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

978-0078025754 Chapter 3 Solution Manual Part 3

March 26, 2020
Problem 3-2A concluded
Adjustment (d)
Dec. 31 Depreciation ExpenseBuilding ................... 30,500
Accumulated DepreciationBuilding ... 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
Teaching Supplies
Accounts Payable
Unadj. Bal.
8,000
Bal.
26,000
(b)
5,200
Adj. Bal.
2,800
Salaries Payable
(a)
2,400
Adj. Bal.
9,600
Unearned Training Fees
Prepaid Rent
(e)
5,000
3,000
Adj. Bal.
0
Common Stock
Professional Library
Bal.
35,000
Retained Earnings
Accumulated Depreciation
Professional Library
Dividends
Problem 3-3A (Continued)
Tuition Fees Earned
Rent Expense
Training Fees Earned
Teaching Supplies Expense
Depreciation Expense
Professional Library
Advertising Expense
Depreciation Expense
Equipment
Utilities Expense
Salaries Expense
Insurance Expense
Problem 3-3A (Continued)
Part 2
Adjustment (a)
Dec. 31
Insurance Expense ......................................................
2,400
Prepaid Insurance ..................................................
2,400
To record the insurance expired.
31
Depreciation ExpenseEquipment ...........................
13,200
Accumulated DepreciationEquipment ....................
13,200
To record equipment depreciation.
Adjustment (d)
31
Depreciation ExpenseProfess. Library ..................
7,200
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 accrued salaries
(2 days x $100 x 2 employees).
Adjustment (h)
31
Rent Expense ...............................................................
3,000
Prepaid Rent ...........................................................
3,000
Problem 3-3A (Continued)
Part 3
WELLS TECHNICAL INSTITUTE
Adjusted Trial Balance
December 31, 2015
Debit
Credit
Professional library .................................................
35,000
Accumulated depreciationProfessional library ...
$ 17,200
Equipment ................................................................
80,000
Accumulated depreciationEquipment ................
28,200
Accounts payable ....................................................
26,000
Tuition fees earned ..................................................
131,400
Training fees earned ................................................
45,000
Depreciation expenseProfessional library ........
7,200
Depreciation expenseEquipment .......................
13,200
Salaries expense .....................................................
50,400
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 expenseProfessional library ... 7,200
Depreciation expenseEquipment .................. 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 depreciationProfessional 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 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
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
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 expenseOffice 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 depreciationOffice equipment .......
(20,000)
64,000
Total assets .................................................................
$124,960
Liabilities
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 expenseAutomobiles ..... 26,000
Depreciation expenseEquipment ........ 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
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).

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