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Problem 3-3A (Continued)
Part 4
WELLS TECHNICAL INSTITUTE
Income Statement
For Year Ended December 31
Revenues
Tuition fees earned …………………………………….. $131,400
Training fees earned …………………………………… 45,000
Total revenues ……………………………………………. $176,400
WELLS TECHNICAL INSTITUTE
Statement of Retained Earnings
For Year Ended December 31
Retained earnings, December 31 prior year end …………… $ 80,000
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Problem 3-3A (Concluded)
WELLS TECHNICAL INSTITUTE
Balance Sheet
December 31
Assets
Cash ……………………………………………………………………… $ 34,000
Accounts receivable ……………………………………………… 7,500
Liabilities
Accounts payable ………………………………………………….. $ 26,000
Salaries payable ……………………………………………………. 400
Unearned training fees ………………………………………….. 7,500
Total liabilities ………………………………………………………. 33,900
Equity
Common stock ……………………………………………………… 10,000
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Problem 3-4A (50 minutes)
CHIARA COMPANY
Income Statement
For Year Ended December 31
Revenues
Fees earned ………………………………………. $484,000
Interest earned …………………………………… 24,000
Total revenues …………………………………… $508,000
Expenses
CHIARA COMPANY
Statement of Retained Earnings
For Year Ended December 31
Retained earnings, Dec. 31 prior year end …… $235,800
Wild and Shaw, Financial & Managerial Accounting, 8e Solutions Manual: Chapter 3
Problem 3-4A (Concluded)
CHIARA COMPANY
Balance Sheet
December 31
Assets
Cash ………………………………………………………………
$ 30,000
Accounts receivable ……………………………………….
52,000
Interest receivable…………………………………………..
18,000
Notes receivable (due in 90 days) ……………………
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 ………………………………………………..
Retained earnings …………………………………………..
Total equity …………………………………………………….
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Problem 3-5A (90 minutes)
INSTRUCTOR: Ledger accounts are shown after Part 7 as they would appear after all entries are posted.
Part 2 — Transactions for April
April 1 Cash ……………………………………………………… 101 30,000
Computer Equipment …………………………….. 167 20,000
Common Stock……………………………….. 307 50,000
Owner investment in exchange for stock.
14 Salaries Expense ……………………………………. 622 1,600
Cash ………………………………………………. 101 1,600
Paid two weeks’ salaries.
24 Cash ……………………………………………………… 101 8,000
Commissions Earned ……………………… 405 8,000
Collected commissions earned.
28 Salaries Expense …………………………………… 622 1,600
Cash ………………………………………………. 101 1,600
Paid two weeks’ salaries.
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Problem 3-5A (Continued)
Part 3
ADVENTURE TRAVEL
Unadjusted Trial Balance
April 30
No. Account Title Debit Credit
101 Cash …………………………………………………. $27,000
106 Accounts receivable ………………………….. 0
124 Office supplies ………………………………….. 1,000
128 Prepaid insurance ……………………………… 2,400
319 Dividends ………………………………………….. 1,500
405 Commissions earned…………………………. 8,000
612 Depreciation expense—
Computer equipment ……………………….. 0
622 Salaries expense ……………………………….. 3,200
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Problem 3-5A (Continued)
Part 4
Adjusting entries
(a) Apr 30 Insurance Expense ……………………………………….. 637 133
Prepaid Insurance ……………………………………. 128 133
Record expired insurance ($2,400/12 x2/3).
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Problem 3-5A (Continued)
Part 4
ADVENTURE TRAVEL
Adjusted Trial Balance
April 30
No. Account Title Debit Credit
101 Cash …………………………………………………. $27,000
106 Accounts receivable ………………………….. 1,750
124 Office supplies ………………………………….. 600
128 Prepaid insurance ……………………………… 2,267
167 Computer equipment …………………………. 20,000
622 Salaries expense ……………………………….. 3,620
637 Insurance expense ……………………………. 133
640 Rent expense …………………………………….. 1,800
650 Office supplies expense …………………….. 400
187
Problem 3-5A (Continued)
Part 5
ADVENTURE TRAVEL
Income Statement
For Month Ended April 30
Commissions earned ………………………………………….. $9,750
Expenses
Depreciation expense—Computer equipment ……. $ 500
ADVENTURE TRAVEL
Statement of Retained Earnings
For Month Ended April 30
Retained earnings, April 1 ………………………… $ 0
Add: Net Income ……………………………………… 2,197
2,197
188
Problem 3-5A (Continued)
Part 5—continued
ADVENTURE TRAVEL
Balance Sheet
April 30
Assets
Cash ………………………………………………………………………. $27,000
Accounts receivable ………………………………………………. 1,750
Liabilities
Salaries payable …………………………………………………….. $ 420
Equity
Common stock ………………………………………………………. 50,000
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Problem 3-5A (Continued)
Part 6
Closing entries
April 30 Commissions Earned ……………………………. 405 9,750
Income Summary ……………………………. 901 9,750
Close revenue account.
30 Income Summary ………………………………….. 901 7,553
Depreciation Exp–Computer Equip …. 612 500
Salaries Expense ……………………………. 622 3,620
Insurance Expense …………………………. 637 133
Part 7
ADVENTURE TRAVEL
Post-Closing Trial Balance
April 30
Debit Credit
Cash …………………………………………………. $27,000
Accounts receivable ………………………….. 1,750
Wild and Shaw, Financial & Managerial Accounting, 8e Solutions Manual: Chapter 3
Problem 3-5A (Continued)
Part 7—continued
Ledger as of April 30
Cash Acct. No. 101
Date Explanation PR Debit Credit Balance
April 1 30,000 30,000
2 1,800 28,200
Accounts Receivable Acct. No. 106
Date Explanation PR Debit Credit Balance
April 30 Adjusting 1,750 1,750
Office Supplies Acct. No. 124
Date Explanation PR Debit Credit Balance
April 1 20,000 20,000
Accumulated Depreciation–Computer Equipment Acct. No. 168
Date Explanation PR Debit Credit Balance
April 30 Adjusting 500 500
Salaries Payable Acct. No. 209
191
Problem 3-5A (Continued)
Common Stock Acct. No. 307
Date Explanation PR Debit Credit Balance
April 1 50,000 50,000
Retained Earnings Acct. No. 318
Date Explanation PR Debit Credit Balance
April 24 8,000 8,000
30 Adjusting 1,750 9,750
30 Closing 9,750 0
Depreciation Expense–Computer Equipment Acct. No. 612
Date Explanation PR Debit Credit Balance
April 30 Adjusting 500 500
30 Closing 500 0
Salaries Expense Acct. No. 622
Date Explanation PR Debit Credit Balance
April 2 1,800 1,800
30 Closing 1,800 0
Office Supplies Expense Acct. No. 650
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Problem 3-5A (Concluded)
Repairs Expense Acct. No. 684
Date Explanation PR Debit Credit Balance
April 29 350 350
30 Closing 350 0
Telephone Expense Acct. No. 688
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Problem 3-6A (75 minutes)
Part 1
TYBALT CONSTRUCTION
Income Statement
For Year Ended December 31, 2019
Revenues
Professional fees earned …………………………….. $97,000
Rent earned ………………………………………………… 14,000
Dividends earned ……………………………………….. 2,000
Rent expense ……………………………………………… 13,400
Supplies expense ……………………………………….. 7,400
Postage expense ………………………………………… 4,200
TYBALT CONSTRUCTION
Statement of Retained Earnings
For Year Ended December 31, 2019
Retained earnings, December 31, 2018 ………….. $121,400
Add: Net income …………………………………………. 4,300
125,700
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Problem 3-6A (Continued)
TYBALT CONSTRUCTION
Balance Sheet
December 31, 2019
Assets
Current assets
Cash …………………………………………………………… $ 5,000
Short-term investments ………………………………. 23,000
Liabilities
Current liabilities
Accounts payable ……………………………………….. $ 16,500
Interest payable ………………………………………….. 2,500
Equity
Common stock …………………………………………….. 5,000
Retained earnings ……………………………………….. 112,700
195
Problem 3-6A (Continued)
Part 2
Closing entries (all dated December 31)
Instructor note: Entries are shown without an account reference column because no posting is required.
(1) Professional Fees Earned ……………………… 97,000
Rent Earned ………………………………………….. 14,000
(2) Income Summary ………………………………….. 110,800
Depreciation Expense—Building …….. 11,000
Depreciation Expense—Equipment …. 6,000
Wages Expense………………………………. 32,000
(3) Income Summary ………………………………….. 4,300
Retained Earnings ………………………….. 4,300
Close income summary account.
Wild and Shaw, Financial & Managerial Accounting, 8e Solutions Manual: Chapter 3
Problem 3-7A (15 minutes)
1.
B
6.
C
11.
E
16.
C
4.
A
9.
A
14.
C
19.
A
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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
Record cost of supplies used
($600 + $4,570 – $800).
Adjustment (b)
31 Insurance Expense …………………………………………. 4,730
Prepaid Insurance ……………………………………. 4,730
Record annual insurance coverage cost.
Policy
Cost per Month
Months Active
in Fiscal Year
2019
Fiscal Year
2019
Expense
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Problem 3-2B (Concluded)
Adjustment (d)
Oct. 31 Depreciation Expense—Building …………………….. 5,400
Accumulated Depreciation—Building ………. 5,400
Record annual depreciation
[($175,000 – $40,000) / 25 years = $5,400].
Adjustment (e)
Part 2
Cash Payment for (c)
Nov. 7 Salaries Payable …………………………………………….. 1,000
Salaries Expense* ………………………………………….. 4,000