EXERCISE 4-11
1. Oct. 31 Supplies Expense …………………………………… 2,000
Supplies
($2,500 – $500) …………………………….. 2,000
EXERCISE 4-12
GARSKA CO.
Income Statement
For the Month Ended July 31, 2014
Revenues
Service revenue ($5,500 + $700) ………………………… $6,200
Expenses
Salaries and wages expense ($2,100 + $360) ……… $2,460
EXERCISE 4-13
Answer Computation
(a) Supplies balance = $1,350 Supplies expense $ 950)
Add: Supplies (1/31) 700)
Purchase date = May 1, 2013 Purchase date: On Jan. 31, there
are 3 months coverage remaining
(c) Salaries and wages
payable = $1,760 Cash paid $2,500
Salaries and wages
payable (1/31/14) 1,060
(d) Unearned service
revenue = $2,950 Service revenue $4,000
EXERCISE 4-14
Jan. 31 Service Revenue …………………………………………… 4,000
Income Summary …………………………………… 4,000
EXERCISE 4-15
(a) July 10 Supplies ………………………………………………… 200
Cash ……………………………………………….. 200
(b) July 31 Supplies Expense …………………………………… 750
Supplies ………………………………………….. 750
EXERCISE 4-16
Aug. 31 Accounts Receivable …………………………………….. 600
Service Revenue ……………………………………. 600
31 Depreciation Expense …………………………………… 1,200
Accumulated Depreciation—Equipment ….. 1,200
EXERCISE 4-17
BERE COMPANY
Income Statement
For the Year Ended August 31, 2014
Revenues
Service revenue …………………………………………….. $34,600
Rent revenue ………………………………………………… 13,100
Total revenues ……………………………………….. $47,700
EXERCISE 4-17 (Continued)
BERE COMPANY
Retained Earnings Statement
For the Year Ended August 31, 2014
Retained earnings, September 1, 2013 ……………………………………. $ 5,500
Add: Net income ………………………………………………………………….. 14,100
BERE COMPANY
Balance Sheet
August 31, 2014
Assets
Current Assets
Cash ………………………………………………………………. $10,900
Accounts receivable ……………………………………….. 9,400
Liabilities and Stockholders’ Equity
Current Liabilities
Accounts payable …………………………………………… $ 5,800
EXERCISE 4-18
Aug. 31 Service Revenue ………………………………………. 34,600
Rent Revenue …………………………………………… 13,100
Income Summary ………………………………. 47,700
31 Income Summary ……………………………………… 33,600
Salaries and Wages Expense ……………… 18,100
31 Income Summary ……………………………………… 14,100
Retained Earnings ……………………………… 14,100
SOLUTIONS TO PROBLEMS
PROBLEM 4-1A
(a)
1. Cash ……………………………………………………………. 19,000
Accounts Receivable ………………………………. 19,000
2. Unearned Sales Revenue ……………………………… 23,000
Sales Revenue ………………………………………… 23,000
(b) Cash received with respect to fees and dues
1. Collection of 2013 dues $ 19,000
Cash
1. 19,000
Accounts Receivable
2013 Bal. 19,000
4. 151,000 1. 19,000
Service Revenue
4. 151,000
2. 23,000
3. 24,000
2014 Bal. 47,000
PROBLEM 4-2A
(a)
Date Account Titles Debit Credit
1.
2014
June 30
Supplies Expense ………………………………
Supplies ($2,000 – $720) ………………
1,280
1,280
5. 30 Salaries and Wages Expense ……………..
Salaries and Wages Payable ………..
1,250
1,250
6. 30 Depreciation Expense ………………………..
Accumulated Depreciation—
Equipment ……………………………….
250
250
(b)
Cash
6/30 Bal. 6,850
Supplies
6/30 Bal. 2,000 6/30 1,280
6/30 Bal. 720
PROBLEM 4-2A (Continued)
Equipment
6/30 Bal. 15,000
Accumulated Depreciation
—
Equipment
Accounts Payable
6/30 Bal. 4,230
Salaries and Wages Payable
Unearned Service Revenue
Common Stock
Service Revenue
6/30 Bal. 8,300
Salaries and Wages Expense
6/30 Bal. 4,000
Depreciation Expense
6/30 250
Insurance Expense
6/30 240
Utilities Expense
6/30 180
Supplies Expense
6/30 1,280
PROBLEM 4-2A (Continued)
(c) LUMAS CONSULTING
Adjusted Trial Balance
June 30, 2014
Debit Credit
Cash …………………………………………………………….
Accounts Receivable ……………………………………
Salaries and Wages Payable …………………………
Unearned Service Revenue …………………………..
Depreciation Expense …………………………………..
Insurance Expense ……………………………………….
$6,850
10,900
250
240
1,250
1,100
PROBLEM 4-3A
(a) 1. May 31 Insurance Expense ……………………………. 450
Prepaid Insurance ………………………. 450
2. 31 Supplies Expense ……………………………… 1,550
Supplies ($2,600 – $1,050) ………….. 1,550
3. 31 Depreciation Expense
31 Depreciation Expense
($3,000 X 1/12) ……………………………….. 250
4. 31 Interest Expense ……………………………….. 180
6. 31 Salaries and Wages Expense …………….. 900
Salaries and Wages Payable ………. 900
(b)
Cash
5/31 Bal. 2,500
Prepaid Insurance
5/31 Bal. 1,800 5/31 450
PROBLEM 4-3A (Continued)
Building
5/31 Bal. 70,000
Accumulated Depreciation—
Building
Accumulated Depreciation—
Equipment
Accounts Payable
5/31 Bal. 4,700
Unearned Rent Revenue
Salaries and Wages Payable
Interest Payable
5/31 180
Mortgage Payable
5/31 Bal. 36,000
Common Stock
Rent Revenue
5/31 Bal. 9,000
Salaries and Wages Expense
5/31 Bal. 3,000
Utilities Expense
5/31 Bal. 800
A
dvertising Expense
Interest Expense
5/31 180
Insurance Expense
5/31 450
5/31 Bal. 450
PROBLEM 4-3A (Continued)
Supplies Expense
5/31 1,550
(c) SOLO HOTEL
Adjusted Trial Balance
May 31, 2014
Debit Credit
Cash …………………………………………………………
Supplies ……………………………………………………
Prepaid Insurance ……………………………………..
$ 2,500
1,050
1,350
PROBLEM 4-3A (Continued)
(d) SOLO HOTEL
Income Statement
For the Month Ended May 31, 2014
Revenues
Rent revenue ……………………………………………. $11,500
Expenses
Salaries and wages expense …………………….. $3,900
Supplies expense …………………………………….. 1,550
SOLO HOTEL
Retained Earnings Statement
For the Month Ended May 31, 2014
Retained earnings, May 1 ………………………………… $ 0
PROBLEM 4-3A (Continued)
SOLO HOTEL
Balance Sheet
May 31, 2014
Assets
Current Assets
Cash ……………………………………………. $ 2,500
Supplies ………………………………………. 1,050
Prepaid insurance ……………………….. 1,350
Liabilities and Stockholders’ Equity
Current Liabilities
Accounts payable…………………………………….. $ 4,700
Salaries and wages payable ……………………… 900
Unearned rent revenue …………………………….. 800
(e) The following accounts would be closed:
Rent Revenue, Salaries and Wages Expense, Utilities Expense, Advertising
Expense, Interest Expense, Insurance Expense, Supplies Expense, Depre–
ciation Expense.
PROBLEM 4-4A
(a) Sept. 30 Accounts Receivable ……………………………… 600
Service Revenue ……………………………… 600
30 Rent Expense ………………………………………… 900
Prepaid Rent …………………………………… 900
30 Interest Expense ……………………………………. 50
Interest Payable ………………………………. 50
(b) WOLF CREEK GOLF INC.
Income Statement
For the Quarter Ended September 30, 2014
Revenues
Service revenue ……………………………………….. $14,700
Rent revenue ……………………………………………. 900
Total revenues ………………………………….. $15,600
Expenses
Salaries and wages expense …………………….. 9,400
PROBLEM 4-4A (Continued)
WOLF CREEK GOLF INC.
Retained Earnings Statement
For the Quarter Ended September 30, 2014
Retained earnings, July 1, 2014 ………………………………………… $ 0
Add: Net income …………………………………………………………….. 2,510
WOLF CREEK GOLF INC.
Balance Sheet
September 30, 2014
Assets
Current Assets
Cash ………………………………………………………. $ 6,700
Accounts receivable ……………………………….. 1,000
Liabilities and Stockholders’ Equity
Current Liabilities
Notes payable …………………………………………. $ 5,000
Accounts payable …………………………………… 1,070
PROBLEM 4-4A (Continued)
(c) The following accounts would be closed: Service Revenue, Rent Revenue,
Salaries and Wages Expense, Rent Expense, Utilities Expense,
(d) Interest of 12% per year equals a monthly rate of 1%; monthly interest
PROBLEM 4-5A
1. Dec. 31 Insurance Expense …………………………………. 8,000
Prepaid Insurance …………………………… 8,000
2. Dec. 31 Unearned Rent Revenue …………………………. 84,000
3. Dec. 31 Interest Expense …………………………………….. 700
Interest Payable
4. Dec. 31 Salaries and Wages Expense ………………….. 3,060
Salaries and Wages Payable ……………. 3,060
PROBLEM 4-6A
(a) 1. June 30 Rent Revenue …………………………….. 57,000
Unearned Rent Revenue …….. 57,000
2. 30 Supplies Expense ……………………….. 6,400
Supplies ($8,200 – $1,800) ….. 6,400
5. 30 Salaries and Wages Expense
($300 X 4) …………………………………. 1,200
Salaries and Wages
Payable …………………………… 1,200