P3-12 (continued)
2. (continued)
LANGER COMPANY
Balance Sheet
December 31, 2010
Assets
Current Assets
Land $ 4,500
Buildings and equipment $20,600
Less: Accumulated depreciation (9,600) 11,000
Total property and equipment $15,500
Total Assets $29,630
Liabilities
Current Liabilities
Stockholders’ Equity
Contributed Capital
Capital stock (2,000 shares) $ 5,000
3-59
P3-12 (continued)
3(a). 2010
Dec. 31 Salaries Expense 250
Salaries Payable 250
To record accrued salaries.
To record accrued interest on
note payable.
31 Rent Receivable 50
Rent Revenue 50
To record rent earned but not
yet received.
3-60
P3-12 (continued)
3(b). 2010
Dec. 31 Sales Revenue 25,140
Rent Revenue 600
Interest Revenue 80
Income Summary 25,820
P3-13
1. 2011
Jan. 1 Interest Payable 100
Interest Expense 100
To reverse entry recorded on
3-61
P3-13 (continued)
1. (continued)
May 1 Notes Payable 6,000
2. 2011
Mar. 1 Cash 4,326
P3-14
2011
Jan. 1 Salaries Payable* 940
Salaries Expense 940
3-62
P3-14 (continued)
Jan. 1 Office Supplies Expense 100
Office Supplies 100
Assuming the remaining office supplies
P3-15
1. 2010
Dec. 4 Cash 3,000
Sales Revenue 3,000
Made cash sales.
4 Cost of Goods Sold 1,800
Inventory 1,800
To record cost of sales.
3-63
P3-15 (continued)
1. (continued)
Dec. 18 Cash 7,800
Land 5,000
Gain on Sale on Land 2,800
Sold land at a gain.
2. Note to Instructor: Only the accounts to which postings are made are shown
below and on next page.
Cash Accounts Receivable
12/01
Bal 3,090
12/27
1,250
12/01
Bal 9,900
12/14 600
3-64
P3-15 (continued)
2. (continued)
Inventory
12/01
Bal 17,750
12/04
1,800
12/07
2,400
12/20
2,400
12/11
360
12/21
360
12/27
1,250
12/31
Bal 17,200
Sales Returns Gain on Sale of Land
12/01
Bal 6,300
12/01
Bal 0
12/11
600
12/18
2,800
12/31
Bal 6,900
12/31
Bal 2,800
ZU COMPANY
Worksheet
For Year Ended December 31, 2010
Trial Balance
Adjustments
Income Statement
Retained Earnings
Statement
Balance Sheet
Account Titles Debit Credit Debit Credit Debit Credit Debit Credit Debit Credit
Cash
Sales revenue
Sales returns
Gain on sale of land
Cost of goods sold
Salaries expense
11,440
6,900
40,700
12,500
83,000
2,800
(a)1,200
6,900
40,700
13,700
83,000
2,800
11,400
P3-15 (continued)
3.
3-65
P3-15 (continued)
4. ZU COMPANY
Income Statement
For Year Ended December 31, 2010
Sales revenue (net of $6,900 returns) $76,100
Other expenses 4,500
Total operating expenses (30,000)
Income from operations $ 5,400
Other item
ZU COMPANY
Statement of Retained Earnings
For Year Ended December 31, 2010
P3-15 (continued)
4. (continued)
ZU COMPANY
Balance Sheet
December 31, 2010
Assets
Current Assets
Cash $11,440
Liabilities
Current Liabilities
Stockholders’ Equity
Contributed Capital
Capital stock (2,000 shares) $20,000
Retained Earnings 46,140
3-68
P3-15 (continued)
5(a). (continued)
Dec. 31 Supplies Expense 770
Supplies 770
5(b). 2010
Dec. 31 Sales Revenue 83,000
Gain on Sale of Land 2,800
Income Summary 85,800
31 Income Summary 80,060
VALLEY SALES
Worksheet
For Year Ended December 31, 2010
12/31/09 Balance
Transactions Adjustments Income Statement Balance Sheet
Account Titles Debit Credit Debit Credit Debit Credit Debit Credit Debit Credit
Cash
Sales
Notes payable
Purchases
Salaries expense
2,300
(a)173,200
(b) 2,000
(b)117,0001
(b) 3,0503
(b)169,800
(a)152,800
(a) 10,000
(d) 8,500
(e) 1,800
(c) 9,200
125,500
4,850
162,000
5,700
8,000
3-69
P3-16
1.
P3-16 (continued)
2. VALLEY SALES
Income Statement
For Year Ended December 31, 2010
Sales $162,000
Cost of goods sold
Inventory, 1/1/2010 $ 12,500
Purchases 125,500
P3-16 (continued)
2. (continued)
VALLEY SALES
Balance Sheet
December 31, 2010
Assets
Current Assets
Cash $ 5,700
Liabilities
Current Liabilities
Accounts payable $ 8,700
3-72
WARD SPECIALTY FOODS
Worksheet to Convert
Trial Balance to Accrual Basis
December 31, 2010
Cash Basis Adjustments Accrual Basis
Debit Credit Debit Credit Debit Credit
Cash
Accounts receivable
Sales
Purchases
Income summary–inventory
Salaries
18,500
4,500
82,700
29,500
187,000
[1] 3,400
[7] 4,000
[3] 20,000
[8] 135
[1] 3,400
[3] 23,000
18,500
7,900
86,700
29,635
190,400
3,000
P3-17 (AICPA adapted solution)
1.
3-73
C-73
P3-17 (continued)
1. (continued)
Explanations of Adjustments:
[1] To convert 2010 sales to accrual basis
[2] To record provision for doubtful accounts
[3] To record increase in inventory from 12/31/09 to 12/31/10
Inventory, 12/31/10 $23,000
Inventory, 12/31/09 (20,000)
Increase $ 3,000
[6] To record depreciation for 2010
[7] To convert 2010 purchases to accrual basis
3-74
P3-17 (continued)
2. WARD SPECIALTY FOODS
Statement of Changes in
Mary Ward, Capital
For the Year Ended December 31, 2010
Mary Ward, capital, 12/31/09 $38,915 [1]
Explanations of Amounts:
[1] Mary Ward, capital, 12/31/09 after adjustment
to accrual basis (per worksheet)