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Title: Quick Study 3-18
QA_Ori:
a. Step 1: Salaries Payable equals $0
To record employee salaries earned but not yet paid.
b. Step 1: Interest Payable equals $0
To record interest incurred but not yet paid.
c. Step 1: Interest Payable equals $0
Title: Quick Study 3-19
QA_Ori:
a. Step 1: Accounts Receivable equals $0
received.
b. Step 1: Interest Receivable equals $0
c. Step 1: Accounts Receivable equals $0
b. Step 1: Interest Receivable equals $0
c. Step 1: Accounts Receivable equals $0
Title: Exercise 3-1
QA_Ori:
1. E
2. C
Title: Exercise 3-2
QA_Ori:
a. Depreciation Expense—Equipment................................. 18,000
b. Insurance Expense........................................................... 4,900
Prepaid Insurance*....................................................... 4,900
c. Office Supplies Expense.................................................. 3,882
d. Unearned Fee Revenue................................................... 10,000
e. Insurance Expense........................................................... 5,800
f. Wages Expense............................................................... 3,200
Notes:
Prepaid Insurance*Office Supplies**
Purch. 3,480
? Used ? Used
Title: Exercise 3-3
QA_Ori:
a. Unearned Fee Revenue................................................... 5,000
b. Wages Expense............................................................... 8,000
c. Depreciation Expense—Equipment................................. 18,531
d. Office Supplies Expense.................................................. 4,992
e. Insurance Expense........................................................... 2,800
f. Interest Receivable........................................................... 1,050
g. Interest Expense.............................................................. 2,500
Prepaid Insurance†Office Supplies*
Title: Exercise 3-4
QA_Ori:
a. Adjusting entry:
2013
Dec. 31 Wages Expense...............................................................1,250
b. Payday entry:
2014
Jan. 4 Wages Expense...............................................................3,750
Title: Exercise 3-5
QA_Ori:
a
. 30-Apr Legal Fees Expense 3,500
b
. 30-Apr
20-May Interest Payable 3,000
c.
30-Apr Salaries Expense 4,000
3-May Salaries Payable 4,000
Title: Exercise 3-6
QA_Ori:
a. Supplies expense for current year: $2,550
Proof:
(a) (b) (c) (d)
Supplies available – prior year-end........ $ 400 $1,200 $ 1,260 $2,288
Title: Exercise 3-7
QA_Ori:
31-Dec Accounts Receivable
2,10
0
Fees Earned 2,100
To record earned but unbilled fees (30% x
$7,000).
Title: Exercise 3-8
QA_Ori:
Balance Sheet Insurance Asset using Insurance Expense using
Accrual
Basis*
Cash
Basis
Accrual
Basis**
Cash
Basis
Dec. 31, 2011.................$13,000 $0 2011................................$ 5,000 $18,000
Explanations:
*Accrual asset balance equals months left in the policy x $500 per month
(monthly cost is computed as $18,000 / 36 months).
Months Left
Balanc
e
12/31/201
1 26
$13,00
0
**Accrual insurance expense equals months covered in the year x $500 per
month.
Months Covered Expense
2011................................10 $ 5,000
Title: Exercise 3-9
QA_Ori:
a. $ 4,361 / $ 44,500 = 9.8%
Analysis and Interpretation: Company c has the highest profitability according to
the profit margin ratio. Company c earns 43.3 cents in net income for every one
dollar of net sales earned.
