Type
Solution Manual
Book Title
Financial Accounting Fundamentals 5th Edition
ISBN 13
978-0078025754

978-0078025754 Chapter 3 Solution Manual Part 2

March 26, 2020
EXERCISES
Exercise 3-1 (15 minutes)
a. Adjusting entry:
2015
Dec. 31
Wages Expense..............................................................
1,250
Wages Payable ......................................................
1,250
Exercise 3-2 (25 minutes)
a.
Apr. 30 Legal Fees Expense ........................................... 3,500
Legal Fees Payable ..................................... 3,500
To record accrued legal fees.
Salaries Expense* .............................................. 6,000
Cash ............................................................. 10,000
To record payment of accrued and current
salaries. *($10,000 weekly salaries x 3/5 week)
Exercise 3-3 (25 minutes)
a.
18,000
18,000
Notes:
Prepaid Insurance*
Office Supplies**
Bal. Bal.
6,000
Beg. Bal.
700
Purch.
3,480
Exercise 3-4 (30 minutes)
a.
5,000
5,000
g.
2,500
2,500
Notes:
Prepaid Insurance
Office Supplies*
Exercise 3-5 (25 minutes)
Dec. 31 Accounts Receivable ............................................. 2,100
Fees Earned ..................................................... 2,100
To record earned but unbilled fees (30% x $7,000).
To record expired prepaid insurance.
31 Office Supplies Expense ........................................ 580
Office Supplies ................................................ 580
To record use of office supplies.
Exercise 3-6 (20 minutes)
adidas AG
Balance Sheet
December 31, 2013
(Euros in millions)
Assets
Noncurrent assets
Intangible assets ................................................... € 148
Tangible and other assets .................................... 304
Other noncurrent assets ....................................... 3,476
Total noncurrent assets ........................................ 3,928
Current assets
Equity
Total equity .............................................................. € 2,489
Liabilities
Exercise 3-7 (20 minutes)
WILSON TRUCKING COMPANY
Income Statement
For Year Ended December 31, 2015
Trucking fees earned ................................................ $130,000
Expenses
Depreciation expenseTrucks ........................... $23,500
WILSON TRUCKING COMPANY
Statement of Retained Earnings
For Year Ended December 31, 2015
Retained earnings, December 31, 2014 ................... $155,000
Exercise 3-8 (10 minutes)
Dec. 31 Net Sales ....................................................... 1,014,345
Income Summary .................................. 1,014,345
Exercise 3-9 (20 minutes)
WILSON TRUCKING COMPANY
Balance Sheet
December 31, 2015
Assets
Current assets
Trucks ............................................................. $172,000
Accumulated depreciation-Trucks .............. (36,000) 136,000
Land ................................................................ 85,000
Total plant assets .......................................... 221,000
Total assets ...................................................... $249,500
Long-term notes payable ................................ 53,000
Total liabilities ................................................. 69,000
Equity
Common stock ................................................ 20,000
Retained earnings* .......................................... 160,500
Total liabilities and equity .............................. $249,500
*From Exercise 3-7
* Retained earnings is computed as:
Exercise 3-10 (10 minutes)
a. $ 4,361 / $ 44,500 = 9.8%
b. $ 97,706 / $ 398,800 = 24.5%
Exercise 3-11 (15 minutes)
Current
Assets
Current
Liabilities
Current
Ratio
Case 1
$ 79,040
/
$ 32,000
=
2.47
Analysis: Company 1 is in the strongest liquidity position. It has about $2.47
Exercise 3-12A (30 minutes)
a.
Dec. 1 Supplies Expense ................................................... 2,000
Cash ................................................................. 2,000
Purchased supplies.
b.
g.
Dec. 31 Remodeling Fees Earned ..................................... 11,130
Unearned Remodeling Fees .......................... 11,130
Adjusted revenues for unfinished projects
($13,000 + 3,700 - $5,570).
Exercise 3-13A (25 minutes)
a. Initial credit recorded in the Unearned Fees account
July 1 Cash ....................................................................... 3,000
Unearned Fees .............................................. 3,000
Received fees for work to be done for Solana.
Completed work for Solana.
18 Cash ....................................................................... 8,500
Unearned Fees .............................................. 8,500
Received fees for work to be done for Jordan.
27 Unearned Fees ...................................................... 7,500
Fees Earned ................................................... 3,000
Received fees for work to be done for Solana.
6 Cash ....................................................................... 7,500
Fees Earned ................................................... 7,500
Received fees for work to be done for Haru.
Exercise 3-13A concluded
c. Under the first method (and using entries from a)
Exercise 3-14B (25 minutes)
WESTCOTT COMPANY
December 31, 2015
Unadjusted
Trial Balance
Dr. Cr.
Adjustments
Dr. Cr.
Adjusted
Trial Balance
Dr. Cr.
Cash ....................................................
21
21
Accounts receivable .........................
12
12
Supplies .............................................
24
(d)
9
15
Prepaid insurance .............................
18
(e)
15
3
Equipment ..........................................
39
39
Exercise 3-15C (30 minutes)
1. Adjusting entries
Oct. 31 Rent Expense ................................................ 2,800
2. Subsequent entries without reversing
Nov. 5 Rent Payable ................................................. 2,800
Rent Expense ................................................ 2,800
3. Reversing entries and subsequent entries
Nov. 1 Rent Payable ................................................. 2,800
Rent Expense ........................................ 2,800
To reverse accrual of rent expense.
PROBLEM SET A
Problem 3-1A (10 minutes)
1. E 5. C 9. D
Problem 3-2A (35 minutes)
Part 1
Adjustment (a)
Adjustment (b)
31 Insurance Expense .......................................... 7,120
Prepaid Insurance .................................... 7,120
To record annual insurance coverage cost.
Policy
Cost per Month
Months Active
in 2015
2015 Cost
Adjustment (c)

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