3-58
PROBLEM 3-33A (cont.)
b.
Colton Enterprises
T-Accounts – 2016
Assets
=
Liabilities
+
Stockholders’ Equity
Cash
Accounts Pay.
Common Stock
1. 35,000
7. 28,000
4. 35,000
1. 35,000
5. 55,500
Bal. 7,000
Bal. 35,000
Bal. 29,500
Service Revenue
Salaries Payable
3. 72,000
9. 2,400
Bal. 72,000
Accounts Receivable
Bal. 2,400
3. 72,000
Bal. 16,500
Operating Expenses
4. 35,000
Prepaid Rent
Bal. 35,000
2. 12,000
Bal. 3,000
Rent Expense
8. 9,000
Bal. 9,000
Salaries Expense
6. 21,000
9. 2,400
Bal. 23,400
3-59
PROBLEM 3-33A (cont.)
c.
Colton Enterprises
Trial Balance
December 31, 2016
Account Titles
Debit
Credit
Cash
$ 29,500
Accounts Receivable
16,500
Prepaid Rent
3,000
Accounts Payable
$ 7,000
Salaries Payable
2,400
Common Stock
35,000
Service Revenue
72,000
Operating Expenses
35,000
Rent Expense
9,000
Salaries Expense
23,400
Totals
$116,400
$116,400
3-60
PROBLEM 3-33A (cont.)
d.
Colton Enterprises
Financial Statements
For the Year Ended December 31, 2016
Income Statement
Service Revenue
$72,000
Expenses
Operating Expenses
$35,000
Rent Expense
9,000
Salaries Expense
23,400
Total Expenses
(67,400)
Net Income
$ 4,600
Statement of Changes in Stockholders’ Equity
Beginning Common Stock
$ -0-
Plus: Stock Issued
35,000
Ending Common Stock
$35,000
Beginning Retained Earnings
$ -0-
Plus: Net Income
4,600
Ending Retained Earnings
4,600
Total Stockholders’ Equity
$39,600
3-61
PROBLEM 3-33A d. (cont.)
Colton Enterprises
Balance Sheet
As of December 31, 2016
Assets
Cash
$29,500
Accounts Receivable
16,500
Prepaid Rent
3,000
Total Assets
$49,000
Liabilities
Accounts Payable
$ 7,000
Salaries Payable
2,400
Total Liabilities
$ 9,400
Stockholders’ Equity
Common Stock
$35,000
Retained Earnings
4,600
Total Stockholders’ Equity
39,600
Total Liabilities and Stockholders’ Equity
$49,000
Statement of Cash Flows
For the Year Ended December 31, 2016
Cash Flows From Operating Activities:
Received cash from Customers
$55,500
Paid cash for Expenses
(61,000)
Net Cash Flow from Operating Activities
$ (5,500)
Cash Flows From Investing Activities
–0-
Cash Flows From Financing Activities:
Received cash from Stock Issue
$35,000
Net Cash Flow from Financing Activities
35,000
Net Change in Cash
29,500
Plus: Beginning Cash Balance
-0-
Ending Cash Balance
$29,500
3-62
PROBLEM 3-33A (cont.)
e.
Date
Account Titles
Debit
Credit
Closing Entries, 2016
Dec. 31
Service Revenue
72,000
Retained Earnings
72,000
Dec. 31
Retained Earnings
67,400
Operating Expenses
35,000
Salaries Expense
23,400
Rent Expense
9,000
Colton Enterprises
T-Accounts for Closing Entries, 2016
Assets
=
Liabilities
+
Stockholders’ Equity
Cash
Accounts Payable
Common Stock
Bal. 29,500
Bal. 7,000
Bal. 35,000
Salaries Payable
Retained Earnings
Accounts Receivable
Bal. 2,400
cl 67,400
cl 72,000
Bal. 16,500
Bal. 4,600
Prepaid Rent
Service Revenue
Bal. 3,000
cl 72,000
Bal. 72,000
Bal. -0-
Operating Expenses
Bal. 35,000
cl 35,000
Bal. -0-
Rent Expense
Bal. 9,000
cl 9,000
Bal. -0-
Salaries Expense
Bal. 23,400
cl 23,400
Bal. -0-
3-63
PROBLEM 3-33AB (cont.)
f.
Colton Enterprises
Post-Closing Trial Balance
December 31, 2016
Account Titles
Debit
Credit
Cash
$29,500
Accounts Receivable
16,500
Prepaid Rent
3,000
Accounts Payable
$ 7,000
Salaries Payable
2,400
Common Stock
35,000
Retained Earnings
4,600
Totals
$49,000
$49,000
3-64
PROBLEM 3-33A (cont.)
g.
Colton Enterprises
General Journal, 2017
Event
Account Titles
Debit
Credit
1.
Salaries Payable
2,400
Cash
2,400
2.
Cash
21,000
Service Revenue
21,000
3.
Supplies
2,800
Accounts Payable
2,800
4.
Prepaid Rent
13,200
Cash
13,200
5.
Accounts Receivable
88,000
Service Revenue
88,000
6.
Operating Expenses
41,500
Accounts Payable
41,500
7.
Cash
89,000
Accounts Receivable
89,000
8.
Accounts Payable
39,000
Cash
39,000
9.
Salaries Expense
31,500
Cash
31,500
10.
Dividends
10,000
Cash
10,000
3-65
PROBLEM 3-33A g. (cont.)
Colton Enterprises
General Journal, 2017
Event
Account Titles
Debit
Credit
Adjusting Entries
11.
Rent Expense1
12,900
Prepaid Rent
12,900
12.
Supplies Expense2
2,350
Supplies
2,350
3-66
PROBLEM 3-33A g. (cont.)
Colton Enterprises
T-Accounts – 2017
Assets
=
Liabilities
+
Stockholders’ Equity
Cash
Accounts Payable
Common Stock
Bal. 29,500
Bal. 7,000
Bal. 35,000
2. 21,000
1. 2,400
8. 39,000
3. 2,800
7. 89,000
4. 13,200
6. 41,500
8. 39,000
Bal. 12,300
9. 31,500
Retained Earnings
10. 10,000
Salaries Payable
Bal. 4,600
Bal. 43,400
Bal. 2,400
1. 2,400
Dividends
Accounts Rec.
Bal. -0-
10. 10,000
Bal. 16,500
Bal. 10,000
5. 88,000
7. 89,000
Bal. 15,500
Service Revenue
2. 21,000
Prepaid Rent
5. 88,000
Bal. 3,000
Bal. 109,000
4. 13,200
11. 12,900
Bal. 3,300
Operating Expenses
6. 41,500
Supplies
Bal. 41,500
3. 2,800
12. 2,350
Bal. 450
Rent Expense
11. 12,900
Bal. 12,900
Salaries Expense
9. 31,500
Bal. 31,500
Supplies Expense
12. 2,350
Bal. 2,350
3-67
PROBLEM 3-33A g. (cont.)
Colton Enterprises
Trial Balance
December 31, 2017
Account Titles
Debit
Credit
Cash
$ 43,400
Accounts Receivable
15,500
Prepaid Rent
3,300
Supplies
450
Accounts Payable
$ 12,300
Common Stock
35,000
Retained Earnings
4,600
Dividends
10,000
Service Revenue
109,000
Operating Expenses
41,500
Rent Expense
12,900
Salaries Expense
31,500
Supplies Expense
2,350
Totals
$160,900
$160,900
3-68
PROBLEM 3-33A g. (cont.)
Colton Enterprises
Financial Statements
For the Year Ended December 31, 2017
Income Statement
Service Revenue
$109,000
Expenses
Operating Expenses
$41,500
Salaries Expense
31,500
Rent Expense
12,900
Supplies Expense
2,350
Total Expenses
(88,250)
Net Income
$ 20,750
Statement of Changes in Stockholders’ Equity
Beginning Common Stock
$ 35,000
Plus: Stock Issued
-0-
Ending Common Stock
$35,000
Beginning Retained Earnings
$ 4,600
Plus: Net Income
20,750
Less: Dividends
(10,000)
Ending Retained Earnings
15,350
Total Stockholders’ Equity
$50,350
3-69
PROBLEM 3-33A g. (cont.)
Colton Enterprises
Balance Sheet
As of December 31, 2017
Assets
Cash
$43,400
Accounts Receivable
15,500
Prepaid Rent
3,300
Supplies
450
Total Assets
$62,650
Liabilities
Accounts Payable
$ 12,300
Total Liabilities
$ 12,300
Stockholders’ Equity
Common Stock
$35,000
Retained Earnings
15,350
Total Stockholders’ Equity
50,350
Total Liabilities and Stockholders’ Equity
$62,650
3-70
PROBLEM 3–33A g. (cont.)
Colton Enterprises
Statement of Cash Flows
For the Year Ended December 31, 2017
Cash Flows From Operating Activities:
Received Cash from Customers1
$110,000
Paid Cash for Expenses2
(86,100)
Net Cash Flow from Operating Activities
$23,900
Cash Flows From Investing Activities
-0-
Cash Flows From Financing Activities:
Paid Cash for Dividends
$ (10,000)
Net Cash Flow from Financing Activities
(10,000)
Net Change in Cash
13,900
Plus: Beginning Cash Balance
29,500
Ending Cash Balance
$43,400
1(2) $21,000 + (7) $89,000 = $110,000
2(1) $2,400 + (4) $13,200 + (8) $39,000 + (9) $31,500 = $86,100
3-71
PROBLEM 3-33A g. (cont.)
Colton Enterprises
Closing Entries
Date
Account Titles
Debit
Credit
Dec. 31
Service Revenue
109,000
Retained Earnings
109,000
Dec. 31
Retained Earnings
88,250
Operating Expenses
41,500
Rent Expense
12,900
Salaries Expense
31,500
Supplies Expense
2,350
Dec. 31
Retained Earnings
10,000
Dividends
10,000
3-72
PROBLEM 3-33A g. (cont.)
Colton Enterprises
T-Accounts for Closing Entries, 2017
Assets
=
Liabilities
+
Stockholders’ Equity
Cash
Accounts Payable
Common Stock
Bal. 43,400
Bal. 12,300
Bal. 35,000
Retained Earnings
Accounts Rec.
cl 88,250
Bal. 4,600
Bal. 15,500
cl 10,000
cl 109,000
Bal. 15,350
Prepaid Rent
Bal. 3,300
Dividends
Bal. 10,000
cl 10,000
Supplies
Bal. -0-
Bal. 450
Service Revenue
cl 109,000
Bal. 109,000
Bal. -0-
Operating Expenses
Bal. 41,500
cl 41,500
Bal. -0-
Rent Expense
Bal. 12,900
cl 12,900
Bal. -0-
Salaries Expense
Bal. 31,500
cl 31,500
Bal. -0-
Supplies Expense
Bal. 2,350
cl 2,350
Bal. -0-
3-73
PROBLEM 3-33A g. (cont.)
Colton Enterprises
Post-Closing Trial Balance
December 31, 2017
Account Titles
Debit
Credit
Cash
$43,400
Accounts Receivable
15,500
Prepaid Rent
3,300
Supplies
450
Accounts Payable
$ 12,300
Common Stock
35,000
Retained Earnings
15,350
Totals
$62,650
$62,650
3-1-117
PROBLEM 3-34A
a. Debt to Assets Ratio: Total debt ÷ Total assets
Alaska $152,000 ÷ $245,000 = 62.0%
Colorado $501,000 ÷ $926,000 = 54.1%
3-1-118
PROBLEM 3-35A
TARVON Inc.
General Journal
Event
Account Titles
Debit
Credit
2016
a. 5/1
Cash
50,000
Notes Payable
50,000
b. 12/31
Interest Expense ($50,000 x 6% x 8/12)
2,000
Interest Payable
2,000
2017
c. 4/30
Interest Expense
1,000
Interest Payable
1,000
d. 4/30
Interest Payable
3,000
Cash
3,000
e. 4/30
Notes Payable
50,000
Cash
50,000
3-1-119
PROBLEM 3-36A
Bower Consulting Company
General Journal, 2016
Event
Account Titles
Debit
Credit
1. 1/1
Office Furniture
12,000
Cash
12,000
2. 3/1
Prepaid Insurance
5,400
Cash
5,400
3.
Supplies
1,800
Cash
1,800
4.
Cash
39,000
Service Revenue
39,000
5.
Salaries Expense
9,000
Cash
9,000
6. 4/1
Cash
12,000
Unearned Revenue
12,000
7.
Depreciation Expense*
2,500
Accumulated Depreciation
2,500
8.
Insurance Expense ($5,400 x 10/12)
4,500
Prepaid Insurance
4,500
9.
Supplies Expense
1,550
Supplies ($1,800 − $250)
1,550
10.
Unearned Revenue ($12,000 x 9/12)
9,000
Service Revenue
9,000
3-1-120
PROBLEM 3-36A a. (cont.)
Bower Consulting Company
T-Accounts – 2016
Assets
=
Liabilities
+
Stockholders’ Equity
Cash
Unearned Revenue
Common Stock
Bal. 25,000
6. 12,000
Bal. 13,000
4. 39,000
1. 12,000
10. 9,000
6. 12,000
2. 5,400
Bal. 3,000
3. 1,800
5. 9,000
Retained Earnings
Bal. 47,800
Bal. 12,000
Service Revenue
Prepaid Insurance
4. 39,000
2. 5,400
8. 4,500
10. 9,000
Bal. 900
Bal. 48,000
Salaries Expense
Supplies
5. 9,000
3. 1,800
9. 1,550
Bal. 9,000
Bal. 250
Depreciation Expense
7. 2,500
Office Furniture
Bal. 2,500
1. 12,000
Bal. 12,000
Insurance Expense
81. 4,500
Accumulated Depr.
Bal. 4,500
7. 2,500
Bal. 2,500
Supplies Expense
9. 1,550
Bal. 1,550