Exercise 3-15C (30 minutes)
1. Adjusting entries
Oct. 31 Rent Expense……………..……….….….….……... 2,800
Rent Payable………………..………..….……. 2,800
To record accrued rent expense.
31 Rent Receivable………………….….….….…….… 850
Rent Earned…………………..…….….……... 850
To record accrued rent income.
3. Reversing entries and subsequent entries
Nov. 1 Rent Payable…………………….……..…….….….. 2,800
Rent Expense……………..…………………... 2,800
To reverse accrual of rent expense.
1 Rent Earned……………..……………………………. 850
Rent Receivable…………………………….… 850
To reverse accrual of rent income.
PROBLEM SET A
Problem 3-1A (10 minutes)
Problem 3-2A (35 minutes)
Part 1
Adjustment (a)
Dec. 31 Office Supplies Expense….…….….……..……... 14,846
($4,000 + $13,400 – $2,554).
Adjustment (b)
31 Insurance Expense…………………………………... 7,120
Prepaid Insurance…………………..…….…… 7,120
To record annual insurance coverage cost.
Policy Cost per Month
Months Active
in 2015 2015 Cost
A $600 ($14,400/24 mo.) 3 $ 1,800
B 360 ($12,960/36 mo.) 12 4,320
Adjustment (c)
31 Salaries Expense……………….……………….……. 3,920
Salaries Payable……………………………….. 3,920
To record accrued but unpaid wages (2
days x $1,960).
Problem 3-2A −concluded
Adjustment (e)
31 Rent Receivable………………….….…….….….… 3,000
Rent Earned…………………..…….….……... 3,000
To record earned but unpaid Dec. rent.
Adjustment (f)
Part 2
Cash Payment for (c)
Jan. 6 Salaries Payable………..…….….……..…….…... 3,920
Salaries Expense*………………….…..….…..….. 5,880
Cash……………………………………………….. 9,800
To record payment of accrued and current
salaries. *(3 days x $1,960)
Cash Payment for (e)
Problem 3-3A (90 minutes)
Parts 1 and 2
Cash Equipment
Unadj. Bal. 34,000 Unadj. Bal. 80,000
Accounts Receivable
Accumulated Depreciation—
Equipment
Teaching Supplies Accounts Payable
Unadj. Bal. 0
Prepaid Insurance (g) 400
Unadj. Bal. 12,000 Adj. Bal. 400
(a) 2,400
Adj. Bal. 9,600 Unearned Training Fees
Unadj. Bal. 12,500
Prepaid Rent (e) 5,000
Unadj. Bal. 3,000 Adj. Bal. 7,500
(h) 3,000
Adj. Bal. 0 Common Stock
Bal. 10,000
Professional Library
Problem 3-3A (Continued)
Training Fees Earned Teaching Supplies Expense
Unadj. Bal. 40,000 Unadj.
Bal. 0
(e) 5,000 (b) 5,200
Adj. Bal. 45,000 Adj. Bal. 5,200
Depreciation Expense—
Professional Library Advertising Expense
Depreciation Expense—
Equipment Utilities Expense
Salaries Expense
Unadj. Bal. 50,000
(g) 400
Adj. Bal. 50,400
Insurance Expense
Problem 3-3A (Continued)
Part 2
Adjustment (a)
Adjustment (b)
31 Teaching Supplies Expense……………………….….……..5,200
Teaching Supplies…………….…………………….……... 5,200
To record supplies used ($8,000 – $2,800).
Adjustment (c)
Adjustment (d)
31 Depreciation Expense—Profess. Library……………....7,200
Accumul. Depreciation—Profess. Library................ 7,200
To record professional library depreciation.
Adjustment (e)
31 Unearned Training Fees………………..………………………5,000
Adjustment (f)
31 Accounts Receivable……………………...….….….…….…..7,500
Tuition Fees Earned……………..…….…….…..…….…. 7,500
To record tuition earned
($3,000 x 2 1/2 months).
Adjustment (g)
Adjustment (h)
31 Rent Expense…………………….…………………………………3,000
Prepaid Rent…………….……………….…..…….….…….. 3,000
To record expiration of prepaid rent.
Problem 3-3A (Continued)
Part 3
WELLS TECHNICAL INSTITUTE
Adjusted Trial Balance
December 31, 2015
Debit Credit
Cash………………………………………………..…….….……. $ 34,000
Accounts receivable……………….……………..….….…. 7,500
Teaching supplies ……………….……………………..…… 2,800
Prepaid insurance…………………..……………………..… 9,600
Prepaid rent……………….………………………….….….…. 0
Professional library…………….…..….….….….….…….. 35,000
Accumulated depreciation—Professional library.... $ 17,200
Salaries expense …………………………………………..… 50,400
Insurance expense………………..….….……..…….….… 2,400
Rent expense…………………………………………………... 36,000
Teaching supplies expense………..….….……..….….. 5,200
Advertising expense………………………………………... 6,000
Utilities expense…………………………………………….… 6,400 _______
Totals
……………………………………………………………….
$345,700
$345,700
Problem 3-3A (Continued)
Part 4
WELLS TECHNICAL INSTITUTE
Income Statement
For Year Ended December 31, 2015
Revenues
Tuition fees earned………………..………………….… $131,400
Training fees earned……………….…….….….….…. 45,000
Total revenues…………..………..….……..….…….…. $176,400
Expenses
Depreciation expense—Professional library... 7,200
Depreciation expense—Equipment……..….…… 13,200
Salaries expense………………..…….……..….……... 50,400
Insurance expense…………….………….…..….……. 2,400
WELLS TECHNICAL INSTITUTE
Statement of Retained Earnings
For Year Ended December 31, 2015
Retained earnings, December 31, 2014………………..…….… $ 80,000
Plus: Net income……………………………….….….…….…….….… 49,600
129,600
Problem 3-3A (Concluded)
WELLS TECHNICAL INSTITUTE
Balance Sheet
December 31, 2015
Assets
Cash…………………………………………..……………………….… $ 34,000
Accounts receivable……………….…….……..…….….……... 7,500
Teaching supplies………………..………..…..…….….…….…. 2,800
Prepaid insurance…………………..…………….…….….…….. 9,600
Professional library…………….……………………………..….. $35,000
Liabilities
Accounts payable……………….…………………………………. $ 26,000
Salaries payable…………..……………………..…….…….….… 400
Unearned training fees……………....….……..…….….…….. 7,500
Total liabilities………….……………………………..………..…... 33,900
Equity
Problem 3-4A (45 minutes) — Part 1
Account
Unadjusted
Trial Balance Adjustments
Adjusted
Trial Balance
Cash….……………………. $ 34,000 $ 34,000
Accounts receivable...... 14,000 (a) 8,000 22,000
Office supplies.............. 16,000 (b) 14,000 2,000
Prepaid insurance......... 8,540 (c) 5,580 2,960
Office equipment……..... 84,000 84,000
Accumulated depreciation
—Office equipment...... $ 14,000 (d) 6,000 $ 20,000
Accounts payable…....... 9,100 (e) 900 10,000
Interest payable............. (f) 1,000 1,000
Salaries payable…………. (g) 7,000 7,000
Insurance expense........ (c) 5,580 5,580
Rent expense………....... 14,500 14,500
Office supplies expense (b) 14,000 14,000
Advertising expense.….. 12,100
_______ (e) 900
______ 13,000
_______
Totals….…………………… $256,340
$256,340
$45,480
$45,480
$279,240
$279,240
Adjustment description
(a) Earned but uncollected revenues.
(b) Cost of office supplies used.
(c) Cost of expired insurance coverage.