Chap 004

Chapter 4
PROBLEM SET B
Problem 4-1B (15 minutes)
1. Z 6. F 11. A 16. E
2. A 7. D 12. E 17. Z
3. B 8. E 13. E 18. A
4. A 9. C 14. G 19. C
5. C 10. C 15. A 20. Z
2013 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in
any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
Solutions Manual, Chapter 4 1
INSTRUCTOR NOTE: Ledger accounts are shown after Part 7 as they would appear after all
entries are posted.
Part 2
Transactions for July
July 1 Cash 101

30,000
Buildings 173
150,000
L. Plume,
Capital 301
180,000
Owner invested in the business.
2 Rent Expense 640
2,000
Cash
101
2,000
Paid one months rent.
5 Office Supplies 124
2,400
Cash
101
2,400
Acquired office supplies.
10 Prepaid Insurance 128
7,200
Cash
101
7,200
Paid 12 months premium in advance.
14 Salaries Expense 622
1,000
Cash
101
1,000
Paid two weeks salary.
24 Cash 101
9,800
Storage Fees
Earned 401
2 Fundamental Accounting Principles, 21st Edition
9,800
Collected fees from customers.
28 Salaries Expense 622
1,000
Cash
101
1,000
Paid two weeks salary.
29 Repairs Expense 684
950
Cash
101
950
Repaired the roof.
30 Telephone Expense 688
400
Cash
101
400
Paid the telephone bill.
31 L. Plume, Withdrawals
302 2,000
Cash
101
2,000
Owner withdrew cash for personal use.
Problem 4-2B (Continued)
Part 3
SAFE STORAGE CO.

Unadjusted Trial Balance
July 31, 2013
No. Account Title Debit Credit
101 Cash..................................................................... $ 22,850
106 Accounts receivable........................................... 0
124 Office supplies.................................................... 2,400
128 Prepaid insurance............................................... 7,200
173 Buildings.............................................................. 150,000
174 Accumulated depreciationBuildings............... $ 0
209 Salaries payable.................................................. 0
301 L. Plume, Capital................................................. 180,000
302 L. Plume, Withdrawals........................................ 2,000
401 Storage fees earned............................................ 9,800
606 Depreciation expenseBuildings...................... 0
622 Salaries expense................................................. 2,000
637 Insurance expense.............................................. 0
640 Rent expense....................................................... 2,000
650 Office supplies expense..................................... 0
684 Repairs expense.................................................. 950
688 Telephone expense............................................. 400
Totals....................................................................$189,800 $189,800
Part 4
Adjusting entries
July 31 Insurance Expense...........................................637 400

..........................................................................................Prepaid Insurance128
..........................................................................................400
To record expired insurance
(2/3 x $7,200/12 per month).
31 Office Supplies Expense..................................650 875

..........................................................................................Office Supplies 124
..........................................................................................875
To record the cost of consumed
supplies ($2,400 - $1,525).
31 Depreciation ExpenseBuildings...................606 1,500

.......................................................................................... Accum. Depreciation
Buildings.........................................................................174 1,500
To record depreciation.
31 Salaries Expense...............................................622 100

..........................................................................................Salaries Payable 209
..........................................................................................100
To record accrued salaries.
31 Accounts Receivable........................................106 1,150

..........................................................................................Storage Fees Earned401
.......................................................................................... 1,150
To record accrued storage fees.
Part 4
SAFE STORAGE CO.

Adjusted Trial Balance
July 31, 2013
No. Account Title Debit Credit
101 Cash..................................................................... $ 22,850
106 Accounts receivable........................................... 1,150
124 Office supplies.................................................... 1,525
128 Prepaid insurance............................................... 6,800
173 Buildings.............................................................. 150,000
174 Accumulated depreciationBuildings............... $ 1,500
209 Salaries payable.................................................. 100
301 L. Plume, Capital................................................. 180,000
302 L. Plume, Withdrawals........................................ 2,000
401 Storage fees earned............................................ 10,950
606 Depreciation expenseBuildings...................... 1,500
622 Salaries expense................................................. 2,100
637 Insurance expense.............................................. 400
640 Rent expense....................................................... 2,000
650 Office supplies expense..................................... 875
684 Repairs expense.................................................. 950
688 Telephone expense............................................. 400
Totals....................................................................$192,550 $192,550
Part 5
SAFE STORAGE CO.

Income Statement
For Month Ended July 31, 2013
Storage fees earned $10,950
Expenses
Depreciation expenseBuildings $1,500
Salaries expense 2,100
Insurance expense 400
Rent expense 2,000
Office supplies expense 875
Repairs expense 950
Telephone expense 400
Total expenses 8,225
Net income $ 2,725
SAFE STORAGE CO.

Statement of Owners Equity
For Month Ended July 31, 2013
L. Plume, Capital, July 1, 2013 $ 0
Add: Owners investment $180,000
Net income 2,725
182,725
Less: Withdrawals (2,000)
L. Plume, Capital, July 31, 2013 $180,725
Part 5
SAFE STORAGE CO.

Balance Sheet
July 31, 2013
Assets
Cash $ 22,850
Accounts receivable 1,150
Office supplies 1,525
Prepaid insurance 6,800
Buildings $150,000
Accumulated depreciation--Buildings (1,500) 148,500
Total assets $180,825
Liabilities
Salaries payable $ 100
Equity
L. Plume, Capital 180,725
Total liabilities and equity $180,825
Part 6
Closing entries
July 31 Storage Fees Earned 401 10,950

Income
Summary 901
10,950
To close the revenue account.
31 Income Summary 901 8,225

Depreciation
ExpBuildings 606
1,500
Salaries
Expense 622
2,100
Insurance
Expense... 637
400
Rent Expense
640
2,000
Office
Supplies Expense 650
875
Repairs
Expense 684
950
Telephone
Expense 688
400
To close the expense accounts.
31 Income Summary 901 2,725

L. Plume,
Capital 301
2,725
To close the Income Summary.
31 L. Plume, Capital 301 2,000

L. Plume,
Withdrawals 302
2,000
To close the withdrawals account.
Part 7
SAFE STORAGE CO.

Post-Closing Trial Balance
July 31, 2013
Debit Credit
Cash $ 22,850
Accounts receivable 1,150
Office supplies 1,525
Buildings 150,000
Accumulated depreciationBuildings $ 1,500
Salaries payable 100
L. Plume, Capital 180,725
Totals $182,325 $182,325
Ledger as of July 31
Cash
Acct. No. 101
Date Explanation PR Debit Credit Balance
July 1
30,000
30,000
2
2,000
28,000
5
2,400
25,600
10
7,200
18,400
14
1,000
17,400
24
9,800
27,200
28
1,000
26,200
29
950
25,250
30
400
24,850
31
2,000
22,850
Accounts Receivable
Acct. No. 106
July 31 Adjusting
1,150
1,150
Office Supplies
Acct. No. 124
July 5
2,400
2,400
31 Adjusting
875
1,525
Prepaid Insurance
Acct. No. 128
July 10
7,200
7,200
31 Adjusting
400
6,800
Buildings
Acct. No. 173
July 1
150,000
150,000
Accumulated DepreciationBuildings
Acct. No. 174
July 31 Adjusting
1,500
1,500
Salaries Payable
Acct. No. 209
July 31 Adjusting
100
100
L. Plume, Capital
Acct. No. 301
July 1
180,000
180,000
31
Closing
2,725
182,725
31
Closing
2,000
180,725
L. Plume, Withdrawals
Acct. No. 302
July 31
2,000
2,000
31 Closing
2,000 0
Storage Fees Earned
Acct.No. 401
July 24
9,800
9,800
31 Adjusting
1,150
10,950
31 Closing
10,950
0
Depreciation ExpenseBuildings
Acct. No. 606
July 31 Adjusting
1,500
1,500
31 Closing
1,500 0
Salaries Expense
Acct. No. 622
July 14
1,000
1,000
28
1,000
2,000
31 Adjusting
100
2,100
31 Closing
2,100 0
Insurance Expense
Acct. No. 637
July 31 Adjusting
400
400
31 Closing
400 0
Rent Expense
Acct. No. 640
July 2
2,000
2,000
31 Closing
2,000 0
Problem 4-2B (Concluded)
Office Supplies Expense
Acct. No. 650
July 31 Adjusting
875
875
31 Closing
875 0
Repairs Expense
Acct. No. 684
July 29
950
950
31 Closing
950 0
Telephone Expense
Acct. No. 688
July 30
400
400
31 Closing
400 0
Income Summary
Acct. No. 901
July 31 Closing
10,950
10,950
31 Closing
8,225
2,725
31 Closing
2,725
0
Problem 4-3B (90 minutes) Part 1
POWER DEMOLITION COMPANY
Work Sheet
For Year Ended April 30, 2013
Balance Sheet
Unadjusted Adjusted Income and Statement of
Trial Balance Adjustments Trial Balance Statement Owners Equity
No. Account Title Dr. Cr. Dr. Cr. Dr. Cr. Dr. Cr. Dr. Cr.
101 Cash...........................................
7,000 7,000 7,000
126 Supplies.......................................
16,000 (a) 8,100 7,900 7,900
128 Prepaid insurance..........................
12,600 (b) 10,600 2,000 2,000
167 Equipment...................................
200,000 200,000 200,000
168 Accumulated depreciation 14,000 (c) 7,000 21,000 21,000
Equipment..................................
201 Accounts payable.......................... 6,800 (d) 800 7,600 7,600
203 Interest payable............................. (h) 300 300 300
208 Rent payable................................. (f) 3,000 3,000 3,000
210 Wages payable.............................. (e) 2,000 2,000 2,000
213 Property taxes payable................... (g) 550 550 550
251 Long-term notes payable................ 30,000 30,000 30,000
301 J. Bonn, Capital............................. 86,900 86,900 86,900
302 J. Bonn, Withdrawals...................... 12,000 12,000 12,000
401 Demolition fees earned................... 187,000 187,000 187,000
612 Depreciation expenseEquip......... (c) 7,000 7,000 7,000
623 Wages expense............................. 41,400 (e) 2,000 43,400 43,400
633 Interest expense............................ 3,300 (h) 300 3,600 3,600
637 Insurance expense......................... (b) 10,600 10,600 10,600
640 Rent expense................................
13,200 (f) 3,000 16,200 16,200
652 Supplies expense.......................... (a) 8,100 8,100 8,100
683 Property taxes expense.................. 9,700 (g) 550 10,250 10,250
684 Repairs expense............................ 4,700 4,700 4,700
690 Utilities expense............................4,800 ______ (d) 800 ______ 5,600 ______ 5,600 ______ ______ ______
Totals..........................................
324,700 324,700 32,350 32,350 338,350 338,350 109,450 187,000 228,900 151,350
Net Income................................... 77,550 ______ ______ 77,550
Totals.......................................... 187,000 187,000 228,900 228,900
2013 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied,
scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
Part 2 Adjusting entries (all on April 30, 2013)

Instructor note: Entries are shown without an account reference column because no posting is required.
(a)......................................................................................Supplies Expense
........................................................................................... 8,100
........................................................................................... Supplies
...........................................................................................8,100
To record consumption of supplies.
(b)......................................................................................Insurance Expense
........................................................................................... 10,600
........................................................................................... Prepaid
Insurance.......................................................................... 10,600
To record expiration of insurance.
(c)......................................................................................Depreciation Expense
Equipment.................................................................... 7,000
........................................................................................... Accumulated
DepreciationEquipment................................................ 7,000
(d)......................................................................................Utilities Expense
........................................................................................... 800
........................................................................................... Accounts
Payable............................................................................. 800
To record accrued utilities costs.
(e)......................................................................................Wages Expense
...........................................................................................2,000
........................................................................................... Wages Payable
........................................................................................... 2,000
To record accrued wages.
(f).......................................................................................Rent Expense
...........................................................................................3,000
........................................................................................... Rent Payable
........................................................................................... 3,000
To record remainder of annual rent.
(g)......................................................................................Property Taxes
Expense............................................................................ 550
........................................................................................... Property Taxes
Payable............................................................................. 550
To record additional property taxes.
2013 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution
in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
(h)......................................................................................Interest Expense
........................................................................................... 300
........................................................................................... Interest Payable
........................................................................................... 300
To record Aprils interest expense
([12%/12] x $30,000).
Closing entries (all on April 30, 2013)

(1) Demolition Fees Earned 187,000

Income Summary 187,000
(2) Income Summary 109,450

Depreciation ExpenseEquipment 7,000
Wages Expense 43,400
Interest Expense 3,600
Insurance Expense 10,600
Rent Expense 16,200
Supplies Expense 8,100
Property Taxes Expense 10,250
Repairs Expense 4,700
Utilities Expense 5,600

J. Bonn, Capital 77,550
To close the Income Summary account.
(4) J. Bonn, Capital 12,000

J. Bonn, Withdrawals 12,000
Part 3

Income Statement
Demolition fees earned $187,000
Expenses
Depreciation expenseEquipment $ 7,000
Wages expense 43,400
Interest expense 3,600
Insurance expense 10,600
Rent expense 16,200
Supplies expense 8,100
Property taxes expense 10,250
Repairs expense 4,700
Utilities expense 5,600
Net income $ 77,550

J. Bonn, Capital, April 30, 2012 $ 46,900
Add: Investments by owner $40,000
Net income 77,550
117,550
J. Bonn, Capital, April 30, 2013 $152,450

Balance Sheet
April 30, 2013
Assets
Current assets
Cash $ 7,000
Supplies 7,900
Total current assets $ 16,900
Plant assets
Equipment 200,000
Accumulated depreciationEquipment (21,000)
179,000
Liabilities
Current liabilities
Accounts payable $ 7,600
Interest payable 300
Rent payable 3,000
Wages payable 2,000
Property taxes payable 550
Current portion of long-term note payable 10,000
Total current liabilities $ 23,450
Long-term liabilities
Long-term note payable (less current portion) 20,000
Total liabilities 43,450
Equity
J. Bonn, Capital 152,450
Part 4
(a) This error enters the wrong amount in the correct accounts. The
ending balance of the Prepaid Insurance account should be $2,000,
but the entry reduces that account by $2,000. Because its
unadjusted balance was $12,600, the adjusted balance will be
$10,600 ($12,600 - $2,000), which is $8,600 greater than the correct
$2,000 balance. In addition, the Insurance Expense account balance
will be only $2,000 instead of $10,600.
The adjusted trial balance columns in the work sheet will be equal,
but the error will cause the work sheets net income to be overstated
by $8,600 because of the understatement of the expense. In
addition, the balance sheet columns will include the overstated
balance for the Prepaid Insurance account.
This error is not likely to be detected as a result of completing the

work sheet. If it is not, the income statement will overstate net
income by $8,600, and the balance sheet will overstate the cost of
the unexpired insurance and total equity by $8,600.
(b) This error inserts a debit in the balance sheet columns instead of the
income statement columns. In the unlikely event that this error is
not immediately detected, it will cause the work sheet measure of
net income to be overstated because the total debits will incorrectly
omit the $4,700 expense for repairs.
In all likelihood, the error will be discovered in the process of
drafting the balance sheet because the accountant will realize that
repairs expense is not an asset. If it is detected and corrected, the
financial statements will be unaffected. However, if the repairs
expense is erroneously included on the balance sheet, the reported
net income will be overstated by $4,700. On the balance sheet, a
nonexistent asset will be reported for the repairs expense and total
equity will be overstated by $4,700.
Part 1
SANTO COMPANY
Income Statement
For Year Ended December 31, 2013
Repair fees earned $54,700

Expenses
Depreciation expenseEquipment $ 2,000
Insurance expense 600
Rent expense 3,600
Store supplies expense 1,200
Net income $18,940
SANTO COMPANY
P. Santo, Capital, December 31, 2012 $35,650

Add: Net income 18,940
54,590
P. Santo, Capital, December 31, 2013 $39,590
SANTO COMPANY
Balance Sheet
December 31, 2013
Assets
Current assets
Cash $14,450
Store supplies 5,140
Total current assets $20,790
Plant assets
Equipment 31,000
Accumulated depreciationEquipment (8,000)
23,000
Liabilities
Current liabilities
Wages payable 2,700
Total current liabilities 4,200
Equity
P. Santo, Capital 39,590
Parts 2 and 3
SANTO COMPANY
Work Sheet
Adjusted Post-Closing
Trial Balance Closing Entry Information Trial Balance
No Account Title Dr. Cr. Dr. Cr. Dr. Cr.
.
101 Cash............................... 14,450 14,450
125 Store supplies.................. 5,140 5,140
128 Prepaid insurance............ 1,200 1,200
167 Equipment....................... 31,000 31,000
168 Accumulated deprecia- 8,000 8,000
tionEquipment............
201 Accounts payable............. 1,500 1,500
210 Wages payable................. 2,700 2,700
301 P. Santo, Capital................ 35,650 (4) 15,000 (3) 18,940 39,590
302 P. Santo, Withdrawals........ 15,000 (4) 15,000
401 Repair fees earned............ 54,700 (1) 54,700
612 Depreciation expense 2,000 (2) 2,000
Equipment.....................
623 Wages expense................ 26,400 (2) 26,400
637 Insurance expense........... 600 (2) 600
640 Rent expense................... 3,600 (2) 3,600
651 Store supplies expense..... 1,200 (2) 1,200
690 Utilities expense............... 1,960 (2) 1,960
901 Income summary............. (2) 35,760 (1) 54,700
______ ______ (3) 18,940 ______ _____ _____
Totals..............................102,550 102,550 124,400 124,400 51,790 51,790
Part 3
Closing entries (all dated December 31, 2013)
(1).....................................................................................Repair Fees Earned

..........................................................................................54,700
..........................................................................................Income Summary
.......................................................................................... 54,700
(2).....................................................................................Income Summary
..........................................................................................35,760
..........................................................................................Depreciation Expense,
Equipment....................................................................... 2,000
..........................................................................................Wages Expense
.......................................................................................... 26,400
..........................................................................................Insurance Expense
.......................................................................................... 600
..........................................................................................Rent Expense
.......................................................................................... 3,600
..........................................................................................Store Supplies
Expense........................................................................... 1,200
..........................................................................................Utilities Expense
.......................................................................................... 1,960
(3).....................................................................................Income Summary
..........................................................................................18,940
.......................................................................................... P. Santo, Capital
.......................................................................................... 18,940
(4).....................................................................................P. Santo, Capital

..........................................................................................15,000
.......................................................................................... P. Santo, Withdrawals
.......................................................................................... 15,000
Part 4
(a) If none of the $600 insurance expense had expired, the income
statement would not report any insurance expense and net income
would be increased by $600.
(b) If there were no earned and unpaid wages (meaning Wages Payable
equals zero), wages expense would be $2,700 less and, thus, net
income $2,700 higher.
Financial Statement Changes
The income statement would reflect the following:

Net income would be increased by $600 + $2,700 = $3,300. (a) & (b)
The balance sheet would reflect the following:

Prepaid insurance and total assets would be increased by $600. (a)
There would not be any wages payable. (b)
Total liabilities would be decreased by $2,700. (b)
Total equity would be increased by $3,300. (a) & (b)
Part 1
ANARA CO.
Income Statement
Revenues
Professional fees earned $59,600
Rent earned 4,500
Dividends earned 1,000
Interest earned 1,320
Total revenues $66,420
Expenses
Depreciation expenseBuilding 2,000
Depreciation expenseEquipment 1,000
Interest expense 1,550
Insurance expense 1,525
Rent expense 3,600
Supplies expense 1,000
Postage expense 410
Property taxes expense 4,825
Repairs expense 679
Telephone expense 521
Net income $28,890
ANARA CO.
Statement of Owner's Equity
P. Anara, Capital, December 31, 2012 $ 52,800
Add: Investments by owner $40,000
Net income 28,890 68,890
121,690
Less: Withdrawals by owner (8,000)
P. Anara, Capital, December 31, 2013 $113,690
ANARA CO.
Balance Sheet
December 31, 2013
Assets
Current assets
Cash $ 7,400
Short-term investments 11,200
Supplies 4,600
Total current assets $ 24,200
Plant assets
Equipment $24,000
Accumulated depreciationEquipment (4,000) 20,000
Building 100,000
Accumulated depreciationBuilding (10,000) 90,000
Land 30,500
Total plant assets 140,500
Liabilities
Current liabilities
Interest payable 1,750
Rent payable 400
Wages payable 1,280
Property taxes payable 3,330
Unearned professional fees 750
Current portion of long-term note payable 8,400
Total current liabilities $ 19,410
Long-term liabilities
Long-term notes payable ($40,000-$8,400) 31,600
Total liabilities 51,010
Equity
P. Anara, Capital 113,690
Part 2
Closing entries (all dated December 31, 2013)
(1) Professional Fees Earned 59,600

Rent Earned 4,500
Dividends Earned 1,000
Interest Earned 1,320
Income Summary 66,420
To close the revenue accounts.

Depreciation ExpenseBuilding 2,000
Depreciation ExpenseEquipment 1,000
Wages Expense 18,500
Interest Expense 1,550
Insurance Expense 1,525
Rent Expense 3,600
Supplies Expense 1,000
Postage Expense 410
Property Taxes Expense 4,825
Repairs Expense 679
Telephone Expense 521
Utilities Expense 1,920

P. Anara, Capital 28,890
(4) P. Anara, Capital 8,000

P. Anara, Withdrawals 8,000
Part 3
a. Return on assets = $28,890/[($160,000 + $164,700)/2] = 17.8% (or 0.178)
b. Debt ratio = $51,010/$164,700 = 0.31
c. Profit margin = $28,890/$66,420 = 43.5% (or 0.435)
d. Current ratio = $24,200/$19,410 = 1.25
Problem 4-6BA (40 minutes)
Part 1
SOLUTIONS CO.
Work Sheet
Unadjusted Adjusted
Trial Balance Adjustments Trial Balance
Dr. Cr. Dr. Cr. Dr. Cr.
Cash.......................................10,000 10,000
Accounts receivable................. (e) 2,450 2,450
Supplies.................................. 7,600 (b) 4,150 3,450
Machinery................................50,000 50,000
Accumulated depreciation
Machinery.............................. 20,000 (f) 3,800 23,800
Interest payable........................ (c) 800 800
Salaries payable....................... (a) 400 400
Unearned rental fees................. 7,200 (d) 4,000 3,200
Notes payable.......................... 30,000 30,000
G. Clay, Capital......................... 14,200 14,200
G. Clay, Withdrawals................. 9,500 9,500
Rental fees earned.................... 32,450 (d) 4,000 38,900
(e) 2,450
Depreciation expense (f) 3,800 3,800
Machinery..............................
Salaries expense......................24,500 (a) 400 24,900
Interest expense....................... 2,250 (c) 800 3,050
Supplies expense..................... _____ _____ (b) 4,150 _____ 4,150 ______
_ _
Totals......................................
103,850 103,850 15,600 15,600 111,300 111,300
Problem 4-6BA (Continued)
Part 2 (all adjusting entries dated December 31, 2013)
(a) Salaries Expense 400

Salaries Payable 400
To record accrued wages.
(b) Supplies Expense 4,150

Supplies 4,150
To record cost of consumed supplies.
(c) Interest Expense 800

Interest Payable 800
To record accrued interest expense.
(d) Unearned Rental Fees 4,000

Rental Fees Earned 4,000
To record earned fees.
(e) Accounts Receivable 2,450

To record accrued revenues.
(f) Depreciation ExpenseMachinery 3,800

Accumulated DepreciationMachinery 3,800
Part 3 (all reversing entries dated January 1, 2014)
(a) Salaries Payable 400

Salaries Expense 400
To reverse accrued wages.
(c) Interest Payable 800

Interest Expense 800
To reverse accrued interest expense.
(e) Rental Fees Earned 2,450

Accounts Receivable 2,450
To reverse accrued revenues.
Problem 4-6BA (Concluded)
Part 4
2014
Jan. 4 Salaries Expense 1,200
Cash 1,200
To record payroll.
15 Interest Expense 900

Cash 900
To record interest payment.
31 Cash 7,850
To record collection of rental fees
($2,450 + $5,400).

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Chapter 4

Problem 4-1B (15 minutes)

5. C 10. C 15. A 20. Z

July 1 Cash 101

SAFE STORAGE CO.

July 31 Insurance Expense...........................................637 400

31 Office Supplies Expense..................................650 875

31 Depreciation ExpenseBuildings...................606 1,500

31 Salaries Expense...............................................622 100

31 Accounts Receivable........................................106 1,150

SAFE STORAGE CO.

SAFE STORAGE CO.

SAFE STORAGE CO.

SAFE STORAGE CO.

July 31 Storage Fees Earned 401 10,950

31 Income Summary 901 8,225

31 Income Summary 901 2,725

31 L. Plume, Capital 301 2,000

SAFE STORAGE CO.

Part 2 Adjusting entries (all on April 30, 2013)

Closing entries (all on April 30, 2013)

(1) Demolition Fees Earned 187,000

(2) Income Summary 109,450

(3) Income Summary 77,550

(4) J. Bonn, Capital 12,000

POWER DEMOLITION COMPANY

POWER DEMOLITION COMPANY

POWER DEMOLITION COMPANY

This error is not likely to be detected as a result of completing the

Repair fees earned $54,700

P. Santo, Capital, December 31, 2012 $35,650

(1).....................................................................................Repair Fees Earned

(4).....................................................................................P. Santo, Capital

Financial Statement Changes

The income statement would reflect the following:

The balance sheet would reflect the following:

(1) Professional Fees Earned 59,600

(2) Income Summary 37,530

(3) Income Summary 28,890

(4) P. Anara, Capital 8,000

(a) Salaries Expense 400

(b) Supplies Expense 4,150

(c) Interest Expense 800

(d) Unearned Rental Fees 4,000

(e) Accounts Receivable 2,450

(f) Depreciation ExpenseMachinery 3,800

Part 3 (all reversing entries dated January 1, 2014)

(a) Salaries Payable 400

(c) Interest Payable 800

(e) Rental Fees Earned 2,450

15 Interest Expense 900

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