Problem 3-5A (50 minutes)
Part 1
CHIARA COMPANY
Income Statement
For Year Ended December 31, 2016
Revenues
Fees earned ………………………………………. $484,000
Interest earned …………………………………… 24,000
CHIARA COMPANY
Statement of Retained Earnings
For Year Ended December 31, 2016
Retained earnings, December 31, 2015 ………… $235,800
Problem 3-5A (Concluded)
CHIARA COMPANY
Balance Sheet
December 31, 2016
Assets
Cash ………………………………………………………………
$ 30,000
Accounts receivable ……………………………………….
52,000
18,000
Notes receivable (due in 90 days) ……………………
16,000
Automobiles …………………………………………………..
Accumulated depreciation—Automobiles ………..
Equipment ………………………………………………………
Accumulated depreciation—Equipment …………..
Total assets ……………………………………………………
$600,000
Liabilities
Accounts payable …………………………………………..
$ 96,000
Salaries payable ……………………………………………..
19,000
Unearned fees ………………………………………………..
30,000
Total liabilities ………………………………………………..
Common stock ……………………………………………….
Retained earnings …………………………………………..
Part 2
Problem 3-6A (90 minutes)
INSTRUCTOR: Ledger accounts are shown after Part 7 as they would appear after all entries are posted.
Part 2 — Transactions for April
April 1 Cash ……………………………………………………… 101 30,000
Computer Equipment …………………………….. 167 20,000
24 Cash ……………………………………………………… 101 8,000
Problem 3-6A (Continued)
Part 3
ADVENTURE TRAVEL
Unadjusted Trial Balance
April 30, 2016
No. Account Title Debit Credit
101 Cash …………………………………………………. $27,000
106 Accounts receivable ………………………….. 0
Problem 3-6A (Continued)
Part 4
Adjusting entries
(a) Apr 30 Insurance Expense ……………………………………….. 637 133
Prepaid Insurance …………………………………… 128 133
Problem 3-6A (Continued)
Part 4
ADVENTURE TRAVEL
Adjusted Trial Balance
April 30, 2016
No. Account Title Debit Credit
101 Cash …………………………………………………. $27,000
106 Accounts receivable ………………………….. 1,750
Problem 3-6A (Continued)
Part 5
ADVENTURE TRAVEL
Income Statement
For Month Ended April 30, 2016
Commissions earned ………………………………………….. $9,750
Expenses
Depreciation expense—Computer equipment ……. $ 500
ADVENTURE TRAVEL
Statement of Retained Earnings
For Month Ended April 30, 2016
Retained earnings, April 1, 2016 ……………….. $ 0
Problem 3-6A (Continued)
Part 5—continued
ADVENTURE TRAVEL
Balance Sheet
April 30, 2016
Assets
Cash ………………………………………………………………………. $27,000
Accounts receivable ………………………………………………. 1,750
Problem 3-6A (Continued)
Part 6
Closing entries
April 30 Commissions Earned …………………………….. 405 9,750
Income Summary ……………………………. 901 9,750
To close the revenue account.
30 Income Summary ………………………………….. 901 2,197
Retained Earnings ………………………….. 318 2,197
Part 7
ADVENTURE TRAVEL
Post-Closing Trial Balance
April 30, 2016
Debit Credit
Cash …………………………………………………. $27,000
Accounts receivable ………………………….. 1,750
Problem 3-6A (Continued)
Part 7—continued
Ledger as of April 30
Cash Acct. No. 101
Date Explanation PR Debit Credit Balance
April 1 30,000 30,000
Accounts Receivable Acct. No. 106
Date Explanation PR Debit Credit Balance
April 30 Adjusting 1,750 1,750
Office Supplies Acct. No. 124
Date Explanation PR Debit Credit Balance
Computer Equipment Acct. No. 167
Date Explanation PR Debit Credit Balance
April 1 20,000 20,000
Problem 3-6A (Continued)
Common Stock Acct. No. 307
Date Explanation PR Debit Credit Balance
April 1 50,000 50,000
Retained Earnings Acct. No. 318
Date Explanation PR Debit Credit Balance
Commissions Earned Acct. No. 405
Date Explanation PR Debit Credit Balance
April 24 8,000 8,000
Salaries Expense Acct. No. 622
Date Explanation PR Debit Credit Balance
April 14 1,600 1,600
Problem 3-6A (Concluded)
Office Supplies Expense Acct. No. 650
Date Explanation PR Debit Credit Balance
Repairs Expense Acct. No. 684
Date Explanation PR Debit Credit Balance
30 Closing 350 0
Telephone Expense Acct. No. 688
Date Explanation PR Debit Credit Balance
April 30 750 750
30 Closing 750 0
Income Summary Acct. No. 901
Date Explanation PR Debit Credit Balance
Problem 3-7A (15 minutes)
Problem 3-8A (75 minutes)
Part 1
TYBALT CONSTRUCTION
Income Statement
For Year Ended December 31, 2016
Revenues
Professional fees earned …………………………….. $97,000
Rent earned ………………………………………………… 14,000
Expenses
Depreciation expense—Building …………………. 11,000
Depreciation expense—Equipment ……………… 6,000
TYBALT CONSTRUCTION
Statement of Retained Earnings
For Year Ended December 31, 2016
Retained earnings, December 31, 2015 ………….. $121,400
Problem 3-8A (Continued)
TYBALT CONSTRUCTION
Balance Sheet
December 31, 2016
Assets
Current assets
Cash …………………………………………………………… $ 5,000
Short-term investments ………………………………. 23,000
Equipment ………………………………………………….. 40,000
Liabilities
Current liabilities
Accounts payable ……………………………………….. $ 16,500
Interest payable ………………………………………….. 2,500
Equity
Problem 3-8A (Continued)
Part 2
Closing entries (all dated December 31, 2016)
Instructor note: Entries are shown without an account reference column because no posting is required.
(1) Professional Fees Earned ……………………… 97,000
(2) Income Summary ………………………………….. 110,800
Depreciation Expense—Building …….. 11,000
Depreciation Expense—Equipment …. 6,000
(3) Income Summary ………………………………….. 4,300
Part 3
PROBLEM SET B
Problem 3-1B (15 minutes)
Problem 3-2B (30 minutes)
Part 1
Adjustment (a)
Adjustment (b)
31 Insurance Expense …………………………………………. 4,730
Adjustment (c)
Problem 3-2B (Concluded)
Adjustment (d)
Oct. 31 Depreciation Expense—Building …………………….. 5,400
Adjustment (e)
Part 2
Cash Payment for (c)
Nov. 7 Salaries Payable …………………………………………….. 1,000
Cash Payment for (e)
Problem 3-3B (90 minutes)
Parts 1 and 2
Cash
Accounts Payable
Bal.
60,000
Bal.
11,200
Accounts Receivable
Salaries Payable
Unadj. Bal.
5,750
(g)
Adj. Bal.
5,750
Adj. Bal.
Unadj. Bal.
70,000
28,600
(b)
50,000
(e)
20,000
Prepaid Insurance
Common Stock
Unadj. Bal.
19,000
Bal.
11,000
(a)
9,500
Adj. Bal.
9,500
Bal.
Unadj. Bal.
3,800
(h)
3,800
Professional Library
Bal.
Bal.
12,000
Accumulated Depreciation—
Professional Library
Unadj. Bal.
2,500
(d)
2,400
Adj. Bal.
4,900
Bal.
40,000
Accumulated Depreciation—
Unadj. Bal.
20,000
(c)
5,000
Adj. Bal.
25,000
Problem 3-3B (Continued)
Parts 1 and 2
Tuition Fees Earned
Advertising Expense
Unadj. Bal.
129,200
Bal.
19,000
(f)
5,750
134,950
68,000
Bal.
13,400
(e)
28,600
96,600
Depreciation Expense—
Professional Library
Unadj. Bal.
(d)
Adj. Bal.
Depreciation Expense—
Unadj. Bal.
(c)
Salaries Expense
Unadj. Bal.
44,200
(g)
Adj. Bal.
44,650
Unadj. Bal.
(a)
Adj. Bal.
Rent Expense
Unadj. Bal.
29,600
(h)
Adj. Bal.
33,400
Unadj. Bal.
(b)
50,000
Adj. Bal.
50,000