## Practice Problems

### Demonstration problem

#### Solution to demonstration problem

a. See the work sheet below.

GREEN HILLS RIDING STABLE, INCORPORATE

Work Sheet

For the Month Ended 2010 July 31

Acct. Account Titles Trial Balance Adjustments Adjusted Balance Income Statement Statement of Retained Earnings Balance Sheet
No. Debit Credit Debit Credit Debit Credit Debit Credit Debit Credit Debit Credit
100 Cash 10,700 10,700 10,700
103 Accounts Receivable S,100 3,100 S,100
130 Land 40,000 40,000 40,000
140 Buildings 24,000 24,000 24,000
200 Accounts Payable 1,100 1,100 1,100
201 Notes Payable 40,000 40,000 40,000
300 Capital Stock 35,000 35,000 35,000
310 Retained Earnings 2010 July 1 3,100 3,100 3,100
320 Dividends 1,000 1,000 1,000
402 Horse Boarding Fees Revenue 4,500 4,500 4,500
404 Riding and Lesson Fees Revenue 3,500 3,600 3,600
507 Salaries Expense 1,400 (2) 300 1,700 1,700
513 Feed Expense 1,100 1,100 1,100
540 Interest Expense 200 200 200
563 Miscellaneous
Expense
300
87,300

37,300
SOO SOO
520 Depreciation Expense Buildings (1) 200 200 200
141 Accumulated Depreciation Buildings (1) 200 200 200
206 Salaries Payable

EOO
(2) 300
5oo

87,500
300

37,300
300
Net Income 4,000
4,100
8,100

4,100
Retained Earnings, 2010 July 31 8,100 8,100 1,000 7,200 82,300 76,600

6,200
7,200

7,200

S2,S00
6,200
32,800

b.

GREEN HILLS RIDING STABLE, INCORPORATED

General Journal

 Date Account Titles and Explanation Post.Ref. Debt Credit 2010 Adjusting Entries July 31 Depredation Expense Buildings (-SE) 520 200 Accumulated Depreciation Buildings (-A) 141 200 To record depreciation expense. 31 Salaries Expense (-SE) 507 300 Salaries Payable (+L) 206 300 To record accrued salaries.

c.

GREEN HILLS RIDING STABLE, INCORPORATED

General Journal

 Date Account Titles and Explanation Post.Ref. Debt Credit 2010 Closing Entries July 31 Horse Boarding Fees Revenue 402 4500 Riding Lesson Fees Revenue 404 3600 Income Summary 600 8100 To close revenue accounts. 31 Income Summary 600 4000 Salaries Expense 507 1700 Feed Expense 513 1100 Interest Expense 540 200 Miscellaneous Expense 568 800 Depreciation Expense – Buildings 520 200 To close expense accounts. 31 Income Summary 600 4100 Retained Earnings 310 4100 To close Income Summary account. 31 Retained Earnings 310 1000 Dividends 320 1000 To close dividends account.