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185
Serial Problem, SP 3 (Continued)
Part 3
BUSINESS SOLUTIONS
Adjusted Trial Balance
December 31, 2017
Debit Credit
Cash ………………………………………………………………… $ 48,372
Accounts receivable …………………………………………. 5,668
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Serial Problem, SP 3 (Continued)
Part 4
BUSINESS SOLUTIONS
Income Statement
For Three Months Ended December 31, 2017
Revenue
Computer services revenue ………………………………… $31,284
Expenses
Depreciation expense—Office equipment …………… $ 400
Part 5
BUSINESS SOLUTIONS
Statement of Owner’s Equity
For Three Months Ended December 31, 2017
S. Rey, Capital, October 1, 2017 ……………………………. $73,000
Wild, Shaw, Chiappetta, FAP 23e Solutions Manual: Chapter 3
187
Serial Problem, SP 3 (Continued)
Part 6
BUSINESS SOLUTIONS
Balance Sheet
December 31, 2017
Assets
Cash ……………………………………………………………………… $ 48,372
Accounts receivable ……………………………………………… 5,668
Wild, Shaw, Chiappetta, FAP 23e Solutions Manual: Chapter 3
Serial Problem, SP 3 (Continued)
[Note: Ledger includes all entries from prior three months. The Working Papers
shorten the solution by showing account balances as of November 30.]
General Ledger
Cash
Acct. No. 101
Date
Explanation
PR
Credit
Balance
Oct.
1
45,000
2
41,700
5
39,480
8
38,060
42,055
40,327
41,727
40,852
37,252
Nov.
1
36,932
2
41,565
5
40,440
42,648
42,398
42,014
40,264
38,264
Dec.
2
37,239
3
36,739
4
40,689
39,939
41,439
47,064
50,064
49,872
48,372
Wild, Shaw, Chiappetta, FAP 23e Solutions Manual: Chapter 3
189
Serial Problem, SP 3 (Continued)
Accounts Receivable
Acct. No. 106
Date
Explanation
PR
Credit
Oct.
6
Computer Supplies
Acct. No. 126
Date
Explanation
PR
Credit
Oct.
3
Nov.
5
Dec.
3,065
Date
Explanation
PR
Credit
Oct.
5
Dec.
Date
Explanation
PR
Credit
Oct.
2
Dec.
2,475
Date
Explanation
PR
Credit
Oct.
1
Date
Explanation
PR
Credit
Dec.
1,400
6,200
4,800
1,400
1,400
5,208
5,208
Nov.
8
5,668
2,208
8,668
3,950
3,000
5,668
190
Date
Explanation
PR
Credit
Oct.
3
1,420
8
Dec.
1,100
Date
Explanation
PR
Credit
Dec.
Date
Explanation
PR
Credit
Dec.
1,500
Date
Explanation
PR
Credit
Oct.
1
Date
Explanation
PR
Credit
Nov.
Dec.
Date
Explanation
PR
Debit
Credit
Balance
Date
Explanation
PR
Debit
Credit
Balance
Dec.
1,250
Wild, Shaw, Chiappetta, FAP 23e Solutions Manual: Chapter 3
191
Serial Problem, SP 3 (Continued)
Computer Services Revenue
Acct. No. 403
Date
Explanation
PR
Credit
Oct.
6
4,800
12
1,400
Depreciation Expense—Office Equipment
Acct. No. 612
Date
Explanation
PR
Credit
Dec.
31
Acct. No. 613
Date
Explanation
PR
Credit
Dec.
31
Acct. No. 623
Date
Explanation
PR
Credit
Oct.
31
Nov.
30
Dec.
10
31
Acct. No. 637
Date
Explanation
PR
Credit
Dec.
31
28
5,208
Nov.
2
4,633
8
5,668
24
3,950
Dec.
20
5,625
Wild, Shaw, Chiappetta, FAP 23e Solutions Manual: Chapter 3
192
Serial Problem, SP 3 (Concluded)
Rent Expense
Acct. No. 640
Date
Explanation
PR
Credit
Dec.
31
Computer Supplies Expense
Acct. No. 652
Date
Explanation
PR
Credit
Dec.
31
3,065
3,065
Acct. No. 655
Date
Explanation
PR
Debit
Credit
Balance
20
1,728
1,728
Dec.
1,025
2,753
Acct. No. 676
Date
Explanation
PR
Debit
Credit
Balance
Nov.
28
Dec.
29
Acct. No. 677
Date
Explanation
PR
Debit
Credit
Balance
Nov.
22
Acct. No. 684
Date
Explanation
PR
Debit
Credit
Balance
17
Dec.
1,305
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193
Reporting in Action — BTN 3-1
1. The chapter states that the “revenue recognition principle requires that
2. Apple provides information on revenue recognition in its Note 1 titled
“Summary of Significant Accounting Policies.” It reports that “The
3. For fiscal year-end September 26, 2015, the profit margin is ($ millions):
Wild, Shaw, Chiappetta, FAP 23e Solutions Manual: Chapter 3
Comparative Analysis — BTN 3-2
($ millions)
1. Apple
Current year, profit margin = $53,394 / $233,715 = 22.8%
2. Apple was more successful on the basis of profit margin in the current
Ethics Challenge — BTN 3-3
1. GAAP requires that annual deprecation be accumulated in a contra–
asset account, called Accumulated Depreciation. While property, plant,
2. One strength of Smith’s method would be the ease of preparing the
balance sheet. The property, plant, and equipment balance in the
3. While both approaches would lead to the same total assets on the
balance sheet, GAAP requires Boland’s approach. As a professional,
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195
Communicating in Practice — BTN 3-4
Taking It to the Net — BTN 3-5
1. The Gap’s main brands (stores) are The Gap, Old Navy, and Banana
2. The Gap’s fiscal year–end is January 31, 2015. It appears that The Gap’s
Wild, Shaw, Chiappetta, FAP 23e Solutions Manual: Chapter 3
196
Teamwork in Action — BTN 3-6
Note that there is no specific solution to this activity. Still, the presentation
of each expert team should reflect the following summary points:
Before Adjusting
Balance Sheet Income Statement
Type Account Account Adjusting Entry
Prepaid expenses Asset overstated Expense understated Dr. Expense
Cr. Asset*
Wild, Shaw, Chiappetta, FAP 23e Solutions Manual: Chapter 3
197
Entrepreneurial Decision — BTN 3-7
1. a. To record the collection of cash from sale of the gift certificate in
advance of delivery of merchandise to the customer:
Cash …………………………………………………………… 300
2. Carrying less inventory would allow the company to save the costs of
3. If the company carries additional inventory, it can potentially sell more
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198
Hitting the Road — BTN 3-8
There is no formal solution to this field activity. The instructor may wish to
Global View — BTN 3-9
1. Samsung (KRW in millions)
Current year, profit margin = ₩19,060,144/ ₩ 200,653,482 = 9.5%
2. Apple is slightly more successful on the basis of profit margin in the
current year relative to Google. However, Apple and Google are both