Problem 3-8B (75 minutes)
Part 1
ANARA CO.
Income Statement
For Year Ended December 31, 2015
Revenues
Professional fees earned …………………………….. $59,600
Rent earned ………………………………………………… 4,500
Problem 3-8B (Continued)
ANARA CO.
Balance Sheet
December 31, 2015
Assets
Current assets
Cash …………………………………………………………… $ 7,400
Total plant assets ……………………………………….. 140,500
Total assets ………………………………………………….. $164,700
Liabilities
Current liabilities
Accounts payable ……………………………………….. $ 3,500
Problem 3-8B (Continued)
Part 2
(1) Professional Fees Earned ……………………… 59,600
Rent Earned …………………………..……………… 4,500
(2) Income Summary ………………………………….. 37,530
Depreciation Expense—Building …….. 2,000
Depreciation Expense—Equipment …. 1,000
Wages Expense…………………………..….. 18,500
(3) Income Summary ………………………………….. 28,890
(4) Retained Earnings …………………………..…….. 8,000
Dividends ……………………………………….. 8,000
To close the dividends account.
Part 3
a. Return on assets = $28,890/[($160,000 + $164,700)/2] = 17.8% (or 0.178)
b. Debt ratio = $51,010/$164,700 = 0.31
Repaired the computer.
4 Cash ……………………………………………………. 101 3,950
Accounts Receivable ……………………..106 3,950
Collected accounts receivable.
10 Wages Expense …………………………………… 623 750
Computer Services Revenue ………….403 5,625
Collected cash revenue from customer.
28 Cash ……………………………………………………. 101 3,000
Accounts Receivable ……………………..106 3,000
Collected accounts receivable.
©2016 by McGraw–Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in
any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
Solutions Manual, Chapter 3
213
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
Annual depreciation (cost/life) …………… $5,000
Expense for three months …………………. $1,250
31 Depreciation Expense—Office Equip …………612 400
Accumulated Depreciation—
Office Equipment …………………………….164 400
©2016 by McGraw–Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in
any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
Financial and Managerial Accounting, 6th Edition
214
Serial Problem, SP 3 (Continued)
Part 3
BUSINESS SOLUTIONS
Adjusted Trial Balance
December 31, 2015
Debit Credit
Cash …………………………..……………………………………. $ 48,372
Unearned computer services revenue ……………….. 1,500
Common stock ………………………………………………….. 73,000
Retained earnings ……………………………………………… 0
Dividends ……………………………………………………….…. 7,100
Computer services revenue ………………………………. 31,284
Totals ……………………………………………………………….. $109,034 $109,034
Serial Problem, SP 3 (Continued)
Part 4
BUSINESS SOLUTIONS
Income Statement
For Three Months Ended December 31, 2015
Revenue
Repairs expense—Computer ………………………………. 1,305
Total expenses …………………………………………………… 16,824
Net income ………………………………………………………….. $14,460
Part 5
BUSINESS SOLUTIONS
Statement of Retained Earnings
©2016 by McGraw–Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in
any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
Financial and Managerial Accounting, 6th Edition
216
Serial Problem, SP 3 (Continued)
Part 6
BUSINESS SOLUTIONS
Balance Sheet
December 31, 2015
Assets
Cash …………………………………………………………………….. $ 48,372
Accounts receivable …………………………..………………… 5,668
Computer supplies ……………………………………………….. 580
Prepaid insurance ………………………………………………… 1,665
Prepaid rent …………………………………………………………. 825
Equity
Common stock ……………………………………………………… 73,000
Retained earnings …………………………..…………………….. 7,360
Total liabilities and equity ……………………………………… $ 83,460
Serial Problem, SP 3 (Continued)
Part 7
Closing entries
2015
Advertising Expense …………………………. 655 2,753
Mileage Expense ……………………………….. 676 896
Miscellaneous Expenses …………………… 677 250
Repairs Expense—Computer …………….. 684 1,305
To close the expense accounts.
©2016 by McGraw–Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in
any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
Financial and Managerial Accounting, 6th Edition
218
Serial Problem, SP 3 (Continued)
Part 8
BUSINESS SOLUTIONS
Post–Closing Trial Balance
December 31, 2015
Debit Credit
Cash …………………………..………………………………………….. $ 48,372
Accounts receivable ………………………………………………. 5,668