Exercise 3-20 (connued)
Requirement 3
Red Flash Photography
Adjusted Trial Balance
December 31, 2015
Accounts Debit Credit
Cash $ 30,000
Accounts Receivable 30,000
Supplies 5,000
Prepaid Rent 9,000
Land 60,000
Exercise 3-20 (connued)
Requirement 4
Red Flash Photography
Income Statement
For the year ended December 31, 2015
Service revenue $70,000
Expenses:
Salaries 27,000
Rent 3,000
Red Flash Photography
Statement of Stockholders’ Equity
For the period ended December 31, 2015
Common
Stock
Retained
Earnings
Total
Stockholders’
Equity
Balance at January 1 $50,000 $25,000 $ 75,000
Issuance of common stock 20,000 20,000
Exercise 3-20 (connued)
Requirement 4 (connued)
Red Flash Photography
Balance Sheet
December 31, 2015
Assets Liabilities
Cash $ 30,000 Accounts payable $ 22,000
Prepaid rent 9,000 Stockholders’ Equity
Exercise 3-20 (concluded)
Requirement 5
December 31, 2015 Debit Credit
Service Revenue 70,000
Retained Earnings 55,000
Salaries Expense 27,000
Rent Expense 3,000
Retained Earnings 2,000
Problem 3-1A (LO 3-1, 3-2)
Accrual-Basis Cash-Basis
Transaction Revenue Expense Revenue Expense
1. Receive cash from customers in
2. Pay utilities bill for the previous
3. Pay for insurance one year in
4. Pay workers’ salaries for the current
5. Incur costs for employee salaries in
the current month but do not pay,
6. Receive cash from customers at the
7. Purchase office supplies on account, $0 $0 $0 $0
Problems: Set a
$330.
8. Borrow cash from the bank, $4,000. $0 $0 $0 $0
9. Receive cash from customers for
10. Pay for advertising to appear in the
Problem 3-2A (LO 3-1, 3-2)
Minutemen Law Services
Income Statement
For the year ended December 31, 2015
Service revenue $73,000a
Expenses:
Salaries $37,700b
Supplies 7,000c
a $70,000 (cash from customers) + $3,000 (increase in accounts receivable) = $73,000
b $36,000 (cash paid for salaries) + $1,700 (increase in salaries payable) = $37,700
Problem 3-3A (LO 3-3)
(a) Debit Credit
Unearned Revenue 3,600
(b) Debit Credit
Depreciation Expense 7,000
(c) Debit Credit
Insurance Expense 1,600
(d) Debit Credit
Interest Expense 800
(e) Debit Credit
Supplies Expense 1,700
Problem 3-4A (LO 3-3)
(a) Debit Credit
Depreciation Expense 6,000
(b) Debit Credit
Salaries Expense 2,100
(c) Debit Credit
Interest Expense 800
(d) Debit Credit
Supplies Expense 1,300
(e) Debit Credit
Rent Expense 5,400
(f) Debit Credit
Utilities Expense 200
Problem 3-5A (LO 3-5)
Boilermaker Unlimited
Income Statement
For the year ended December 31, 2015
Service revenues:
New construction $450,000
Expenses:
Salaries 160,000
Supplies 285,000
Depreciation 50,000
Problem 3-5A (concluded)
Boilermaker Unlimited
Statement of Stockholders’ Equity
For the year ended December 31, 2015
Common
Stock
Retained
Earnings
Total
Stockholders’
Equity
Balance at January 1 $170,000 $ 31,000 $201,000
Issuance of common stock 30,000 30,000
Boilermaker Unlimited
Balance Sheet
December 31, 2015
Assets Liabilities
Cash $ 16,000 Accounts payable $ 31,000
Accounts receivable 25,000 Salaries payable 28,000
Total Liabilities 214,000
Equipment 625,000 Stockholders’ Equity
Accumulated depr. (200,000) Common stock 200,000
Retained earnings 91,000