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.