Problem 3-1C
Accrual-Basis Cash-Basis
Transaction Revenue Expense Revenue Expense
1. Record employee salaries incurred
2. Pay advertising for the current
3. Pay utilities for the previous month,
4. Receive cash from customers in
5. Purchase office supplies on account,
6. Pay dividends to stockholders, $200. $0 $0 $0 $0
7. Pay for supplies previously
8. Pay for insurance one year in
9. Receive cash from customers for
services performed in the current
10. Provide services to customers on
Problems: Set C
Problem 3-2C
Follette’s Accessories
Income Statement
For the year ended December 31, 2015
Service revenue $63,000a
Expenses:
Salaries 24,800b
Supplies 6,800c
a $60,000 (cash from customers) + $3,000 (increase in accounts receivable) = $63,000
b $25,000 (cash paid for salaries) − $200 (decrease in salaries payable) = $24,800
c $6,000 (cash paid for supplies) + $800 (decrease in supplies) = $6,800
Problem 3-3C
(a) Debit Credit
Depreciation Expense 7,000
(b) Debit Credit
Salaries Expense 3,400
(c) Debit Credit
Interest Expense 600
(d) Debit Credit
Insurance Expense 11,250
(e) Debit Credit
Supplies Expense 1,500
(f) Debit Credit
Unearned Revenue 1,400
(g) Debit Credit
Advertising Expense 1,000
Problem 3-4C
(a) Debit Credit
Depreciation Expense 13,600
(b) Debit Credit
Salaries Expense 4,200
(c) Debit Credit
Interest Expense 2,000
(d) Debit Credit
Insurance Expense 11,250
(e) Debit Credit
Supplies Expense 17,400
(f) Debit Credit
Utilities Expense 1,900
Problem 3-5C
Russell Engineering
Income Statement
For the year ended December 31, 2015
Service revenue $118,500
Expenses:
Salaries 45,000
Rent 17,600
Depreciation 6,000
Supplies 9,400
Problem 3-5C (concluded)
Russell Engineering
Statement of Stockholders’ Equity
For the year ended December 31, 2015
Common
Stock
Retained
Earnings
Total
Stockholders’
Equity
Balance at January 1 $36,800 $20,200 $57,000
Issuance of common stock 8,000 8,000
Net income for 2015 13,500 13,500
Less: Dividends (0) (0)
Russell Engineering
Balance Sheet
December 31, 2015
Assets Liabilities
Cash $ 5,500 Accounts Payable $ 3,600
Accts.
Receivable
4,200 Salaries Payable 3,500
Supplies 2,300 Utilities Payable 1,500
Equipment 114,000 Stockholders’ Equity
Accum. Depr. (25,000) Common Stock 44,800
Retained Earnings 33,700
Total stockholders’ equity 78,500
Problem 3-6C
December 31, 2015 Debit Credit
Service Revenue 87,500
Retained Earnings 69,600
Salaries Expense 47,100
Supplies Expense 9,600
Rent Expense 7,700
Retained Earnings 5,000
Post-Closing Trial Balance
Account Title Debit Credit
Cash $ 7,500
Accounts Receivable 8,300
Land 123,400
Problem 3-7C
Requirements 1 and 2 (adjusng entries posted in red)
Cash Accounts Receivable Supplies
18,100 16,200 20,400
Prepaid Insurance Equipment Accumulated Depr.
15,000
95,000 27,200
Accounts Payable Salaries Payable Utilities Payable
10,500 0
0
Interest Payable Notes Payable Common Stock
0
40,000 24,000
Retained Earnings Dividends Service Revenue
10,500 2,500 224,900
Salaries Expense Depreciation Expense Insurance Expense
158,500
0
0
Supplies Expense Utilities Expense Interest Expense
0
11,400
0
17,400 13,300 2,000
Problem 3-7C (connued)
Requirement 3
Adjusted Trial Balance
Account Title Debit Credit
Cash $ 18,100
Accounts Receivable 16,200
Supplies 3,000
Prepaid Insurance 3,750
Equipment 95,000
Accumulated Depreciation $ 40,800
Accounts Payable 10,500
Salaries Payable 4,200
Utilities Payable 1,900
Problem 3-7C (connued)
Requirement 4
David’s Services
Income Statement
For the year ended December 31, 2015
Service revenue $224,900
Expenses:
Salaries 162,700
Depreciation 13,600
Insurance 11,250
David’s Services
Statement of Stockholders’ Equity
For the year ended December 31, 2015
Common
Stock
Retained
Earnings
Total
Stockholders’
Equity
Balance at January 1 $24,000 $10,500 $34,500
Issuance of common stock 0 0