E4–15 (continued)
Req. 4
E4–16
Req. 1
(a) Insurance Expense (+E, −SE) ……………………………. 5
Prepaid Insurance (−A) …………………………….. 5
(b) Depreciation Expense (+E, −SE) …………………………. 4
Accumulated Depreciation–Equipment (+xA, −A) 4
(c) Salaries and Wages Expense (+E, −SE) ………………. 7
E4–16 (continued)
Req. 2 (continued)
Salaries and Wages
Expense (E)
Depreciation
Expense (E)
Insurance
Expense (E)
Bal. 10
Bal. 0
Bal. 0
c 7
b 4
a 5
Bal. 17
Bal. 4
Bal. 5
Income Tax
Expense (E)
Bal. 0
d 9
Bal. 9
MINT CLEANING INC.
Adjusted Trial Balance
December 31
(in thousands of dollars)
Account Titles
Debit
Credit
Cash
$ 38
Accounts Receivable
9
Prepaid Insurance
1
Equipment
80
Accumulated Depreciation–Equipment
$ 4
Accounts Payable
9
Salaries and Wages Payable
7
Income Tax Payable
9
Common Stock
76
Retained Earnings
4
Sales Revenue
80
Supplies Expenses
26
Salaries and Wages Expense
17
Depreciation Expense
4
Insurance Expense
5
Income Tax Expense
9
Totals
$ 189
$ 189
Req. 3
Fundamentals of Financial Accounting, 5/e 4–33
E4–17 MINT CLEANING INC.
Income Statement
For the Year Ended December 31
(in thousands of dollars)
Sales Revenue
$ 80
Supplies Expenses
26
Salaries and Wages Expense
17
Depreciation Expense
4
Insurance Expense
5
Income Tax Expense
9
Total Expenses
61
Net Income
$ 19
MINT CLEANING INC.
Statement of Retained Earnings
For the Year Ended December 31
(in thousands of dollars)
Beginning Balance, 1/1/2015
$ 4
Add: Net Income
19
Subtract: Dividends
0
Ending Balance, 12/31/2015
$ 23
MINT CLEANING INC.
Balance Sheet
At December 31
(in thousands of dollars)
Assets
Liabilities
Current Assets
Current Liabilities
Cash
$ 38
Accounts Payable
$ 9
Accounts Receivable
9
Salaries and Wages Payable
7
Prepaid Insurance
1
Income Tax Payable
9
Total Current Assets
48
Total Current Liabilities
25
Equipment $80
Stockholders’ Equity
Accum. Depn–Equip. (4)
Common Stock
76
Equipment, Net
76
Retained Earnings
23
Total Assets
$ 124
Total Liabilities and
Stockholders’ Equity
$ 124
E4–18
Sales Revenue (−R) …………………………………………… 80
Supplies Expenses (−E) …………………………….. 26
E4–19
Event a
(1)
On January 22, 2015, MSM received $24,000 cash from customers for one–
year subscriptions to the magazine for February 2015 – January 2016.
(2)
Assets
=
Liabilities
+
Stockholders’ Equity
Cash +24,000
Unearned
Revenue +24,000
(3)
Account Names
Debit
Credit
Cash (+A)
24,000
Unearned Revenue (+R, +SE)
24,000
(4)
Cash
Unearned Revenue
24,000
24,000
E4–19 (continued)
Event b
(1)
MSM received utilities services on account at a cost of $3,000.
(2)
Assets
=
Liabilities
+
Stockholders’ Equity
Accounts
Payable +3,000
Utilities
Expense (+E) –3,000
(3)
Account Names
Debit
Credit
Utilities Expense (+E, –SE)
3,000
Accounts Payable (+L)
3,000
(4)
Accounts Payable
Utilities Expense
3,000
3,000
Event c
(1)
MSM provided $2,000 of subscriptions for which it had previously
received payment.
(2)
Assets
=
Liabilities
+
Stockholders’ Equity
Unearned Revenue
–2,000
Subscription Revenue (+R)
+2,000
(3)
Account Names
Debit
Credit
Unearned Revenue (–L)
2,000
Subscription Revenue (+R, +SE)
2,000
(4)
Unearned Revenue
Subscription Revenue
2,000
2,000
Fundamentals of Financial Accounting, 5/e 4–36
Event d
(1)
On March 31, 2015, MSM recorded an adjusting entry for the month’s
depreciation of $10,000.
(2)
Assets
=
Liabilities
+
Stockholders’ Equity
Accumulated
Depreciation
Depreciation–Equipment
(+xA) –10,000
Expense (+E) –10,000
(3)
Account Names
Debit
Credit
Depreciation Expense (+E, –SE)
10,000
Accumulated Depreciation–
Equipment (+xA, –A)
10,000
(4)
Accumulated Depreciation–
Equipment
Depreciation Expense
10,000
10,000
Event e
(1)
On April 1, MSM paid $5,000 rent in advance of obtaining its benefits.
(2)
Assets
=
Liabilities
+
Stockholders’ Equity
Cash –5,000
Prepaid Rent +5,000
(3)
Account Names
Debit
Credit
Prepaid Rent (+A)
5,000
Cash (–A)
5,000
(4)
Cash
Prepaid Rent
5,000
5,000
Fundamentals of Financial Accounting, 5/e 4–37
E4–19 (continued)
Event f
(1)
On April 30, 2015, MSM billed customers for $10,000 of advertising
services provided on account.
(2)
Assets
=
Liabilities
+
Stockholders’ Equity
Accounts
Service
Receivable +10,000
Revenue (+R) +10,000
(3)
Account Names
Debit
Credit
Accounts Receivable (+A)
10,000
Service Revenue (+R, +SE)
10,000
(4)
Accounts Receivable
Service Revenue
10,000
10,000
Fundamentals of Financial Accounting, 5/e 4–38
ANSWERS TO COACHED PROBLEMS
CP4–1
Req. 1 ROLLCOM, INC.
Adjusted Trial Balance
At September 30, 2015
Account Titles
Debit
Credit
Cash
$ 80,300
Accounts Receivable
66,500
Supplies
35,200
Equipment
90,700
Accumulated Depreciation–Equipment
$ 21,500
Accounts Payable
39,100
Notes Payable (long–term)
1,500
Common Stock
94,800
Retained Earnings
99,900
Sales Revenue
325,600
Rent Expense
164,200
Salaries and Wages Expenses
128,700
Office Expense
6,300
Income Tax Expense
10,500
Totals
$ 582,400
$ 582,400
No. The amount to be reported for Retained Earnings on the balance sheet would be
the amount calculated for ending Retained Earnings on the statement of retained
earnings. The $99,900 in the adjusted trial balance does not yet include the revenues
and expenses for the year ended September 30, 2015.
Req. 2
Sales Revenue (−R) …………………………..…………………
325,600
Rent Expense (−E) ………………………………………..
164,200
Salaries and Wages Expenses (−E)
128,700
Office Expense (−E) ………………………………………
6,300
Income Tax Expense (−E) …………………………..….
10,500
Retained Earnings (+SE) ……………………………….
15,900
Fundamentals of Financial Accounting, 5/e 4–39
CP4–1 (continued)
Req. 3 ROLLCOM, INC.
Post–closing Trial Balance
At September 30, 2015
Account Titles
Debit
Credit
Cash
$ 80,300
Accounts Receivable
66,500
Supplies
35,200
Equipment
90,700
Accumulated Depreciation–Equipment
$ 21,500
Accounts Payable
39,100
Notes Payable (long–term)
1,500
Common Stock
94,800
Retained Earnings*
115,800
Sales Revenue
0
Rent Expense
0
Salaries and Wages Expenses
0
Office Expense
0
Income Tax Expense
0
Totals
$ 272,700
$ 272,700
* Post–closing Retained Earnings = Unadjusted Balance + Effects of Closing Entry
= $99,900+ $15,900 = $115,800
CP4–2
Req. 1
Assets
=
Liabilities
+
Stockholders’ Equity
a.
=
Interest
Payable
+700
Interest
Expense (+E)
−700
b.
=
Unearned
Revenue
−3,200
Rent
Revenue (+R)
+3,200
c.
Accounts
Receivable
+3,300
=
Service
Revenue (+R)
+3,300
d.
Prepaid
Insurance
−700
=
Insurance
Expense (+E)
−700
e.
=
Salaries
and
Wages
Payable
+1,100
Salaries and
Wages
Expense (+E)
−1,100
f.
Accumulated
Depreciation
–Equipment
(+xA)
−1,000
=
Depreciation
Expense (+E)
−1,000
g.
=
Income Tax
Payable
+9,000*
Income Tax
Expense (+E)
−9,000
* Income tax expense incurred but not paid:
Income before income taxes 30,000
Income tax rate x 30%
Income tax expense $ 9,000