© 2013 Cengage Learning. All
r
ights reserved. No
d
is
t
r
ibution allowed without express
a
u
t
hor
ization.
3-31Solutions
3.27 (Regaldo Department Stores; analysis of transactions and
preparation of income statement and balance sheet.) (amounts in
US$)
a. T-accounts.
C
a
s h
(
A)
A
cc
o
u n
t
s
R
e c e i
va
b
l
e
(
A)
√ 247,200 √ 0
(3a) 62,900 32,400 (4) (3a) 194,600 84,600 (6
) (6) 84,600 2,700 (5)
205,800 (7a
)
29,000 (7b
)
√ 124,800 √ 110,000
I
n
v
e
n
t
o r
y
(
A)
P r
e
pa
i
d
R
e n
t
(
A)
√ 188,800 √ 60,00
0 (2) 217,900 162,400 (3b)
4,200 (7a) 30,000
(11)
√ 240,100 √ 30,000
P r
e
pa
i
d
I
n
s u r
a
n c
e
(
A)
E
q
u
i
p
m
e n
t
(
A)
√ 12,000 1,000 (12) √
0 (1)
90,00
0
√ 11,000 √ 90,000
A
c c u
m
u
l
a
t
ed
D
e
p
r
e
c i
a
t
i
on
(
X
A)
P
a
t
e n
t
(
A)
0 √ √ 24,000
1,500 (10) 400
(13)
1,500 √ √ 23,600
A
cc
o
u n
t
s P
ay
a
b
l
e
(
L
)
N
o
t
e
P
ay
a
b
l
e
(
L
)
32,000 √ 0
√
(7a) 210,000 217,900 (2)
(7b) 29,000 90,000 (1)
10,900 √ 90,000
√
Solutions 3-32
C
o
m
p
e n
s
a
t
i
on P
a
y
a
b
l
e
(
L
)
U
t
i
l
i
t
i
e
s P
aya
b
l
e
(
L
)
0
√
0
√
6,700 (8) 800 (9)
© 2013 Cengage Learning. All
r
ights reserved. No
d
is
t
r
ibution allowed without express
a
u
t
hor
ization.
6,700 √ 800
√
I
n
t
e
r e s
t
P
ay
a
b
l
e
(
L
)
I
n c
o
m
e
T
a
x
P
a
y
a
b
l
e
(
L
)
0
√
0
√
900 (14) 5,610 (15)
900 √ 5,610
√
C
o
m
m
on S
t
o c k
(
S
E
)
R
e
t
a
i
n
ed
E
a
r n
i n
g
s
(
S
E)
500,000 √ 0
√
13,090 (16)
500
,
000 √ 13
,
090
√
S
al
e
s
Re
v
e
n
u
e
(
S
E)
C
o
s
t
of
G
oo
d
s
S
o
l
d
(
S
E)
(16) 257,500 257,500 (3a) (3b) 162,400 162,400
(16)
C
o
m
p
e
n
s
a
t
i
on
E
x
p
e
n
s
e
(
S
E)
U
t
i
l
i
t
i
e
s
E
x
p
e
n
s
e
(
S
E)
(4) 32,400 (5)
2,700
(8) 6,700 39,100 (16) (9) 800 3,500
(16)
D
e
p
r
e
c
i
a
t
i
on
E
x
p
e
n
s
e
(
S
E
)
Re
n
t
E
x
p
e
n
s
e
(
S
E)
(10) 1,500 1,500 (16) (11) 30,000 30,000
(16)
3-33
P
at
en
t
I
n
s
u
r
a
n
c
e
E
x
p
e
n
s
e
(
S
E)
A
m
o
r
t
i
z
a
t
i
on
E x p
e n
s e (
S E)
(12) 1,000 1,000 (16) (13)
400 400 (16)
I
n
t
e
r
e
s
t
E
x
p
e
n
s
e
(
S
E)
I
n
c
o
m
e
T
a
x
E
x
p
e
n
s
e
(
S
E)
(14) 900 900 (16) (15)
5,610 5,610 (16)
b. REGALDO DEPARTMENT STORES
© 2013 Cengage Learning. All
r
ights reserved. No
d
is
t
r
ibution allowed without express
a
u
t
hor
ization.
Income Statement
For the Month of February Year 8
Sales
Revenue……………………………………………………………
$
25
7
, 50
0
Expenses:
Cost of Goods
S
o
l
d
………………………………………………….
$
162,400
Compensation (= $32,400 +
$6,700)
…………………………
39,100
Utilities (= $2,700 + $800)
………………………………………
3,500
Depreciation……………………………………………………
……..
1,500
R
en
t ………………………………………………………………
………
30,000
Insurance………………………………………………………..
……..
1,000
Patent Amortization
………………………………………………
400
I
n
te
res
t ………………………………………………………….
………
90
0
Total
Expenses……………………………………………………
$
23
8
, 80
0
Net Income before Income
T
ax
es
………………………………….
$ 18,700
Income Tax Expense at 30%
………………………………………..
(
5
, 61
0
Net Income
………………………………………………………………..
$ 1
3
, 09
0
Solutions 3-34
3.27 continued.
c.REGALDO DEPARTMENT STORES Comparative
Balance Sheet
A
sse
t
s
January 31, February
28,
Year 8 Year
8
© 2013 Cengage Learning. All
r
ights reserved. No
d
is
t
r
ibution allowed without express
a
u
t
hor
ization.
Cash …………………………………………………… $ 247,200
$ 124,800
Accounts Receivable …………………………….. 0 110,000
Inventories ………………………………………….. 188,800
240,100
Prepaid R
en
t ……………………………………….. 60,000 30,000
Prepaid Insurance…………………………………
1
2
,
00
0
1
1
, 00
0
Total Current A
ss
et
s
………………………… $ 50
8
, 00
0
$
51
5
, 90
0
Equipment (at
Cost)
…………………………….. $ 0 $
90,000
Less Accumulated Depreciation……………..
0
(
1
, 50
0
) Equipment (
N
et) ………………………………….. $ 0
$ 88,500
Patent………………………………………………….
2
4
,
00
0
2
3
, 60
0
Total Noncurrent Assets …………………… $ 2
4
, 00
0 $
11
2
, 10
0
Total A
ss
et
s
…………………………………….. $ 53
2
, 00
0
$
62
8
, 00
0
Liabilities and Shareholders’ Equity
Accounts
P
ayab
l
e …………………………………. $ 32,000 $
10,900
Notes
P
ayab
l
e ……………………………………… 0 90,000
Compensation Payable…………………………. 0 6,700
Utilities Payable …………………………………. 0 800
Interest Payable…………………………………… 0 900
Income Tax
P
ayab
l
e ………………………………
0
5
, 61
0
Total Liabilities……………………………….. $ 3
2
, 00
0 $
11
4
, 91
0
Common
S
t
ock
…………………………………….. $ 500,000
$ 500,000
Retained Ea
rnin
g
s
………………………………..
0
1
3
,
09
0
Total Shareholders’ Equity………………… $ 50
0
, 00
0
$
51
3
, 09
0
Total Liabilities and Shareholders’
Equity………………………………………….. $
53
2
, 00
0 $
62
8
, 00
0
3-35Solutions
3.28 (Zealock Bookstore; analysis of transactions and preparation of
income statement and balance sheet.) (amounts in US$)
a.
T-accounts.
© 2013 Cengage Learning. All
r
ights reserved. No
d
is
t
r
ibution allowed without express
a
u
t
hor
ization.
C
a
s
h
(
A)
A cc o u n
t
s Re c e iva
b
l
e
(
A)
(1) 25,000 20,000 (3) (8) 148,200
142,400 (10) (2) 30,000 4,000 (4)
(8) 24,600 10,000
(5)
(10) 142,400 8,000 (6)
(13) 850 16,700 (11)
139,800 (12)
24,350 5
,
800
M
e
r
c
h
a
n
d
i
s
e
I
n
v
e
n
t
o
r
y
(
A)
P r e pai
d Re n
t (
A)
(7) 160,000 140,000 (8) (3) 20,000
10,000 (15)
14,600 (9)
5,400 10
,
00
0
D
e
p
o
s
i
t
w
i
t
h
S
u
ppli
e
r
s
(
A)
E q u
ip
m e n
t (
A)
(6) 8,000 (4) 4,000
(5) 10,000
8,000 14
,
000
A
c c u
m
u
l
a
t
ed
D
e
p
r
e
c i
a
t
i
on
(
X
A)
N
o
t
e
P
ay
a
b
l
e
(
L
)
400 (16) 30,000 (2)
1,500 (17)
1,900 30,000
A
cc
o
u
n
t
s
P
ay
a
bl
e
(
L
)
A
dv
a n c es f r om
C u
s
t
o
m e r
s (
L )
(9) 14,600 160,000 (7)
850 (13) (12) 139,800
5,600 850
Solutions 3-36
© 2013 Cengage Learning. All
r
ights reserved. No
d
is
t
r
ibution allowed without express
a
u
t
hor
ization.
3.28 a. continued.
I
n
t
e
r e s
t
P
ay
a
b
l
e
(
L
)
I
n c
o
m
e
T
a
x
P
a
y
a
b
l
e
(
L
)
900 (14) 1,320
(19)
900 1,320
C
o
m
m
on S
t
o c k
(
S
E
)
R
e
t
a
i
n
ed
E
a
r n
i n
g
s
(
S
E)
25,000 (1) 1,980
(20)
25,000 1,980
S
al
e
s
Re
v
e
n
u
e
(
S
E)
C
o
s
t
of
G
oo
d
s
S
o
l
d
(
S
E)
(20) 172,800 172,800 (8) (8) 140,000 140,000
(20)
C
o
m
p
e
n
s
a
t
i
on
E
x
p
e
n
s
e
(
S
E)
I
n
t
e
r
e
s
t
E
x
p
e
n
s
e
(
S
E)
(11) 16,700 16,700 (20) (14) 900
900 (20)
Re
n
t
E
x
p
e
n
s
e
(
S
E)
D
e
p
r
e
c
i
a
t
i
on
E
x
p
e
n
s
e
(
S
E
)
(15) 10,000 10,000 (20) (16)
400 1,900 (20)
(17) 1,500
I
n
c
o
m
e
T
a
x
E
x
p
e
n
s
e
(
S
E)
(19) 1,320 1,320 (20)
3-37 Solutions
© 2013 Cengage Learning. All
r
ights reserved. No
d
is
t
r
ibution allowed without express
a
u
t
hor
ization.
Sales
Revenue……………………………………………………………
. Less Expenses:
Cost of Goods
S
o
l
d
$
17
2
, 80
0
$
Compensation Expense
……………………………………………
16,700
Interest Expense
……………………………………………………..
900
Rent Expense
………………………………………………………….
10,000
Depreciation Expense
………………………………………………
1,900
Income Tax
Expense…………………………………………………
1
,
32
0
Total
Expenses…………………………………………………….
$
17
0
, 82
0
Net Income
…………………………………………………………………
$ 1
, 98
0
c. ZEALOCK
B
OO
KS
TO
RE
Balance Sheet
Dece
mb
er 31, Year 4
A
sse
t
s
Cash
………………………………………………………………
….
$ 24,350
Accounts Receivable
……………………………………………
5,800
Merchandise
Inventories
……………………………………..
5,400
Prepaid R
en
t
………………………………………………………
10,000
Deposit with
Su
pp
liers
………………………………………..
8
,
00
0
Total Current A
ss
et
s
……………………………………….
$ 5
3
, 55
0
Equipment ………………………………………………………
…
$ 14,000
Less Accumulated
Depreciation……………………………
(
1
, 90
0
Equipment (
N
et)
…………………………………………………
$ 1
2
, 10
0
Total A
ss
et
s
……………………………………………………
$ 6
5
, 65
0
3.28 continued.
b. ZEALOCK BOOKSTORE
Income Statement
For the Six Months Ending December 31, Year 4
Current Assets:
Solutions3-38
3.28 c. continued.
Liabilities and Shareholders’ Equity
Current Liabilities:
Accounts
P
ayab
l
e ……………………………………………….. $
5,600
Note Payable……………………………………………………… 30,000
Advances from Customers ………………………………….. 850
Interest Payable…………………………………………………. 900
Income Tax
P
ayab
l
e …………………………………………….
© 2013 Cengage Learning. All
r
ights reserved. No
d
is
t
r
ibution allowed without express
a
u
t
hor
ization.
1
, 32
0
Total Current Liabilities ………………………………… $ 3
8
, 67
0
Shareholders’ Equity:
Common
S
t
ock
……………………………………………………
$ 25,
00
0
Retained Ea
rnin
g
s
………………………………………………
1
, 98
Total Shareholders’ Equity
………………………………
$
2
6
, 98
Total Liabilities and Shareholders’ Eq
ui
ty
………..
$
6
5
, 65
3.29 (Zealock Bookstore; analysis of transactions and preparation of
comparative income statements and balance sheet.) (amounts in
US$)
a. T-accounts.
C
a
s h
(
A)
A
cc
o
u n
t
s
R
e c e i
va
b
l
e
(
A)
√ 24,350 √ 5,800
(3) 75,000 1,320 (1) (7) 327,950 320,600 (9)
(4)
8,000 31,800 (2)
(7) 24,900 20,000 (5)
(9) 320,600 29,400 (10)
281,100 (11)
4,000 (12)
√ 85,230 √ 13,150
M
e r c h
a
n
d
i
s
e
I
n
v
e
n
t
o r
y
(
A)
P r
e
pa
i
d
R
e n
t
(
A)
√ 5,400 √ 10,000
(6) 310,000 286,400 (7) (5) 20,000 20,000 (13)
22,700 (8)
√ 6,300 √ 10,000
3-39 Solutions
√ 8,000 √
14,00
0
8,000 (4)
√ 0 √
14,00
0
A
c c u
m
u
l
a
t
ed
D
e
p
r
e
c i
a
t
i
on
(
X
A)
N
o
t
e
P
ay
a
b
l
e
(
L
)
1,900 √ 30,000 √
800 (14) (2) 30,000 75,000 (3)
3,000 (15)
5,700 √ 75,000 √
A
cc
o
u n
t
s P
ay
a
b
l
e
(
L
)
A
dv
a
n c
e
f
r
om
C
u
s
t
o
m
e r
s
(
L
)
5,600 √ 850 √
© 2013 Cengage Learning. All
r
ights reserved. No
d
is
t
r
ibution allowed without express
a
u
t
hor
ization.
(8) 22,700 310,000 (6) (7) 850
(11) 281,100
11,800 √ 0
√
I
n
t
e
r e s
t
P
ay
a
b
l
e
(
L
)
I
n c
o
m
e
T
a
x
P
a
y
a
b
l
e
(
L
)
900 √ 1,320 √
(2) 900 3,000 (16) (1) 1,320 4,080 (17)
3,000 √ 4,080
√
C
o
m
m
on S
t
o c k
(
S
E
)
R
e
t
a
i
n
ed
E
a
r n
i n
g
s
(
S
E)
25,000 √ 1,980
√
(12) 4,000 6,120 (18)
25,000 √ 4,100
√
S
al
e
s
Re
v
e
n
u
e
(
S
E)
C
o
s
t
of
G
oo
d
s
S
o
l
d
(
S
E)
(18) 353,700 353,700 (7) (7) 286,400 286,400
(18)
Solutions
Re
n
t
E
x
p
e
n
s
e
(
S
E)
D
e
p
r
e
c
i
a
t
i
on
E
x
p
e
n
s
e
(
S
E
)
(13) 20,000 20,000 (18)
(14) 800
(15) 3,000 3,800 (18)
I
n
c
o
m
e
T
a
x
E
x
p
e
n
s
e
(
S
E)
(17) 4,080 4,080 (18)
b. ZEALOCK BOOKSTORE
Comparative Income
Statement
For Year 5 and Year 4
Year 5 Year 4
Sales
Revenue…………………………………………
$ 35
3
, 70
0
$
17
2
, 80
0
Less Expenses:
Cost of Goods
S
o
l
d
……………………………….
$ 286,400
$
140,000
Compensation Expense
………………………..
29,400
16,70
0
Interest Expense
………………………………….
3,900 900
Rent Expense
………………………………………
20,000
10,00
0
Depreciation Expense
…………………………..
3,800
1,90
0
Income Tax
Expense……………………………..
4
,
08
0
1
, 32
Total
Expenses…………………………………
$ 34
7
, 58
0
$
17
0
, 82
0
Net Income
……………………………………………..
$ 6
, 12
0
$
1
, 98
© 2013 Cengage Learning. All
r
ights reserved. No
d
is
t
r
ibution allowed without express
a
u
t
hor
ization.
6,700 √ 800
√
I
n
t
e
r e s
t
P
ay
a
b
l
e
(
L
)
I
n c
o
m
e
T
a
x
P
a
y
a
b
l
e
(
L
)
0
√
0
√
900 (14) 5,610 (15)
900 √ 5,610
√
C
o
m
m
on S
t
o c k
(
S
E
)
R
e
t
a
i
n
ed
E
a
r n
i n
g
s
(
S
E)
500,000 √ 0
√
13,090 (16)
500
,
000 √ 13
,
090
√
S
al
e
s
Re
v
e
n
u
e
(
S
E)
C
o
s
t
of
G
oo
d
s
S
o
l
d
(
S
E)
(16) 257,500 257,500 (3a) (3b) 162,400 162,400
(16)
C
o
m
p
e
n
s
a
t
i
on
E
x
p
e
n
s
e
(
S
E)
U
t
i
l
i
t
i
e
s
E
x
p
e
n
s
e
(
S
E)
(4) 32,400 (5)
2,700
(8) 6,700 39,100 (16) (9) 800 3,500
(16)
D
e
p
r
e
c
i
a
t
i
on
E
x
p
e
n
s
e
(
S
E
)
Re
n
t
E
x
p
e
n
s
e
(
S
E)
(10) 1,500 1,500 (16) (11) 30,000 30,000
(16)
3-33
P
at
en
t
I
n
s
u
r
a
n
c
e
E
x
p
e
n
s
e
(
S
E)
A
m
o
r
t
i
z
a
t
i
on
E x p
e n
s e (
S E)
(12) 1,000 1,000 (16) (13)
400 400 (16)
I
n
t
e
r
e
s
t
E
x
p
e
n
s
e
(
S
E)
I
n
c
o
m
e
T
a
x
E
x
p
e
n
s
e
(
S
E)
(14) 900 900 (16) (15)
5,610 5,610 (16)
b. REGALDO DEPARTMENT STORES
© 2013 Cengage Learning. All
r
ights reserved. No
d
is
t
r
ibution allowed without express
a
u
t
hor
ization.
Income Statement
For the Month of February Year 8
Sales
Revenue……………………………………………………………
$
25
7
, 50
0
Expenses:
Cost of Goods
S
o
l
d
………………………………………………….
$
162,400
Compensation (= $32,400 +
$6,700)
…………………………
39,100
Utilities (= $2,700 + $800)
………………………………………
3,500
Depreciation……………………………………………………
……..
1,500
R
en
t ………………………………………………………………
………
30,000
Insurance………………………………………………………..
……..
1,000
Patent Amortization
………………………………………………
400
I
n
te
res
t ………………………………………………………….
………
90
0
Total
Expenses……………………………………………………
$
23
8
, 80
0
Net Income before Income
T
ax
es
………………………………….
$ 18,700
Income Tax Expense at 30%
………………………………………..
(
5
, 61
0
Net Income
………………………………………………………………..
$ 1
3
, 09
0
Solutions 3-34
3.27 continued.
c.REGALDO DEPARTMENT STORES Comparative
Balance Sheet
A
sse
t
s
January 31, February
28,
Year 8 Year
8
© 2013 Cengage Learning. All
r
ights reserved. No
d
is
t
r
ibution allowed without express
a
u
t
hor
ization.
Cash …………………………………………………… $ 247,200
$ 124,800
Accounts Receivable …………………………….. 0 110,000
Inventories ………………………………………….. 188,800
240,100
Prepaid R
en
t ……………………………………….. 60,000 30,000
Prepaid Insurance…………………………………
1
2
,
00
0
1
1
, 00
0
Total Current A
ss
et
s
………………………… $ 50
8
, 00
0
$
51
5
, 90
0
Equipment (at
Cost)
…………………………….. $ 0 $
90,000
Less Accumulated Depreciation……………..
0
(
1
, 50
0
) Equipment (
N
et) ………………………………….. $ 0
$ 88,500
Patent………………………………………………….
2
4
,
00
0
2
3
, 60
0
Total Noncurrent Assets …………………… $ 2
4
, 00
0 $
11
2
, 10
0
Total A
ss
et
s
…………………………………….. $ 53
2
, 00
0
$
62
8
, 00
0
Liabilities and Shareholders’ Equity
Accounts
P
ayab
l
e …………………………………. $ 32,000 $
10,900
Notes
P
ayab
l
e ……………………………………… 0 90,000
Compensation Payable…………………………. 0 6,700
Utilities Payable …………………………………. 0 800
Interest Payable…………………………………… 0 900
Income Tax
P
ayab
l
e ………………………………
0
5
, 61
0
Total Liabilities……………………………….. $ 3
2
, 00
0 $
11
4
, 91
0
Common
S
t
ock
…………………………………….. $ 500,000
$ 500,000
Retained Ea
rnin
g
s
………………………………..
0
1
3
,
09
0
Total Shareholders’ Equity………………… $ 50
0
, 00
0
$
51
3
, 09
0
Total Liabilities and Shareholders’
Equity………………………………………….. $
53
2
, 00
0 $
62
8
, 00
0
3-35Solutions
3.28 (Zealock Bookstore; analysis of transactions and preparation of
income statement and balance sheet.) (amounts in US$)
a.
T-accounts.
© 2013 Cengage Learning. All
r
ights reserved. No
d
is
t
r
ibution allowed without express
a
u
t
hor
ization.
C
a
s
h
(
A)
A cc o u n
t
s Re c e iva
b
l
e
(
A)
(1) 25,000 20,000 (3) (8) 148,200
142,400 (10) (2) 30,000 4,000 (4)
(8) 24,600 10,000
(5)
(10) 142,400 8,000 (6)
(13) 850 16,700 (11)
139,800 (12)
24,350 5
,
800
M
e
r
c
h
a
n
d
i
s
e
I
n
v
e
n
t
o
r
y
(
A)
P r e pai
d Re n
t (
A)
(7) 160,000 140,000 (8) (3) 20,000
10,000 (15)
14,600 (9)
5,400 10
,
00
0
D
e
p
o
s
i
t
w
i
t
h
S
u
ppli
e
r
s
(
A)
E q u
ip
m e n
t (
A)
(6) 8,000 (4) 4,000
(5) 10,000
8,000 14
,
000
A
c c u
m
u
l
a
t
ed
D
e
p
r
e
c i
a
t
i
on
(
X
A)
N
o
t
e
P
ay
a
b
l
e
(
L
)
400 (16) 30,000 (2)
1,500 (17)
1,900 30,000
A
cc
o
u
n
t
s
P
ay
a
bl
e
(
L
)
A
dv
a n c es f r om
C u
s
t
o
m e r
s (
L )
(9) 14,600 160,000 (7)
850 (13) (12) 139,800
5,600 850
Solutions 3-36
© 2013 Cengage Learning. All
r
ights reserved. No
d
is
t
r
ibution allowed without express
a
u
t
hor
ization.
3.28 a. continued.
I
n
t
e
r e s
t
P
ay
a
b
l
e
(
L
)
I
n c
o
m
e
T
a
x
P
a
y
a
b
l
e
(
L
)
900 (14) 1,320
(19)
900 1,320
C
o
m
m
on S
t
o c k
(
S
E
)
R
e
t
a
i
n
ed
E
a
r n
i n
g
s
(
S
E)
25,000 (1) 1,980
(20)
25,000 1,980
S
al
e
s
Re
v
e
n
u
e
(
S
E)
C
o
s
t
of
G
oo
d
s
S
o
l
d
(
S
E)
(20) 172,800 172,800 (8) (8) 140,000 140,000
(20)
C
o
m
p
e
n
s
a
t
i
on
E
x
p
e
n
s
e
(
S
E)
I
n
t
e
r
e
s
t
E
x
p
e
n
s
e
(
S
E)
(11) 16,700 16,700 (20) (14) 900
900 (20)
Re
n
t
E
x
p
e
n
s
e
(
S
E)
D
e
p
r
e
c
i
a
t
i
on
E
x
p
e
n
s
e
(
S
E
)
(15) 10,000 10,000 (20) (16)
400 1,900 (20)
(17) 1,500
I
n
c
o
m
e
T
a
x
E
x
p
e
n
s
e
(
S
E)
(19) 1,320 1,320 (20)
3-37 Solutions
© 2013 Cengage Learning. All
r
ights reserved. No
d
is
t
r
ibution allowed without express
a
u
t
hor
ization.
Sales
Revenue……………………………………………………………
. Less Expenses:
Cost of Goods
S
o
l
d
$
17
2
, 80
0
$
Compensation Expense
……………………………………………
16,700
Interest Expense
……………………………………………………..
900
Rent Expense
………………………………………………………….
10,000
Depreciation Expense
………………………………………………
1,900
Income Tax
Expense…………………………………………………
1
,
32
0
Total
Expenses…………………………………………………….
$
17
0
, 82
0
Net Income
…………………………………………………………………
$ 1
, 98
0
c. ZEALOCK
B
OO
KS
TO
RE
Balance Sheet
Dece
mb
er 31, Year 4
A
sse
t
s
Cash
………………………………………………………………
….
$ 24,350
Accounts Receivable
……………………………………………
5,800
Merchandise
Inventories
……………………………………..
5,400
Prepaid R
en
t
………………………………………………………
10,000
Deposit with
Su
pp
liers
………………………………………..
8
,
00
0
Total Current A
ss
et
s
……………………………………….
$ 5
3
, 55
0
Equipment ………………………………………………………
…
$ 14,000
Less Accumulated
Depreciation……………………………
(
1
, 90
0
Equipment (
N
et)
…………………………………………………
$ 1
2
, 10
0
Total A
ss
et
s
……………………………………………………
$ 6
5
, 65
0
3.28 continued.
b. ZEALOCK BOOKSTORE
Income Statement
For the Six Months Ending December 31, Year 4
Current Assets:
Solutions3-38
3.28 c. continued.
Liabilities and Shareholders’ Equity
Current Liabilities:
Accounts
P
ayab
l
e ……………………………………………….. $
5,600
Note Payable……………………………………………………… 30,000
Advances from Customers ………………………………….. 850
Interest Payable…………………………………………………. 900
Income Tax
P
ayab
l
e …………………………………………….
© 2013 Cengage Learning. All
r
ights reserved. No
d
is
t
r
ibution allowed without express
a
u
t
hor
ization.
1
, 32
0
Total Current Liabilities ………………………………… $ 3
8
, 67
0
Shareholders’ Equity:
Common
S
t
ock
……………………………………………………
$ 25,
00
0
Retained Ea
rnin
g
s
………………………………………………
1
, 98
Total Shareholders’ Equity
………………………………
$
2
6
, 98
Total Liabilities and Shareholders’ Eq
ui
ty
………..
$
6
5
, 65
3.29 (Zealock Bookstore; analysis of transactions and preparation of
comparative income statements and balance sheet.) (amounts in
US$)
a. T-accounts.
C
a
s h
(
A)
A
cc
o
u n
t
s
R
e c e i
va
b
l
e
(
A)
√ 24,350 √ 5,800
(3) 75,000 1,320 (1) (7) 327,950 320,600 (9)
(4)
8,000 31,800 (2)
(7) 24,900 20,000 (5)
(9) 320,600 29,400 (10)
281,100 (11)
4,000 (12)
√ 85,230 √ 13,150
M
e r c h
a
n
d
i
s
e
I
n
v
e
n
t
o r
y
(
A)
P r
e
pa
i
d
R
e n
t
(
A)
√ 5,400 √ 10,000
(6) 310,000 286,400 (7) (5) 20,000 20,000 (13)
22,700 (8)
√ 6,300 √ 10,000
3-39 Solutions
√ 8,000 √
14,00
0
8,000 (4)
√ 0 √
14,00
0
A
c c u
m
u
l
a
t
ed
D
e
p
r
e
c i
a
t
i
on
(
X
A)
N
o
t
e
P
ay
a
b
l
e
(
L
)
1,900 √ 30,000 √
800 (14) (2) 30,000 75,000 (3)
3,000 (15)
5,700 √ 75,000 √
A
cc
o
u n
t
s P
ay
a
b
l
e
(
L
)
A
dv
a
n c
e
f
r
om
C
u
s
t
o
m
e r
s
(
L
)
5,600 √ 850 √
© 2013 Cengage Learning. All
r
ights reserved. No
d
is
t
r
ibution allowed without express
a
u
t
hor
ization.
(8) 22,700 310,000 (6) (7) 850
(11) 281,100
11,800 √ 0
√
I
n
t
e
r e s
t
P
ay
a
b
l
e
(
L
)
I
n c
o
m
e
T
a
x
P
a
y
a
b
l
e
(
L
)
900 √ 1,320 √
(2) 900 3,000 (16) (1) 1,320 4,080 (17)
3,000 √ 4,080
√
C
o
m
m
on S
t
o c k
(
S
E
)
R
e
t
a
i
n
ed
E
a
r n
i n
g
s
(
S
E)
25,000 √ 1,980
√
(12) 4,000 6,120 (18)
25,000 √ 4,100
√
S
al
e
s
Re
v
e
n
u
e
(
S
E)
C
o
s
t
of
G
oo
d
s
S
o
l
d
(
S
E)
(18) 353,700 353,700 (7) (7) 286,400 286,400
(18)
Solutions
Re
n
t
E
x
p
e
n
s
e
(
S
E)
D
e
p
r
e
c
i
a
t
i
on
E
x
p
e
n
s
e
(
S
E
)
(13) 20,000 20,000 (18)
(14) 800
(15) 3,000 3,800 (18)
I
n
c
o
m
e
T
a
x
E
x
p
e
n
s
e
(
S
E)
(17) 4,080 4,080 (18)
b. ZEALOCK BOOKSTORE
Comparative Income
Statement
For Year 5 and Year 4
Year 5 Year 4
Sales
Revenue…………………………………………
$ 35
3
, 70
0
$
17
2
, 80
0
Less Expenses:
Cost of Goods
S
o
l
d
……………………………….
$ 286,400
$
140,000
Compensation Expense
………………………..
29,400
16,70
0
Interest Expense
………………………………….
3,900 900
Rent Expense
………………………………………
20,000
10,00
0
Depreciation Expense
…………………………..
3,800
1,90
0
Income Tax
Expense……………………………..
4
,
08
0
1
, 32
Total
Expenses…………………………………
$ 34
7
, 58
0
$
17
0
, 82
0
Net Income
……………………………………………..
$ 6
, 12
0
$
1
, 98