Chapter 4: Q4TI_1 (page 201)
For each account listed, identify whether the account would appear on the post-closing trial balance. Indicate either yes or no.
16. Dividends
No
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Mark’s Bowling Alley’s adjusted trial balance as of December 31, 2018, is presented below:
Requirements
1. Prepare the closing entries for Mark’s Bowling Alley.
2. Prepare a post-closing trial balance.
3. Compute the current ratio for Mark’s Bowling Alley
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.
For each account listed, identify whether the account would appear in either the income statement section or the balance sheet section of the worksheet. Assuming normal balances, identify if the account would be recorded in the debit (DR) or credit (CR)
column.
10. Cash
Refer to the data in Short Exercise S4-1. Prepare Dalton’s classified balance sheet at December 31, 2018. Assume the Notes Payable is due on December 1, 2025. Use the report form.
What is the closing process?
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