PROBLEM 3.10
(a), (b), (c)
Cash
Accounts Receivable
Allow. for Doubtful Accts.
Bal.
Bal.
32,000
Bal.
700
Adj.
1,400
2,100
Bal.
Bal.
84,000
Bal.
35,000
Adj.
12,000
47,000
Bal.
Adj.
2,550
Bal.
28,000
Adj.
3,360
Cls.
3,360
Sales Revenue
Bal.
80,600
Cls.
600,000
Bal.
600,000
Adj.
2,550
Cls.
2,550
Salaries and Wages
Expense (Sales)
Advertising Expense
Salaries and Wages Expense
(Administrative)
Bal.
Cls.
52,400
Bal.
6,700
Adj.
700
Adj.
65,000
Cls.
65,000
Adj.
Cls.
6,000
52,400
6,700
6,700
Supplies Expense
Prepaid Advertising
Adj.
Cls.
1,400
Bal.
5,000
Adj.
1,500
Adj.
700
Cls.
3,500
5,000
5,000
Interest Payable
Income Summary
Adj.
Adj.
12,000
Cls.
12,000
Exp.
554,210
Sales
600,000
Inc.
600,000
600,000
Salaries and Wages Payable
Adj.
Adj.
2,400
Bal.
10,000
Bal.
408,000
408,000
Inc.
45,790
PROBLEM 3.10 (Continued)
(b)
-1-
Dec. 31 Bad Debt Expense ……………………………………………………..
1,400
Allowance for Doubtful Accounts …………………………..
1,400
-2-
Dec. 31 Depreciation Expense ($84,000 ÷ 7)…………………………..
Equipment …………………………………………………….
-3-
Dec. 31 Insurance Expense …………………………………………………….
2,550
Prepaid Insurance ……………………………………………………
2,550
-4-
Dec. 31 Interest Expense ……………………………………………………….
3,360
Interest Payable ……………………………………………………….
3,360
-5-
Dec. 31 Salaries and Wages Expense (Sales) …………………………..
2,400
Salaries and Wages Payable …………………………..
2,400
-6-
Dec. 31 Prepaid Advertising ……………………………………………………
Advertising Expense …………………………..
-7-
Dec. 31 Supplies ……………………………………………………….
1,500
Supplies Expense ……………………………………………………
1,500
PROBLEM 3.10 (Continued)
(c)
Dec. 31
Sales Revenue ……………………………………………………….
600,000
Income Summary ……………………………………………………….
600,000a
Dec. 31
Income Summary ……………………………………………………….
554,210b
Cost of Goods Sold ……………………………………………………….
408,000
Advertising Expense ……………………………………………………….
Salaries and Wages Expense (Sales) …………………………..
Supplies Expense ……………………………………………………….
Insurance Expense ……………………………………………………….
Bad Debt Expense ……………………………………………………….
Depreciation Expense ……………………………………………………….
Interest Expense ……………………………………………………….
Dec. 31
Retained Earnings ……………………………………………………….
*PROBLEM 3.11
(a) ARKANSAS SALES AND SERVICE
Income Statement
For the Month Ended January 31, 2020
(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)
*PROBLEM 3.11 (Continued)
(b) ARKANSAS SALES AND SERVICE
Balance Sheet
As of January 31, 2020
(1)
Cash Basis
(2)
Accrual
Basis
Assets
Cash ………………………………………………………
$58,500a
$ 58,500a
Accounts receivable …………………………..
Inventory …………………………..……………………
Prepaid rent ($6,000 – $2,000) …………………..
Total assets ……………………………………….
Liabilities and owners’ Equity
Salaries and wages payable …………………….
Accounts payable …………………………..
$58,500c
aOriginal investment $ 90,000
Cash sales 75,000
Cash purchases (82,500)
Rent paid (6,000)
Salaries paid (9,600)
*PROBLEM 3.11 (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
understates the amount of revenues and inflow of assets in
January from the sale of computers and printers by $23,400.
2. The cost of computers and printers sold in January is overstated
Copyright © 2019 WILEY Kieso, Intermediate Accounting, 17/e, Solutions Manual (For Instructor Use Only) 3-67
(a) COOKE COMPANY
Worksheet
For the Year Ended September 30, 2020
Balance Sheet
Cr.
2,000
Dr.
37,400
4,200
14,000
Income Statement
Cr.
280,500
Dr.
109,000
30,500
Adjusted Trial Balance
Cr.
2,000
280,500
Dr.
37,400
4,200
14,000
109,000
30,500
Adjustments
Cr.
14,400
2,000
(b)
(d)
Dr.
Trial Balance
Cr.
2,000
278,500
Dr.
37,400
18,600
14,000
109,000
30,500
Account Titles
Cash
Supplies
Dividends
Retained Earnings
Service Revenue
Sal. and Wages Exp.
Maintenance and
Repairs Expense
*PROBLEM 3.12 (Continued)
(b) COOKE COMPANY
Balance Sheet
September 30, 2020
Assets
Current assets
Cash ……………………………………………………….
$37,400
Supplies ……………………………………………………….
4,200
Prepaid insurance …………………………..
Total current assets …………………………..
Property, plant, and equipment
Equipment ………………………………………………………
Liabilities and Stockholders’ Equity
Current liabilities
Accounts payable ……………………………………………
$14,600
Current maturity of long-term debt …………………..
10,000*
Interest payable ………………………………………….
6,000
Property taxes payable ……………………………………
3,000
Unearned service revenue …………………………..
Total current liabilities …………………………..
Long-term liabilities
Mortgage payable ($50,000 – $10,000*) ……………..
Total liabilities ………………………………………..
*PROBLEM 3.12 (Continued)
(c)
Sep. 30
Insurance Expense ……………………………………………………….
28,000
Prepaid Insurance …………………………..
28,000
30
Supplies Expense ……………………………………………………….
14,400
Supplies ……………………………………………………….
14,400
Depreciation Expense ……………………………………………………….
30
Unearned Service Revenue ($2,700 – $700) …………………………..
Service Revenue ……………………………………………………….
30
Property Tax Expense …………………………..
Property Taxes Payable …………………………..
30
Interest Expense ……………………………………………………….
Interest Payable ……………………………………………………….
(d)
Sep. 30
Service Revenue ……………………………………………………….
280,500
Income Summary …………………………..
280,500a
30
Income Summary ……………………………………………………….
247,000b
Salaries and Wages Expense …………………………..
109,000
Maintenance and Repairs
Expense ……………………………………………………….
30,500
Insurance Expense …………………………..
28,000
Property Tax Expense …………………………..
Supplies Expense …………………………..
Utilities Expenses …………………………..
16,900
Interest Expense …………………………..
Advertising Expense …………………………..
Depreciation Expense …………………………..
Income Summary ($280,500a – $247,000b) …………………………..
Retained Earnings …………………………..
Retained Earnings ……………………………………………………….
*PROBLEM 3.12 (Continued)
(e) COOKE COMPANY
Post-Closing Trial Balance
September 30, 2020
Debit
Credit
Cash ……………………………………………………….
$ 37,400
Supplies ……………………………………………………….
4,200
Prepaid Insurance ……………………………………………………
3,900
Land ……………………………………………………….
Equipment ……………………………………………………….
Accumulated Depreciation – Equipment ……………………
Accounts Payable …………………………………………………….
14,600
Unearned Service Revenue …………………………..
Interest Payable ……………………………………………………….
Property Tax Payable ……………………………………………….
Mortgage Payable …………………………………………………….
50,000
Common Stock ……………………………………………………….
FINANCIAL REPORTING PROBLEM
(a) June 30, 2017 total assets: $120,406 million.
June 30, 2016 total assets: $127,136 million.
(e) An adjusting entry for deferrals is necessary when the receipt/disburse–
ment precedes the recognition in the financial statements. Accounts
(f) 2017 Depreciation and amortization expense: $2,820 million
2016 Depreciation and amortization expense: $3,078 million
2015 Depreciation and amortization expense: $3,134 million