3-6–45
COMPREHENSIVE PROBLEM – CHAPTER 3 (cont.)
e.
Pacilio Security Services, Inc. T-Accounts for 2013
Assets
=
Liabilities
+
Stockholders’ Equity
Cash
Accounts Payable
Common Stock
Bal.
Bal.
-0-
Bal.
8,000
Retained Earnings
Accounts Receivable
Unearned Revenue
cl
19,445
Bal.
2,815
Bal.
Bal.
900
cl
4,650
cl
32,500
Bal.
11,220
Supplies
Dividends
Bal.
120
Salaries Payable
Bal.
4,650
cl
4,650
Bal.
1,000
Bal.
-0-
Prepaid Rent
Security Service
Revenue
Bal.
1,000
cl
32,500
Bal.
32,500
Bal.
-0-
Land
Advertising Expense
Bal.
4,000
Bal.
1,800
cl
1,800
Bal.
-0-
Other Operating
Expense
Bal.
4,200
cl
4,200
Bal.
-0-
Rent Expense
Bal.
2,800
cl
2,800
Bal.
-0-
Salaries Expense
Bal.
10,000
cl
10,000
Bal.
-0-
Supplies Expense
Bal.
645
cl
645
Bal.
-0-
3-6–46
3-6–47
COMPREHENSIVE PROBLEM- CHAPTER 3 (cont.)
f.
Pacilio Security Services, Inc.
Post-Closing Trial Balance
December 31, 2013
Cash
$ 12,500
Accounts Receivable
3,500
Supplies
120
Prepaid Rent
1,000
Land
4,000
Unearned Revenue
$ 900
Salaries Payable
1,000
Common Stock
8,000
Retained Earnings
11,220
Totals
$21,120
$21,120
3-6–48
SOLUTIONS TO EXERCISES – SERIES A – CHAPTER 3
EXERCISE 3-1A
Accounting
Elements
Used to Increase
This Element
Used to Decrease
This Element
Assets
Debit
Credit
Liabilities
Credit
Debit
Common Stock
Credit
Debit
Retained Earnings
Credit
Debit
Revenue
Credit
Debit
Expense
Debit
Credit
Dividends
Debit
Credit
3-6–49
EXERCISE 3-2A
3-6–50
EXERCISE 3-3A
Account
Normal Balance
a. Salaries Expense
Debit
b. Consulting Revenue
Credit
c. Unearned Revenue
Credit
d. Accounts Payable
Credit
e. Dividends
Debit
f. Land
Debit
g. Salaries Payable
Credit
g. Cash
Debit
i. Prepaid Insurance
Debit
j. Common Stock
Credit
k. Interest Revenue
Credit
l. Rent Expense
Debit
EXERCISE 3-4A
a.
Event
Account Debited
Account Credited
1. Acquired cash from the issue
of common stock.
Cash
Common Stock
2. Provided services for cash.
Cash
Service Revenue
3. Paid cash for salaries
expense.
Salaries Expense
Cash
4. Purchased supplies for cash.
Supplies
Cash
5. Paid in advance for two-year
lease on office space.
Prepaid Rent
Cash
6. Provided services on
account.
Accounts
Receivable
Service Revenue
7. Recognized expense for
prepaid rent that had been
used up by the end of the
accounting period.
Rent Expense
Prepaid Rent
8. Recognized accrued interest
revenue
Interest Receivable
Interest Revenue
9. Recorded accrued salaries at
the end of the accounting
period.
Salaries Expense
Salaries Payable
b.
No.
Assets
=
Liab.
+
Equity
Rev.
−
Exp.
=
Net Inc.
Cash Flow
1.
+
NA
+
NA
NA
NA
+ FA
2.
+
NA
+
+
NA
+
+ OA
3.
−
NA
−
NA
+
−
− OA
4.
+/−
NA
NA
NA
NA
NA
− OA
5.
+/−
NA
NA
NA
NA
NA
− OA
6.
+
NA
+
+
NA
+
+ OA
7.
−
NA
−
NA
+
−
NA
8.
+
NA
+
+
NA
+
NA
9.
NA
+
−
NA
+
−
NA
3-6–52
EXERCISE 3-5A
Event
Account Debited
Account Credited
a.
Cash
Common Stock
b.
Cash
Unearned Revenue
c.
Salaries Payable
Cash
d.
Accounts Receivable
Service Revenue
e.
Operating Expenses
Cash
f.
Supplies
Accounts Payable
g.
Unearned Revenue
Service Revenue
h.
Salaries Expense
Salaries Payable
i.
Supplies Expense
Supplies
j.
Cash
Service Revenue
k.
Interest Receivable
Interest Revenue
l.
Accounts Payable
Cash
m.
Cash
Accounts Receivable
n.
Dividends
Cash
3-6–53
EXERCISE 3-6A
Stockholders’ Equity
Event
Type of
Event
Assets
=
Liabilities
+
Common
Stock
+
Retained
Earnings
a.
AS
+ Debit
+ Credit
NA
NA
b.
AS
+ Debit
NA
+ Credit
NA
c.
AE
+ Debit
− Credit
NA
NA
NA
d.
AU
− Credit
− Debit
NA
NA
e.
AS
+ Debit
+ Credit
NA
NA
f.
AU
− Credit
NA
NA
− Debit
g.
AE
+ Debit
− Credit
NA
NA
NA
h.
AU
− Credit
− Debit
NA
NA
i.
AS
+ Debit
NA
NA
+ Credit
j.
AU
− Credit
NA
NA
− Debit
k.
CE
NA
− Debit
NA
+ Credit
l.
AS
+ Debit
NA
NA
+ Credit
m.
CE
NA
+ Credit
NA
− Debit
n.
AE
+ Debit
− Credit
NA
NA
NA
3-6–54
EXERCISE 3-7A
Cash
Accounts Payable
Common Stock
Debit
Credit
Debit
Credit
Debit
Credit
Increase
Decrease
Decrease
Increase
Decrease
Increase
Accounts Receivable
Salaries Payable
Dividends
Debit
Credit
Debit
Credit
Debit
Credit
Increase
Decrease
Decrease
Increase
Increase
Decrease
Supplies
Service Revenue
Debit
Credit
Debit
Credit
Increase
Decrease
Decrease
Increase
Other Operating Exp.
Debit
Credit
Increase
Decrease
EXERCISE 3-8A
a.
Cash
Common Stock
Debit
Credit
Debit
Credit
$20,000
$20,000
This is an asset source transaction. Assets are increased; equity is
Cash
Supplies
Debit
Credit
Debit
Credit
$1,000
$1,000
Credit
Credit
Cash
Debit
Credit
Credit
EXERCISE 3-9A
a., e. & f.
Assets
=
Stockholders’ Equity
Cash
Accounts Rec.
Retained Earnings
2016
2016
2016
2. 120,000
1. 160,000
2. 120,000
cl 160,000
Bal. 120,000
Bal. 40,000
Bal. 160,000
2017
2017
3. 40,000
3. 40,000
Service Revenue
Bal. 160,000
Bal. -0-
2016
cl 160,000
1. 160,000
Bal. -0-
+
3-57
3-58
EXERCISE 3-9A (cont.)
c. 2016 Revenue = $160,000
3-59
EXERCISE 3-10A
a. b. & e.
Assets
=
Liabilities
+
Stockholders’ Equity
Accounts Rec.
Accounts Pay.
Retained Earnings
Debit
Credit
Debit
Credit
Debit
Credit
a1 25,000
a2 2,800
cl 2,550
cl 25,000
Bal. 25,000
Bal. 2,800
Bal. 22,450
Supplies
Service Revenue
Debit
Credit
Debit
Credit
a2 2,800
b. 2,550
cl 25,000
a1 25,000
Bal. 250
Bal. -0-
Supplies Expense
Debit
Credit
b. 2,550
cl 2,550
Bal. -0-
3-60
EXERCISE 3-10A (cont.)
c. NC = Net Change in Cash
Chase Architectural Services
Effect of Transactions on the Financial Statements for 2016
Assets
=
Liab.
+
Stockholders’ Equity
Rev.
−
Exp.
=
Net Inc.
Cash Flows
No.
Accts.
Rec.
+
Supplies
=
Accts.
Pay.
+
Commo
n Stock
+
Retained
Earnings
a1.
25,000
NA
NA
NA
25,000
25,000
NA
25,000
NA
a2.
NA
2,800
2,800
NA
NA
NA
NA
NA
NA
b.
NA
(2,550)
NA
NA
(2,550)
NA
2,550
(2,550)
NA
Bal.
25,000
+
250
=
2,800
+
-0-
+
22,450
25,000
−
2,550
=
22,450
-0- NC
d. Net income is $22,450; Net Cash Flow from Operating Activities is $-0-. $25,000 of revenue was
earned on account, but none was collected; $2,550 of supplies were used, but none were paid for.
3-61
EXERCISE 3-10A (cont.)
e.
General Journal
Date
Account Titles
Debit
Credit
Closing Entries
Dec. 31
Service Revenue
25,000
Retained Earnings
25,000
Dec. 31
Retained Earnings
2,550
Supplies Expense
2,550
Closing entries are posted to the T-accounts in part a.
Chase Architectural Services
Post-Closing Trial Balance
December 31, 2016
Account Titles
Debit
Credit
Accounts Receivable
$25,000
Supplies
250
Accounts Payable
$ 2,800
Retained Earnings
22,450
Totals
$25,250
$25,250
3-62
EXERCISE 3-11A
a. & b.
Assets
=
Liabilities
+
Stockholders’ Equity
Cash
Unearned Revenue
Service Revenue
6/1 60,000
12/31 35,000
6/1 60,000
12/31 35,000*
Bal. 25,000
3-63
Net Cash Flow from Operating Activities $60,000
3-64
EXERCISE 3-12A
Accounts Receivable
Debit
Credit
Beg. Bal. 132,000
Coll. 196,000
Rev. 180,000
End. Bal. 116,000
$196,000 of cash was collected [($132,000 + $180,000) − $116,000].
Cash inflow from operating activities = $196,000
EXERCISE 3-13A
Accounts Payable
Debit
Credit
Beg. Bal. 60,000
Paid 148,000
Exp. 152,000
End Bal. 64,000
$148,000 of cash was paid for expenses [($60,000 + $152,000) − $64,000].