Problem 3-2A −concluded
Adjustment (d)
Dec. 31 Depreciation Expense—Building ………………. 30,500
Accumulated Depreciation—Building … 30,500
To record annual depreciation expense
[($960,000 -$45,000) / 30 years = $30,500]
Adjustment (e)
Adjustment (f)
Part 2
Cash Payment for (c)
Cash Payment for (e)
Problem 3-3A (90 minutes)
Parts 1 and 2
Cash
Equipment
Unadj. Bal.
34,000
Unadj. Bal.
80,000
Accounts Receivable
Accumulated Depreciation—
Equipment
Unadj. Bal.
0
Unadj. Bal.
15,000
(f)
7,500
(c)
13,200
Adj. Bal.
7,500
Adj. Bal.
28,200
Teaching Supplies
Accounts Payable
Unadj. Bal.
8,000
Bal.
26,000
(b)
5,200
Adj. Bal.
2,800
Salaries Payable
Unadj. Bal.
0
Prepaid Insurance
(g)
400
Unadj. Bal.
12,000
Adj. Bal.
400
(a)
2,400
Adj. Bal.
9,600
Unearned Training Fees
Unadj. Bal.
12,500
Prepaid Rent
(e)
5,000
Unadj. Bal.
3,000
Adj. Bal.
7,500
3,000
Adj. Bal.
0
Common Stock
Bal.
10,000
Professional Library
Bal.
35,000
Retained Earnings
Bal.
80,000
Accumulated Depreciation—
Professional Library
Dividends
10,000
Bal.
50,000
7,200
17,200
Problem 3-3A (Continued)
Tuition Fees Earned
Rent Expense
Unadj. Bal.
123,900
Unadj. Bal.
33,000
(f)
7,500
(h)
3,000
Adj. Bal.
131,400
Adj. Bal.
36,000
Training Fees Earned
Teaching Supplies Expense
Unadj. Bal.
40,000
Unadj.
Bal.
0
(e)
5,000
(b)
5,200
Adj. Bal.
45,000
Adj. Bal.
5,200
Depreciation Expense—
Professional Library
Advertising Expense
Unadj. Bal.
0
Bal.
6,000
(d)
7,200
Adj. Bal.
7,200
Depreciation Expense—
Equipment
Utilities Expense
Unadj. Bal.
0
Bal.
6,400
(c)
13,200
Adj. Bal.
13,200
Salaries Expense
Unadj. Bal.
50,000
(g)
400
Adj. Bal.
50,400
Insurance Expense
Unadj. Bal.
0
(a)
2,400
Adj. Bal.
2,400
Problem 3-3A (Continued)
Part 2
Adjustment (a)
Dec. 31
Insurance Expense …………………………………….………..
2,400
Prepaid Insurance …………………………………………..
2,400
To record the insurance expired.
Adjustment (b)
31
Teaching Supplies Expense ……………………….….
5,200
Teaching Supplies ………………………………..………..
5,200
To record supplies used ($8,000 – $2,800).
Adjustment (c)
31
Depreciation Expense—Equipment …………….………..
13,200
Accumulated Depreciation—Equipment ……..…………
13,200
To record equipment depreciation.
Adjustment (d)
31
Depreciation Expense—Profess. Library …….………..
7,200
Accumul. Depreciation—Profess. Library …..………..
7,200
To record professional library depreciation.
Adjustment (e)
31
Unearned Training Fees ……………………………..………..
5,000
Training Fees Earned ……………………………………..
5,000
To record 2 months’ training fees earned
that were collected in advance.
Adjustment (f)
31
Accounts Receivable ………………………………….………..
7,500
Tuition Fees Earned………………………………………..
7,500
To record tuition earned
($3,000 x 2 1/2 months).
Adjustment (g)
31
Salaries Expense ……………………………………….………..
400
Salaries Payable……………………………………………..
400
To record accrued salaries
(2 days x $100 x 2 employees).
Adjustment (h)
31
Rent Expense …………………………………………….………..
3,000
Prepaid Rent …………………………………………………..
3,000
To record expiration of prepaid rent.
Problem 3-3A (Continued)
Part 3
WELLS TECHNICAL INSTITUTE
Adjusted Trial Balance
December 31, 2015
Debit
Credit
Cash ………………………………………………………………..
$ 34,000
Accounts receivable …………………………………………
7,500
Teaching supplies ……………………………………………
2,800
Prepaid insurance …………………………………………….
9,600
Prepaid rent ……………………………………………………..
0
Professional library ………………………………………….
35,000
Accumulated depreciation—Professional library …
$ 17,200
Equipment ……………………………………………………….
80,000
Accumulated depreciation—Equipment …………….
28,200
Accounts payable …………………………………………….
26,000
Salaries payable ……………………………………………….
400
Unearned training fees ……………………………………..
7,500
Common stock …………………………………………………
10,000
Retained earnings …………………………………………….
80,000
Dividends …………………………………………………………
50,000
Tuition fees earned …………………………………………..
131,400
Training fees earned …………………………………………
45,000
Depreciation expense—Professional library ……..
7,200
Depreciation expense—Equipment …………………..
13,200
Salaries expense ……………………………………………..
50,400
Insurance expense …………………………………………..
2,400
Rent expense ……………………………………………………
36,000
Teaching supplies expense ………………………………
5,200
Advertising expense …………………………………………
6,000
Utilities expense……………………………………………….
6,400
_______
Totals ………………………………………………………………
$345,700
$345,700
Problem 3-3A (Continued)
Part 4
WELLS TECHNICAL INSTITUTE
Income Statement
For Year Ended December 31, 2015
Revenues
Tuition fees earned …………………………………….. $131,400
Training fees earned …………………………………… 45,000
Total revenues ……………………………………………. $176,400
Expenses
Depreciation expense—Professional library … 7,200
Depreciation expense—Equipment ……………… 13,200
WELLS TECHNICAL INSTITUTE
Statement of Retained Earnings
For Year Ended December 31, 2015
Retained earnings, December 31, 2014 ………………………… $ 80,000
Problem 3-3A (Concluded)
WELLS TECHNICAL INSTITUTE
Balance Sheet
December 31, 2015
Assets
Cash ……………………………………………………………………… $ 34,000
Accounts receivable ……………………………………………… 7,500
Teaching supplies …………………………………………………. 2,800
Prepaid insurance …………………………………………………. 9,600
Professional library ……………………………………………….. $35,000
Accumulated depreciation—Professional library ……. (17,200) 17,800
Equipment …………………………………………………………….. 80,000
Problem 3-4A (45 minutes) — Part 1
Account
Unadjusted
Trial Balance
Adjustments
Adjusted
Trial Balance
Cash …………………………..…
$ 34,000
$ 34,000
Accounts receivable …….
14,000
(a)
8,000
22,000
Office supplies ……………..
16,000
(b)
14,000
2,000
Prepaid insurance ………..
8,540
(c)
5,580
2,960
Office equipment ………….
84,000
84,000
Accumulated depreciation
—Office equipment ………
$ 14,000
(d)
6,000
$ 20,000
Accounts payable ………….
9,100
(e)
900
10,000
Interest payable ……………..
(f)
1,000
1,000
Salaries payable …………….
(g)
7,000
7,000
Unearned consulting fees .
18,000
(h)
3,000
15,000
Long–term notes payable ..
52,000
52,000
Common stock …………….
15,000
15,000
Retained earnings ………..
25,000
25,000
Dividends ……………………..
5,000
5,000
Consulting fees
earned …………………………
123,240
(a)
(h)
8,000
3,000
134,240
Depreciation expense—
Office equipment ………..
(d)
6,000
6,000
Salaries expense ………….
67,000
(g)
7,000
74,000
Interest expense …………..
1,200
(f)
1,000
2,200
Insurance expense ………
(c)
5,580
5,580
Rent expense ……………….
14,500
14,500
Office supplies expense
(b)
14,000
14,000
Advertising expense ……
12,100
_______
(e)
900
______
13,000
_______
Totals …………………………...
$256,340
$256,340
$45,480
$45,480
$279,240
$279,240
Adjustment description
(a) Earned but uncollected revenues.
(b) Cost of office supplies used.
(c) Cost of expired insurance coverage.
Problem 3-4A (Continued)
Part 2
JKL COMPANY
Income Statement
For Year Ended July 31, 2015
Revenues
Consulting fees earned ………………………….. $134,240
Expenses
Depreciation expense—Office equipment .. $ 6,000
Salaries expense …………………………………… 74,000
JKL COMPANY
Statement of Retained Earnings
For Year Ended July 31, 2015
Retained earnings, July 31, 2014 ………………. $25,000
Problem 3-4A (Concluded)
Part 2
JKL COMPANY
Balance Sheet
July 31, 2015
Assets
Cash …………………………………………………………………..
$ 34,000
Accounts receivable …………………………………………..
22,000
Office supplies ……………………………………………………
2,000
Prepaid insurance ………………………………………………
2,960
Office equipment ………………………………………………..
$84,000
Accumulated depreciation—Office equipment …….
(20,000)
64,000
Total assets ………………………………………………………..
$124,960
Liabilities
Accounts payable ……………………………………………….
$ 10,000
Interest payable ………………………………………………….
1,000
Salaries payable …………………………………………………
7,000
Unearned consulting fees …………………………………..
15,000
Long-term notes payable …………………………………….
52,000
Total liabilities ……………………………………………………
85,000
Equity
Common stock …………………………………………………..
15,000
Retained earnings ………………………………………………
24,960
Total liabilities and equity …………………………………..
$124,960
Problem 3-5A (50 minutes)
Part 1
CHIARA COMPANY
Income Statement
For Year Ended December 31, 2015
Revenues
Fees earned ………………………………………. $484,000
Interest earned …………………………………… 24,000
Total revenues …………………………………… $508,000
Expenses
Depreciation expense—Automobiles ….. 26,000
Depreciation expense—Equipment …….. 18,000
CHIARA COMPANY
Statement of Retained Earnings
For Year Ended December 31, 2015
Retained earnings, December 31, 2014 ………… $235,800
Problem 3-5A (Concluded)
CHIARA COMPANY
Balance Sheet
December 31, 2015
Assets
Cash ………………………………………………………………
$ 30,000
Accounts receivable ……………………………………….
52,000
Interest receivable…………………………………………..
18,000
Notes receivable (due in 90 days) ……………………
168,000
Office supplies ……………………………………………….
16,000
Automobiles …………………………………………………..
$168,000
Accumulated depreciation—Automobiles ………..
(50,000)
118,000
Equipment …………………………..………………………….
138,000
Accumulated depreciation—Equipment …………..
(18,000)
120,000
Land ……………………………………………………….………
78,000
Total assets ……………………………………………………
$600,000
Liabilities
Accounts payable …………………………………………..
$ 96,000
Interest payable ………………………………………………
20,000
Salaries payable ……………………………………………..
19,000
Unearned fees ………………………………………………..
30,000
Long-term notes payable ………………………………..
138,000
Total liabilities ………………………………………………..
303,000
Equity
Common stock ……………………………………………….
20,000
Retained earnings …………………………………………..
277,000
Total liabilities and equity ……………………………….
$600,000
Part 2
Problem 3-6A (90 minutes)
INSTRUCTOR: Ledger accounts are shown after Part 7 as they would appear after all entries are posted.
Part 2 — Transactions for April
April 1 Cash ……………………………………………………… 101 30,000
Computer Equipment …………………………….. 167 20,000
3 Office Supplies ………………………………………. 124 1,000
Cash ………………………………………………. 101 1,000
Acquired office supplies.
10 Prepaid Insurance ………………………………….. 128 2,400
Cash ………………………………………………. 101 2,400
Commissions Earned ……………………… 405 8,000
Collected commissions from airlines.
28 Salaries Expense …………………………………… 622 1,600
Cash ………………………………………………. 101 1,600
Paid two weeks’ salaries.
Paid the telephone bill.
Paid cash for dividends.
Problem 3-6A (Continued)
Part 3
ADVENTURE TRAVEL
Unadjusted Trial Balance
April 30, 2015
No. Account Title Debit Credit
101 Cash …………………………………………………. $27,000
106 Accounts receivable ………………………….. 0
124 Office supplies ………………………………….. 1,000
128 Prepaid insurance ……………………………… 2,400
Problem 3-6A (Continued)
Part 4
Adjusting entries
(a) Apr 30 Insurance Expense ……………………………………….. 637 133
Prepaid Insurance …………………………………… 128 133
To record expired insurance ($2,400/12 x2/3).