PROBLEM 4-2A
(a)
Date
Account Titles
Debit
Credit
1.
2017
June 30
Supplies Expense ………………………………..
Supplies ($2,000 – $720) ……………….
1,280
1,280
3.
30
Insurance Expense ………………………………
240
4.
30
Unearned Service Revenue ………………….
Service Revenue …………………………..
4,100
4,100
5.
30
Salaries and Wages Expense ……………….
Salaries and Wages Payable …………
1,250
1,250
6.
30
Depreciation Expense ………………………….
250
7.
30
Accounts Receivable …………………………..
Service Revenue …………………………..
3,900
3,900
(b)
Cash
6/30 Bal. 6,850
6/30 Bal. 720
Accounts Receivable
6/30 3,900
6/30 Bal. 2,640
6/30 Bal. 7,000
Supplies
6/30 Bal. 2,000
6/30 1,280
Prepaid Insurance
6/30 Bal. 2,880
6/30 240
PROBLEM 4-2A (Continued)
Equipment
6/30 Bal. 15,000
6/30 Bal. 5,250
Accumulated Depreciation—
Equipment
6/30 250
6/30 Bal. 250
Accounts Payable
6/30 Bal. 4,230
6/30 180
6/30 4,410
6/30 Bal. 250
Salaries and Wages Payable
6/30 1,250
6/30 Bal. 1,250
Unearned Service Revenue
6/30 4,100
6/30 Bal. 5,200
6/30 Bal. 1,100
6/30 Bal. 180
Common Stock
6/30 Bal. 22,000
Service Revenue
6/30 Bal. 16,300
6/30 Bal. 8,300
Salaries and Wages Expense
6/30 Bal. 4,000
Rent Expense
6/30 Bal. 2,000
Depreciation Expense
6/30 250
Insurance Expense
6/30 240
6/30 Bal. 240
Utilities Expense
6/30 180
Supplies Expense
6/30 1,280
6/30 Bal. 1,280
PROBLEM 4-2A (Continued)
(c) KUMAR CONSULTING
Adjusted Trial Balance
June 30, 2017
Debit
Credit
Cash ……………………………………………………………
Accounts Payable ………………………………………..
Salaries and Wages Payable …………………………
Unearned Service Revenue …………………………..
Depreciation Expense ………………………………….
Insurance Expense ………………………………………
Utilities Expense ………………………………………….
$ 6,850
250
240
180
4,410
1,250
1,100
(Total debits = Total credits)
PROBLEM 4-3A
(a) 1. May 31 Insurance Expense ……………………………. 450
Prepaid Insurance ………………………. 450
3. 31 Depreciation Expense
($3,600 X 1/12) ……………………………….. 300
4. 31 Interest Expense ……………………………….. 180
Interest Payable
[($36,000 X 6%) X 1/12] ……………. 180
(b)
Cash
5/31 Bal. 2,500
5/31 Bal. 2,600
5/31 1,550
5/31 Bal. 1,050
5/31 Bal. 1,350
Land
5/31 Bal. 15,000
Prepaid Insurance
5/31 Bal. 1,800
5/31 450
PROBLEM 4-3A (Continued)
Building
5/31 Bal. 70,000
Accumulated Depreciation—
Building
5/31 300
5/31 Bal. 300
5/31 Bal. 16,800
5/31 Bal. 9,000
5/31 Bal. 11,500
Accumulated Depreciation—
Equipment
5/31 250
5/31 Bal. 250
Accounts Payable
5/31 Bal. 4,700
Unearned Rent Revenue
5/31 2,500
5/31 Bal. 3,300
5/31 Bal. 800
5/31 900
5/31 Bal. 900
5/31 180
5/31 Bal. 180
Interest Expense
5/31 180
5/31 Bal. 180
5/31 450
5/31 Bal. 450
Mortgage Payable
5/31 Bal. 36,000
Common Stock
5/31 Bal. 60,000
Rent Revenue
Salaries and Wages Expense
5/31 Bal. 3,000
Utilities Expense
5/31 Bal. 800
Advertising Expense
5/31 Bal. 500
PROBLEM 4-3A (Continued)
Supplies Expense
5/31 1,550
5/31 Bal. 1,550
Depreciation Expense
5/31 300
5/31 250
5/31 Bal. 550
(c) MOTO HOTEL
Adjusted Trial Balance
May 31, 2017
Debit
Credit
Cash …………………………………………………………….
Supplies ………………………………………………………
Accumulated Depreciation—Building ……………
Equipment ……………………………………………………
Accumulated Depreciation—Equipment ………..
Accounts Payable ………………………………………..
Unearned Rent Revenue ……………………………….
Salaries and Wages Expense ………………………..
Utilities Expense …………………………………………..
Advertising Expense …………………………………….
Interest Expense …………………………………………..
$ 2,500
1,050
16,800
3,900
800
500
180
$ 300
250
4,700
800
PROBLEM 4-3A (Continued)
(d) MOTO HOTEL
Income Statement
For the Month Ended May 31, 2017
Revenues
Rent revenue …………………………………………… $11,500
Expenses
Salaries and wages expense …………………….. $3,900
Supplies expense …………………………………….. 1,550
MOTO HOTEL
Retained Earnings Statement
For the Month Ended May 31, 2017
Retained earnings, May 1 ………………………………… $ 0
PROBLEM 4-3A (Continued)
MOTO HOTEL
Balance Sheet
May 31, 2017
Assets
Current Assets
Cash …………………………………………… $ 2,500
Property, plant, and equipment
Land …………………………………………… 15,000
Building ………………………………………. $70,000
Liabilities and Stockholders’ Equity
Current Liabilities
Accounts payable …………………………………….. $ 4,700
Salaries and wages payable ……………………… 900
Stockholders’ equity
Common stock …………………………………………. 60,000
Retained earnings …………………………………….. 3,570
PROBLEM 4-3A (Continued)
(e) The following accounts would be closed:
PROBLEM 4-4A
(a) Sept. 30 Accounts Receivable ……………………………… 600
Service Revenue ……………………………… 600
30 Rent Expense ………………………………………… 900
Prepaid Rent …………………………………… 900
30 Supplies Expense…………………………………… 1,020
Supplies ………………………………………….. 1,020
(b) SALT CREEK GOLF INC.
Income Statement
For the Quarter Ended September 30, 2017
Revenues
Service revenue ……………………………………….. $14,700
Rent revenue ……………………………………………. 900
Total revenues ………………………………….. $15,600
Expenses
Salaries and wages expense …………………….. 9,400
Rent expense …………………………………………… 1,800
PROBLEM 4-4A (Continued)
SALT CREEK GOLF INC.
Retained Earnings Statement
For the Quarter Ended September 30, 2017
Retained earnings, July 1, 2017 ………………………………………… $ 0
Add: Net income …………………………………………………………….. 2,510
SALT CREEK GOLF INC.
Balance Sheet
September 30, 2017
Assets
Current Assets
Cash ………………………………………………………. $ 6,700
Accounts receivable ……………………………….. 1,000
Liabilities and Stockholders’ Equity
Current Liabilities
Notes payable …………………………………………. $ 5,000
Accounts payable …………………………………… 1,070
Unearned rent revenue ……………………………. 800
PROBLEM 4-4A (Continued)
(c) The following accounts would be closed: Service Revenue, Rent Revenue,
PROBLEM 4-5A
1. Dec. 31 Insurance Expense …………………………………. 8,000
Prepaid Insurance …………………………... 8,000
2. Dec. 31 Unearned Rent Revenue …………………………. 84,000
Rent Revenue ………………………………….. 84,000
3. Dec. 31 Interest Expense …………………………………….. 700
4. Dec. 31 Salaries and Wages Expense ………………….. 3,060
Salaries and Wages Payable ……………. 3,060
PROBLEM 4-6A
2. 30 Supplies Expense ……………………….. 6,400
Supplies ($8,200 – $1,800) ….. 6,400
3. 30 Insurance Expense
4. 30 Maintenance and
Repairs Expense ……………………… 4,450
5. 30 Salaries and Wages Expense
6. 30 Interest Expense
PROBLEM 4-6A (Continued)
(b) ROADSIDE TRAVEL COURT
Income Statement
For the Quarter Ended June 30, 2017
Revenues
Rent revenue ($212,000 – $57,000) ………………….. $155,000
Expenses
Salaries and wages expense
Supplies expense …………………………………………… 6,400
Advertising expense ($3,800 + $110) ………………. 3,910
Insurance expense …………………………………………. 3,600
PROBLEM 4-6A (Continued)
(c) The generally accepted accounting principles pertaining to the income
statement not recognized by Betty were the revenue recognition
principle and the expense recognition principle.
The revenue recognition principle states that revenue is recognized
when the performance obligation is satisfied. The cash payments of
$57,000 for summer rentals have not been earned and, therefore,
should not be reported as income for the quarter ended June 30.
PROBLEM 4-7A
(a), (c) & (e)
Cash
11/29 750
11/25 1,000
11/30 Bal. 3,840
11/30 Bal. 4,700
11/1 Bal. 2,790
11/8 1,220
Accounts Receivable
11/30 Bal. 2,010
11/30 Bal. 650
11/1 Bal. 2,910
11/10 1,800
Supplies
11/1 Bal. 1,120
11/17 1,300
11/30 1,320
11/30 Bal. 1,100
Equipment
11/15 3,600
11/30 Bal. 13,600
11/1 Bal. 500
11/30 250
11/30 Bal. 750
11/30 Bal. 10,000
11/1 Bal. 3,000
11/30 Bal. 3,000
11/1 Bal. 10,000
Accounts Payable
11/20 2,500
11/1 Bal. 2,300
Unearned
Service Revenue
11/30 500
11/1 Bal. 400
Salaries and Wages Payable
11/8 620
11/1 Bal. 620
11/30 480
11/30 Bal. 480
Common Stock
11/1 Bal. 10,000
PROBLEM 4-7A (Continued)
Service Revenue
11/30 Bal. 5,100
11/30 Bal. 2,080
11/12 3,700
11/27 900
Depreciation Expense
11/30 250
11/30 Bal. 250
11/30 1,320
11/30 Bal. 1,320
Salaries and Wages Expense
11/8 600
11/25 1,000
Rent Expense
11/22 480
11/30 Bal. 480
PROBLEM 4-7A (Continued)
(b)
General Journal
Date
Account Titles
Debit
Credit
Nov. 8
Salaries and Wages Payable ………………………
Salaries and Wages Expense …………………….
Cash ………………………………………………….
620
600
1,220
10
Cash …………………………………………………………
Accounts Receivable ………………………….
1,800
1,800
12
Cash …………………………………………………………
Service Revenue …………………………………
15
Equipment ………………………………………………..
Accounts Payable ………………………………
3,600
3,600
17
Supplies ……………………………………………………
Accounts Payable ………………………………
1,300
1,300
20
Accounts Payable ……………………………………..
Cash ………………………………………………….
2,500
2,500
22
Rent Expense ……………………………………………
480
25
Salaries and Wages Expense …………………….
1,000
27
Accounts Receivable …………………………………
900
29
Cash …………………………………………………………
750
PROBLEM 4-7A (Continued)
(d) & (f) SOHO EQUIPMENT REPAIR
Trial Balances
November 30, 2017
Before
Adjustment
After
Adjustment
Dr.
Cr.
Dr.
Cr.
Cash ………………………………………
Salaries and Wages Payable …..
Common Stock ………………………
Retained Earnings ………………….
Service Revenue …………………….
Depreciation Expense …………….
$ 3,840
10,000
3,000
4,600
$ 3,840
250
480
10,000
3,000
5,100