Financial Accounting, 10/e 3-41
P3–6.
Req. 1 (in millions, except par value)
Debit
Credit
(a)
Cash (+A)
1,390
Receivables (+A)
24,704
Delivery service revenue (+R, +SE)
26,094
(b)
Property and equipment (+A)
3,434
Long-term notes payable (+L)
(c)
Rent expense (+E, –SE)
3,136
Prepaid expenses (+A)
4,728
Cash (–A)
(d)
Repairs expense (+E, –SE)
864
Cash (–A)
864
(e)
Cash (+A)
24,285
Receivables (–A)
24,285
(f)
Long-term notes payable (-L)
150
Cash (–A)
150
(g)
Cash (+A)
16
Common stock (+SE) [20 x $0.10 par value]
2
Additional paid-in capital (+SE) [difference]
14
(h)
Wages expense (+E, –SE)
9,276
Cash (–A)
(i)
Spare parts, supplies, and fuel (+A)
6,564
Cash (–A)
(j)
Spare parts, supplies, and fuel expense (+E, –SE)
6,450
(k)
Accounts payable (–L)
784
Cash (–A)
784
(l)
No entry required.
P3–6. (continued)
Req. 2 (in millions)
Cash
Receivables
Spare Parts, Supplies,
and Fuel
6,564 (i)
784 (k)
1,968
508
Prepaid Expenses
Other Current Assets
Property and
Equipment (net)
Beg. 108
(c) 4,728
Beg. 879
Beg. 13,894
(b) 3,434
4,836
879
17,328
Other Noncurrent
Assets
Accounts
Payable
Accrued Expenses
Payable
(k) 784
1,257 Beg.
2,070 Beg.
2,070
Other Current
Liabilities
Long-Term
Notes Payable
Other Noncurrent
Liabilities
1,939 Beg.
(f) 150
1,490 Beg.
3,434 (b)
3,290 Beg.
1,939
4,774
3,290
Common
Stock
Additional Paid-in
Capital
Retained
Earnings
1 Beg.
2 (g)
607 Beg.
14 (g)
9,606 Beg.
621
9,606
Expense
864
Financial Accounting, 10/e 3-43
P3–6. (continued)
Req. 3
FedEx
Income Statement (unadjusted)
For the Year Ended May 31 (current year)
(in millions)
Revenues:
Delivery service revenue
Expenses:
$ 26,094
Req. 4
Net Profit Margin Ratio
=
Net Income
=
$6,368
=
0.24 or 24%
Net Sales (or Operating)
Revenues
$26,094
The net profit margin ratio suggests that the company obtained $0.24 in net income for
P3–7.
Req. 1
(in thousands)
a.
Cash (+A). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
596,042
Admissions revenue (+R, +SE). . . . . . . . . . . . . . . .
596,042
Wages expense (+E, −SE). . . . . . . . . . . . . . . . . . . . . .
31,786
Long-term notes payable (−L). . . . . . . . . . . . . . . . . . . . .
Cash (−A). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
d.
Cash (+A). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
365,693
Sales revenue (+R, + SE). . . . . . . . . . . . . . . . . . . . .
365,693
Cost of goods sold (+E, −SE). . . . . . . . . . . . . . . . . . . . . .
92,057
Inventory (−A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
92,057
e.
Equipment (+A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
90,190
Cash (−A). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
90,190
f.
Cash (+A). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accounts receivable (+A). . . . . . . . . . . . . . . . . . . . . . . .
81,855
1,139
Accommodations revenue (+R, +SE) . . . . . . . . . . .
82,994
Interest expense (+E, −SE). . . . . . . . . . . . . . . . . . . . . . .
Cash (−A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
h.
28,100
11,600
Cash (−A). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
11,600
P3–7. (continued)
Req. 2
Transaction
Operating, Investing, or
Financing Cash Flows
Direction and Amount
of the Effect (in thousands)
(a)
O
+596,042
(b)
O
–401,630
(c)
(d)
O
(e)
O
+81,855
(g)
O
–153,326
(h)
O
–119,431
O
–134,044
O
ALTERNATE PROBLEMS
AP3-1.
Transactions
Debit
Credit
a.
Example: Issued stock to new investors.
1
11, 12
b.
Incurred and recorded operating expenses on credit to
be paid next period.
15
7
e.
Prepaid a fire insurance policy this period to cover the
next 12 months.
cash down payment and signing a mortgage loan for the
5
g.
Collected cash this year for services rendered and
recorded in the prior year.
1
2
h.
Collected cash for services rendered this period.
1
14
i.
Paid cash this period for wages earned and recorded
last period.
9
1
j.
Paid cash for operating expenses charged on accounts
payable in the prior period.
7
1
Paid cash for operating expenses incurred in the current
15
1
l.
Made a payment on the mortgage loan, which was part
principal repayment and part interest.
1
to another person for an amount above the original
issuance price.
n.
Used supplies on hand to clean the offices.
15
3
o.
Recorded income taxes for this period to be paid at the
beginning of the next period.
16
10
p.
Declared and paid a cash dividend this period.
13
1
Financial Accounting, 10/e 3-47
AP3–2.
a.
Accounts receivable (+A) …………………………………………….
23,500
Service revenue (+R, +SE) ………………………………….
23,500
b.
Accounts payable (−L) …………………………………………………
3,005
Cash (−A) …………………………………………………………
3,005
c.
Supplies (+A) ……………………………………………………………..
Accounts payable (+L) ………………………………………..
d.
Equipment (+A) ………………………………………………………….
Cash (−A) …………………………………………………………
Advertising expense (+E, −SE) ……………………………………..
1,400
Cash (−A) …………………………………………………………
1,400
f.
Wages expense (+E, −SE) …………………………………………..
Wages payable (−L) ……………………………………………………
8,100
3,800
Cash (−A) …………………………………………………………
11,900
g.
Cash (+A) ………………………………………………………………….
135,000
Common stock (+SE) …………………………………………
Additional paid-in capital (+SE) …………………………...
1,500
133,500
h.
Cash (+A) ………………………………………………………………….
Accounts receivable (−A) …………………………………….
Accounts receivable (+A) …………………………………………….
Service revenue (+R, +SE) ………………………………….
Land (+A) ………………………………………………………………….
7,000
k.
Utilities expense (+E, −SE) …………………………………………..
Accounts payable (+L) ………………………………………..
AP3–3.
Req. 1
Req. 2
Balance Sheet
Income Statement
Stmt of
Cash Flows
Assets
Liabilities
Stockholders’
Equity
Revenues
Expenses
Net
Income
a.
–
+
–
NE
+
–
O
b.
–
NE
–
NE
+
–
O
e.
NE
NE
NE
NE
O
–
NE
–
NE
+
–
g.
–
–
NE
NE
NE
NE
F
h.
+
NE
+
+
NE
+
O
–
–
NE
NE
NE
O
k.
+
NE
+
NE
NE
F
–
NE
–
NE
+
–
O
Financial Accounting, 10/e 3-49
AP3–4.
Req. 1 and 2
Cash
Accounts Receivable
Supplies
6,000 (j)
3,600 (k)
500 (m)
Beg. 0
Beg. 0
(a) 90,000
Beg. 0
(a)100,000
Beg. 0
(a) 60,000
31,000 (b)
1,240 (g)
Beg. 0
(c) 35,260
10,000 (i)
Beg. 0
(a) 12,000
Accounts Payable
Unearned Revenue
Long-Term
Note Payable
(h) 2,700
0 Beg.
3,810 (f)
1,800 (l)
0 Beg.
2,400 (e)
0 Beg.
31,000 (b)
2,910
2,400
31,000
0 Beg.
150 (a)
0 Beg.
150
Service Revenue
35,260
13,200
0 Beg.
Common
Additional Paid-in
Utilities Expense
Wages Expense
(g) 1,240
Beg. 0
Beg. 0
Retained
AP3–4. (continued)
Req. 3
ALPINE STABLES, INC.
Income Statement (unadjusted)
For the Month Ended April 30, 2020
Revenues:
Animal care service revenue
$ 35,260
Req. 4
Date: (today’s date)
To: Shareholders of Alpine Stables, Inc.
From: (your name)
After analyzing the effects of transactions for Alpine Stables, Inc., for April, the
company has realized a profit of $39,420. This is 81% of total revenues. However, this
Financial Accounting, 10/e 3-51
AP3–4. (continued)
Req. 5
Net
Income
÷
Net Sales (or
Operating) Revenue
=
Net Profit Margin
Ratio
2022
$50,000
$450,000
0.1111 or 11.11%
2020
AP3–5.
Transaction
Operating, Investing, or
Financing Cash Flows
Direction and Amount
of the Effect (in thousands)
(a)
F
+60,000
(b)
I
-31,000
(c)
NE
NE
(d)
O
+13,200
(e)
O
NE
NE
(g)
O
(h)
O
O
+10,000
O
(k)
O
NE
NE
F
AP3–6.
Req. 1 (in millions)
Debit
Credit
(a)
Property and equipment (+A)
1,610
Accounts payable (+L)
1,610
(b)
Cash (+A)
3,100
Accounts receivable (–A)
3,100
(c)
Utilities expense (+E, –SE)
Cash (–A)
(d)
Accounts receivable (+A)
Sales revenue (+R, +SE)
Cost of sales (+E, –SE)
5,984
Inventories (–A)
5,984
(e)
Wages expense (+E, –SE)
1,238
Cash (-A)
1,238
(f)
Income taxes payable (–L) [3/4 x $12,727]
9,545
Cash (–A)
9,545
(g)
Inventories (+A)
Accounts payable (+L)
(h)
Prepaid expenses (+A)
Cash (–A)
(i)
Other long-term debt (–L)
Interest expense (+E, –SE)
Cash (–A)
Cash (–A)
Financial Accounting, 10/e 3-53
AP3–6. (continued)
Req. 2 (in millions)
Cash
Short-Term Investments
Accounts Receivable
6 (j)
4,879
Beg. 12,664
3 (c)
Beg. 404
Beg. 38,642
Inventories
Prepaid Expenses
Other Current Assets
Beg. 11,665
(g) 23
5,984 (d)
Beg. 3,359
(h) 82
Beg. 6,229
5,704
3,441
6,229
Long-Term Investments
Property &
Equipment (net)
Other Assets and
Intangibles
Accounts
Payable
Income Taxes
Payable
Short-Term
Notes Payable
57,067 Beg.
1,610 (a)
23 (g)
(f) 9,545
12,727 Beg.
9,322 Beg.
58,700
3,182
9,322
7,711 Beg.
9,512 Beg.
7,711
83,471
9,512
Retained Earnings
Sales Revenue
Cost of Sales
151,232 Beg.
0 Beg.
Beg. 0
39,780 (d)
(d) 5,984
151,232
39,780
5,984
Wages Expense
AP3–6. (continued)
Req. 3
Exxon Mobil Corporation
Income Statement (unadjusted)
For the Month Ended January 31
(in millions)
Revenues:
Sales revenue
Expenses:
Cost of sales
$39,780
5,984
Req. 4
The net profit margin ratio suggests that the company had nearly $0.82 in net income
Net Income
=
$32,554
Net Sales (or Operating)
Revenue
$39,780
= 0.8184 or 81.84%
CONTINUING PROBLEM
CON3–1.
Req. 1
(a)
Advertising expense (+E, −SE) ……………………………………..
2,600
Cash (−A) ………………………………………………………..
2,600
Cash (+A) …………………………………………………………………..
Accounts receivable (+A) ……………………………………………..
Pool cleaning revenue (+R, +SE) …………………………
Accounts payable (−L) …………………………………………………
Cash (−A) ………………………………………………………..
Cash (+A) ………………………………………………………………….
Unearned revenue (+L) ………………………………………
(e)
Wages payable (−L) ……………………………………………………
1,500
Wages expense (+E, −SE ) ………………………………………….
3,000
Cash (−A) …………………………………………………………
4,500
(f)
Repairs expense (+E, −SE) ………………………………………….
310
Cash (−A) …………………………………………………………
310
Utilities expense (+E, −SE) …………………………………………..
220
Cash (−A) …………………………………………………………
220
Cash (+A) ………………………………………………………………….
Interest revenue (+R, +SE) …………………………………
Property tax expense (+E, −SE) ……………………………………
600
Property taxes payable (+L) ……………………………….
Prepaid expenses (+A) ………………………………………………..
Cash (−A) ………………………………………………………..
2,400
CON3–1. (continued)
Req. 2
Penny’s Pool Service & Supply, Inc.
Income Statement (unadjusted)
For the Quarter Ended September 30
Pool cleaning revenue
Operating expenses:
$19,200
Req. 3
Income before
Taxes
÷
Operating
Revenue
=
Net Profit Margin
Ratio
PPSS’s net profit margin ratio suggests that the company received approximately $0.65
for every dollar of revenue. The company appears to be very effective at generating
revenues and controlling expenses.
Financial Accounting, 10/e 3-57
COMPREHENSIVE PROBLEM (Chapters 1 – 3)
COMP3-1
Req. 1
Debit
Credit
a.
Cash (+A) [200 shares x $40 market per share]
8,000
Common stock (+SE) [200 shares x $0.05 par]
10
Additional paid-in capital (+SE) [difference]
7,990
b.
Cash (+A)
Long-term note payable (+L)
Prepaid expenses (+A)
1,800
d.
Equipment (+A)
Accounts payable (+L)
e.
No transaction (no exchange until the items are received)
f.
Short-term note receivable (+A)
1,000
Cash (−A)
1,000
g.
Supplies (+A)
2,600
Accounts payable (+L)
2,600
h.
Prepaid expenses (+A)
2,000
Insurance expense (+E, −SE)
Prepaid expenses (+A)
2,200
Cash (−A)
2,400
Short-term investments (+A)
Cash (−A)
Cash (+A)
Accounts receivable (+A)
COMP3–1. (continued)
Debit
Credit
l.
Wages expense (+E, −SE)
18,000
Cash (−A)
18,000
m.
Utilities expense (+E, −SE)
310
Utilities payable (+L)
310
Long-term note payable (−L)
Cash (−A)
Cash (+A)
Interest revenue (+R, +SE)
Training expense (+E, −SE)
Cash (−A)
Cash (+A)
Unearned revenue (+L)