Preparing Balance Sheets and Statements

Instructions : Complete Quick Study question QS 4-2 on

. 156 and Exercises 4-4 and 4-5 on

. 159

4 .2 PAGE 156 . List the following steps of the accounting cycle in their proper

a . Preparing the post-closing trial balance

b . Posting the journal entries

c . Journalizing and posting adjusting entries

d . Preparing the adjusted trial balance

e . Journalizing and posting closing entries

f . Analyzing transactions and events

g . Preparing the financial statements

h . Preparing the unadjusted trial balance

i . Journalizing transactions and events

Answer : The steps in

the accounting cycle are as follows

1 . Analyzing transactions and events

2 . Journalizing transactions and events

3 . Posting the journal entries

4 . Preparing the unadjusted trial balance

5 . Journalizing and posting adjusting entries

6 . Preparing the adjusted trial balance

7 . Preparing the financial statements

8 . Journalizing and posting closing entries

9 . Preparing the post-closing trial balance

4 .4 PAGE 159 . Use the following adjusted trial balance of Webb Trucking Company to prepare a classified balance sheet as of December 31 , 2005

Account Title Debit Credit

Cash 7 ,000

Accounts receivable . 16 ,500

Office supplies . 2 ,000

Trucks . 170 ,000

Accumulated depreciation - Trucks 35 ,000

Land 75 ,000

Accounts payable 11 ,000

Interest payable 3 ,000

Long-term notes payable 52 ,000

K .Webb , Capital 161 ,000

K .Webb , Withdrawals . 19 ,000

Trucking fees earned 128 ,000

Depreciation expense - Trucks . 22 ,500

Salaries expense . 60 ,000

Office supplies expense . 7 ,000

Repairs expense - Trucks . 11 ,000

--------- --------- Answer

All entries for the classified balance sheet has been given , except for the net working capital . The net working capital is determined after preparing the income statement and the statement of owner 's equity

Webb Trucking Company

Classified Balance Sheet

As of Dec . 31 , 2005

Assets

Current Assets

Cash 7 ,000

Accounts receivable 16 ,500

Plant assets

Trucks 170 ,000

Less Accumulated depreciation - Trucks . 35 ,000 135 ,000 ----------

Office supplies 2 ,000

Land 75 ,000 ---------- Liabilities and Equity

Current liabilities

Accounts payable . 11 ,000

Interest payable 3 ,000

Long-Term Liabilities

Long-term notes payable . 52 ,000 ----------

66 ,000 ----------

Equity

Net K .Webb , Capital 169 ,500 ---------- 4 .5 PAGE 159 . Use the information in the adjusted trial balance reported in Exercise 4-4 to prepare Webb Trucking Company 's (1 ) income statement , and (2 ) statement of owner 's equity . The K . Webb , Capital account balance is 161 ,000 at December 31 , 2004

Answer

Webb Trucking Company

Income Statement

Year Ended Dec . 31 , 2005

Revenues

Trucking fees earned 128 ,000 ---------- Expenses

Depreciation expense - Trucks . 22 ,500

Salaries expense . 60 ,000

Office supplies expense . 7 ,000

Repairs expense - Trucks . 11 ,000 ---------- ----------

Net income 27 ,500

Webb Trucking Company

Statement of Owner 's Equity

Year Ended Dec . 31 , 2005

K . Webb , Capital , December 31 , 2004 161 ,000

Add : Investment by owner 0

Net income . 27 ,500 27 ,500 ----------

Less : Withdrawals by owner 19 ,000 ----------

K . Webb , Capital , December 31 , 2005 169 ,500

MIDTOWN REPAIR COMPANY

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