Exam 6: Completing a Worksheet and Completing the Accounting Cycle

If the accounting records are free of errors,

On May 25, Mt. Hood Company received a $370 check from Douglas Fir for services to be performed in the future. The bookkeeper for Mt. Wood Company incorrectly debited Cash for $370 and credited Accounts Receivable for $370. The amounts have been posted to the ledger. To correct this entry, the bookkeeper should:

On Feb. 20, Ben's Cafe purchased on account equipment costing $540. The transaction was journalized and posted as a debit to Equipment $54 and a credit to Accounts Payable $54. The correcting entry should include a

After all closing entries have been journalized and posted, the final step in the accounting cycle is to prepare a ______________ trial balance.

Kenham Co. was organized on April 1, 2022. The company prepares monthly financial statements. The adjusted trial balance amounts in the April 30 worksheet are shown below. Debit Credit Cash \ 6,700 Accumulated Depreciation- Accounts Receivable 600 Equipment 850 Prepaid Insurance 1,800 Notes Payable 5,000 Supplies 1,000 Accounts Payable 1,510 Equipment 15,000 Salaries and Wages Payable 400 Owner's Drawings 600 Interest Payable 550 Salaries and Wages Expense 9,400 Owner's Capital 13,000 Insurance Expense 1,200 Service Revenue 15,800 Depreciation Expense 850 Rent Revenue 800 Supplies Expense 200 Utilities Expense 510 Interest Expense 50 \3 7,910 \3 7,910 In which worksheet column will the net income amount be entered?

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

A post-closing trial balance is prepared

Preparing a worksheet involves

Closing entries may be prepared from all of the following except

Distinguish between a correcting entry and an adjusting entry. Are correcting entries required?

After a worksheet has been completed, the statement columns contain all data that are required for the preparation of financial statements.

The Owner's Drawings account is closed to the ______________ account at the end of the accounting period.

If the total debit column exceeds the total credit column of the income statement columns on a worksheet, then the company has

The income statement for the year 2022 of Bugati Co. contains the following information: $\begin{array}{lr}\text { Revenues }&&\$73,000\\\text { Expenses: }\\\text { Salaries and Wages Expense } & \$ 43,000 \\\text { Rent Expense } & 12,000 \\\text { Advertising Expense } & 11,000 \\\text { Supplies Expense } & 6,000 \\\text { Utilities Expense } & 3,500 \\\text { Insurance Expense } & 4,000 \\\text { Total expenses }&&79,500\\\text { Net income (loss) }&&\$(6,500)\end{array}$ After all closing entries have been posted, the revenue account will have a balance of

The steps in the preparation of a worksheet do not include

The closing process consists of closing

Bill Kilmer, CPA, was asked by Karol King to review the accounting records and prepare the financial statements for her upholstering shop. Bill reviewed the records and found three errors. 1. Cash paid on accounts payable for $810 was recorded as a debit to Accounts Payable $180 and a credit to Cash $180. 2. The purchase of supplies on account for $400 was debited to Equipment $400 and credited to Accounts Payable $400. 3. Karol withdrew $1,700 of cash and the bookkeeper debited Accounts Receivable for $170 and credited Cash $170. Instructions Prepare an analysis of each error showing the (a) incorrect entry. (b) correct entry. (c) correcting entry.

The owner's drawings account is closed to the Income Summary account in order to properly determine net income (or loss) for the period.

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

The income statement for the year 2022 of Bugati Co. contains the following information: $\begin{array}{lr}\text { Revenues }&&\$73,000\\\text { Expenses: }\\\text { Salaries and Wages Expense } & \$ 43,000 \\\text { Rent Expense } & 12,000 \\\text { Advertising Expense } & 11,000 \\\text { Supplies Expense } & 6,000 \\\text { Utilities Expense } & 3,500 \\\text { Insurance Expense } & 4,000 \\\text { Total expenses }&&79,500\\\text { Net income (loss) }&&\$(6,500)\end{array}$ After all closing entries have been posted, the Income Summary account will have a balance of