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