Problem 3-8B (75 minutes)
Part 1
ANARA CO.
Income Statement
For Year Ended December 31, 2016
Revenues
Professional fees earned …………………………….. $59,600
ANARA CO.
Statement of Retained Earnings
For Year Ended December 31, 2016
Problem 3-8B (Continued)
ANARA CO.
Balance Sheet
December 31, 2016
Assets
Current assets
Cash …………………………………………………………… $ 7,400
Liabilities
Current liabilities
Accounts payable ……………………………………….. $ 3,500
Equity
Common stock …………………………………………….. 30,000
Problem 3-8B (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 ……………………… 59,600
Rent Earned ………………………………………….. 4,500
(2) Income Summary ………………………………….. 37,530
Depreciation Expense—Building …….. 2,000
(3) Income Summary ………………………………….. 28,890
To close the dividends account.
Part 3
SERIAL PROBLEM – SP 3
Serial Problem, Business Solutions (180 minutes) — Part 1
<Note: The general ledger is displayed at the end of Part 8>
Journal entries
Dec. 2 Advertising Expense ……………………………. 655 1,025
Cash ……………………………………………..101 1,025
Paid share of mall advertising costs.
10 Wages Expense …………………………………… 623 750
Cash ……………………………………………..101 750
Paid employee for part-time work.
Serial Problem, SP 3 (Continued)
Part 2
Adjusting entries
Dec. 31 Computer Supplies Expense …………………….652 3,065
Computer Supplies …………………………...126 3,065
Adjustment for supplies used (supplies
balance less cost of supplies available).
31 Depreciation Expense–Computer Equip …….613 1,250
31 Depreciation Expense—Office Equip …………612 400
Accumulated Depreciation—
Serial Problem, SP 3 (Continued)
Part 3
BUSINESS SOLUTIONS
Adjusted Trial Balance
December 31, 2016
Debit Credit
Cash ………………………………………………………………… $ 48,372
Accounts receivable …………………………………………. 5,668
Serial Problem, SP 3 (Continued)
Part 4
BUSINESS SOLUTIONS
Income Statement
For Three Months Ended December 31, 2016
Revenue
Computer services revenue ………………………………… $31,284
Expenses
Depreciation expense—Office equipment …………… $ 400
Depreciation expense—Computer equipment ……… 1,250
Part 5
BUSINESS SOLUTIONS
Statement of Retained Earnings
For Three Months Ended December 31, 2016
Retained earnings, October 1, 2016 ………………………. $ 0
Serial Problem, SP 3 (Continued)
Part 6
BUSINESS SOLUTIONS
Balance Sheet
December 31, 2016
Assets
Cash …………………………………………………………………….. $ 48,372
Liabilities
Accounts payable ………………………………………………….. $ 1,100
Serial Problem, SP 3 (Continued)
Part 7
Closing entries
2016
Dec. 31 Computer Services Revenue …………………….. 403 31,284
31 Income Summary ……………………………………… 901 14,460
Serial Problem, SP 3 (Continued)
Part 8
BUSINESS SOLUTIONS
Post-Closing Trial Balance
December 31, 2016
Debit Credit
Cash ………………………………………………………………………. $ 48,372
Accounts receivable ………………………………………………. 5,668
Computer equipment ……………………………………………… 20,000
Accumulated depreciation—Computer equipment ….. 1,250
Serial Problem, SP 3 (Continued)
[Instructor Note: Ledger includes all entries from prior three months. The Working
Papers shorten the solution by showing account balances as of November 30.]
General Ledger
Cash
Acct. No. 101
Date
Explanation
PR
Debit
Credit
Balance
Oct.
1
45,000
45,000
2
3,300
41,700
5
2,220
39,480
8
1,420
38,060
42,055
1,728
40,327
41,727
40,852
3,600
37,252
Nov.
1
36,932
2
41,565
5
1,125
40,440
42,648
42,398
42,014
1,750
40,264
2,000
38,264
Dec.
2
1,025
37,239
3
36,739
4
40,689
39,939
41,439
47,064
50,064
49,872
1,500
48,372
Serial Problem, SP 3 (Continued)
Accounts Receivable
Acct. No. 106
Date
Explanation
PR
Debit
Credit
Balance
Oct.
6
4,800
4,800
12
1,400
6,200
15
4,800
1,400
22
1,400
28
5,208
5,208
Nov.
8
5,668
18
2,208
8,668
24
3,950
28
3,000
5,668
Computer Supplies
Acct. No. 126
Date
Explanation
PR
Debit
Credit
Balance
Oct.
3
1,420
1,420
Nov.
5
1,125
2,545
Dec.
15
1,100
3,645
31
3,065
Prepaid Insurance
Acct. No. 128
Date
Explanation
PR
Debit
Credit
Balance
Oct.
5
2,220
2,220
Dec.
31
1,665
Prepaid Rent
Acct. No. 131
Date
Explanation
PR
Debit
Credit
Balance
Oct.
2
3,300
3,300
Dec.
31
2,475
Acct. No. 163
Date
Explanation
PR
Debit
Credit
Balance
Oct.
1
8,000
8,000
Acct. No. 164
Date
Explanation
PR
Debit
Credit
Balance
Dec.
31