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
0
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
Prepaid Rent
Land
Notes Receivable
Accounts Payable
Deferred Revenue
Utilities Payable
Common Stock
Retained Earnings
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
15,000
5,000
7,500
25,000
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
Cash
18,000
Accounts Receivable
18,000
(Collect on account)
(3) June 30
Debit
Credit
Cash
Common Stock
(Issue common stock)
(4) August 1
Debit
Credit
Salaries Payable
7,500
Cash
7,500
(Pay for past salaries)
(5) September 25
Debit
Credit
Repairs and Maintenance Expense
13,000
Cash
13,000
(Pay repairs and maintenance expenses)
(6) October 19
Debit
Credit
Equipment
(7) December 30
Debit
Credit
Dividends
Chapter 3 – The Accounting Cycle: End of the Period
Problem 3-8A (continued)
Requirement 3 (entries posted in red)
Cash
Accounts Receivable
Supplies
53,400
11,000
15,000
8,000
23,000
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
Salaries Expense
13,000
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
Salaries Payable
Common Stock
Retained Earnings
Dividends
Service Revenue
Salaries Expense
Repairs and Main. Expense
13,000
Depreciation Expense
Supplies Expense
Requirement 5
December 31
Debit
Credit
Salaries Expense
19,600
Salaries Payable
19,600
(Record salaries owed at December 31)
(Record depreciation expense for the year)
2,800
Supplies
Chapter 3 – The Accounting Cycle: End of the Period
Problem 3-8A (continued)
Requirement 6 (adjusted entries posted in red)
Cash
Accounts Receivable
Supplies
11,000
23,000
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
13,000
Depr. 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
Equipment
Salaries Payable
Common Stock
Retained Earnings
Dividends
Service Revenue
Salaries Expense
Repairs and Main. Expense
Depreciation Expense
Supplies expense
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:
Net income
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
Long-term assets:
Common stock
23,000
Retained earnings
Problem 3-8A (continued)
Requirement 9
December 31
Debit
Credit
Service Revenue
60,000
Retained Earnings
60,000
(Close revenue accounts)
Retained Earnings
(Close expense accounts)
(Close dividends account)
Chapter 3 – The Accounting Cycle: End of the Period
Problem 3-8A (continued)
Requirement 10 (closing entries posted in red)
Cash
Accounts Receivable
Supplies
11,000
23,000
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
0
0
0
Depr. Expense
5,000
0
0
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
Equipment
Accumulated Depreciation
$10,000
Common Stock
Retained Earnings
$88,600
$88,600
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
(Collect on account)
(3) April 25
Debit
Credit
Cash
12,900
Deferred Revenue
12,900
(Receive cash in advance from customers)
(4) May 6
Debit
Credit
Supplies
Accounts Payable
(Purchase supplies on account)
(5) July 15
Debit
Credit
Property Tax Expense
Cash
(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
(Pay salaries for the current year)
(8) November 20
Debit
Credit
Common Stock
(Issue shares of common stock)
(9) December 30
Debit
Credit
Dividends
Cash
2,800
(Pay dividends)
Chapter 3 – The Accounting Cycle: End of the Period
Problem 3-9A (continued)
Requirement 3 (entries posted in red)
Cash
Accounts Receivable
Prepaid Insurance
9,200
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
2,800
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
Prepaid Insurance
Supplies
Common Stock
Retained Earnings
Dividends
Service Revenue
Salaries Expense
Insurance Expense
Supplies Expense
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
Deferred Revenue
(Provide services to customers who paid in advance)
Problem 3-9A (continued)
Requirement 6 (adjusted entries posted in red)
Cash
Accounts Receivable
Prepaid Insurance
103,800
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
27,000
6,900
Salaries Expense
0
0
123,600
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
Deferred Revenue
Common Stock
Retained Earnings
Dividends
2,800
Service Revenue
Property Tax Expense
Salaries Expense
Insurance Expense
7,000
Supplies Expense
6,300
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:
Net income
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
Prepaid Insurance
Supplies
Common stock
Long-term assets:
Retained earnings
Land
Total assets
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
Insurance Expense
7,000
Supplies Expense
6,300
(Close expense accounts)
Dividends
(Close dividends account)