PROBLEM 3-7B (Continued)
(c) The following accounts would be closed: Service Revenue, Rent Revenue,
Salaries and Wages Expense, Rent Expense, Utilities Expense, Depreciation
Expense, Supplies Expense, Interest Expense, Dividends.
PROBLEM 3-8B
(a)
Dec. 31
Accounts Receivable ……………………………………………………….
2,000
Service Revenue ……………………………………………………….
2,000
31
Supplies Expense ……………………………………………………….
1,850
Supplies ……………………………………………………….
1,850
Revenues
Service revenue …………………………..……………………….
$90,200
Expenses
Salaries and wages expense …………………………..
Rent expense ……………………………………………………….
Depreciation expense …………………………………………..
Supplies expense …………………………………………………
Insurance expense ……………………………………………….
Interest expense …………………………………………………..
Total expenses…………………………………………………
31
Insurance Expense ……………………………………………………….
1,300
Prepaid Insurance ……………………………………………………….
1,300
31
Depreciation Expense ……………………………………………………….
Accumulated Depreciation—Equipment …………………………..
31
Interest Expense ……………………………………………………….
1,350
Interest Payable ……………………………………………………….
1,350
31
Unearned Service Revenue …………………………..
Service Revenue ……………………………………………………….
31
Salaries and Wages Expense …………………………..
1,300
Salaries and Wages Payable …………………………..
1,300
PROBLEM 3-8B (Continued)
BALTIC TRAVEL AGENCY
Retained Earnings Statement
For the Year Ended December 31, 2014
Retained earnings, Janaury 1 …………………………..
Add: Net income …………………………..…………………………..
Less: Dividends ……………………………………………………….
BALTIC TRAVEL AGENCY
Balance Sheet
December 31, 2014
Assets
Current assets
Cash ……………………………………………………….
$6,500
Accounts receivable…………………………………….
Supplies ……………………………………………………..
Prepaid insurance ……………………………………….
Total current assets …………………………..
Equipment ……………………………………………………….
36,900
Liabilities and Stockholders’ Equity
Current liabilities
Notes payable …………………………………………………..
$15,000
Accounts payable ……………………………………………..
1,500
Unearned service revenue …………………………..
Salaries and wages payable …………………………..
1,300
Common stock ………………………………………………….
Retained earnings……………………………………………..
PROBLEM 3-8B (Continued)
(c) Service Revenue, Salaries and Wages Expense, Depreciation Expense, Rent
Expense, Supplies Expense, Insurance Expense, Interest Expense, Dividends.
*PROBLEM 3-9B
(a), (b), (d)
Cash
Prepaid Insurance
Salaries and Wages Expense
Accounts Receivable
Retained Earnings
Maintenance and Repairs
Expense
Bal.
23,500
Bal.
200,900
Bal.
95,000
Close
95,000
Inc.
244,300
345,200
Allow. for Doubtful Accts.
Dues Revenue
Depr. Expense
Bal.
Adj.
Bal.
Adj.
Close
44,400
Adj.
Cls.
Adj.
489,600
44,400
Bal.
Close
121,000
Bal.
121,000
Accum. Depr.—Equipment
Bal.
Close
28,800
Bal.
Bal.
121,850
Adj.
Adj.
28,800
28,800
147,950
Accum. Depr.—Buildings
Utilities Expenses
Insurance Expense
Bal.
59,900
Bal.
65,600
Close
65,600
Adj.
3,000
Close
3,000
Adj.
18,300
78,200
Bad Debt Expense
Income Summary
Adj.
Adj.
Close
Exp.
Rev.
Inc.
244,300
622,800
622,800
Bal.
Bal.
Adj.
3,000
Bal.
Close
Adj.
Common Stock
Bal.
*PROBLEM 3-9B (Continued)
Salaries and Wages
Payable
Unearned Dues Revenue
Adj.
4,600
Adj.
16,600
Equipment
Bal.
261,000
(b)
-1-
-2-
Depreciation Expense ……………………………………………………….
26,100
Accumulated Depreciation—Equipment
(10% X $261,000) ……………………………………………………….
26,100
-3-
Insurance Expense ……………………………………………………….
Prepaid Insurance ……………………………………………………….
-4-
Rent Receivable ……………………………………………………….
2,400
Rent Revenue
(1/11 X $26,400) ……………………………………………………….
2,400
-5-
Bad Debt Expense …………………………..…………………………..
Allowance for Doubtful Accounts
[($23,500 X 20%) – $3,800] …………………………..
-6-
Salaries and Wages Expense …………………………………………………..
4,600
Salaries and Wages Payable …………………………..
4,600
-7-
Dues Revenue ……………………………………………………….
16,600
Unearned Dues Revenue …………………………………………………..
16,600
Depreciation Expense ……………………………………………………….
18,300
Accumulated Depreciation—Buildings
(1/30 X $549,000) ……………………………………………………….
18,300
*PROBLEM 3-9B (Continued)
(c) ALI GOLF AND TENNIS CLUB, INC.
Adjusted Trial Balance
December 31, XXXX
Dr.
Cr.
Cash ……………………………………………………………………
$ 9,500
Accounts Receivable ……………………………………………
23,500
Allowance for Doubtful Accounts ………………………….
$ 4,700
Prepaid Insurance ………………………………………………..
1,850
Land ……………………………………………………………………
650,000
Buildings ……………………………………………………….
549,000
Accum. Depreciation—Buildings …………………………..
78,200
Equipment ……………………………………………………….
Accum. Depreciation—Equipment …………………………
Salaries and Wages Payable …………………………..
Common Stock …………………………………………………….
Retained Earnings ………………………………………………..
Dues Revenue ……………………………………………………..
Green Fees Revenue …………………………………………….
Rent Revenue …………………………..………………………….
Utilities Expense …………………………………………………..
Salaries and Wages Expense …………………………..
Maintenance and Repairs Expenses ………………………
Bad Debt Expense ………………………………………………..
Unearned Dues Revenue ………………………………………
16,600
Rent Receivable ……………………………………………………
Depreciation Expense …………………………………………..
44,400
Insurance Expense ……………………………………………….
*PROBLEM 3-9B (Continued)
(d)
-Dec. 31-
Dues Revenue ……………………………………………………….
473,000
Green Fees Revenue ……………………………………………………….
121,000
–31–
Income Summary …………………………..…………………………..
378,500
Utilities Expense ……………………………………………………….
Bad Debt Expense ……………………………………………………….
Salaries and Wages Expense …………………………..
Maintenance Expense ……………………………………………………….
Depreciation Expense ……………………………………………………….
Insurance Expense ……………………………………………………….
–31–
Income Summary …………………………..…………………………..
244,300
Retained Earnings ……………………………………………………….
244,300
Rent Revenue ……………………………………………………….
Income Summary ……………………………………………………….
*PROBLEM 3-10B
(a), (b), (c)
Cash
Accounts Receivable
Allow. for Doubtful Accts.
Bal.
23,850
Bal.
16,000
Bal.
600
Adj.
1,600
2,200
Prepaid Insurance
Notes Payable
Accounts Payable
Bal.
5,200
Adj.
3,650
Bal.
21,000
Bal.
18,400
1,550
Common Stock
Sales Revenue
Insurance Expense
Bal.
10,000
Cls.
397,300
Bal.
397,300
Adj.
3,650
Cls.
3,650
Bal.
Cls.
Bal.
Adj.
1,100
Adj.
79,300
Cls.
79,300
59,600
26,700
Supplies Expense
Adj.
1,600
Cls.
1,600
Bal.
4,200
Adj.
900
Adj.
1,100
Cls.
3,300
4,200
4,200
Income Summary
Adj.
Adj.
7,500
Cls.
7,500
Exp.
Rev.
Inc.
Supplies
Salaries and Wages Payable
Interest Expense
Adj.
900
Adj.
2,750
Adj.
2,050
Cls.
2,050
Cost of Goods Sold
Bal.
76,550
Bal.
204,150
Cls.
Inc.
Bal.
Bal.
60,000
Bal.
26,000
Adj.
7,500
33,500
*PROBLEM 3-10B (Continued)
(b)
-1-
-2-
Depreciation Expense ($60,000 ÷ 8) …………………………..
7,500
Accumulated Depreciation—Equipment …………………………..
7,500
-3-
Insurance Expense ……………………………………………………….
3,650
Prepaid Insurance ……………………………………………………….
3,650
-4-
Interest Expense ……………………………………………………….
2,050
Interest Payable ……………………………………………………….
2,050
-5-
Salaries and Wages Expense (Sales) …………………………..
2,750
Salaries and Wages Payable …………………………..
2,750
-6-
Prepaid Advertising Expense …………………………………………………..
1,100
Advertising Expense ……………………………………………………….
1,100
-7-
Supplies …………………………………………………………………………………
900
Supplies Expense ……………………………………………………….
900
Bad Debt Expense …………………………..…………………………..
1,600
Allowance for Doubtful Accounts …………………………..
1,600
*PROBLEM 3-10B (Continued)
(c)
Dec. 31
Sales Revenue ……………………………………………………….
397,300
Income Summary ……………………………………………………….
397,300
Dec. 31
Income Summary ……………………………………………………….
386,750
Cost of Goods Sold ……………………………………………………….
204,150
Dec. 31
Income Summary ……………………………………………………….
10,550
Retained Earnings ……………………………………………………….
10,550
Advertising Expense ……………………………………………………….
25,600
Salaries and Wages Expense (Admin.) …………………………..
79,300
Salaries and Wages Expense (Sales) …………………………..
59,600
Supplies Expense ……………………………………………………….
Insurance Expense ……………………………………………………….
Bad Debt Expense ……………………………………………………….
Depreciation Expense ……………………………………………………….
Interest Expense ……………………………………………………….
*PROBLEM 3-11B
(a) LAMBCHOP REFRIGERATION SALES AND SERVICE
Income Statement
For the Month Ended January 31, 2014
(1)
Cash Basis
(2)
Accrual Basis
Revenues ……………………………………………………….
$ 19,250
$39,600*
Expenses
Cost of computers & printers:
*($3,100 X 6) + ($1,750 X 12)
Purchased and paid …………………………..
Cost of goods sold …………………………..
Salaries and wages …………………………..
Rent ……………………………………………………….
Total expenses …………………………..
*PROBLEM 3-11B (Continued)
(b) LAMBCHOP REFRIGERATION SALES AND SERVICE
Balance Sheet
As of January 31, 2014
(1)
Cash Basis
(2)
Accrual
Basis
Assets
Cash …………………………..………………………….
$68,250a
$ 68,250a
Liabilities and Owners’ Equity
Salaries and wages payable …………………….
$ 4,100
Accounts payable …………………………..
equity ……………………………………………..
aOriginal investment $ 100,000
Cash sales 19,250
Cash purchases (33,000)
Accounts receivable …………………………..
Inventory ………………………………………………..
Prepaid rent expense …………………………..
6,200
Total assets ……………………………………….
*PROBLEM 3-11B (Continued)
(c) 1. The $20,350 in receivables from customers is an asset and a future cash
flow resulting from sales that is ignored. The cash basis understates the
amount of revenues and inflow of assets in January from the sale of
computers and printers by $20,350.
2. The cost of computers and printers sold in January is overstated by
4. Rent expense on the cash basis is overstated by $6,200 under the cash
5. Other operating expenses on a cash basis are understated by $850 as is
the liability for the unpaid portion of these expenses incurred in January.
14,350
14,350
Insurance Expense
Interest Payable
Net Income
(a) COOKE COMPANY
Worksheet
For the Year Ended September 30, 2012
Balance Sheet
Cr.
Dr.
36,500
6,200
4,550
105,000
Income Statement
Cr.
Dr.
133,700
26,500
31,000
29,500
9,000
9,000
Adjusted Trial Balance
Cr.
Dr.
36,500
6,200
4,550
105,000
133,700
26,500
31,000
29,500
9,000
9,000
Adjustments
Cr.
6,400
14,350
(b)
(a)
Dr.
2,500
3,000
(e)
(f)
Trial Balance
Cr.
______
Dr.
36,500
12,600
18,900
105,000
133,700
26,500
31,000
29,500
6,500
6,000
Account Titles
Cash
Supplies
Prepaid Insurance
Land
Sal. and Wages Exp.
Maintenance and
Repairs Expense
Advertising Expense
Utilities Expenses
Prop. Tax Expense
Interest Expense
63,800
11,300
3,610
(c)
(d)
3,610
Accum. Depr.-Equip.
Accounts Payable
Unearned Adm. Rev.
Admissions Revenue
*PROBLEM 3-12B (Continued)
(b) YOUNG COMPANY
Balance Sheet
June 30, 2014
Assets
Current assets
Cash ……………………………………………………….
$36,500
Supplies ……………………………………………………….
6,200
Prepaid insurance …………………………..
4,550
Total current assets …………………………..
$ 47,250
Property, plant, and equipment
Unearned admissions revenue …………………………
2,600
Total current liabilities …………………………..
$ 28,600
Long-term liabilities
Mortgage payable ……………………………………………
48,000
Total liabilities ………………………………………..
76,600
Equipment ………………………………………………………
Less: Accum. depreciation …………………………..
Current liabilities
Accounts payable ……………………………………………
Current maturity of long-term debt …………………..
Interest payable ………………………………………….
Property taxes payable ……………………………………
*PROBLEM 3-12B (Continued)
(c)
Jun. 30
Insurance Expense …………………………..
14,350
Prepaid Insurance …………………………..
14,350
30
Interest Expense ……………………………………………………….
3,000
Interest Payable …………………………..
3,000
(d)
Jun. 30
Admissions Revenue …………………………..
365,110
Income Summary …………………………..
365,110
30
Income Summary …………………………..…………………………..
270,750
Salaries and Wages Expense …………………………..
133,700
Advertising Expense …………………………..
31,000
Utilities Expenses …………………………..
29,500
Insurance Expense …………………………..
14,350
Depreciation Expense …………………………..
11,300
Property Tax Expense …………………………..
Interest Expense …………………………..
9,000
Supplies Expense …………………………..
Income Summary ……………………………………………………….
94,360
Supplies Expense ……………………………………………………….
Supplies ……………………………………………………….
6,400
Depreciation Expense …………………………..
11,300
30
Unearned Admissions Revenue …………………………..
3,610
Admissions Revenue …………………………..
3,610
30
Property Tax Expense …………………………..
2,500
Property Taxes Payable …………………………..
2,500
*PROBLEM 3-12B (Continued)
(e) YOUNG COMPANY
Post-Closing Trial Balance
June 30, 2014
Debit
Credit
Cash ……………………………………………………….
$ 36,500
Supplies ……………………………………………………….
6,200
Prepaid Insurance ……………………………………………………
4,550
Land ……………………………………………………….
105,000
Equipment ……………………………………………………….
164,000
Accounts Payable …………………………………………………….
Unearned Admissions Revenue …………………………..
Interest Payable …………………………..…………………………..
Property Tax Payable ……………………………………………….
Mortgage Payable …………………………………………………….