Exam 4: Completing the Accounting Cycle

You have just accepted your first job out of college,which requires you to evaluate loan requests at Eastwood National Bank.The first loan request you receive is from Richard Enterprises.Richard Tracy,the CEO,is requesting $105,000 and brings you the following trial balance or statement of accounts for the first year of operations ended December 31. What three accounts do you think should be relabeled for greater clarity?

The income statement is prepared from the adjusted trial balance or the income statement columns on the work sheet.

The following balance sheet contains errors. $\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\text { Mark Brock Services Co. }$ $\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\text { Balance Sheet }$ $\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\text { For the Year Ended December } 31$ Current assets: Cash \ 7,170 Accounts payable 7,500 Supplies 2,590 Prepaid insurance 800 Land Total current assets \ 42,060 Current liabilities: Accounts receivable \ 10,000 Accum. depr.-building 12,525 Accum. depr.-equipment 7,340 Net income Total liabilities \ 41,365 Property, plant, and equipment: Building \ 43,700 Equipment Total property, plant, and equipment Total assets Wages payable \ 1,500 Common stock 86,645 Retained Earnings Total stockholders' equity Total liabilities and stockholders' equity a List the errors in the balance sheet above and b prepare a corrected balance sheet.

An end-of-period spreadsheet includes columns for

$\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\text { Stockton Company }$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\text { Adjusted Trial Balance }$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\text { December } 31$ Cash 7,530 Accounts Receivable 2,100 Prepaid Expenses 700 Equipment 13,700 Accumulated Depreciation 1,100 Accounts Payable 1,900 Notes Payable 4,300 Common Stock 1,000 Retained Earnings 12,940 Dividends 790 Fees Earned 9,250 Wages Expense 2,500 Rent Expense 1,960 Utilities Expense 775 Depreciation Expense 250 Miscellaneous Expense 185 Totals 30,490 30,490 -Determine the retained earnings ending balance.

Of the following steps of the accounting cycle,which step should be completed first?

Balance sheet accounts

The difference between a classified balance sheet and one that is not classified is that the classified one has subheadings.

Accumulated Depreciation is a permanent account.

After Net Income or Loss is entered on the work sheet,the debit column total must equal the credit column total for the Balance Sheet pair of columns.

On the basis of the following data taken from the Adjusted Trial Balance columns of the work sheet for the year ended March 31 for Banes Domino's Corporation, journalize the four closing entries.

It is not necessary to post the closing entries to the general ledger.

Financial statements should be prepared before the closing entries are journalized and posted.

In the accounting cycle,the last step is

Accounts reported on the balance sheet that are carried forward from year to year are known as permanent accounts.

The dividends account is closed to the income summary account.

The majority of businesses end their fiscal year on December 31.

Prepaid insurance is reported on the balance sheet as a

The accounting cycle requires three trial balances be done.In what order should they be prepared?

On which financial statement will Income Summary be shown?