Wild and Shaw, Financial & Managerial Accounting, 8e Solutions Manual: Chapter 3
199
Problem 3-3B (90 minutes)
Parts 1 and 2
Cash
Accounts Payable
Bal.
60,000
Bal.
11,200
Accounts Receivable
Salaries Payable
Unadj. Bal.
5,750
(g)
Adj. Bal.
5,750
Adj. Bal.
Teaching Supplies
(b)
50,000
(e)
Adj. Bal.
20,000
Prepaid Insurance
Common Stock
Unadj. Bal.
19,000
Bal.
11,000
(a)
9,500
Adj. Bal.
9,500
Retained Earnings
Prepaid Rent
Bal.
60,500
Unadj. Bal.
3,800
(h)
3,800
Adj. Bal.
Professional Library
Bal.
12,000
Accumulated Depreciation—
Professional Library
Unadj. Bal.
2,500
(d)
2,400
Adj. Bal.
4,900
Equipment
Bal.
40,000
Accumulated Depreciation—
Equipment
Unadj. Bal.
20,000
(c)
5,000
25,000
200
Problem 3-3B (Continued)
Parts 1 and 2
Tuition Fees Earned
Advertising Expense
Unadj. Bal.
129,200
Bal.
(f)
5,750
Adj. Bal.
134,950
Bal.
(e)
Depreciation Expense—
Professional Library
Unadj. Bal.
0
(d)
2,400
Adj. Bal.
2,400
Depreciation Expense—
Unadj. Bal.
0
(c)
5,000
Adj. Bal.
5,000
Unadj. Bal.
(g)
Adj. Bal.
Insurance Expense
Unadj. Bal.
0
(a)
9,500
Adj. Bal.
9,500
Rent Expense
Unadj. Bal.
(h)
3,800
Adj. Bal.
Unadj. Bal.
0
(b)
Adj. Bal.
Wild and Shaw, Financial & Managerial Accounting, 8e Solutions Manual: Chapter 3
201
Problem 3-3B (Continued)
Part 2
Adjustment (a)
Dec. 31 Insurance Expense ………………………………………… 9,500
Prepaid Insurance …………………………………… 9,500
Record the insurance expired.
Adjustment (b)
Adjustment (d)
31 Depreciation Expense—Professional Library …. 2,400
Accumulated Depreciation—Professional
Library ………………………………………………… 2,400
Record professional library depreciation.
Adjustment (e)
31 Unearned Training Fees ………………………………… 28,600
Training Fees Earned ……………………………… 28,600
Record training fees earned that were
collected in advance.
Adjustment (f)
Wild and Shaw, Financial & Managerial Accounting, 8e Solutions Manual: Chapter 3
Problem 3-3B (Continued)
Part 3
ALONZO INSTITUTE
Adjusted Trial Balance
December 31
Debit
Credit
Cash ………………………………………………………………………………
$ 60,000
Accounts receivable ……………………………………………………..
5,750
Teaching supplies …………………………………………………………
Prepaid rent …………………………………………………………………..
Professional library ……………………………………………………….
Accumulated depreciation—Professional library …………
Accumulated depreciation—Equipment ………………………
25,000
Accounts payable ………………………………………………………….
11,200
Salaries payable …………………………………………………………….
450
Unearned training fees ………………………………………………….
0
Common stock ………………………………………………………………
11,000
Retained earnings …………………………………………………………
60,500
Dividends ………………………………………………………………………
Training fees earned ……………………………………………………..
96,600
Depreciation expense—Professional library ………………..
2,400
Depreciation expense—Equipment …………………………..….
5,000
9,500
Rent expense …………………………………………………………………
Teaching supplies expense …………………………………………..
Advertising expense ……………………………………………………..
Utilities expense …………………………………………………………….
Wild and Shaw, Financial & Managerial Accounting, 8e Solutions Manual: Chapter 3
203
Problem 3-3B (Continued)
Part 4
ALONZO INSTITUTE
Income Statement
For Year Ended December 31
Revenues
Tuition fees earned …………………………………………… $134,950
Training fees earned …………………………………………. 96,600
Total revenues ………………………………………………….. $231,550
Expenses
ALONZO INSTITUTE
Statement of Retained Earnings
For Year Ended December 31
Retained earnings, Dec. 31 prior year end …….. $ 60,500
Wild and Shaw, Financial & Managerial Accounting, 8e Solutions Manual: Chapter 3
204
Problem 3-3B (Concluded)
ALONZO INSTITUTE
Balance Sheet
December 31
Assets
Cash …………………………………………………………………… $ 60,000
Accounts receivable …………………………………………… 5,750
Liabilities
Accounts payable ……………………………………………….. $ 11,200
Salaries payable …………………………………………………. 450
Total liabilities ……………………………………………………. 11,650
Equity
Wild and Shaw, Financial & Managerial Accounting, 8e Solutions Manual: Chapter 3
205
Problem 3-4B (50 minutes)
SPEEDY COURIER
Income Statement
For Year Ended December 31
Revenues
Delivery fees earned ………………………………. $611,800
Interest earned ……………………………………….. 34,000
Total revenues ……………………………………….. $645,800
Expenses
SPEEDY COURIER
Statement of Retained Earnings
For Year Ended December 31
Retained earnings, Dec. 31 prior yr end ……. $110,000
Plus: Net income …………………………………….. 86,000
196,000
Wild and Shaw, Financial & Managerial Accounting, 8e Solutions Manual: Chapter 3
Problem 3-4B (Concluded)
SPEEDY COURIER
Balance Sheet
December 31
Assets
Cash …………………………………………………………….
$ 58,000
Accounts receivable ……………………………………..
120,000
Interest receivable …………………………………………
7,000
Notes receivable (due in 90 days)…………………….
210,000
Trucks ………………………………………………………….
Accumulated depreciation—Trucks ……………….
Equipment …………………………………………………….
Accumulated depreciation—Equipment …………
Total assets ………………………………………………….
Liabilities
Accounts payable …………………………………………
$134,000
Interest payable …………………………………………….
20,000
Salaries payable ……………………………………………
28,000
Unearned delivery fees ………………………………….
Total liabilities ………………………………………………
Common stock ……………………………………………..
Retained earnings …………………………………………
Total equity …………………………………………………..
Wild and Shaw, Financial & Managerial Accounting, 8e Solutions Manual: Chapter 3
207
Problem 3-5B (90 minutes)
INSTRUCTOR NOTE: Ledger accounts are shown after Part 7 as they would appear after all
entries are posted.
Part 2
Transactions for July
July 1 Cash ……………………………………………………… 101 30,000
Buildings ………………………………………………. 173 150,000
Common Stock……………………………….. 307 180,000
Owner investment in exchange for stock.
Paid 12 months’ premium in advance.
14 Salaries Expense …………………………………… 622 1,000
Cash ………………………………………………. 101 1,000
Paid two weeks’ salary.
24 Cash ……………………………………………………… 101 9,800
Storage Fees Earned ………………………. 401 9,800
Collected fees from customers.
208
Problem 3-5B (Continued)
Part 3
SAFE STORAGE CO.
Unadjusted Trial Balance
July 31
No. Account Title Debit Credit
101 Cash …………………………………………………………… $ 22,850
106 Accounts receivable …………………………………… 0
318 Retained earnings ………………………………………. 0
319 Dividends …………………………………………………… 2,000
401 Storage fees earned ……………………………………. 9,800
606 Depreciation expense–Buildings …………………. 0
Wild and Shaw, Financial & Managerial Accounting, 8e Solutions Manual: Chapter 3
209
Problem 3-5B (Continued)
Part 4
Adjusting entries
July 31 Insurance Expense …………………………………………637 400
Prepaid Insurance …………………………………..128 400
Record expired insurance.
(2/3 x $7,200/12 per month)
Wild and Shaw, Financial & Managerial Accounting, 8e Solutions Manual: Chapter 3
210
Problem 3-5B (Continued)
Part 4
SAFE STORAGE CO.
Adjusted Trial Balance
July 31
No. Account Title Debit Credit
101 Cash …………………………………………………………… $ 22,850
106 Accounts receivable …………………………………… 1,150
124 Office supplies ……………………………………………. 1,525
318 Retained earnings ………………………………………. 0
319 Dividends …………………………………………………… 2,000
401 Storage fees earned ……………………………………. 10,950
606 Depreciation expense–Buildings …………………. 1,500
Wild and Shaw, Financial & Managerial Accounting, 8e Solutions Manual: Chapter 3
211
Problem 3-5B (Continued)
Part 5
SAFE STORAGE CO.
Income Statement
For Month Ended July 31
Storage fees earned …………………………….. $10,950
Expenses
Depreciation expense–Buildings ………… $1,500
SAFE STORAGE CO.
Statement of Retained Earnings
For Month Ended July 31
Retained earnings, July 1 …………………….. $ 0
Add: Net income ………………………………… 2,725
2,725
Wild and Shaw, Financial & Managerial Accounting, 8e Solutions Manual: Chapter 3
212
Problem 3-5B (Continued)
Part 5
SAFE STORAGE CO.
Balance Sheet
July 31
Assets
Cash ……………………………………………………. $ 22,850
Accounts receivable ……………………………. 1,150
Liabilities
Salaries payable ………………………………….. $ 100
Equity
Common stock ……………………………………. 180,000
Wild and Shaw, Financial & Managerial Accounting, 8e Solutions Manual: Chapter 3
213
Problem 3-5B (Continued)
Part 6
Closing entries
July 31 Storage Fees Earned …………………………... 401 10,950
Income Summary ……………………………. 901 10,950
Close revenue account.
31 Income Summary ………………………………… 901 8,225
Depreciation Exp—Buildings ………….. 606 1,500
Part 7
SAFE STORAGE CO.
Post-Closing Trial Balance
July 31
Debit Credit
Cash ……………………………………………………. $ 22,850
Accounts receivable ……………………………. 1,150
Office supplies …………………………………….. 1,525
Wild and Shaw, Financial & Managerial Accounting, 8e Solutions Manual: Chapter 3
214
Problem 3-5B (Continued)
Ledger as of July 31
Cash Acct. No. 101
Date Explanation PR Debit Credit Balance
July 1 30,000 30,000
2 2,000 28,000
Accounts Receivable Acct. No. 106
Date Explanation PR Debit Credit Balance
July 31 Adjusting 1,150 1,150
Office Supplies Acct. No. 124
Date Explanation PR Debit Credit Balance
July 5 2,400 2,400
31 Adjusting 875 1,525
Prepaid Insurance Acct. No. 128
Wild and Shaw, Financial & Managerial Accounting, 8e Solutions Manual: Chapter 3
Problem 3-5B (Continued)
Common Stock Acct. No. 307
Date Explanation PR Debit Credit Balance
July 1 180,000 180,000
Retained Earnings Acct. No. 318
Storage Fees Earned Acct.No. 401
Date Explanation PR Debit Credit Balance
July 24 9,800 9,800
31 Adjusting 1,150 10,950
31 Closing 10,950 0
Depreciation Expense—Buildings Acct. No. 606
Date Explanation PR Debit Credit Balance
July 31 Adjusting 1,500 1,500
31 Closing 1,500 0
Salaries Expense Acct. No. 622
Wild and Shaw, Financial & Managerial Accounting, 8e Solutions Manual: Chapter 3
216
Problem 3-5B (Concluded)
Office Supplies Expense Acct. No. 650
Date Explanation PR Debit Credit Balance
July 31 Adjusting 875 875
31 Closing 875 0
Repairs Expense Acct. No. 684
Date Explanation PR Debit Credit Balance
217
Problem 3-6B (75 minutes)
Part 1
ANARA CO.
Income Statement
For Year Ended December 31, 2019
Revenues
Professional fees earned …………………………….. $59,600
Expenses
Depreciation expense—Building …………………. 2,000
Depreciation expense—Equipment ……………… 1,000
Wages expense ………………………………………….. 18,500
ANARA CO.
Statement of Retained Earnings
For Year Ended December 31, 2019
Retained earnings, December 31, 2018 ………….. $ 52,800
Add: Net income ………………………………………….. 28,890
81,690
218
Problem 3-6B (Continued)
ANARA CO.
Balance Sheet
December 31, 2019
Assets
Current assets
Cash …………………………………………………………… $ 7,400
Short-term investments ………………………………. 11,200
Supplies …………………………………………………….. 4,600
Liabilities
Current liabilities
Accounts payable ……………………………………….. $ 3,500
Interest payable ………………………………………….. 1,750
Equity
Common stock …………………………………………….. 40,000
Retained earnings ………………………………………… 73,690