Wild and Shaw Financial and Managerial Accounting 9e Solutions Manual: Chapter 3
201
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
Accumulated Depreciation–Profess. Library ……………..
7,200
Record professional library depreciation.
Adjustment (e)
31
Unearned Revenue ………………………………………………
5,000
Training Revenue ……………………………………………
5,000
31
Accounts Receivable ……………………………………………
7,500
Tuition Revenue ……………………………………………..
7,500
Adjustment (g)
31
Salaries Expense …………………………………………………
400
Salaries Payable……………………………………………..
400
Record accrued salaries
(2 days x $100 x 2 employees).
Adjustment (h)
31
Rent Expense ………………………………………………………
3,000
Prepaid Rent …………………………………………………..
3,000
Record expiration of prepaid rent.
Wild and Shaw Financial and Managerial Accounting 9e Solutions Manual: Chapter 3
202
Problem 3-3A (Continued)
Part 3
WELLS TECHNICAL INSTITUTE
Adjusted Trial Balance
December 31
Debit
Credit
$ 34,000
7,500
2,800
35,000
80,000
28,200
26,000
7,500
10,000
80,000
50,000
131,400
45,000
7,200
13,200
50,400
2,400
36,000
5,200
6,000
203
Problem 3-3A (Continued)
Part 4
WELLS TECHNICAL INSTITUTE
Income Statement
For Year Ended December 31
Revenues
Tuition revenue …………………………………………… $131,400
Training revenue ………………………………………… 45,000
Total revenues ……………………………………………. $176,400
Expenses
Depreciation expense—Professional library … 7,200
WELLS TECHNICAL INSTITUTE
Statement of Retained Earnings
For Year Ended December 31
Retained earnings, December 31 prior year end …………… $ 80,000
204
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
Wild and Shaw Financial and Managerial Accounting 9e Solutions Manual: Chapter 3
205
Problem 3-4A (50 minutes)
CHIARA COMPANY
Income Statement
For Year Ended December 31
Revenues
Services revenue ……………………………….. $484,000
Interest revenue …………………………………. 24,000
CHIARA COMPANY
Statement of Retained Earnings
For Year Ended December 31
Retained earnings, Dec. 31 prior year end …… $235,800
Add: Net income ………………………………………… 87,200
Wild and Shaw Financial and Managerial Accounting 9e 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) ……………………
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 revenue …………………………………………..
30,000
Total liabilities ………………………………………………..
Common stock ……………………………………………….
Total equity …………………………………………………….
Wild and Shaw Financial and Managerial Accounting 9e Solutions Manual: Chapter 3
207
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 2 Cash …………………………..…………………………. 101 30,000
Computer Equipment …………………………….. 167 20,000
Common Stock……………………………….. 307 50,000
Owner invested in the business.
14 Salaries Expense …………………………..……….. 622 1,600
Cash ………………………………………………. 101 1,600
Paid two weeks’ salaries.
24 Cash ……………………………………………………… 101 8,000
Commissions Revenue …………………… 403 8,000
Collected commissions revenue.
28 Salaries Expense …………………………………… 622 1,600
Cash ………………………………………………. 101 1,600
Paid two weeks’ salaries.
208
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
Computer equipment ……………………….. 0
622 Salaries expense ……………………………….. 3,200
637 Insurance expense ……………………………. 0
640 Rent expense …………………………………….. 1,800
Wild and Shaw Financial and Managerial Accounting 9e Solutions Manual: Chapter 3
209
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).
(b) Apr 30 Office Supplies Expense ……………………………….. 650 400
Office Supplies ………………………………………… 124 400
Record cost of supplies used ($1,000 – $600).
210
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
Computer equipment ……………………….. 500
622 Salaries expense ……………………………….. 3,620
637 Insurance expense ……………………………. 133
640 Rent expense …………………………………….. 1,800
Wild and Shaw Financial and Managerial Accounting 9e Solutions Manual: Chapter 3
211
Problem 3-5A (Continued)
Part 5
ADVENTURE TRAVEL
Income Statement
For Month Ended April 30
Commissions revenue ………………………………………… $9,750
Expenses
Depreciation expense—Computer equipment ……. $ 500
Salaries expense ………………………………………………. 3,620
ADVENTURE TRAVEL
Statement of Retained Earnings
For Month Ended April 30
Retained earnings, April 1 ………………………… $ 0
Add: Net Income ……………………………………. 2,197
2,197
Wild and Shaw Financial and Managerial Accounting 9e Solutions Manual: Chapter 3
212
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
Total liabilities ……………………………………………………….. 420
Equity
Wild and Shaw Financial and Managerial Accounting 9e Solutions Manual: Chapter 3
213
Problem 3-5A (Continued)
Part 6
Closing entries
April 30 Commissions Revenue ………………………….. 403 9,750
Income Summary ……………………………. 901 9,750
Close revenue account.
30 Income Summary ………………………………….. 901 7,553
Depreciation Exp–Computer Equip …. 612 500
30 Income Summary ………………………………….. 901 2,197
Retained Earnings ………………………….. 318 2,197
Close Income Summary account.
Part 7
ADVENTURE TRAVEL
Post-Closing Trial Balance
April 30
Debit Credit
Cash …………………………………………………. $27,000
Accounts receivable ………………………….. 1,750
Office supplies ………………………………….. 600
Problem 3-5A (Continued)
Part 7—continued
Ledger as of April 30
Cash Acct. No. 101
Date Explanation PR Debit Credit Balance
April 2 30,000 30,000
3 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 4 1,000 1,000
30 Adjusting 400 600
Prepaid Insurance Acct. No. 128
Accumulated Depreciation–Computer Equipment Acct. No. 168
Date Explanation PR Debit Credit Balance
April 30 Adjusting 500 500
215
Problem 3-5A (Continued)
Common Stock Acct. No. 307
Date Explanation PR Debit Credit Balance
April 2 50,000 50,000
Retained Earnings Acct. No. 318
Commissions Revenue Acct. No. 403
Date Explanation PR Debit Credit Balance
April 24 8,000 8,000
30 Adjusting 1,750 9,750
30 Closing 9,750 0
Insurance Expense Acct. No. 637
Date Explanation PR Debit Credit Balance
April 30 Adjusting 133 133
30 Closing 133 0
Rent Expense Acct. No. 640
216
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
Wild and Shaw Financial and Managerial Accounting 9e Solutions Manual: Chapter 3
Problem 3-6A (15 minutes)
Balance sheet category
Account
1.
Long-term investments
Long-term investment in stock
2.
Not on balance sheet
Depreciation expense—Building
3.
Current assets
4.
Current assets
Interest receivable
5.
Current liabilities
Taxes payable (due in 5 weeks)
6.
Automobiles
7.
Notes payable (due in 3 years)
8.
Current liabilities
Accounts payable
9.
Current assets
Cash
10.
Intangible assets
Patents
11.
Current liabilities
Unearned services revenue
12.
Plant assets
Trucks
13.
Current assets
Prepaid insurance (expires in 5 months)
14.
Plant assets
Buildings
15.
Current assets
Store supplies
16.
Plant assets
Office equipment
17.
Plant assets
18.
Not on balance sheet
Repairs expense
19.
Current assets
Office supplies
20.
Current liabilities
Wages Payable
Wild and Shaw Financial and Managerial Accounting 9e Solutions Manual: Chapter 3
218
Problem 3-7A (75 minutes)
Part 1
TYBALT CONSTRUCTION
Income Statement
For Year Ended December 31
Revenues
Services revenue …………………………..……………. $97,000
Rent revenue …………………………..………………….. 14,000
Interest revenue …………………………..……………… 4,100
TYBALT CONSTRUCTION
Statement of Retained Earnings
For Year Ended December 31
Retained earnings, December 31 prior year …… $111,400
Add: Net income …………………………………………. 4,300
115,700
Wild and Shaw Financial and Managerial Accounting 9e Solutions Manual: Chapter 3
Problem 3-7A (Continued)
TYBALT CONSTRUCTION
Balance Sheet
December 31
Assets
Current assets
Cash …………………………………………………………… $ 5,000
Supplies …………………………………………………….. 31,100
Prepaid insurance ………………………………………. 7,000
Liabilities
Current liabilities
Accounts payable …………………………..…………… $16,500
Interest payable ………………………………………….. 2,500
Rent payable ………………………………………………. 3,500
Wages payable …………………………………………… 2,500
220
Problem 3-7A (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) Services Revenue …………………………..……… 97,000
Rent Revenue ……………………………………….. 14,000
(2) Income Summary ………………………………….. 110,800
Depreciation Expense—Building …….. 11,000
Depreciation Expense—Equipment …. 6,000
(3) Income Summary ………………………………….. 4,300
Retained Earnings ………………………….. 4,300
Close income summary account.