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Problem 3-4B (45 minutes) — Part 1
Account
Unadjusted
Trial Balance Adjustments
Adjusted
Trial Balance
Cash..................................$ 45,000 $ 45,000
Accounts receivable........... 60,000 (a) 6,660 66,660
Office supplies................... 40,000 (b) 23,000 17,000
Prepaid insurance.............. 8,200 (c) 4,600 3,600
Adjustment Descriptions
(a) Earned but uncollected revenues.
(b) Cost of office supplies used.
Problem 3-4B (continued)
Part 2
YAN CONSULTING COMPANY
Income Statement
For Year Ended December 31, 2015
Revenues
Consulting fees earned .................................... $253,460
Expenses
Depreciation expense—Office equipment....... $ 10,000
YAN CONSULTING COMPANY
Statement of Owner’s Equity
For Year Ended December 31, 2015
Z. Yan, Capital, December 31, 2014.................... $ 80,200
Problem 3-4B (Concluded)
Part 2
YAN CONSULTING COMPANY
Balance Sheet
December 31, 2015
Assets
Cash.............................................................................. $ 45,000
Accounts receivable.................................................... 66,660
Office supplies............................................................. 17,000
Liabilities
Accounts payable........................................................ $ 32,000
Interest payable........................................................... 2,150
Equity
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
SPEEDY COURIER
Statement of Owner's Equity
For Year Ended December 31, 2015
L. Horace, Capital, December 31, 2014......... $125,000
Problem 3-5B (Concluded)
SPEEDY COURIER
Balance Sheet
December 31, 2015
Assets
Cash..................................................................... $ 58,000
Accounts receivable........................................... 120,000
Interest receivable.............................................. 7,000
Liabilities
Accounts payable............................................... $134,000
Interest payable................................................... 20,000
Equity
Part 2
Problem 3-6BA (40 minutes)
Part 1
Method that records prepaid expenses and unearned revenues in balance sheet accounts
Apr. 1 Prepaid Consulting Fees.................................... 2,450
Cash............................................................. 2,450
Paid for future consulting services.
May 1 Prepaid Advertising............................................ 4,450
Cash............................................................. 4,450
Paid for future advertising.
23 Cash ................................................................... 10,450
Unearned Service Fees.............................. 10,450
Received fees in advance.
Problem 3-6BA (Continued)
Part 2
Method that records prepaid expenses and unearned revenues in income statement accounts
Apr. 1 Consulting Fees Expense................................. 2,450
Cash............................................................ 2,450
Paid for future consulting services.
May 1 Advertising Expense......................................... 4,450
Cash............................................................ 4,450
Paid for future advertising.
23 Cash.................................................................... 10,450
Service Fees Earned.................................. 10,450
Received fees in advance.
Problem 3-6BA (Concluded)
Part 3
There are no differences between the two methods in terms of the amounts
that appear on the financial statements. In both cases, the financial
statements reflect the following:
Prepaid consulting fees as of May 31........................................ $ 450
Consulting fees expense for two months.................................. 2,000
When prepaid expenses and unearned revenues are recorded in balance
sheet accounts, the related adjusting entries are designed to generate the
SERIAL PROBLEM – SP 3
Serial Problem, Business Solutions (180 minutes) — Part 1
<Note: The general ledger is displayed at the end of Part 6>
Journal entries
Dec. 2 Advertising Expense.................................655 1,025
Cash....................................................101 1,025
Paid share of mall advertising costs.
3 Repairs Expense–Computer.....................684 500
Cash....................................................101 500
Repaired the computer.
Serial Problem, SP 3 (Continued)
Part 2
Adjusting entries
Dec. 31 Computer Supplies Expense ........................652 3,065
Computer Supplies ................................126 3,065
Adjustment for supplies used (supplies
balance less cost of supplies available).
31 Insurance Expense .......................................637 555
Prepaid Insurance ..................................128 555
Adjustment for expired insurance (1/4
of $2,220 original prepaid amount).
