Fundamentals of Financial Accounting, 5/e 3-21
E3-7
Assets
Liabilities
Stockholders’ Equity
a.
Cash –1,000
NE
Wages Expense (+E) –1,000
b.
Cash +5,000
Note Payable (short-term)
+5,000
NE
c.
Equipment +2,000
Accounts Payable +2,000
NE
d.
Cash +400
NE
Sales Revenue (+R) +400
e.
NE
Accounts Payable +800
Utilities Expense (+E) –800
f.
Accounts Receivable
+1,700
NE
Sales Revenue (+R) +1,700
g.
Cash –300
Accounts Payable –300
NE
h.
Cash –70
NE
Travel Expense (+E) –70
i.
Cash +200
Accounts Receivable
+200
NE
Service Revenue (+R) +400
j.
Cash +100
Accounts Receivable
–100
NE
NE
k.
Cash –150
Accounts Payable +150
Advertising Expense (+E) –300
Preliminary net income is $330 ($400 + 1,700 + 400 – 1,000 – 800 – 70 – 300).
E3-8
Assets
Liabilities
Stockholders’ Equity
a.
Cash +49,000
NE
Sales Revenue (+R) +49,000
b.
Supplies +3,000
Accounts Payable +3,000
NE
c.
Cash +58,000
Notes Payable (long-term)
+58,000
NE
d.
Cash –18,600
Equipment
+18,600
NE
NE
e.
Cash –18,000
Accounts Payable +9,000
Selling Expense (+E) –27,000
f.
Cash –9,400
Prepaid Rent
+4,700
NE
Rent Expense (+E) –4,700
Preliminary net income is $17,300 ($49,000 – 27,000 – 4,700).
E3-9
Cash (+A) ………………………………………………………………..
80,000
Notes Payable (short-term) (+L) ……………………………..
80,000
Debits equal credits. Assets and liabilities increase by the same amount.
Cash (+A) ………………………………………………………………..
Accounts Receivable (+A) ………………………………………….
5,000
95,000
Service Revenue (+R, +SE) ……………………………………
100,000
Debits equal credits. Revenue increases retained earnings (part of
stockholders’ equity). Stockholders’ equity and assets increase by the same
amount.
Equipment (+A) ………………………………………………………..
130,000
Cash (-A) ……………………………………………………………..
130,000
Debits equal credits. Assets increase and decrease by the same amount.
Salaries and Wages Expense (+E,-SE) …………………………
1,000
Cash (-A) …………………………..………………………………….
1,000
Debits equal credits. Expenses decrease retained earnings (part of
stockholders’ equity). Thus, stockholders’ equity and assets decrease by the
same amount.
Cash (+A) ………………………………………………………………..
410
Accounts Receivable (-A) …………………………..…………..
410
Debits equal credits. Assets increase and decrease by the same amount.
Travel Expense (+E, –SE) ……………………………………………
4,000
Cash (-A) …………………………..………………………………….
4,000
Debits equal credits. Expenses decrease retained earnings (part of
stockholders’ equity). Thus, stockholders’ equity and assets decrease by the
same amount.
Accounts Payable (-L) ………………………………………………..
8,200
Cash (-A) …………………………..………………………………….
8,200
Debits equal credits. Assets and liabilities decrease by the same amount.
Utilities Expense (+E, –SE) ………………………………………….
20,000
Cash (-A) …………………………..………………………………….
Accounts Payable (+L) …………………………………………..
15,000
5,000
Debits equal credits. Expenses decrease retained earnings (part of
stockholders‘ equity). The net decrease in stockholders’ equity and liabilities
combined is equal to the decrease in assets.
Preliminary net income is $75,000 ($100,000 – 1,000 – 4,000 – 20,000).
E3–10
a. Cash (+A) …………………………………………………………. 500,000
Note Payable (short-term) (+L) ………………….. 500,000
Debits equal credits. Assets and liabilities increase by the same amount.
b. Equipment (+A) ………………………………………………… 20,000
Cash (-A) ……………………………………………….. 20,000
Debits equal credits. Since the season passes are sold before Greek Peak
provides service, revenue is deferred until it is earned. Assets and liabilities
increase by the same amount.
f. Cash (+A) ………………………………………………………… 76,000
Service Revenue (+R, +SE) ………………………. 76,000
E3-11
Rent Expense (+E,-SE) ………………………………………………
200
Cash (-A) …………………………..…………………………….
200
Cash (+A) ………………………………………………………………..
800
Unearned Revenue (+L) ……………………………………
800
Cash (+A) ………………………………………………………………..
900
Service Revenue (+R, +SE) ………………………………
900
Salaries and Wages Expense (+E, –SE) ………………………..
1,200
Cash (-A) …………………………..…………………………….
1,200
Advertising Expense (+E, –SE) …………………………………….
100
Cash (-A) …………………………..…………………………….
100
Cash (+A) ………………………………………………………………..
Accounts Receivable (+A) ………………………………………….
500
1,200
Service Revenue (+R, +SE) ………………………………
1,700
Supplies (+A) ……………………………………………………………
1,350
Accounts Payable (+L) ……………………………………..
1,350
Preliminary net income is $1,100 ($900 + 1,700 – 200 – 1,200 – 100).
Net Profit Margin=Net Income
Revenues
= $1,100
$2,600
=0.423 or 42.3%
E3-12
Req. 1
Included with Req. 3 on the next page.
Req. 2
Cash (+A) ………………………………………………………………..
500
Unearned Revenue (+L) ……………………………………
500
Cash (+A) ………………………………………………………………..
300
Rent Revenue (+R, +SE) …………………………………..
300
Cash (+A) ………………………………………………………………..
14,500
Service Revenue (+R, +SE) ………………………………
14,500
Accounts Receivable (+A) ………………………………………….
7,000
Service Revenue (+R, +SE) ………………………………
7,000
Cash (+A) ………………………………………………………………..
6,000
Accounts Receivable (-A) …………………………………..
6,000
Utilities Expense (+E, –SE) ………………………………………….
350
Accounts Payable (+L) ……………………………………..
350
No transaction because there has been no exchange.
Accounts Payable (-L) ……………………………………………….
1,700
Cash (-A) …………………………..…………………………...
1,700
Salaries and Wages Expense (+E, –SE) ………………………..
10,000
Cash (-A) ………………………………………………………..
10,000
Supplies (+A) ……………………………………………………………
800
Cash (-A) ………………………………………………………..
800
E3-12 (continued)
Req. 1 and 3
Cash (A)
Accounts Receivable (A)
Supplies (A)
Beg. 6,000
(a) 500
(b) 300
(c) 14,500
(e) 6,000
1,700 (h)
10,000 (i)
800 (j)
Beg. 25,000
(d) 7,000
6,000 (e)
Beg. 1,200
(j) 800
14,800
26,000
2,000
Equipment (A)
Land (A)
Building (A)
Beg. 8,000
Beg. 6,000
Beg. 22,000
8,000
6,000
22,000
Accounts Payable (L)
Unearned Revenue (L)
Notes Payable (L)
(h) 1,700
8,000 Beg.
350 (f)
3,200 Beg.
500 (a)
40,000 Beg.
6,650
3,700
40,000
Common Stock (SE)
Retained Earnings (SE)
Service
Revenue (R)
8,000 Beg.
9,000 Beg.
0 Beg.
14,500 (c)
7,000 (d)
8,000
9,000
21,500
Rent Revenue (R)
Salaries and Wages Expense
(E)
Utilities Expense (E)
0 Beg.
300 (b)
Beg. 0
(i) 10,000
Beg. 0
(f) 350
300
10,000
350
Item (g) is not a transaction; there has been no exchange.
E3-13
RICKY’S PIANO REBUILDING COMPANY
Unadjusted Trial Balance
At January 31
Debit
Credit
Cash
$14,800
Accounts Receivable
26,000
Supplies
2,000
Equipment
8,000
Land
6,000
Building
22,000
Accounts Payable
$ 6,650
Unearned Revenue
3,700
Notes Payable
40,000
Common Stock
8,000
Retained Earnings
9,000
Service Revenue
21,500
Rent Revenue
300
Salaries and Wages Expense
10,000
Utilities Expense
350
Total
$89,150
$89,150
E3-14
OT TECHNOLOGIES (OTT)
NEWS NOW (NN)
a) Advertising Expense
Accounts Payable
500
500
a) Accounts Receivable
Advertising Revenue
500
500
b) Accounts Receivable
Service Revenue
135
135
b) Repairs and Maint. Expense 135
Accounts Payable
135
c) Accounts Payable
Cash
500
500
c) Cash
Accounts Receivable
500
500
d) Cash
Advertising Revenue
60
60
d) Advertising Expense
Cash
60
60
e) Note Receivable 1,000
Cash 1,000
e) Cash 1,000
Note Payable (short-term)
1,000
E3-15
Req. 1
Accounts Receivable increases with sales to customers on account and decreases
with cash collections from customers.
Prepaid Rent increases with cash payments for rent related to future periods and
decreases as the benefits of these prepayments are used up over time.
E3-16
Assets
=
Liabilities
+
Stockholders’ Equity
a.
Cash
+9,500
=
Service
Revenue (+R)
+9,500
b.
Cash
+10,000
=
Common Stock
+10,000
c.
Equipment
Cash
+12,000
-3,000
=
Note
Payable
(long)
+9,000
d.
Cash
+7,500
=
Unearned
Revenue
+7,500
e.
Supplies
+1,000
=
Accounts
Payable
+1,000
f.
NE
=
Accounts
Payable
+1,250
Utilities Expense
(+E)
-1,250
g.
Accounts
Receivable
+15,900
=
Service
Revenue (+R)
+15,900
h.
Accounts
Receivable
Cash
–12,000
+12,000
=
NE
i.
Cash
–500
=
Accounts
Payable
–500
E3-17
Cash (+A) ………………………………………………………………..
9,500
Service Revenue (+R,+SE) ……………………………….
9,500
Cash (+A) ………………………………………………………………..
10,000
Common Stock (+SE) ……………………………………….
10,000
Equipment (+A) ………………………………………………………..
12,000
Cash (-A) ………………………………………………………..
3,000
Note Payable (long-term) (+L) …………………………...
9,000
Cash (+A) ………………………………………………………………..
7,500
Unearned Revenue (+L) ……………………………………
7,500
Supplies (+A) ……………………………………………………………
1,000
Accounts Payable (+L) ……………………………………..
1,000