Problem 3-7B (Continued)
Part 4
SAFE STORAGE CO.
Adjusted Trial Balance
July 31, 2013
No. Account Title Debit Credit
101 Cash …………………………………………………………… $ 22,850
106 Accounts receivable …………………………………… 1,150
124 Office supplies ……………………………………………. 1,525
128 Prepaid insurance ………………………………………. 6,800
Problem 3-7B (Continued)
Part 5
SAFE STORAGE CO.
Income Statement
For Month Ended July 31, 2013
Storage fees earned …………………………….. $10,950
Expenses
Depreciation expense–Buildings ………… $1,500
Salaries expense ……………………………….. 2,100
SAFE STORAGE CO.
Statement of Retained Earnings
For Month Ended July 31, 2013
Retained earnings, July 1, 2013 ……………. $ 0
Add: Net income ………………………………… 2,725
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Problem 3-7B (Continued)
Part 5
SAFE STORAGE CO.
Balance Sheet
July 31, 2013
Assets
Cash ……………………………………………………. $ 22,850
Accounts receivable ……………………………. 1,150
Office supplies …………………………………….. 1,525
Prepaid insurance ……………………………….. 6,800
Problem 3-7B (Continued)
Part 6
Closing entries
July 31 Storage Fees Earned …………………………... 401 10,950
Income Summary ……………………………. 901 10,950
To close the revenue account.
31 Income Summary ………………………………… 901 8,225
Depreciation Exp—Buildings ………….. 606 1,500
Salaries Expense ……………………………. 622 2,100
Part 7
SAFE STORAGE CO.
Post-Closing Trial Balance
July 31, 2013
Debit Credit
Cash ……………………………………………………. $ 22,850
Accounts receivable ……………………………. 1,150
Office supplies …………………………………….. 1,525
Prepaid insurance ……………………………….. 6,800
Financial & Managerial Accounting, 5th Edition
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Problem 3-7B (Continued)
Ledger as of July 31
Cash Acct. No. 101
Date Explanation PR Debit Credit Balance
July 1 30,000 30,000
2 2,000 28,000
5 2,400 25,600
10 7,200 18,400
14 1,000 17,400
Accounts Receivable Acct. No. 106
Date Explanation PR Debit Credit Balance
July 31 Adjusting 1,150 1,150
Office Supplies Acct. No. 124
Date Explanation PR Debit Credit Balance
Problem 3-7B (Continued)
Common Stock Acct. No. 307
Date Explanation PR Debit Credit Balance
July 1 180,000 180,000
Retained Earnings Acct. No. 318
Date Explanation PR Debit Credit Balance
July 31 Closing 2,725 2,725
Rent Expense Acct. No. 640
Date Explanation PR Debit Credit Balance
July 2 2,000 2,000
31 Closing 2,000 0
Problem 3-7B (Concluded)
Office Supplies Expense Acct. No. 650
Date Explanation PR Debit Credit Balance
July 31 Adjusting 875 875
31 Closing 875 0
Repairs Expense Acct. No. 684
Date Explanation PR Debit Credit Balance
July 29 950 950
Problem 3-8B (75 minutes)
Part 1
ANARA CO.
Income Statement
For Year Ended December 31, 2013
Revenues
Professional fees earned …………………………….. $59,600
Rent earned ………………………………………………… 4,500
Dividends earned ……………………………………….. 1,000
ANARA CO.
Statement of Retained Earnings
For Year Ended December 31, 2013
Retained earnings, December 31, 2012 ………….. $ 52,800
Add: Net income ………………………………………….. 28,890
81,690
Financial & Managerial Accounting, 5th Edition
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Problem 3-8B (Continued)
ANARA CO.
Balance Sheet
December 31, 2013
Assets
Current assets
Cash …………………………………………………………… $ 7,400
Short-term investments …………………………..….. 11,200
Supplies …………………………………………………….. 4,600
Prepaid insurance ………………………………………. 1,000
Liabilities
Current liabilities
Accounts payable ……………………………………….. $ 3,500
Interest payable ………………………………………….. 1,750
Rent payable ………………………………………………. 400
Equity
Common stock …………………………………………….. 40,000
Problem 3-8B (Continued)
Part 2
Closing entries (all dated December 31, 2013)
Instructor note: Entries are shown without an account reference column because no posting is required.
(1) Professional Fees Earned ……………………… 59,600
Rent Earned ………………………………………….. 4,500
Dividends Earned ………………………………….. 1,000
Interest Earned ……………………………………… 1,320
Income Summary ……………………………. 66,420
To close the revenue accounts.
(2) Income Summary ………………………………….. 37,530
Depreciation Expense—Building …….. 2,000
Depreciation Expense—Equipment …. 1,000
Wages Expense………………………………. 18,500
Interest Expense …………………………….. 1,550
Part 3
a. Return on assets = $28,890/[($160,000 + $164,700)/2] = 17.8% (or 0.178)
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SERIAL PROBLEM – SP 3
Serial Problem, Success Systems (180 minutes) — Part 1
<Note: The general ledger is displayed at the end of Part 6>
Journal entries
Dec. 2 Advertising Expense ……………………………. 655 1,025
Cash ……………………………………………..101 1,025
Paid share of mall advertising costs.
3 Repairs Expense–Computer ………………… 684 500
Cash ……………………………………………..101 500
Repaired the computer.
4 Cash ……………………………………………………. 101 3,950
Accounts Receivable ……………………..106 3,950
Serial Problem, SP 3 (Continued)
Part 2
Adjusting entries
Dec. 31 Computer Supplies Expense …………………….652 3,065
Computer Supplies …………………………...126 3,065
Adjustment for supplies used (supplies
balance less cost of supplies available).
31 Insurance Expense …………………………………..637 555
Prepaid Insurance ……………………………..128 555
Adjustment for expired insurance (1/4
Serial Problem, SP 3 (Continued)
Part 3
SUCCESS SYSTEMS
Adjusted Trial Balance
December 31, 2013
Debit Credit
Cash ………………………………………………………………… $ 58,160
Accounts receivable …………………………………………. 5,668
Computer supplies …………………………………………… 580
Prepaid insurance …………………………………………….. 1,665
Prepaid rent ……………………………………………………… 825
Office equipment ……………………………………………… 8,000
Accumulated depreciation—Office equipment ……. $ 400
Computer equipment ………………………………………… 20,000
Accumulated depreciation—Computer equipment 1,250
Accounts payable …………………………………………….. 1,100
Serial Problem, SP 3 (Continued)
Part 4
SUCCESS SYSTEMS
Income Statement
For Three Months Ended December 31, 2013
Revenue
Computer services revenue ………………………………… $31,284
Expenses
Depreciation expense—Office equipment …………… $ 400
Depreciation expense—Computer equipment ……… 1,250
Part 5
SUCCESS SYSTEMS
Statement of Retained Earnings
For Three Months Ended December 31, 2013
Retained earnings, October 1, 2013 ………………………. $ 0
Plus: Net income …………………………………………………. 14,248
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Serial Problem, SP 3 (Continued)
Part 6
SUCCESS SYSTEMS
Balance Sheet
December 31, 2013
Assets
Cash …………………………………………………………………….. $ 58,160
Accounts receivable …………………………..………………… 5,668
Computer supplies ……………………………………………….. 580
Liabilities
Accounts payable ………………………………………………….. $ 1,100
Equity
Common stock ……………………………………………………… 83,000