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Quick Study 3-15 (15 minutes)
Accounts Debited and Credited
Financial Statement
a.
Debit
Unearned Revenue
Balance Sheet
Credit
Revenue Earned
Income Statement
b.
Debit
Wages Expense
Income Statement
Credit
Wages Payable
Balance Sheet
c.
Debit
Accounts Receivable
Balance Sheet
Credit
Revenue Earned
Income Statement
d.
Debit
Insurance Expense
Income Statement
Credit
Prepaid Insurance
Balance Sheet
e.
Debit
Depreciation Expense
Income Statement
Credit
Accumulated Depreciation
Balance Sheet
Quick Study 3-16 (15 minutes)
The answer is 2.
Explanation:
Quick Study 3-18 (10 minutes)
a. Under IFRS, financial statements normally present assets from least liquid
Quick Study 3-19 (10 minutes)
11.3 cents in net income. The company’s profit margin of 11.3% is markedly
Quick Study 3-20A (5 minutes)
Quick Study 3-21 (15 minutes)
Dec. 31 Services Revenue ......................................... 13,000
Income Summary .................................. 13,000
To close the revenue account.
Quick Study 3-22 (5 minutes)
Quick Study 3-26B (20 minutes)
Planta Company
Work Sheet
Adjusted
Trial Balance
Income
Statement
Balance Sheet
No.
Account
Dr.
Cr.
Dr.
Cr.
Dr.
Cr.
101
Cash .......................................
7,000
7,000
106
Accounts receivable ...........
27,200
27,200
153
Trucks ....................................
42,000
42,000
154
Accumulated
depreciation—Trucks ...........
17,500
17,500
183
Land .......................................
32,000
32,000
201
Accounts payable ...............
15,000
15,000
209
Salaries payable ..................
4,200
4,200
233
Unearned fees ......................
3,600
3,600
307
Common stock ....................
20,000
20,000
318
Retained earnings ...............
45,500
45,500
319
Dividends ..............................
15,400
15,400
401
Plumbing fees earned ........
84,000
84,000
611
Depreciation expense—
Trucks ................................
6,500
6,500
622
Salaries expense .................
38,000
38,000
640
Rent expense .......................
13,000
13,000
677
Miscellaneous expense .....
8,700
______
8,700
______
_______
______
Totals .....................................
189,800
189,800
66,200
84,000
123,600
105,800
Net income............................
17,800
______
_______
17,800
Totals .....................................
84,000
84,000
123,600
123,600
Quick Study 3-27C (10 minutes)
2014—NOT required (2014 shown for instructional purposes only)
Dec. 31 Accounts Receivable ........................................... 12,000
EXERCISES
Exercise 3-1 (15 minutes)
a. Adjusting entry:
2015
Dec. 31
Wages Expense ..............................................................
1,250
Wages Payable ......................................................
1,250
To record accrued wages for one day.
(5 workers x $250)
b. Payday entry:
2016
Jan. 4
Wages Expense ..............................................................
3,750
Wages Payable ...............................................................
1,250
Cash ................................................................
5,000
To record accrued and current wages.
Wages expense = 5 workers x 3 days x $250
Cash = 5 workers x 4 days x $250
Exercise 3-2 (25 minutes)
a.
Apr. 30 Legal Fees Expense ........................................... 3,500
Legal Fees Payable ..................................... 3,500
To record accrued legal fees.
May 12 Legal Fees Payable ............................................ 3,500
Exercise 3-3 (25 minutes)
a.
Depreciation Expense—Equipment..................................
18,000
Accumulated Depreciation—Equipment .....................
18,000
To record depreciation expense for the year.
b.
Insurance Expense .............................................................
4,900
Prepaid Insurance* .........................................................
4,900
To record insurance coverage that expired
($6,000 - $1,100).
c.
Office Supplies Expense ....................................................
3,880
Office Supplies** ..............................................................
3,880
To record office supplies used ($700 + $3,480 - $300).
d.
Unearned Fee Revenue ......................................................
10,000
Fee Revenue ....................................................................
10,000
To record earned portion of fee received in advance
($15,000 x 2/3).
e.
Insurance Expense .............................................................
5,800
Prepaid Insurance ...........................................................
5,800
To record insurance coverage that expired.
f.
Wages Expense ...................................................................
3,200
Wages Payable ................................................................
3,200
To record wages accrued but not yet paid.
Notes:
Prepaid Insurance*
Office Supplies**
Bal. Bal.
6,000
Beg. Bal.
700
Purch.
3,480
?
Used
?
Used
End. Bal.
1,100
End. Bal.
300
Exercise 3-4 (30 minutes)
a.
Unearned Fee Revenue ......................................................
5,000
Fee Revenue ....................................................................
5,000
To record earned portion of fee received in advance
($15,000 x 1/3).
b.
Wages Expense ...................................................................
8,000
Wages Payable ................................................................
8,000
To record wages accrued but not yet paid.
c.
Depreciation Expense—Equipment..................................
18,000
Accumulated Depreciation—Equipment .....................
18,000
To record depreciation expense for the year.
d.
Office Supplies Expense ....................................................
5,000
Office Supplies* ...............................................................
5,000
To record office supplies used ($240 + $5,200 - $440).
e.
Insurance Expense .............................................................
2,800
Prepaid Insurance† .........................................................
2,800
To record insurance coverage expired ($4,000 - $1,200).
f.
Interest Receivable .........................................................
1,050
Interest Revenue ........................................................
1,050
To record interest earned but not yet received.
g.
Interest Expense .............................................................
2,500
Interest Payable ...........................................................
2,500
To record interest incurred but not yet paid.
Notes:
Prepaid Insurance†
Office Supplies*
Beg. Bal.
4,000
Beg. Bal.
240
Purch.
5,200
?
Used
?
Used
End. Bal.
1,200
End. Bal.
440
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).
31 Unearned Fees ........................................................ 4,900
