Exercise 3-4 (LO 3-2)
September 2.
January 6.
January 1.
February 23.
Exercise 3-5 (LO 3-1)
Net income (unadjusted)
$100,000
a. Record insurance expense of $2,000 per month
(6,000)
b. Reclassify service revenue as deferred revenue (liability)
(4,000)
c. Reclassify supplies expense as supplies (asset)
Net income (adjusted)
Exercise 3-6 (LO 3-3, 3-4, 3-5, 3-6, 3-7)
(i)
Use source documents to identify accounts affected by external
transactions.
(g)
Analyze the impact of the transaction on the accounting
equation.
the account balance.
Record the transaction.
Post the transaction to the T-account in the general ledger.
Prepare a trial balance.
flows).
Record and post closing entries.
Exercise 3-7 (LO 3-3)
(a)
Credit
Supplies Expense
Supplies
3,000
(Adjust supplies)
Credit
Insurance Expense
Prepaid Insurance
2,000
(Adjust prepaid insurance)
(c)
Credit
Salaries Expense
Salaries Payable
(Adjust salaries payable)
Credit
Deferred Revenue
Exercise 3-8 (LO 3-3)
(a)
Credit
Depreciation Expense
Accumulated Depreciation
7,000
Credit
Interest Receivable
Interest Revenue
(c)
Credit
Deferred Revenue
Service Revenue
4,000
Exercise 3-9 (LO 3-3)
If the adjusting entry is NOT made:
Revenues
−
Expenses
=
Net Income
(a)
$0
−
−$7,000
=
+$7,000
(c)
−
=
Total
Chapter 3 – The Accounting Cycle: End of the Period
Exercise 3-10 (LO 3-3)
(a)
Credit
Deferred Revenue
Credit
Advertising Expense
(c)
Credit
Salaries Expense
Credit
Interest Expense
Exercise 3-11 (LO 3-3, 3-4)
If the adjusting entry is NOT made:
Assets
=
Liabilities
+
Stockholders’
Equity
(a)
$0
=
+$1,500
+
−$1,500
Total
Exercise 3-12 (LO 3-3)
(a)
Credit
Deferred Revenue
Service Revenue
2,000
(Adjust deferred revenue)
(b)
Credit
Insurance Expense
Prepaid Insurance
(c)
Credit
Salaries Expense
Salaries Payable
(Adjust salaries payable)
Credit
Interest Expense
Interest Payable
Supplies Expense
Supplies
Chapter 3 – The Accounting Cycle: End of the Period
Exercise 3-13 (LO 3-3)
(a)
Credit
Interest Receivable
Interest Revenue
270
(Adjust interest receivable)
Credit
Rent Expense
Prepaid Rent
(Adjust prepaid rent)
(c)
Credit
Deferred Revenue
Service Revenue
(Adjust deferred revenue)
Credit
Depreciation Expense
Salaries Expense
Salaries Payable
Supplies Expense
Supplies
Exercise 3-14 (LO 3-3, 3-4)
Requirement 1
(a)
Credit
Rent Expense
Credit
Deferred Revenue
(c)
Credit
Salaries Expense
Credit
Supplies Expense
Chapter 3 – The Accounting Cycle: End of the Period
Exercise 3-14 (concluded)
Requirement 2
Demon Deacons Corporation
Adjusted Trial Balance
December 31, 2018
Accounts
Debit
Credit
Cash
$ 10,000
Accounts Receivable
15,000
Prepaid Rent
Supplies
Salaries Payable
700
Common Stock
Retained Earnings
Service Revenue
Rent Expense
Supplies Expense
Exercise 3-15 (LO 3-5)
Volunteers Inc.
(in millions)
Raiders Inc.
(in millions)
Year
Net
Income (Loss)
Retained
Earnings
Net
Income (Loss)
Retained
Earnings
2009
—
$ 0
$ 35
$ 11
2010
$ 30
30
(43)
(32)
2011
2012
2013
2014
(42)
2018
Exercise 3-16 (LO 3-5)
Requirement 1
Fightin’ Blue Hens Corporation
Income Statement
For the year ended December 31, 2018
Service revenue
$500,000
Expenses:
Salaries
400,000
465,000
Net income
Requirement 2
Fightin’ Blue Hens Corporation
Statement of Stockholders’ Equity
For the period ended December 31, 2018
Common
Stock
Retained
Earnings
Total
Stockholders’
Equity
Exercise 3-16 (concluded)
Requirement 3
Fightin’ Blue Hens Corporation
Balance Sheet
December 31, 2018
Assets
Liabilities
Current assets:
Current liabilities:
Cash
$ 12,000
Accounts payable
$ 12,000
Accounts receivable
150,000
Salaries payable
11,000
Prepaid rent
Interest payable
Notes payable
40,000
Common stock
Equipment
Retained earnings
Accumulated depr.
Total assets
Chapter 3 – The Accounting Cycle: End of the Period
Exercise 3-17 (LO 3-6)
Requirement 1
December 31, 2018
Debit
Credit
Service Revenue
50,000
Interest Revenue
6,000
Retained Earnings
Retained Earnings
Requirement 2
Retained Earnings
30,000
Exercise 3-18 (LO 3-6)
Requirement 1
December 31, 2018
Debit
Credit
Service Revenue
54,000
Retained Earnings
54,000
(Close revenue accounts)
Advertising Expense
Rent Expense
Utilities Expense
(Close expense accounts)
Dividends
(Close dividends account)
Requirement 2
Retained Earnings
9000
Exercise 3-18 (concluded)
Requirement 3
Laker Incorporated
Post-Closing Trial Balance
December 31, 2018
Accounts
Debit
Credit
Cash
$12,000
Supplies
Prepaid Rent
Notes Payable
Common Stock
Retained Earnings
Exercise 3-19 (LO 3-6, 3-7)
Requirement 1
December 31, 2018
Debit
Credit
Service Revenue
500,000
Retained Earnings
500,000
Retained Earnings
465,000
Salaries Expense
400,000
Rent Expense
Interest Expense
Requirement 2
Fightin’ Blue Hens Corporation
Post-Closing Trial Balance
December 31, 2018
Accounts
Debit
Credit
Cash
$ 12,000
Accounts Receivable
150,000
Prepaid Rent
6,000
Office Supplies
Equipment
400,000
Accumulated Depreciation
Accounts Payable
Salaries Payable
Interest Payable
5,000
Notes Payable
Common Stock
Retained Earnings
Chapter 3 – The Accounting Cycle: End of the Period
Exercise 3-20 (LO 3-3, 3-4, 3-5, 3-6, 3-7)
Requirement 1
February 15
Credit
1. Cash
May 20
2. Cash
August 31
3. Salaries Expense
October 1
4. Prepaid Rent
12,000
November 17
5. Supplies
22,000
December 30
6. Dividends
Exercise 3-20 (continued)
Requirement 2
December 31
Credit
1. Salaries Expense
2. Rent Expense
3. Supplies Expense
25,000
4. Deferred Revenue
Exercise 3-20 (continued)
Requirement 3
Red Flash Photography
Adjusted Trial Balance
December 31, 2018
Accounts
Debit
Credit
Cash
$ 30,000
Accounts Receivable
30,000
Supplies
5,000
Prepaid Rent
Land
Accounts Payable
Salaries Payable
Common Stock
Retained Earnings
Dividends
2,000
Service Revenue
Salaries Expense
Rent Expense
Supplies Expense
Exercise 3-20 (continued)
Requirement 4
Red Flash Photography
Income Statement
For the year ended December 31, 2018
Service revenue
$70,000
Expenses:
Net income
Red Flash Photography
Statement of Stockholders’ Equity
For the period ended December 31, 2018
Common
Stock
Retained
Earnings
Total
Stockholders’
Equity
Balance at January 1
Issuance of common stock
Less: Dividends
Balance at December 31