Comprehensive Problem

(a)
General Journal J1
Date Account Titles and Explanation Ref. Debit Credit
July 1 Cash...................................................... 101 14,000
Share Capital—Ordinary........... 311 14,000

1 Equipment............................................ 157 10,000

Cash............................................ 101 3,000
Accounts Payable...................... 201 7,000

3 Cleaning Supplies................................ 128 800

Accounts Payable...................... 201 800

5 Prepaid Insurance................................ 130 1,800

Cash............................................ 101 1,800

12 Accounts Receivable........................... 112 3,800

Service Revenue........................ 400 3,800

18 Accounts Payable................................ 201 1,400

Cash............................................ 101 1,400

20 Salaries Expense................................. 726 1,600

Cash............................................ 101 1,600

21 Cash...................................................... 101 1,400

...............................................................
Accounts Receivable................ 112 1,400

25 Accounts Receivable........................... 112 1,500

Service Revenue........................ 400 1,500

31 Gas & Oil Expense............................... 633 400

Cash............................................ 101 400

31 Dividends............................................. 332 600

Cash............................................ 101 600

Copyright © 2011 John Wiley & Sons, Inc.   Weygandt, IFRS, 1/e, Solutions Manual   (For Instructor Use Only) 4-1
 COMPREHENSIVE PROBLEM (Continued)
Only)
4-86
Copyright © 2011 John Wiley & Sons, Inc.   Weygandt, IFRS, 1/e, Solutions Manual   (For Instructor Use

(b) & (c) JULIE’S MAIDS CLEANING SERVICE INC.

Worksheet
For the Month Ended July 31, 2011
Adjusted Income Statement of
Account Titles Trial Balance Adjustments Trial Balance Statement Financial Position
Dr. Cr. Dr. Cr. Dr. Cr. Dr. Cr. Dr. Cr.
Cash  6,600  6,600  6,600
Accounts Receivable  3,900 (a) 1,300  5,200  5,200
Cleaning Supplies    800 (d)   700    100   100
Prepaid Insurance  1,800 (c)   150  1,650  1,650
Equipment 10,000 10,000 10,000
Accounts Payable  6,400  6,400  6,400
Share Capital—Ordinary 14,000 14,000 14,000
Dividends    600    600
   600
Service Revenue  5,300 (a) 1,300  6,600 6,600
Gas & Oil Expense   400
   400    400
Salaries Expense              (e)   500 2,100
 1,600  2,100
Total 25,700
Depreciation Expense 25,700 (b)   200   200
Accum. Depr.—Equipment (b)   200    200    200    200
Insurance Expense (c)   150   150
Cleaning Supplies Expense (d)   700    150   700
Salaries Payable           (e)   500    700    500               500
Totals 2,850 2,850 27,700 3,550 6,600 24,150 21,100
Net Income 27,700 3,050             3,050
Totals 6,600 6,600 24,150 24,150

Key: (a) Service Revenue; (b) Depreciation Expense; (c) Insurance Expired; (d) Cleaning Supplies Used; (e) Unpaid Salaries.
COMPREHENSIVE PROBLEM (Continued)

(a), (e) & (f)

Cash No. 101

Date Explanation Ref. Debit Credit Balance
July 1 J1 14,000 14,000
1 J1 3,000 11,000
5 J1 1,800 9,200
18 J1 1,400 7,800
20 J1 1,600 6,200
21 J1 1,400 7,600
31 J1 400 7,200
31 J1 600 6,600

Accounts Receivable No. 112

Date Explanation Ref. Debit Credit Balance
July 12 J1 3,800 3,800
21 J1 1,400 2,400
25 J1 1,500 3,900
31 Adjusting J2 1,300 5,200

Cleaning Supplies No. 128

Date Explanation Ref. Debit Credit Balance
July3 J1 800 800
31 Adjusting J2 700 100

Prepaid Insurance No. 130

Date Explanation Ref. Debit Credit Balance
July 5 J1 1,800 1,800
31 Adjusting J2 150 1,650

Equipment No. 157

Date Explanation Ref. Debit Credit Balance
July 1 J1 10,000 10,000
COMPREHENSIVE PROBLEM (Continued)

Accumulated Depreciation—Equipment No. 158

Date Explanation Ref. Debit Credit Balance
July 31 Adjusting J2 200 200

Accounts Payable No. 201

Date Explanation Ref. Debit Credit Balance
July 1 J1 7,000 7,000
3 J1 800 7,800
18 J1 1,400 6,400

Salaries Payable No. 212

Date Explanation Ref. Debit Credit Balance
July 31 Adjusting J2 500 500

Share Capital—Ordinary No. 311

Date Explanation Ref. Debit Credit Balance
July 1 J1 14,000 14,000

Retained Earnings No. 320

Date Explanation Ref. Debit Credit Balance
July 31 Closing J3 3,050 3,050
31 Closing J3 600 2,450

Dividends No. 332

Date Explanation Ref. Debit Credit Balance
July 31 J1 600 600
31 Closing J3 600 0

Income Summary No. 350

Date Explanation Ref. Debit Credit Balance
July 31 Closing J3 6,600 6,600
31 Closing J3 3,550 3,050
31 Closing J3 3,050 0
COMPREHENSIVE PROBLEM (Continued)

Service Revenue No. 400

Date Explanation Ref. Debit Credit Balance
July 12 J1 3,800 3,800
25 J1 1,500 5,300
31 Adjusting J2 1,300 6,600
31 Closing J3 6,600 0

Gas & Oil Expense No. 633

Date Explanation Ref. Debit Credit Balance
July 31 J1 400 400
31 Closing J3 400 0

Cleaning Supplies Expense No. 634

Date Explanation Ref. Debit Credit Balance
July 31 Adjusting J2 700 700
31 Closing J3 700 0

Depreciation Expense No. 711

Date Explanation Ref. Debit Credit Balance
July 31 Adjusting J2 200 200
31 Closing J3 200 0

Insurance Expense No. 722

Date Explanation Ref. Debit Credit Balance
July 31 Adjusting J2 150 150
31 Closing J3 150 0

Salaries Expense No. 726

Date Explanation Ref. Debit Credit Balance
July 20 J1 1,600 1,600
31 Adjusting J2 500 2,100
31 Closing J3 2,100 0
COMPREHENSIVE PROBLEM (Continued)

(d) JULIE’S MAIDS CLEANING SERVICE INC.

Income Statement
For the Month Ended July 31, 2011

Revenues
Service revenue............................................... $6,600
Expenses
Salaries expense.............................................. $2,100
Cleaning supplies expense............................. 700
Gas & oil expense............................................ 400
Depreciation expense...................................... 200
Insurance expense........................................... 150
Total expenses......................................... 3,550
Net income............................................................... $3,050

JULIE’S MAIDS CLEANING SERVICE INC.

Retained Earnings Statement
For the Month Ended July 31, 2011

Retained earnings, July 1...................................................... $ 0

Add: Net income.................................................................. 3,050
3,050
Less: Dividends.................................................................... 600
Retained earnings, July 31................................................... $2,450
COMPREHENSIVE PROBLEM (Continued)

JULIE’S MAIDS CLEANING SERVICE INC.

Statement of Financial Position
July 31, 2011

Assets
Property, plant, and equipment
Equipment........................................................ $10,000
Less: Accumulated depreciation................... 200 $ 9,800
Current assets
Prepaid insurance............................................ 1,650
Cleaning supplies............................................ 100
Accounts receivable........................................ 5,200
Cash..................................................................     6,600   13,550
Total assets.............................................................. $23,350

Equity and Liabilities

Equity
Share capital—ordinary................................... $14,000
Retained earnings............................................ 2,450 $16,450
Current liabilities
Accounts payable............................................ 6,400
Salaries payable............................................... 500     6,900
Total equity and liabilities....................................... $23,350
COMPREHENSIVE PROBLEM (Continued)

(e)
General Journal J2
Date Account Titles and Explanation Ref. Debit Credit
July 31 Accounts Receivable......................... 112 1,300
Service Revenue........................ 400 1,300

31 Depreciation Expense........................ 711 200

Accumulated Depreciation—
Equipment.............................. 158 200

31 Insurance Expense............................. 722 150

Prepaid Insurance..................... 130 150

31 Cleaning Supplies Expense............... 634 700

Cleaning Supplies..................... 128 700

31 Salaries Expense................................ 726 500

Salaries Payable........................ 212 500

(f)
General Journal J3
Date Account Titles and Explanation Ref. Debit Credit
July 31 Service Revenue................................. 400 6,600
Income Summary....................... 350 6,600

31 Income Summary................................ 350 3,550

Salaries Expense....................... 726 2,100
Depreciation Expense............... 711 200
Insurance Expense.................... 722 150
Cleaning Supplies Expense...... 634 700
Gas & Oil Expense..................... 633 400

31 Income Summary................................ 350 3,050

Retained Earnings..................... 320 3,050

31 Retained Earnings.............................. 320 600

Dividends................................... 332 600
COMPREHENSIVE PROBLEM (Continued)

(g) JULIE’S MAIDS CLEANING SERVICE INC.

Post-Closing Trial Balance
July 31, 2011

Debit Credit
Cash...................................................................... $ 6,600
Accounts Receivable.......................................... 5,200
Cleaning Supplies............................................... 100
Prepaid Insurance............................................... 1,650
Equipment............................................................ 10,000
Accumulated Depreciation—Equipment........... $ 200
Accounts Payable................................................ 6,400
Salaries Payable.................................................. 500
Share Capital—Ordinary..................................... 14,000
Retained Earnings...............................................               2,450
$23,550 $23,550
# Questions Ans Dept
Which of the following statements about users of accounting information is
incorrect?
A. Management is an internal user.
1 D ECO
B. Taxing authorities are external users.
C. Present creditors are external users.
D. Regulatory authorities are internal users.
Debits:
A. increase both assets and liabilities.
2 B. decrease both assets and liabilities. C ECO
C. increase assets and decrease liabilities.
D. decrease assets and increase liabilities.
One of the following statements about the accrual-basis of accounting is false.
That statement is:
A. Events that change a company's financial statements are recorded in the
periods in which the events occur.
3 D ECO
B. To be recognized, revenue must be measurable.
C. The accrual basis is in accord with IFRS.
D. Revenue is recorded only when cash is received, and expense is recorded
only when cash is paid.
In the unadjusted trial balance of its worksheet for the year ended December 31,
2011, Taitum Company reported Office Equipment of $120,000. The year-end
adjusting entries require an adjustment of $15,000 for depreciation expense for
the office equipment. After adjustment, the following adjusted amount should be
reported:
A. A debit of $105,000 for Office Equipment in the statement of financial position
4 column. B ECO
B. A credit of $15,000 for Depreciation Expense—Office Equipment in the income
statement column.
C. A debit of $120,000 for Office Equipment in the statement of financial position
column.
D. A debit of $15,000 for Accumulated Depreciation—Office Equipment in the
statement of financial position column.
The three types of business entities are:
A. proprietorships, small businesses, and partnerships.
5 B. proprietorships, partnerships, and corporations. B ECO
C. proprietorships, partnerships, and large businesses.
D. financial, manufacturing, and service companies.
The expanded accounting equation is:
A. Assets + Liabilities = Share Capital + Retained Earnings + Dividends +
Revenues + Expenses
B. Assets = Liabilities + Share Capital + Retained Earnings + Dividends +
6 Revenues - Expenses D ECO
C. Assets = Liabilities - Share Capital – Retained Earnings - Dividends -
Revenues - Expenses
D. Assets = Liabilities + Share Capital + Retained Earnings - Dividends +
Revenues – Expenses
7 Each of the following is a major type (or category) of adjusting entries except: D ECO
A. prepaid expenses.
B. accrued revenues.
 C. accrued expenses.
D. earned revenues.
The closing process involves separate entries to close (1) expenses, (2)
dividends, (3) revenues, and (4) income summary. The correct sequencing of the
entries is:
8 A. (4), (3), (2), (1) C ECO
B. (1), (2), (3), (4)
C. (3), (1), (4), (2)
D. (3), (2), (1), (4)
As of December 31, 2011, Stoneland Company has assets of €3,500 and equity
of €2,000. What are the liabilities for Stoneland Company as of December 31,
2011?
9 A. €1,500. A ECO
B. €1,000.
C. €2,500.
D. €2,000.
The purchase of supplies on account should result in:
A. a debit to Supplies Expense and a credit to Cash.
10 B. a debit to Supplies Expense and a credit to Accounts Payable. C ECO
C. a debit to Supplies and a credit to Accounts Payable.
D. a debit to Supplies and a credit to Accounts Receivable.
Accumulated Depreciation is:
A. a contra-asset account.
11 B. an expense account. A ECO
C. an equity account.
D. a liability account.
The proper order of the following steps in the accounting cycle is:
A. prepare unadjusted trial balance, journalize transactions, post to ledger
accounts, journalize and post adjusting entries.
B. journalize transactions, prepare unadjusted trial balance, post to ledger
12 accounts, journalize and post adjusting entries. C ECO
C. journalize transactions, post to ledger accounts, prepare unadjusted trial
balance, journalize and post adjusting entries.
D. prepare unadjusted trial balance, journalize and post adjusting entries,
journalize transactions, post to ledger accounts.
Payment of accounts payable affects the components of the accounting equation
in the following way.
A. Decreases equity and decreases liabilities.
13 D ECO
B. Increases assets and decreases liabilities.
C. Decreases assets and increases equity.
D. Decreases assets and decreases liabilities.
Before posting a payment of €5,000 to a creditor, the Accounts Payable account
of Senator Company has a normal balance of €16,000. The balance after posting
the payment is:
14 A. €21,000. C ECO
B. €5,000.
C. €11,000.
D. Cannot be determined.
15 Adjustments for accrued revenues: B ECO
A. have a liabilities and revenues account relationship.
B. have an assets and revenues account relationship.
C. decrease assets and revenues.
 D. decrease liabilities and increase revenues.
The correct order of presentation in a classified statement of financial position for
the following current assets is:
A. accounts receivable, cash, prepaid insurance, inventories.
16 C ECO
B. cash, inventories, accounts receivable, prepaid insurance.
C. prepaid insurance, inventories, accounts receivable, cash,
D. inventories, cash, accounts receivable, prepaid insurance.
The financial statement that reports assets, liabilities, and equity is the:
A. income statement.
17 B. retained earnings statement. C ECO
C. statement of financial position.
D. statement of cash flow.
The trial balance of Clooney Corporation had accounts with the following normal
balances: Cash $5,000, Revenue $85,000, Salaries Payable $4,000, Salaries
Expense $40,000, Rent Expense $10,000, Share Capital – Ordinary $42,000;
Dividends $15,000; Equipment $61,000. In preparing a trial balance, the total in
18 the debit column is: A ECO
A. $131,000
B. $216,000
C. $91,000
D. $116,000
The trial balance shows Supplies $0 and Supplies Expense $1,500. If $800 of
supplies are on hand at the end of the period, the adjusting entry is:
A. Debit Supplies $800 and credit Supplies Expense $800.
19 A ECO
B. Debit Supplies Expense $800 and credit Supplies $800.
C. Debit Supplies $700 and credit Supplies Expense $700.
D. Debit Supplies Expense $700 and credit Supplies $700.
Current assets are listed:
A. by the reverse order of their expected conversion to cash.
20 B. by importance. A ECO
C. by longevity.
D. alphabetically.