171
Problem 3-3B (Continued)
Part 2
Adjustment (a)
Dec. 31 Insurance Expense ………………………………………… 9,500
Prepaid Insurance …………………………………… 9,500
Adjustment (d)
31 Depreciation Expense—Professional Library …. 2,400
Accumulated Depreciation—Professional
172
Problem 3-3B (Continued)
Part 3
ALONZO INSTITUTE
Adjusted Trial Balance
December 31, 2017
Debit
Credit
Cash ……………………………………………………………………………….
$ 60,000
Teaching supplies …………………………..……………………………..
Tuition fees earned ……………………………………………………….
Teaching supplies expense …………………………………………..
173
Problem 3-3B (Continued)
Part 4
ALONZO INSTITUTE
Income Statement
For Year Ended December 31, 2017
Revenues
Tuition fees earned …………………………………………… $134,950
ALONZO INSTITUTE
Statement of Owner’s Equity
For Year Ended December 31, 2017
C. Alonzo, Capital, December 31, 2016 ………….. $ 71,500
174
Problem 3-3B (Concluded)
ALONZO INSTITUTE
Balance Sheet
December 31, 2017
Assets
Cash …………………………………………………………………… $ 60,000
Problem 3-4B (45 minutes) — Part 1
Account
Unadjusted
Trial Balance
Adjustments
Adjusted
Trial Balance
Cash …………………………………….
$ 45,000
$ 45,000
Accounts receivable …………..
60,000
(a)
6,660
66,660
Office supplies …………………….
40,000
(b)
23,000
17,000
Prepaid insurance ………………
Office equipment ………………..
Accounts payable ……………….
26,000
(e)
32,000
Interest payable …………………..
Salaries payable ………………….
(g)
16,000
16,000
Unearned consulting fees …….
40,000
(h)
12,200
27,800
Long–term notes payable …..
75,000
75,000
Z. Yan, Capital ……………………..
80,200
80,200
Z. Yan, Withdrawals ……………
20,000
20,000
12,200
Salaries expense …………………
16,000
Interest expense ………………….
2,150
10,750
Insurance expense …………….
Rent expense ………………………
20,000
20,000
Office supplies expense …….
23,000
23,000
Advertising expense …………..
(a)
6,660
Adjustment Descriptions
(a) Earned but uncollected revenues.
(b) Cost of office supplies used.
(c) Cost of expired insurance coverage.
176
Problem 3-4B (continued)
Part 2
YAN CONSULTING COMPANY
Income Statement
For Year Ended December 31, 2017
Revenues
Consulting fees earned ……………………………….. $253,460
Expenses
YAN CONSULTING COMPANY
Statement of Owner’s Equity
For Year Ended December 31, 2017
Z. Yan, Capital, December 31, 2016 ……………….. $ 80,200
177
Problem 3-4B (Concluded)
Part 2
YAN CONSULTING COMPANY
Balance Sheet
December 31, 2017
Assets
Cash ……………………………………………………………………..
$ 45,000
Accounts receivable ……………………………………………..
Accumulated depreciation—Office equipment ……….
Total assets …………………………………………………………..
$222,260
Liabilities
Accounts payable ………………………………………………….
$ 32,000
Salaries payable ……………………………………………………
Unearned consulting fees ……………………………………..
Total liabilities ………………………………………………………
178
Problem 3-5B (50 minutes)
Part 1
SPEEDY COURIER
Income Statement
For Year Ended December 31, 2017
Revenues
Delivery fees earned ………………………………. $611,800
SPEEDY COURIER
Statement of Owner‘s Equity
For Year Ended December 31, 2017
L. Horace, Capital, December 31, 2016 ……… $125,000
179
Problem 3-5B (Concluded)
SPEEDY COURIER
Balance Sheet
December 31, 2017
Assets
Cash …………………………………………………………….
$ 58,000
Accounts receivable ……………………………………..
120,000
Notes receivable (due in 90 days)…………………….
210,000
Trucks ………………………………………………………….
Accumulated depreciation—Trucks ……………….
Equipment …………………………………………………….
Accumulated depreciation—Equipment …………
Total assets ………………………………………………….
$663,000
Liabilities
Accounts payable …………………………………………
$134,000
Salaries payable ……………………………………………
Unearned delivery fees ………………………………….
Total liabilities ………………………………………………
Equity
Part 2
Profit margin = $86,000 / $645,800 = 13.3%
180
Problem 3-6BA (40 minutes)
Part 1
Method that records prepaid expenses and unearned revenues in balance sheet accounts
Apr. 1 Prepaid Consulting Fees ………………………………. 2,450
Cash …………………………..…………………………. 2,450
May 1 Prepaid Advertising ……………………………………… 4,450
Cash …………………………..…………………………. 4,450
Paid for future advertising.
23 Cash …………………………………………………………… 10,450
Unearned Service Fees …………………………. 10,450
Received fees in advance.
181
Problem 3-6BA (Continued)
Part 2
Method that records prepaid expenses and unearned revenues in income statement accounts
Apr. 1 Consulting Fees Expense ……………………………. 2,450
Cash …………………………..……………………….. 2,450
Paid for future consulting services.
23 Cash …………………………………………………………… 10,450
Service Fees Earned …………………………….. 10,450
Received fees in advance.
31 Prepaid Consulting Fees …………………………..… 450
Consulting Fees Expense …………………….. 450
182
Problem 3-6BA (Concluded)
Part 3
There are no differences between the two methods in terms of the amounts
that appear on the financial statements. In both cases, the financial
statements reflect the following:
Prepaid consulting fees as of May 31 ………………………………….. $ 450
Wild, Shaw, Chiappetta, FAP 23e Solutions Manual: Chapter 3
183
SERIAL PROBLEM – SP 3
Serial Problem, Business Solutions (180 minutes) — Part 1
<Note: The general ledger is displayed at the end of Part 6>
Journal entries
Dec. 2 Advertising Expense ……………………………. 655 1,025
Cash …………………………..…………………101 1,025
Paid share of mall advertising costs.
Wild, Shaw, Chiappetta, FAP 23e Solutions Manual: Chapter 3
184
Serial Problem, SP 3 (Continued)
Part 2
Adjusting entries
31 Wages Expense ……………………………………….623 500
Wages Payable ………………………………….210 500
Adjustment for accrued wages.