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EXERCISE 3.9 (15–20 minutes)
(a)
10/15
Salaries and Wages Expense ...........................................................
800
Cash ............................................................................................
800
(To record payment of October 15
payroll)
(b)
10/31
Supplies Expense ................................................................
470
Supplies ................................................................
470
(To record the use of supplies during
October)
EXERCISE 3.10 (25–30 minutes)
(a)
1.
Aug. 31
Insurance Expense (¥4,500 X 3/12) ................................
1,125
Prepaid Insurance ................................
1,125
2.
Aug. 31
Supplies Expense (¥2,600 – ¥650) ................................
1,950
Supplies ................................................................
1,950
4.
Aug. 31
Unearned Rent Revenue ................................
3,800
Rent Revenue ................................................................
3,800
5.
Aug. 31
Salaries and Wages Expense ................................
375
Salaries and Wages Payable ................................
375
EXERCISE 3.10 (Continued)
(b) UHURA RESORT
Adjusted Trial Balance
August 31, 2019
Debit
Credit
Cash .......................................................................
¥ 19,600
Accounts Receivable (6) ......................................
800
Retained Earnings .................................................
Dividends ...............................................................
5,000
Rent Revenue (¥86,200 + ¥3,800 + ¥800) (4) & (6)
90,800
Salaries and Wages Expense (¥44,800 + ¥375) ...
45,175
Utilities Expense ....................................................
9,200
EXERCISE 3.11 (20–25 Minutes)
(a) CAVAMANLIS CO.
Income Statement
For the Year Ended December 31, 2019
Revenues
Service revenue ..............................................
$12,590
Expenses
(b) CAVAMANLIS CO.
Retained Earnings Statement
For the Year Ended December 31, 2019
Retained earnings, January 1 .....................................................
$11,310
Copyright © 2018 Wiley Kieso, IFRS, 3/e, Solutions Manual (For Instructor Use Only) 3-25
EXERCISE 3.11 (Continued)
(c) CAVAMANLIS CO.
Statement of Financial Position
December 31, 2019
Assets
Noncurrent assets
Property, plant, and equipment
Equity and Liabilities
Equity
Share capital—ordinary ....................................
$20,000
Retained earnings .............................................
11,072
$31,072
Current liabilities
EXERCISE 3.12 (20–25 Minutes)
(a) FLYNN DESIGN
Income Statement
For the Year Ended December 31, 2019
Revenues
Service revenue .............................................
€58,500
Expenses
FLYNN DESIGN
Retained Earnings Statement
For the Year Ended December 31, 2019
EXERCISE 3.12 (Continued)
(a) (Continued) FLYNN DESIGN
Statement of Financial Position
December 31, 2019
Assets
Equipment ......................................................................
€60,000
Less: Accumulated depreciation—equipment ............
35,000
€25,000
Equity and Liabilities
Equity
Share capital—ordinary ....................................
€10,000
Retained earnings .............................................
33,950
€43,950
Liabilities
Notes payable .......................................................
5,000
(b) 1. Based on interest payable at December 31, 2019, interest is €25 per
month or .5% of the note payable. .5% X 12 = 6% interest per year.
EXERCISE 3.13 (10–15 Minutes)
(a)
Sales revenue ................................................................
£800,000
(b)
Sales Revenue ................................................................
800,000
Income Summary ................................................................
800,000
EXERCISE 3.14 (10–15 minutes)
Sales Revenue ................................................................
340,000
Income Summary ................................................................
340,000
Income Summary ................................................................
323,000
Cost of Goods Sold ................................................................
202,000
Sales Returns and Allowances ................................
13,000
EXERCISE 3.15 (10–15 minutes)
(a) $5,000 ($90,000 – $85,000) (d) $95,000 ($5,000 + $90,000)
EXERCISE 3.16 (10–15 minutes)
Sales Revenue ................................................................
390,000
Cost of Goods Sold................................................................
235,700
Sales Returns and Allowances ................................
12,000
(or)
Sales Revenue ................................................................
390,000
Income Summary ................................................................
390,000
Income Summary ................................................................
346,700
Cost of Goods Sold................................................................
235,700
Income Summary ................................................................
43,300
Retained Earnings ................................................................
43,300
EXERCISE 3.17 (10–15 minutes)
Mar.
1
Cash ................................................................................
60,000
Share Capital—Ordinary .....................................
60,000
(Investment of cash in business)
3
Land ................................................................................
10,000
Buildings ........................................................................
22,000
10
Equipment ......................................................................
2,500
Accounts Payable ................................................
2,500
(Purchased equipment on account)
31
Cash ................................................................................
750
Service Revenue ..................................................
750
(Received cash for services performed)
LO: 2, Bloom: AP, Difficulty: Moderate, Time: 10-15, AACSB: Analytic, AICPA BB: None, AICPA FC: Reporting, AICPA PC: None
*EXERCISE 3.18 (15–20 minutes)
CORINNE DUNBAR, M.D.
Conversion of Cash Basis to Accrual Basis
For the Year 2019
Excess of cash collected over cash disbursed
(€142,600 – €60,470) ......................................................................
€82,130
Alternate solution:
CORINNE DUNBAR, M.D.
Conversion of Income Statement Data
from Cash Basis to Accrual Basis
For the Year 2019
Cash
Adjustments
Accrual
Basis
Add
Deduct
Basis
Collections from customers:
€142,600
–Accounts receivable, Jan. 1
€11,250
+Accounts receivable, Dec. 31
€15,927
*EXERCISE 3.19 (10–15 minutes)
(a) BUTLER CORP.
Income Statement (Cash Basis)
For the Year Ended December 31,
2018
2019
Cash receipts* .............................................
$290,000
$515,000
(b) BUTLER CORP.
Income Statement (Accrual Basis)
For the Year Ended December 31,
2018
2019
Revenues* ....................................................
$480,000
$445,000
*EXERCISE 3.20 (20–25 minutes)
(a)
Adjusting Entries:
1.
Insurance Expense (₺6,000 X 5/24) ................................
1,250
Prepaid Insurance ................................................................
1,250
(b)
Reversing Entries:
1.
No reversing entry required.
*EXERCISE 3.21 (10–15 minutes)
Accounts
Adjusted Trial
Balance
Income
Statement
Statement of
Financial
Position
Dr.
Cr.
Dr.
Cr.
Dr.
Cr.
Cash
15,000
15,000
*EXERCISE 3.22 (20–25 minutes)
MADRASAH SE
Worksheet (Partial)
For the Month Ended April 30, 2019
Adjusted Trial
Balance
Income
Statement
Statement of
Financial
Position
Account Titles
Dr.
Cr.
Dr.
Cr.
Dr.
Cr.
Cash
18,972
18,972
Accounts Receivable
6,920
6,920
Service Revenue
12,590
12,590
Salaries and Wages
Expense
6,840
6,840
*EXERCISE 3.22 (Continued)
MADRASAH SE
Statement of Financial Position
April 30, 2019
Assets
Noncurrent Assets
Property, plant, and equipment
Equity and Liabilities
Equity
Share capital-ordinary .................................................
€33,960
Retained earnings……………………………………...
Current liabilities
(2,888)
€31,072
Notes payable ...............................................................
€ 5,700
*EXERCISE 3.23 (10–15 minutes)
LETTERMAN AG
Worksheet (Partial)
For Month Ended February 28, 2019
Trial
Balance
Adjustments
Adjusted
Trial
Balance
Income
Statement
Statement
of Financial
Position
Account Titles
Dr.
Cr.
Dr.
Cr.
Dr.
Cr.
Dr.
Cr.
Dr.
Cr.
Supplies
1,756
(a)
1,241
515
515
Accumulated
The following accounts and amounts would be shown in the February
income statement:
Supplies expense ................................ €2,741
TIME AND PURPOSE OF PROBLEMS
Problem 3.1 (Time 25–35 minutes)
Purpose—to provide an opportunity for the student to post daily transactions to a “T” account ledger,
Problem 3.2 (Time 35–40 minutes)
Purpose—to provide an opportunity for the student to prepare adjusting entries, and prepare financial
statements (income statement, statement of financial position, and statement of retained earnings). The
student also is asked to analyze two transactions to find missing amounts.
Problem 3.3 (Time 25–30 minutes)
Problem 3.4 (Time 40–50 minutes)
Problem 3.5 (Time 15–20 minutes)
Problem 3.6 (Time 25–35 minutes)
Purpose—to provide the student with an opportunity to prepare year-end adjusting entries from a trial
Problem 3.7 (Time 25–35 minutes)
Purpose—to provide an opportunity for the student to figure out the year-end adjusting entries that were
Problem 3.8 (Time 30–40 minutes)
Problem 3.9 (Time 30–35 minutes)
Purpose—to provide an opportunity for the student to prepare adjusting and closing entries from a trial
balance and related information. The student is also required to post the entries to “T” accounts.
*Problem 3.10 (Time 35–40 minutes)
Purpose—to provide an opportunity for the student to prepare and compare (a) cash basis and accrual
SOLUTIONS TO PROBLEMS
PROBLEM 3.1
(a) (Explanations are omitted.) and (d)
Cash
Equipment
Sept.
1
20,000
Sept.
4
680
Sept.
2
17,280
8
1,690
5
942
Accounts Receivable
Sept.
14
5,820
Sept.
20
980
25
2,110
Accounts Payable
Bal.
30
6,950
Sept.
18
3,600
Sept.
2
17,280
Bal.
30
13,680
Rent Expense
Office Expense
Accumulated Depreciation–Equipment
Sept.
10
430
Sept.
30
515
Sept.
30
288
30
85
515
515
PROBLEM 3.1 (Continued)
Depreciation Expense
Income Summary
Sept.
30
288
Sept.
30
288
Sept.
30
680
Sept.
30
9,620
30
515
(b) YASUNARI KAWABATA, D.D.S.
Trial Balance
September 30
Debit
Credit
Cash ........................................................................................
¥12,133
Accounts Receivable .............................................................
6,950
