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Exam 4: Completing the Accounting Cycle

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Question 51

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Zen Arcade paid the weekly payroll on January 2 by debiting Salaries and Wages Expense for $47,000. The accountant preparing the payroll entry overlooked the fact that Salaries and Wages Expense of $27,000 had been accrued at year end on December 31. The correcting entry is a. Salaries and Wages Payable $\quad$$\quad$ 27,000 $\quad$$\quad$ Cash $\quad$$\quad$ 27,000 b. Cash $\quad$$\quad$ 27,000 $\quad$$\quad$ Salaries and Wages Expense. $\quad$$\quad$ 27,000 c. Salaries and Wages Payable $\quad$$\quad$ 27,000 $\quad$$\quad$ Salaries and Wages Expense. $\quad$$\quad$ 27,000 d. Cash $\quad$$\quad$ 27,000 $\quad$$\quad$ Salaries and Wages Expense $\quad$$\quad$ 27,000

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Question 52

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Closing entries are unnecessary if the business plans to continue operating in the future and issue financial statements each year.

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Question 53

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The income statement for the year 2015 of Fugazi Co. contains the following information: $\begin{array}{lr}\text { Revenues }&&\$70,000\\\text { Expenses: }\\\text { Salaries and Wages Expense } & \$ 45,000 \\\text { Rent Expense } & 12,000 \\\text { Advertising Expense } & 10,000 \\\text { Supplies Expense } & 6,000 \\\text { Utilities Expense } & 2,500 \\\text { Insurance Expense } & 2,000 \\\text { Total expenses }&&77,500\\\text { Net income (loss) }&&\$(7,500) \end{array}$ After all closing entries have been posted, the Income Summary account will have a balance of

The following items are taken from the financial statements of the Postal Service for the year ending December 31, 2015: $\begin{array}{lr}\text { Accounts payable } & \$ 18,000 \\\text { Accounts receivable } & 11,000 \\\text { Accumulated depreciation - equipment } & 28,000 \\\text { Advertising expense } & 21,000 \\\text { Cash } & 15,000 \\\text { Common stock } & 42,000 \\\text { Dividends } & 14,000 \\\text { Depreciation expense } & 12,000\end{array}$ $\begin{array} { l r } \text { Insurance expense } & 3,000 \\\text { Note payable, due 6/30/16 } & 70,000 \\\text { Prepaid insurance (12-month policy) } & 6,000 \\\text { Rent expense } & 17,000 \\\text { Retained earnings (1/1/15) } & 60,000 \\\text { Salaries and wages expense } & 32,000 \\\text { Service revenue } & 133,000 \\\text { Supplies } & 4,000 \\\text { Supplies expense } & 6,000 \\\text { Equipment } & 210,000\end{array}$ What are total long-term liabilities at December 31, 2015?

A post-closing trial balance will show

All of the following are stockholders' equity accounts except

All of the following are property, plant, and equipment except

The most efficient way to accomplish closing entries is to

A current asset is

The income statement for the month of June, 2015 of Camera Obscura Enterprises contains the following information: $\begin{array}{lr}\text { Revenues }&&\$7,000\\\text { Expenses: }\\\text { Salaries and Wages Expense } & \$ 3,000 \\\text { Rent Expense } & 1,500 \\\text { Advertising Expense } & 800 \\\text { Supplies Expense } & 300 \\\text { Insurance Expense } & 100\\\text { Total expenses }&&5,700\\\text { Net income }&&\$1,300\end{array}$ The entry to close the revenue account includes a

The balance in the income summary account before it is closed will be equal to

The accounting cycle begins at the start of a new accounting period.

The following information is for Bright Eyes Auto Supplies: Bright Eyes Auto Supplies Balance Sheet December 31, 2015 $\begin{array}{lrlr}\text { Cash } & \$ 40,000 & \text { Accounts Payable } & \$ 130,000 \\\text { Prepaid Insurance } & 80,000 & \text { Salaries and Wages Payable } & 50,000 \\\text { Accounts Receivable } & 100,000 & \text { Mortgage Payable } & 150,000 \\\text { Inventory } & 140,000 & \text { Total Liabilities } & 330,000\\\text { Land Held for Investment } & 180,000 \\\text { Land } & 250,000\\\text { Buildings } \$ 200,000 && \text { Common Stock } \$ 400,000\\\text { Less Accumulated } && \text { Retained Earnings } 340,000&740,000 \\\text { Depreciation } (60,000) & 140,000\\\text { Trademark } & 140,000 & \text { Total Liabilities and }\\\text { Total Assets }&\$1,070,000&\text { Stockholders' Equity }&\$1,070,000\end{array}$ The total dollar amount of assets to be classified as property, plant, and equipment is

A company's operating cycle and fiscal year are usually the same length of time.

After the adjusting entries are journalized and posted to the accounts in the general ledger, the balance of each account should agree with the balance shown on the

Correcting entries are made

The closing entry process consists of closing

When constructing a worksheet, accounts are often needed that are not listed in the trial balance already entered on the worksheet from the ledger. Where should these additional accounts be shown on the worksheet?

If Income Summary has a credit balance after revenues and expenses have been closed into it, the closing entry for Income Summary will include a

The account, Supplies, will appear in the following debit columns of the worksheet.