Exercise 3-8 (25 minutes)
Dec. 31 Accounts Receivable…………………………………….. 2,100
Fees Earned……………………………………………. 2,100
To record earned but unbilled fees (30% x $7,000).
31 Unearned Fees………………………………………………. 4,900
Fees Earned……………………………………………. 4,900
To record earned fees collected in advance
(70% x $7,000).
Exercise 3-9 (20 minutes)
adidas AG
Balance Sheet
December 31, 2013
(Euros in millions)
Assets
Noncurrent assets
Intangible assets…………………………………………… € 148
Tangible and other assets……………………………… 304
Equity
Total equity…………………………………………………….. € 2,489
Liabilities
Exercise 3-10 (10 minutes)
a. $ 4,361 / $ 44,500 = 9.8%
b. $ 97,706 / $ 398,800 = 24.5%
Analysis and Interpretation: Company c has the highest profitability
according to the profit margin ratio. Company c earns 43.3 cents in net
income for every one dollar of net sales earned.
Exercise 3-11A (30 minutes)
a.
Dec. 1 Supplies Expense………………………………………….. 2,000
Cash………………………………………………………. 2,000
Purchased supplies.
b.
g.
Dec. 31 Remodeling Fees Earned ………………………………. 11,130
Exercise 3-12A (25 minutes)
a. Initial credit recorded in the Unearned Fees account
July 1 Cash…………………………………………………………… 3,000
Unearned Fees……………………………………… 3,000
Received fees for work to be done for Solana.
6 Cash…………………………………………………………… 7,500
Unearned Fees……………………………………… 7,500
Received fees for work to be done for Haru.
b. Initial credit recorded in the Fees Earned account
July 1 Cash…………………………………………………………… 3,000
Fees Earned…………………………………………. 3,000
Received fees for work to be done for Solana.
Exercise 3-12A –concluded
c. Under the first method (and using entries from a)
Under the second method (and using entries from b)
[Note: Both procedures yield identical results in the financial statements.]
PROBLEM SET A
Problem 3-1A (10 minutes)
1. E 5. C 9. D
Problem 3-2A (35 minutes)
Part 1
Adjustment (a)
Dec. 31 Office Supplies Expense…………………………. 14,846
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
Adjustment (c)
31 Salaries Expense…………………………………….. 3,920
Problem 3-2A −concluded
Adjustment (d)
Dec. 31 Depreciation Expense—Building……………… 30,500
Adjustment (e)
31 Rent Receivable……………………………………. 3,000
Adjustment (f)
31 Unearned Rent……………………………………… 5,600
Part 2
Cash Payment for (c)
Jan. 6 Salaries Payable…………………………………… 3,920
Cash Payment for (e)
15 Cash……………………………………………………. 6,000
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. 12,500
Prepaid Rent (e) 5,000
Unadj. Bal. 3,000 Adj. Bal. 7,500
(h) 3,000
Adj. Bal. 0 T. Wells, Capital
Bal. 90,000
Professional Library
Bal. 50,000
Accumulated Depreciation—
Professional Library
Problem 3-3A (Continued)
Tuition Fees Earned Rent Expense
Training Fees Earned Teaching Supplies Expense
Unadj. Bal. 40,000 Unadj.
Bal. 0
Depreciation Expense—
Professional Library Advertising Expense
Unadj. Bal. 0Bal. 6,000
Depreciation Expense—
Equipment Utilities Expense
Unadj. Bal. 0Bal. 6,400
(c) 13,200
Adj. Bal. 13,200
Salaries Expense
Insurance Expense
Problem 3-3A (Continued)
Part 2
Adjustment (a)
Dec. 31 Insurance Expense……………………………………………..2,400
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)
Adjustment (f)
31 Accounts Receivable…………………………………………..7,500
Tuition Fees Earned………………………………………. 7,500
Adjustment (g)
31 Salaries Expense………………………………………………..400
Adjustment (h)
31 Rent Expense……………………………………………………..3,000