Exercise 2–8
1. Prepaid insurance ($12,000 x 30/36)………………………… 10,000
Insurance expense………………………………………….. 10,000
2. Depreciation expense…………………………………………. 15,000
Accumulated depreciation ……………………………… 15,000
Solutions Manual, Vol.1, Chapter 2
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Exercise 2–9
1. Interest receivable ($90,000 x 8% x 3/12)………………….. 1,800
Interest revenue……………………………………………… 1,800
2. Rent expense ($6,000 x 2/3)…………………………………… 4,000
Prepaid rent…………………………………………………… 4,000
Solutions Manual, Vol.1, Chapter 2
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consent of McGraw-Hill Education.
Exercise 2–10
1. $7,200 represents nine months of interest on a $120,000 note, or 75% of
annual interest.
$7,200 ÷ 0.75 = $9,600 in annual interest
2. $60,000 ÷ 12 months = $5,000 per month in rent
3. $500 represents two months (November and December) in accrued
interest, or $250 per month.
Solutions Manual, Vol.1, Chapter 2
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consent of McGraw-Hill Education.
Exercise 2–11
1. Insurance expense ($6,000 x 3/12)…………………………… 1,500
Prepaid insurance…………………………………………… 1,500
2. Interest expense ($80,000 x 8% 3/12)………………………. 1,600
Interest payable……………………………………………… 1,600
Solutions Manual, Vol.1, Chapter 2
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consent of McGraw-Hill Education.
Exercise 2–12
Requirement 1
BLUEBOY CHEESE CORPORATION
Income Statement
For the Year Ended December 31, 2018
Sales revenue ……………………………………….. $800,000
Operating expenses:
Total operating expenses ………….. 215,000
Operating income …………………………………. 105,000
Solutions Manual, Vol.1, Chapter 2
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Exercise 2–12 (continued)
BLUEBOY CHEESE CORPORATION
Balance Sheet
At December 31, 2018
Assets
Current assets:
Cash ………………………………………………….. $ 21,000
Property and equipment:
Liabilities and Shareholders’ Equity
Current liabilities:
Shareholders’ equity:
Common stock …………………………………… $400,000
Solutions Manual, Vol.1, Chapter 2
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Exercise 2–12 (concluded)
Requirement 2
December 31, 2018
Sales revenue………………………………………………………… 800,000
……………………………………………………Income summary
……………………………………………………………………….800,000
Solutions Manual, Vol.1, Chapter 2
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consent of McGraw-Hill Education.
Exercise 2–13
December 31, 2018
Sales revenue………………………………………………………… 750,000
Interest revenue……………………………………………………… 3,000
……………………………………………………Income summary
……………………………………………………………………….753,000
Solutions Manual, Vol.1, Chapter 2
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consent of McGraw-Hill Education.
Exercise 2–14
December 31, 2018
Sales revenue………………………………………………………… 492,000
Interest revenue……………………………………………………… 6,000
Gain on sale of investments ……………………………………. 8,000
……………………………………………………Income summary
……………………………………………………………………….506,000
Solutions Manual, Vol.1, Chapter 2
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consent of McGraw-Hill Education.