Chapter 4: Q16RQ (page 216)
What are the steps in the closing process?
The steps in the closing process are as follows:
Close dividends account
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What are temporary accounts? Are temporary accounts closed in the closing process?
The steps of the accounting cycle are presented below. Identify the correct order of the steps.
a. Journalize and post the closing entries.
b. Start with the beginning account balances.
c. Prepare the financial statements.
d. Compute the unadjusted balance in each account, and prepare the unadjusted trial balance.
e. Journalize and post adjusting entries.
f. Enter the unadjusted trial balance on the worksheet, and complete the worksheet (optional).
g. Prepare the adjusted trial balance.
h. Analyze and journalize transactions as they occur.
i. Post journal entries to the accounts.
j. Prepare the post-closing trial balance.
List the steps of the accounting cycle.
Grant Film Productions wishes to expand and has borrowed \(100,000. As a condition for making this loan, the bank requires that the business maintain a current ratio of at least 1.50. Business has been good but not great. Expansion costs have brought the current ratio down to 1.40 on December 15. Rita Grant, owner of the business, is considering what might happen if she reports a current ratio of 1.40 to the bank. One course of action for Grant is to record in December \)10,000 of revenue that the business will earn in January of next year. The contract for this job has been signed. Requirements 1. Journalize the revenue transaction, and indicate how recording this revenue in December would affect the current ratio. 2. Discuss whether it is ethical to record the revenue transaction in December. Identify the accounting principle relevant to this situation, and give the reasons underlying your conclusion.
The unadjusted trial balance of Fleming Investment Advisers at December 31, 2018, follows: Adjustment data at December 31, 2018: a. Unearned Revenue earned during the year, \(700. b. Office Supplies on hand, \)3,000. c. Depreciation for the year, \(3,000. d. Accrued Salaries Expense, \)4,500. e. Accrued Service Revenue, \(9,000. Account Title Office Supplies Cash Debit Credit Accounts Receivable Equipment Accumulated Depreciation—Equipment Accounts Payable Salaries Payable Unearned Revenue Notes Payable (long-term) Common Stock Dividends Service Revenue Insurance Expense Salaries Expense Supplies Expense Interest Expense Rent Expense Depreciation Expense—Equipment Total Balance \) 25,000 \( 183,000 \) 183,000 26,000 4,500 15,000 Retained Earnings 5,500 28,000 99,000 51,000 7,500 26,000 $ 19,000 14,000 2,500 33,000 3,000 7,000 FLEMING INVESTMENT ADVISERS Unadjusted Trial Balance December 31, 2018 Requirements 1. Prepare a worksheet for Fleming Investment Advisers at December 31, 2018. 2. Prepare the income statement, the statement of retained earnings, and the classified balance sheet in account format. 3. Prepare closing entries.
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