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Chapter 3 - The Accounting Cycle: End of the Period
Problem 3-7A (continued)
Requirement 5
December 31,
2021
Debit
Credit
Service Revenue
45,500
Interest Revenue
800
Chapter 3 - The Accounting Cycle: End of the Period
3-62 Financial Accounting, 5e
Problem 3-7A (concluded)
Requirement 6 (closing entries posted in red)
Retained Earnings
Service Revenue
Interest Revenue
19,700
42,200
Supplies Expense
Utilities Expense
0
1,300
1,300
2,400
200
2,600
0
0
Requirement 7
Crimson Tide Music Academy
Post-Closing Trial Balance
December 31, 2021
Accounts
Debit
Credit
Cash
$ 10,300
Accounts Receivable
9,500
Interest Receivable
800
Chapter 3 - The Accounting Cycle: End of the Period
Problem 3-8A (LO 3-3, 3-4, 3-5, 3-6, 3-7)
Requirement 1
Cash
Accounts Receivable
Supplies
20,000
8,000
4,000
20,000
8,000
4,000
Equipment
Accumulated Depr.
Salaries Payable
15,000
5,000
7,500
3-64 Financial Accounting, 5e
Problem 3-8A (continued)
Requirement 2
(1) March 12
Debit
Credit
Accounts Receivable
21,000
Cash
39,000
Service Revenue
60,000
(Service revenue on account and for cash)
(2) May 2
Debit
Credit
Salaries Payable
7,500
Cash
7,500
(Pay for past salaries)
(5) September 25
Debit
Credit
Repairs and Maintenance Expense
13,000
Chapter 3 - The Accounting Cycle: End of the Period
Problem 3-8A (continued)
Requirement 3 (entries posted in red)
Cash
Accounts Receivable
Supplies
20,000
7,500
8,000
4,000
Common Stock
Retained Earnings
Service Revenue
25,000
6,000
9,500
0
60,000
31,000
9,500
60,000
Problem 3-8A (continued)
Requirement 4
Red Storm Cleaners
Unadjusted Trial Balance
December 31, 2021
Accounts
Debit
Credit
Cash
$ 53,400
Accounts Receivable
11,000
Supplies
4,000
Equipment
23,000
Requirement 5
December 31
Debit
Credit
Salaries Expense
19,600
Salaries Payable
19,600
(Record salaries owed at December 31)
Chapter 3 - The Accounting Cycle: End of the Period
Problem 3-8A (continued)
Requirement 6 (adjusted entries posted in red)
Cash
Accounts Receivable
Supplies
20,000
39,000
7,500
13,000
8,000
21,000
18,000
4,000
2,800
Common Stock
Retained Earnings
Service Revenue
25,000
6,000
9,500
0
60,000
31,000
9,500
60,000
Dividends
Salaries Expense
R&M Expense
0
0
0
Chapter 3 - The Accounting Cycle: End of the Period
3-68 Financial Accounting, 5e
Problem 3-8A (continued)
Requirement 7
Red Storm Cleaners
Adjusted Trial Balance
December 31, 2021
Accounts
Debit
Credit
Cash
$ 53,400
Accounts Receivable
11,000
Supplies
1,200
Chapter 3 - The Accounting Cycle: End of the Period
Problem 3-8A (continued)
Requirement 8
Red Storm Cleaners
Income Statement
For the year ended December 31, 2021
Service revenue
$60,000
Expenses:
Red Storm Cleaners
Balance Sheet
December 31, 2021
Assets
Liabilities
Current assets
Current liabilities.
Cash
$53,400
Salaries payable
$19,600
Accounts receivable
11,000
Problem 3-8A (continued)
Requirement 9
December 31
Debit
Credit
Service Revenue
60,000
Retained Earnings
60,000
(Close revenue accounts)
Chapter 3 - The Accounting Cycle: End of the Period
Problem 3-8A (continued)
Requirement 10 (closing entries posted in red)
Cash
Accounts Receivable
Supplies
20,000
7,500
8,000
4,000
Common Stock
Retained Earnings
Service Revenue
25,000
6,000
40,400
1,100
9,500
60,000
60,000
0
60,000
31,000
28,000
0
Dividends
Salaries Expense
R&M Expense
Chapter 3 - The Accounting Cycle: End of the Period
3-72 Financial Accounting, 5e
Problem 3-8A (concluded)
Requirement 11
Red Storm Cleaners
Post-Closing Trial Balance
December 31, 2021
Accounts
Debit
Credit
Cash
$53,400
Chapter 3 - The Accounting Cycle: End of the Period
Problem 3-9A (LO 3-3, 3-4, 3-5, 3-6, 3-7)
Requirement 1
Cash
Accounts Receivable
Prepaid Insurance
24,600
15,400
12,000
24,600
15,400
12,000
Chapter 3 - The Accounting Cycle: End of the Period
3-74 Financial Accounting, 5e
Problem 3-9A (continued)
Requirement 2
(1) January 9
Debit
Credit
Cash
134,100
Accounts Receivable
52,200
Service Revenue
186,300
(Provide services for cash and on account)
(2) February 12
Debit
Credit
Cash
51,500
Accounts Receivable
51,500
(Pay property taxes)
(6) September 10
Debit
Credit
Accounts Payable
11,400
Cash
11,400
(Pay on account)
(7) October 31
Debit
Credit
Salaries Expense
123,600
Cash
123,600
Chapter 3 - The Accounting Cycle: End of the Period
Problem 3-9A (continued)
Requirement 3 (entries posted in red)
Cash
Accounts Receivable
Prepaid Insurance
24,600
134,100
8,500
15,400
52,200
51,500
12,000
Deferred Revenue
Common Stock
Retained Earnings
5,800
12,900
143,000
27,000
44,500
18,700
170,000
44,500
Chapter 3 - The Accounting Cycle: End of the Period
Problem 3-9A (continued)
Requirement 4
Zips Storage
Unadjusted Trial Balance
December 31, 2021
Accounts
Debit
Credit
Cash
$103,800
Accounts Receivable
16,100
Requirement 5
December 31
Debit
Credit
Insurance Expense
7,000
Prepaid Insurance
7,000
(Reduce prepaid insurance due to passage of time)
Supplies Expense
6,300
Problem 3-9A (continued)
Requirement 6 (adjusted entries posted in red)
Cash
Accounts Receivable
Prepaid Insurance
24,600
134,100
8,500
15,400
52,200
51,500
12,000
7,000
Supplies
Land
Accounts Payable
0
9,200
6,300
148,000
11,400
6,700
9,200
2,900
148,000
4,500
Chapter 3 - The Accounting Cycle: End of the Period
3-78 Financial Accounting, 5e
Problem 3-9A (continued)
Requirement 7
Zips Storage
Adjusted Trial Balance
December 31, 2021
Accounts
Debit
Credit
Cash
$103,800
Accounts Receivable
16,100
Prepaid Insurance
5,000
Supplies
2,900
Land
148,000
Chapter 3 - The Accounting Cycle: End of the Period
Problem 3-9A (continued)
Requirement 8
Zips Storage
Income Statement
For the year ended December 31, 2021
Service revenue
$198,100
Expenses:
Zips Storage
Balance Sheet
December 31, 2021
Assets
Liabilities
Current assets:
Current liabilities:
Cash
$103,800
Accounts Payable
$ 4,500
Accounts receivable
16,100
Deferred Revenue
6,900
Chapter 3 - The Accounting Cycle: End of the Period
Problem 3-9A (continued)
Requirement 9
December 31
Debit
Credit
Service Revenue
198,100
Retained Earnings
198,100
(Close revenue accounts)
Retained Earnings
145,400
Property Tax Expense
8,500
