Fundamentals of Financial Accounting, 5/e 4–21
E4–3
Ref / Date
Journal Entries and Adjusting Journal Entries
(a) Sept 1
Prepaid Rent (+A)……………………………………12,000
Cash (−A)……………………………………. 12,000
Sept 30
Rent Expense (+E, −SE) ($12,000 x 1/6)………. 2,000
Prepaid Rent (−A)……………………………. 2,000
(b) Sept 1
Cash (+A)……………………………………………60,000
Unearned Revenue (+L)……………………. 60,000
Sept 30
Unearned Revenue (−L)……………………………. 5,000
Sales Revenue (+R, +SE) ($60,000 x 1/12) 5,000
(c) Sept 1
No journal entry. A transaction has not yet occurred.
Sept 30
Accounts Receivable (+A)………………………… 2,000
Rent Revenue (+R, +SE)…………………… 2,000
(d) Sept 1
No journal entry. A transaction has not yet occurred.
Sept 30
Salaries and Wages Expense (+E, −SE)..……… 3,000
Salaries and Wages Payable (+L)………… 3,000
Fundamentals of Financial Accounting, 5/e 4–22
E4–4
Req. 1
The annual reporting period for this company is November 1 through October 31.
Req. 2
Req. 3
Assets
=
Liabilities
+
Stockholders’ Equity
=
Salaries
and
Wages
Payable
+6,000
Salaries and
Wages
Expense (+E)
–6,000
Interest
Receivable
+3,000
=
Interest
Revenue
(+R)
+3,000
Req. 4
Adjustments are needed to ensure the financial statements are up–to–date and
complete. Adjusting entries are necessary at the end of the accounting period to ensure
Fundamentals of Financial Accounting, 5/e 4–23
E4–5
(a) October 31:
Salaries and Wage Expense (+E, −SE) ……………….. 6,000
Salaries and Wages Payable (+L) ……………… 6,000
E4–6
Req. 1
2015 Income statement:
Insurance Expense ($7,200 x 12/24) = $3,600 used.
2015 Balance sheet:
Prepaid Insurance ($7,200 x 12/24) = $3,600
Req. 2
E4–8
a.
Supplies Expense (+E, −SE) ……………………………….
750
Supplies (−A) …………………………………………….
750
Supplies used ($850 − 100 = $750).
b.
Salaries and Wages Expense (+E, −SE) ……………….
3,700
Salaries and Wages Payable (+L) …………………
3,700
c.
Unearned Revenue (−L) ……………………………………..
2,200
Rent Revenue (+R, +SE) ……………………………..
2,200
Rent earned ($2,200 = $6,600 x 2/6)
d.
Depreciation Expense (+E, −SE) ………………………….
2,000
Accumulated Depreciation–Equipment (+xA, −A)
2,000
e.
Insurance Expense (+E, −SE) ……………………………..
750
Prepaid Insurance (−A) …………………………..…..
750
($3,000 x 6/24 months)
f.
Accounts Receivable (+A) …………………………..………
750
Service Revenue (+R, +SE) ………………………..
750
E4–9
Trans.
Assets
Liabilities
Stockholders’ Equity
(a)
Supplies –750
NE
Supplies Expense (+E) –750
(b)
NE
Salaries and
Wages Payable
+3,700
Salaries and Wages Expense (+E) –
3,700
(c)
NE
Unearned Revenue
–2,200
Rent Revenue (+R) +2,200
(d)
Accum. Depn–Equip.
(+xA) –2,000
NE
Depreciation Expense (+E) –2,000
(e)
Prepaid Ins. –750
NE
Insurance Expense (+E) –750
(f)
Accts. Rec. +750
NE
Service Revenue (+R) +750
E4–10
Req. 1
Income Tax Payable
• Increase – With a credit for accrual of additional income taxes payable.
• Decrease – With a debit for cash paid on accrued income taxes payable.
Interest Payable
• Increase – With a credit for accrual of additional interest payable.
Fundamentals of Financial Accounting, 5/e 4–27
Debit
Credit
Code
Amount
Code
Amount
a.
K
$ 400
L
$ 400
b.
C
600
P
600
c.
F
220
G
220
d.
D
1,000
B
1,000
e.
A
1,000
M
1,000
f.
O
250
N
250
g.
M
75,000
J
75,000
E4–13
Items
Net
Income
Total
Assets
Total
Liabilities
Stockholders’
Equity
Amounts reported
$30,000
$90,000
$40,000
$50,000
Effects of:
a. Amortization
(8,000)
(8,000)
(8,000)
b. Salaries and
Wages
(17,000)
17,000
(17,000)
c. Rent Revenue
1,600
(1,600)
1,600
Adjusted balances
6,600
82,000
55,400
26,600
d. Effect of
Income Taxes
(1,980)
1,980
(1,980)
Correct amounts
$ 4,620
$82,000
$57,380
$24,620
Computations:
a. Given, $8,000 Amortization Expense.
Fundamentals of Financial Accounting, 5/e 4–28
E4–14
Req. 1
a.
Salaries and Wages Expense (+E, −SE) ………….
310
Salaries and Wages Payable (+L) ……………..
310
b.
Utilities Expense (+E, −SE) …………………………...
400
Accounts Payable (+L) …………………………….
400
c.
Depreciation Expense (+E, −SE) …………………….
23,000
Accum. Depn–Equip. (+xA, −A) …………………
23,000
d.
Interest Expense (+E, −SE) …………………………...
500
Interest Payable (+L) ……………………………….
500
e.
Rent Revenue (–R, −SE) ……………………………….
4,000
Unearned Revenue (+L) …………………………..
4,000
f.
Supplies Expense (+E, −SE) ………………………….
600
Supplies (−A) …………………………………………
600
g.
Income Tax Expense (+E, −SE) ……………………..
7,000
Income Taxes Payable (+L) ……………………..
7,000
Req. 2 DYER, INC.
Income Statement
For the Year Ended December 31, 2015
Rent Revenue ($114,000 − $4,000)
$ 110,000
Expenses:
Salaries and Wages ($28,500 + $310)
$ 28,810
Depreciation Expense
23,000
Repairs and Maintenance Expense
13,000
Rent Expense
9,000
Utilities Expense ($4,000 + $400)
4,400
Travel Expense
3,000
Supplies Expense
600
Interest Expense
500
Income Tax Expense
7,000
Total Expenses
89,310
Net Income
$ 20,690
E4–14 (continued)
Req. 3
E4–15
Req. 1
Assets
=
Liabilities
+
Stockholders’ Equity
Prepaid Rent
−1,200
=
Rent Expense
(+E)
−1,200
Accumulated
Depreciation
–Equipment
(+xA)
−1,000
=
Depreciation
Expense (+E)
−1,000
=
Accounts
Payable
+9,000
Utilities Expense
(+E)
−9,000
=
Income Tax
Payable
+390
Income Tax
Expense (+E)
−390
Req. 2
(a) Rent Expense (+E, −SE) ………………………………….. 1,200
Prepaid Rent (−A) ……………………………………. 1,200
(b) Depreciation Expense (+E, −SE) ………………………… 1,000
Accumulated Depreciation–Equipment (+xA, −A) 1,000
(c) Utilities Expense (+E, −SE) ……………………………….. 9,000
Accounts Payable (+L) ……………………………… 9,000
(d) Income Tax Expense (+E, −SE) …………………………. 390
Income Tax Payable (+L) ………………………….. 390
E4–15 (continued)
Req. 3
Prepaid Rent (A)
Rent Expense (E)
Bal.
2,400
1,200 a
Bal.
a
0
1,200
1,200
1,200
Accumulated Dep.–Equipment
(xA)
Depreciation Expense (E)
1,000
1,000
Bal.
b
Bal.
b
0
1,000
2,000
1,000
Accounts Payable (L)
Utilities Expense (E)
1,000
9,000
Bal.
c
Bal.
c
12,500
9,000
10,000
21,500
NORTH STAR
Adjusted Trial Balance
As of December 31
Account Titles
Debit
Credit
Cash
12,000
Accounts Receivable
6,000
Prepaid Rent
1,200
Equipment
21,000
Accumulated Depreciation–Equipment
2,000
Accounts Payable
10,000
Income Taxes Payable
390
Common Stock
24,800
Retained Earnings
2,100
Sales Revenue
50,000
Salaries and Wages Expense
25,000
Utilities Expense
21,500
Rent Expense
1,200
Depreciation Expense
1,000
Income Tax Expense
390
Totals
$ 89,290
$ 89,290
0
390
Bal.
d
Bal.
d
0
390
390
390