1. ACCOUNTS AND EXPLANATIONS
Journal
DATE
ACCOUNTS AND EXPLANATIONS
POST.
REF.
DEBIT
CREDIT
Adjusting Entries
Sept. 30
Account Receivable
600
Service Revenue
Depreciation Expense
100
Accumulated Depreciation
Salary Expense
500
Salary Payable
Rent Expense
800
Prepaid Rent
Supplies Expense
1,600
Supplies

2. E4-2 Closing Entries Service Revenue 7,700 Income Summary 5,500
Closing Entries 30
Service Revenue
7,700
Income Summary
5,500
Depreciation Expense
100
Salary Expense
2,300
Rent Expense
800
Utilities Expense
700
Supplies Expense
1,600
2,200
Gail Pfeiffer, Capital
2,000
Gail Pfeiffer, Withdrawals

3. E4-3
3400
Adj
Accounts Receivable
Bal. 4,000
Bal
1,200
Adj
Prepaid Rent
3,300
Supplies
Adj ,600
Bal ,700
1,800
Adj
Bal ,900
Accumulated Depreciation

4. Salary Payable
Adj
Bal
36,000
Clo ,200
Clo. 2,000
Bal ,200
Gail Pfeiffer, Capital
2,000
Gail Pfeiffer, Withdrawals
Clo ,000
Clo. 2,200
Income Summary
Clo. 5,500
Clo ,700
Clo ,200
7,100
Adj
Service Revenue
Clo ,700
Depreciation Expense
Adj
Bal
Clo
Bal ,700

5. Salary Expense
1,800
Adj
Bal. 2,300
Clo ,300
Rent Expense
Adj
Bal
Clo
Supplies Expense
Adj ,600
Bal ,600
Clo ,600
Utilities Expense
700
Bal
Clo

6. DaySpring Woodworking Service Postclosing Trial Balance
September 30, 20X6
ACCOUNT
DEBIT
CREDIT
Cash
$ 3,500
Accounts receivable ($3,400 + $600)
4,000
Prepaid rent ($1,200 – $800)
400
Supplies ($3,300 – $1,600)
1,700
Equipment
32,600
Accumulated depreciation ($1,800 + $100)
$ 1,900
Accounts payable
3,600
Salary payable ($0 + $500)
500
Gail Pfeiffer, capital (see solution to Ex. 4-3)
             
36,200
Total
$42,200

7. ACCOUNTS AND EXPLANATIONS
Journal
ACCOUNTS AND EXPLANATIONS
POST.
REF
DEBIT
CREDIT a.
Prepaid Insurance
4,800
Cash b.
Insurance Expense
($1,400 + $4,800 – $1,600)
4,600 c.
17,000
Unearned Service Revenue d.
18,000
Service Revenue

8. Prepaid Insurance
12/31/X1 1,400
a ,800
b ,600
12/31/X2 1,600
Insurance Expense
b ,600
12/31/X2 4,600
Unearned Service Revenue
12/31/X1 4,100
c ,000
d ,000
12/31/X2 3,100
Service Revenue
d ,000
12/31/X2 18,000

9. ACCOUNTS AND EXPLANATIONS
Journal
DATE
ACCOUNTS AND EXPLANATIONS
POST.
REF.
DEBIT
CREDIT
Closing Entries
Service Revenue
18,000
Income Summary
4,600
Insurance Expense

10. ACCOUNTS AND EXPLANATIONS
Journal
DATE
ACCOUNTS AND EXPLANATIONS
POST.
REF.
DEBIT
CREDIT
Closing Entries
June 30
Service Revenue
110,000
Interest Revenue
700
Income Summary
110,700
32,500
Salary Expense
12,500
Supplies Expense
1,700
Interest Expense
2,200
Depreciation Expense
10,200
Rent Expense
5,900
($110,700 – $32,500)
78,200
Park Daewoo, Capital
40,000
Park Daewoo, Withdrawals

11. Park Daewoo, Capital Withdrawals 40,000 Net income 78,200 Bal. 59,800
21,600
Net income ,200
Withdrawals ,000
Bal ,800

12. ACCOUNTS AND EXPLANATIONS
Journal
DATE
ACCOUNTS AND EXPLANATIONS
POST.
REF.
DEBIT
CREDIT
Closing Entries
Dec. 31
Service Revenue
117,500
Income Summary
117,500   31
Income Summary
35,800
Salary Expense
($26,000 + $700)
26,700
Supplies Expense
2,000
Depreciation Expense—Furniture
1,100
Depreciation Expense—Building
6,000 31
Income Summary
($117,500 – $35,800)
81,700
Felix Rohr, Capital
81,700 31
Felix Rohr, Capital
61,400
Felix Rohr, Withdrawals
61,400

13. Statement of Owner’s Equity
Chang Realty Company
Statement of Owner’s Equity
Year Ended December 31, 20X2
Alvin Chang, capital, January 1, 20X2
$164,000
Add: Net income
143,000
307,000
Less: Withdrawals
(72,000)
Alvin Chang, capital, December 31, 20X2
$235,000

14. ACCOUNTS AND EXPLANATIONS
Journal
DATE
ACCOUNTS AND EXPLANATIONS
POST.
REF.
DEBIT
CREDIT
Adjusting Entries
April 30
Unearned Service Revenue
1,200
Service Revenue ($16,000 – $14,800)
Salary Expense ($3,800 – $3,000)
800
Salary Payable
Rent Expense ($1,400 – $1,200)
200
Prepaid Rent
Depreciation Expense ($300 – $0)
300
Accumulated Depreciation
Supplies Expense ($400 – $0)
400
Supplies

15. E4-10 Closing Entries April Service Revenue 16,000 Income Summary
Closing Entries
April 30
Service Revenue
16,000
Income Summary
6,700
Salary Expense
3,800
Rent Expense
1,400
Depreciation Expense
300
Supplies Expense
400
Utilities Expense
800
Income Summary ($16,000 – $6,700)
9,300
Megan Price, Capital
1,000
Megan Price, Withdrawals

16. The Megan Price Decorator Guild
Balance Sheet
April 30, 20XX
ASSETS
Current assets:
Cash
$14,200
Supplies ($2,400 – $400)
2,000
Prepaid rent [$1,100 – ($1,400 – $1,200)]
900
Total current assets
17,100
Plant assets:
Equipment
$51,100
Less accumulated depreciation
($6,200 + $300)
(6,500)
44,600
Total assets
$61,700
LIABILITIES
Current liabilities:
Accounts payable
$ 4,600
Salary payable ($3,800 – $3,000)
800
Unearned service revenue
[$4,400 – ($16,000 – $14,800)]
3,200
Total current liabilities
8,600
Long-term note payable
10,000
Total liabilities
18,600
OWNER’S EQUITY
Megan Price, capital
($34,800 + $9,300 – $1,000)
43,100
Total liabilities and owner’s equity

17. E4-12 Joy’s Dance Studio Income Statement Year Ended December 31, 20X7
Service revenue:
($93,600 + $8,100)
$101,700
Expenses:
Salary expense ($42,700 + $1,400)
$44,100
Depreciation expense
2,900
Supplies expense
600
Insurance expense
1,800
49,400
Net income
$ 52,300

18. E4-13 Closing Entries Dec. 31 Service Revenue 3,200 Income Summary
1,510
Rent Expense
500
Utilities Expense
200
Salary Expense
Depreciation Expense—
Equipment 50
Furniture 60
Supplies Expense
Income Summary ($3,200 – $1,510)
1,690
Marsha Walker, Capital
1,600
Marsha Walker, Withdrawals
E4-13

19. Marsha Walker, Consultant
Balance Sheet
December 31, 20XX
ASSETS
LIABILITIES
Current assets:
Current liabilities:
Cash
$11,700
Accounts payable
$ 3,600
Accounts receivable
1,500
Salary payable
500
Supplies
100
Unearned service
Total current assets
13,300
revenue
600
Plant assets:
Total current liabilities
4,700
Equipment
$2,000
Less accum.
depr.
(50)
1,950
OWNER’S EQUITY
Furniture
$3,600
Marsha Walker, capital
14,090
(60)
3,540
Total liabilities and
             
Total assets
$18,790
owner’s equity

20. Carl Redmon Consulting
Balance Sheet
December 31, 2008
ASSETS
LIABILITIES
Current assets:
Current liabilities:
Cash
$ 7,700
Accounts payable
$ 3,600
Accounts receivable
1,500
Salary payable
500
Supplies
100
Unearned service
Total current assets
9,300
revenue
600
Plant assets:
Total current liabilities
4,700
Equipment
$2,000
Less accum.
depr.
(50)
1,950
OWNER’S EQUITY
Furniture
$3,600
Carl Redmon, capital
10,090
(60)
3,540
Total liabilities and
             
Total assets
$14,790
owner’s equity

21. ACCOUNTS AND EXPLANATIONS
P4-3A
Journal
DATE
ACCOUNTS AND EXPLANATIONS
POST.
REF.
DEBIT
CREDIT
Adjusting Entries
Apr. 30
Accounts Receivable
2,200
Service Revenue
Depreciation Expense—Equipment
6,900
Accumulated Depreciation—
Equipment
Depreciation Expense—Building
3,700
Building
Wage Expense
800
Wages Payable

22. P4-3A Unearned Service Revenue 4,100 Service Revenue Supplies Expense30
Unearned Service Revenue
4,100
Service Revenue
Supplies Expense
500
Supplies
Insurance Expense
700
Prepaid Expense
Interest Expense
1,200
Interest Payable

23. ACCOUNTS AND EXPLANATIONS
Journal
DATE
ACCOUNTS AND EXPLANATIONS
POST.
REF.
DEBIT
CREDIT
Closing Entries
Apr. 30
Service Revenue
($98,500 + $2,200 + $4,100)
104,800
Income Summary
71,500
Depreciation Expense—Equipment
6,900
Depreciation Expense—Building
3,700
Wage Expense ($32,800 + $800)
33,600
Insurance Expense ($5,100 + $700)
5,800
Interest Expense ($8,100 + $1,200)
9,300
Utilities Expense
4,900
Supplies Expense ($6,800 + $500)
7,300
Income Summary ($104,800 – $71,500)
33,300
Jeff Trichel, Capital
27,500
Jeff Trichel, Withdrawals

24. P4-4A TexasOnline Service Income Statement Year Ended April 30, 20X8
Revenues:
Service revenue
($98,500 + $2,200 + $4,100)
$104,800
Expenses:
Wage expense ($32,800 + $800)
$33,600
Interest expense ($8,100 + $1,200)
9,300
Supplies expense ($6,800 + $500)
7,300
Depreciation expense—equipment
6,900
Insurance expense ($5,100 + $700)
5,800
Utilities expense
4,900
Depreciation expense—building
3,700
Total expenses
71,500
Net income
$ 33,300

25. P4-6A Mark Tynes, Architect Balance Sheet December 31, 20X3 ASSETS
Current assets:
Cash
$ 3,400
Accounts receivable
41,500
Prepaid rent
4,700
Prepaid insurance
600
Supplies
3,800
Total current assets
54,000
Plant assets:
Equipment
$24,200
Less Accumulated depreciation
(7,700)
16,500
Building
$55,900
(47,300)
8,600
Other assets
2,300
Total assets
$81,400
LIABILITIES
Current liabilities:
Accounts payable
$34,700
Salary payable
2,400
Unearned service revenue
1,700
Other current liabilities
1,100
Total current liabilities
39,900
Note payable, long-term
3,200
Total liabilities
43,100
OWNER’S EQUITY
Mark Tynes, capital
38,300
Total liabilities and owner’s equity
P 4-6A
P 4-6A

26. P4-6A
Current Ratio =$54,000/$39,900=1.35
The ability to pay current liabilities with current assets improved during 20X3.
Debt Ratio =$43,100/$81,400= 0.53
The overall ability to pay total liabilities was almost unchanged during 20X3.