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.
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.
6 Cash…………………………………………………………… 7,500
Fees Earned…………………………………………. 7,500
Received fees for work to be done for Haru.
Exercise 3-12A –concluded
c. Under the first method (and using entries from a)
Under the second method (and using entries from b)
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
Office Supplies…………………………………. 14,846
Adjustment (b)
31 Insurance Expense…………………………………. 7,120
Policy Cost per Month
Months Active
in 2015 2015 Cost
A $600 ($14,400/24 mo.) 3 $ 1,800
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
Accounts Receivable
Accumulated Depreciation—
Equipment
Unadj. Bal. 0Unadj. Bal. 15,000
Teaching Supplies Accounts Payable
Unadj. Bal. 8,000 Bal. 26,000
Unadj. Bal. 0
Unadj. Bal. 12,500
Prepaid Rent (e) 5,000
Bal. 90,000
Professional Library
Bal. 35,000 T. Wells, Withdrawals
Bal. 50,000
Accumulated Depreciation—
Professional Library
Problem 3-3A (Continued)
Tuition Fees Earned Rent Expense
Unadj. Bal. 123,900 Unadj. Bal. 33,000
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
Salaries Expense
Unadj. Bal. 50,000
Insurance Expense
Unadj. Bal. 0
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
Adjustment (g)
31 Salaries Expense………………………………………………..400
Salaries Payable……………………………………………. 400
To record accrued salaries
(2 days x $100 x 2 employees).
Adjustment (h)
Problem 3-3A (Continued)
Part 3
WELLS TECHNICAL INSTITUTE
Adjusted Trial Balance
December 31, 2015
Debit Credit
Cash……………………………………………………………… $ 34,000
Accounts receivable……………………………………….. 7,500
Teaching supplies …………………………………………. 2,800
Prepaid insurance………………………………………….. 9,600
Insurance expense…………………………………………. 2,400
Rent expense…………………………………………………. 36,000
Teaching supplies expense…………………………….. 5,200
Advertising expense………………………………………. 6,000
Utilities expense…………………………………………….. 6,400 _______
Totals
……………………………………………………………..
$345,700
Problem 3-3A (Continued)
Part 4
WELLS TECHNICAL INSTITUTE
Income Statement
For Year Ended December 31, 2015
Revenues
Tuition fees earned……………………………………. $131,400
WELLS TECHNICAL INSTITUTE
Statement of Owner’s Equity
For Year Ended December 31, 2015
T. Wells, Capital, December 31, 2014…………………………… $ 90,000
Plus: Net income……………………………………………………….. 49,600
Problem 3-3A (Concluded)
WELLS TECHNICAL INSTITUTE
Balance Sheet
December 31, 2015
Assets
Cash…………………………………………………………………… $ 34,000
Accounts receivable…………………………………………….. 7,500
Teaching supplies………………………………………………… 2,800
Prepaid insurance………………………………………………… 9,600
Liabilities
Accounts payable………………………………………………… $ 26,000
Equity