Financial Accounting: An Integrated Statements Approach, 2nd Edition

Chapter 4 Accounting Information Systems 179

2. Journalize each transaction in a two-column journal. Show the effects of each transaction on
   the financial statements using the margin notation illustrated in this chapter.


3. Post the journal entries to the T accounts, placing the date to the left of each amount to iden-
   tify the transaction. Determine the account balances after all posting is complete.


4. Prepare an unadjusted trial balance as of April 30, 2007.


5. Data necessary to determine the end-of-month adjustments are as follows:
   a.Supplies on hand at April 30, $185.
   b.Professional fees accrued on April 30, $1,375.
   c. Insurance premiums expired during April, $435.
   d.Depreciation on equipment during April, $80.
   e.Salaries accrued at April 30, $300.
   Journalize and post the necessary adjusting entries for April. Identify each adjusting entry in
   the account as “Adjusting.” Show the effects of each transaction on the financial statements
   using the margin notation illustrated in this chapter. For the adjusted accounts, determine an
   adjusted balance.


6. Prepare an adjusted trial balance as of April 30, 2007.


7. Prepare an income statement, a retained earnings statement, and a classified balance sheet.


8. Journalize and post the closing entries for April. Identify each entry in the accounts as
   “Closing.”


9. Prepare a post-closing trial balance as of April 30, 2007.


10. (Appendix) Prepare a statement of cash flows for April. Note that the April 12 payment of
    $1,250 on account was for the equipment purchase. The April 20 payment of $200 on ac-
    count was for laboratory expense.


11. (Appendix) Reconcile net income with net cash flows from operations for April. Note that
    only $45 of the increase in Accounts Payable represents operating activities. The remaining
    $525 increase in Accounts Payable relates to the purchase of equipment, an investing
    activity.

Solution to Illustrative Problem

2.

Apr. 1 Rent Expense 800

Cash 800

3 Equipment 1,575

Accounts Payable 1,575

5 Cash 3,150

Accounts Receivable 3,150

8 Supplies 245

Accounts Payable 245

9 Accounts Payable 325

Equipment 325

12 Accounts Payable 1,250

Cash 1,250

17 Prepaid Insurance 370

Cash 370

20 Accounts Payable 200

Cash 200

24 Laboratory Expense 545

Cash 545

25 Accounts Receivable 5,145

Professional Fees 5,145

27 Dividends 1,250

Cash 1,250

28 Cash 1,720

Professional Fees 1,720

SCF BS IS

OT ATSET Ec

—AcLc —

Oc ATc —

—AcLc —

—ATLT —

OT ATLT —

OT AcT —

OT ATLT —

OT ATSET Ec

—AcSEc Rc

FT ATSET —

Oc AcSEc Rc

(continued)