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Problem 3-4A (Continued)
Part 2
JKL COMPANY
Income Statement
For Year Ended July 31, 2015
Revenues
Consulting fees earned ................................ $134,240
Expenses
Depreciation expense—Office equipment. . $ 6,000
Salaries expense .......................................... 74,000
Interest expense ........................................... 2,200
JKL COMPANY
Statement of Retained Earnings
For Year Ended July 31, 2015
Retained earnings, July 31, 2014................... $25,000
Plus: Net income............................................. 4,960
Problem 3-4A (Concluded)
Part 2
JKL COMPANY
Balance Sheet
July 31, 2015
Assets
Cash............................................................................. $ 34,000
Accounts receivable................................................... 22,000
Office supplies............................................................ 2,000
Liabilities
Accounts payable....................................................... $ 10,000
Interest payable........................................................... 1,000
Salaries payable.......................................................... 7,000
Equity
Common stock............................................................ 15,000
Retained earnings....................................................... 24,960
Total liabilities and equity.......................................... $124,960
Problem 3-5A (50 minutes)
Part 1
CHIARA COMPANY
Income Statement
For Year Ended December 31, 2015
Revenues
Fees earned.............................................. $484,000
Interest earned.......................................... 24,000
Total revenues.......................................... $508,000
Expenses
Advertising expense................................ 58,000
Repairs expense—Automobiles............. 24,800
Total expenses.......................................... 420,800
Net income.................................................. $ 87,200
CHIARA COMPANY
Statement of Retained Earnings
For Year Ended December 31, 2015
Retained earnings, December 31, 2014............ $235,800
Plus: Net income................................................ 87,200
323,000
Problem 3-5A (Concluded)
CHIARA COMPANY
Balance Sheet
December 31, 2015
Assets
Cash......................................................................... $ 30,000
Accounts receivable.............................................. 52,000
Interest receivable.................................................. 18,000
Notes receivable (due in 90 days)......................... 168,000
Office supplies........................................................ 16,000
Liabilities
Accounts payable................................................... $ 96,000
Interest payable...................................................... 20,000
Salaries payable..................................................... 19,000
Equity
Common stock....................................................... 20,000
Retained earnings.................................................. 277,000
Total liabilities and equity...................................... $600,000
Part 2
Problem 3-6A (90 minutes)
INSTRUCTOR: Ledger accounts are shown after Part 7 as they would appear after all entries are posted.
Part 2 — Transactions for April
April 1 Cash...............................................................101 30,000
Computer Equipment...................................167 20,000
Common Stock......................................307 50,000
Owner invested in the business for stock.
14 Salaries Expense...........................................622 1,600
Cash........................................................101 1,600
Paid two weeks’ salaries.
24 Cash...............................................................101 8,000
Commissions Earned............................405 8,000
Collected commissions from airlines.
28 Salaries Expense..........................................622 1,600
Cash........................................................101 1,600
Paid two weeks’ salaries.
Paid the telephone bill.
30 Dividends.......................................................319 1,500
Cash........................................................101 1,500
Paid cash for dividends.
Problem 3-6A (Continued)
Part 3
ADVENTURE TRAVEL
Unadjusted Trial Balance
April 30, 2015
No. Account Title Debit Credit
101 Cash.......................................................... $27,000
106 Accounts receivable................................ 0
124 Office supplies......................................... 1,000
128 Prepaid insurance.................................... 2,400
405 Commissions earned.............................. 8,000
612 Depreciation expense—
Computer equipment............................. 0
622 Salaries expense...................................... 3,200
637 Insurance expense.................................. 0
640 Rent expense............................................ 1,800
Problem 3-6A (Continued)
Part 4
Adjusting entries
(a) Apr 30 Insurance Expense............................................... 637 133
Prepaid Insurance.......................................... 128 133
To record expired insurance ($2,400/12 x2/3).
(b) 30 Office Supplies Expense....................................... 650 400
Office Supplies............................................... 124 400
To record cost of supplies used ($1,000 - $600).
(e) 30 Accounts Receivable............................................ 106 1,750
Commissions Earned.................................... 405 1,750
To record accrued commissions.
Problem 3-6A (Continued)
Part 4
ADVENTURE TRAVEL
Adjusted Trial Balance
April 30, 2015
No. Account Title Debit Credit
101 Cash.......................................................... $27,000
106 Accounts receivable................................ 1,750
124 Office supplies......................................... 600
128 Prepaid insurance.................................... 2,267
167 Computer equipment............................... 20,000
168 Accumulated depreciation—..................
640 Rent expense............................................ 1,800
650 Office supplies expense.......................... 400
684 Repairs expense...................................... 350
688 Telephone expense.................................. 750
Totals......................................................... $60,670 $60,670
Problem 3-6A (Continued)
Part 5
ADVENTURE TRAVEL
Income Statement
For Month Ended April 30, 2015
Commissions earned.................................................. $9,750
Expenses
Depreciation expense—Computer equipment........ $ 500
Salaries expense........................................................ 3,620
Insurance expense.................................................... 133
ADVENTURE TRAVEL
Statement of Retained Earnings
For Month Ended April 30, 2015
Retained earnings, April 1, 2015.................... $ 0
Add: Net Income............................................. 2,197
2,197
Problem 3-6A (Continued)
Part 5—continued
ADVENTURE TRAVEL
Balance Sheet
April 30, 2015
Assets
Cash.................................................................................. $27,000
Accounts receivable........................................................ 1,750
Office supplies................................................................. 600
Liabilities
Salaries payable.............................................................. $ 420
Equity
Common stock................................................................. 50,000
