Problem 3-3B (90 minutes)
Parts 1 and 2
Cash
Accounts Payable
Bal.
60,000
Bal.
11,200
Unadj. Bal.
0
Unadj. Bal.
0
5,750
(g)
Adj. Bal.
5,750
Adj. Bal.
Teaching Supplies
Unearned Training Fees
Unadj. Bal.
70,000
Unadj. Bal.
28,600
(b)
50,000
(e)
28,600
Adj. Bal.
20,000
Adj. Bal.
0
Prepaid Insurance
Common Stock
Unadj. Bal.
19,000
Bal.
11,000
(a)
9,500
Adj. Bal.
9,500
Retained Earnings
Prepaid Rent
Bal.
60,500
Unadj. Bal.
3,800
(h)
3,800
Adj. Bal.
0
20,000
Professional Library
Bal.
12,000
Accumulated Depreciation—
Professional Library
Unadj. Bal.
2,500
(d)
2,400
Adj. Bal.
4,900
Equipment
Bal.
40,000
Accumulated Depreciation—
Equipment
Unadj. Bal.
20,000
(c)
5,000
Adj. Bal.
25,000
Problem 3-3B (Continued)
Parts 1 and 2
Tuition Fees Earned
Advertising Expense
Unadj. Bal.
129,200
Bal.
19,000
(f)
5,750
Adj. Bal.
134,950
68,000
Bal.
13,400
(e)
28,600
96,600
Depreciation Expense—
Professional Library
Unadj. Bal.
0
(d)
2,400
Adj. Bal.
2,400
Depreciation Expense—
Equipment
Unadj. Bal.
0
(c)
5,000
Adj. Bal.
5,000
Salaries Expense
Unadj. Bal.
44,200
(g)
450
Adj. Bal.
44,650
Insurance Expense
Unadj. Bal.
0
(a)
9,500
Adj. Bal.
9,500
Rent Expense
Unadj. Bal.
29,600
(h)
3,800
Adj. Bal.
33,400
Unadj. Bal.
0
(b)
50,000
Adj. Bal.
50,000
Problem 3-3B (Continued)
Part 2
Adjustment (a)
Dec. 31 Insurance Expense ………………………………………… 9,500
Prepaid Insurance …………………………………… 9,500
Record the insurance expired.
Adjustment (b)
Adjustment (c)
31 Depreciation Expense—Equipment………………… 5,000
Accumulated Depreciation—Equipment ….. 5,000
Record equipment depreciation.
Adjustment (d)
Adjustment (e)
31 Unearned Training Fees ………………………………… 28,600
Training Fees Earned ……………………………… 28,600
Record training fees earned that were
collected in advance.
Adjustment (f)
31 Accounts Receivable …………………………………….. 5,750
Tuition Fees Earned………………………………… 5,750
Record tuition earned.
Adjustment (g)
Problem 3-3B (Continued)
Part 3
ALONZO INSTITUTE
Adjusted Trial Balance
December 31
Debit
Credit
Cash ………………………………………………………………………………
$ 60,000
Accounts receivable ……………………………………………………..
5,750
Teaching supplies …………………………………………………………
20,000
Prepaid insurance …………………………………………………………
9,500
Prepaid rent …………………………………………………………………..
Professional library ……………………………………………………….
12,000
Accumulated depreciation—Professional library …………
Accumulated depreciation—Equipment ………………………
25,000
Accounts payable ………………………………………………………….
11,200
Salaries payable …………………………………………………………….
450
Unearned training fees ………………………………………………….
0
Common stock ………………………………………………………………
11,000
Retained earnings …………………………………………………………
60,500
Dividends ………………………………………………………………………
20,000
Tuition fees earned ………………………………………………………..
134,950
Training fees earned ……………………………………………………..
96,600
Depreciation expense—Professional library ………………..
2,400
Depreciation expense—Equipment …………………………..….
5,000
Salaries expense …………………………………………………………..
Rent expense …………………………………………………………………
33,400
Teaching supplies expense …………………………………………..
50,000
Advertising expense ……………………………………………………..
Utilities expense …………………………………………………………….
Problem 3-3B (Continued)
Part 4
ALONZO INSTITUTE
Income Statement
For Year Ended December 31
Revenues
Tuition fees earned …………………………………………… $134,950
Training fees earned …………………………………………. 96,600
Total revenues ………………………………………………….. $231,550
Expenses
Depreciation expense—Professional library ………. 2,400
ALONZO INSTITUTE
Statement of Retained Earnings
For Year Ended December 31
Retained earnings, Dec. 31 prior year end …….. $ 60,500
Plus: Net income ………………………………………….. 54,200
114,700
Problem 3-3B (Concluded)
ALONZO INSTITUTE
Balance Sheet
December 31
Assets
Cash …………………………………………………………………… $ 60,000
Accounts receivable …………………………………………… 5,750
Teaching supplies ………………………………………………. 20,000
Prepaid insurance ………………………………………………. 9,500
Liabilities
Accounts payable ……………………………………………….. $ 11,200
Salaries payable …………………………………………………. 450
Total liabilities ……………………………………………………. 11,650
Equity
Common stock …………………………………………………… 11,000
Problem 3-4B (50 minutes)
SPEEDY COURIER
Income Statement
For Year Ended December 31
Revenues
Delivery fees earned ………………………………. $611,800
Interest earned ……………………………………….. 34,000
Total revenues ……………………………………….. $645,800
Expenses
Depreciation expense—Trucks ……………….. 29,000
Depreciation expense—Equipment …………. 48,000
Salaries expense ……………………………………. 74,000
SPEEDY COURIER
Statement of Retained Earnings
For Year Ended December 31
Retained earnings, Dec. 31 prior yr end ……. $110,000
Plus: Net income …………………………………….. 86,000
196,000
Less: Dividends ……………………………………….. 50,000
Retained earnings, Dec. 31 current yr end … $146,000
Problem 3-4B (Concluded)
SPEEDY COURIER
Balance Sheet
December 31
Assets
Cash …………………………………………………………….
$ 58,000
Accounts receivable ……………………………………..
120,000
Interest receivable …………………………………………
7,000
Notes receivable (due in 90 days)…………………….
210,000
Office supplies ……………………………………………..
22,000
Trucks ………………………………………………………….
Accumulated depreciation—Trucks ……………….
Equipment …………………………………………………….
Accumulated depreciation—Equipment …………
Land ……………………………………………………………..
100,000
Total assets ………………………………………………….
Liabilities
Accounts payable …………………………………………
$134,000
Interest payable …………………………………………….
20,000
Salaries payable ……………………………………………
28,000
Unearned delivery fees ………………………………….
120,000
Long-term notes payable ………………………………
200,000
Total liabilities ………………………………………………
502,000
Equity
Common stock ……………………………………………..
Retained earnings …………………………………………
Total equity …………………………………………………..
Problem 3-5B (90 minutes)
INSTRUCTOR NOTE: Ledger accounts are shown after Part 7 as they would appear after all
entries are posted.
Part 2
Transactions for July
July 1 Cash ……………………………………………………… 101 30,000
Buildings ………………………………………………. 173 150,000
Common Stock……………………………….. 307 180,000
Owner investment in exchange for stock.
10 Prepaid Insurance …………………………………. 128 7,200
Cash ………………………………………………. 101 7,200
Paid 12 months’ premium in advance.
14 Salaries Expense …………………………………… 622 1,000
Cash ………………………………………………. 101 1,000
Paid two weeks’ salary.
24 Cash ……………………………………………………… 101 9,800
Storage Fees Earned ………………………. 401 9,800
Collected fees from customers.
28 Salaries Expense …………………………………… 622 1,000
Cash ………………………………………………. 101 1,000
Paid two weeks’ salary.
Problem 3-5B (Continued)
Part 3
SAFE STORAGE CO.
Unadjusted Trial Balance
July 31
No. Account Title Debit Credit
101 Cash …………………………………………………………… $ 22,850
106 Accounts receivable …………………………………… 0
124 Office supplies ……………………………………………. 2,400
318 Retained earnings ………………………………………. 0
319 Dividends …………………………………………………… 2,000
401 Storage fees earned ……………………………………. 9,800
606 Depreciation expense–Buildings …………………. 0
622 Salaries expense ………………………………………… 2,000
637 Insurance expense …………………………..…………. 0
Problem 3-5B (Continued)
Part 4
Adjusting entries
July 31 Insurance Expense …………………………………………637 400
Prepaid Insurance …………………………………..128 400
Record expired insurance.
(2/3 x $7,200/12 per month)
July 31 Office Supplies Expense …………………………………650 875
Office Supplies ……………………………………….124 875
Record cost of consumed supplies.
($2,400 – $1,525)
Problem 3-5B (Continued)
Part 4
SAFE STORAGE CO.
Adjusted Trial Balance
July 31
No. Account Title Debit Credit
101 Cash …………………………………………………………… $ 22,850
106 Accounts receivable …………………………………… 1,150
124 Office supplies ……………………………………………. 1,525
128 Prepaid insurance ………………………………………. 6,800
173 Buildings ……………………………………………………. 150,000
319 Dividends …………………………………………………… 2,000
401 Storage fees earned ……………………………………. 10,950
606 Depreciation expense–Buildings …………………. 1,500
622 Salaries expense ………………………………………… 2,100
637 Insurance expense …………………………..…………. 400
640 Rent expense ……………………………………………… 2,000
Problem 3-5B (Continued)
Part 5
SAFE STORAGE CO.
Income Statement
For Month Ended July 31
Storage fees earned …………………………….. $10,950
Expenses
Depreciation expense–Buildings ………… $1,500
Salaries expense ……………………………….. 2,100
Insurance expense …………………………….. 400
Rent expense …………………………………….. 2,000
SAFE STORAGE CO.
Statement of Retained Earnings
For Month Ended July 31
Retained earnings, July 1 …………………….. $ 0
Add: Net income ………………………………… 2,725
2,725
Less: Dividends ………………………………….. (2,000)
Retained earnings, July 31 …………………… $ 725
Problem 3-5B (Continued)
Part 5
SAFE STORAGE CO.
Balance Sheet
July 31
Assets
Cash ……………………………………………………. $ 22,850
Accounts receivable ……………………………. 1,150
Office supplies …………………………………….. 1,525
Prepaid insurance ……………………………….. 6,800
Buildings …………………………………………….. $150,000
Accumulated depreciation—Buildings …. (1,500) 148,500
Total assets …………………………………………. $180,825
Problem 3-5B (Continued)
Part 6
Closing entries
July 31 Storage Fees Earned …………………………... 401 10,950
Income Summary ……………………………. 901 10,950
Close revenue account.
31 Income Summary ………………………………… 901 2,725
Retained Earnings ………………………….. 318 2,725
Close Income Summary.
31 Retained Earnings ………………………………. 318 2,000
Dividends ……………………………………….. 319 2,000
Close dividends account.
Part 7
SAFE STORAGE CO.
Post-Closing Trial Balance
July 31
Debit Credit
Cash ……………………………………………………. $ 22,850
Accounts receivable ……………………………. 1,150
Office supplies …………………………………….. 1,525
Prepaid insurance ……………………………….. 6,800
Problem 3-5B (Continued)
Ledger as of July 31
Cash Acct. No. 101
Date Explanation PR Debit Credit Balance
July 1 30,000 30,000
2 2,000 28,000
5 2,400 25,600
10 7,200 18,400
Accounts Receivable Acct. No. 106
Date Explanation PR Debit Credit Balance
July 31 Adjusting 1,150 1,150
Office Supplies Acct. No. 124
Date Explanation PR Debit Credit Balance
July 5 2,400 2,400
31 Adjusting 875 1,525
Prepaid Insurance Acct. No. 128
Date Explanation PR Debit Credit Balance
Buildings Acct. No. 173
Date Explanation PR Debit Credit Balance
July 1 150,000 150,000
Accumulated Depreciation—Buildings Acct. No. 174
Date Explanation PR Debit Credit Balance
July 31 Adjusting 1,500 1,500
Salaries Payable Acct. No. 209
Problem 3-5B (Continued)
Common Stock Acct. No. 307
Date Explanation PR Debit Credit Balance
July 1 180,000 180,000
Retained Earnings Acct. No. 318
Date Explanation PR Debit Credit Balance
July 31 Closing 2,725 2,725
31 Closing 2,000 725
Dividends Acct. No. 319
Storage Fees Earned Acct.No. 401
Date Explanation PR Debit Credit Balance
July 24 9,800 9,800
31 Adjusting 1,150 10,950
31 Closing 10,950 0
Depreciation Expense—Buildings Acct. No. 606
Date Explanation PR Debit Credit Balance
Salaries Expense Acct. No. 622
Date Explanation PR Debit Credit Balance
July 14 1,000 1,000
28 1,000 2,000
31 Adjusting 100 2,100
31 Closing 2,100 0
Insurance Expense Acct. No. 637
Date Explanation PR Debit Credit Balance
Rent Expense Acct. No. 640
Date Explanation PR Debit Credit Balance
Problem 3-5B (Concluded)
Office Supplies Expense Acct. No. 650
Date Explanation PR Debit Credit Balance
July 31 Adjusting 875 875
31 Closing 875 0
Repairs Expense Acct. No. 684
Telephone Expense Acct. No. 688
Date Explanation PR Debit Credit Balance
July 30 400 400
31 Closing 400 0
Income Summary Acct. No. 901
Date Explanation PR Debit Credit Balance
Problem 3-6B (75 minutes)
Part 1
ANARA CO.
Income Statement
For Year Ended December 31, 2019
Revenues
Professional fees earned …………………………….. $59,600
Rent earned ………………………………………………… 4,500
Dividends earned ……………………………………….. 1,000
Interest earned ……………………………………………. 1,320
Total revenues ……………………………………………. $66,420
Rent expense ……………………………………………… 3,600
Supplies expense ……………………………………….. 1,000
Postage expense ………………………………………… 410
Property taxes expense ………………………………. 4,825
Repairs expense …………………………………………. 679
Telephone expense …………………………………….. 521
ANARA CO.
Statement of Retained Earnings
For Year Ended December 31, 2019
Retained earnings, December 31, 2018 ………….. $ 52,800
Add: Net income ………………………………………….. 28,890
81,690
Less: Dividends ……………………………………………. (8,000)
Retained earnings, December 31, 2019 ………….. $ 73,690
Problem 3-6B (Continued)
ANARA CO.
Balance Sheet
December 31, 2019
Assets
Current assets
Cash …………………………………………………………… $ 7,400
Short-term investments ………………………………. 11,200
Supplies …………………………………………………….. 4,600
Prepaid insurance ………………………………………. 1,000
Total current assets ……………………………………. $ 24,200
Plant assets
Equipment ………………………………………………….. $24,000
Accumulated depreciation—Equipment ………. (4,000) 20,000
Building ……………………………………………………… 100,000
Accumulated depreciation—Building ………….. (10,000) 90,000
Land …………………………………………………………… 30,500
Total plant assets ……………………………………….. 140,500
Total assets ………………………………………………….. $164,700
Long-term notes payable …………………………….. 31,600
Total liabilities ……………………………………………… 51,010
Equity
Common stock …………………………………………….. 40,000
Retained earnings ………………………………………… 73,690