CP3-4 (continued)
Req. 2
8/31
Cash (+A) ………………………………………………………………..
1,500
Unearned Revenue (+L) ……………………………………
1,500
9/11
Cash (+A) ………………………………………………………………..
3,800
Service Revenue (+R, +SE) ………………………………
3,800
9/13
Supplies (+A) ……………………………………………………………
200
Accounts Payable (+L) ……………………………………..
200
9/15
Salaries and Wages Expense (+E, –SE) ………………………..
1,500
Cash (-A) …………………………..…………………………….
1,500
9/25
Cash (+A) ………………………………………………………………..
7,200
Service Revenue (+R, +SE) ……………………………..
7,200
9/26
Accounts Receivable (+A) ………………………………………….
210
Service Revenue (+R, +SE) ………………………………
210
9/27
Prepaid Advertising (+A) …………………………………………….
300
Cash (-A) …………………………..…………………………….
300
9/29
Cash (+A) ………………………………………………………………..
210
Accounts Receivable (-A) …………………………………..
210
9/30
Utilities Expense (+E,-SE) …………………………………………..
300
Accounts Payable (+L) ……………………………………..
300
Req. 3
Preliminary net income = Revenues – Expenses
= ($3,800 + 7,200 + 210) – 1,500 – 300
= $9,410
Net income is greater than zero, so it suggests LTC is profitable.
Fundamentals of Financial Accounting, 5/e 3-42
CP3-4 (continued)
Req. 4
Adjustments will be needed to report the membership revenue earned in September
(previously recorded as Unearned Revenue), the cost of supplies used up in
ANSWERS TO GROUP A PROBLEMS
PA3-1
Transaction
Debit
Credit
a.
5
6
b.
2
13
c.
14
1
d.
11
5
e.
4
5, 10
f.
5
2
g.
12
5
h.
1
5
i.
3
5
j.
3
1
k.
5
13
l.
15
14
m.
7
8
n.
None*
Fundamentals of Financial Accounting, 5/e 3-43
PA3-2
Supplies (+A) …………………………………………………………….
500
Accounts Payable (+L) ………………………………………
500
Accounts Receivable (+A) …………………………………………..
3,000
Service Revenue (+R, +SE) ……………………………….
3,000
Accounts Payable (-L) …………………………………………………
250
Cash (-A) ………………………………………………………….
250
Advertising Expense (+E,-SE) ………………………………………
400
Cash (-A) ………………………………………………………….
400
Equipment (+A) …………………………………………………………
2,300
Cash (-A) ………………………………………………………….
2,300
Salaries and Wages Expense (+E, –SE) …………………………
1,200
Cash (-A) ………………………………………………………….
1,200
Cash (+A) …………………………………………………………………
1,000
Accounts Receivable (-A) ……………………………………
1,000
Land (+A) …………………………………………………………………
10,000
Cash (-A) ………………………………………………………….
Note Payable (long-term) (+L) …………………………….
2,000
8,000
Cash (+A) …………………………………………………………………
80,000
Common Stock (+SE) ………………………………………..
80,000
Accounts Receivable (+A) …………………………………………..
2,000
Service Revenue (+R, +SE) ……………………………….
2,000
Utilities Expense (+E, –SE) …………………………………………..
300
Accounts Payable (+L) ………………………………………
300
Fundamentals of Financial Accounting, 5/e 3-44
PA3-3
Req. 1
1.
Cash (+A) ………………………………………………………………..
200,000
Common Stock (+SE) ……………………………………….
200,000
2.
Buildings (+A) ……………………………………………………………
142,000
Notes Payable (long-term) (+L) …………………………..
71,000
Cash (–A) ……………………………………………………….
71,000
3.
Accounts Receivable (+A) …………………………………………..
16,000
Service Revenue (+R, +SE) ………………………………
16,000
4.
Cash (+A) …………………………………………………………………
13,000
Rent Revenue (+R, +SE) ……………………………………
13,000
5.
Cash (+A) …………………………………………………………………
1,500
Unearned Revenue (+L) …………………………………….
1,500
6.
Supplies (+A) ……………………………………………………………
3,000
Accounts Payable (+L) ………………………………………
3,000
7.
Accounts Payable (–L) ……………………………………………….
1,700
Cash (–A) ……………………………………………………….
1,700
8.
Cash (+A) …………………………………………………………………
1,000
Accounts Receivable (–A) …………………………………
1,000
9.
Prepaid Insurance (+A) ……………………………………………….
3,600
Cash (–A) ……………………………………………………….
3,600
10.
Utilities Expense (+E, –SE) ………………………………………..
800
Cash (–A) ………………………………………………………..
800
11.
Salaries and Wages Expense (+E, –SE) ……………………….
14,000
Cash (–A) ……………………………………………………….
14,000
Fundamentals of Financial Accounting, 5/e 3-45
PA3-3 (continued)
Req. 1 (continued)
12.
Utilities Expense (+E, –SE) …………………………………………
1,200
Accounts Payable (+L) ……………………………………..
1,200
Req. 2
Cash (A)
Accounts Receivable (A)
Supplies (A)
Beg. 0
Beg. 0
1,000 (8)
Beg. 0
(1)200,000
(4) 13,000
(5) 1,500
(8) 1,000
71,000 (2)
1,700 (7)
3,600 (9)
800 (10)
14,000 (11)
(3) 16,000
(6) 3,000
End. 124,400
End. 15,000
End. 3,000
Prepaid Insurance (A)
Buildings (A)
Accounts Payable (L)
Beg. 0
Beg. 0
0 Beg.
3,000 (6)
1,200 (12)
(9) 3,600
(2)142,000
(7) 1,700
End. 3,600
End.142,000
2,500 End.
Unearned Revenue (L)
Notes Payable (long-term)
(L)
Common Stock (SE)
0 Beg.
1,500 (5)
0 Beg.
71,000 (2)
0 Beg.
200,000(1)
1,500 End.
71,000 End.
200,000 End.
Service Revenue (R)
Rent Revenue (R)
Utilities Expense (E)
0 Beg.
16,000 (3)
0 Beg.
13,000 (4)
Beg. 0
(10) 800
(12) 1,200
16,000 End.
13,000 End.
End. 2,000
Salaries and Wages
Expense (E)
Beg. 0
(11) 14,000
End. 14,000
Fundamentals of Financial Accounting, 5/e 3-46
PA3-3 (continued)
Req. 3
SPICEWOOD STABLES, INC.
Unadjusted Trial Balance
At April 30
Debit
Credit
Cash
$124,400
Accounts Receivable
15,000
Supplies
3,000
Prepaid Insurance
3,600
Buildings
142,000
Accounts Payable
$ 2,500
Unearned Revenue
1,500
Notes Payable (long-term)
71,000
Common Stock
200,000
Service Revenue
16,000
Rent Revenue
13,000
Utilities Expense
2,000
Salaries and Wages Expense
14,000
Total
$304,000
$ 304,000
Req. 4
Preliminary net income is $13,000 (16,000 + 13,000 – 2,000 – 14,000)
Net Profit Margin=Net Income
Fundamentals of Financial Accounting, 5/e 3-47
PA3-4
Req. 1
Assets
=
Liabilities
+
Stockholders’ Equity
9/1
Cash
+10,000
=
Common Stock
+10,000
9/8
Cash
+30,000
=
Note
Payable
+30,000
9/10
Equipment
Cash
+20,000
-20,000
=
No change
9/15
Supplies
+1,000
=
Accounts
Payable
+1,000
9/16
Cash
-1,500
=
Rent Expense
(+E)
-1,500
9/22
Cash
Accounts
Receivable
+6,000
+2,000
=
Service Revenue
(+R)
+8,000
9/28
Cash – 200
=
Utilities Expense
(+E)
–200
9/29
Cash
-4,000
=
Salaries & Wages
Expense (+E)
-4,000
9/30
No change
=
Accounts
Payable
+300
Utilities Expense
(+E)
–300
PA3-4 (continued)
Req. 2
9/1
Cash (+A) ………………………………………………………………..
10,000
Common Stock (+SE) ……………………………………….
10,000
9/8
Cash (+A) ………………………………………………………………..
30,000
Note Payable (long-term) (+L) …………………………...
30,000
9/10
Equipment (+A) ………………………………………………………..
20,000
Cash (-A) …………………………..…………………………….
20,000
9/15
Supplies (+A) ……………………………………………………………
1,000
Accounts Payable (+L) ………………………………………
1,000
9/16
Rent Expense (+E, –SE) ……………………………………………..
1,500
Cash (-A) …………………………..…………………………….
1,500
9/22
Cash (+A) ………………………………………………………………..
6,000
Accounts Receivable (+A) ………………………………………….
2,000
Service Revenue (+R, +SE) …………………………..….
8,000
9/28
Utilities Expense (+E, –SE) ………………………………………….
200
Cash (-A) …………………………..…………………………….
200
9/29
Salaries and Wages Expense (+E, –SE) ………………………..
4,000
Cash (-A) …………………………..…………………………….
4,000
9/30
Utilities Expense (+E, –SE) ………………………………………….
300
Accounts Payable (+L) ……………………………………..
300
Req. 3
Preliminary net income = Revenues – Expenses
= $8,000 – 1,500 – 200 – 4,000 – 300
= $2,000
Net income is greater than zero, so it suggests OCC is profitable.
Fundamentals of Financial Accounting, 5/e 3-49
PA3-4 (continued)
Req. 4
Adjustments will be needed to report service revenue earned from September 22–30
ANSWERS TO GROUP B PROBLEMS
PB3-1
Transaction
Debit
Credit
a.
9
3
b.
3
2
c.
11
10
d.
3
12
e.
5
1, 3
f.
1
3
g.
3
4
h.
7
3
i.
3
6
Cash (+A) …………………………………………………………………
90,000
Notes Payable (long-term) (+L) …………………………….
90,000
g.
Prepaid Rent (+A) ………………………………………………………
74,400
Cash (-A) ………………………………………………………….
74,400
h.
Wages Expense (+E, –SE) …………………………………………..
38,000
Cash (-A) ………………………………………………………….
38,000
Delivery Expense (+E,-SE) …………………………………………..
49,000
Cash (-A) …………………………………………………………
49,000
Accounts Payable (-L) ………………………………………………..
2,000
Cash (-A) …………………………………………………………
2,000
k.
No entry because no exchange transaction has occurred.
PB3-2
Cash (+A) …………………………………………………………………
80,000
Common Stock (+SE) ………………………………………..
80,000
Cash (+A) …………………………………………………………………
16,000
Accounts Receivable (+A) …………………………………………..
72,000
Service Revenue (+R, +SE) ……………………………….
88,000
Equipment (+A) …………………………………………………………
82,000
Notes Payable (long-term) (+L) …………………………….
82,000
Repairs and Maintenance Expense (+E, –SE) …………………
3,000
Accounts Payable (+L) ………………………………………
3,000
Cash (+A) …………………………………………………………………
65,000
Accounts Receivable (-A) ……………………………………
65,000