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Problem 3-5B (50 minutes)
Part 1
SPEEDY COURIER
Income Statement
For Year Ended December 31, 2015
Revenues
Delivery fees earned..................................... $611,800
Interest earned............................................... 34,000
Total revenues............................................... $645,800
Expenses
Depreciation expense—Trucks.................... 29,000
Depreciation expense—Equipment............. 48,000
Salaries expense........................................... 74,000
Wages expense.............................................. 300,000
SPEEDY COURIER
Statement of Retained Earnings
For Year Ended December 31, 2015
Retained earnings, December 31, 2014......... $110,000
Plus : Net income........................................... 86,000
196,000
Problem 3-5B (Concluded)
SPEEDY COURIER
Balance Sheet
December 31, 2015
Assets
Cash....................................................................... $ 58,000
Accounts receivable............................................ 120,000
Interest receivable................................................ 7,000
Notes receivable (due in 90 days)......................... 210,000
Office supplies...................................................... 22,000
Trucks.................................................................... $ 134,000
Liabilities
Accounts payable................................................. $134,000
Interest payable.................................................... 20,000
Salaries payable................................................... 28,000
Equity
Common stock..................................................... 15,000
Retained earnings................................................ 146,000
Total liabilities and equity.................................... $663,000
Part 2
Problem 3-6B (90 minutes)
INSTRUCTOR NOTE: Ledger accounts are shown after Part 7 as they would appear after
all entries are posted.
Part 2
Transactions for July
July 1 Cash...............................................................101 30,000
Buildings........................................................173 150,000
Common Stock......................................307 180,000
Owner invested in the business for stock.
Paid 12 months’ premium in advance.
14 Salaries Expense..........................................622 1,000
Cash........................................................101 1,000
Paid two weeks’ salary.
24 Cash...............................................................101 9,800
Storage Fees Earned.............................401 9,800
Collected fees from customers.
Paid the telephone bill.
31 Dividends.......................................................319 2,000
Cash........................................................101 2,000
Paid cash for dividends.
Problem 3-6B (Continued)
Part 3
SAFE STORAGE CO.
Unadjusted Trial Balance
July 31, 2015
No. Account Title Debit Credit
101 Cash..................................................................... $ 22,850
106 Accounts receivable........................................... 0
124 Office supplies.................................................... 2,400
128 Prepaid insurance............................................... 7,200
173 Buildings.............................................................. 150,000
606 Depreciation expense–Buildings...................... 0
622 Salaries expense................................................. 2,000
637 Insurance expense.............................................. 0
640 Rent expense....................................................... 2,000
650 Office supplies expense..................................... 0
Problem 3-6B (Continued)
Part 4
Adjusting entries
July 31 Insurance Expense...........................................637 400
Prepaid Insurance....................................128 400
To record expired insurance
(2/3 x $7,200/12 per month).
31 Office Supplies Expense..................................650 875
Office Supplies.........................................124 875
To record the cost of consumed
supplies ($2,400 - $1,525).
31 Accounts Receivable........................................106 1,150
Storage Fees Earned...............................401 1,150
To record accrued storage fees.
Problem 3-6B (Continued)
Part 4
SAFE STORAGE CO.
Adjusted Trial Balance
July 31, 2015
No. Account Title Debit Credit
101 Cash..................................................................... $ 22,850
106 Accounts receivable........................................... 1,150
124 Office supplies.................................................... 1,525
128 Prepaid insurance............................................... 6,800
622 Salaries expense................................................. 2,100
637 Insurance expense.............................................. 400
640 Rent expense....................................................... 2,000
650 Office supplies expense..................................... 875
684 Repairs expense.................................................. 950
Problem 3-6B (Continued)
Part 5
SAFE STORAGE CO.
Income Statement
For Month Ended July 31, 2015
Storage fees earned................................... $10,950
Expenses
Depreciation expense–Buildings............ $1,500
Salaries expense...................................... 2,100
Insurance expense................................... 400
Rent expense............................................ 2,000
SAFE STORAGE CO.
Statement of Retained Earnings
For Month Ended July 31, 2015
Retained earnings, July 1, 2015................ $ 0
Add: Net income....................................... 2,725
2,725
Problem 3-6B (Continued)
Part 5
SAFE STORAGE CO.
Balance Sheet
July 31, 2015
Assets
Cash............................................................. $ 22,850
Accounts receivable.................................. 1,150
Office supplies............................................ 1,525
Liabilities
Salaries payable......................................... $ 100
Equity
Common stock........................................... 180,000
Problem 3-6B (Continued)
Part 6
Closing entries
July 31 Storage Fees Earned.................................401 10,950
Income Summary..................................901 10,950
To close the revenue account.
31 Income Summary.......................................901 2,725
Retained Earnings.................................318 2,725
To close the Income Summary.
31 Retained Earnings......................................318 2,000
Dividends...............................................319 2,000
To close the dividends account.
Part 7
SAFE STORAGE CO.
Post-Closing Trial Balance
July 31, 2015
Debit Credit
Cash............................................................. $ 22,850
Accounts receivable.................................. 1,150
Office supplies............................................ 1,525
Prepaid insurance...................................... 6,800
Problem 3-6B (Continued)
Ledger as of July 31
Cash Acct. No. 101
Date Explanation PR Debit Credit Balance
July 1 30,000 30,000
2 2,000 28,000
5 2,400 25,600
10 7,200 18,400
Accounts Receivable Acct. No. 106
Date Explanation PR Debit Credit Balance
July 31 Adjusting 1,150 1,150
Office Supplies Acct. No. 124
Prepaid Insurance Acct. No. 128
Date Explanation PR Debit Credit Balance
July 10 7,200 7,200
31 Adjusting 400 6,800
Buildings Acct. No. 173
Date Explanation PR Debit Credit Balance
July 1 150,000 150,000
Accumulated Depreciation—Buildings Acct. No. 174
Date Explanation PR Debit Credit Balance
July 31 Adjusting 1,500 1,500
Salaries Payable Acct. No. 209
Date Explanation PR Debit Credit Balance
