Chapter 03 – The Accounting Cycle: End of the Period
Requirement 3
Blue Hens Corporation
Balance Sheet
December 31, 2018
Assets
Liabilities
Cash
$ 15,700
Accounts payable
$ 9,300
Accts. receivable
132,500
Salaries payable
12,500
Prepaid rent
Interest payable
Supplies
34,400
Total current liabilities
26,600
Total current assets
Notes payable
27,500
Stockholders’ Equity
Equipment
280,000
Common stock
126,200
Accum. depr.
(156,900)
Retained earnings
131,500
*
257,700
$311,800
Total assets
$311,800
*
Retained earnings = beginning retained earnings + net income − dividends
Exercise 3-17
Requirement 1
December 31, 2018
Debit
Credit
Service Revenue
48,500
Interest Revenue
11,500
Retained Earnings
60,000
Retained Earnings
Salaries Expense
Rent Expense
Advertising Expense
Interest Expense
Retained Earnings
Requirement 2
Retained Earnings
20,000
Exercise 3-18
Requirement 1
December 31, 2018
Debit
Credit
Service Revenue
36,300
Retained Earnings
36,300
(Close revenue accounts)
Retained Earnings
Salaries Expense
Advertising Expense
Rent Expense
Utilities Expense
Retained Earnings
Dividends
(Close dividends account)
Requirement 2
Retained Earnings
16,500
Exercise 3-18 (concluded)
Requirement 3
Laker Incorporated
Post-Closing Trial Balance
December 31, 2018
Accounts
Debit
Credit
Cash
$29,700
Supplies
25,200
Prepaid Rent
Accounts Payable
Notes Payable
Common Stock
Retained Earnings
21,300
Totals
Chapter 03 – The Accounting Cycle: End of the Period
Exercise 3-19
Requirement 1
December 31, 2018
Debit
Credit
Service Revenue
420,000
Retained Earnings
420,000
Retained Earnings
310,000
Rent Expense
Depreciation Expense
Interest Expense
Requirement 2
Blue Hens Corporation
Post-Closing Trial Balance
December 31, 2018
Accounts
Debit
Credit
Cash
$ 15,700
Accounts receivable
132,500
Prepaid rent
6,100
Office supplies
Equipment
Accumulated depreciation
Accounts payable
Salaries payable
Interest payable
Notes payable
Common stock
Retained earnings
Totals
$468,700
Exercise 3-20
Requirement 1
Debit
Credit
1. Cash
22,000
2. Cash
40,000
Accounts Receivable
30,000
3. Salaries Expense
25,000
4. Prepaid Rent
18,000
5. Supplies
20,000
6. Dividends
3,000
Exercise 3-20 (continued)
Requirement 2
Debit
Credit
1. Salaries Expense
5,000
3. Supplies Expense
4. Deferred Revenue
6,000
Exercise 3-20 (continued)
Requirement 3
Red Flash Photography
Adjusted Trial Balance
December 31, 2018
Accounts
Debit
Credit
Cash
$ 31,000
Accounts Receivable
30,000
Supplies
4,000
Land
Accounts Payable
$ 20,000
Salaries Payable
Common Stock
Dividends
3,000
Service Revenue
Salaries Expense
30,000
Rent Expense
4,500
$203,000
Chapter 03 – The Accounting Cycle: End of the Period
Exercise 3-20 (continued)
Requirement 4
Red Flash Photography
Income Statement
For the year ended December 31, 2018
Service revenue
$76,000
Expenses:
Salaries
30,000
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
$60,000
$20,000
$ 80,000
Issuance of common stock
Add: Net income for 2018
Less: Dividends
Balance at December 31
Exercise 3-20 (continued)
Requirement 4 (continued)
Red Flash Photography
Balance Sheet
December 31, 2018
Assets
Liabilities
Cash
$ 31,000
Accounts payable
$ 20,000
Accounts receivable
30,000
Salaries payable
5,000
Supplies
Common stock
Retained earnings
Total assets
Exercise 3-20 (concluded)
Requirement 5
December 31, 2018
Debit
Credit
Service Revenue
76,000
Retained Earnings
76,000
Retained Earnings
Retained Earnings