Wild, Shaw, Chiappetta, FAP 23e Solutions Manual: Chapter 3
151
PROBLEM SET A
Problem 3-1A (10 minutes)
1. E 5. C 9. D
Problem 3-2A (35 minutes)
Part 1
Adjustment (a)
Dec. 31 Office Supplies Expense ………………………….. 14,846
Office Supplies ………………………………….. 14,846
152
Problem 3-2A (Concluded)
Adjustment (d)
Dec. 31 Depreciation Expense—Building ………………. 30,500
Accumulated Depreciation—Building … 30,500
Part 2
Cash Payment for (c)
Jan. 6 Salaries Payable ……………………………………. 3,920
Bal.
35,000
Bal.
50,000
10,000
7,200
17,200
Problem 3-3A (90 minutes)
Parts 1 and 2
Equipment
Unadj. Bal.
34,000
Unadj. Bal.
80,000
Equipment
0
7,500
(c)
Adj. Bal.
7,500
Unadj. Bal.
8,000
(b)
5,200
Adj. Bal.
2,800
Salaries Payable
Unadj. Bal.
0
(g)
Unadj. Bal.
12,000
(a)
2,400
Adj. Bal.
9,600
Unadj. Bal.
(e)
5,000
Unadj. Bal.
3,000
7,500
(h)
3,000
Adj. Bal.
0
T. Wells, Capital
154
Problem 3-3A (Continued)
Tuition Fees Earned
Rent Expense
Unadj. Bal.
123,900
Unadj. Bal.
33,000
(f)
7,500
(h)
3,000
Adj. Bal.
131,400
36,000
(e)
(b)
5,200
Adj. Bal.
45,000
5,200
Depreciation Expense—
Professional Library
Advertising Expense
Unadj. Bal.
0
Bal.
6,000
(d)
7,200
7,200
Depreciation Expense—
Unadj. Bal.
0
Bal.
6,400
(c)
(g)
Unadj. Bal.
0
(a)
2,400
2,400
155
Problem 3-3A (Continued)
Part 2
Adjustment (a)
Dec. 31
Insurance Expense ………………………………………………
2,400
Prepaid Insurance …………………………………………..
2,400
Record the insurance expired.
Adjustment (b)
31
Teaching Supplies Expense …………………………..
5,200
Teaching Supplies ………………………………………….
5,200
Record supplies used ($8,000 – $2,800).
Adjustment (c)
31
Depreciation Expense—Equipment ………………………
Record equipment depreciation.
Adjustment (d)
31
Depreciation Expense—Profess. Library ………………
7,200
Accumul. Depreciation—Profess. Library …………….
7,200
Record professional library depreciation.
Adjustment (e)
31
Unearned Training Fees ……………………………………….
5,000
Training Fees Earned ……………………………………..
5,000
31
Accounts Receivable …………………………..……………….
7,500
Tuition Fees Earned………………………………………..
7,500
Adjustment (g)
31
Salaries Expense …………………………………………………
400
Salaries Payable……………………………………………..
400
Adjustment (h)
31
Rent Expense ………………………………………………………
3,000
Prepaid Rent …………………………………………………..
3,000
Record expiration of prepaid rent.
156
Problem 3-3A (Continued)
Part 3
WELLS TECHNICAL INSTITUTE
Adjusted Trial Balance
December 31, 2017
Debit
Credit
Cash ………………………………………………………………..
$ 34,000
Accounts receivable …………………………………………
Teaching supplies ……………………………………………
Professional library ………………………………………….
Equipment ……………………………………………………….
Accumulated depreciation—Equipment …………….
28,200
Accounts payable …………………………………………….
26,000
Salaries payable ……………………………………………….
Unearned training fees ……………………………………..
T. Wells, Capital ……………………………………………….
90,000
T. Wells, Withdrawals ……………………………………….
Tuition fees earned …………………………………………..
Training fees earned …………………………………………
45,000
Depreciation expense—Professional library ……..
Depreciation expense—Equipment …………………..
Salaries expense ……………………………………………..
Insurance expense …………………………………………..
Rent expense ……………………………………………………
Teaching supplies expense ………………………………
Advertising expense …………………………………………
157
Problem 3-3A (Continued)
Part 4
WELLS TECHNICAL INSTITUTE
Income Statement
For Year Ended December 31, 2017
Revenues
Tuition fees earned …………………………………….. $131,400
Training fees earned …………………………………… 45,000
WELLS TECHNICAL INSTITUTE
Statement of Owner’s Equity
For Year Ended December 31, 2017
T. Wells, Capital, December 31, 2016 …………………………... $ 90,000
158
Problem 3-3A (Concluded)
WELLS TECHNICAL INSTITUTE
Balance Sheet
December 31, 2017
Assets
Cash ……………………………………………………………………… $ 34,000
Accounts receivable ……………………………………………… 7,500
Liabilities
Accounts payable ………………………………………………….. $ 26,000
Problem 3-4A (45 minutes) — Part 1
Account
Unadjusted
Trial Balance
Adjustments
Adjusted
Trial Balance
Cash ……………………………..
$ 34,000
$ 34,000
Accounts receivable …….
14,000
(a)
8,000
22,000
Office supplies ……………..
16,000
Prepaid insurance ………..
5,580
Office equipment ………….
84,000
84,000
Accounts payable ………….
9,100
10,000
Interest payable ……………..
1,000
Salaries payable …………….
7,000
Unearned consulting fees .
18,000
3,000
15,000
Long–term notes payable ..
52,000
52,000
J. Logan, Capital …………..
40,000
40,000
J. Logan, Withdrawals ….
5,000
5,000
Salaries expense ………….
67,000
7,000
74,000
Interest expense …………..
1,000
Insurance expense ……….
(c)
5,580
5,580
Rent expense ……………….
14,500
14,500
Office supplies expense
14,000
Adjustment description
(a) Earned but uncollected revenues.
(b) Cost of office supplies used.
160
Problem 3-4A (Continued)
Part 2
JKL COMPANY
Income Statement
For Year Ended July 31, 2017
Revenues
Consulting fees earned …………………………... $134,240
Expenses
Depreciation expense—Office equipment .. $ 6,000
JKL COMPANY
Statement of Owner’s Equity
For Year Ended July 31, 2017
J. Logan, Capital, July 31, 2016 ………………… $40,000
161
Problem 3-4A (Concluded)
Part 2
JKL COMPANY
Balance Sheet
July 31, 2017
Assets
Cash …………………………………………………………………..
$ 34,000
Accounts receivable …………………………………………..
22,000
Office supplies ……………………………………………………
2,000
2,960
Office equipment ………………………………………………..
Accumulated depreciation—Office equipment …….
Total assets ………………………………………………………..
$124,960
Liabilities
Accounts payable ……………………………………………….
$ 10,000
Interest payable ………………………………………………….
1,000
Salaries payable …………………………………………………
7,000
Unearned consulting fees …………………………………..
15,000
Total liabilities ……………………………………………………
85,000
162
Problem 3-5A (50 minutes)
Part 1
CHIARA COMPANY
Income Statement
For Year Ended December 31, 2017
Revenues
Fees earned ………………………………………. $484,000
CHIARA COMPANY
Statement of Owner‘s Equity
For Year Ended December 31, 2017
R. Chiara, Capital, December 31, 2016 …………. $255,800
163
Problem 3-5A (Concluded)
CHIARA COMPANY
Balance Sheet
December 31, 2017
Assets
Cash …………………………..………………………………….
$ 30,000
Accounts receivable ……………………………………….
52,000
Interest receivable…………………………………………..
18,000
Notes receivable (due in 90 days) ……………………
Office supplies ……………………………………………….
16,000
Automobiles …………………………..………………………
Accumulated depreciation—Automobiles ………..
Equipment ………………………………………………………
Accumulated depreciation—Equipment …………..
Total assets …………………………..……………………….
$600,000
Liabilities
Accounts payable …………………………………………..
$ 96,000
Interest payable ………………………………………………
20,000
Salaries payable ……………………………………………..
19,000
Unearned fees ………………………………………………..
30,000
Total liabilities ………………………………………………..
Part 2
Problem 3-6AA (40 minutes)
Part 1
Assume prepaid expenses are recorded as assets and unearned revenues as liabilities.
Nov. 1 Prepaid Advertising ………………………………… 1,800
Cash …………………………………………………. 1,800
Dec. 1 Prepaid Consulting Fees …………………………. 3,000
Cash …………………………………………………. 3,000
Paid for future consulting.
165
Problem 3-6AA (Continued)
Part 2
Assume prepaid expenses are recorded as expenses and unearned revenues as revenues.
Nov. 1 Advertising Expense ………………………………… 1,800
Dec. 1 Consulting Fees Expense …………………………. 3,000
Cash …………………………………………………. 3,000
Paid for future consulting.
166
Problem 3-6AA (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:
Advertising expense for two months ………………………………. $ 600
Prepaid advertising as of December 31 …………………………... 1,200
Wild, Shaw, Chiappetta, FAP 23e Solutions Manual: Chapter 3
PROBLEM SET B
Problem 3-1B (15 minutes)
1. H 5. B 9. I
Problem 3-2B (30 minutes)
Part 1
Adjustment (a)
Oct. 31 Office Supplies Expense ………………………………… 4,370
Office Supplies ………………………………………… 4,370
168
Problem 3-2B (Concluded)
Adjustment (d)
Oct. 31 Depreciation Expense—Building …………………….. 5,400
Accumulated Depreciation—Building ………. 5,400
Part 2
Cash Payment for (c)
Nov. 7 Salaries Payable …………………………………………….. 1,000
169
Problem 3-3B (90 minutes)
Parts 1 and 2
Cash
Accounts Payable
Bal.
Accounts Receivable
Salaries Payable
Unadj. Bal.
Adj. Bal.
Unadj. Bal.
(e)
Prepaid Insurance
C. Alonzo, Capital
Unadj. Bal.
9,500
Adj. Bal.
Bal.
Unadj. Bal.
3,800
Professional Library
Bal.
Accumulated Depreciation—
Professional Library
Unadj. Bal.
2,500
2,400
4,900
Accumulated Depreciation—
5,000
170
Problem 3-3B (Continued)
Parts 1 and 2
Tuition Fees Earned
Advertising Expense
Unadj. Bal.
129,200
Bal.
19,000
134,950
Bal.
13,400
(e)
Professional Library
(d)
Adj. Bal.
Depreciation Expense—
Depreciation Expense—
Equipment
Unadj. Bal.
(c)
Adj. Bal.
Salaries Expense
Unadj. Bal.
44,200
(g)
Adj. Bal.
44,650
Insurance Expense
Unadj. Bal.
(a)
Adj. Bal.
(h)
33,400
Teaching Supplies Expense
(b)
50,000
Adj. Bal.
50,000