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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
$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
