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c.
Dec. 31 52
,
000
Income Summar
y
52
,
000
A
g
enc
y
Fees Earne
d
To close A
g
enc
y
Fees Earned.
(
2
)
PROBLEM 5.6B
TOUCHTONE TALENT AGENC
Y
December 31, 201
5
(1)
General Journal
TOUCHTONE TALENT AGENCY (continued
)
d.
14
,
950$ 38
,
300 600 250 530
Fees receivabl
e
PROBLEM 5.6B
TOUCHTONE TALENT AGENCY (continued
)
Unex
p
ired insurance
p
olicies
Office su
pp
lies
TOUCHTONE TALENT AGENC
Y
December 31, 201
5
After-Closing Trial Balanc
e
Cash
Pre
p
aid rent
50 Minutes, Strong
Dr. Cr. Dr. Cr. Dr. Cr. Dr. Cr. Dr. Cr.
Balance sheet accounts:
Cash
20
,
000
20
,
000
20
,
000
Prepaid film rental
31
,
200
(1)
15
,
200
16
,
000
16
,
000
Land
120
,
000
120
,
000
120
,
000
Building
168
,
000
168
,
000
168
,
000
Accounts payable
4
,
400
4
,
400
4
,
400
Concessions revenue receivable
(6)
2
,
250
2
,
250
2
,
250
Salaries payable
(7)
1
,
700
1
,
700
1
,
700
Income statement accounts:
Depreciation expense: building
4
,
900
(2)
700
5
,
600
5
,
600
Depreciation expense: fixtures
and equipment
4
,
200
(3)
600
4
,
800
4
,
800
Interest expense 10,500 (4) 1,500 12,000 12,000
Income taxes expense 40,000 (8) 4,200 44,200 44,200
(1) Film rental expense for August. (6) Revenue from concessions for August.
(2) Depreciation expense for August ($168,000 ÷ 240 =$700). (7) Salaries owed to employees but not yet paid.
(3) Depreciation expense for August ($36,000 ÷ 60 =$600). (8) Accrued income taxes on August income.
(4) Accrued interest on notes payable.
(5) Advance payment from YMCA earned during August ($1,500 x 1/3 = $500 per month).
CAMPUS THEATER
Income Statement Balance Shee
t
PROBLEM 5.7B
CAMPUS THEATE
R
Trial Balance
A
djustments
*
A
djusted Trial Balanc
e
WORKSHEET
For the Month Ended August 31, 201
5
15 Minutes, Medium
5.7%
24.1%
PROBLEM 5.8B
THE GAP, INC.
*Average Stockholders’ Equity = ($4.1 billion + $2.8 billion)/2
a. $833 million ÷ $14.5 billion =
Return on equity: Net Income/Average Stockholders' Equity
Net income percentage: Net Income/Total Revenue
$833 million ÷ $3.45 billion*
Working capital: Current Assets – Current Liabilitiesb.
25 Minutes, Strong
a.
SOLUTIONS TO CRITICAL THINKING CASE
S
A
DEQUATE DISCLOSUR
E
CASE 5.1
Mandella Construction Co. should disclose the accounting method that it is using in the
notes accompanying its financial statements. When different accounting methods are
Group assignment:
No time estimate
CASE 5.2
We do not
p
rovide com
p
rehensive solutions for
g
rou
p
p
roblems. It is the nature of these
p
roblems
that solutions should reflect the collective experiences of the group. But the following
observations may be useful in stimulating class discussion:
WORKING FOR THE COMPETITION
ETHICS, FRAUD & CORPORATE GOVERNANCE
5 Minutes, Easy
The purpose of the personal certification process is to make CEOs and CFOs more accountable
and personally responsible for the contents in the annual reports issued by their companies.
CASE 5.3
CEOs AND CFOs
CERTIFICATIONS BY
15 Minutes, Easy
Debt and CommitmentsAccounting Policies
INTERNET
CASE 5.4
ANNUAL REPORT DISCLOSURES
Listed below are the headings of the major disclosure items presented in Ford’s most recent financial statement footnotes.
Students are to discuss the general nature and content of the various topics. The advanced nature of some of these topics goes
beyond the scope of an introductory course.
