PROBLEM 3-3
1.
Dec. 31
Salaries and Wages Expense …………………………..
2,120
Salaries and Wages Payable …………………………..
2,120
(5 X $700 X 2/5) = $1,400
(3 X $600 X 2/5) = 720
2.
31
Unearned Rent Revenue ……………………………………………………….
94,000
Rent Revenue ……………………………………………………….
94,000
(5 X $6,000 X 2) = $60,000
(4 X $8,500 X 1) = 34,000
3.
31
Advertising Expense ……………………………………………………….
4,900
Prepaid Advertising ……………………………………………………….
4,900
(A650 – $500 per month
for 8 months) = $4,000
(B974 – $300 per month
for 3 months) = 900
Interest Expense ……………………………………………………….
4,200
Interest Payable
($60,000 X 12% X 7/12) …………………………..
4,200
3-42
PROBLEM 3-4
(a)
Nov. 30
Supplies Expense ……………………………………………………….
4,000
Supplies ……………………………………………………….
4,000
Depreciation Expense …………………………..
Interest Expense ……………………………………………………….
PROBLEM 3-4 (Continued)
(b) BELLEMY FASHION CENTER
Adjusted Trial Balance
November 30, 2012
Dr.
Cr.
Cash……………………………………………………….
$ 28,700
Accounts Receivable ……………………………………………
33,700
Inventory ……………………………………………………….
45,000
Supplies ……………………………………………………….
Equipment ……………………………………………………….
Accumulated Depr.— Equipment …………………………
Notes Payable ……………………………………………………..
Accounts Payable ………………………………………………..
Common Stock ……………………………………………………
Retained Earnings ……………………………………………….
Sales ……………………………………………………….
Sales Returns and Allowances …………………………..
Cost of Goods Sold ……………………………………………..
Salaries and Wages Expense …………………………..
Advertising Expense ……………………………………………
26,400
Utilities Expense ………………………………………………….
14,000
Maintenance and Repairs Expense ……………………….
12,100
Delivery Expense …………………………………………………
16,700
Rent Expense ………………………………………………………
24,000
Supplies Expense ………………………………………………..
Depreciation Expense ………………………………………….
15,000
Interest Expense ………………………………………………….
11,000
Interest Payable …………………………………………………..
3-44
PROBLEM 3-4 (Continued)
(c) BELLEMY FASHION CENTER
Income Statement
For the Year Ended November 30, 2012
Sales revenue
Sales ……………………………………………………….
$757,200
Less: Sales returns and
Selling expenses
Salaries and wages expense
($140,000 X 70%) …………………………..
$98,000
Advertising expense …………………………..
26,400
Rent expense
($24,000 X 80%) …………………………..
19,200
Freight Out ……………………………………………..
16,700
Utilities expense
($14,000 X 80%) …………………..
11,200
Depreciation Expense …………………………..
15,000
Supplies expense …………………………..
4,000
Total selling expenses ………………………
$190,500
Administrative expenses
Salaries and wages expense
($140,000 X 30%) …………………………..
42,000
Rent expense
($24,000 X 20%) …………………………..
4,800
Utilities expense
($14,000 X 20%) …………………………..
2,800
Total admin. expenses ………………………
61,700
Total oper. expenses ……………………
252,200
Income from operations…………………………..
Other expenses and losses
Interest expense ……………………………………………..
Net sales ……………………………………………………….
Cost of goods sold …………………………………………………..
Gross profit ……………………………………………………….
Operating expenses
PROBLEM 3-4 (Continued)
BELLEMY FASHION CENTER
Retained Earnings Statement
For the Year Ended November 30, 2012
Retained earnings, December 1, 2011 …………………………..
Less: Net loss ……………………………………………………….
BELLEMY FASHION CENTER
Balance Sheet
November 30, 2012
Assets
Current assets
Cash ……………………………………………………….
$28,700
Accounts receivable …………………………..
33,700
Inventory ……………………………………………………….
45,000
Supplies ……………………………………………………….
1,500
Total current assets …………………………..
Property, plant, and equipment
Equipment ……………………………………………………..
133,000
equipment ……………………………………………..
Total assets ……………………………………………
$202,900
Liabilities and Stockholders’ Equity
Current liabilities
Notes payable due next year …………………………..
$30,000
Accounts payable …………………………………………..
48,500
Interest payable ……………………………………………..
Total current liabilities …………………………..
Long-term liabilities
Notes payable ………………………………………………..
Total liabilities ………………………………………..
Common stock ……………………………………………….
3-46
PROBLEM 3-4 (Continued)
(d)
Nov. 30
Sales Revenue …………………………..…………………………..
757,200
Income Summary …………………………..
757,200
30
Income Summary ……………………………………………………….
762,800
Sales Returns and Allowances …………………………..
4,200
30
Retained Earnings ……………………………………………………….
5,600
Income Summary …………………………..
5,600
(e) BELLEMY FASHION CENTER
Post-Closing Trial Balance
November 30, 2012
Debit
Credit
Cash ……………………………………………………………………….
$ 28,700
Accounts Receivable ……………………………………………….
33,700
Inventory ……………………………………………………….
Supplies ……………………………………………………….
Equipment ……………………………………………………….
Accumulated Depreciation—Equipment …………………….
Notes Payable ……………………………………………………….
Accounts Payable …………………………..………………………..
Interest Payable ……………………………………………………….
Common Stock ……………………………………………………….
Retained Earnings ……………………………………………………
Cost of Goods Sold …………………………..
Salaries and Wages Expense …………………………..
140,000
Advertising Expense …………………………..
Utilities Expense …………………………..
Repair Expense ……………………………………………………….
Freight Out ……………………………………………………….
Rent Expense ……………………………………………………….
Supplies Expense …………………………..
4,000
Depreciation Expense …………………………..
Interest Expense …………………………..
PROBLEM 3-5
(a)
-1-
Depreciation Expense …………………………..…………..
10,500
Accumulated Depreciation—Equipment
(1/16 X $168,000) …………………………………….
10,500
Interest Expense………………………………………………..
Interest Payable
($90,000 X 8% X 72/360) …………………………..
Admissions Revenue …………………………………………
Unearned Admissions Revenue
(2,000 X $30) ……………………………………………
60,000
Prepaid Advertising …………………………………………..
Advertising Expense ……………………………………
Salaries and Wages Expense ……………………………..
Salaries and Wages Payable ………………………..
(b) 1. Interest expense, $2,840 ($1,400 + $1,440).
2. Admissions revenue, $320,000 ($380,000 – $60,000).
3. Advertising expense, $12,580 ($13,680 – $1,100).
PROBLEM 3-6
(a)
-1-
Service Revenue ……………………………………………………….
6,000
Unearned Service Revenue …………………………..
6,000
-2-
Accounts Receivable ……………………………………………………….
4,900
Service Revenue ……………………………………………………….
4,900
-3-
Bad Debt Expense ……………………………………………………….
1,430
Allowance for Doubtful Accounts …………………………..
1,430
-4-
Insurance Expense ……………………………………………………….
480
Prepaid Insurance ……………………………………………………….
480
-5-
Depreciation Expense ……………………………………………………….
2,500
Accumulated Depreciation—Equipment
($25,000 X .10) ……………………………………………………….
2,500
-6-
Interest Expense ……………………………………………………….
Interest Payable
($7,200 X .10 X 30/360)……………………………………………………
-7-
Prepaid Rent Expense ……………………………………………………….
750
Rent Expense ……………………………………………………….
750
-8-
Salaries and Wages Expense ……………………………………………………
2,510
Salaries and Wages Payable …………………………..
2,510
3-49
PROBLEM 3-6 (Continued)
(b) YORKIS PEREZ, CONSULTING ENGINEER
Income Statement
For the Year Ended December 31, 2012
Service revenue ($100,000 – $6,000 + $4,900) ……………….
$98,900
Expenses
Salaries and wages expense
($30,500+$2,510) ………………………………………………
$33,010
YORKIS PEREZ, CONSULTING ENGINEER
Statement of Owners’ Equity
For the Year Ended December 31, 2012
Onwer’s Capital, January 1 ……………………………………………………….
$ 52,010a
Add: Net income ……………………………………………………….
Less: Withdrawals ……………………………………………………….
Rent expense ($9,750 – $750) …………………………..
Depreciation expense…………………………………………..
Utilities expense ………………………………………………….
Office expense …………………………………………………….
Interest expense ………………………………………………….
Total expenses ………………………………………………..
PROBLEM 3-6 (Continued)
YORKIS PEREZ, CONSULTING ENGINEER
Balance Sheet
December 31, 2012
Assets
Current assets
Cash …………………………..…………………………..
$29,500
Accounts receivable
($49,600 + $4,900) …………………………..
$54,500
Supplies …………………………..…………………………
Prepaid insurance
Prepaid rent expense …………………………..
Total current assets …………………………..
Liabilities and Owners’ Equity
Current liabilities
Notes payable …………………………..
$7,200
Unearned service revenue …………………………..
Salaries and wages payable ………………………..
Interest payable …………………………..
60
3-51
PROBLEM 3-7
(a)
Sep. 30
Accounts Receivable ……………………………………………………….
600
Service Revenue ……………………………………………………….
600
30
Rent Expense ……………………………………………………….
900
Prepaid Rent Expense …………………………..…………………………..
900
30
Interest Expense ……………………………………………………….
50
Interest Payable ……………………………………………………….
50
30
Unearned Rent Revenue ……………………………………………………….
200
Rent Revenue ……………………………………………………….
200
30
Salaries and Wages Expense …………………………..
600
Salaries and Wages Payable …………………………..
600
(b) ROLLING HILLS GOLF INC.
Income Statement
For the Quarter Ended September 30, 2012
Revenues
Service revenue ……………………………………………………
$14,700
Rent revenue ……………………………………………………….
Total revenue …………………………………………………
Expenses
Salaries and wages expense …………………………..
Rent expense ……………………………………………………….
Supplies expense …………………………………………………
Utilities expense …………………………………………………..
Depreciation expense …………………………………………..
Interest expense …………………………………………………..
50
Total expenses ………………………………………………..
30
Supplies Expense ……………………………………………………….
Supplies …………………………..…………………………..
30
Depreciation Expense ……………………………………………………….
350
Accumulated Depreciation—Equipment …………………………..
350
PROBLEM 3-7 (Continued)
ROLLING HILLS GOLF INC.
Retained Earnings Statement
For the Quarter Ended September 30, 2012
Retained earnings, July 1, 2012 …………………………………………………
$ 0
Add: Net income ……………………………………………………….………………
Less: Dividends ………………………………………………………………………..
(600)
ROLLING HILLS GOLF INC.
Balance Sheet
September 30, 2012
Assets
Current assets
Cash ……………………………………………………….
$6,700
Accounts receivable …………………………..
Supplies ……………………………………………………..
Prepaid rent expense …………………………..
Total current assets …………………………..
Equipment ……………………………………………………….
Liabilities and Stockholders’ Equity
Current liabilities
Notes payable …………………………..
$5,000
Unearned rent revenue …………………………..
Salaries and wages payable ………………………..
Retained earnings …………………………..
Total stockholders’ equity
3-53
PROBLEM 3-7 (Continued)
(c) The following accounts would be closed: Service Revenue, Rent Revenue,
PROBLEM 3-8
(a)
Dec. 31
Accounts Receivable ……………………………………………………….
3,500
Service Revenue ……………………………………………………….
3,500
31
Supplies Expense ……………………………………………………….
2,900
Supplies ……………………………………………………….
2,900
31
Insurance Expense ……………………………………………………….
1,560
Prepaid Insurance ……………………………………………………….
1,560
31
Depreciation Expense ……………………………………………………….
5,000
Accumulated Depreciation—Equipment …………………………..
5,000
31
Interest Expense ……………………………………………………….
560
Interest Payable ……………………………………………………….
560
31
Unearned Service Revenue …………………………..
1,900
Service Revenue ……………………………………………………….
1,900
31
Salaries and Wages Expense …………………………..
820
Salaries and Wages Payable …………………………..
820
(b) VEDULA ADVERTISING AGENCY
Income Statement
For the Year Ended December 31, 2012
Revenues
Service revenue ……………………………………………………
$63,000
Expenses
Salaries and wages expense …………………………..
Depreciation expense …………………………………………..
Rent expense ……………………………………………………….
Supplies expense …………………………………………………
Insurance expense ……………………………………………….
Interest expense …………………………………………………..
Total expenses…………………………………………………
3-55
PROBLEM 3-8 (Continued)
VEDULA ADVERTISING AGENCY
Retained Earnings Statement
For the Year Ended December 31, 2012
Retained earnings, Janaury 1 …………………………..
$ 5,500
VEDULA ADVERTISING AGENCY
Balance Sheet
December 31, 2012
Assets
Current assets
Cash ……………………………………………………….
$11,000
Accounts receivable ……………………………………
Supplies ……………………………………………………..
Prepaid insurance ……………………………………….
Total current assets …………………………..
Equipment ……………………………………………………….
Liabilities and Stockholders’ Equity
Current liabilities
Notes payable …………………………………………………..
$8,000
Accounts payable …………………………………………….
2,000
Unearned service revenue …………………………..
Salaries and wages payable …………………………..
Interest payable ………………………………………………..
Common stock …………………………………………………
Retained earnings …………………………………………….
34,310
Add: Net income ……………………………………………………….
Less: Dividends ……………………………………………………….
PROBLEM 3-8 (Continued)
(c) Service Revenue, Salaries and Wages Expense, Depreciation Expense,
Rent Expense, Supplies Expense, Insurance Expense, Interest Expense,
Dividends.
3-57
*PROBLEM 3-9
(a), (b), (d)
Cash
Prepaid Insurance
Salaries and Wages Expense
Bal.
15,000
Bal.
9,000
Adj.
3,500
Bal.
80,000
Close
83,600
5,500
Adj.
3,600
83,600
83,600
Allow. for Doubtful Accts.
Dues Revenue
Depr. Expense
Bal.
1,100
Adj.
8,900
Bal.
200,000
Adj.
4,000
Close
19,000
Adj.
460
Cls.
191,100
Adj.
15,000
1,560
200,000
200,000
19,000
Bal.
Close
5,900
Bal.
5,900
Bal.
120,000
Close
19,200
Bal.
17,600
Bal.
70,000
Adj.
1,600
Adj.
15,000
19,200
19,200
85,000
Accum. Depr.—Buildings
Utilities Expenses
Insurance Expense
Bal.
38,400
Bal.
54,000
Close
54,000
Adj.
3,500
Close
3,500
Adj.
4,000
42,400
Income Summary
Adj.
Adj.
Close
Exp.
216,200
Inc.
Bal.
400,000
Bal.
Bal.
82,000
Bal.
24,000
Close
24,000
Inc.
113,640
3-58
*PROBLEM 3-9 (Continued)
Salaries and Wages
Payable
Unearned Dues Revenue
(b)
-1-
Depreciation Expense ……………………………………………………….
4,000
Accumulated Depreciation—Buildings
(1/30 X $120,000) ……………………………………………………….
4,000
-2-
Depreciation Expense ……………………………………………………….
Accumulated Depreciation—Equipment
(10% X $150,000) ……………………………………………………….
-3-
Insurance Expense ……………………………………………………….
3,500
Prepaid Insurance ……………………………………………………….
3,500
-4-
Rent Receivable ……………………………………………………….
1,600
Rent Revenue
(1/11 X $17,600) ……………………………………………………….
1,600
-5-
Bad Debt Expense ……………………………………………………….
Allowance for Doubtful Accounts
[($13,000 X 12%) – $1,100] …………………………..
-6-
Salaries and Wages Expense …………………………………………………..
3,600
Salaries and Wages Payable …………………………..
3,600
-7-
Dues Revenue …………………………..…………………………..
8,900
Adj.
Adj.
Bal.
3-59
*PROBLEM 3-9 (Continued)
(c) CRESTWOOD GOLF CLUB, INC.
Adjusted Trial Balance
December 31, XXXX
Dr.
Cr.
Cash ……………………………………………………………………
$ 15,000
Accounts Receivable ……………………………………………
13,000
Allowance for Doubtful Accounts ………………………….
$ 1,560
Prepaid Insurance …………………………..……………………
5,500
Land ……………………………………………………………………
Buildings ……………………………………………………….
Accum. Depreciation—Buildings…………………………..
Equipment ……………………………………………………….
Accum. Depreciation—Equipment ………………………..
Salaries and Wages Payable …………………………..
Common Stock ……………………………………………………
Retained Earnings ……………………………………………….
Dues Revenue ……………………………………………………..
Green Fees Revenue ……………………………………………
Rent Revenue …………………………..………………………….
Utilities Expenses ………………………………………………..
Salaries and Wages Expense …………………………..
83,600
Maintenance and Repairs Expenses ……………………..
Bad Debt Expense ……………………………………………….
Unearned Dues Revenue ………………………………………
Rent Receivable …………………………………………………..
1,600
Depreciation Expense ………………………………………….
Insurance Expense ………………………………………………
3-60
*PROBLEM 3-9 (Continued)
(d)
-Dec. 31-
Dues Revenue …………………………..…………………………..
191,100
–31–
Income Summary ……………………………………………………….
184,560
Utilities Expenses ……………………………………………………….
54,000
Bad Debt Expense ……………………………………………………….
460
Salaries and Wages Expense …………………………..
Maintenance Expense ……………………………………………………….
24,000
Depreciation Expense ……………………………………………………….
19,000
Insurance Expense ……………………………………………………….
–31–
Income Summary ……………………………………………………….
Retained Earnings ……………………………………………………….
31,640
Green Fees Revenue ……………………………………………………….
Rent Revenue ……………………………………………………….
Income Summary ……………………………………………………….