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Exercise 3-3 (25 minutes)
a.
Apr. 30 Legal Services Expense ……………………………… 3,500
Legal Services Payable ………………………… 3,500
Record accrued legal fees.
May 20 Interest Payable ………………………………………….. 3,000
Interest Expense* ……………………………………….. 6,000
Cash ……………………………………………………. 9,000
Record payment of accrued and current interest.
*($9,000 – $3,000)
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Exercise 3-4 (30 minutes)
a.
Wages Expense ……………………………………………………….
8,000
Wages Payable ………………………………………………….
8,000
Record wages accrued but not yet paid.
b.
Depreciation Expense—Equipment …………………………..
Accumulated Depreciation—Equipment ……………..
Record depreciation expense for the year.
c.
Supplies Expense …………………………………………………….
Record supplies used ($240 + $5,200 – $440).
d.
Insurance Expense …………………………………………………..
2,800
Prepaid Insurance† …………………………………………….
2,800
Record insurance coverage expired ($4,000 – $1,200).
e.
Interest Receivable …………………………………………………
1,050
Interest Revenue ………………………………………………
1,050
f.
Interest Expense …………………………………………………….
2,500
Interest Payable ……………………………………………….
2,500
Record interest incurred but not yet paid.
Notes:
Prepaid Insurance†
Supplies*
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Exercise 3-5 (20 minutes)
a.
Accounts Receivable ……………………………………………..
2,000
Revenue …………………………………………………………..
2,000
Record services provided but payment not yet received.
b.
Wages Expense …………………………………………………..
1,000
Wages Payable ………………………………………………..
1,000
Record wages expense accrued but not yet paid.
c.
400
400
d.
Lawn Services Expense …………………………………………
500
Lawn Services Payable ……………………………………
500
Record lawn services incurred but not yet paid.
200
200
Salary Expense ……………………………………………………..
900
Salary Payable………………………………………………….
900
Record salary expense accrued but not yet paid.
Wild and Shaw, Financial & Managerial Accounting, 8e Solutions Manual: Chapter 3
Exercise 3-6 (30 minutes)
a.
Depreciation Expense—Equipment …………………………..
5,000
Accumulated Depreciation—Equipment……………….
5,000
Record depreciation expense for the year.
b.
Insurance Expense …………………………………………………..
1,400
Prepaid Insurance ……………………………………………….
1,400
c.
Unearned Revenue ……………………………………………………
Consulting Revenue ……………………………………………
d.
Wages Expense ……………………………………………………….
Wages Payable ……………………………………………………
e.
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Exercise 3-7 (25 minutes)
a. Dec. 31 Accounts Receivable …………………………………. 7,000
Fees Earned ………………………………………… 7,000
Record earned but unbilled fees.
d. Dec. 31 Salaries Expense ……………………………………….. 2,250
Salaries Payable………………………………….. 2,250
Record accrued salaries.
e. Dec. 31 Insurance Expense …………………………………….. 1,400
Prepaid Insurance ……………………………….. 1,400
Record expired prepaid insurance.
164
Exercise 3-8 (25 minutes)
STARK COMPANY
Income Statement
For Year Ended December 31
Services revenue ……………………………………………… $20,000
Expenses
Depreciation expense—Buildings …………………. $2,000
STARK COMPANY
Statement of Retained Earnings
For Year Ended December 31
Retained earnings, Dec. 31 prior year end …………. $14,800
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Exercise 3-8 (concluded)
STARK COMPANY
Balance Sheet
December 31
Assets
Cash ………………………………………………………… $10,000
Accounts receivable ………………………………… 4,000
Liabilities
Accounts payable …………………………………….. $ 1,500
Notes payable ………………………………………….. 11,000
Wages payable ………………………………………… 400
Exercise 3-9 (10 minutes)
(Yen in millions)
Mar. 31 Net Sales ………………………………………………. 504,459
Income Summary ……………………………. 504,459
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Exercise 3-10 (30 minutes)
1.
Dec. 31 Services Revenue ………………………………….. 404 44,000
Income Summary ……………………………. 901 44,000
Close revenue account.
2.
CRUZ COMPANY
Post-Closing Trial Balance
December 31
Debit Credit
Cash ………………………………………………………. $19,000
Supplies ………………………………………………… 13,000
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Exercise 3-11 (20 minutes)
WILSON TRUCKING COMPANY
Income Statement
For Year Ended December 31
Trucking fees earned ………………………………………… $130,000
Expenses
Depreciation expense—Trucks ……………………… $23,500
WILSON TRUCKING COMPANY
Statement of Retained Earnings
For Year Ended December 31
Retained earnings, December 31 prior year ……….. $155,000
Wild and Shaw, Financial & Managerial Accounting, 8e Solutions Manual: Chapter 3
Exercise 3-12 (20 minutes)
WILSON TRUCKING COMPANY
Balance Sheet
December 31
Assets
Current assets
Cash ………………………………………………………. $ 8,000
Accounts receivable ………………………………. 17,500
Liabilities
Current liabilities
Accounts payable …………………………………… $ 12,000
Interest payable ……………………………………… 4,000
104,880
/
=
1.38
/
=
0.92
TRU
/
=
1.05
Exercise 3-13 (10 minutes)
a. $ 4,361 / $ 44,500 = 9.8%
b. $ 97,706 / $ 398,800 = 24.5%
Exercise 3-14 (15 minutes)
Current
Assets
Current
Liabilities
Current
Ratio
Edison
$ 79,040
/
$ 32,000
=
2.47
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Exercise 3-15A (30 minutes)
a.
Dec. 1 Supplies Expense …………………………………………… 2,000
Cash ……………………………………………………….. 2,000
Purchased supplies.
Received fees for work to be done.
d.
Dec. 28 Cash ………………………………………………………………. 3,700
Remodeling Fees Earned …………………………. 3,700
Received fees for work to be done.
e.
Dec. 31 Supplies ………………………………………………………… 1,840
Supplies Expense ……………………………………. 1,840
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Exercise 3-16B (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
Accum. depreciation–Equip ………………………….
18
18
Accounts payable …………………………..
6
6
6
Salaries payable …………………………..
0
(b)
6
6
6
Unearned revenue …………………………..
12
(c)
12
0
0
Common stock …………………………..
10
10
10
Retained earnings …………………………..
32
32
32
Dividends …………………………..…………………………
6
6
6
Revenue ……………………………………………………….
75
(c)
12
87
87
Depreciation expense–Equip…………………………
(a)
3
3
3
Salaries expense …………………………..
18
6
24
24
Insurance expense …………………………..
(e)
15
15
15
Supplies expense …………………………..
9
9
9
Utilities expense …………………………..
12
__
__
__
Totals ……………………………………………………….
150
45
45
Wild and Shaw, Financial & Managerial Accounting, 8e Solutions Manual: Chapter 3
Exercise 3-17C (30 minutes)
1. Adjusting entries
Oct. 31 Rent Expense ………………………………………… 2,800
Rent Payable ………………………………….. 2,800
2. Subsequent entries without reversing
Nov. 5 Rent Payable …………………………………………. 2,800
Rent Expense ………………………………………… 2,800
3. Reversing entries and subsequent entries
Nov. 1 Rent Payable …………………………………………. 2,800
Rent Expense …………………………………. 2,800
Reverse accrual of rent expense.
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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).
Adjustment (c)
31 Salaries Expense ……………………………………… 3,920
Salaries Payable………………………………… 3,920
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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
Salaries Expense* …………………………………. 5,880
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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
15,000
7,500
(c)
13,200
Adj. Bal.
7,500
Adj. Bal.
28,200
Unadj. Bal.
8,000
Bal.
26,000
(b)
5,200
Adj. Bal.
2,800
Unadj. Bal.
Prepaid Insurance
(g)
400
Unadj. Bal.
12,000
Adj. Bal.
400
(a)
2,400
Adj. Bal.
9,600
Unearned Training Fees
Unadj. Bal.
12,500
Prepaid Rent
(e)
5,000
Unadj. Bal.
3,000
Adj. Bal.
7,500
(h)
3,000
Adj. Bal.
0
Common Stock
Bal.
10,000
Professional Library
Bal.
35,000
Bal.
Professional Library
Bal.
50,000
7,200
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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
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
177
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
Record training fees earned for two
courses that were collected in advance.
31
Accounts Receivable ……………………………………………
7,500
Tuition Fees Earned………………………………………..
7,500
Adjustment (g)
31
Salaries Expense …………………………………………………
Salaries Payable……………………………………………..
Adjustment (h)
31
Rent Expense ………………………………………………………
3,000
Prepaid Rent …………………………………………………..
3,000
Record expiration of prepaid rent.
Wild and Shaw, Financial & Managerial Accounting, 8e Solutions Manual: Chapter 3
Problem 3-3A (Continued)
Part 3
WELLS TECHNICAL INSTITUTE
Adjusted Trial Balance
December 31
Debit
Credit
Cash ………………………………………………………………..
$ 34,000
Accounts receivable …………………………………………
7,500
Teaching supplies ……………………………………………
2,800
9,600
Professional library ………………………………………….
Equipment ……………………………………………………….
Accumulated depreciation—Equipment …………….
28,200
Accounts payable …………………………………………….
26,000
Salaries payable ……………………………………………….
400
Unearned training fees ……………………………………..
7,500
Common stock …………………………………………………
10,000
Retained earnings …………………………………………….
80,000
Dividends …………………………………………………………
Tuition fees earned …………………………………………..
Training fees earned …………………………………………
45,000
Depreciation expense—Professional library ……..
7,200
Depreciation expense—Equipment …………………..
Salaries expense ……………………………………………..
Insurance expense …………………………………………..
2,400
Teaching supplies expense ………………………………
5,200
Advertising expense …………………………………………
6,000