PROBLEM 3.3
1.
Dec. 31
Salaries and Wages Expense …………………………..
2,120
Salaries and Wages Payable …………………………..
2,120
(5 X $700 X 2/5) = $1,400
(3 X $600 X 2/5) = 720
Total accrued salaries $2,120
2.
31
Unearned Rent Revenue ……………………………………………………….
94,000
Rent Revenue ……………………………………………………….
94,000
(5 X $6,000 X 2) = $60,000
(4 X $8,500 X 1) = 34,000
3.
31
Advertising Expense ……………………………………………………….
Prepaid Advertising ……………………………………………………….
for 8 months) = $4,000
for 3 months) = 900
31
Interest Expense ……………………………………………………….
Interest Payable
($60,000 X 12% X 7/12) …………………………..
PROBLEM 3.4
(a)
Nov. 30
Supplies Expense ($5,500 − $1,500) …………………………..
4,000
Supplies ……………………………………………………….
4,000
Depreciation Expense …………………………..
Interest Expense ……………………………………………………….
Interest Payable …………………………..
PROBLEM 3.4 (Continued)
(b) BELLEMY FASHION CENTER
Adjusted Trial Balance
November 30, 2020
Dr.
Cr.
Cash …………………………………………………………………..
$ 28,700
Accounts Receivable …………………………………………..
33,700
Inventory ……………………………………………………….
45,000
Supplies ($5,500 – $4,000) …………………………………….
1,500
Equipment ……………………………………………………….
133,000
Notes Payable ……………………………………………………..
Accounts Payable………………………………………………..
Common Stock ……………………………………………………
Retained Earnings ……………………………………………….
Sales Revenue …………………………………………………….
Sales Returns and Allowances …………………………..
4,200
Cost of Goods Sold …………………………..…………………
495,400
Salaries and Wages Expense …………………………..
140,000
Advertising Expense ……………………………………………
26,400
Utilities Expenses ………………………………………………..
14,000
Maintenance and Repairs Expense ……………………….
12,100
Delivery Expense …………………………………………………
16,700
Rent Expense ………………………………………………………
24,000
Supplies Expense ($0 + $4,000) …………………………..
Depreciation Expense ($0 + $15,000) …………………….
15,000
Interest Expense ($0 + $11,000) …………………………..
11,000
Interest Payable ($0 + $11,000) …………………………..
PROBLEM 3.4 (Continued)
(c) BELLEMY FASHION CENTER
Income Statement
For the Year Ended November 30, 2020
Sales revenue
Sales ……………………………………………………….
$757,200
Net sales ……………………………………………………….
Cost of goods sold …………………………………………………..
Gross profit ……………………………………………………….
Operating expenses
Selling expenses
Salaries and wages expense
($140,000 X 70%) …………………………..
$98,000
Advertising expense …………………………..
26,400
Rent expense
($24,000 X 80%) …………………………..
19,200
Delivery expense …………………………..
16,700
Utilities expenses
($14,000 X 80%) …………………..
11,200
Depreciation Expense …………………………..
15,000
Supplies expense …………………………..
4,000
Total selling expenses ………………………
Administrative expenses
Salaries and wages expense
($140,000 X 30%) …………………………..
42,000
Rent expense
($24,000 X 20%) …………………………..
4,800
Utilities expenses
($14,000 X 20%) …………………………..
2,800
Total admin. expenses ………………………
61,700
Total oper. expenses ……………………
252,200
Income from operations…………………………..
Other expenses and losses
Interest expense ……………………………………………..
PROBLEM 3.4 (Continued)
BELLEMY FASHION CENTER
Retained Earnings Statement
For the Year Ended November 30, 2020
Retained earnings, December 1, 2019 …………………………..
$8,000
Less: Net loss ……………………………………………………….
BELLEMY FASHION CENTER
Balance Sheet
November 30, 2020
Assets
Current assets
Cash ……………………………………………………….
$28,700
Accounts receivable ……………………………………….
Inventory ……………………………………………………….
Supplies …………………………..…………………………..
1,500
Total current assets …………………………..
Property, plant, and equipment
Equipment ……………………………………………………..
133,000
Liabilities and Stockholders’ Equity
Current liabilities
Notes payable due next year …………………………..
$30,000
Accounts payable …………………………………………..
48,500
Interest payable ……………………………………………..
Total current liabilities …………………………..
Long-term liabilities
Notes payable ($51,000 – $30,000) ……………………
Total liabilities ………………………………………..
Common stock ……………………………………………….
PROBLEM 3.4 (Continued)
(d)
Nov. 30
Sales Revenue ……………………………………………………….
757,200
Income Summary ……………………………………………………….
757,200
30
Income Summary ……………………………………………………….
762,800
Sales Returns and Allowances …………………………..
4,200
Cost of Goods Sold …………………………..
Salaries and Wages Expense …………………………..
140,000
Advertising Expense …………………………..
Maintenance and Repair Expense …………………………..
Delivery Expense ……………………………………………………….
Rent Expense …………………………..…………………………..
Supplies Expense ……………………………………………………….
4,000
Depreciation Expense …………………………..
Interest Expense ……………………………………………………….
30
Retained Earnings ……………………………………………………….
Income Summary ($757,200 – $762,800) …………………………..
(e) BELLEMY FASHION CENTER
Post-Closing Trial Balance
November 30, 2020
Debit
Credit
Cash ……………………………………………………………………….
$ 28,700
Accounts Receivable ……………………………………………….
33,700
Inventory ……………………………………………………….
45,000
Supplies ……………………………………………………….
Equipment ……………………………………………………….
Notes Payable ……………………………………………………….
Accounts Payable …………………………………………………….
Interest Payable ……………………………………………………….
Common Stock ……………………………………………………….
Retained Earnings ……………………………………………………
PROBLEM 3.5
(a)
-1-
Dec. 31 Depreciation Expense …………………………..
10,500
Accum. Depreciation—Equipment
(1/16 X [$192,000 − $24,000]) …………..
10,500
-2-
Dec. 31 Interest Expense …………………………………..
1,440*
Interest Payable
($90,000 X 8% X 72/360) ……………………
1,440*
-3-
Dec. 31 Admissions Revenue …………………………….
Unearned Admissions Revenue
(2,000 X $30) ……………………………………
60,000
-4-
Dec. 31 Prepaid Advertising ………………………………
1,100
Advertising Expense …………………………..
1,100
-5-
Dec. 31 Salaries and Wages Expense …………………
Salaries and Wages Payable ……………….
(b) 1. Interest expense, $2,840 ($1,400 + $1,440).
PROBLEM 3.6
(a)
-1-
Dec. 31 Service Revenue ……………………………………………………….
6,000
Unearned Service Revenue …………………………..
6,000
-2-
Dec. 31 Accounts Receivable ………………………………………………….
Service Revenue ……………………………………………………..
-3-
Dec. 31 Bad Debt Expense ………………………………………………………
1,430
Allowance for Doubtful Accounts …………………………..
-4-
Dec. 31 Insurance Expense ……………………………………………………..
480
Prepaid Insurance…………………………………………………….
480
-5-
Dec. 31 Depreciation Expense …………………………………………………
($25,000 X 10%) …………………………..
-6-
Dec. 31 Interest Expense ……………………………………………………….
Interest Payable
($7,200 X 10% X 30/360) …………………………..
-7-
Dec. 31 Prepaid Rent ……………………………………………………….
750
Rent Expense ……………………………………………………….
750
-8-
Dec. 31 Salaries and Wages Expense …………………………..
2,510
Salaries and Wages Payable …………………………..
2,510
PROBLEM 3.6 (Continued)
(b) PEREZ CONSULTING ENGINEERS
Income Statement
For the Year Ended December 31, 2020
Service revenue ($100,000 – $6,000 + $4,900) ……………….
$98,900
Expenses
Depreciation expense…………………………………………..
Utilities expenses ………………………………………………..
Office expense …………………………………………………….
Interest expense ………………………………………………….
Total expenses ………………………………………………..
Salaries and wages expense
PEREZ CONSULTING ENGINEERS
Retained Earnings Statement
For the Year Ended December 31, 2020
Retained Earnings, January 1 ……………………………………………………
$ 42,010a
Add: Net income ……………………………………………………….
Less: Dividends ……………………………………………………….
PROBLEM 3.6 (Continued)
PEREZ CONSULTING ENGINEERS
Balance Sheet
December 31, 2020
Assets
Current assets
Cash …………………………..…………………………..
$29,500
Supplies ……………………………………………………..
Prepaid insurance
Prepaid rent …………………………..
Total current assets …………………………..
Accounts receivable
Liabilities and owners’ equity
Current liabilities
Notes payable …………………………..
$7,200
Unearned service revenue …………………………..
6,000
Salaries and wages payable ………………………..
Interest payable …………………………..
60
PROBLEM 3.7
(a)
Sep. 30
Accounts Receivable ($1,000 – $400) …………………………..
600
Service Revenue ……………………………………………………….
600
30
Rent Expense ……………………………………………………….
900
Prepaid Rent ($1,800 – $900) …………………………..
900
30
Supplies Expense ……………………………………………………….
Supplies ($1,200 – $180) …………………………..
30
Depreciation Expense ……………………………………………………….
350
350
30
Interest Expense ……………………………………………………….
Interest Payable ……………………………………………………….
30
Unearned Rent Revenue ($1,000 – $800) …………………………..
200
Rent Revenue ……………………………………………………….
200
30
Salaries and Wages Expense ($9,400 – $8,800) …………………………..
600
Salaries and Wages Payable …………………………..
600
(b) ROLLING HILLS GOLF INC.
Income Statement
For the Quarter Ended September 30, 2020
Revenues
Service revenue ……………………………………………………
$14,700
Rent revenue ……………………………………………………….
Total revenue …………………………………………………
Expenses
Salaries and wages expense …………………………..
Rent expense ……………………………………………………….
Supplies expense …………………………………………………
Utilities expenses …………………………………………………
Depreciation expense …………………………………………..
Interest expense …………………………………………………..
50
Total expenses ………………………………………………..
PROBLEM 3.7 (Continued)
ROLLING HILLS GOLF INC.
Retained Earnings Statement
For the Quarter Ended September 30, 2020
Retained earnings, July 1, 2020 …………………………………………………
$ 0
Add: Net income ……………………………………………………………………….
Less: Dividends ………………………………………………………………………..
ROLLING HILLS GOLF INC.
Balance Sheet
September 30, 2020
Assets
Current assets
Cash ……………………………………………………….
Accounts receivable …………………………..
Supplies …………………………..…………………………
Prepaid rent expense …………………………..
Total current assets …………………………..
Equipment ……………………………………………………….
Liabilities and Stockholders’ Equity
Current liabilities
Notes payable …………………………..
Accounts payable …………………………..
Unearned rent revenue …………………………..
Salaries and wages payable ………………………..
Interest payable …………………………..
Stockholders’ Equity
Common stock………………………………………………….
14,000
Retained earnings …………………………..
PROBLEM 3.7 (Continued)
(c) The following accounts would be closed: Service Revenue, Rent Revenue,
Salaries and Wages Expense, Rent Expense, Utilities Expense,
PROBLEM 3.8
(a)
Dec. 31
Accounts Receivable ($19,500 − $16,000) …………………………..
3,500
Service Revenue ……………………………………………………….
3,500
31
Supplies Expense ……………………………………………………….
2,900
Supplies ($9,400 − $6,500) …………………………..
2,900
31
Insurance Expense ……………………………………………………….
1,560
Prepaid Insurance ($3,350 − $1,790) …………………………..
1,560
31
Depreciation Expense ……………………………………………………….
5,000
Accumulated Depreciation—Equipment …………………………..
5,000
31
Interest Expense ……………………………………………………….
Interest Payable ……………………………………………………….
560
31
Unearned Service Revenue ($5,000 − $3,100) …………………………..
1,900
Service Revenue ……………………………………………………….
31
Salaries and Wages Expense ($9,820 – $9,000)…………………………..
Salaries and Wages Payable …………………………..
820
(b) VEDULA ADVERTISING
Income Statement
For the Year Ended December 31, 2020
Revenues
Service revenue ……………………………………………………
$63,000
Expenses
Salaries and wages expense …………………………..
$9,820
Depreciation expense …………………………………………..
Rent expense ……………………………………………………….
Supplies expense …………………………………………………
Insurance expense ……………………………………………….
Interest expense …………………………………………………..
Total expenses…………………………………………………
PROBLEM 3.8 (Continued)
VEDULA ADVERTISING
Retained Earnings Statement
For the Year Ended December 31, 2020
Retained earnings, January 1 …………………………..
$ 5,500
Add: Net income ……………………………………………………….
Less: Dividends ……………………………………………………….
VEDULA ADVERTISING
Balance Sheet
December 31, 2020
Assets
Current assets
Cash ……………………………………………………….
$11,000
Accounts receivable ……………………………………
Supplies ……………………………………………………..
Prepaid insurance ……………………………………….
Total current assets …………………………..
Equipment ……………………………………………………….
Liabilities and Stockholders’ Equity
Current liabilities
Notes payable …………………………………………………..
$ 8,000
Accounts payable …………………………………………….
2,000
Unearned service revenue …………………………..
Salaries and wages payable …………………………..
Interest payable ………………………………………………..
Common stock …………………………..…………………….
Retained earnings …………………………………………….
PROBLEM 3.8 (Continued)
(c) Service Revenue, Salaries and Wages Expense, Depreciation Expense,
Rent Expense, Supplies Expense, Insurance Expense, Interest Expense,
Dividends.
PROBLEM 3.9
(a), (b), (d)
Cash
Prepaid Insurance
Salaries and Wages Expense
Bal.
15,000
Bal.
9,000
Adj.
3,500
Bal.
80,000
Close
83,600
5,500
Adj.
3,600
83,600
83,600
Common Stock
Bal.
Bal.
13,000
Bal.
82,000
Bal.
24,000
Close
24,000
Inc.
Depr. Expense
Bal.
1,100
Adj.
8,900
Bal.
Adj.
4,000
Close
19,000
Adj.
460
Cls.
Adj.
15,000
1,560
19,000
Land
Green Fees Revenue
Equipment
Bal.
350,000
Close
5,900
Bal.
5,900
Bal.
150,000
Buildings
Rent Revenue
Accum. Depr.—Equipment
Bal.
120,000
Close
19,200
Bal.
17,600
Bal.
70,000
Adj.
1,600
Adj.
15,000
19,200
19,200
85,000
Utilities Expenses
Adj.
Income Summary
Adj.
$1,600
Adj.
Close
Exp.
Inc.
PROBLEM 3.9 (Continued)
Salaries and Wages
Payable
Unearned Dues Revenue
Adj.
3,600
Adj.
8,900
(b)
Dec. 31 Depreciation Expense…………………………..
4,000
4,000
-2-
Dec. 31 Depreciation Expense…………………………..
-3-
Dec. 31 Insurance Expense …………………………………………………….
3,500
Prepaid Insurance ……………………………………………………
3,500
-4-
Dec. 31 Rent Receivable ……………………………………………………….
1,600
1,600
-5-
Dec. 31 Bad Debt Expense ……………………………………………………..
Allowance for Doubtful Accounts
-6-
Dec. 31 Salaries and Wages Expense …………………………..
3,600
Salaries and Wages Payable …………………………..
3,600
-7-
Dec. 31 Dues Revenue …………………………..…………………………..
8,900
Unearned Dues Revenue …………………………..
8,900
PROBLEM 3.9 (Continued)
(c) CRESTWOOD GOLF CLUB, INC.
Adjusted Trial Balance
December 31, XXXX
Dr.
Cr.
Cash ……………………………………………………………………
$ 15,000
Accounts Receivable ……………………………………………
13,000
Allowance for Doubtful Accounts ………………………….
$ 1,560
Rent Receivable …………………………………………………..
1,600
Land ……………………………………………………………………
350,000
Equipment ……………………………………………………….
150,000
Salaries and Wages Payable …………………………..
Unearned Dues Revenue ………………………………………
Retained Earnings ……………………………………………….
Dues Revenue ……………………………………………………..
Green Fees Revenue ……………………………………………
Rent Revenue …………………………..………………………….
Utilities Expenses ………………………………………………..
Salaries and Wages Expense …………………………..
83,600
Maintenance and Repairs Expense ……………………….
Bad Debt Expense ……………………………………………….
Depreciation Expense ($15,000 + $4,000) ………………
19,000
Insurance Expense ………………………………………………
PROBLEM 3.9 (Continued)
(d)
-Dec. 31-
Dues Revenue …………………………..…………………………..
191,100
Green Fees Revenue ……………………………………………………….
Rent Revenue ……………………………………………………….
Income Summary ……………………………………………………….
–31–
Income Summary ……………………………………………………….
184,560b
Utilities Expenses ……………………………………………………….
54,000
Bad Debt Expense ……………………………………………………….
460
Salaries and Wages Expense …………………………..
Maintenance and Repairs Expense …………………………..
24,000
Depreciation Expense ……………………………………………………….
19,000
Insurance Expense ……………………………………………………….
–31–
Retained Earnings ……………………………………………………….
31,640