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Instructions

The document outlines various accounting problems related to payroll adjustments, dental practice transactions, and closing entries for a company's income statement. It includes specific instructions for preparing journal entries, adjusting entries, and closing entries for different scenarios. The problems require knowledge of accounting principles and practices to accurately record and summarize financial activities.

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Bracu 2023
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18 views3 pages

Instructions

The document outlines various accounting problems related to payroll adjustments, dental practice transactions, and closing entries for a company's income statement. It includes specific instructions for preparing journal entries, adjusting entries, and closing entries for different scenarios. The problems require knowledge of accounting principles and practices to accurately record and summarize financial activities.

Uploaded by

Bracu 2023
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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Problem-1

ABC Company has an accounting fiscal year which ends on December 31. The company also has a policy
of paying the weekly payroll on Friday. Payroll records indicate the following salary costs were incurred.
Date Amount
Monday Dec 28 $7000
Tuesday Dec 29 6,500
Wednesday Dec 30 5,500
Thursday Dec 31 6,000
Friday Jan 1 5,000

Instructions
(a) Prepare any necessary adjusting journal entries that should be made at year end on December 31.
(b) Prepare the journal entry to record the payment of the weekly payroll on January 1.

Problem-2

Andy Wright, D.D.S., opened a dental practice on January 1, 2010. During the first month of operations
the following transactions occurred.
1. Performed services for patients who had dental plan insurance. At January 31, $875 of such services
was earned but not yet recorded.
2. Utility expenses incurred but not paid prior to January 31 totaled $520.
3. Purchased dental equipment on January 1 for $80,000, paying $20,000 in cash and signing a $60,000,
3-year note payable. The equipment depreciates $400 per month. Interest is $500 per month.
4. Purchased a one-year malpractice insurance policy on January 1 for $12,000.
5. Purchased $1,600 of dental supplies. On January 31, determined that $400 of supplies were on hand.
Instructions
Prepare the adjusting entries on January 31. Account titles are: Accumulated Depreciation—
Dental Equipment, Depreciation Expense, Service Revenue, Accounts Receivable, Insurance
Expense, Interest Expense, Interest Payable, Prepaid Insurance, Supplies, Supplies Expense,
Utilities Expense, and Utilities Payable.
Chapter 4
Problem-1
Use the following information for questions 1–7
The income statement for the year 2008 of Nova Co. contains the following information:
Revenues $70,000
Expenses:
Wages Expense $45,000
Rent Expense 12,000
Advertising Expense 6,000
Supplies Expense 6,000
Utilities Expense 2,500
Insurance Expense 2,000
Total expenses 73,500
Net income (loss) $(3,500)

1. The entry to close the revenue account includes a


a. debit to Income Summary for $3,500.
b. credit to Income Summary for $3,500.
c. debit to Revenues for $70,000.
d. credit to Revenues for $70,000.
2. The entry to close the expense accounts includes a
a. debit to Income Summary for $3,500.
b. credit to Income Summary for $3,500.
c. debit to Income Summary for $73,500.
d. debit to Wages Expense for $2,500.
3. After the revenue and expense accounts have been closed, the balance in Income Summary will be
a. $0.
b. a debit balance of $3,500.
c. a credit balance of $3,500.
d. a credit balance of $70,000.
4. The entry to close Income Summary to Nova, Capital includes
a. a debit to Revenue for $70,000.
b. credits to Expenses totalling $73,500.
c. a credit to Income Summary for $3,500.
d. a credit to Nova, Capital for $3,500.
5. At January 1, 2008, Nova reported owner’s equity of $50,000. Owner drawings for the year totalled
$10,000. At December 31, 2008, the company will report owner’s equity of
a. $13,500.
b. $36,500.
c. $40,000.
d. $43,500.
6. After all closing entries have been posted, the Income Summary account will have a balance of
a. $0. b. $3,500 debit.
c. $3,500 credit. d. $36,500 credit.
7. After all closing entries have been posted, the revenue account will have a balance of
a. $0. b. $70,000 credit.
c. $70,000 debit. d. $3,500 credit.

Problem-2

Instructions:
(a) Prepare the closing entries that were made.
(b) Post the closing entries to Income Summary.

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