ACC121 Seminar 3 Examples

M41.
Hagadorn Company
Adjusted Trial Balance
At June 30, 2011

Debit

Cash

175

Accounts receivable

420

Inventories

710

Prepaid expenses
Buildings and equipment

30
1,400
$

Accumulated depreciation
Land

Credit

250

300

Accounts payable

250

Accrued expenses payable

160

Income taxes payable

50

Unearned fees

90

Long-term debt

1,460

Contributed capital

400

Retained earnings

150

Sales revenue

2,400

Interest income

60

Cost of sales

780

Salaries expense

640

Rent expense

460

Depreciation expense

150

Interest expense

70

Income taxes expense

Totals

135
$ 5,270

$ 5,270

E46.

Req. 1
a.

Accrued expense

b.

Deferred expense

c.

Accrued revenue

d.

Deferred expense

e.

Deferred expense

f.

Deferred revenue

g.

Accrued revenue

Req. 2
a.

Computations
2,700
Wages expense (+E, SE) .................................................

Given

Wages payable (+L) ................................................. 2,700

b.

675
Office supplies expense (+E, SE) .....................................
Office supplies (A) ..................................................

$450 + $500
675

- $275 = $675 used

c.

Rent receivable (+A) ...........................................................

1,120

$560 x 2 months

Rent revenue (+R, +SE) ........................................... 1,120

d.

12,100
Depreciation expense (+E, SE) ........................................
Accumulated depreciation (+XA, A)

e.

Given

12,100

600
Insurance expense (+E, SE) .............................................
Prepaid insurance (A) .............................................

f.

$2,400 x 6/24 =
600

3,200
Unearned rent revenue (L) ...............................................

Repair accounts receivable (+A).........................................

800
Repair shop revenue (+R, +SE) ................................

$600 used

$9,600 x 2/6 =

Rent revenue (+R, +SE) ........................................... 3,200

g.

= $1,120 earned

$3,200 earned

Given
800

AP47.

Req. 1
December 31, 2011, Adjusting Entries:

(a)

Depreciation expense (+E, SE) ......................................

3,000

Accumulated depreciation (+XA, A) ....................

(b)

Insurance expense (+E, SE) ...........................................

3,000

450

Prepaid insurance (A) .........................................

(c)

Wages expense (+E, SE) ................................................

450

2,100

Wages payable (+L) ..............................................

(d)

Supplies expense (+E, SE) .............................................

2,100

500

Supplies (A) ........................................................

(e)

Income tax expense (+E, SE) .........................................

Income tax payable (+L) .......................................

Req. 2
SOUTH BEND REPAIR SERVICE CO.
Income Statement
For the Year Ended December 31, 2011

500

3,150
3,150

Operating Revenue:
Service revenue

$48,000

Operating Expenses:
Depreciation expense
Insurance expense
Wages expense

3,000
450
2,100

Supplies expense ($1,300 balance - $800 on hand) 500

Remaining expenses (not detailed)
Total expenses
Operating Income
Income tax expense
Net Income

Earnings per share ($5,900 3,000 shares)

32,900
38,950
9,050
3,150
$5,900

$1.97

AP47. (continued)

SOUTH BEND REPAIR SERVICE CO.

Balance Sheet
At December 31, 2011

Liabilities and Stockholders Equity

Assets
Current Assets:
Cash
Accounts receivable

Current Liabilities:
$19,600
7,000

Supplies

800

Prepaid insurance

450

Total current assets

Equipment
Accumulated depreciation
Other assets (not detailed)

Accounts payable
Wages payable

2,100

Income tax payable

3,150

Total current liabilities

Note payable, long term

5,000

27,000

Total liabilities

12,750

(15,000)
5,100

Stockholders' Equity
Contributed capital

16,000

Retained earnings*

16,200

$44,950

Total liabilities and

stockholders' equity

*Unadjusted balance, $10,300 + Net income, $5,900 = Ending balance, $16,200.

Req. 3

7,750

27,850

Total stockholders' equity

Total assets

$ 2,500

32,200

$44,950

December 31, 2011, Closing Entry:

Service revenue (R).........................................................

48,000

Retained earnings (+SE) .......................................

5,900

Depreciation expense (E) ....................................

3,000

Insurance expense (E) ........................................

450

Wages expense (E) ............................................

2,100

Supplies expense (E) ..........................................

500

Remaining expenses (not detailed) (E) ................

32,900

Income tax expense (E) ......................................

3,150

AP5-1.

Req. 1

TANGOCO
Balance Sheet
December 31, 2012

Assets
Current Assets
Cash ...........................................................................
Accounts receivable ....................................................
Prepaid rent ................................................................
Inventory .....................................................................
Total current assets ............................................
Long-Term Investments
Stock of PIL Corporation .............................................
Fixed Assets
Store equipment .........................................................
Less accumulated depreciation ..............................
Total fixed assets ...............................................
Other Assets
Used store equipment held for disposal ......................
Total assets ........................................................

$ 48,800
71,820
1,120
154,000
$275,740
36,400
67,200
13,440
53,760
9,800
$375,700

Liabilities
Current Liabilities
Accounts payable .......................................................
Income taxes payable .................................................
Total current liabilities.........................................
Long-Term Liabilities
Note payable ..............................................................
Total liabilities .....................................................

$ 58,800
9,800
$ 68,600
32,000
100,600

Stockholders' Equity
Contributed Capital
Common stock, par $1 per share, 100,000 shares .....
Additional paid-in capital .............................................
Total contributed capital .....................................
Retained Earnings .............................................................
Total stockholders' equity ...................................
Total liabilities and stockholders' equity .............

100,000
10,000
110,000
165,100
275,100
$375,700

AP5-1. (continued)

Req. 2

Store equipment

$67,200 - $13,440 = $53,760

Acquisition cost less sum of all

depreciation expense to date.

Net book value (sometimes called book value or carrying value) is the amount of cost
less any contra accounts (offsets).

AP5-2.

Req. 1
MESA INDUSTRIES
Balance Sheet
December 31, 2012

Stockholders' Equity
Common stock (par $15, 8,500 shares outstanding)
(8,500 x $15) ...............................................................
Additional paid-in capital
[$9,000 + (1,500 shares x $11 = $16,500)] ...................
Retained earnings
[$48,000 + $46,000 - (7,000 shares x $1 = $7,000)] ....
Total stockholders' equity ...........................................
Req. 2

$127,500
25,500
87,000
$240,000

Cash (1,500 shares x $26) (+A) ..................................

Common stock (1,500 shares x $15) (+SE) ......
Additional paid-in capital
[1,500 shares x ($26 - $15)] (+SE)................

39,000
22,500
16,500