PROBLEM 3.1 (Continued)
(c) YASUNARI KAWABATA, D.D.S.
Income Statement
For the Month of September
Service revenue ……………………………………………………….
¥9,620
Expenses:
Salaries and wages expense …………………………
¥1,800
Rent expense ………………………………………………
Supplies expense
Depreciation expense …………………………..
Total expenses …………………………………………
YASUNARI KAWABATA, D.D.S.
Statement of Owner’s Equity
For the Month of September
Kawabata, Capital September 1 ………………………………………….
Add: Net income for September ……………………………………….
Less: Withdrawal by owner ……………………………………………….
PROBLEM 3.1 (Continued)
YASUNARI KAWABATA, D.D.S.
Statement of Financial Position
As of September 30
Assets
Equity and Liabilities
Equipment. …………………….
¥17,280
Yasunari Kawabata,
equipment ……………….
Supplies …………………………
Accounts payable ………………..
Accounts receivable ……….
6,950
Cash …………………………..
Total equity and
(e) YASUNARI KAWABATA, D.D.S.
Post-Closing Trial Balance
September 30
Debit
Credit
Cash ……………………………………………………….
¥12,133
Accounts Receivable ………………………………………
6,950
Supplies ……………………………………………………….
Equipment ………………………………………………………
Accumulated Depreciation–Equipment …………….
¥ 288
Accounts Payable …………………………………………..
Yasunari Kawabata, Capital …………………………..
PROBLEM 3.2
(a)
Dec. 31
Accounts Receivable ……………………………………………………….
3,500
Service Revenue ……………………………………………………….
3,500
31
Unearned Service Revenue …………………………..
1,400
Service Revenue ……………………………………………………….
1,400
31
Supplies Expense ……………………………………………………….
5,400
Supplies ……………………………………………………….
5,400
31
Depreciation Expense ……………………………………………………….
5,000
Accumulated Depreciation-Equipment …………………………..
5,000
31
Interest Expense ……………………………………………………….
Interest Payable ……………………………………………………….
31
Insurance Expense ……………………………………………………….
Prepaid Insurance ……………………………………………………….
31
Salaries and Wages Expense …………………………..
1,300
Salaries and Wages Payable …………………………..
1,300
PROBLEM 3.2 (Continued)
(b) MASON ADVERTISING AGENCY
Income Statement
For the Year Ended December 31, 2019
Revenues
Service revenue ………………………………………………
€63,500
Expenses
Salaries and wages expense …………………………..
€11,300
Depreciation expense …………………………..
Rent expense ………………………………………………….
Insurance expense …………………………..
Interest expense ……………………………………………..
Total expenses …………………………..
MASON ADVERTISING AGENCY
Retained Earnings Statement
For the Year Ended December 31, 2019
Retained earnings, January 1 ……………………………………………………
€ 3,500
Add: Net income………………………………………………………………………
PROBLEM 3.2 (Continued)
MASON ADVERTISING AGENCY
Statement of Financial Position
December 31, 2019
Assets
Equipment ……………………………………………………………….
€60,000
Less: Accumulated depreciation—equipment …………..
33,000
€27,000
Supplies ………………………………………………………………….
Prepaid insurance ……………………………………………………
Accounts receivable …………………………………………………
Cash ……………………………………………………………………….
Equity and Liabilities
Equity
Share capital—ordinary ……………………………………
€10,000
Retained earnings ……………………………………………
39,950
€49,950
Liabilities
Notes payable …………………………………………………
5,000
Accounts payable ……………………………………………
5,000
Unearned service revenue …………………………..
5,600
Salaries and wages payable…………………………..
Interest payable ………………………………………………
Total liabilities …………………………………………..
(c) 1. Interest is €50 per month or 1% of the note payable. 1% X 12 = 12%
interest per year.
PROBLEM 3.3
December 31
1.
Salaries and Wages Expense …………………………..
2,120
Salaries and Wages Payable …………………………..
2,120
(5 X $700 X 2/5) = $1,400
(3 X $600 X 2/5) = 720
2.
Unearned Rent Revenue …………………………..
Rent Revenue ……………………………………………………….
(5 X $6,000 X 2) = $60,000
(4 X $8,500 X 1) = 34,000
3.
Advertising Expense ……………………………………………………….
4,900
Prepaid Advertising …………………………..
4,900
(A650 – $500 per month
for 8 months) = $4,000
(B974 – $300 per month
for 3 months) = 900
Interest Expense …………………………..…………………………..
4,200
Interest Payable
($60,000 X 12% X 7/12) …………………………..
4,200
PROBLEM 3.4
November 30
(a)
Supplies Expense (€5,500 – €1,500) …………………………..
4,000
Supplies ……………………………………………………….
4,000
Depreciation Expense—Equipment …………………………..
Equipment ……………………………………………………….
Interest Expense ……………………………………………………….
Interest Payable ……………………………………………………….
PROBLEM 3.4 (Continued)
(b) BELLEMY FASHION CENTER
Adjusted Trial Balance
November 30, 2019
Dr.
Cr.
Cash ……………………………………………………….
€ 28,700
Accounts Receivable……………………………………….
33,700
Inventory ……………………………………………………….
45,000
Supplies ……………………………………………………….
Equipment ………………………………………………………
Accumulated Depreciation—Equipment …………..
Notes Payable …………………………..…………………….
Accounts Payable …………………………..……………….
Share Capital—Ordinary …………………………..
Retained Earnings …………………………………………..
Sales Revenue ………………………………………………..
Sales Returns and
Allowances …………………………..………………………
4,200
Cost of Goods Sold …………………………………………
495,400
Salaries Expense …………………………………………….
140,000
Advertising Expense ……………………………………….
26,400
Utilities Expense ……………………………………………..
14,000
Maintenance and Repairs Expense …………………..
12,100
Delivery Expense …………………………………………….
16,700
Rent Expense ………………………………………………….
24,000
Supplies Expense ……………………………………………
Depreciation Expense—Equipment ………………….
15,000
Interest Expense ……………………………………………..
11,000
Interest Payable ………………………………………………
PROBLEM 3.4 (Continued)
(c) BELLEMY FASHION CENTER
Income Statement
For the Year Ended November 30, 2019
Sales revenue
Sales revenue …………………………………………………
€757,200
Less: Sales returns and allowances………………..
4,200
Net sales ……………………………………………………….
753,000
Cost of goods sold …………………………………………………..
Gross profit ……………………………………………………….
257,600
Operating expenses
Selling expenses
Salaries and wages expense
(€140,000 X 70%) …………………………..
Advertising expense …………………………..
26,400
Rent expense (€24,000 X 80%) …………………
19,200
Delivery expense …………………………………….
16,700
Utilities expense (€14,000 X 80%) …………….
11,200
Depr. exp.— equipment …………………………..
Supplies expense ……………………………………
190,500
Administrative expenses
Salaries and wages expense
(€140,000 X 30%) …………………………..
42,000
Maintenance and repairs expense ……………
12,100
Rent expense (€24,000 X 20%) …………………
4,800
Utilities expense (€14,000 X 20%) …………….
Other income and expense
Interest expense ……………………………………………..
PROBLEM 3.4 (Continued)
BELLEMY FASHION CENTER
Retained Earnings Statement
For the Year Ended November 30, 2019
Retained earnings, December 1, 2018 ………………………………………..
€8,000
Less: Net loss …………………………………………………………………………
BELLEMY FASHION CENTER
Statement of Financial Position
November 30, 2019
Assets
Noncurrent assets
Property, plant, and equipment
Equipment ……………………………………………………..
€133,000
Accum. depreciation–equipment ……………………..
Current assets
Supplies ……………………………………………………….
Inventory ……………………………………………………….
Accounts receivable …………………………..
Cash ……………………………………………………….
Total current assets …………………………..
Equity and Liabilities
Equity
Share capital—ordinary …………………………..
€90,000
Retained earnings …………………………..
2,400
€ 92,400
Noncurrent Liabilities
Current Liabilities
Notes payable due next year …………………………..
Accounts payable …………………………..
Interest payable ………………………………………………
Total current liabilities …………………………..
Total liabilities …………………………..
PROBLEM 3.4 (Continued)
Nov. 30
(d)
Sales Revenue ……………………………………………………….
757,200
Income Summary ……………………………………………………….
757,200
30
Income Summary ……………………………………………………….
762,800
Sales Returns and Allowances …………………………..
4,200
Cost of Goods Sold …………………………..
495,400
Salaries and Wages Expense …………………………..
140,000
Advertising Expense …………………………..
Utilities Expense ……………………………………………………….
Maintenance and Repairs Expense …………………………..
Delivery Expense ……………………………………………………….
Rent Expense ……………………………………………………….
Supplies Expense …………………………..
4,000
Equipment ……………………………………………………….
Interest Expense ……………………………………………………….
30
Retained Earnings (757,200 – 762,800) …………………………..
5,600
Income Summary ……………………………………………………….
5,600
PROBLEM 3.4 (Continued)
(e) BELLEMY FASHION CENTER
Post-Closing Trial Balance
November 30, 2019
Debit
Credit
Cash ………………………………………………………………………..
€ 28,700
Accounts Receivable …………………………..……………………
33,700
Merchandise Inventory ……………………………………………..
45,000
Equipment ……………………………………………………….
Accumulated Depreciation—Equipment …………………….
Notes Payable ……………………………………………………….
Accounts Payable …………………………..………………………..
Interest Payable ……………………………………………………….
Share Capital—Ordinary …………………………………………..
PROBLEM 3.5
(a)
-1-
Depreciation Expense ……………………………………….
10,500
Accumulated Depreciation—Equipment
(1/16 X [€192,000 – €24,000]) ……………………
10,500
-2-
Interest Expense ………………………………………………..
1,440*
Interest Payable
(€90,000 X 8% X 72/360) …………………………..
-3-
Admissions Revenue …………………………………………
Unearned Admissions Revenue
(2,000 X €30) …………………………..……………….
60,000
-4-
Prepaid Advertising ……………………………………………
1,100
Advertising Expense ……………………………………
1,100
-5-
Salaries and Wages Expense …………………………..
4,700
Salaries and Wages Payable ………………………..
4,700
(b) 1. Interest expense, €2,840 (€1,400 + €1,440).
PROBLEM 3.6
(a)
-1-
Service Revenue ……………………………………………………….
6,000
Unearned Service Revenue ……………………………………………….
6,000
-2-
Accounts Receivable ……………………………………………………….
4,900
Service Revenue …………………………..…………………………..
4,900
-3-
Bad Debt Expense ……………………………………………………….
1,430
Allowance for Doubtful Accounts …………………………..
1,430
-4-
Insurance Expense ……………………………………………………….
480
Prepaid Insurance ……………………………………………………….
480
-5-
Accumulated Depreciation—Equipment
(R$25,000 X .10) ……………………………………………………….
2,500
-6-
Interest Expense ……………………………………………………….
Interest Payable
(R$7,200 X .10 X 30/360) …………………………..…………………….
-7-
Prepaid Rent ……………………………………………………….
750
Rent Expense ……………………………………………………….
750
-8-
Salaries and Wages Expense …………………………………………………..
Salaries and Wages Payable …………………………..
PROBLEM 3.6 (Continued)
(b) YORKIS PEREZ, CONSULTING ENGINEER
Income Statement
For the Year Ended December 31, 2019
Service revenue (R$100,000 – R$6,000 + R$4,900) …………
R$98,900
Expenses
(R$30,500 + R$2,510) …………………………………………..
Rent expense (R$9,750 – R$750) …………………………..
Depreciation expense …………………………..………………..
Bad debt expense ………………………………………………….
Utilities expense …………………………..……………………….
Office expense ………………………………………………………
Insurance expense ………………………………………………..
Interest expense …………………………..……………………….
60
Total expenses ………………………………………………….
Salaries and wages expense
PROBLEM 3.6 (Continued)
YORKIS PEREZ, CONSULTING ENGINEER
Statement of Changes in Equity
For the Year Ended December 31, 2019
Yorkis Perez, Capital, January 1 ………………………………………………
R$ 52,010a
Add: Net income ……………………………………………………………………..
50,620
Less: Withdrawals …………………………………………………………………..
PROBLEM 3.6 (Continued)
YORKIS PEREZ, CONSULTING ENGINEER
Statement of Financial Position
December 31, 2019
Assets
Noncurrent assets
Equipment ……………………………………………………….
R$25,000
Less: Accum. depreciation—
equipment …………………………………………………..
8,750**
R$ 16,250
Current assets
Supplies ……………………………………………………….
Prepaid insurance
Prepaid rent ………………………………………………………
Accounts receivable
Less: Allowance for doubtful
accounts …………………………………………………….
Cash ……………………………………………………….
Equity and Liabilities
Equity
Yorkis Perez, Capital
(R$35,010 + R$50,620) …………………………..
R$ 85,630
Liabilities
Current liabilities
Notes payable …………………………..
Salaries and wages payable …………………………
Interest payable …………………………..
PROBLEM 3.7
(a)
Dec. 31
Account Receivable …………………………..
1,000
Service Revenue …………………………..
1,000
31
Unearned Service Revenue …………………………..
1,400
Service Revenue …………………………..
1,400
Supplies ……………………………………………………….
5,000
31
Depreciation Expense …………………………..
8,750
Equipment ……………………………………………………….
8,750
31
Interest Expense …………………………..…………………………..
150
Interest Payable …………………………..
150
31
Insurance Expense …………………………..
750
Prepaid Insurance …………………………..
750
31
1,500
Salaries and Wages Payable …………………………..
1,500
PROBLEM 3.7 (Continued)
(b) SORENSTAM ADVERTISING AG
Income Statement
For the Year Ended December 31, 2019
Revenues
Service revenue ………………………………………………
€61,000
Expenses
Salaries and wages expense …………………………..
€11,500
Supplies expense ……………………………………………
Depreciation expense …………………………..
Rent expense ………………………………………………….
Insurance expense ………………………………………….
Interest expense ……………………………………………..
Total expenses ………………………………………..
SORENSTAM ADVERTISING AG
Retained Earnings Statement
For the Year Ended December 31, 2019
Retained earnings, January 1 ……………………………………………………..
Add: Net income ……………………………………………………………………….
PROBLEM 3.7 (Continued)
SORENSTAM ADVERTISING AG
Statement of Financial Position
December 31, 2019
Assets
Equipment ……………………………………………………….
€60,000
Less: Accum. depr.—equipment …………………………..
35,750
€24,250
Prepaid insurance ………………………………………………………
Supplies …………………………………………………………………….
Accounts receivable …………………………………………………..
Cash …………………………..………………………………………
Equity and Liabilities
Equity
Share capital—ordinary …………………………..
€10,000
Retained earnings……………………………………………
30,000
Total equity …………………………………………….
€40,000
Liabilities
Notes payable …………………………………………………..
5,000
Accounts payable ……………………………………………..
5,000
Unearned service revenue …………………………..
5,600
Salaries and wages payable …………………………..
Total liabilities…………………………………………..