Exercise 3-4 (30 minutes)
a. Unearned Fee Revenue…………………………………………….. 5,000
Fee Revenue………………………………………………………… 5,000
To record earned portion of fee received in advance
($15,000 x 1/3).
b. Wages Expense………………………………………….…….……… 8,000
Wages Payable………………………………………….…………. 8,000
To record wages accrued but not yet paid.
g. Interest Expense………………….…………………….…………… 2,500
Interest Payable……………..…………………………………… 2,500
To record interest incurred but not yet paid.
Notes:
Prepaid Insurance†Office Supplies*
Exercise 3-5 (25 minutes)
Dec. 31 Accounts Receivable……………..……………………..… 2,100
Fees Earned………………….…………….…..….…... 2,100
To record earned but unbilled fees (30% x $7,000).
31 Depreciation Expense—Office Furniture……….….. 1,850
Accumulated Depreciation—Office Furniture.... 1,850
To record depreciation on office furniture.
31 Salaries Expense……………………….….….….…….….. 2,250
Salaries Payable………………………….…..….…... 2,250
To record accrued salaries.
To record use of office supplies.
31 Utilities Expense………….……………….…..…….….…... 90
Utilities Payable…………..………………..…..….…. 90
To record incurred and unpaid utility costs.
forwarded, distributed, or posted on a website, in whole or part.
Financial and Managerial Accounting, 6th Edition
150
Exercise 3-6 (20 minutes)
adidas AG
Balance Sheet
December 31, 2013
(Euros in millions)
Assets
Noncurrent assets
Intangible assets…………..…………………….….….….. € 148
Tangible and other assets…..………………..….….…. 304
Other noncurrent assets…………..….….….….….…. 3,476
Total noncurrent assets………………………..………… 3,928
Current assets
Equity
Total equity……..…………………….…….….….….…….…. € 2,489
Liabilities
Total noncurrent liabilities……..….…….…..….….…... 3,411
Total current liabilities……………………..….….….….… 794
Exercise 3-7 (20 minutes)
WILSON TRUCKING COMPANY
Income Statement
For Year Ended December 31, 2015
Trucking fees earned……………….….….…..….….…….. $130,000
Expenses
Depreciation expense—Trucks…………..….….….. $23,500
Salaries expense………………….……….….….….…... 61,000
WILSON TRUCKING COMPANY
Statement of Retained Earnings
For Year Ended December 31, 2015
Retained earnings, December 31, 2014………………. $155,000
Add: Net income……………..………………..………..…… 25,500
Exercise 3-8 (10 minutes)
Dec. 31 Net Sales………………………………….……….…...1,014,345
Income Summary……………………………. 1,014,345
To close the revenue account.
31 Income Summary……………..…………….….….. 936,724
To close the expense accounts.
Exercise 3-9 (20 minutes)
WILSON TRUCKING COMPANY
Balance Sheet
December 31, 2015
Assets
Current assets
Cash………….…………………….…………….…….… $ 8,000
Accounts receivable………….….….….….….…. 17,500
Office supplies………….……………………………. 3,000
Total current assets…..….….….….….….….….. 28,500
Plant assets
Liabilities
Current liabilities
Accounts payable…………….…………………….. $ 12,000
Interest payable…………..……………..…..….….. 4,000
Total current liabilities………….….….…..….…. 16,000
Long-term notes payable…………….……………. 53,000
Total liabilities….…………………….………………... 69,000
Equity
forwarded, distributed, or posted on a website, in whole or part.
Exercise 3-10 (10 minutes)
a. $ 4,361 / $ 44,500 = 9.8%
b. $ 97,706 / $ 398,800 = 24.5%
Exercise 3-11 (15 minutes)
Current
Assets
Current
Liabilities
Current
Ratio
Case 1 $ 79,040 / $ 32,000 = 2.47
Case 2 104,880 / 76,000 = 1.38
Exercise 3-12A (30 minutes)
a.
Dec. 1 Supplies Expense…………………………….…….….…... 2,000
Cash………………………………….…………….…….… 2,000
Purchased supplies.
b.
Dec. 2 Insurance Expense…………………………….….….……. 1,540
Cash………………………………….…………….…….… 1,540
Paid insurance premiums.
c.
Dec. 15 Cash………………………………….………….….….….….…. 13,000
Remodeling Fees Earned….….….….…….….…. 13,000
Received fees for work to be done.
d.
Dec. 28 Cash………………………………….………….….….….….…. 3,700
Remodeling Fees Earned….….….….…….….…. 3,700
Received fees for work to be done.
e.
Exercise 3-13A (25 minutes)
a. Initial credit recorded in the Unearned Fees account
July 1 Cash………………………………….……………..………..… 3,000
Unearned Fees…………………..…….….…..….… 3,000
Received fees for work to be done for Solana.
6 Cash………………………………….……………..………..… 7,500
Unearned Fees…………………..…….….…..….… 7,500
Received fees for work to be done for Haru.
b. Initial credit recorded in the Fees Earned account
July 1 Cash………………………………….……………..………..… 3,000
Fees Earned………………….……………………….. 3,000
Received fees for work to be done for Solana.
6 Cash………………………………….……………..………..… 7,500
Fees Earned………………….……………………….. 7,500
Received fees for work to be done for Haru.
12 No entry required.
Exercise 3-13A –concluded
c. Under the first method (and using entries from a)
Unearned Fees = $3,000 + $7,500 – $3,000 + $8,500 – $7,500 = $8,500
Fees Earned = $3,000 + $7,500 = $10,500
Exercise 3-14B (25 minutes)
WESTCOTT COMPANY
December 31, 2015
Unadjusted
Trial Balance
Dr. Cr.
Adjustments
Dr. Cr.
Adjusted
Trial Balance
Dr. Cr.
Cash……………………………………….…... 21 21
Accounts receivable……………….….… 12 12
Supplies…………….………………………… 24 (d) 9 15
Prepaid insurance….….….…….…....... 18 (e) 15 3
Equipment…………………..….…….….…. 39 39
Salaries expense…………………………. 18 (b) 6 24
Insurance expense………………………. (e) 15 15
Supplies expense.……………………….. (d) 9 9
Utilities expense………….….….….….… 12 ___ __ __ 12 ___
Totals…..……………..….….….….….…..…150 150 45 45 159 159