Exercise 3-22 (20 minutes)
WILSON TRUCKING COMPANY
Balance Sheet
December 31
Assets
Current assets
Cash ………………………………………………………. $ 8,000
Accounts receivable ………………………………. 17,500
Office supplies ……………………………………….. 3,000
Liabilities
Current liabilities
Accounts payable …………………………………… $ 12,000
Interest payable ……………………………………… 4,000
Wild and Shaw Financial and Managerial Accounting 9e Solutions Manual: Chapter 3
Exercise 3-23 (10 minutes)
Dec. 31 Trucking Revenue …………………………………. 130,000
Income Summary ……………………………. 130,000
Close revenue account.
Dec. 31 Income Summary ………………………………….. 104,500
Depreciation Expense—Trucks ……….. 23,500
Wild and Shaw Financial and Managerial Accounting 9e Solutions Manual: Chapter 3
Exercise 3-24 (20 minutes)
ANDREA CO.
Balance Sheet
December 31
Assets
Current assets
Cash ………………………………………………………. $13,000
Accounts receivable ………………………………. 4,000
Merchandise inventory …………………………... 5,000
Liabilities
Current liabilities
Accounts payable …………………………………… $ 8,000
Salaries payable …………………………………….. 1,000
Wild and Shaw Financial and Managerial Accounting 9e Solutions Manual: Chapter 3
Exercise 3-25 (10 minutes)
a. $ 4,361 / $ 44,500 = 9.8%
b. $ 97,706 / $ 398,800 = 24.5%
Exercise 3-26 (15 minutes)
a.
Current assets:
Cash ……………………………………………………………………… $ 8,000
Accounts receivable ……………………………………………… 17,500
b. Wilson Trucking
Interpretation: Wilson Trucking Company’s current ratio of 1.78 exceeds
Spalding’s ratio of 1.5. This implies Wilson Trucking Company is in a
slightly better position to pay its short-term obligations than its competitor.
Wild and Shaw Financial and Managerial Accounting 9e Solutions Manual: Chapter 3
Exercise 3-27 (15 minutes)
a.
Current
Assets
Current
Liabilities
Current
Ratio
Edison
$ 79,040
/
$ 32,000
=
2.47
104,880
/
=
1.38
TRU
/
=
1.05
b. Edison
Analysis: Edison is in the strongest position to pay its short-term
obligations based on the current ratio. It has about $2.47 of current assets
Wild and Shaw Financial and Managerial Accounting 9e Solutions Manual: Chapter 3
Exercise 3-28A (30 minutes)
a.
Dec. 1 Supplies Expense …………………………………………… 2,000
Cash ……………………………………………………….. 2,000
Purchased supplies.
Received cash in advance of work.
d.
Dec. 28 Cash ………………………………………………………………. 3,700
Remodeling Revenue ………………………………. 3,700
Received cash in advance of work.
e.
Dec. 31 Supplies ………………………………………………………… 1,840
Supplies Expense ……………………………………. 1,840
Adjust expenses for unused supplies.
Wild and Shaw Financial and Managerial Accounting 9e Solutions Manual: Chapter 3
Exercise 3-29A (25 minutes)
a. Initial credit recorded in the Unearned Revenue account
July 1 Cash …………………………………………………………….. 3,000
Unearned Revenue ………………………………… 3,000
Received cash for work to be done for Solana.
6 Cash …………………………………………………………….. 7,500
Unearned Revenue ………………………………… 7,500
Received cash for work to be done for Haru.
b. Initial credit recorded in the Services Revenue account
July 1 Cash …………………………………………………………….. 3,000
Services Revenue ………………………………….. 3,000
Received cash for work to be done for Solana.
Wild and Shaw Financial and Managerial Accounting 9e Solutions Manual: Chapter 3
Exercise 3-29A –concluded
c. Under the first method (and using entries from a)
Services Revenue = $3,000 + $7,500 = $10,500
Exercise 3-30B (15 minutes)
1.
B Interest Revenue
9.
C Accounts Receivable
3.
C Dividends
11.
C Office Supplies
5.
D Accounts Payable
13.
C Interest Receivable
6.
B Services Revenue
14.
C Cash
8.
A Interest Expense
16.
D Wages Payable
Wild and Shaw Financial and Managerial Accounting 9e Solutions Manual: Chapter 3
Exercise 3-31B (20 minutes)
Planta Company
Work Sheet
Adjusted
Trial Balance
Income
Statement
Balance Sheet
No.
Account
Dr.
Cr.
Dr.
Cr.
Dr.
Cr.
101
Cash………………………………..
7,000
7,000
106
Accounts receivable ………..
27,200
27,200
153
Trucks …………………………..
42,000
42,000
17,500
17,500
183
Land ………………………………..
32,000
32,000
201
Accounts payable ……………
15,000
15,000
209
Salaries payable ………………
4,200
4,200
236
Unearned revenue …………..
3,600
3,600
307
Common stock ………………..
10,000
10,000
318
Retained earnings……………
55,500
55,500
319
Dividends ………………………..
15,400
15,400
403
Plumbing revenue …………..
84,000
84,000
622
Salaries expense ……………..
38,000
38,000
640
Rent expense…………………..
13,000
13,000
677
Miscellaneous expense …..
Totals ………………………………
189,800
66,200
84,000
Net income ………………………
17,800
Wild and Shaw Financial and Managerial Accounting 9e Solutions Manual: Chapter 3
Exercise 3-32B (20 minutes)
Instructor note: Entries are shown without an account reference column because no posting is required.
(a) Insurance Expense ……………………………………………. 900
Prepaid Insurance ………………………………………. 900
Record expired insurance.
Wild and Shaw Financial and Managerial Accounting 9e Solutions Manual: Chapter 3
Exercise 3-33B (25 minutes)
WESTCOTT COMPANY
December 31
Unadjusted
Trial Balance
Dr. Cr.
Adjustments
Dr. Cr.
Adjusted
Trial Balance
Dr. Cr.
Income
Statement
Dr. Cr.
Balance Sheet
Dr. Cr.
Cash ……………………………………………………….
21
21
21
Accounts receivable …………………………..
12
12
12
Supplies ……………………………………………………….
24
(d)
9
15
15
Prepaid insurance …………………………..
18
(e)
15
3
3
Equipment …………………………..
39
39
39
Accum. depreciation–Equip ………………………….
15
(a)
3
18
Accounts payable …………………………..
6
Salaries payable …………………………..
(b)
6
6
Unearned revenue …………………………..
12
(c)
12
0
Common stock …………………………..
10
10
Retained earnings …………………………..
32
32
32
Dividends ……………………………………………………..
6
6
6
Services revenue …………………………..
75
(c)
12
87
87
Depreciation expense–Equip…………………………
0
(a)
3
3
3
Salaries expense …………………………..
18
(b)
6
24
24
Insurance expense …………………………..
0
(e)
15
15
15
Supplies expense …………………………..
0
(d)
9
9
9
Utilities expense …………………………..
__
__
__
__
Totals ……………………………………………………….
45
45
Net income…………………………..
Wild and Shaw Financial and Managerial Accounting 9e Solutions Manual: Chapter 3
Exercise 3-34B (25 minutes)
1.
Work Sheet—Income Statement Columns Only
Account Title
Debit
Credit
Rental Revenue ………………………………. $120,000
Salaries expense …………………………….. $ 46,300
2. Closing entries
(1) Rental revenue ………………………………………. 120,000
Income Summary ……………………………. 120,000
Close revenue account.
(2) Income Summary ………………………………….. 94,400
Salaries Expense ……………………………. 46,300
Insurance Expense …………………………. 7,400
closed as Dividends were zero this period.
Wild and Shaw Financial and Managerial Accounting 9e Solutions Manual: Chapter 3
Exercise 3-35B Part 1 (30 minutes)
DYLAN DELIVERY COMPANY
Work Sheet
For Year Ended December 31
Unadjusted
Trial Balance
Adjustments
Adjusted
Trial Balance
Income
Statement
Balance Sheet
Account Title
Dr.
Cr.
Dr.
Cr.
Dr.
Cr.
Dr.
Cr.
Dr.
Cr.
Cash …………………………………………..
16,000
16,000
16,000
Accounts receivable ………………….
34,000
34,000
34,000
Supplies …………………………………….
3,000
Trucks ………………………………………..
Accum. Depreciation—Trucks …..
80,000
Land …………………………………………..
Accounts payable………………………
24,000
24,000
24,000
Interest payable …………………………
(b)
1,000
Common stock ………………………….
50,000
50,000
50,000
Retained earnings ……………………..
257,000
257,000
257,000
Dividends …………………………………..
34,000
34,000
34,000
Delivery revenue ………………………..
263,000
263,000
263,000
Depreciation expense—Trucks …
40,000
80,000
Salaries expense ……………………….
110,000
Supplies expense ………………………
15,000
3,000
18,000
Interest expense ………………………..
(b)
1,000
Repairs expense ………………………..
Totals …………………………………………
224,000
Wild and Shaw Financial and Managerial Accounting 9e Solutions Manual: Chapter 3
Exercise 3-35B (Continued)
2. a. Closing entries
Delivery Revenue ………………………………….. 263,000
Income Summary ……………………………. 263,000
Close revenue account.
Income Summary ………………………………….. 224,000
b. Retained earnings computation
Retained earnings on the balance sheet
Retained earnings, Beginning balance …… $257,000
Wild and Shaw Financial and Managerial Accounting 9e Solutions Manual: Chapter 3
Exercise 3-36C (10 minutes)
Reversing entries are appropriate for accounting adjustments (a) and (e)
Jan. 1 Service Revenues ………………………………….. 6,000
Wild and Shaw Financial and Managerial Accounting 9e Solutions Manual: Chapter 3
Exercise 3-37C (30 minutes)
1. Adjusting entries
Dec. 31 Rent Expense ………………………………………… 2,800
2. Subsequent entries without reversing
Jan. 2 Rent Payable …………………………………………. 2,800
Rent Expense ………………………………………… 2,800
3. Reversing entries on January 1 and subsequent entries
Jan. 1 Rent Payable …………………………………………. 2,800
Rent Expense …………………………………. 2,800
Reverse accrued rent expense.
Wild and Shaw Financial and Managerial Accounting 9e Solutions Manual: Chapter 3
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
Record cost of supplies used
($4,000 + $13,400 – $2,554).
Wild and Shaw Financial and Managerial Accounting 9e Solutions Manual: Chapter 3
Problem 3-2A (Concluded)
Adjustment (d)
Dec. 31 Depreciation Expense—Building ………………. 30,500
Accumulated Depreciation—Building … 30,500
Record annual depreciation expense
[($960,000 – $45,000) / 30 years = $30,500]
Part 2
Cash Payment for (c)
Jan. 6 Salaries Payable ……………………………………. 3,920
Wild and Shaw Financial and Managerial Accounting 9e Solutions Manual: Chapter 3
Problem 3-3A (90 minutes)
Parts 1 and 2
Cash
Equipment
Unadj. Bal.
34,000
Unadj. Bal.
80,000
Accounts Receivable
Accumulated Depreciation—
Equipment
Unadj. Bal.
0
Unadj. Bal.
15,000
(f)
7,500
(c)
13,200
Adj. Bal.
7,500
28,200
Teaching Supplies
Unadj. Bal.
8,000
26,000
(b)
5,200
Adj. Bal.
2,800
Unadj. Bal.
0
Prepaid Insurance
(g)
400
Unadj. Bal.
12,000
Adj. Bal.
400
(a)
2,400
Adj. Bal.
9,600
Unearned Revenue
Unadj. Bal.
12,500
(e)
5,000
Unadj. Bal.
3,000
(h)
3,000
Adj. Bal.
0
10,000
Professional Library
Bal.
35,000
Bal.
Professional Library
Unadj. Bal.
10,000
Bal.
50,000
7,200
Adj. Bal.
17,200
Wild and Shaw Financial and Managerial Accounting 9e Solutions Manual: Chapter 3
Problem 3-3A (Continued)
Tuition Revenue
Rent Expense
Unadj. Bal.
123,900
Unadj. Bal.
33,000
(f)
7,500
(h)
3,000
Adj. Bal.
131,400
Adj. Bal.
36,000
Unadj. Bal.
40,000
Unadj. Bal.
(e)
(b)
5,200
45,000
5,200
Depreciation Expense—
0
6,000
(d)
7,200
Adj. Bal.
7,200
Depreciation Expense—
Equipment
Utilities Expense
Unadj. Bal.
0
Bal.
6,400
(c)
13,200
Adj. Bal.
13,200
Unadj. Bal.
50,000
(g)
Adj. Bal.
50,400
Unadj. Bal.
0
(a)
2,400
Adj. Bal.
2,400