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EXERCISE 3-14B
a.
Account Title
Debit
Credit
Accounts Receivable
50,000
Service Revenue
50,000
Assets
=
Liab.
+
Equity
Rev.
−
Exp.
=
Net Inc.
Cash Flows
50,000
NA
50,000
50,000
NA
50,000
NA
b.
Account Title
Debit
Credit
Operating Expenses
2,000
Accounts Payable
2,000
Assets
=
Liab.
+
Equity
Rev.
−
Exp.
=
Net Inc.
Cash Flows
NA
2,000
(2,000)
NA
2,000
(2,000)
NA
c.
Account Title
Debit
Credit
Cash
27,000
Accounts Receivable
27,000
EXERCISE 3-14B (cont.)
e.
Account Title
Debit
Credit
Prepaid Insurance
6,800
Cash
6,800
Assets
=
Liab.
+
Equity
Rev.
−
Exp.
=
Net Inc.
Cash Flows
6,800
NA
NA
NA
NA
NA
(6,800) OA
(6,800)
f.
Account Title
Debit
Credit
Insurance Expense
4,500
Prepaid Insurance
4,500
Assets
=
Liab.
+
Equity
Rev.
−
Exp.
=
Net Inc.
Cash Flows
(4,500)
NA
(4,500)
NA
4,500
(4,500)
NA
g.
Account Title
Debit
Credit
Interest Receivable
800
Interest Revenue
800
Assets
=
Liab.
+
Equity
Rev.
−
Exp.
=
Net Inc.
Cash Flows
800
NA
800
800
NA
800
NA
h.
Account Title
Debit
Credit
Cash
4,000
Unearned Revenue
4,000
3-104
EXERCISE 3-14B (cont.)
i.
Account Title
Debit
Credit
Supplies
2,400
Cash
2,400
Assets
=
Liab.
+
Equity
Rev.
−
Exp.
=
Net Inc.
Cash Flows
2,400
NA
NA
NA
NA
NA
(2,400) OA
(2,400)
3-105
EXERCISE 3-15B
a.
Debit
Credit
Salaries Expense
12,000
Salaries Payable
12,000
b.
Assets
=
Liab.
+
Equity
Rev.
−
Exp.
=
Net Inc.
Cash Flows
Sal. Pay.
Ret. Earn.
NA
12,000
(12,000)
NA
12,000
(12,000)
NA
c. Revenue $29,000
Salaries Expense (12,000)
Net Income $17,000
Cash Flows From Operating Activities:
Cash Received from Revenue $29,000
Cash Payment for Expense -0-
Net Cash Flow from Operating Activities $29,000
d. Salaries Payable = $12,000
3-106
EXERCISE 3-16B
a. & b.
Virginia Mining
Journal Entries for 2016
Date
Account Titles
Debit
Credit
a. 3/1
Prepaid Rent (Lease)
135,000
Cash
135,000
b. 12/31
Rent Expense
112,500
Prepaid Rent
112,500
*$135,000 12 = $11,250 per month; $11,250 x 10 mo. = $112,500
3-6-107
EXERCISE 3-16B (cont.)
c. NC = Net Change in Cash
Virginia Mining
Horizontal Statements Model for 2016
Assets
=
Liab.
+
Stk. Equity
Income Statement
Statement
Event
Cash
+
Prepaid
Rent
=
+
Comm.
Stock
+
Ret. Earn
Revenue
−
Expense
=
Net Inc.
of
Cash Flows
1.
150,000
NA
NA
150,000
NA
NA
NA
NA
150,000 FA
2.
(135,000)
135,000
NA
NA
NA
NA
NA
NA
(135,000) OA
3.
172,500
NA
NA
NA
172,500
172,500
NA
172,500
172,500 OA
Adj.
NA
(112,500)
NA
NA
(112,500)
NA
112,500
(112,500)
NA
Bal.
187,500
+
22,500
=
NA
+
150,000
+
60,000
172,500
−
112,500
=
60,000
187,500 NC
3-6-108
EXERCISE 3-17B
a.
Closing Entries
Debit
Credit
1.
Service Revenue
153,000
Retained Earnings
153,000
2.
Retained Earnings
91,600
Advertising Expense
7,000
Rent Expense
15,600
Salaries Expense
64,000
Supplies Expense
5,000
3.
Retained Earnings
10,000
Dividends
10,000
b.
Retained Earnings, 2016
Beginning Retained Earnings
$38,800
Add: Revenue
153,000
Less: Expenses
(91,600)
Less: Dividends
(10,000)
Ending Retained Earnings
$90,200
3-6-109
EXERCISE 3-18B
a.
Colton Training Co.
General Journal, 2016
Event
Account Titles
Debit
Credit
1.
Cash
60,000
Common Stock
60,000
2.
Accounts Receivable
100,000
Service Revenue
100,000
3.
Salaries Expense
74,000
Cash
74,000
4.
Supplies
13,000
Accounts Payable
13,000
5.
Cash
79,000
Accounts Receivable
79,000
6.
Accounts Payable
9,500
Cash
9,500
7.
Dividends
6,000
Cash
6,000
8.
Supplies Expense*
10,500
Supplies
10,500
3-6-110
EXERCISE 3-18B (cont.)
b.
ASSETS
=
LIABILITIES
+
STOCKHOLDERS’
EQUITY
Cash
Accounts Payable
Common Stock
1. 60,000
3. 74,000
6. 9,500
4. 13,000
1. 60,000
5. 79,000
6. 9,500
Bal. 3,500
Bal. 60,000
7. 6,000
Bal. 49,500
Dividends
7. 6,000
Bal. 6,000
Accounts Receivable
2. 100,000
5. 79,000
Service Revenue
Bal. 21,000
2. 100,000
Bal. 100,000
Supplies
4. 13,000
8. 10,500
Bal. 2,500
Salaries Expense
3. 74,000
Bal. 74,000
Supplies Expense
8. 10,500
Bal. 10,500
3-6-111
EXERCISE 3-19B
Wages Company
Trial Balance
December 31, 2016
Account Titles
Debit
Credit
Cash
$ 120,000
Accounts Receivable
13,000
Office Supplies
3,600
Prepaid Insurance
12,800
Land
44,000
Accounts Payable
$ 4,000
Unearned Revenue
36,000
Common Stock
50,000
Retained Earnings
28,400
Dividends
10,000
Service Revenue
152,000
Advertising Expense
5,000
Rent Expense
30,000
Salaries Expense
32,000
Totals
$270,400
$270,400
3-6-112
EXERCISE 3-20B
a. Out of balance; credits are understated by $2,000; Salaries Payable is
understated by $2,000. The debit side of the trial balance will be
higher.
b. Out of balance; debits are understated, the asset account, Cash, is
higher.
