PROBLEM 4-4C
(a) Dec. 31 Accounts Receivable ……………………………… 3,500
Service Revenue ……………………………… 3,500
31 Supplies Expense ………………………………….. 2,900
Supplies …………………………………………. 2,900
(b) VEDULA ADVERTISING AGENCY
Income Statement
For the Year Ended December 31, 2014
Revenues
Service revenue……………………………………….. $63,000
Expenses
Salaries and wages expense …………………….. $9,820
Depreciation expense ………………………………. 5,000
PROBLEM 4-4C (Continued)
VEDULA ADVERTISING AGENCY
Retained Earnings Statement
For the Year Ended December 31, 2014
Retained earnings, January 1 ………………………… $ 5,500
Add: Net income …………………………………………. 38,810
VEDULA ADVERTISING AGENCY
Balance Sheet
December 31, 2014
Assets
Current assets
Cash ……………………………………………………….. $11,000
Accounts receivable ………………………………… 19,500
Liabilities and Stockholders’ Equity
Current liabilities
Notes payable ………………………………………….. $ 8,000
Accounts payable ……………………………………. 2,000
Unearned service revenue ……………………….. 3,100
PROBLEM 4-4C (Continued)
(c) Service Revenue, Salaries and Wages Expense, Depreciation Expense,
Rent Expense, Supplies Expense, Insurance Expense, Interest Expense,
Dividends.
PROBLEM 4-5C
1. Dec. 31 Salaries and Wages Expense ……………… 2,400
Salaries and Wages Payable ………… 2,400
2. 31 Unearned Rent Revenue …………………….. 70,000
Rent Revenue ……………………………… 70,000
3. 31 Insurance Expense …………………………….. 7,550
4. 31 Interest Expense ………………………………… 4,800
PROBLEM 4-6C
(a) 1. March 31 Service Revenue …………………………………. 20,000
Unearned Service Revenue ……………. 20,000
3. 31 Insurance Expense ($3,360 X 3/12) ………. 840
Prepaid Insurance …………………………. 840
5. 31 Salaries and Wages Expense
6. 31 Interest Expense
PROBLEM 4-6C (Continued)
(b)
FLY RIGHT TRAVEL AGENCY
Income Statement
For the Quarter Ended March 31, 2014
Revenues
Service revenue ($50,000 – $20,000) ……………….. $30,000
Expenses
Salaries and wages expense ($11,000 + $640) …. $11,640
Advertising expense ………………………………………. 2,600
Supplies expense …………………………………………… 2,100
(c) The generally accepted accounting principles that Joe did not
recognize when he prepared the income statement were the revenue
recognition principle and the expense recognition principle.
PROBLEM 4-7C
(a), (c) & (e)
Cash
9/29 650
9/25 1,200
9/30 Bal. 3,110
9/30 Bal. 3,600
9/1 Bal. 4,880
9/10 1,500
9/8 1,100
9/20 4,500
Accounts Receivable
9/30 Bal. 3,960
9/30 Bal. 770
9/1 Bal. 3,420
9/10 1,500
Supplies
9/30 Bal. 1,100
9/30 Bal. 400
9/1 Bal. 800
9/30 1,700
Equipment
9/30 Bal. 18,000
9/1 Bal. 1,600
9/30 Bal. 1,800
9/30 Bal. 10,000
9/1 Bal. 8,300
9/30 Bal. 8,300
9/1 Bal. 15,000
Accounts Payable
9/20 4,500
9/1 Bal. 3,100
9/15 3,000
Unearned
Service Revenue
9/30 280
9/1 Bal. 400
Salaries and Wages Payable
9/8 700
9/1 Bal. 700
Common Stock
9/1 Bal. 10,000
PROBLEM 4-7C (Continued)
Service Revenue
9/30 Bal. 5,720
9/30 Bal. 2,000
9/12 3,400
9/27 2,040
Depreciation Expense
9/30 200
9/30 Bal. 200
9/30 1,700
9/30 Bal. 1,700
9/8 400
9/25 1,200
Rent Expense
9/22 520
9/30 Bal. 520
PROBLEM 4-7C (Continued)
(b)
General Journal
Date
Account Titles
Debit
Credit
Sept. 8
Salaries and Wages Payable………………………..
Salaries and Wages Expense ………………………
Cash ……………………………………………………
700
400
1,100
10
Cash ……………………………………………………….
Accounts Receivable …………………………..
1,500
1,500
12
Cash ……………………………………………………….
Service Revenue ………………………………….
3,400
3,400
15
Equipment ………………………………………………….
Accounts Payable ………………………………..
3,000
3,000
17
Supplies ……………………………………………………..
Accounts Payable ………………………………..
2,000
2,000
20
Accounts Payable ……………………………………….
Cash ……………………………………………………
4,500
4,500
22
Rent Expense ……………………………………………..
520
25
Salaries and Wages Expense ………………………
1,200
27
Accounts Receivable …………………………………..
2,040
29
Cash ……………………………………………………….
650
PROBLEM 4-7C (Continued)
(d) & (f) WORTHINGTON EQUIPMENT REPAIR
Trial Balances
September 30, 2014
Before
Adjustment
After
Adjustment
Dr.
Cr.
Dr.
Cr.
Cash ………………………………………
Accounts Receivable ……………..
Supplies ………………………………..
$ 3,110
3,960
2,800
$ 3,110
3,960
1,100
(e) 1. Sept. 30 Supplies Expense ……………………………… 1,700
Supplies ($2,800 – $1,100) ………….. 1,700
2. 30 Salaries and Wages Expense …………….. 400
Salaries and Wages Payable ………. 400
PROBLEM 4-7C (Continued)
(g) WORTHINGTON EQUIPMENT REPAIR
Income Statement
For the Month Ended September 30, 2014
Revenues
Service revenue………………………………………….. $5,720
Expenses
Salaries and wages expense ……………………….. $2,000
WORTHINGTON EQUIPMENT REPAIR
Retained Earnings Statement
For the Month Ended September 30, 2014
Retained earnings, September 1 ……………………………………….. $8,300
PROBLEM 4-7C (Continued)
WORTHINGTON EQUIPMENT REPAIR
Balance Sheet
September 30, 2014
Assets
Current assets
Cash ………………………………………………………….. $ 3,110
Accounts receivable …………………………………… 3,960
Supplies …………………………………………………….. 1,100
Liabilities and Stockholders’ Equity
Current liabilities
Accounts payable ……………………………………….. $ 3,600
Unearned service revenue …………………………... 770