PROBLEM 3-10
(a), (b), (c)
Cash
Accounts Receivable
Allow. for Doubtful Accts.
Bal.
Bal.
32,000
Bal.
700
Adj.
1,400
2,100
Bal.
Bal.
84,000
Bal.
35,000
Adj.
12,000
47,000
Bal.
Adj.
2,550
Bal.
28,000
Adj.
3,360
Cls.
3,360
Common Stock
Sales Revenue
Insurance Expense
Bal.
80,600
Cls.
600,000
Bal.
600,000
Adj.
2,550
Cls.
2,550
Salaries and Wages
Expense (Sales)
Advertising Expense
Salaries and Wages Expense
(Administrative)
Bal.
Cls.
52,400
Bal.
6,700
Adj.
700
Adj.
65,000
Cls.
65,000
Adj.
Cls.
6,000
52,400
6,700
6,700
Supplies Expense
Adj.
Cls.
1,400
Bal.
5,000
Adj.
1,500
Adj.
700
Cls.
3,500
5,000
5,000
Income Summary
Adj.
Adj.
12,000
Cls.
12,000
Exp.
554,210
Sales
600,000
Inc.
600,000
600,000
Salaries and Wages Payable
Adj.
Adj.
2,400
Cost of Goods Sold
Bal.
10,000
Bal.
408,000
Cls.
408,000
Inc.
45,790
PROBLEM 3-10 (Continued)
(b)
-1-
Bad Debt Expense ……………………………………………………….
1,400
Allowance for Doubtful Accounts …………………………..
1,400
-2-
Depreciation Expense ($84,000 ÷ 7) …………………………..
12,000
Accumulated Depreciation—Equipment …………………………..
12,000
-3-
Insurance Expense ……………………………………………………….
2,550
Prepaid Insurance ……………………………………………………….
2,550
-4-
Interest Expense ……………………………………………………….
3,360
Interest Payable ……………………………………………………….
3,360
-5-
Salaries and Wages Expense (Sales) …………………………..
2,400
Salaries and Wages Payable …………………………..
2,400
-6-
Prepaid Advertising ……………………………………………………….
Advertising Expense ……………………………………………………….
-7-
Supplies …………………………………………………………………………………
1,500
Supplies Expense ……………………………………………………….
1,500
PROBLEM 3-10 (Continued)
(c)
Dec. 31
Sales Revenue ……………………………………………………….
600,000
Income Summary ……………………………………………………….
600,000
Dec. 31
Income Summary ……………………………………………………….
554,210
Cost of Goods Sold ……………………………………………………….
408,000
Advertising Expense …………………………..…………………………..
Salaries and Wages Expense (Admin.) …………………………..
Salaries and Wages Expense (Sales) …………………………..
Supplies Expense ……………………………………………………….
Insurance Expense ……………………………………………………….
Bad Debt Expense ……………………………………………………….
Depreciation Expense ……………………………………………………….
Interest Expense ……………………………………………………….
Dec. 31
Income Summary ……………………………………………………….
45,790
Retained Earnings ……………………………………………………….
*PROBLEM 3-11
(a) ARKANSAS SALES AND SERVICE
Income Statement
For the Month Ended January 31, 2014
(1)
Cash Basis
(2)
Accrual Basis
Revenues ……………………………………………………….
$ 75,000
$98,400*
Expenses
Cost of computers & printers:
Purchased and paid …………………………..
Cost of goods sold …………………………..
Salaries and wages …………………………..
Rent ……………………………………………………….
Other operating expenses ……………………….
Total expenses …………………………..
106,500
*PROBLEM 3-11 (Continued)
(b) ARKANSAS SALES AND SERVICE
Balance Sheet
As of January 31, 2014
(1)
Cash Basis
(2)
Accrual
Basis
Assets
Cash ………………………………………………………
$58,500a
$ 58,500a
Inventory ………………………………………………..
Prepaid rent ……………………………………………
Total assets …………………………..…………..
Liabilities and owners’ Equity
Salaries and wages payable …………………….
Accounts payable …………………………..
$58,500c
aOriginal investment $ 90,000
Cash sales 75,000
Cash purchases (82,500)
*PROBLEM 3-11 (Continued)
2. The cost of computers and printers sold in January is overstated
by $23,000. The unsold computers and printers are an asset of
$23,000 in the form of inventory.
3. The cash basis ignores $3,000 of the salaries that have been
earned by the employees in January and will be paid in February.
Copyright © 2013 John Wiley & Sons, Inc. Kieso, Intermediate Accounting, 15/e, Solutions Manual (For Instructor Use Only) 3-67
*PROBLEM 3-12
(a) COOKE COMPANY
Worksheet
For the Year Ended September 30, 2014
50,000
107,700
2,000
14,000
280,500
109,000
30,500
9,400
16,900
50,000
107,700
2,000
280,500
14,000
109,000
30,500
9,400
16,900
2,000
(d)
50,000
107,700
2,000
278,500
14,000
109,000
30,500
9,400
16,900
Mortgage Payable
Common Stock
Dividends
Retained Earnings
Service Revenue
Sal. and Wages Exp.
Maintenance and
Repairs Expense
Advertising Expense
Utilities Expenses
*PROBLEM 3-12 (Continued)
(b) COOKE COMPANY
Balance Sheet
September 30, 2014
Assets
Current assets
Cash ……………………………………………………….
$37,400
Supplies ……………………………………………………….
4,200
Prepaid insurance …………………………..
Property, plant, and equipment
Equipment …………………………..………………………….
Liabilities and Stockholders’ Equity
Current liabilities
Accounts payable ……………………………………………
$14,600
Current maturity of long-term debt …………………..
10,000
Interest payable ………………………………………….
6,000
Property taxes payable ……………………………………
3,000
Unearned service revenue …………………………..
Total current liabilities …………………………..
Long-term liabilities
Mortgage payable ……………………………………………
Total liabilities ………………………………………..
*PROBLEM 3-12 (Continued)
(c)
Sep. 30
Insurance Expense …………………………..
28,000
Prepaid Insurance …………………………..
28,000
30
Supplies Expense ……………………………………………………….
14,400
Supplies ……………………………………………………….
14,400
Depreciation Expense …………………………..
30
Unearned Service Revenue …………………………..
Service Revenue …………………………..
30
Property Tax Expense …………………………..
Property Taxes Payable …………………………..
30
Interest Expense ……………………………………………………….
Interest Payable …………………………..
(d)
Sep. 30
Service Revenue …………………………..…………………………..
280,500
Income Summary …………………………..
280,500
30
Income Summary ……………………………………………………….
247,000
Salaries and Wages Expense …………………………..
109,000
Maintenance and Repairs
Expense ……………………………………………………….
30,500
Insurance Expense …………………………..
Property Tax Expense …………………………..
21,000
Supplies Expense …………………………..
14,400
Utilities Expenses …………………………..
Interest Expense …………………………..
12,000
Advertising Expense …………………………..
Depreciation Expense …………………………..
Income Summary ……………………………………………………….
33,500
Retained Earnings …………………………..
Retained Earnings …………………………..
14,000
*PROBLEM 3-12 (Continued)
(e) COOKE COMPANY
Post-Closing Trial Balance
September 30, 2014
Debit
Credit
Cash ……………………………………………………….
$ 37,400
Supplies ……………………………………………………….
4,200
Prepaid Insurance ……………………………………………………
3,900
Land ……………………………………………………….
Equipment ……………………………………………………….
Accumulated Depreciation – Equipment ……………………
Accounts Payable …………………………………………………….
14,600
Unearned Service Revenue …………………………..
Interest Payable ……………………………………………………….
Property Tax Payable …………………………..…………………..
Mortgage Payable …………………………………………………….
50,000
Common Stock ……………………………………………………….
Retained Earnings ……………………………………………………
FINANCIAL REPORTING PROBLEM
(a) June 30, 2011 total assets: $138,354 million.
June 30, 2010 total assets: $128,172 million.
(e) An adjusting entry for deferrals is necessary when the receipt/disburse–
ment precedes the recognition in the financial statements. Accounts
such as prepaid insurance and prepaid rent may be included in the
Prepaid Expenses and Other Current Assets ($4,408 million at June 30,
(f) 2011 Depreciation and amortization expense: $2,838 million
2010 Depreciation and amortization expense: $3,108 million
COMPARATIVE ANALYSIS CASE
(a) The Coca-Cola Company percentage increase is computed as follows:
Total assets (December 31, 2011) …………………………………………….
$79,974
Total assets (December 31, 2010) …………………………………………….
72,921
Difference ………………………………………………………………………………
$ 7,053
Total assets (December 29, 2011) …………………………………………….
$72,882
Total assets (December 30, 2010) …………………………………………….
68,153
Difference ………………………………………………………………………………
$ 4,729
(b)
5-Year Growth Rate
The Coca-Cola Company
PepsiCo, Inc.
Net sales
operations
(c) The Coca-Cola Company had depreciation and amortization expense