3-65
3-66
EXERCISE 3-14A
a.
Account Title
Debit
Credit
Accounts Receivable
8,200
Service Revenue
8,200
Assets
=
Liab.
+
Rev.
−
Exp.
=
Net Inc.
Cash Flow
8,200
NA
8,200
NA
8,200
NA
b.
Account Title
Debit
Credit
Cash
5,600
Accounts Receivable
5,600
Assets
=
Liab.
+
Equity
Rev.
−
Exp.
=
Net Inc.
Cash Flow
5,600
NA
NA
NA
NA
NA
5,600 OA
(5,600)
c.
Account Title
Debit
Credit
Prepaid Insurance
1,450
Cash
1,450
Assets
=
Liab.
+
Equity
Rev.
−
Exp.
=
Net Inc.
Cash Flow
1,450
NA
NA
NA
NA
NA
(1,450) OA
3-67
(1,450)
EXERCISE 3-14A (cont.)
d.
Account Title
Debit
Credit
Accounts Payable
400
Cash
400
Assets
=
Liab.
+
Equity
Rev.
−
Exp.
=
Net Inc.
Cash Flow
(400)
(400)
NA
NA
NA
NA
(400) OA
e.
Account Title
Debit
Credit
Insurance Expense
300
Prepaid Insurance
300
Assets
=
Liab.
+
Equity
Rev.
−
Exp.
=
Net Inc.
Cash Flow
(300)
NA
(300)
NA
300
(300)
NA
f.
Account Title
Debit
Credit
Interest Receivable
200
Interest Revenue
200
3-68
Assets
=
Liab.
+
Equity
Rev.
−
Exp.
=
Net Inc.
Cash Flow
200
NA
200
200
NA
200
NA
EXERCISE 3-14A (cont.)
g.
Account Title
Debit
Credit
Cash
1,600
Unearned Revenue
1,600
Assets
=
Liab.
+
Equity
Rev.
−
Exp.
=
Net Inc.
Cash Flow
1,600
1,600
NA
NA
NA
NA
1,600 OA
Account Title
Debit
Credit
Land
9,000
Cash
9,000
Assets
=
Liab.
+
Equity
Rev.
−
Exp.
=
Net Inc.
Cash Flow
9,000
(9,000)
NA
NA
NA
NA
NA
(9,000) IA
i.
Account Title
Debit
Credit
Supplies
350
Cash
350
3-69
Assets
=
Liab.
+
Equity
Rev.
−
Exp.
=
Net Inc.
Cash Flow
350
NA
NA
NA
NA
NA
(350) OA
(350)
3-70
EXERCISE 3-15A
a. & b.
Cherokee Company
Journal Entries for 2016
Date
Account Titles
Debit
Credit
a. 3/1
Prepaid Rent (Lease)
60,000
Cash
60,000
b. 12/31
Rent Expense
50,000*
Prepaid Rent
50,000
*$60,000 12 = $5,000 per month. $5,000 x 10 mo. = $50,000.
c. NC = Net Change in Cash
Cherokee Company
Horizontal Statements Model
Assets
Liab.
=
Stockholders’ Equity
Income Statement
Statement of
Cash
+
=
+
Retained
Earn.
Rev.
−
Exp.
=
Net Inc.
Cash
Flows
1.
80,000
NA
NA
NA
NA
NA
80,000 FA
2.
(60,000)
NA
NA
NA
NA
NA
(60,000) OA
3.
98,000
NA
98,000
98,000
NA
98,000
98,000 OA
adj
NA
NA
(50,000)
NA
50,000
(50,000)
NA
Bal.
118,000
+
=
NA
=
+
48,000
98,000
−
50,000
=
48,000
118,000 NC
3-6–71
EXERCISE 3-15A (cont.)
d. Revenue $98,000
Expense (50,000)
3-6–72
EXERCISE 3-16A
a.
Debit
Credit
Salaries Expense
6,400
Salaries Payable
6,400
b.
Assets
=
Liab.
+
Equity
Rev.
−
Exp.
=
Net Inc.
Cash Flow
Sal. Pay.
Ret. Earn.
NA
6,400
(6,400)
NA
6,400
(6,400)
NA
c. Revenue $36,000
Salaries Expense (6,400)
Net Income $29,600
Cash Flows From Operating Activities:
Cash Received from Revenue $36,000
Cash Payment for Expense -0-
Net Cash Flow from Operating Activities $36,000
d. Salaries Payable = $6,400
3-6–73
EXERCISE 3-17A
a.
Closing Entries
Debit
Credit
1.
Service Revenue
65,400
Retained Earnings
65,400
2.
Retained Earnings
61,350
Operating Expense
35,300
Rent Expense
8,400
Salaries Expense
14,500
Supplies Expense
3,150
3.
Retained Earnings
2,000
Dividends
2,000
b.
Retained Earnings, 2016
Beginning Retained Earnings
$41,250
Add: Revenue
65,400
Less: Expenses
(61,350)
Less: Dividends
(2,000)
Ending Retained Earnings
$43,300
3-6–74
EXERCISE 3-18A
a.
Montgomery Company
General Journal, 2016
Event
Account Titles
Debit
Credit
1.
Cash
36,000
Common Stock
36,000
2.
Accounts Receivable
48,000
Service Revenue
48,000
3.
Other Operating Expense
6,500
Accounts Payable
6,500
4.
Salaries Expense
21,000
Cash
21,000
5.
Cash
34,500
Accounts Receivable
34,500
6.
Dividends
3,000
Cash
3,000
7.
Cash
9,500
Service Revenue
9,500
8.
Accounts Payable
5,500
Cash
5,500
3-6–75
EXERCISE 3-18A (cont.)
b.
Assets
=
Liabilities
+
Stockholders’ Equity
Cash
Accounts Payable
Common Stock
1. 36,000
4. 21,000
8. 5,500
3. 6,500
1. 36,000
5. 34,500
6. 3,000
Bal. 1,000
Bal. 36,000
7. 9,500
8. 5,500
Bal. 50,500
Dividends
6. 3,000
Bal. 3,000
Accounts Receivable
2. 48,000
5. 34,500
Service Revenue
Bal. 13,500
2. 48,000
7. 9,500
Bal. 57,500
Salaries Expense
4. 21,000
Bal. 21,000
Other Operating Exp.
3. 6,500
Bal. 6,500
c. Total Assets = $64,000 ($50,500 + $13,500)
d. Net Income = $30,000 ($57,500 − $21,000 −$6,500)
3-6–76
EXERCISE 3-19A
Montgomery Company
Trial Balance
December 31, 2016
Account Titles
Debit
Credit
Cash
$ 90,000
Accounts Receivable
15,400
Office Supplies
2,500
Prepaid Rent
5,600
Land
30,000
Accounts Payable
$ 7,000
Unearned Revenue
32,000
Common Stock
80,000
Retained Earnings
9,000
Dividends
8,000
Service Revenue
86,000
Operating Expense
41,000
Salaries Expense
18,000
Advertising Expense
3,500
Totals
$214,000
$214,000
3-6–77
EXERCISE 3-20A
a. Not out of balance because a credit was posted and debits equaled
credits, even though the credit is to the wrong account; the liability
account, Unearned Revenue, will be understated by $900 and the
3-6–78
EXERCISE 3-21A
Equipment Services, Inc.
T-Accounts
Assets
=
Liabilities
+
Stockholders’ Equity
Cash
Accounts Payable
Common Stock
Retained Earnings
Debit
Credit
Debit
Credit
Debit
Credit
Debit
Credit
1. 60,000
7. 15,100
7. 15,100
3. 2,000
1. 60,000
-0-
2. 8,200
8. 2,000
5. 16,100
Bal. 60,000
6. 28,500
Bal. 3,000
Dividends
Bal. 79,600
Debit
Credit
Salaries Payable
8. 2,000
Accounts Rec.
Debit
Credit
Bal. 2,000
Debit
Credit
10. 3,100
4. 36,000
6. 28,500
Bal. 3,100
Service Revenue
Bal. 7,500
Debit
Credit
4. 36,000
Supplies
Unearned Revenue
11. 3,100
Debit
Credit
Debit
Credit
Bal. 39,100
3. 2,000
9. 1,600
11. 3,100
2. 8,200
Bal. 400
Bal. 5,100
Interest Revenue
Debit
Credit
Interest Receivable
12. 500
Debit
Credit
Bal. 500
12. 500
Bal. 500
Operating Expenses
Debit
Credit
5. 16,100
Bal. 16,100
Salaries Expense
Debit
Credit
10. 3,100
Bal. 3,100
Supplies Expense
Debit
Credit
9. 1,600
Bal. 1,600
3-6–79
EXERCISE 3-21A (cont.)
b.
Equipment Services, Inc.
Trial Balance
Account Titles
Debit
Credit
Cash
$ 79,600
Accounts Receivable
7,500
Interest Receivable
500
Supplies
400
Accounts Payable
$ 3,000
Salaries Payable
3,100
Unearned Revenue
5,100
Common Stock
60,000
Dividends
2,000
Service Revenue
39,100
Interest Revenue
500
Operating Expenses
16,100
Salaries Expense
3,100
Supplies Expense
1,600
Totals
$110,800
$110,800
EXERCISE 3-22A
a.
Oak Consulting
General Journal
2016
Date
Account Titles
Debit
Credit
1.
Accounts Receivable
185,000
Service Revenue
185,000
2.
Operating Expenses
45,800
Accounts Payable
45,800
3.
Cash
140,000
Accounts Receivable
140,000
4.
Salaries Expense
120,000
Cash
120,000
5.
Accounts Payable
31,400
Cash
31,400
6.
Dividends
10,000
Cash
10,000
3-6–81
EXERCISE 3-22A (cont.)
b. and d.
Oak Consulting
T-Accounts, 2016
Assets
=
Liabilities
+
Stockholders’ Equity
Cash
Accounts Payable
Common Stock
Debit
Credit
Debit
Credit
Debit
Credit
Bal. 42,000
Bal. 8,400
Bal. 24,000
3. 140,000
4. 120,000
5. 31,400
2. 45,800
5. 31,400
Bal. 22,800
Retained Earnings
6. 10,000
Debit
Credit
Bal. 20,600
Bal. 34,600
cl 165,800
cl 185,000
Accounts Receivable
cl 10,000
Debit
Credit
Bal. 43,800
Bal. 25,000
1. 185,000
3. 140,000
Dividends
Bal. 70,000
Debit
Credit
6. 10,000
Bal. 10,000
cl 10,000
Bal. -0-
Service Revenue
Debit
Credit
1. 185,000
Bal. 185,000
cl 185,000
Bal. -0-
Operating Expenses
Debit
Credit
2. 45,800
Bal. 45,800
cl 45,800
Bal. -0-
Salaries Expense
Debit
Credit
4. 120,000
Bal. 120,000
cl 120,000
3-6–82
Bal. -0-
3-83
EXERCISE 3-22A (cont.)
c. NC = Net Change in Cash
Oak Consulting
Effect of Transactions on the Financial Statements for 2016
Balance Sheet
Income Statement
Statement of
Assets
=
Liab.
+
Stockholders’
Equity
Rev.
−
Exp.
=
Net Inc.
Cash Flows
No.
Cash
+
Accts.
Rec.
=
Acc. Pay.
+
Comm.
Stock
+
Retained
Earn.
Bal.
42,000
25,000
8,400
24,000
34,600
NA
NA
NA
NA
1.
NA
185,000
NA
NA
185,000
185,000
NA
185,000
NA
2.
NA
NA
45,800
NA
(45,800)
NA
45,800
(45,800)
NA
3.
140,000
(140,000)
NA
NA
NA
NA
NA
NA
140,000 OA
4.
(120,000)
NA
NA
NA
(120,000)
NA
120,000
(120,000)
(120,000) OA
5.
(31,400)
NA
(31,400)
NA
NA
NA
NA
NA
(31,400) OA
6.
(10,000)
NA
NA
NA
(10,000)
NA
NA
NA
(10,000) FA
Bal.
20,600
+
70,000
=
22,800
+
24,000
+
43,800
185,000
−
165,800
=
19,200
(21,400) NC
EXERCISE 3-22A (cont.)
d.
Event
Account Titles
Debit
Credit
Closing Entries
7.
Service Revenue
185,000
Retained Earnings
185,000
8.
Retained Earnings
165,800
Operating Expenses
45,800
Salaries Expense
120,000
9.
Retained Earnings
10,000
Dividends
10,000
Net Income = $19,200
e. Change in retained earnings = $9,200 (NI $19,200 − Div. 10,000)
Cash
Accounts Receivable
Accounts Payable
Common Stock
Retained Earnings