b.
Dec. 31 56
,
700
Income Summar
y
56
,
700
31 88
,
300
Insurance Ex
p
ense 6
,
200
Office Rent Ex
p
ense 12
,
000
Su
pp
lies Ex
p
ense 300
p
,
,
,
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
,
c.
450$ 220
1
,
600 1
,
800 900
10
,
000 6
,
600$ 7
,
100
,
,
p
,
,
,
PROBLEM 5.3B
DEBIT DOCTORS, INC. (concluded)
DEBIT DOCTORS, INC.
Furniture & fixtures
Su
pp
lies
Cash
After-Closing Trial Balanc
e
December 31, 201
5
Unex
p
ired insurance
Accounts receivabl
e
Pre
p
aid rent
Accumulated de
p
reciation: furniture and fixtures
Accounts
p
a
y
abl
e
a.
Month Ended Quarter Ended 9 Months Ended
Sept. 30 Sept. 30 Sept. 30
30
,
000$ 120
,
000$ 320
,
000$
10
,
000 30
,
000 66
,
000
6
,
000 20
,
000 76
,
000
,
,
,
,
,
,
pp
b.
c. If Howard closed its accounts monthly , the current adjusted balances could be used in
preparing financial statements for the month ended September 30. However, to prepare
an income statement for the quarter ended September 30, it would be necessary to
combine for each revenue and expense account the balances as of July 31, August 31, and
September 30. To determine revenue and expenses for the nine months ended September
30, it would be necessary to combine the monthly amounts for each of the nine months.
No computations are required for the balance sheet accounts, because their balances
describe financial position at a point in time, rather than a period of time.
The balances in the revenue and expense accounts at September 30 represent the year-to-
date. To determine revenue or expense for the month of September, the balance as of
August 31 is subtracted from the September 30 balance. To determine the revenue or
$320,000 – $200,000 = $120,00
0
Third Quarter Commissions:
For the Following Time Periods
Se
p
tember Commissions:
Salaries ex
p
ense
$320,000 – $290,000 = $30,00
0
Commissions earned
Revenue:
Ex
p
enses:
Advertisin
g
ex
p
ens
e
Income Statement
PROBLEM 5.4B
HOWARD REALT
Y
HOWARD REALT
Y
,
,
,
a.
Dec. 31 25
,
000
Consultin
g
Services Revenu
e
25
,
000
31 15
,
000
Consultin
g
Services Revenu
e
15
,
000
31 12
,
000
Salaries Pa
y
able 12
,
000
31 200
5
,
000
Income Taxes Pa
y
abl
e
5
,
000
(
2
)
PROBLEM 5.5B
To record revenue accrued at the end of Dec.
December 31, 201
5
(1)
NEXT JOB, INC.
General Journal
NEXT JOB, INC.
Accounts Receivabl
e
70 Minutes, Strong
Unearned Consultin
g
Services Revenu
e
To convert unearned revenue to earned revenue in Dec.
To record accrued but un
p
aid salaries in Dec.
Salaries Ex
p
ense
(
7
)
in December.
To record income taxes ex
p
ense accrued in Dec.
(
8
)
Income Taxes Ex
p
ense
(
9
)
Interest Ex
p
ense
pp
(
)
(
)
(
)
(
)
a. (continued)
Computations for each of the adjusting journal entries:
1. Accounts receivable increased by the $25,000 of accrued revenue in December.
2. Unearned revenue is reduced by the $15,000 amount earned in December.
NEXT JOB, INC. (continued)
PROBLEM 5.5B
The company’s adjusted trial balance dated December 31, 2015, appears on the following page.
a. (cont’d.)
276
,
500$ 115
,
000 300
Pre
p
aid rent 2
,
400 1
,
250
72
,
000 25
,
000$ 4
,
000
60
,
000
Interest
p
a
y
able 800
14
,
000 3
,
000
12
,
000 7
,
000
200
,
000
Retainin
g
earnin
g
s40
,
000
3
,
000
Consultin
g
fees earned 540
,
000
,
,
,
,
,
,
p
,
,
,
Office e
q
ui
p
ment
Accumulated de
p
reciation: office e
q
ui
p
ment
Income taxes
p
a
y
able
Salaries
p
a
y
able
Dividends
Ca
p
ital stock
Unearned consultin
g
fees
Accounts
p
a
y
abl
e
Notes
p
a
y
able
(
8-month
)
Dividends
p
a
y
abl
e
Unex
p
ired insurance
NEXT JOB, INC.
December 31, 201
5
Adjusted Trial Balanc
e
Accounts receivabl
e
Cash
Office su
pp
lies
NEXT JOB, INC. (continued)
PROBLEM 5.5B
,
b.
540
,
000$
15
,
900$ 2
,
450 5
,
000
12
,
000
,
,
,
,
,
104
,
650$
40,000$
Net Income
Consultin
g
fees earned
Insurance ex
p
ense
Ex
p
enses:
Rent ex
p
ense
De
p
reciation ex
p
ense: office e
q
ui
p
ment
Office su
pp
lies ex
p
ense
PROBLEM 5.5B
NEXT JOB, INC. (continued)
Revenues:
NEXT JOB, INC.
For the Year Ended December 31, 201
5
Income Statement
Retained earnings (1/1/15)
For the Year Ended December 31, 2015
NEXT JOB, INC.
Statement of Retained Earnings
b. (cont’d)
Asset
s
$ 276
,
500
115
,
000
300
2
,
400
1
,
250
$ 72
,
000
25
,
000 47
,
000
$ 442
,
450
$ 4
,
000
60
,
000
,
y
,
,
,
,
,
,
,
y
Pre
p
aid rent
Office e
q
ui
p
ment
Note
p
a
y
able
(
Due 3/1/16
)
Unex
p
ired insurance
Less: Accumulated De
p
reciation: office e
q
ui
p
men
t
Total assets
Liabilities
Accounts
p
a
y
abl
e
PROBLEM 5.5B
NEXT JOB, INC. (continued)
Accounts receivabl
e
Office su
pp
lies
NEXT JOB, INC.
December 31, 201
5
Balance Shee
t
Cash
,
c.
Dec. 31 540
,
000
Income Summar
y
540
,
000
31 435
,
350
Rent ex
p
ense 15
,
900
Insurance ex
p
ense 2
,
450
Office su
pp
lies ex
p
ense 5
,
000
,
,
,
,
,
y
(
)
,
,
Consultin
g
Services Revenu
e
To close A
g
enc
y
Fees Earned.
PROBLEM 5.5B
NEXT JOB, INC.
December 31, 201
5
(1)
NEXT JOB, INC. (continued)
General Journal
(
)
(
2
)
Income Summar
y
,
d.
276
,
500$ 115
,
000 300
2
,
400 1
,
250
72
,
000 25
,
000$ 4
,
000
60
,
000 800
,
,
,
,
,
,
,
NEXT JOB, INC.
December 31, 201
5
After-Closing Trial Balanc
e
Office su
pp
lies
Cash
Pre
p
aid rent
Notes
p
a
y
able
(
Due 3/1/16
)
Accounts
p
a
y
abl
e
Office e
q
ui
p
ment
Accounts receivabl
e
Accumulated de
p
reciation: office e
q
ui
p
ment
PROBLEM 5.5B
NEXT JOB, INC. (continued)
Unex
p
ired insurance
,
f.
15
,
900
$
8
,
400
(
at
$
1
,
200/mo.
)
,
$
$
PROBLEM 5.5B
Less: Total rent ex
p
ense June throu
g
h December
NEXT JOB, INC. (concluded)
Rent ex
p
ense incurred in 2015
,
$