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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
Exercise 2–10
1. $7,200 represents nine months of interest on a $120,000 note, or 75% of
annual interest.
2. $60,000 ÷ 12 months = $5,000 per month in rent
$35,000 ÷ $5,000 = 7 months expired. The rent was paid on June 1, seven
months ago.
3. $500 represents two months (November and December) in accrued interest, or
2–22 Intermediate Accounting, 8/e
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
Exercise 2–12
Requirement 1
BLUEBOY CHEESE CORPORATION
Income Statement
For the Year Ended December 31, 2016
Sales revenue ...............................................
$800,000
Cost of goods sold .......................................
480,000
Gross profit ..................................................
320,000
Exercise 2–12 (continued)
BLUEBOY CHEESE CORPORATION
Balance Sheet
At December 31, 2016
Assets
Current assets:
Cash ..........................................................
$ 21,000
Accounts receivable ..................................
300,000
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable ......................................
$ 60,000
Salaries payable ........................................
8,000
Exercise 2–12 (concluded)
Requirement 2
December 31, 2016
Sales revenue .................................................................. 800,000
Income summary ........................................................ 800,000
Income summary ............................................................ 699,000
2–26 Intermediate Accounting, 8/e
Exercise 2–13
December 31, 2016
Sales revenue ................................................................... 750,000
Interest revenue ............................................................... 3,000
Income summary ......................................................... 753,000
Exercise 2–14
December 31, 2016
Sales revenue .................................................................. 492,000
Interest revenue ............................................................... 6,000
Gain on sale of investments ........................................... 8,000
Income summary ........................................................ 506,000
Exercise 2–15
Requirement 1
Supplies
11/30 Balance 1,500
Exercise 2–15 (continued)
Requirement 2
Prepaid insurance
11/30 Balance 6,000
Expense ?
Requirement 3
Salaries and wages payable
10,000 11/30 Balance
Salaries and wages paid 10,000 ? Accrued salaries and wages
Exercise 2–15 (concluded)
Requirement 4
Deferred rent revenue
2,000 11/30 Balance
Recognized for Dec. 1,000
2–30 Intermediate Accounting, 8/e
Exercise 2–16
Requirement 1
2016
Debit
Credit
Feb. 1
Cash ....................................................
12,000
Note payable ...................................
12,000
Requirement 2
2016
Debit
Credit
Dec. 31
Interest expense ($12,000 x 10% x 11/12)
1,100
Interest payable ................................
1,100
Exercise 2–17
Unadjusted net income $30,000
Adjustments:
Exercise 2–18
Stanley and Jones Lawn Service Company
Income Statement
For the Year Ended December 31, 2016
Sales revenue (1) ...........................................
$315,000
Operating expenses:
(1) $320,000 cash collected less $5,000 decrease in accounts receivable.
(2) $25,000 cash paid for the purchase of supplies less $500 increase in supplies.
Exercise 2–18 (concluded)
(3) $6,000 cash paid for insurance less $2,000 ending balance in prepaid insurance.
(4) $20,000 cash paid for miscellaneous expenses plus increase in accrued liabilities.
Exercise 2–19
Cash basis income ($545,000 – 412,000) $133,000
Add:
Exercise 2–20
Requirement 1
Account Title
Unadjusted Trial Balance
Adjusting Entries
Adjusted Trial Balance
Income Statement
Balance Sheet
Dr.
Cr.
Dr.
Cr.
Dr.
Cr.
Dr.
Cr.
Dr.
Cr.
Cash
20,000
20,000
20,000
Accounts receivable
35,000
35,000
35,000
Prepaid rent
5,000
5,000
5,000
Inventory
50,000
50,000
50,000
2–36 Intermediate Accounting, 8/e
Exercise 2–20 (continued)
Requirement 2
WOLKSTEIN DRUG COMPANY
Income Statement
For the Year Ended December 31, 2016
Sales revenue ...............................................
$323,000
Cost of goods sold .......................................
180,000
Exercise 2–20 (concluded)
WOLKSTEIN DRUG COMPANY
Balance Sheet
At December 31, 2016
Assets
Current assets:
Cash .............................................................
$ 20,000
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable ........................................
$ 25,000
*Beginning balance of $29,000 plus net income of $12,000.
Exercise 2–21
Requirement 1
June 30 - adjusting entry
Salaries and wages expense ($10,000 x 3/5) ....................... 6,000
Salaries and wages payable ......................................... 6,000
Requirement 2
June 30 - adjusting entry
Salaries and wages expense ............................................ 6,000
Salaries and wages payable ......................................... 6,000
Exercise 2–22
Requirement 1
The accountant would reverse adjusting entry 1, the accrual of interest receivable, and
Requirement 2
1. Interest receivable ($90,000 x 8% x 3/12) ...................... 1,800
Requirement 3
1. Interest revenue ........................................................ 1,800
Exercise 2–23
Requirement 1
The transactions affected would be the prepayment of rent, transaction 2, and the
purchase of supplies in transaction 6.
Requirement 2
2. Original transaction on November 1:
Adjusting entry on December 31:
Supplies ..................................................................... 3,250
Supplies expense ................................................... 3,250
Requirement 3
2. Rent expense ............................................................. 2,000
