E3-17 (continued)
f.
Utilities Expense (+E, –SE) ………………………………………….
1,250
Accounts Payable (+L) ……………………………………..
1,250
g.
Accounts Receivable (+A) ………………………………………….
15,900
Service Revenue (+R, +SE) ………………………………
15,900
h.
Cash (+A) ………………………………………………………………..
12,000
Accounts Receivable (-A) ………………………………….
12,000
i.
Accounts Payable (-L) ……………………………………………….
500
Cash (-A) ………………………………………………………..
500
E3-18
6,750 End.
8,800
Beg.
8,800 End.
9,000 End.
15,900
25,400 End.
Utilities Expense (E)
Beg.
0
End. 1,250
Beg.
Cash (A)
Beg.
a
b
d
10,000
9,500
10,000
7,500
3,000
500
Accounts Payable (L)
i
500
5,000
1,000
1,250
Beg.
e
f
Common Stock (SE)
12,000
10,000
Beg.
b
22,000 End.
10,000 End.
Accounts Receivable (A)
Beg.
g
12,500
15,900
12,000
h
End. 16,400
Note Payable (L)
0
9,000
Beg.
c
Service Revenue (R)
E3-19
TONGO, INC.
Unadjusted Trial Balance
At January 31
Debit
Credit
Cash
$ 45,500
Accounts Receivable
16,400
Supplies
1,800
Equipment
17,000
Accounts Payable
$ 6,750
Unearned Revenue
10,000
Note Payable (long-term)
9,000
Common Stock
22,000
Retained Earnings
8,800
Service Revenue
25,400
Utilities Expense
1,250
Totals
$ 81,950
$ 81,950
E3–20
Req. 1
Transaction
Brief Explanation
a.
Issued common stock for $11,000 cash.
b.
Incurred $710 of utilities expense in July, not yet paid.
c.
Sold $5,000 of services to customers on account.
d.
Purchased $10,000 of equipment, paying $6,000 in cash and the
balance ($4,000) on account.
e.
Sold $1,000 of services to customers, who paid in cash.
f.
Purchased $550 of supplies on account.
g.
Paid $3,000 cash toward accounts payable.
h.
Paid $2,000 cash for wage expense.
i.
Paid $750 cash toward July rent.
j.
Collected $1,500 cash from customers on account.
Balance Sheet
accounts
Income Statement
accounts
Fundamentals of Financial Accounting, 5/e 3-33
E3–20 (continued)
Req. 2
NEPCO
Income Statement
For the Month Ended July 31
Revenues:
Service Revenue
$ 6,000
Total Revenues
6,000
Expenses:
Salaries and Wages Expense
2,000
Rent Expense
750
Utilities Expense
710
Total Expenses
3,460
Net Income
$ 2,540
NEPCO
Statement of Retained Earnings
For the Month Ended July 31
Retained Earnings, July 1
$ 0
Add: Net Income
2,540
Subtract: Dividends
( 0)
Retained Earnings, July 31
$2,540
Fundamentals of Financial Accounting, 5/e 3-34
E3–20 (continued)
NEPCO
Balance Sheet
At July 31
Assets
Current Assets
Cash
$ 1,750
Accounts Receivable
3,500
Supplies
550
Total Current Assets
5,800
Equipment
10,000
Total Assets
$ 15,800
Liabilities
Current Liabilities
Accounts Payable
$ 2,260
Total Liabilities
2,260
Stockholders’ Equity
Common Stock
11,000
Retained Earnings
2,540
Total Stockholders’ Equity
13,540
Total Liabilities and Stockholders’ Equity
$ 15,800
Req. 3
Net Profit Margin=Net Income
Revenues
Fundamentals of Financial Accounting, 5/e 3-35
E3-21
Debit Side of Journal Entry Credit Side of Journal Entry
Account Account Direction Normal Account Account Direction Normal
Name Type of Change Balance Name Type of Change Balance
(a) Cash A + Debit Common Stock SE + Credit
(b) Accounts
Receivable A + Debit Service Revenue R + Credit
Fundamentals of Financial Accounting, 5/e 3-36
ANSWERS TO COACHED PROBLEMS
CP3-1
Transaction
Debit
Credit
a.
5
3, 8
b.
3
4
c.
3
11
d.
10
3
e.
2
11
f.
3
2
g.
1
3
h.
12
3
i.
13
12
j.
6
3, 7
k.
9
3
CP3-2
a) 5/1
Cash (A+) …………………………………………………………………
30,000
Common Stock (+SE) ……………………………………………
30,000
b) 5/15
Cash (+A) …………………………………………………………………
50,000
Notes Payable (long-term) (+L) ……………………………….
50,000
c) 5/31
Prepaid Insurance (+A) ………………………………………………
2,400
Cash (-A) ……………………………………………………………..
2,400
d) 6/3
Equipment (+A) …………………………………………………………
15,000
Accounts Payable (+L) ………………………………………….
15,000
e) 6/5
Advertising Expense (+E, –SE) …………………………………….
250
Cash (-A) ……………………………………………………………..
250
f) 6/9
Cash (+A) …………………………………………………………………
400
Service Revenue (+R, +SE) …………………………………..
400
g) 6/14
Accounts Payable (-L) ………………………………………………..
15,000
Cash (-A) ……………………………………………………………..
15,000
CP3-3
Req. 1
1.
Cash (+A) ………………………………………………………………..
16,000
Common Stock (+SE) ……………………………………….
16,000
2.
Prepaid Rent (+A) ………………………………………………………
2,400
Cash (–A) ……………………………………………………….
2,400
3.
Supplies (+A) ……………………………………………………………
300
Cash (–A) ……………………………………………………….
300
4.
Cash (+A) …………………………………………………………………
10,000
Notes Payable (long-term) (+L) …………………………..
10,000
5.
Equipment (+A) …………………………………………………………
2,500
Land (+A) ………………………………………………………………….
7,500
Cash (–A) ………………………………………………………..
10,000
6.
Advertising Expense (+E, –SE) ……………………………………
425
Cash (–A) ………………………………………………………..
425
7.
Cash (+A) …………………………………………………………………
1,525
Accounts Receivable (+A) …………………………………………..
275
Sales Revenue (+R, +SE) ………………………………….
1,800
8.
Cash (+A) …………………………………………………………………
50
Accounts Receivable (–A) …………………………………
50
9.
Repairs and Maintenance Expense (+E, –SE) ……………….
120
Cash (–A) ……………………………………………………….
120
10.
Salaries and Wages Expense (+E, –SE) ……………………….
420
Cash (–A) ……………………………………………………….
420
Fundamentals of Financial Accounting, 5/e 3-38
CP3-3 (continued)
Req. 2
Cash (A)
Accounts Receivable (A)
Supplies (A)
Beg. 0
Beg. 0
50 (8)
Beg. 0
(1) 16,000
(4) 10,000
(7) 1,525
(8) 50
2,400 (2)
300 (3)
10,000 (5)
425 (6)
120 (9)
420 (10)
(7) 275
(3) 300
End. 13,910
End. 225
End. 300
Prepaid Rent (A)
Land (A)
Equipment (A)
Beg. 0
Beg. 0
Beg. 0
(2) 2,400
(5) 7,500
(5) 2,500
End. 2,400
End. 7,500
End. 2,500
Notes Payable (long-term)
(L)
0 Beg.
10,000 (4)
10,000 End.
Common Stock (SE)
Sales Revenue (R)
0 Beg.
16,000 (1)
0 Beg.
1,800 (7)
16,000 End.
1,800 End.
Advertising Expense (E)
Salaries and Wages
Expense (E)
Repairs & Maintenance
Expense (E)
Beg. 0
Beg. 0
(10) 420
Beg. 0
(6) 425
(9) 120
End. 425
End. 420
End. 120
Fundamentals of Financial Accounting, 5/e 3-39
CP3-3 (continued)
Req. 3
BARB’S BOOK BUSINESS
Unadjusted Trial Balance
At February 28
Debit
Credit
Cash
$ 13,910
Accounts Receivable
225
Supplies
300
Prepaid Rent
2,400
Land
7,500
Equipment
2,500
Notes Payable
10,000
Common Stock
16,000
Sales Revenue
1,800
Advertising Expense
425
Salaries and Wages Expense
420
Repairs and Maintenance Expense
120
Total
$ 27,800
$ 27,800
Req. 4
Preliminary net income is $835 (1,800 – 425 – 420 – 120).
Net Profit Margin=Net Income
Fundamentals of Financial Accounting, 5/e 3-40
CP3-4
Req. 1
Assets
=
Liabilities
+
Stockholders’ Equity
8/31
Cash
+1,500
=
Unearned
Revenue
+1,500
9/11
Cash
+3,800
=
Service Revenue
(+R)
+3,800
9/13
Supplies
+200
=
Accounts
Payable
+200
9/15
Cash
-1,500
=
Salaries & Wages
Expense (+E)
-1,500
9/25
Cash
+7,200
=
Service Revenue
(+R)
+7,200
9/26
Accounts
Receivable
+210
=
Service Revenue
(+R)
+210
9/27
Prepaid Advertising +300
Cash – 300
=
NE
9/29
Cash
Accounts
Receivable
+210
–210
=
NE
9/30
NE
=
Accounts
Payable
+300
Utilities Expense
(+E)
–300