Professional Documents
Culture Documents
Q3-2
Q3-3
Q3-4
78 78
Q3-6
(a)
Supplies Expense of $455 must be recorded for the period. This will reduce the asset account and increase the expense account by $455. ($825+$260-$630=$455) If the adjustment is not made, Supplies Expense is understated by $455, Supplies (asset) and Equity are both overstated by $455 on the January 31 balance sheet.
(b) Q3-7
Balance Sheet
Transaction
Cash UR 9,720 9,720
+9,720
Unearned Revenue
-405
Unearned Revenue
+405
Retained Earnings
+405
Sales
= +405
Cash................................................................................ Subscriptions Received in Advance ...................... To record receipt of two-year subscriptions. Subscriptions Received in Advance ............................ Subscriptions Revenue........................................... To record subscription revenue earned during January ($9,720 / 24 = $405).
9,720 9,720
(b) Jan. 31
405 405
Q3-9
Jan. 31
Wages Expense ............................................................. Wages Payable......................................................... To record unpaid wages for Jan. 3031 [($475 / 5) 2 = $190].
190 190
Cambridge Business Publishers, 2008 3-2 Financial Accounting for MBAs, 3rd Edition
Q3-10 On January 31, the interest receivable account and the interest income account both should be increased by $360 to reflect the fact that the company has earned interest but not yet received it. The journal entry would be as follows: Jan. 31 Interest Receivable........................................................ Interest Income ........................................................ To record interest earned during January.
360 360
Q3-11 All temporary accounts are closed at year-end. They consist of the income statement accounts (expense and revenue accounts) and the dividend account. Step 1) Close revenue accounts: Debit each revenue account for an amount equal to its balance, and credit retained earnings for the total of revenues. Step 2) Close expense accounts: Credit each expense account for an amount equal to its balance, and debit retained earnings for the total of expenses. Step 3) Close the dividend account: Credit the dividend account for an amount equal to its balance, and debit retained earnings.
Income Statement
Cash Noncash Liabil- Contrib Earned RevExpenNet + = + + = Asset Assets ities . Capital Capital enues ses Income +20,100 = Unearne
d Revenue
b.
Balance Sheet
Transaction
UR 3,350 Rev 3,350
UR 3,350 Rev 3,350
Income Statement
Cash Noncash Liabil- Contrib. Earned RevExpenNet + = + + = Asset Assets ities Capital Capital enues ses Income -3,350 = Unearne
+3,350
Revenue
d Revenue
= +3,350
c.
Balance Sheet
AR Rev 570 570
Income Statement
Transactio Cash Noncash Liabil- Contrib Earned RevExpenNet + = + + = n Asset Assets ities . Capital Capital enues ses Income Adjusting entry for fees earned but not billed
+570
Fees Receivable
+570 =
+570
= +570
Cambridge Business Publishers, 2008 3-12 Financial Accounting for MBAs, 3rd Edition
Jan. 31
Jan. 31
570 570
-185
Prepaid Insurance
-185 =
Retained Earnings
+185 Insurance =
Expense
-185
b.
Balance Sheet
Transaction
SUPE SUP 1,080 1,080
Income Statement
Cash Noncash Liabil- Contrib. Earned RevExpenNet + = + + = Asset Assets ities Capital Capital enues ses Income
-1,080
Supplies
-1,080 =
Retained Earnings
M3-18continued c.
Balance Sheet
Transaction
DE AD
DE 62 AD 62
Income Statement
Cash Noncash Liabil- Contrib. Earned RevExpenNet + = + + = Asset Assets ities Capital Capital enues ses Income -62
Accum. Depreciation
62 62
-62 =
Retained Earnings
+62 Deprecia- =
tion Expense
-62
d.
Balance Sheet Income Statement
Net Cash Noncash LiabilContrib. Earned RevExpen+ = + + = Incom Asset Assets ities Capital Capital enues ses e -875 = Unearned
Rent Revenue
Transaction
UR Rev
UR 875 Rev 875
875 875
+875
+875 = +875
e.
Balance Sheet
Transaction
WE WP
WE 490 WP 490
Income Statement
Net Cash Noncash Liabil- Contrib. Earned RevExpen+ = + + = Incom Asset Assets ities Capital Capital enues ses e
490 490
+490 = Wages
Payable
-490
Retained Earnings
+490
Wages Expense
-490
Cambridge Business Publishers, 2008 3-14 Financial Accounting for MBAs, 3rd Edition
EXERCISES
E3-26 (30 minutes)
Balance Sheet
Cash Noncash + = Asset Assets
Income Statement
Transaction
DE AD
DE 610 AD 610
Net LiabilContrib. Earned RevExpen+ + = Incom ities Capital Capital enues ses e -610 +610 Deprecia- =
tion Expense
610 610
-610
Accum. Depreciation
Retained Earnings
-610
SUPE SUP
1,890 1,890
-1,890
Supplies
-1,890 =
Retained Earnings
UE AP
UE 390
390 390
AP 390
+390 =
Accounts (Utilities) Payable
-390
Retained Earnings
+390 Utilities =
Expense
-390
-700
Prepaid Rent
-700 =
Retained Earnings
+700
Rent Expense
-700
UR Rev
UR 468
468 468
Rev 468
-468 =
Unearned premium revenue
+468
+468 = +468
WE WP
WE 965
965 965
WP 965
+965 =
Wages Payable
-965
Retained Earnings
+965 Wages
Expense
-965
E3-26continued
AR OI
AR 300 OI 300
300 300
+300
Interest receivable
+300
+300 = +300
b.
c.
d.
e.
468 468
f.
g.
Cambridge Business Publishers, 2008 3-22 Financial Accounting for MBAs, 3rd Edition
PROBLEMS
P3-39 (35 minutes)
Balance Sheet
Transaction
WE WP 720 720
Income Statement
ExpenNet = ses Income
Cash Noncash Liabil- Contrib. Earned Rev+ = + + Asset Assets ities Capital Capital enues
WE 720 WP 720
+720 = Wages
Payable
-720
Retained Earnings
+720
Wage E xpense
-720
IE IP
200 200
IE 200 IP 200
+200 = Interest
Payable
-200
Retained Earnings
+200
Interest Expense
-200
+900
Fees (Accounts) Receivable
+900
+900 = +900
-400
Prepaid Maintenance
-400 =
Retained Earnings
+400
Maintenance = (Operating) Expense
-400
-300
Prepaid Advertising
-300 =
Retained Earnings
+300 Advertisting =
Expense
-300
RNTE RNTP
160 160
+160 =
Rent Payable
-160
Retained Earnings
+160
Rent Expense
-160
AR OI
38 38
AR 38 OI 38
+38
Interest (Accounts) Receivable
+38
+38 = +38
Cambridge Business Publishers, 2008 3-32 Financial Accounting for MBAs, 3rd Edition
P3-39continued
DE AD 2,175 2,175
DE 2,175 AD 2,175
-2,175
Accum. Depreciation
-2,175 =
Retained Earnings
P3-40 (20 minutes) Date Dec 31 Description Salaries Expense Salaries Payable
To accrue salaries at December 31 ($1,800 2/5 = $720).
Debit 720
Credit 720
31
31
31
31
31
160 160
31
38 38
31
2,175
Income Statement
Transactio Cash Noncash Liabil- Contrib. Earned RevExpenNet + = + + = Asset Assets ities Capital Capital enues ses Income +11,500 =
Common stock
-6,100
Cash
+ 6,100 =
Truck
-1,000
Cash
+3,100
Equipment
+2,100 = Accounts
Payable
-2,880
Cash
+2,880
Prepaid insurance
SUP AP
1,200 1,200
+ 1,200
Supplies
+1,200 = Accounts
Payable
Cash UR
1,800 1,800
+1,800 = Unearned
roofing fees
P3-44continued
Balance Sheet
Transaction
AR 5,500 Rev 5,500
AR 5,500 Rev 5,500
Income Statement
Cash Noncash Liabil- Contrib. Earned RevExpenNet + = + + = Asset Assets ities Capital Capital enues ses Income +5,500
Roofing Fees Revenue
+5,500
Accounts Receivable
+5,500 =
Retained Earnings
= +5,500
Cash AR
4,900 4,900
-4,900
Accounts Receivable
OE Cash
675 675
-675 =
Retained Earnings
+675
Fuel = (Operating) Expense
-675
AE Cash
100 100
-100 =
Retained Earnings
+100 Advertising =
Expense
-100
WE Cash
2,500 2,500
-2,500 =
Retained Earnings
+2,500
Wages Expense
= -2,500
AR Rev
4,000 4,000
+4,000
Accounts Receivable
+4,000 =
Retained Earnings
+4,000
Roofing Fees Revenue
= +4,000
Cambridge Business Publishers, 2008 3-42 Financial Accounting for MBAs, 3rd Edition
P3-44continued b.
Balance Sheet
Cash + Asset Noncash Assets
Income Statement
Net Expen= Incom ses e
Transaction
IE PPI
INSE 120 PPI 120
120 120
-120
Prepaid Insurance
-120 =
Retained Earnings
+120 Insurance =
Expense
-120
SUPE SUP
SUPE 800
800 800
SUP 800
-800
Supplies
-800 =
Retained Earnings
+800
Supplies Expense
-800
DE AD
125 125
DE 125 AD 125
-125
Accum. Deprn --Trucks*
-125 =
Retained Earnings
+125 Depreciation =
Expense
-125
DE AD
35 35
DE 35 AD 35
-35
Accum. Deprn --Equipment*
-35
Retained Earnings
+35 Depreciation =
Expense
-35
UR Rev
450 450
-450 =
Unearned Roofing Fees
+450
+450 = +450
P3-45 (25 minutes) a. Pownall Photomake Company Unadjusted Trial Balance December 31, 2008 Debit Cash.............................................................. $2,150 Accounts Receivable .................................. 3,800 Prepaid Rent ................................................ 12,600 Prepaid Insurance ....................................... 2,970 Supplies........................................................ 4,250 Equipment.................................................... 22,800 Accounts Payable ....................................... Unearned Photography Fees ..................... Common Stock............................................ Photography Fees Earned.......................... Wages Expense ........................................... 11,000 Utilities Expense.......................................... 3,420 Totals ............................................................ $62,990 b.
Balance Sheet
Transaction
AR Rev 925 925
Credit
Income Statement
Expenses = Net Income
Cash Noncash Liabil- Contrib. Earned Rev+ = + + Asset Assets ities Capital Capital enues +925
Fees (Accounts) Receivable
+925 =
PhotoRetained graphy Earnings Fees Earned
+925
+925
DE AD
2,280 2,280
DE 2,280 AD 2,280
-2,280
Accum. Depreciation Equipment
-2,280 =
Retained Earnings
OE ACC
400 400
+400 = Utilities
Payable
-400
Retained Earnings
+400
Utilities Expense
-400
Cambridge Business Publishers, 2008 3-44 Financial Accounting for MBAs, 3rd Edition
P3-45continued
Balance Sheet
Transaction
RNTE 6,300 PPRNT 6,300
RNTE 6,300 PPRNT 6,300
Income Statement
-6,300
Prepaid Rent
-6,300
Retained Earnings
+6,300
Rent Expense
= -6,300
UR Rev
2,600 2,600
-2,600 =
Unearned photo. fees
= +2,600
IE PPI
990 990
INSE 990 PPI 990
-990
Prepaid insurance
-990 =
Retained Earnings
+990 Insurance =
expense
-990
SUPE SUP
2,730 2,730
-2,730
Supplies
-2,730 =
Retained Earnings
WE WP
375 375
WE 375 WP 375
+375 =
Wages payable
-375
Retained Earnings
+375
Wages expense
-375
P3-47 (40 minutes) a. BensEx Unadjusted Trial Balance December 31, 2008 Debit $ 2,300 5,120 1,680 6,270 42,240 $
Credit
Cash Accounts Receivable Prepaid Advertising Supplies Equipment Notes Payable Accounts Payable Common Stock Mailing Fees Earned Wages Expense Rent Expense Utilities Expense Totals b.
________ $105,730
Balance Sheet
Income Statement
Net = Incom e
Transaction
AE 1,540 PPDA 1,540
AE 1,540 PPDA 1,540
Cash Noncash Liabil- Contrib. Earned RevExpen+ = + + Asset Assets ities Capital Capital enues ses
-1,540
Prepaid advertising
-1,540 =
Retained Earnings
DE AD
5,280 5,280
DE 5,280 AD 5,280
-5,280
Accum. Deprn equipment
-5,280 =
Retained Earnings
OE AP
325 325
OE 325 AP 325
+325 = Accounts
Payable
-325
Retained Earnings
+325
Utilities expense
-325
Cambridge Business Publishers, 2008 3-48 Financial Accounting for MBAs, 3rd Edition
P3-47continued
Balance Sheet
Transaction
WE WP 1,200 1,200
Income Statement
Cash Noncash Liabil- Contrib. Earned RevExpenNet + = + + = Asset Assets ities Capital Capital enues ses Income
WE 1,200 WP 1,200
+1,200 = Wages
payable
-1,200
Retained Earnings
+1,200
Wages expense
= -1,200
SUPE SUP
4,750 4,750
Supplies
-4,750 =
-4,750
Retained Earnings
IE IP
450 450
IE 450 IP 450
+450 = Interest
payable
-450
Retained Earnings
+450 Interest =
Expense
-450
RNTE AP
430 430
+430 = Accounts
Payable
-430
Retained Earnings
+430
Rent Expense
-430
* (1/2% $86,000 = $430). The rent for the year (6,300 = $525 x 12) has already been recognized in the accounts. See the beginning balances given in the problem statement.