50 Minutes, Strong
Dr. Cr. Dr. Cr. Dr. Cr. Dr. Cr. Dr. Cr.
Balance sheet accounts:
Cash
49
,
100
49
,
100
49
,
100
Consulting fees receivable
23
,
400
(7)
11
,
000
34
,
400
34
,
400
Prepaid office rent
6
,
300
(1)
2
,
100
4
,
200
4
,
200
Prepaid dues and subscriptions
300
(2)
50
250
250
Supplies
600
(3)
150
450
450
Equipment
36
,
000
36
,
000
36
,
000
Accumulated Depr.: Equipment
10
,
200
(4)
600
10
,
800
10
,
800
12
000
(9)
5
000
17
000
17
000
5
950
(6)
2
850
3
100
3
100
30
000
30
000
30
000
32
700
32
700
32
700
60
000
60
000
60
000
Salaries payable
(8)
1
,
700
1
,
700
1
,
700
Interest payable
(5)
100
100
100
Income statement accounts:
Consulting fees earned
257
,
180
(6)
2
,
850
271
,
030
271
,
030
(7)
11
,
000
Salaries expense
88
,
820
(8)
1
,
700
90
,
520
90
,
520
Telephone expense
2
,
550
2
,
550
2
,
550
Rent expense
22
,
000
(1)
2
,
100
24
,
100
24
,
100
Income taxes expense
51
,
000
(9)
5
,
000
56
,
000
56
,
000
Dues and subscriptions expense
560
(2)
50
610
610
1
600
(3)
150
1
750
1
750
Adjustments:
(1) Rent expense for December. (6) Consulting services performed for clients who paid in advance.
(2) Dues and subscriptions expense for December. (7) Services rendered but not billed.
(3) Supplies used in December (
$
600-
$
450). (8) Salaries earned but not paid.
(4) Depreciation expense (
$
36,000 ÷ 60 mos.). (9) Estimated income taxes expense.
(5) Accrued interest on notes payable.
PROBLEM 5.7A
INTERNET CONSULTING SERVICE, INC.
Income Statement Balance Shee
t
INTERNET CONSULTING
Trial Balance
A
djustments
*
A
djusted Trial Balanc
e
Worksheet
For the Month Ended December 31, 2015
SERVICE, INC.
5
000
5
000
5
000
15 Minutes, Medium
2.3%
$189.2 million
Working capital: Current Assets – Current Liabilities
Beginning of year: $404.7 million – $215.5 mllion
b.
PROBLEM 5.8
A
HHGREGG
Net income percentage: Net Income/Total Revenue
Return on equity: Net Income/Average Stockholders’ Equity
$48.2 million/$2,077.7 million =
a.
a.
160
,
000$
1
,
800$
18
,
000 1
,
,
,
,
,
,
,
,
,
,
,
,
5
,
,
,
Service revenue earne
d
Insurance ex
p
ense
Ex
p
enses:
Office rent ex
p
ense
Revenues:
SOLUTIONS TO PROBLEMS SET B
STRONG KNOT, INC.
For the Year Ended December 31, 201
5
20 Minutes, Easy PROBLEM 5.1B
STRONG KNOT, INC.
Income Statement
Asset
s
15
,
400$ 8
,
200 3
,
000 800 900
37
,
000$ 12
,
000 25
,
000
,
,
p
,
,
,
,
,
,
p
,
,
,
* Notes payable of $33,000 is the plug figure required to make the balance sheet balance.
Automobile
Su
pp
lies
Unex
p
ired insurance
PROBLEM 5.1B
STRONG KNOT, INC. (continued)
Accounts receivabl
e
a. (cont’d) STRONG KNOT, INC.
Balance Shee
t
Cash
Pre
p
aid rent
Less: Accumulated de
p
reciation: automobile
December 31, 201
5
,
b.
Dec. 31 160
,
000
Income Summar
y
160
,
000
31 141
,
200
Insurance Ex
p
ense 1
,
800
Office Rent Ex
p
ense 18
,
000
Su
pp
lies Ex
p
ense 1
,
200
Salaries Ex
p
ense 96
,
000
De
p
reciation Ex
p
ense: Automobile 4
,
000
De
p
reciation Ex
p
ense: E
q
ui
p
ment 3
,
000
,
,
,
,
g
y
(
)
,
,
(
)
Service Revenue Earne
d
PROBLEM 5.1B
STRONG KNOT, INC.
December 31, 201
5
(1)
General Journal
STRONG KNOT, INC. (concluded)
To close revenue account.
Income Summar
y
(
2
)
p
,
a.
194
,
000$
1
,
800$
28
,
000 5
,
600
72
,
000 16
,
000 4
,
p
,
,
p
,
,
,
,
,
43
,
600$
21,000$
43,600
PROBLEM 5.2B
GARDEN WIZARD
S
Revenues:
GARDEN WIZARD
S
For the Year Ended December 31, 201
5
Income Statement
Ex
p
enses:
Net income
Office rent ex
p
ense
Su
pp
lies ex
p
ense
Salar
y
ex
p
ens
e
De
p
reciation ex
p
ense: trucks
Insurance ex
p
ense
Service revenue earne
d
Add: Net income
Retained earnings (1/1/15)
GARDEN WIZARDS
Statement of Retained Earnings
For the Year Ended December 31, 2015
Asset
s
27
,
800$ 4
,
300 8
,
700 3
,
200 1
,
400
140
,
000$ 75
,
000 65
,
000
,
,
p
,
,
,
,
,
,
,
p
,
,
,
Su
pp
lies
Trucks
Less: Accumulated de
p
reciation: trucks
Pre
p
aid rent
GARDEN WIZARDS (continued
)
Accounts receivabl
e
Unex
p
ired insurance
GARDEN WIZARD
S
December 31, 201
5
Balance Shee
t
PROBLEM 5.2B
Cash
a. (cont’d)
,
b.
Dec. 31 194
,
000
Income Summar
y
194
,
000
31 150
,
400
Insurance Ex
p
ense 1
,
800
,
,
,
Interest Ex
p
ense 3
,
800
Income Taxes Ex
p
ense 9
,
000
y
31 3
,
300
Dividends 3
,
300
g
Income Summar
y
(
2
)
General Journal
Service Revenue Earne
d
To close revenue account.
To close all ex
p
ense accounts.
To transfer net income earned in 2015 to the
(
3
)
PROBLEM 5.2B
GARDEN WIZARD
S
December 31, 201
5
(1)
GARDEN WIZARDS (continued
)
To transfer dividends declared in 2015 to the
(
)
Retained Earnin
g
s
Retained Earnin
g
s account.
,
c.
27
,
800$ 4
,
300 8
,
700 3
,
200 1
,
400
140
,
000 75
,
000$
,
,
y
,
,
p
,
,
,
Accumulated de
p
reciation: trucks
PROBLEM 5.2B
GARDEN WIZARDS (concluded
)
Pre
p
aid rent
Su
pp
lies
GARDEN WIZARDS
December 31, 201
5
After-Closing Trial Balanc
e
Cash
Unex
p
ired insurance
Accounts receivabl
e
Trucks
,
a.
56
,
700$
6
,
200$
,
,
,
,
,
,
,
Insurance ex
p
ense
Client revenue earned
PROBLEM 5.3B
DEBIT DOCTORS, INC.
Ex
p
enses:
DEBIT DOCTORS, INC.
For the Year Ended December 31, 201
5
Income Statement
Revenues:
,
a. (cont’d)
450$ 220
1
,
600 1
,
800 900
10
,
000$ 6
,
600 3
,
400 8
,
370$
7
,
100$
24
,
000 2
,
,
,
p
,
Accounts receivabl
e
Furniture & fixtures
Notes
p
a
y
able
Accumulated de
p
reciation: furniture and fixtures
Total assets
Liabilities
Unex
p
ired insurance
Pre
p
aid rent
Su
pp
lies
Accounts
p
a
y
abl
e
PROBLEM 5.3B
DEBIT DOCTORS, INC. (continued)
Cash
December 31, 201
5
Balance Shee
t
Asset
s
DEBIT DOCTORS, INC.
b.
Dec. 31 56
,
700
Income Summar
y
56
,
700
31 88
,
300
Insurance Ex
p
ense 6
,
200
,
,
g
,
,
,
31 31
,
600
Income Summar
y
31
,
600
PROBLEM 5.3B
DEBIT DOCTORS, INC.
December 31, 201
5
(1)
(
3
)
General Journal
DEBIT DOCTORS, INC. (continued)
Client revenue earned
To close revenue account.
Income Summar
y
(
2
)
Retained Earnin
g
s
To transfer net loss to the Retained Earnin
g
s
account
(
$56,700 – $88,300 = $31,600 loss.
)
,