Fundamentals of Financial Accounting, 5/e 3-51
PB3-3
Req. 1
1.
Cash (+A) ………………………………………………………………..
50,000
Common Stock (+SE) ……………………………………….
50,000
2.
Equipment (+A) …………………………………………………………
20,000
Cash (–A) ……………………………………………………….
20,000
3.
Cash (+A) …………………………………………………………………
5,000
Service Revenue (+R, +SE) ………………………………
5,000
4.
Cash (+A) …………………………………………………………………
2,000
Accounts Receivable (+A) …………………………………………..
8,000
Service Revenue (+R, +SE) ……………………………….
10,000
5.
Cash (+A) …………………………………………………………………
2,500
Unearned Revenue (+L) …………………………………….
2,500
6.
Supplies (+A) ……………………………………………………………
600
Accounts Payable (+L) ………………………………………
600
7.
Rent Expense (+E, –SE) ……………………………………………
6,000
Cash (–A) ………………………………………………………..
6,000
8.
Prepaid Rent (+A) ………………………………………………………
6,000
Cash (–A) ……………………………………………………….
6,000
9.
Cash (+A) …………………………………………………………………
1,000
Accounts Receivable (–A) …………………………………
1,000
10.
Advertising Expense (+E, –SE) ……………………………………
1,000
Cash (–A) ……………………………………………………….
1,000
11.
Salaries and Wages Expense (+E, –SE) ……………………….
4,000
Cash (–A) ……………………………………………………….
4,000
Fundamentals of Financial Accounting, 5/e 3-52
PB3-3 (continued)
Req. 2
Cash (A)
Accounts Receivable (A)
Supplies (A)
20,000 (2)
6,000 (7)
6,000 (8)
1,000 (10)
4,000 (11)
Beg. 0
(4) 8,000
1,000 (9)
Beg. 0
(6) 600
End. 7,000
End. 600
Prepaid Rent (A)
Equipment (A)
Accounts Payable (L)
Beg. 0
0 Beg.
(2) 20,000
600 (6)
End. 20,000
600 End.
Unearned Revenue (L)
Common Stock (SE)
Service Revenue (R)
0 Beg.
2,500 (5)
0 Beg.
50,000 (1)
0 Beg.
5,000 (3)
10,000 (4)
2,500 End.
50,000 End.
15,000 End.
Rent Expense (E)
Salaries and Wages Expense
(E)
Advertising Expense (E)
Beg. 0
Beg. 0
(11) 4,000
(10) 1,000
End. 4,000
End. 1,000
PB3-3 (continued)
Req. 3
FUNFLATABLES
Unadjusted Trial Balance
At June 30
Debit
Credit
Cash
$23,500
Accounts Receivable
7,000
Supplies
600
Prepaid Rent
6,000
Equipment
20,000
Accounts Payable
$ 600
Unearned Revenue
2,500
Common Stock
50,000
Service Revenue
15,000
Rent Expense
6,000
Salaries and Wages Expense
4,000
Advertising Expense
1,000
Total
$68,100
$ 68,100
Req. 4
Preliminary net income is $4,000 (15,000 – 6,000 – 4,000 – 1,000)
Net Profit Margin=Net Income
Revenues
= $ 4,000
$15,000
=0.267 or 26.7%
FunFlatables Net Profit Margin is 26.7%, which is slightly worse than the 30.0% Net
Profit Margin of its close competitor.
Fundamentals of Financial Accounting, 5/e 3-54
PB3-4
Req. 1
Assets
=
Liabilities
+
Stockholders’ Equity
12/1
Cash
+10,000
=
Common Stock
+10,000
12/7
No transaction; only promises were exchanged.
12/17
Cash
+200
=
Unearned
Revenue
+200
12/21
No change
=
Accounts
Payable
+500
Advertising
Expense (+E)
–500
12/22
Prepaid Rent
Cash
+1,000
-1,000
=
No change
12/23
No transaction; the separate entity assumption allows only transactions involving
the company to be recorded.
12/28
Cash
–500
=
Accounts
Payable
–500
12/29
Supplies
+2,000
=
Accounts
Payable
+2,000
12/31
Accounts
Receivable
+2,000
=
Service Revenue
(+R)
+2,000
PB3-4 (continued)
Req. 2
12/1
Cash (+A) ………………………………………………………………..
10,000
Common Stock (+SE) ………………………………………..
10,000
12/7
No transaction because only promises were exchanged.
12/17
Cash (+A) ………………………………………………………………..
200
Unearned Revenue (+L) ……………………………………
200
12/21
Advertising Expense (+E,-SE) ……………………………………..
500
Accounts Payable (+L) ………………………………………
500
12/22
Prepaid Rent (+A) ……………………………………………………..
1,000
Cash (-A) …………………………………………………………
1,000
12/23
No transaction because the separate entity assumption allows only transactions
involving the company to be recorded.
12/28
Accounts Payable (-L) ………………………………………………..
500
Cash (-A) …………………………………………………………
500
12/29
Supplies (+A) ……………………………………………………………
2,000
Accounts Payable (+L) ……………………………………..
2,000
12/31
Accounts Receivable (+A) …………………………..……………..
2,000
Service Revenue (+R, +SE) …………………………..….
2,000
Req. 4
Adjustments will be needed to report the cost of supplies used up in December and
income taxes on the company’s net income (not yet recorded).
Fundamentals of Financial Accounting, 5/e 3-56
ANSWERS TO COMPREHENSIVE PROBLEM
C3-1
Req. 1
Assets
=
Liabilities
+
Stockholders’ Equity
1.
Cash
Accounts
Receivable
+50,000
-50,000
=
No change
2.
Equipment
Cash
+33,500
-10,000
=
Note
Payable
(long-
term)
+23,500
3.
Cash
-10,000
=
Advertising
Expense (+E)
-10,000
4.
Supplies
+3,000
=
Accounts
Payable
+3,000
5.
Cash
+170,000
=
Service
Revenue (+R)
+170,000
6.
Cash
-3,000
=
Accounts
Payable
-3,000
7.
Cash
Accounts
Receivable
+112,500
+112,500
=
Service
Revenue (+R)
+225,000
8.
Cash
-378,000
=
Salaries/Wages
Expense (+E)
-378,000
9.
No Change
=
Accounts
Payable
+5,350
Utilities
Expense (+E)
-5,350
Fundamentals of Financial Accounting, 5/e 3-57
C3-1 (continued)
Req. 2
1.
Cash (+A) ………………………………………………………………..
50,000
Accounts Receivable (-A) ………………………………….
50,000
2.
Equipment (+A) ………………………………………………………..
33,500
Cash (-A) ………………………………………………………..
10,000
Note Payable (long-term) (+L) …………………………...
23,500
3.
Advertising Expense (+E, –SE) …………………………..………..
10,000
Cash (-A) ………………………………………………………..
10,000
4.
Supplies (+A) ……………………………………………………………
3,000
Accounts Payable (+L) ……………………………………..
3,000
5.
Cash (+A) ………………………………………………………………..
170,000
Service Revenue (+R, +SE) ……………………………….
170,000
6.
Accounts Payable (-L) ……………………………………………….
3,000
Cash (-A) ………………………………………………………..
3,000
7.
Cash (+A) ………………………………………………………………..
112,500
Accounts Receivable (+A) ………………………………………….
112,500
Service Revenue (+R, +SE) ……………………………….
225,000
8.
Salaries and Wages Expense (+E, –SE) ………………………..
378,000
Cash (-A) ………………………………………………………..
378,000
9.
Utilities Expense (+E, –SE) ………………………………………….
5,350
Accounts Payable (+L) ……………………………………..
5,350
C3-1 (continued)
Req. 3
Cash (A)
Accounts Receivable (A)
Supplies (A)
Beg.
1.
5.
7.
1,500,000
50,000
170,000
112,500
10,000
10,000
3,000
378,00
0
2.
3.
6.
8.
Beg.
7.
150,000
112,500
50,000
1.
Beg.
4.
14,700
3,000
End. 1,431,500
End. 212,500
End. 17,700
2.
108,000
73,500
60,000
113,350 End.
73,500 End.
83,500 End.
End. 378,000
End. 10,000
Fundamentals of Financial Accounting, 5/e 3-59
C3-1 (continued)
Req. 4
VANISHING GAMES CORPORATION
Unadjusted Trial Balance
At January 31, 2015
Debit
Credit
Cash
$1,431,500
Accounts Receivable
212,500
Supplies
17,700
Equipment
908,000
Building
422,000
Land
1,200,000
Accounts Payable
$ 113,350
Unearned Revenue
73,500
Notes Payable
83,500
Common Stock
2,500,000
Retained Earnings
1,419,700
Service Revenue
395,000
Salaries and Wages Expense
378,000
Advertising Expense
10,000
Utilities Expense
5,350
Total
$4,585,050
$4,585,050
Req. 5
VANISHING GAMES CORPORATION
Income Statement
For the Month Ended January 31, 2015
Revenues:
Service Revenue
$ 395,000
Total Revenues
395,000
Expenses:
Salaries and Wages Expense
378,000
Advertising Expense
10,000
Utilities Expense
5,350
Total Expenses
393,350
Net Income (Loss)
$ 1,650