PROBLEM 3-2C
(a)
J1
Date
Account Titles
Ref.
Debit
Credit
May 31
Insurance Expense…………………………
Prepaid Insurance ………………….
722
130
200
200
31
Supplies Expense ………………………….
Supplies ($1,900 – $300) …………
631
126
1,600
1,600
Equipment ………………………….
150
250
31
Interest Expense …………………………...
Interest Payable
[($40,000 X 12%) X 1/12] ………
718
230
400
400
31
Unearned Rent Revenue …………………
208
1,200
31
Salaries and Wages Expense ………….
726
(b)
Cash No. 101
Explanation
Ref.
Debit
Credit
Balance
Balance
2,500
PROBLEM 3-2C (Continued)
Supplies No. 126
Date
Explanation
Ref.
Debit
Credit
Balance
Prepaid Insurance No. 130
Date
Explanation
Ref.
Debit
Credit
Balance
May 31
31
Balance
Adjusting
J1
200
2,400
2,200
Land No. 140
Date
Explanation
Ref.
Debit
Credit
Balance
May 31
Balance
15,000
Buildings No. 141
Date
Explanation
Ref.
Debit
Credit
Balance
May 31
Balance
70,000
Accumulated Depreciation—Buildings No. 142
Date
Explanation
Ref.
Debit
Credit
Balance
May 31
Adjusting
Equipment No. 149
Date
Explanation
Ref.
Debit
Credit
Balance
May 31
Balance
16,800
Accumulated Depreciation—Equipment No. 150
Date
Explanation
Ref.
Debit
Credit
Balance
May 31
Adjusting
250
PROBLEM 3-2C (Continued)
Accounts Payable No. 201
Date
Explanation
Ref.
Debit
Credit
Balance
May 31
Balance
5,300
Unearned Rent Revenue No. 208
Date
Explanation
Ref.
Debit
Credit
Balance
Salaries and Wages Payable No. 212
Date
Explanation
Ref.
Debit
Credit
Balance
May 31
Adjusting
J1
800
800
Interest Payable No. 230
Date
Explanation
Ref.
Debit
Credit
Balance
May 31
Adjusting
J1
400
400
Mortgage Payable No. 275
Date
Explanation
Ref.
Debit
Credit
Balance
May 31
Balance
Owner’s Capital No. 301
Date
Explanation
Ref.
Debit
Credit
Balance
May 31
Balance
55,000
Rent Revenue No. 429
Date
Explanation
Ref.
Debit
Credit
Balance
PROBLEM 3-2C (Continued)
Advertising Expense No. 610
Date
Explanation
Ref.
Debit
Credit
Balance
May 31
Balance
500
Depreciation Expense No. 619
Date
Explanation
Ref.
Debit
Credit
Balance
May 31
Adjusting
300
300
Adjusting
J1
Supplies Expense No. 631
Date
Explanation
Ref.
Debit
Credit
Balance
May 31
Adjusting
J1
1,600
1,600
Interest Expense No. 718
Date
Explanation
Ref.
Debit
Credit
Balance
May 31
Adjusting
J1
400
400
Insurance Expense No. 722
Date
Explanation
Ref.
Debit
Credit
Balance
May 31
Adjusting
J1
200
Salaries and Wages Expense No. 726
Date
Explanation
Ref.
Debit
Credit
Balance
May 31
31
Balance
Adjusting
J1
800
3,000
3,800
Utilities Expense No. 732
Date
Explanation
Ref.
Debit
Credit
Balance
PROBLEM 3-2C (Continued)
(c) COLLISON MOTEL
Adjusted Trial Balance
May 31, 2017
Debit
Credit
Cash …………………………………………………………..
Supplies ……………………………………………………..
Prepaid Insurance …………………………..…………..
Unearned Rent Revenue ………………………………
Salaries and Wages Payable ………………………..
Interest Payable …………………………………………..
Mortgage Payable …………………………..……………
Interest Expense ………………………………………….
Insurance Expense ………………………………………
$ 2,500
300
2,200
400
200
2,400
800
400
40,000
PROBLEM 3-2C (Continued)
(d) COLLISON MOTEL
Income Statement
For the Month Ended May 31, 2017
Revenues
Rent revenue …………………………………………… $10,400
Expenses
Salaries and wages expense …………………….. $3,800
Supplies expense …………………………………….. 1,600
Utilities expense ………………………………………. 1,000
COLLISON MOTEL
Owner’s Equity Statement
For the Month Ended May 31, 2017
Owner’s Capital, May 1 …………………………………………………… $ 0
Investment by owner ……………………………………………………… 55,000
PROBLEM 3-2C (Continued)
COLLISON MOTEL
Balance Sheet
May 31, 2017
Assets
Cash …………………………..……………………………… $ 2,500
Supplies ……………………………………………………. 300
Prepaid insurance ………………………………………. 2,200
Land ………………………………………………………….. 15,000
Buildings …………………………………………………… $70,000
Liabilities and Owner’s Equity
Liabilities
Accounts payable ……………………………….. $ 5,300
Unearned rent revenue ………………………… 2,400
PROBLEM 3-3C
(a) Sept. 30 Accounts Receivable ………………………… 500
Service Revenue ………………………….. 500
30 Rent Expense …………………………………… 600
Prepaid Rent ……………………………….. 600
30 Depreciation Expense ……………………….. 350
Accum. Depreciation—Equipment ….. 350
(b) RENN CO.
Income Statement
For the Quarter Ended September 30, 2017
Revenues
Service revenue………………………………………….. $14,500
Rent revenue ……………………………………………… 800
Total revenues …………………………………….. $15,300
Expenses
Salaries and wages expense ……………………….. 9,600
Rent expense ……………………………………………… 1,500
PROBLEM 3-3C (Continued)
RENN CO.
Owner’s Equity Statement
For the Quarter Ended September 30, 2017
Owner’s Capital, July 1, 2017 …………………………..……………… $ 0
Investment by owner ……………………………………………………… 14,000
RENN CO.
Balance Sheet
September 30, 2017
Assets
Cash …………………………..………………………………… $ 6,700
Accounts receivable ……………………………………… 900
Supplies ………………………………………………………. 1,000
Liabilities and Owner’s Equity
Liabilities
Notes payable ………………………………………… $ 5,000
Accounts payable ………………………………….. 1,510
Salaries and wages payable ……………………. 600
(c) Interest of 12% per year equals a monthly rate of 1%; monthly interest
is $50 ($5,000 X 1%). Since total interest expense is $50, the note has
been outstanding one month.
PROBLEM 3-4C
1. Dec. 31 Insurance Expense ………………………………… 4,100
Prepaid Insurance …………………………... 4,100
[($6,000 ÷ 3) = $2,000
[($4,200 ÷ 2) = 2,100
$4,100]
2. Dec. 31 Unearned Rent ………………………………………. 84,000
3. Dec. 31 Interest Expense ……………………………………. 1,800
Interest Payable
($60,000 X 9% X 4/12) …………………… 1,800
PROBLEM 3-5C
(a), (c) & (e)
Cash No. 101
Date
Explanation
Ref.
Debit
Credit
Balance
Nov. 1
8
10
Balance
J1
J1
1,200
1,100
2,790
1,690
2,890
Accounts Receivable No. 112
Date
Explanation
Ref.
Debit
Credit
Balance
Nov. 1
Balance
2,510
Supplies No. 126
Date
Explanation
Ref.
Debit
Credit
Balance
Nov. 1
Balance
2,000
Equipment No. 153
Date
Explanation
Ref.
Debit
Credit
Balance
Nov. 1
Balance
10,000
PROBLEM 3-5C (Continued)
Accumulated Depreciation—Equipment No. 154
Date
Explanation
Ref.
Debit
Credit
Balance
Nov. 1
30
Balance
Adjusting
J1
100
500
600
Accounts Payable No. 201
Date
Explanation
Ref.
Debit
Credit
Balance
Nov. 1
Balance
2,100
Unearned Service Revenue No. 209
Date
Explanation
Ref.
Debit
Credit
Balance
Nov. 1
Balance
1,400
Salaries and Wages Payable No. 212
Date
Explanation
Ref.
Debit
Credit
Balance
Nov. 1
Balance
500
Owner’s Capital No. 301
Date
Explanation
Ref.
Debit
Credit
Balance
Nov. 1
Balance
12,800
PROBLEM 3-5C (Continued)
Service Revenue No. 400
Date
Explanation
Ref.
Debit
Credit
Balance
Nov. 12
J1
Depreciation Expense No. 615
Date
Explanation
Ref.
Debit
Credit
Balance
Nov. 30
Adjusting
J1
100
100
Supplies Expense No. 631
Date
Explanation
Ref.
Debit
Credit
Balance
Salaries and Wages Expense No. 726
Date
Explanation
Ref.
Debit
Credit
Balance
Nov. 8
J1
600
600
Rent Expense No. 729
Date
Explanation
Ref.
Debit
Credit
Balance
Nov. 22
J1
300
300
PROBLEM 3-5C (Continued)
(b)
General Journal J1
Date
Account Titles and Explanation
Ref.
Debit
Credit
Nov. 8
Salaries and Wages Payable …………..
Salaries and Wages Expense …………
Cash ………………………………………
212
726
101
500
600
1,100
10
Cash ……………………………………………..
Accounts Receivable ………………
101
112
1,200
1,200
Service Revenue …………………….
400
1,400
15
Equipment …………………………………….
Accounts Payable …………………..
153
201
3,000
3,000
17
Supplies ……………………………………….
Accounts Payable …………………..
126
201
500
500
20
Accounts Payable ………………………….
Cash ………………………………………
201
101
2,500
2,500
22
Rent Expense ………………………………..
729
300
25
Salaries and Wages Expense …………
726
1,300
27
Accounts Receivable ……………………..
112
900
Unearned Service Revenue ……..
209
550
PROBLEM 3-5C (Continued)
(d) & (f) PINE EQUIPMENT REPAIR
Trial Balances
November 30, 2017
Before
Adjustment
After
Adjustment
Dr.
Cr.
Dr.
Cr.
Cash …………………………………….
Accounts Receivable …………….
Unearned Service Revenue ……
Salaries and Wages Payable ….
Owner’s Capital …………………….
Service Revenue ……………………
Depreciation Expense ……………
Supplies Expense ………………….
$ 740
2,210
1,950
12,800
2,300
$ 740
2,210
100
1,500
800
500
12,800
3,450
(e) 1. Nov. 30 Supplies Expense …………………… 631 1,500
Supplies ($2,500 – $1,000) ….. 126 1,500
3. 30 Depreciation Expense ……………… 615 100
Accumulated Depreciation—
Equipment …………………….. 154 100
PROBLEM 3-5C (Continued)
(g) PINE EQUIPMENT REPAIR
Income Statement
For the Month Ended November 30, 2017
Revenues
Service revenue……………………………………….. $ 3,450
Expenses
Salaries and wages expense …………………….. $2,400
Supplies expense …………………………………….. 1,500
PINE EQUIPMENT REPAIR
Owner’s Equity Statement
For the Month Ended November 30, 2017
Owner’s Capital, November 1 …………………………………………. $12,800
PROBLEM 3-5C (Continued)
PINE EQUIPMENT REPAIR
Balance Sheet
November 30, 2017
Assets
Cash …………………………..………………………………… $ 740
Accounts receivable ……………………………………… 2,210
Supplies ………………………………………………………. 1,000
Liabilities and Owner’s Equity
Liabilities
Accounts payable ………………………………….. $ 3,100
Unearned service revenue ………………………. 800