,000.00

General Ledger
Account: Office Supplies Expense
Post.
Item
Debit
Ref
$

Credit

400.00

Account No. 521

Balance
Debit
$ 40,000.00

Credit

Account No. 523

Balance
Debit
$

400.00

General Ledger
Account: Food Supplies Expense
Post.
Item
Debit
Ref
$

Credit

30,700.00

Account No. 524

Balance
Debit
$ 30,700.00

General Ledger
Account: Telephone Expense
Post.
Item
Ref

Debit
$

Credit

1,200.00

Account No. 525

Balance
Debit
$

1,200.00

General Ledger
Account: Utilities Expense
Post.
Item
Ref

Debit
$

Credit

2,000.00

Account No. 533

Balance
Debit
$

2,000.00

General Ledger
Account: Insurance Expense
Post.
Item
Ref

Debit
$

1,500.00

Credit

Account No. 535

Balance
Debit
$

1,500.00

unt No. 401

Balance

General Ledger
Account: Miscellaneous Expense
Credit

3,500.00

$ 73,600.00
$ 104,100.00
$ 139,700.00

Date
April

Item

Post.
Ref

18

Debit
$

150.00

$ 171,700.00

General Ledger
Account: Depreciation Expense -- Fishing Boats
Date
Date

unt No. 511

Balance
Credit

unt No. 521

Balance
Credit

unt No. 523

Balance
Credit

Item

Post.
Ref

Debit
$ 1,000.00

Page 10

unt No. 524

Balance
Credit

unt No. 525

Balance
Credit

unt No. 533

Balance
Credit

unt No. 535

Balance
Credit

Page 11

al Ledger
Credit

Account No. 536

Balance
Debit
Credit
$

150.00

al Ledger
Account No. 542
Credit

Balance
Debit
$ 1,000.00

Credit

Page 12

Account Title
1 Cash
2 Office Supplies
3 Food Supplies
4 Prepaid Insurance
5 Fishing Boats
6 Accum. Dep - Fish Boats
7 Accounts Payable
8 Night, Capital
9 Night, Drawing
10 Registration Fees
11 Wages Expense
12 Rent Expense
13 Miscellaneous Expense
14 Utilities Expense
15 Telephone Expense
16 Depreciation Expense
17 Insurance Expense
18 Wages Payable
19 Office Supplies Exp.
20 Food Expense
21
22
23
24
25
26
27
28
29
30
31 Net Income

The General's Favorite Fishing Hole

Work Sheet
For the Month Ended April 30, 20-Trial Balance
Debit
Credit
$ 130,650.00
$
500.00
$ 38,700.00
$
9,000.00
$ 60,000.00
$
$
$

Adjustments
Debit

66,500.00
90,000.00

6,000.00
$ 171,700.00

$
$
$
$
$

40,000.00
40,000.00
150.00
2,000.00
1,200.00

500.00

$
$

1,000.00
1,500.00

$
400.00
$ 30,700.00

$ 328,200.00

$ 328,200.00

$ 34,100.00

The General's Favorite Fishing Hole

Work Sheet
For the Month Ended April 30, 20-Income Statement
Debit

Adjustments
Credit
$
400.00
$ 30,700.00
$
1,500.00
$

$
$
$
$
$

1,000.00

$
$
$
$
$
$
$
$
$

500.00
$
$

$ 34,100.00

Adjusted Trial balance

Debit
Credit
130,650.00
100.00
8,000.00
7,500.00
60,000.00
$
1,000.00
$ 66,500.00
$ 90,000.00
6,000.00
$ 171,700.00
40,500.00
40,000.00
150.00
2,000.00
1,200.00
1,000.00
1,500.00
$
500.00
400.00
30,700.00

$ 329,700.00

$ 329,700.00

$
$
$
$
$
$
$

40,500.00
40,000.00
150.00
2,000.00
1,200.00
1,000.00
1,500.00

$
$

400.00
30,700.00

$ 117,450.00

Page 13

eral's Favorite Fishing Hole

Work Sheet
Month Ended April 30, 20-Income Statement
Balance Sheet
Credit
Debit
Credit
$ 130,650.00
$
100.00
$
8,000.00
$
7,500.00
$ 60,000.00
$
(1,000.00)
$ 66,500.00
$ 138,250.00
$ 171,700.00

$ 171,700.00

$ 205,250.00

500.00

$ 205,250.00
$ 54,250.00

Page 14

The General's Favorite Fishing Hole

Income Statement
For Month End April 30, 20-Registration Fees
Less: Expenses:
Wages Expense
Rent Expense
Office Supplies Expense
Food Supplies Expense
Telephone Expense
Utilities Expense
Insurance Expense
Miscellaneous Expse
Depreciation Expense - Fishing Boats

$ 171,700.00
$ 40,500.00
$ 40,000.00
$
400.00
$ 30,700.00
$
1,200.00
$
2,000.00
$
1,500.00
$
150.00
$
1,000.00

Net Income

$ 117,450.00

$ 54,250.00
The General's Favorite Fishing Hole
Statement of Owner's Equity
For Month Ended April 30, 20--

Night, Capital
Net Income
Night, Drawings

$ 90,000.00
$ 54,250.00
$ 144,250.00
$
6,000.00

Night, Capital

$138,250.00

Page 15

The General's Favorite Fishing Hole

Balance Sheet
April 30, 20-Assets
Current Assets:
Cash
Office Supplies
Foods Supplies
Prepaid Insurance

$ 130,650.00
$
100.00
$
8,000.00
$
7,500.00

Fishing Boats
Less: Accumulated Depreciation
Total Assets

$
(1,000.00) $

60,000.00
59,000.00

$205,250.00
Liabilities

Accounts Payable
Wages Payable
Bob Night, Capital

$ 66,500.00
$
500.00
$ 138,250.00

Total Liabilities and Equity

$205,250.00

Page 16

General Journal: 5
Date
1 Apr.
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16

17

18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36

Description
Adjusting Entries
Office Supplies Expense
Office Supplies
office supplies on hand

Post. Ref

Debit

523 $
142

400.00

Food Supplies Expense

Food Supplies
food supplies on hand

524 $
144

30,700.00

Insurance Expense
Prepaid Insurance
expired insurance

535 $
145

1,500.00

Depreciation Expense - Fishing Boats

Accumumlated depreciation- Fishing Boats
depreciation from fishing boats

542 $
181.1

1,000.00

Wages Expense
Wages Payable
wages earned, but not payed

511 $
219

500.00

Closing Entries
30 Registration Fees
Income Summary
to close the credit balance account

401 $ 171,700.00
313

Income Summary
Wages Expense
Rent Expense
Office Expense
Food Expense
Telephone Expense
Utilities Expense
Miscellaneous Expense
Insurance Expense
Depreciation Expense - Fishing Boats
to close the debit balance accounts

313 $ 117,450.00
511
521
523
524
525
533
536
535
542

Income Summary
Night, Capital
to close the income summary account

313 $ 138,250.00
311

Night, Capital
Night, Withdrawel

311 $

6,000.00

Credit

400.00

30,700.00

1,500.00

1,000.00

500.00

$ 171,700.00

$
$
$
$
$
$
$
$
$

40,500.00
40,000.00
400.00
30,700.00
1,200.00
2,000.00
1,500.00
150.00
1,000.00

$ 138,250.00

6,000.00

The General's Favorite Fishing Hole

Post-Closing Trial Balance
April 30, 20-Acct.
Account Title
No Debit Balance Credit Balance
Cash
101 $ 130,650.00
Office Supplies
142 $
100.00
Food Supplies
144 $
8,000.00
Prepaid Insurance
145 $
7,500.00
Fishing Boats
181 $ 60,000.00
Accumulated Depreciation - Fishing Boats
181.1
$
1,000.00
Accounts Payable
202
$ 66,500.00
Wages Payable
219
$
500.00
Night, Capital
311
$ 138,250.00
Total

$206,250.00 $206,250.00

Page 18