Problem 3-6A (Continued)
Part 6
Closing entries
April 30 Commissions Earned……………….………….…405 9,750
Income Summary…………………………….901 9,750
To close the revenue account.
30 Income Summary………………………….….…….901 7,553
Depreciation Exp–Computer Equip.....612 500
Salaries Expense……………………..……...622 3,620
Insurance Expense…………………………..637 133
30 Retained Earnings………………….………….…..318 1,500
Dividends…………………….….…………..….319 1,500
To close the dividends account.
Part 7
ADVENTURE TRAVEL
Post-Closing Trial Balance
April 30, 2015
Debit Credit
Cash……………………………….…………..……. $27,000
Accounts receivable…………………..….….. 1,750
Office supplies………………..………….….…. 600
Prepaid insurance…………………..…….…… 2,267
Computer equipment……………………….… 20,000
Accumulated depreciation–
Totals………..…………………………….……..…. $51,617 $51,617
Problem 3-6A (Continued)
Part 7—continued
Ledger as of April 30
Cash Acct. No. 101
Date Explanation PR Debit Credit Balance
April 1 30,000 30,000
2 1,800 28,200
3 1,000 27,200
10 2,400 24,800
14 1,600 23,200
Accounts Receivable Acct. No. 106
Date Explanation PR Debit Credit Balance
April 30 Adjusting 1,750 1,750
Office Supplies Acct. No. 124
Date Explanation PR Debit Credit Balance
April 3 1,000 1,000
30 Adjusting 400 600
Prepaid Insurance Acct. No. 128
Date Explanation PR Debit Credit Balance
Computer Equipment Acct. No. 167
Date Explanation PR Debit Credit Balance
April 1 20,000 20,000
Accumulated Depreciation–Computer Equipment Acct. No. 168
Date Explanation PR Debit Credit Balance
April 30 Adjusting 500 500
Salaries Payable Acct. No. 209
Date Explanation PR Debit Credit Balance
April 30 Adjusting 420 420
forwarded, distributed, or posted on a website, in whole or part.
Financial and Managerial Accounting, 6th Edition
180
Problem 3-6A (Continued)
Common Stock Acct. No. 307
Retained Earnings Acct. No. 318
Date Explanation PR Debit Credit Balance
April 30 Closing 2,197 2,197
30 Closing 1,500 697
Dividends Acct. No. 319
Date Explanation PR Debit Credit Balance
April 30 1,500 1,500
30 Closing 1,500 0
Commissions Earned Acct. No. 405
Date Explanation PR Debit Credit Balance
Depreciation Expense–Computer Equipment Acct. No. 612
Date Explanation PR Debit Credit Balance
Salaries Expense Acct. No. 622
Date Explanation PR Debit Credit Balance
April 14 1,600 1,600
28 1,600 3,200
Insurance Expense Acct. No. 637
Date Explanation PR Debit Credit Balance
Rent Expense Acct. No. 640
Date Explanation PR Debit Credit Balance
April 2 1,800 1,800
30 Closing 1,800 0
Problem 3-6A (Concluded)
Office Supplies Expense Acct. No. 650
Date Explanation PR Debit Credit Balance
Repairs Expense Acct. No. 684
Date Explanation PR Debit Credit Balance
April 29 350 350
30 Closing 350 0
Telephone Expense Acct. No. 688
Date Explanation PR Debit Credit Balance
Income Summary Acct. No. 901
Date Explanation PR Debit Credit Balance
Problem 3-7A (15 minutes)
1. B 6. C 11. E 16. C
Problem 3-8A (75 minutes)
Part 1
TYBALT CONSTRUCTION
Income Statement
For Year Ended December 31, 2015
Revenues
Professional fees earned………………………..…… $97,000
Rent earned……………….……………………………….. 14,000
Dividends earned……………………………..………… 2,000
Interest earned………………………………………...…. 2,100
Total revenues………..……………………..…………... $115,100
Expenses
Supplies expense………………..……….…..………… 7,400
Postage expense………………..………..…..………… 4,200
Property taxes expense………………….…….…….. 5,000
Repairs expense…………………………………………. 8,900
Telephone expense……………………….…….……… 3,200
Utilities expense……………………………..………….. 4,600
Total expenses…………..……………………………….. 110,800
Net income……………..……………………….….……….. $ 4,300
TYBALT CONSTRUCTION
Statement of Retained Earnings
For Year Ended December 31, 2015
Retained earnings, December 31, 2014………….. $121,400
Add: Net income……………..……………………..…… 4,300
Problem 3-8A (Continued)
TYBALT CONSTRUCTION
Balance Sheet
December 31, 2015
Assets
Current assets
Cash………….…………………………..………………..…. $ 5,000
Short-term investments……….………..….….…….. 23,000
Supplies…………..…………….……….….…….……….. 8,100
Prepaid insurance…………………………….…….….. 7,000
Total current assets…………..…….……….…….….. $ 43,100
Plant assets
Total assets…………………………………………..……... $218,100
Liabilities
Current liabilities
Accounts payable…………….…………………………. $ 16,500
Interest payable…………..………………….………….. 2,500
Rent payable………………..……………….….………… 3,500
Wages payable…………..……………………………..... 2,500
Property taxes payable……………..…..…….……… 900
Unearned professional fees………………….….…. 7,500
Current portion of long-term note payable…… 7,000
Problem 3-8A (Continued)
Part 2
Closing entries (all dated December 31, 2015)
Instructor note: Entries are shown without an account reference column because no posting is required.
(1) Professional Fees Earned…………………….… 97,000
Rent Earned……………..………………………….… 14,000
Dividends Earned….………………………………. 2,000
Interest Earned………………..………………….…. 2,100
Income Summary……………………………. 115,100
To close the revenue accounts.
(2) Income Summary……………..………….…….….. 110,800
Postage Expense…………………………….. 4,200
Property Taxes Expense……………..…… 5,000
Repairs Expense…………………………….. 8,900
Telephone Expense…………………..….…. 3,200
Utilities Expense………………..……………. 4,600
To close the expense accounts.
(3) Income Summary……………..………….…….….. 4,300
Retained Earnings………………....….……. 4,300
To close the income summary account.
Part 3
a. Return on assets = $4,300/[($200,000 + $218,100)/2] = 2.1% (or 0.021)
b. Debt ratio = $100,400/$218,100 = 0.46
PROBLEM SET B
Problem 3-1B (15 minutes)
1. H 5. B 9. I
4. D 8. F 12. E
Problem 3-2B (30 minutes)
Part 1
Adjustment (a)
Oct. 31 Office Supplies Expense……………………….….…….. 4,370
Office Supplies………………….….…………..…….. 4,370
To record cost of supplies used
($600 + $4,570 – $800).
Policy Cost per Month
Months Active
in Fiscal Year
2015
Fiscal Year
2015
Expense
A $250 ($6,000/24 mo.) 12 $3,000
B 200 ($7,200/36 mo.) 7 1,400
Adjustment (c)
31 Salaries Expense…………………….……….….…………. 1,000
Salaries Payable………………………..…….….…… 1,000
To record accrued but unpaid wages
(1 day x $1,000).
Problem 3-2B (Concluded)
Adjustment (e)
31 Rent Receivable…………………………….….………….… 1,000
Rent Earned……………..………..….………..………. 1,000
To record earned but unpaid Oct. rent.
Part 2
Cash Payment for (c)
Nov. 7 Salaries Payable………………..……….…….………….… 1,000
Salaries Expense*………………….……………………….. 4,000
Cash………………………………………..………………. 5,000
To record payment of accrued and
current salaries. *(4 days x $1,000)
To record past due rent for two months.