Comprehensive Problem 1
The Accounting Cycle
Bob Night opened "The General's Favorite Fishing Hole." The fishing camp is open
from April through September and attracts many famous college basketball
coaches during the off-season. Guests typically register for one week, arriving on
Sunday afternoon and returning home the following Saturday afternoon. The
registration fee includes room and board, the use of fishing boats, and professional
instruction in fishing techniques. The chart of accounts for the camping operations
is provided below.
The General's Favorite Fishing Hole
Chart of Accounts
Assets
Revenues
101 Cash
401 Registration Fees
142 Office Supplies
144 Food Supplies
Expenses
145 Prepaid Insurance
511 Wages Expense
181 Fishing Boats
521 Rent Expense
181.1 Accum. Depr. -- Fishing Boats
523 Office Supplies Expense
524 Food Supplies Expense
Liabilities
525 Telephone Expense
202 Accounts Payable
533 Utilities Expense
219 Wages Payable
535 Insurance Expense
536 Miscellaneous Expense
Owner's Equity
542 Depr. Exp. -- Fishing Boats
311 Bob Night, Capital
312 Bob Night, Drawing
313 Income Summary
The following transactions took place during April 20-Apr. 1
Night invested cash in business, $90,000
1 Paid insurance premium for six-month camping season, $9,000
2 Paid rent for lodge and campgrounds for the month of April, $40,000
2 Deposited registration fees, $35,000
2 Purchased 10 fishing boats on account for $60,000. The boats have
estimated useful lives of fives years, at which time they will be donated
to a local day camp. Arrangements were made to pay for the boats in July
3 Purchased food supplies from Acme Super Market on account, $7,000
5 Purchased office supplies from Gordon Office Supplies on account, $500
7 Deposited registration fees, $38,600
10 Purchased food supplies from Acme Super Market on account, $8,200
10 Paid wages to fishing guides, $10,000
14 Deposited registration fees, $30,500
16 Purchased food supplies from Acme Super Market on account, $9,000
17 Paid wages to fishing guides, $10,000
18 Paid miscellaneous Expense, $150
21 Deposited registration fees, $35,600
24 Purchased food supplies from Acme Super Market on account, $8,500
24 Paid wages to fishing guides, $10,000
28 Deposited registration fees, $32,000
29 Paid wages to fishing guides, $10,000
30 Purchased food supplies from Acme Super Market on account, $6,000
30 Paid Acme Super Market on account, $32,700
30 Paid utilities bill, $2,000
30 Paid telephone bill, $1,200
30 Bob Night withdrew cash for personal use, $6,000
Adjustment information for the end of April is provided below.
(a)
Office supplies remaining on hand, $100
(b)
Food supplies remaining on hand, $8,000
(c)
Insurance expired during the month of April, $1,500
(d)
Depreciation on the fishing boats for the month of April, $1,000
(e)
Wages earned, but not yet paid, at the end of April, $500
Required
1 Enter the transactions in a general journal. Enter transactions from April 1-5
on page 1, April 7-18 on page 2, April 21-29 and the first two enters from
April 30 on page 3, and the remaining entries from April 30 on page 4.
2 Post the entries to the general ledger.
3 Prepare a trial balance on a work sheet
(page 13-14)
4 Complete the work sheet (In chapter 4, page 143, is an explanation of the work
sheet process and a template example)
5 Journalize the adjusting entries to the general ledger (page 17)
6 Post the adjusting entries to the general ledger
7 Prepare the income statement
(page 15)
8 Prepare the statement of owner's equity
(page 15)
9 Prepare the balance sheet
(page 16)
10 Journalize the closing entries
(page 17)
11 Post the closing entries to the general ledger
12 Prepare a post closing trial balance
(page 18)
Page 1
m April 1-5
n of the work
Page 2
General Journal: 1
Date
1 April
2
3
4 April
5
6
7 April
8
9
10
11 April
12
13
14
15 April
16
17
18
19 April
20
21
22
23 April
24
25
26
27
28
29
30
31
32
33
34
35
36
Description
Post. Ref
Debit
1 Cash
Night Capital
cash investment
101 $ 90,000.00
311
1 Prepaid Insurance
Cash
paid insurance premium
2 Rent Expense
Cash
payed rent for lodge and campground
145 $
101
2 Cash
Registration Fees
deposited registration fees
101 $ 35,000.00
401
2 Fishing Boats
Accounts Payable
purchased fishing boats on account
181 $ 60,000.00
202
3 Food Supplies
Accounts Payable
purchased food supplies on account
144 $
202
7,000.00
5 Office Supplies
Accounts Payable
purchased office supplies on account
142 $
202
500.00
9,000.00
521 $ 40,000.00
101
Credit
$ 90,000.00
9,000.00
$ 40,000.00
$ 35,000.00
$ 60,000.00
7,000.00
500.00
Page 3
General Journal: 2
Date
1 April
2
3
4
5 April
6
7
8
9 April
10
11
12
13 April
14
15
16
17 April
18
19
20
21 April
22
23
24
25 April
26
27
28
29
30
31
32
33
34
35
36
Description
7 Cash
Registration Fees
deposited registration fees
Post. Ref
Debit
101 $ 38,600.00
401
10 Food Supplies
Accounts Payable
purchased food supplies on account
144 $
202
8,200.00
10 Wages Expense
Cash
payed wages expense
511 $ 10,000.00
101
14 Cash
Registration Fees
deposited registration fees
101 $ 30,500.00
401
16 Food Supplies
Accounts Payable
purchased food supplies on account
144 $
202
17 Wages Expense
Cash
payed wages expense
511 $ 10,000.00
101
18 Miscellaneous Expense
Cash
payed miscellaneous expense
536 $
101
9,000.00
150.00
Credit
$ 38,600.00
8,200.00
$ 10,000.00
$ 30,500.00
9,000.00
$ 10,000.00
150.00
Page 4
General Journal: 3
Date
1 April
2
3
4
5 April
6
7
8
9 April
10
11
12
13 April
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
Description
Post. Ref
Debit
21 Cash
Registration Fees
deposited registration fees
101 $ 35,600.00
401
24 Food Supplies
Accounts Payable
purchased food supplies on account
144 $
202
28 Cash
Registration Fees
deposited registration fees
101 $ 32,000.00
401
29 Wages Expense
Cash
payed wages expense
511 $ 10,000.00
101
8,500.00
Credit
$ 35,600.00
8,500.00
$ 32,000.00
$ 10,000.00
Page 5
General Journal: 4
Date
1 April
2
3
4
5 April
6
7
8
9 April
10
11
12
13 April
14
15
16
17 April
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
Description
Post. Ref
Debit
30 Food Supplies
Accounts Payable
purchased food supplies on account
144 $
202
6,000.00
30 Accounts Payable
Cash
payed food supplies bill
202 $ 32,700.00
101
30 Utilities Expense
Cash
payed utilities bill
533 $
101
2,000.00
30 Telephone Expense
Cash
payed telephone bill
525 $
101
1,200.00
30 Night, Drawing
Cash
withdrew from the company
312 $
101
6,000.00
Credit
$
6,000.00
$ 32,700.00
2,000.00
1,200.00
6,000.00
Page 6
General Ledger
Account: Cash
Date
Item
Post.
Ref
J1
Debit
Apr.
April
April
April
2
2
7
April
April
April
April
April
10
14
17
18
21
$ 38,600.00
April
April
24
28
$ 35,600.00
April
April
April
April
April
29
30
30
30
30
$ 32,000.00
April
30
Credit
$ 90,000.00
Account No. 101
Balance
Debit
$
90,000.00
$
$
$
81,000.00
41,000.00
76,000.00
$ 10,000.00
$
150.00
$
$
$
$
$
114,600.00
104,600.00
135,100.00
125,100.00
124,950.00
$ 10,000.00
$ 160,550.00
$ 150,550.00
$ 10,000.00
$ 32,700.00
$ 2,000.00
$ 1,200.00
$
$
$
$
$
$ 130,650.00
$ 9,000.00
$ 40,000.00
$ 35,000.00
$ 10,000.00
$ 30,500.00
6,000.00
182,550.00
172,550.00
139,850.00
137,850.00
136,650.00
General Ledger
Account: Office Supplies
Post.
Item
Ref
Date
April
Debit
$
Credit
500.00
Account No. 142
Balance
Debit
$
500.00
General Ledger
Account: Food Supplies
Post.
Item
Ref
Date
Debit
April
April
April
April
3
10
16
24
$
$
$
$
7,000.00
8,200.00
9,000.00
8,500.00
April
30
6,000.00
Credit
Account No. 144
Balance
Debit
$
7,000.00
$ 15,200.00
$ 24,200.00
$ 32,700.00
$
38,700.00
General Ledger
Account: Prepaid Insurance
Post.
Item
Ref
Date
April
Debit
$
Account No. 145
Balance
Debit
Credit
9,000.00
9,000.00
General Ledger
Account: Fishing Boats
Post.
Item
Ref
Date
April
Date
Debit
Account No. 181
Balance
Debit
Credit
$ 60,000.00
General Ledger
Account: Accum. Depr.-- Fishing Boats
Post.
Item
Debit
Ref
Credit
$
60,000.00
Account No. 181.1
Balance
Debit
1,000.00
General Ledger
Account: Accounts Payable
Post.
Item
Ref
Date
April
April
April
April
April
April
April
2
3
5
10
16
24
30
April
30
Debit
Credit
$ 60,000.00
$ 7,000.00
$
500.00
$ 8,200.00
$ 9,000.00
$ 8,500.00
$ 6,000.00
$ 32,700.00
Account No. 202
Balance
Debit
General Ledger
nt No. 101
Balance
Account: Wages Payable
Post.
Item
Ref
Date
Credit
Debit
General Ledger
Account: Bob Night, Capital
Post.
Item
Ref
Date
April
Debit
General Ledger
Account: Bob Night, Drawing
Date
April
Item
Post.
Ref
Debit
$
6,000.00
nt No. 142
Balance
Credit
General Ledger
Account: Income Summary
Date
nt No. 144
Balance
Item
Post.
Ref
Debit
$ 117,450.00
$ 138,250.00
Credit
Page 7
nt No. 145
Balance
Credit
nt No. 181
Balance
Credit
No. 181.1
Balance
Credit
$
1,000.00
nt No. 202
Balance
Credit
$
$
$
$
$
$
$
60,000.00
67,000.00
67,500.00
75,700.00
84,700.00
93,200.00
99,200.00
$ 66,500.00
Page 8
ral Ledger
Credit
$
Account No. 219
Balance
Debit
Credit
500.00
500.00
Account: Registration Fees
Date
April
April
April
April
7
14
21
April
28
ral Ledger
Credit
$
Account No. 311
Balance
Debit
Credit
90,000.00
90,000.00
Account: Wages Expense
Date
ral Ledger
Account No. 312
Balance
Credit
Debit
$
Credit
6,000.00
April
10
April
April
17
24
April
29
ral Ledger
Account: Rent Expense
Account No. 313
Balance
Credit
Debit
Credit
$ 171,700.00
$ 171,700.00
$ 54,250.00
$ 84,000.00
Date
April
Account: Office Supplies Expe
Date
a
Page 9
Account: Food Supplies Expen
Date
b
Account: Telephone Expense
Date
April
30
Account: Utilities Expense
Date
April
30
Account: Insurance Expens
Date
c
General Ledger
Account: Registration Fees
Post.
Item
Ref
Debit
Credit
Account No. 401
Balance
Debit
$ 35,000.00
$ 38,600.00
$ 30,500.00
$ 35,600.00
$ 32,000.00
General Ledger
Account: Wages Expense
Post.
Item
Ref
Debit
Credit
Account No. 511
Balance
Debit
###
10,000.00
$
$
10,000.00
10,000.00
$ 20,000.00
$ 30,000.00
10,000.00
$ 40,000.00
General Ledger
Account: Rent Expense
Post.
Item
Ref
Debit
$
40,000.00
General Ledger
Account: Office Supplies Expense
Post.
Item
Debit
Ref
$
Credit
400.00
Account No. 521
Balance
Debit
$ 40,000.00
Credit
Account No. 523
Balance
Debit
$
400.00
General Ledger
Account: Food Supplies Expense
Post.
Item
Debit
Ref
$
Credit
30,700.00
Account No. 524
Balance
Debit
$ 30,700.00
General Ledger
Account: Telephone Expense
Post.
Item
Ref
Debit
$
Credit
1,200.00
Account No. 525
Balance
Debit
$
1,200.00
General Ledger
Account: Utilities Expense
Post.
Item
Ref
Debit
$
Credit
2,000.00
Account No. 533
Balance
Debit
$
2,000.00
General Ledger
Account: Insurance Expense
Post.
Item
Ref
Debit
$
1,500.00
Credit
Account No. 535
Balance
Debit
$
1,500.00
unt No. 401
Balance
General Ledger
Account: Miscellaneous Expense
Credit
3,500.00
$ 73,600.00
$ 104,100.00
$ 139,700.00
Date
April
Item
Post.
Ref
18
Debit
$
150.00
$ 171,700.00
General Ledger
Account: Depreciation Expense -- Fishing Boats
Date
Date
unt No. 511
Balance
Credit
unt No. 521
Balance
Credit
unt No. 523
Balance
Credit
Item
Post.
Ref
Debit
$ 1,000.00
Page 10
unt No. 524
Balance
Credit
unt No. 525
Balance
Credit
unt No. 533
Balance
Credit
unt No. 535
Balance
Credit
Page 11
al Ledger
Credit
Account No. 536
Balance
Debit
Credit
$
150.00
al Ledger
Account No. 542
Credit
Balance
Debit
$ 1,000.00
Credit
Page 12
Account Title
1 Cash
2 Office Supplies
3 Food Supplies
4 Prepaid Insurance
5 Fishing Boats
6 Accum. Dep - Fish Boats
7 Accounts Payable
8 Night, Capital
9 Night, Drawing
10 Registration Fees
11 Wages Expense
12 Rent Expense
13 Miscellaneous Expense
14 Utilities Expense
15 Telephone Expense
16 Depreciation Expense
17 Insurance Expense
18 Wages Payable
19 Office Supplies Exp.
20 Food Expense
21
22
23
24
25
26
27
28
29
30
31 Net Income
The General's Favorite Fishing Hole
Work Sheet
For the Month Ended April 30, 20-Trial Balance
Debit
Credit
$ 130,650.00
$
500.00
$ 38,700.00
$
9,000.00
$ 60,000.00
$
$
$
Adjustments
Debit
66,500.00
90,000.00
6,000.00
$ 171,700.00
$
$
$
$
$
40,000.00
40,000.00
150.00
2,000.00
1,200.00
500.00
$
$
1,000.00
1,500.00
$
400.00
$ 30,700.00
$ 328,200.00
$ 328,200.00
$ 34,100.00
The General's Favorite Fishing Hole
Work Sheet
For the Month Ended April 30, 20-Income Statement
Debit
Adjustments
Credit
$
400.00
$ 30,700.00
$
1,500.00
$
$
$
$
$
$
1,000.00
$
$
$
$
$
$
$
$
$
500.00
$
$
$ 34,100.00
Adjusted Trial balance
Debit
Credit
130,650.00
100.00
8,000.00
7,500.00
60,000.00
$
1,000.00
$ 66,500.00
$ 90,000.00
6,000.00
$ 171,700.00
40,500.00
40,000.00
150.00
2,000.00
1,200.00
1,000.00
1,500.00
$
500.00
400.00
30,700.00
$ 329,700.00
$ 329,700.00
$
$
$
$
$
$
$
40,500.00
40,000.00
150.00
2,000.00
1,200.00
1,000.00
1,500.00
$
$
400.00
30,700.00
$ 117,450.00
Page 13
eral's Favorite Fishing Hole
Work Sheet
Month Ended April 30, 20-Income Statement
Balance Sheet
Credit
Debit
Credit
$ 130,650.00
$
100.00
$
8,000.00
$
7,500.00
$ 60,000.00
$
(1,000.00)
$ 66,500.00
$ 138,250.00
$ 171,700.00
$ 171,700.00
$ 205,250.00
500.00
$ 205,250.00
$ 54,250.00
Page 14
The General's Favorite Fishing Hole
Income Statement
For Month End April 30, 20-Registration Fees
Less: Expenses:
Wages Expense
Rent Expense
Office Supplies Expense
Food Supplies Expense
Telephone Expense
Utilities Expense
Insurance Expense
Miscellaneous Expse
Depreciation Expense - Fishing Boats
$ 171,700.00
$ 40,500.00
$ 40,000.00
$
400.00
$ 30,700.00
$
1,200.00
$
2,000.00
$
1,500.00
$
150.00
$
1,000.00
Net Income
$ 117,450.00
$ 54,250.00
The General's Favorite Fishing Hole
Statement of Owner's Equity
For Month Ended April 30, 20--
Night, Capital
Net Income
Night, Drawings
$ 90,000.00
$ 54,250.00
$ 144,250.00
$
6,000.00
Night, Capital
$138,250.00
Page 15
The General's Favorite Fishing Hole
Balance Sheet
April 30, 20-Assets
Current Assets:
Cash
Office Supplies
Foods Supplies
Prepaid Insurance
$ 130,650.00
$
100.00
$
8,000.00
$
7,500.00
Fishing Boats
Less: Accumulated Depreciation
Total Assets
$
(1,000.00) $
60,000.00
59,000.00
$205,250.00
Liabilities
Accounts Payable
Wages Payable
Bob Night, Capital
$ 66,500.00
$
500.00
$ 138,250.00
Total Liabilities and Equity
$205,250.00
Page 16
General Journal: 5
Date
1 Apr.
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
Description
Adjusting Entries
Office Supplies Expense
Office Supplies
office supplies on hand
Post. Ref
Debit
523 $
142
400.00
Food Supplies Expense
Food Supplies
food supplies on hand
524 $
144
30,700.00
Insurance Expense
Prepaid Insurance
expired insurance
535 $
145
1,500.00
Depreciation Expense - Fishing Boats
Accumumlated depreciation- Fishing Boats
depreciation from fishing boats
542 $
181.1
1,000.00
Wages Expense
Wages Payable
wages earned, but not payed
511 $
219
500.00
Closing Entries
30 Registration Fees
Income Summary
to close the credit balance account
401 $ 171,700.00
313
Income Summary
Wages Expense
Rent Expense
Office Expense
Food Expense
Telephone Expense
Utilities Expense
Miscellaneous Expense
Insurance Expense
Depreciation Expense - Fishing Boats
to close the debit balance accounts
313 $ 117,450.00
511
521
523
524
525
533
536
535
542
Income Summary
Night, Capital
to close the income summary account
313 $ 138,250.00
311
Night, Capital
Night, Withdrawel
311 $
6,000.00
Credit
400.00
30,700.00
1,500.00
1,000.00
500.00
$ 171,700.00
$
$
$
$
$
$
$
$
$
40,500.00
40,000.00
400.00
30,700.00
1,200.00
2,000.00
1,500.00
150.00
1,000.00
$ 138,250.00
6,000.00
The General's Favorite Fishing Hole
Post-Closing Trial Balance
April 30, 20-Acct.
Account Title
No Debit Balance Credit Balance
Cash
101 $ 130,650.00
Office Supplies
142 $
100.00
Food Supplies
144 $
8,000.00
Prepaid Insurance
145 $
7,500.00
Fishing Boats
181 $ 60,000.00
Accumulated Depreciation - Fishing Boats
181.1
$
1,000.00
Accounts Payable
202
$ 66,500.00
Wages Payable
219
$
500.00
Night, Capital
311
$ 138,250.00
Total
$206,250.00 $206,250.00
Page 18
