PROBLEM 3.7 (Continued)
(c) 1. Total depreciable cost = €8,750 X 6 = €52,500.
PROBLEM 3.8
(a), (b), (d)
Cash
Prepaid Insurance
Salaries and Wages Expense
Bal.
15,000
Bal.
9,000
Adj.
3,500
Bal.
80,000
Close
83,600
5,500
Adj.
3,600
83,600
83,600
Bal.
Bal.
13,000
Bal.
82,000
Bal.
24,000
Close
24,000
Inc.
Bal.
1,100
Adj.
8,900
Bal.
Adj.
Cls.
191,100
1,560
200,000
Land
Green Fees Revenue
Depr. Expense
Bal.
350,000
Close
5,900
Bal.
5,900
Adj.
4,000
Close
19,000
Adj.
15,000
19,000
Bal.
Close
Bal.
17,600
Bal.
70,000
Adj.
1,600
Adj.
15,000
19,200
85,000
Bal.
Bal.
Close
54,000
Adj.
3,500
Close
3,500
Adj.
Bad Debt Expense
Adj.
Rev.
1,600
Adj.
Close
Exp.
Rev.
PROBLEM 3.8 (Continued)
Salaries and Wages Payable
Unearned Dues Revenue
Bal.
(b)
-1-
Depreciation Expense ……………………………………………………….
4,000
Accumulated Depreciation—Buildings
(1/30 X £120,000) ……………………………………………………….
4,000
-2-
Depreciation Expense ……………………………………………………….
15,000
Accumulated Depreciation—Equipment
(10% X £150,000) ……………………………………………………….
15,000
-3-
Insurance Expense ……………………………………………………….
3,500
Prepaid Insurance ……………………………………………………….
3,500
-4-
Rent Receivable ……………………………………………………….
Rent Revenue
(1/11 X £17,600) ……………………………………………………….
-5-
Bad Debt Expense ……………………………………………………….
460
Allowance for Doubtful Accounts
[(£13,000 X 12%) – £1,100] …………………………..
460
-6-
Salaries and Wages Expense …………………………..
3,600
Salaries and Wages Payable …………………………..
-7-
Dues Revenue ……………………………………………………….
8,900
Unearned Dues Revenue …………………………..
8,900
*PROBLEM 3.8 (Continued)
(c) KO GOLF CLUB, INC.
Adjusted Trial Balance
December 31, XXXX
Dr.
Cr.
Cash ……………………………………………………………………
£ 15,000
Accounts Receivable ……………………………………………
13,000
Allowance for Doubtful Accounts ………………………….
Land ……………………………………………………………………
350,000
Buildings ……………………………………………………….
120,000
Accumulated Depreciation—Buildings …………………..
Equipment ……………………………………………………….
150,000
Accumulated Depreciation—Equipment ………………..
85,000
Salaries and Wages Payable …………………………..
3,600
Share Capital—Ordinary ……………………………………….
400,000
Retained Earnings ………………………………………………..
82,000
Dues Revenue………………………………………………………
191,100
Green Fees Revenue …………………………………………….
5,900
Rent Revenue ………………………………………………………
19,200
Utilities Expense …………………………………………………..
54,000
Salaries and Wages Expense …………………………..
83,600
Maintenance and Repairs Expense ………………………..
24,000
Bad Debt Expense ………………………………………………..
Unearned Dues Revenue ………………………………………
8,900
Rent Receivable ……………………………………………………
Depreciation Expense …………………………………………..
19,000
Insurance Expense ……………………………………………….
*PROBLEM 3.8 (Continued)
(d)
December 31
Dues Revenues ……………………………………………………….
191,100
Green Fees Revenue …………………………..…………………………..
5,900
Rent Revenue ……………………………………………………….
Income Summary ……………………………………………………….
Income Summary ……………………………………………………….
184,560
Utilities Expense ……………………………………………………….
Bad Debt Expense ……………………………………………………….
Salaries and Wages Expense …………………………..
Maintenance and Repairs Expense …………………………..
Depreciation Expense ……………………………………………………….
Insurance Expense ……………………………………………………….
Income Summary (216,200 – 184,560) …………………………..
Retained Earnings ……………………………………………………….
PROBLEM 3.9
(a), (b), (c)
Cash
Accounts Receivable
Allow. for Doubtful Accts.
Bal.
18,500
Bal.
32,000
Bal.
700
Adj.
1,400
2,100
Bal.
Bal.
Bal.
Adj.
12,000
47,000
Notes Payable
28,000
Share Capital—Ordinary
Sales Revenue
Insurance Expense
Bal.
80,600
Cls.
600,000
Bal.
600,000
Adj.
2,550
Cls.
2,550
Salaries and Wages
Expense
Advertising Expense
Interest Expense
Bal.
115,000
Cls.
117,400
Bal.
6,700
Adj.
700
Adj.
3,360
Cls.
3,360
Adj.
2,400
Cls.
6,000
117,400
117,400
6,700
6,700
Office Expense
Adj.
Cls.
Bal.
5,000
Adj.
1,500
Adj.
700
Cls.
3,500
5,000
5,000
Adj.
Adj.
Cls.
Exp.
554,210
Sales
600,000
Inc.
600,000
Adj.
Adj.
2,400
PROBLEM 3.9 (Continued)
(b)
-1-
Bad Debt Expense ……………………………………………………….
1,400
Allowance for Doubtful Accounts …………………………..
1,400
-2-
Depreciation Expense (€84,000 ÷ 7) …………………………..
Accumulated Depreciation—Equipment …………………………..
12,000
-3-
Insurance Expense ……………………………………………………….
Prepaid Insurance ……………………………………………………….
2,550
-4-
Interest Expense ……………………………………………………….
Interest Payable ……………………………………………………….
-5-
Salaries and Wages Expense …………………………..………………………
2,400
Salaries and Wages Payable …………………………..
2,400
-6-
Prepaid Advertising ……………………………………………………….
Advertising Expense ……………………………………………………….
-7-
Supplies …………………………………………………………………………………
Office Expense ……………………………………………………….
PROBLEM 3.9 (Continued)
(c)
Dec. 31
Sales Revenue ……………………………………………………….
600,000
Income Summary ……………………………………………………….
600,000
Dec. 31
Income Summary ……………………………………………………….
554,210
Cost of Goods Sold ……………………………………………………….
408,000
Advertising Expense …………………………..…………………………..
Salaries and Wages Expense …………………………..
Office Expense (€5,000 – €1,500) …………………………..
Insurance Expense ……………………………………………………….
Bad Debt Expense ……………………………………………………….
Depreciation Expense ……………………………………………………….
Interest Expense ……………………………………………………….
Dec. 31
Income Summary (€600,000 – €554,210) …………………………..
Retained Earnings ……………………………………………………….
*PROBLEM 3.10
(a) LAKELAND SALES AND SERVICE
Income Statement
For the Month Ended January 31, 2019
(1)
Cash Basis
(2)
Accrual Basis
Revenues ……………………………………………………….
£ 75,000
£98,400*
Expenses
Cost of computers & printers:
Purchased and paid …………………………..
Cost of goods sold …………………………..
Salaries and wages …………………………..
Rent ……………………………………………………….
Other operating expenses ……………………….
Total expenses …………………………..
106,500
*(£2,550 X 30) + (£3,600 X 4) + (£500 X 15) or (£75,000 + £23,400)
**(£1,500 X 40) + (£2,500 X 6) + (£300 X 25)
*PROBLEM 3.10 (Continued)
(b) LAKELAND SALES AND SERVICE
Statement of Financial Position
As of January 31, 2019
(1)
Cash Basis
(2)
Accrual Basis
Assets
Prepaid rent …………………………..……………….
£ 4,000
Inventory …………………………..……………………
Accounts receivable …………………………..
Cash ………………………………………………………
Total assets …………………………..
Equity and Liabilities
Equity …………………………………………………….
Salaries and wages payable …………………….
Accounts payable …………………………..
Total equity and liabilities …………………….
aOriginal investment £ 90,000
Cash sales 75,000
Cash purchases (82,500)
Rent paid (6,000)
*PROBLEM 3.10 (Continued)
(c) 1. The £23,400 in receivables from customers is an asset and a future
cash flow resulting from sales that is ignored. The cash basis
under states the amount of revenues and inflow of assets in
January from the sale of computers and printers by £23,400.
4. Rent expense on the cash basis is overstated by £4,000 under the
cash basis. This prepayment is an asset in the form of two
months’ future right to the use of office, showroom, and repair
space and should appear on the statement of financial position.
3-72 Copyright © 2018 Wiley Kieso, IFRS, 3/e, Solutions Manual (For Instructor Use Only)
16,900
21,000
6,000
16,900
21,000
6,000
(e)
Utilities Expense
Prop. Taxes Expense
Interest Payable
(a) COOKE NV
Worksheet
For the Year Ended September 30, 2019
Statement of
Financial
Position
Cr.
50,000
108,700
1,000
Dr.
37,400
14,000
Income
Statement
Cr.
280,500
Dr.
109,000
Adjusted Trial
Balance
Cr.
50,000
108,700
1,000
280,500
Dr.
37,400
14,000
109,000
Adjustments
Cr.
2,000
(d)
Dr.
Trial Balance
Cr.
50,000
108,700
1,000
278,500
Dr.
37,400
14,000
109,000
Account Titles
Cash
Mortgage Payable
Share capital-ordinary
Retained Earnings
Dividends
Service Revenue
Salaries and Wages Expense
Maintenance and Repairs
80,000
120,000
14,600
80,000
120,000
120,000
Land
Equipment
Accounts Payable