Wild and Shaw Financial and Managerial Accounting 9e Solutions Manual: Chapter 3
Problem 3-8AB (90 minutes) Part 1
ACE CONSTRUCTION CO.
Work Sheet
For Year Ended June 30
Unadjusted
Trial Balance
Adjustments
Adjusted
Trial Balance
Income
Statement
Balance Sheet
No.
Account Title
Cr.
Dr.
Cr.
Dr.
Cr.
Dr.
Dr.
Cr.
101
Cash …………………………………………..
18,500
18,500
126
Supplies …………………………………….
(a)
6,600
3,300
3,300
128
Prepaid insurance …………………….
(b)
3,800
3,400
3,400
167
Equipment …………………………..
132,000
132,000
201
Accounts payable ……………………..
6,800
(d)
7,450
203
Interest payable …………………………
0
(h)
208
Rent payable …………………………..
0
210
Wages payable ………………………….
0
(e)
1,800
1,800
213
Property taxes payable …………….
0
(g)
1,000
1,000
307
Common stock ………………………….
318
Retained earnings …………………….
78,660
78,660
78,660
319
Dividends …………………………..
33,000
33,000
403
Construction revenue ……………….
132,100
132,100
132,100
612
Depreciation expense—
Equipment …………………………..
(c)
8,400
8,400
8,400
623
Wages expense …………………………
(e)
1,800
48,660
48,660
633
Interest expense ………………………..
3,000
3,000
637
Insurance expense ……………………
(b)
3,800
3,800
3,800
Rent expense …………………………..
12,500
12,500
652
Supplies expense ……………………..
6,600
6,600
6,600
683
Property taxes expense ……………
(g)
1,000
8,800
8,800
684
Repairs expense ……………………….
2,910
2,910
690
Utilities expense ………………………..
(d)
6,540
6,540
(h)
Wild and Shaw Financial and Managerial Accounting 9e Solutions Manual: Chapter 3
Problem 3-8AB (Continued)
Part 2 Adjusting entries (all dated June 30)
Instructor note: Entries are shown without an account reference column because no posting is required.
(a) Supplies Expense ………………………………………. 6,600
Supplies ……………………………………………… 6,600
Record consumption of supplies.
(e) Wages Expense …………………………………………. 1,800
Wages Payable ……………………………………. 1,800
Record accrued wages.
Wild and Shaw Financial and Managerial Accounting 9e Solutions Manual: Chapter 3
Problem 3-8AB (Continued)
Closing entries (all dated June 30)
Instructor note: Entries are shown without an account reference column because no posting is required.
(1) Construction Revenue …………………………... 132,100
(2) Income Summary ………………………………….. 101,210
Depreciation Expense–Equipment …… 8,400
Wages Expense………………………………. 48,660
(3) Income Summary ………………………………….. 30,890
Retained Earnings ………………………….. 30,890
Problem 3-8AB (Continued)
Part 3
ACE CONSTRUCTION CO.
Income Statement
For Year Ended June 30
Construction revenue …………………………………. $132,100
Expenses
Depreciation expense—Equipment …………… $ 8,400
Wages expense ………………………………………… 48,660
ACE CONSTRUCTION CO.
Statement of Retained Earnings
For Year Ended June 30
Retained earnings, June 30 prior year …………. $ 78,660
Add: Net income ………………………………………. 30,890
109,550
Wild and Shaw Financial and Managerial Accounting 9e Solutions Manual: Chapter 3
Problem 3-8AB (Concluded)
ACE CONSTRUCTION CO.
Balance Sheet
June 30
Assets
Current assets
Cash …………………………………………………………….. $ 18,500
Liabilities
Current liabilities
Accounts payable …………………………………………. $ 7,450
Interest payable ……………………………………………. 250
Total liabilities ………………………………………………… 36,000
Equity
Common stock ……………………………………………….. 10,000
Wild and Shaw Financial and Managerial Accounting 9e Solutions Manual: Chapter 3
Problem 3-9A (30 minutes)
Part 1
KARISE REPAIRS
Income Statement
For Year Ended December 31
Services revenue …………………………………. $90,950
Expenses
Wild and Shaw Financial and Managerial Accounting 9e Solutions Manual: Chapter 3
Problem 3-9A (Continued)
KARISE REPAIRS
Statement of Retained Earnings
For Year Ended December 31
Retained earnings, Dec. 31 prior year …………. $23,000
KARISE REPAIRS
Balance Sheet
December 31
Assets
Current assets
Cash …………………………………………………….. $14,000
Liabilities
Current liabilities
Accounts payable …………………………………. $14,000
Wages payable …………………………………….. 600
Total current liabilities ………………………….. 14,600
Equity
Wild and Shaw Financial and Managerial Accounting 9e Solutions Manual: Chapter 3
Problem 3-9A (Concluded)
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 …………………………………….. 90,950
(2) Income Summary …………………………………….. 60,200
Depreciation Expense—Equipment ……. 5,000
(3) Income Summary …………………………………….. 30,750
(4) Retained Earnings ……………………………………. 16,000
Wild and Shaw Financial and Managerial Accounting 9e Solutions Manual: Chapter 3
Problem 3-10AA (40 minutes)
Part 1
Assume prepaid expenses are recorded as assets and unearned revenues as liabilities.
Nov. 1 Prepaid Advertising ………………………………… 1,800
Cash …………………………………………………. 1,800
Paid for future advertising.
Dec. 1 Prepaid Consulting ………………………………….. 3,000
Cash …………………………………………………. 3,000
Paid for future consulting.
15 Cash …………………………..……………………………. 7,950
Unearned Revenue ……………………………. 7,950
Received cash in advance.
Wild and Shaw Financial and Managerial Accounting 9e Solutions Manual: Chapter 3
Problem 3-10AA (Continued)
Part 2
Assume prepaid expenses are recorded as expenses and unearned revenues as revenues.
Nov. 1 Advertising Expense ………………………………… 1,800
Cash …………………………………………………. 1,800
Paid for future advertising.
Dec. 1 Consulting Expense …………………………………. 3,000
Cash …………………………………………………. 3,000
Paid for future consulting.
15 Cash ………………………………………………………… 7,950
Services Revenue ……………………………… 7,950
Received cash in advance.
Problem 3-11AC (40 minutes)
Part 1
HAWKEYE RANGES
Work Sheet
For Year Ended December 31
Unadjusted
Trial Balance
Adjustments
Adjusted
Trial Balance
Account Title
Dr.
Cr.
Dr.
Cr.
Dr.
Cr.
Cash …………………………..
14,000
14,000
Accounts receivable …..
0
(e)
9,300
9,300
Supplies ……………………..
6,500
3,500
3,000
Equipment ………………….
Interest payable ………….
0
1,875
1,875
Salaries payable …………
0
1,200
1,200
Unearned revenue ………
15,000
(d)
9,200
5,800
Notes payable …………….
75,000
75,000
Common stock …………..
20,000
20,000
Retained earnings ………
30,250
30,250
Dividends ……………………
9,300
Salaries expense ………..
1,200
Interest expense …………
5,625
1,875
7,500
Wild and Shaw Financial and Managerial Accounting 9e Solutions Manual: Chapter 3
Problem 3-11AC (Continued)
Part 2 (all adjusting entries dated December 31)
Instructor note: Entries are shown without an account reference column because no posting is required.
(a) Salaries Expense …………………………………… 1,200
Salaries Payable……………………………… 1,200
(e) Accounts Receivable …………………………….. 9,300
Services Revenue …………………………... 9,300
Record accrued revenue.
(f) Depreciation Expense—Equipment………… 15,000
Accumulated Depreciation—Equipment .. 15,000
Record depreciation.
Part 3 (all reversing entries dated January 1)
(a) Salaries Payable ……………………………………. 1,200
Salaries Expense ……………………………. 1,200
Wild and Shaw Financial and Managerial Accounting 9e Solutions Manual: Chapter 3
Problem 3-11AC (Concluded)
Part 4
Instructor note: Entries are shown without an account reference column because no posting is required.
Jan. 4 Salaries Expense ………………………………….. 1,500
Cash ………………………………………………. 1,500
Record payroll payment.
Wild and Shaw Financial and Managerial Accounting 9e Solutions Manual: Chapter 3
PROBLEM SET B
Problem 3-1B (15 minutes)
1. H 5. B 9. I
Problem 3-2B (30 minutes)
Part 1
Adjustment (a)
Oct. 31 Office Supplies Expense ………………………………… 4,370
Office Supplies ………………………………………… 4,370
Record cost of supplies used
($600 + $4,570 – $800).
Problem 3-2B (Concluded)
Adjustment (d)
Oct. 31 Depreciation Expense—Building …………………….. 5,400
Accumulated Depreciation—Building ………. 5,400
Record annual depreciation
[($175,000 – $40,000) / 25 years = $5,400].
Part 2
Cash Payment for (c)
Nov. 7 Salaries Payable …………………………………………….. 1,000
Wild and Shaw Financial and Managerial Accounting 9e Solutions Manual: Chapter 3
Problem 3-3B (90 minutes)
Parts 1 and 2
Cash
Accounts Payable
Bal.
60,000
Bal.
11,200
Accounts Receivable
Salaries Payable
Unadj. Bal.
0
Unadj. Bal.
0
(f)
5,750
(g)
450
Adj. Bal.
5,750
Adj. Bal.
450
(b)
50,000
(e)
Adj. Bal.
20,000
0
Unadj. Bal.
19,000
Bal.
(a)
9,500
Adj. Bal.
9,500
Bal.
Unadj. Bal.
3,800
(h)
3,800
Adj. Bal.
0
Professional Library
Bal.
12,000
Accumulated Depreciation—
Professional Library
Unadj. Bal.
2,500
(d)
2,400
Adj. Bal.
4,900
Bal.
40,000
Accumulated Depreciation—
Unadj. Bal.
20,000
(c)
5,000
25,000
Wild and Shaw Financial and Managerial Accounting 9e Solutions Manual: Chapter 3
Problem 3-3B (Continued)
Parts 1 and 2
Tuition Revenue
Advertising Expense
Bal.
Bal.
(e)
Depreciation Expense—
Professional Library
Unadj. Bal.
0
(d)
2,400
Adj. Bal.
2,400
Depreciation Expense—
Unadj. Bal.
0
(c)
5,000
Adj. Bal.
5,000
Unadj. Bal.
(g)
Adj. Bal.
Insurance Expense
Unadj. Bal.
0
(a)
9,500
Adj. Bal.
9,500
Unadj. Bal.
(h)
3,800
Adj. Bal.
Unadj. Bal.
0
(b)
Adj. Bal.
Wild and Shaw Financial and Managerial Accounting 9e Solutions Manual: Chapter 3
Problem 3-3B (Continued)
Part 2
Adjustment (a)
Dec. 31 Insurance Expense ………………………………………… 9,500
Prepaid Insurance …………………………………… 9,500
Record the insurance expired.
Adjustment (b)
Adjustment (d)
31 Depreciation Expense—Professional Library …. 2,400
Accumulated Depreciation—Professional
Library ………………………………………………… 2,400
Record professional library depreciation.
Adjustment (e)
Adjustment (g)
31 Salaries Expense …………………………………………… 450
Salaries Payable……………………………………… 450
Accrue salaries expense (3 days x $150).
Wild and Shaw Financial and Managerial Accounting 9e Solutions Manual: Chapter 3
Problem 3-3B (Continued)
Part 3
ALONZO INSTITUTE
Adjusted Trial Balance
December 31
Debit
Credit
Cash …………………………..…………………………………………………..
$ 60,000
Accounts receivable ………………………………………………………
5,750
Teaching supplies ………………………………………………………….
20,000
12,000
Accumulated depreciation—Professional library …………
Accumulated depreciation—Equipment ……………………….
25,000
Accounts payable ………………………………………………………….
11,200
Unearned revenue ………………………………………………………….
0
Common stock ………………………………………………………………
11,000
Retained earnings ………………………………………………………….
60,500
Dividends …………………………..…………………………………………..
20,000
Tuition revenue ………………………………………………………………
134,950
Training revenue ……………………………………………………………
96,600
Depreciation expense—Professional library …………………
2,400
Depreciation expense—Equipment ………………………………
5,000
9,500
Rent expense …………………………………………………………………
33,400
Teaching supplies expense …………………………………………..
50,000
Advertising expense ………………………………………………………
Utilities expense …………………………..………………………………..
Wild and Shaw Financial and Managerial Accounting 9e Solutions Manual: Chapter 3
Problem 3-3B (Continued)
Part 4
ALONZO INSTITUTE
Income Statement
For Year Ended December 31
Revenues
Tuition revenue …………………………………………………. $134,950
Training revenue ………………………………………………. 96,600
ALONZO INSTITUTE
Statement of Retained Earnings
For Year Ended December 31
Retained earnings, Dec. 31 prior year end …….. $ 60,500
Add: Net income …………………………………………… 54,200
114,700