I need the following Answered.

E3-3B

E3-5B

E3-8B

E3-14B

P3-8B

P3-11B

c03BExercises.qxd 12/7/12 10:30 AM Page 1 B EXERCISES 4 E3-1B (Transaction AnalysisService Company) Brown is a licensed CPA. During the first month of operations of her business (a sole proprietorship), the following events and transactions occurred. April 2 2 3 7 11 12 17 21 30 30 30 Invested $73,600 cash and equipment valued at $32,200 in the business. Hired a secretary-receptionist at a salary of $667 per week, payable monthly. Purchased supplies on account $1,610. (Debit an asset account.) Paid office rent of $1,380 for the month. Completed a tax assignment and billed client $2,530 for services rendered. (Use Service Revenue account.) Received $7,360 advance on a management consulting engagement. Received cash of $5,290 for services completed for Calunga Co. Paid insurance expense $253. Paid secretary-receptionist $2,668 for the month. A count of supplies indicated that $276 of supplies had been used. Purchased a new computer for $14,030 with personal funds. (The computer will be used exclusively for business purposes.) Instructions Journalize the transactions in the general journal. (Omit explanations.) 4 E3-2B (Corrected Trial Balance) The trial balance of Vista Company does not balance. Your review of the ledger reveals the following: (a) Each account had a normal balance. (b) The credit footings in Prepaid Insurance, Accounts Payable, and Advertising Expense were each understated $500. (c) A transposition error was made in Accounts Receivable and Service Revenue; the correct balances for Accounts Receivable and Service Revenue are $1,840 and $12,060, respectively. (d) A credit posting to Property Tax Expense of $380 was omitted. (e) A $2,000 cash drawing by the owner was debited to Vista, Capital, and credited to Cash. VISTA COMPANY TRIAL BALANCE APRIL 30, 2014 Debit Cash Accounts Receivable Prepaid Insurance Equipment Accounts Payable Property Tax Payable Owner's Capital Service Revenue Salaries and Wages Expense Advertising Expense Property Tax Expense Credit $ 5,600 2,380 900 $ 9,600 6,000 1,200 4,900 12,600 6,150 600 1,350 $16,830 $34,450 Instructions Prepare a correct trial balance. 4 E3-3B (Corrected Trial Balance) The trial balance of Cervantes Corporation, below, does not balance. CERVANTES CORPORATION TRIAL BALANCE APRIL 30, 2014 Debit Cash Accounts Receivable Supplies Equipment Accounts Payable Common Stock Retained Earnings Service Revenue Office Expense Credit $11,824 10,480 5,934 12,200 $14,088 16,000 4,000 10,400 8,640 $49,078 $44,488 1 c03BExercises.qxd 2 12/7/12 10:30 AM Page 2 Chapter 3 The Accounting Information System An examination of the ledger shows these errors. 1. Cash received from a customer on account was recorded (both debit and credit) as $2,760 instead of $3,660. 2. The purchase on account of a computer costing $6,400 was recorded as a debit to Office Expense and a credit to Accounts Payable. 3. Services were performed on account for a client, $4,500, for which Accounts Receivable was debited $4,500 and Service Revenue was credited $450. 4. A payment of $190 for telephone charges was entered as a debit to Office Expenses and a debit to Cash. 5. The Service Revenue account was totaled at $10,400 instead of $10,560. Instructions From this information prepare a corrected trial balance. 4 E3-4B (Corrected Trial Balance) The trial balance of Vail Co. does not balance. VAIL CO. TRIAL BALANCE JUNE 30, 2014 Debit Cash Accounts Receivable Supplies Equipment Accounts Payable Unearned Service Revenue Common Stock Retained Earnings Service Revenue Salaries and Wages Expense Office Expense Credit $ 1,650 $ 8,618 1,200 10,480 5,600 600 10,000 2,038 7,950 2,100 1,380 $24,378 $27,238 Each of the listed accounts should have a normal balance per the general ledger. An examination of the ledger and journal reveals the following errors. 1. Cash received from a customer on account was debited for $160, and Accounts Receivable was credited for the same amount. The actual collection was for $610. 2. The purchase of a computer printer on account for $850 was recorded as a debit to Supplies for $850 and a credit to Accounts Payable for $850. 3. Services were performed on account for a client for $460. Accounts Receivable was debited for $60 and Service Revenue was credited for $460. 4. A payment of $150 for internet charges was recorded as a credit to Office Expense for $150 and a credit to Cash for $150. 5. When the Unearned Service Revenue account was reviewed, it was found that service revenue amounting to $200 was performed prior to June 30. 6. A debit posting to Salaries and Wages Expense of $1,200 was omitted. 7. A payment on account for $350 was credited to Cash for $350 and credited to Accounts Payable for $350. 8. A dividend of $600 was debited to Salaries and Wages Expense for $600 and credited to Cash for $60. Instructions Prepare a correct trial balance. (Note: It may be necessary to add one or more accounts to the trial balance.) 5 E3-5B (Adjusting Entries) The ledger of Chan Rental Agency on March 31 of the current year includes the following selected accounts before adjusting entries have been prepared. Debit Prepaid Insurance Supplies Equipment Accumulated DepreciationEquipment Notes Payable Unearned Rent Revenue Rent Revenue Interest Expense Salaries and Wage Expense Credit $ 2,700 2,100 18,750 $ 6,300 15,000 6,975 45,000 -0- 10,500 c03BExercises.qxd 12/7/12 10:30 AM Page 3 B Exercises An analysis of the accounts shows the following. 1. 2. 3. 4. 5. The equipment depreciates $188 per month. One-third of the unearned rent was recognised as revenue during the quarter. Interest of $375 is accrued on the notes payable. Supplies on hand total $637. Insurance expires at the rate of $225 per month. Instructions Prepare the adjusting entries at March 31, assuming that adjusting entries are made quarterly. Additional accounts are: Depreciation Expense; Insurance Expense; Interest Payable; and Supplies Expense. 5 E3-6B (Adjusting Entries) Cheng, D.D.S., opened a dental practice on January 1, 2014. During the first month of operations the following transactions occurred. 1. Performed services for patients who had dental plan insurance. At January 31, $375 of such services was performed but not yet billed to the insurance companies. 2. Utility expenses incurred but not paid prior to January 31 totaled $260. 3. Purchased dental equipment on January 1 for $40,000, paying $10,000 in cash and signing a $30,000, 3-year note payable. The equipment depreciates $200 per month. Interest is $250 per month. 4. Purchased a one-year malpractice insurance policy on January 1 for $6,000. 5. Purchased $800 of dental supplies. On January 31, determined that $250 of supplies were on hand. Instructions Prepare the adjusting entries on January 31. Account titles are: Accumulated DepreciationEquipment Depreciation Expense Service Revenue Accounts Receivable Insurance Expense Interest Expense 5 Interest Payable Prepaid Insurance Supplies Supplies Expense Utilities Expense Utilities Payable E3-7B (Analyze Adjusted Data) A partial adjusted trial balance of Coy Company at January 31, 2014, shows the following. COY COMPANY ADJUSTED TRIAL BALANCE JANUARY 31, 2014 Debit Supplies Prepaid Insurance Salaries and Wages Payable Unearned Revenue Supplies Expense Insurance Expense Salaries and Wages Expense Service Revenue Credit $1,120 3,840 $1,280 1,200 1,520 640 2,880 3,200 Instructions Answer the following questions, assuming the year begins January 1. (a) If the amount in Supplies Expense is the January 31 adjusting entry, and $1,360 of supplies was purchased in January, what was the balance in Supplies on January 1? (b) If the amount in Insurance Expense is the January 31 adjusting entry, and the original insurance premium was for one year, what was the total premium and when was the policy purchased? (c) If $4,000 of salaries was paid in January, what was the balance in Salaries Payable at December 31, 2013? (d) If $2,560 was received in January for services performed in January, what was the balance in Unearned Revenue at December 31, 2013? 3 c03BExercises.qxd 4 12/7/12 10:30 AM Page 4 Chapter 3 The Accounting Information System 5 E3-8B (Adjusting Entries) Dement is the new owner of Fung Computer Services. At the end of August 2014, his first month of ownership, Dement is trying to prepare monthly financial statements. Below is some information related to unrecorded expenses that the business incurred during August. 1. At August 31, Dement owed his employees $2,280 in wages that will be paid on September 1. 2. At the end of the month he had not yet received the month's utility bill. Based on past experience, he estimated the bill would be approximately $720. 3. On August 1, Dement borrowed $36,000 from a local bank on a 15-year mortgage. The annual interest rate is 6%. 4. A telephone bill in the amount of $140 covering August charges is unpaid at August 31. Instructions Prepare the adjusting journal entries as of August 31, 2014, suggested by the information above. 5 E3-9B (Adjusting Entries) Selected accounts of Conan Company are shown below. Supplies Beg. Bal. 1,200 Accounts Receivable 8 31 712 8 17 8 31 12,100 3,600 Salaries and Wages Expense 8 15 8 31 Salaries and Wages Payable 2,600 2,100 8 31 Unearned Service Revenue 8 31 2,000 8 20 2,100 Supplies Expense 3,200 8 31 712 Service Revenue 8 17 8 31 8 31 12,100 3,600 2,000 Instructions From an analysis of the T-accounts, reconstruct (a) the August transaction entries, and (b) the adjusting journal entries that were made on August 31, 2014. Prepare explanations for each journal entry. 5 E3-10B (Adjusting Entries) Gonzalez Resort opened for business on June 1 with eight air-conditioned units. Its trial balance on August 31 is as follows. GONZALEZ RESORT TRIAL BALANCE AUGUST 31, 2014 Debit Cash Prepaid Insurance Supplies Land Buildings Equipment Accounts Payable Unearned Rent Revenue Mortgage Payable Common Stock Retained Earnings Dividends Rent Revenue Salaries and Wages Expense Utilities Expense Maintenance and Repairs Expense Credit $ 1,960 440 260 2,000 12,000 1,600 $ 450 460 6,000 9,100 890 500 7,620 4,480 920 360 $24,520 $24,520 Other data: 1. 2. 3. 4. The balance in prepaid insurance is a one-year premium paid on June 1, 2014. An inventory count on August 31 shows $45 of supplies on hand. Annual depreciation rates are cottages (10%) and furniture (15%). Salvage value is estimated to be 10% of cost. Unearned Rent Revenue of $380 was earned prior to August 31. c03BExercises.qxd 12/7/12 10:30 AM Page 5 B Exercises 5. 6. 7. Salaries of $38 were unpaid at August 31. Rentals of $80 were due from tenants at August 31. The mortgage interest rate is 6% per year. Instructions (a) Journalize the adjusting entries on August 31 for the 3-month period June 1-August 31. (b) Prepare an adjusted trial balance on August 31. 6 E3-11B (Prepare Financial Statements) The adjusted trial balance of Decimal Co. as of December 31, 2014, contains the following. DECIMAL CO. ADJUSTED TRIAL BALANCE DECEMBER 31, 2014 Account Titles Dr. Cash Accounts Receivable Prepaid Rent Equipment Accumulated DepreciationEquipment Notes Payable Accounts Payable Common Stock Retained Earnings Dividends Service Revenue Salaries and Wages Expense Rent Expense Depreciation Expense Interest Expense Interest Payable Cr. $ 6,590 15,618 1,200 31,800 $ 9,680 12,500 11,601 20,000 3,619 6,000 27,600 15,600 7,800 392 211 211 $85,211 $85,211 Instructions (a) Prepare an income statement. (b) Prepare a statement of retained earnings. (c) Prepare a classified balance sheet. 6 E3-12B (Prepare Financial Statements) Comp Corp. was founded by Kevin Flynn in January 2008. Presented below is the adjusted trial balance as of December 31, 2014. COMP CORP. ADJUSTED TRIAL BALANCE DECEMBER 31, 2014 Dr. Cash Accounts Receivable Supplies Prepaid Insurance Equipment Accumulated DepreciationEquipment Accounts Payable Interest Payable Notes Payable Unearned Service Revenue Salaries and Wages Payable Common Stock Retained Earnings Service Revenue Salaries and Wages Expense Insurance Expense Interest Expense Depreciation Expense Supplies Expense Rent Expense $ Cr. 2,500 35,600 7,100 3,000 30,000 $ 12,000 17,600 200 10,000 2,100 400 20,000 7,060 53,600 25,600 600 960 2,500 7,100 8,000 $122,960 $122,960 5 c03BExercises.qxd 6 12/7/12 10:30 AM Page 6 Chapter 3 The Accounting Information System Instructions (a) Prepare an income statement and a statement of retained earnings for the year ending December 31, 2014, and an unclassified balance sheet at December 31. (b) Answer the following questions. (1) If the note has been outstanding 2 months, what is the annual interest rate on that note? (2) If the company paid $26,400 in salaries in 2014, what was the balance in Salaries and Wages Payable on December 31, 2013? 7 E3-13B (Closing Entries) The adjusted trial balance of Guevara Company shows the following data pertaining to sales at the end of its fiscal year, October 31, 2014: Sales Freight-out $320,000 $4,800 Sales Returns and Allowances Sales Discounts $9,600 $6,000 Instructions (a) Prepare the sales revenues section of the income statement. (b) Prepare separate closing entries for (1) sales, and (2) the contra accounts to sales. 7 E3-14B (Closing Entries) Presented below is information related to Crowe Corporation for the month of January 2014. Cost of goods sold Freight-out Insurance expense Rent expense $361,000 22,500 12,000 32,000 Salaries and Wages expense Sales discounts Sales returns and allowances Sales $201,000 31,000 21,500 812,000 Instructions Prepare the necessary closing entries. 6 E3-15B (Missing Amounts) Presented below is financial information for two different companies. Sales Sales returns Net sales Cost of goods sold Gross profit Operating expenses Net income Hirsch Company $30,000 (a) 27,000 18,600 (b) 5,000 (c) Ho Company (d) $ 1,600 31,600 (e) 12,600 7,600 5,000 Instructions Compute the missing amounts. 7 E3-16B (Closing Entries for a Corporation) Presented below are selected account balances for Kirby Co. as of December 31, 2014. Merchandise Inventory 12 31 14 Common Stock Retained Earnings Dividends Sales Returns and Allowances Sales Discounts $24,000 30,000 18,000 7,200 4,800 6,000 Sales Cost of Goods Sold Selling Expenses Administrative Expenses Income Tax Expense $164,000 90,280 6,400 15,200 12,000 Instructions Prepare closing entries for Kirby Co. on December 31, 2014. 4 E3-17B (Transactions of a Corporation, Including Investment and Dividend) Scott Loder opened Ledford Miniature Golf and Driving Range Inc. on March 1. The following selected events and transactions occurred during March. Mar. 1 3 5 6 10 18 25 30 30 31 Invested $62,500 cash in the business in exchange for common stock. Purchased Moises Moreno's Golf Land for $47,500 cash. The price consists of land $12,500; building $27,500; and equipment $7,500. (Make one compound entry.) Advertised the opening of the driving range and miniature golf course, paying advertising expenses of $2,000. Paid cash $1,850 for a one-year insurance policy. Purchased golf equipment for $3,125 from Moore Company, payable in 30 days. Received golf fees of $1,500 in cash. Declared and paid a $625 cash dividend. Paid wages of $1,125. Paid Moore Company in full. Received $950 of fees in cash. c03BExercises.qxd 12/7/12 10:30 AM Page 7 B Exercises Ledford uses the following accounts: Cash Prepaid Insurance Land Buildings Equipment Accounts Payable Common Stock Dividends Service Revenue Advertising Expense Salaries and Wages Expense Instructions Journalize the March transactions. 8 *E3-18B (Cash to Accrual Basis) June Murray, M.D., maintains the accounting records of Murray Clinic on a cash basis. During 2014, Dr. Murray collected $285,200 from her patients and paid $110,940 in expenses. At January 1, 2014, and December 31, 2014, she had accounts receivable, unearned service revenue, accrued expenses, and prepaid expenses as follows. All long-lived assets are rented. Accounts receivable Unearned service revenue Accrued expenses Prepaid expenses January 1, 2014 December 31, 2014 $18,500 5,680 6,870 3,834 $31,854 8,222 4,216 6,464 Instructions Prepare a schedule that converts Dr. Murray's \"excess of cash collected over cash disbursed\" for the year 2014 to net income on an accrual basis for the year 2014. 4 8 *E3-19B (Cash and Accrual Basis) Letterman Corp. maintains its financial records on the cash basis of ac- counting. Interested in securing a long-term loan from its regular bank, Letterman Corp. requests you as its independent CPA to convert its cash-basis income statement data to the accrual basis. You are provided with the following summarized data covering 2013, 2014, and 2015. Cash receipts from sales: On 2013 sales On 2014 sales On 2015 sales Cash payments for expenses: On 2013 expenses On 2014 expenses On 2015 expenses a Prepayments of 2014 expenses. b Prepayments of 2015 expenses. 2013 2014 2015 $600,000 -0- $201,000 701,000 $75,000 161,000 602,000 360,000 10,000a 42,000 406,000 21,000b 25,000 71,000 451,000 Instructions (a) Using the data above, prepare abbreviated income statements for the years 2013 and 2014 on the cash basis. (b) Using the data above, prepare abbreviated income statements for the years 2013 and 2014 on the accrual basis. 5 9 *E3-20B (Adjusting and Reversing Entries) When the accounts of David Nguyen Inc. are examined, the adjusting data listed below are uncovered on December 31, the end of an annual fiscal period. 1. 2. 3. 4. The prepaid insurance account shows a debit of $7,200, representing the cost of a 2-year fire insurance policy dated August 1 of the current year. On November 1, Rent Revenue was credited for $1,500, representing revenue from a subrental for a 3-month period beginning on that date. Purchase of advertising materials for $1,000 during the year was recorded in the Advertising Expense account. On December 31, advertising materials of $300 are on hand. Interest of $850 has accrued on notes payable. Instructions Prepare the following in general journal form. (a) The adjusting entry for each item. (b) The reversing entry for each item where appropriate. 10 *E3-21B (Worksheet) Presented below are selected accounts for Avacado Company as reported in the worksheet at the end of April 2014. 7 c03BExercises.qxd 8 12/7/12 10:30 AM Page 8 Chapter 3 The Accounting Information System Accounts Cash Inventory Sales Sales Returns and Allowances Sales Discounts Cost of Goods Sold Adjusted Trial Balance Debit Credit 26,000 112,000 801,000 8,000 21,000 468,500 Income Statement Debit Credit Balance Sheet Debit Credit Instructions Complete the worksheet by extending amounts reported in the adjusted trial balance to the appropriate columns in the worksheet. Do not total individual columns. 10 *E3-22B (Worksheet and Balance Sheet Presentation) The adjusted trial balance for Berkeley Co. is pre- sented in the following worksheet for the month ended April 30, 2014. BERKELEY CO. Worksheet (PARTIAL) For The Month Ended April 30, 2014 Account Titles Cash Accounts Receivable Prepaid Rent Equipment Accumulated Depreciation Equipment Notes Payable Accounts Payable Common Stock Retaind Earnings, April 1, 2014 Dividends Service Revenue Salaries and Wages Expense Rent Expense Depreciation Expense Interest Expense Interest Payable Adjusted Trial Balance Debit Credit $12,180 21,316 3,560 36,510 Income Statement Debit Credit Balance Sheet Debit Credit $ 12,611 21,000 9,654 26,610 2,000 12,000 37,591 15,600 7,100 1,200 1,050 1,050 Instructions Complete the worksheet and prepare a classified balance sheet. 10 *E3-23B (Partial Worksheet Preparation) Leno Co. prepares monthly financial statements from a work- sheet. Selected portions of the January worksheet showed the following data. LENO CO. Worksheet (PARTIAL) For The Month Ended January 31, 2014 Account Title Supplies Accumulated Depreciation Equipment Interest Payable Supplies Expense Depreciation Expense Interest Expense Trial Balance Debit Credit 5,200 Adjustments Debit Credit (a) 1,500 12,610 600 (b) 2,100 (c) 100 (a) 1,500 (b) 2,100 (c) 100 Adjusted Trial Balance Debit Credit 3,700 14,710 700 1,500 2,100 100 During February no events occurred that affected these accounts, but at the end of February the following information was available. (a) Supplies on hand (b) Monthly depreciation (c) Accrued interest $2,150 $2,100 $ 100 Instructions Reproduce the data that would appear in the February worksheet, and indicate the amounts that would be shown in the February income statement. c03BProblems.indd Page 1 07/12/12 2:22 PM user-f409 B PROBLEMS 4 6 7 P3-1B (Transactions, Financial StatementsService Company) Listed below are the transactions of Rook Medical., for the month of March. March 1 1 3 3 4 10 15 21 23 26 30 31 31 Rook begins practice as a family practitioner and invests $50,000 cash. Purchases medical equipment on account from JK Enterprises for $22,800. Pays rent for office space, $1,500 for the month. Employs a receptionist, Michelle Kwin. Purchases medical supplies for cash, $1,165. Receives cash of $850 from patients for services performed. Bills patients $11,560 for services performed. Pays JK Enterprises. on account, $7,600. Withdraws $3,000 cash from the business for personal use. Receives $2,600 from patients on account. Bills patients $6,890 for services performed. Pays the following expenses in cash: Salaries and wages $2,500; miscellaneous office expenses $910. Medical supplies used during the month, $695. Instructions (a) Enter the transactions shown above in appropriate general ledger accounts (use T-accounts). Use the following ledger accounts: Cash, Accounts Receivable, Supplies, Equipment, Accumulated DepreciationEquipment, Accounts Payable, Owner's Capital, Service Revenue, Rent Expense, Office Expense, Salaries and Wages Expense, Supplies Expense, Depreciation Expense, and Income Summary. Allow 10 lines for the Cash and Income Summary accounts, and 5 lines for each of the other accounts needed. Record depreciation using a 5-year life on the equipment, the straight-line method, and no salvage value. Do not use a drawing account. (b) Prepare a trial balance. (c) Prepare an income statement, a statement of owner's equity, and an unclassified balance sheet. (d) Close the ledger. (e) Prepare a post-closing trial balance. 5 6 P3-2B (Adjusting Entries and Financial Statements) Palm Travel Agency was founded in January 2010. Presented below are adjusted and unadjusted trial balances as of December 31,2014. PALM TRAVEL AGENCY TRIAL BALANCE DECEMBER 31, 2014 Unadjusted Debit Cash Accounts Receivable Supplies Prepaid Insurance Equipment Accumulated DepreciationEquipment Notes Payable Accounts Payable Interest Payable Salaries and Wages Payable Unearned Service Revenue Common Stock Retained Earnings Service Revenue Salaries and Wages Expense Insurance Expense Interest Expenses Depreciation Expense Supplies Expense Rent Expense Adjusted Credit $16,500 6,500 3,600 2,000 30,000 Debit $ 12,000 10,000 2,600 0 0 1,100 1,000 13,800 46,100 26,000 0 0 0 0 2,000 $86,600 Credit $16,500 7,250 800 800 30,000 $15,000 10,000 2,600 600 1,850 250 1,000 13,800 47,700 27,850 1,200 600 3,000 2,800 2,000 $86,600 $92,800 $92,800 1 c03BProblems.indd Page 2 07/12/12 2:22 PM user-f409 2 Chapter 3 The Accounting Information System Instructions (a) Journalize the annual adjusting entries that were made. (Omit explanations.) (b) Prepare an income statement and a statement of retained earnings for the year ending December 31, 2014, and an unclassified balance sheet at December 31. (c) Answer the following questions. (1) If the note has been outstanding 6 months, what is the annual interest rate on that note? (2) If the company paid $27,200 in salaries and wages in 2014, what was the balance in Salaries and Wages Payable on December 31,2013? 5 P3-3B (Adjusting Entries) A review of the ledger of Dallas Company at December 31, 2014, produces the following data pertaining to the preparation of annual adjusting entries. 1. Salaries and Wages Payable $0. There are nine employees. Salaries and wages are paid every Friday for the current week. Five employees receive $850 each per week, and four employees earn $500 each per week. December 31 is a Wednesday. Employees do not work weekends. All employees worked the last 3 days of December. 2. Unearned Rent Revenue $65,000. The company began leasing office space in its new building on October 1. Each tenant is required to make a $10,000 security deposit that is not refundable until occupancy is terminated. At December 31, the company had the following rental contracts that are paid in full for the entire term of the lease. Date Term (in months) Monthly Rent Number of Leases Oct. 1 Nov. 1 Dec. 1 12 6 12 $ 8,000 $10,000 $ 8,500 2 1 4 3. Prepaid Advertising $6,800. This balance consists of payments on three advertising contracts. The contracts provide for monthly advertising in three trade magazines. The terms of the contracts are as shown below. Contract Date Amount Number of Magazine Issues J5K K56 L76H July 1 Oct 1 Dec 1 $6,000 $8,400 $9,000 12 12 6 The first advertisement runs in the month in which the contract is signed. 4. Notes Payable $108,000. This balance consists of a note for one year at an annual interest rate of 10%, dated September 1. Instructions Prepare the adjusting entries at December 31,2014. (Show all computations). c03BProblems.indd Page 3 07/12/12 2:22 PM user-f409 B Problems 3 4 5 6 7 P3-4B (Financial Statements, Adjusting and Closing Entries) The trial balance of Orange Center contained the following accounts at June 30, the end of the company's fiscal year. ORANGE CENTER TRIAL BALANCE JUNE 30, 2014 Debit Cash Accounts Receivable Inventory Supplies Equipment Accumulated DepreciationEquipment Notes Payable Accounts Payable Common Stock Retained Earnings Sales Revenue Sales Returns and Allowances Cost of Goods Sold Salaries and Wages Expense Advertising Expense Utilities Expenses Maintenance and Repairs Expense Freight-out Rent Expense $ Credit 6,800 49,800 56,950 5,600 62,000 $ 20,000 41,000 32,500 1,000 61,700 506,800 13,000 246,900 125,650 36,000 6,890 9,810 16,800 26,800 $663,000 $663,000 Adjustment data: 1. Supplies on hand totaled $2,200. 2. Depreciation is $6,800 on the equipment. 3. Interest of $3,800 is accrued on notes payable at June 30. Other data: 1. 2. 3. 4. Salaries and wages expense is 60% selling and 40% administrative. Rent expense and utilities expense are 70% selling and 30% administrative. $10,000 of notes payable are due for payment next year. Maintenance and repairs expense is 100% administrative. Instructions (a) Journalize the adjusting entries. (b) Prepare an adjusted trial balance. (c) Prepare a multiple-step income statement and retained earnings statement for the year and a classified balance sheet as of June 30,2014. (d) Journalize the closing entries. (e) Prepare a post-closing trial balance. 5 P3-5B (Adjusting Entries) The accounts listed below appeared in the December 31 trial balance of the Danforth Club. Debit Equipment Accumulated DepreciationEquipment Notes Payable Admissions Revenue Advertising Expense Salaries and Wages Expense Interest Expense Credit $ 268,000 $ 165,000 160,000 680,000 56,580 168,000 2,000 c03BProblems.indd Page 4 07/12/12 2:22 PM user-f409 4 Chapter 3 The Accounting Information System Instructions (a) From the account balances listed above and the information given below, prepare the annual adjusting entries necessary on December 31. (Omit explanations.) 1. The equipment has an estimated life of 16 years and a salvage value of $28,000 at the end of that time. (Use straight-line method.) 2. The note payable is a 180-day note given to the bank Aug 18 and bearing interest at 12%. (Use 360 days for denominator.) 3. In December, 5,000 coupon admission books were sold at $25 each. They could be used for admission any time after January 1. 4. Advertising expense paid in advance and included in Advertising Expense $4,500. 5. Salaries and wages accrued but unpaid $9,200. (b) What amounts should be shown for each of the following on the income statement for the year? 1. Interest expense. 3. Advertising expense. 2. Admissions revenue. 4. Salaries and wages expense. 5 6 P3-6B (Adjusting Entries and Financial Statements) Presented below are the trial balance and the other information related to Gator Consulting. GATOR CONSULTING TRIAL BALANCE DECEMBER 31, 2014 Debit Cash Accounts Receivable Allowance for Doubtful Accounts Supplies Prepaid Insurance Equipment Accumulated DepreciationEquipment Notes Payable Owner's Capital Service Revenue Rent Expense Salaries and Wages Expense Utilities Expense Office Expense Credit $21,600 85,600 $1,600 12,600 2,800 43,000 10,750 50,000 18,250 427,500 42,000 256,800 16,800 26,900 $508,100 $508,100 Fees received in advance from clients $9,000. Services performed for clients that were not recorded by December 31, $12,600. Bad debt expense for the year is $3,650. Insurance expired during the year $2,100. Equipment is being depreciated at 10% per year. Gator gave the bank a 90-day, 12% note for $50,000 on December 1,2014. Rent of the building is $3,000 per month. The rent for 2014 has been paid, as has that for January and February 2015. 8. Office salaries and wages earned but unpaid December 31,2014, $2,650. 1. 2. 3. 4. 5. 6. 7. Instructions (a) From the trial balance and other information given, prepare annual adjusting entries as of December 31,2014. (Omit explanations.) (b) Prepare an income statement for 2014, a statement of owner's equity, and a classified balance sheet. The owner withdrew $25,000 cash for personal use during the year. c03BProblems.indd Page 5 07/12/12 2:22 PM user-f409 B Problems 5 5 6 P3-7B (Adjusting Entries and Financial Statements) Austin Sports, Inc. was organized on April 1,2014. Quarterly financial statements are prepared. The trial balance and adjusted trial balance on June 30 are shown here. AUSTIN SPORTS, INC. TRIAL BALANCE JUNE 30, 2014 Unadjusted Dr. Cash Accounts Receivable Prepaid Rent Supplies Equipment Accumulated DepreciationEquipment Notes Payable Accounts Payable Salaries and Wages Payable Interest Payable Unearned Rent Revenue Common Stock Retained Earnings Dividends Service Revenue Rent Revenue Salaries and Wages Expense Rent Expense Depreciation Expense Supplies Expense Utilities Expense Interest Expense Adjusted Cr. $ 12,500 6,500 600 1,600 26,000 Dr. $12,500 7,200 0 850 26,000 $ 650 20,000 1,200 1,600 500 600 10,500 0 $ 20,000 1,200 2,000 10,500 0 500 500 35,450 1,200 20,100 1,600 36,150 2,600 21,700 2,200 650 750 950 500 950 $ 70,350 Cr. $ 70,350 $73,800 $ 73,800 Instructions (a) Journalize the adjusting entries that were made. (b) Prepare an income statement and a retained earnings statement for the 3 months ending June 30 and a classified balance sheet at June 30. (c) Identify which accounts should be closed on June 30. (d) If the note bears interest at 10%, how many months has it been outstanding? c03BProblems.indd Page 6 07/12/12 2:22 PM user-f409 6 Chapter 3 The Accounting Information System 5 6 P3-8B (Adjusting Entries and Financial Statements) Baltic Travel Agency was established in January 2010. The adjusted and unadjusted trial balances as of December 31, 2014 are shown here. BALTIC TRAVEL AGENCY. TRIAL BALANCE DECEMBER 31, 2014 Unadjusted Dr. Cash Accounts Receivable Supplies Prepaid Insurance Equipment Accumulated DepreciationEquipment Notes Payable Accounts Payable Interest Payable Unearned Service Revenue Salaries and Wages Payable Common Stock Retained Earnings Dividends Service Revenue Salaries and Wages Expense Insurance Expense Interest Expense Depreciation Expense Supplies Expense Rent Expense $ Adjusted Cr. 6,500 22,600 3,650 2,400 36,900 Dr. $ $ 15,800 15,000 1,500 0 3,600 0 10,000 6,400 6,000 $ 21,500 15,000 1,500 1,350 2,100 1,300 10,000 6,400 6,000 85,200 46,950 90,200 48,250 1,300 1,350 5,700 1,850 12,500 12,500 $137,500 Cr. 6,500 26,100 1.800 1,100 36,900 $137,500 $149,350 $149,350 Instructions (a) Journalize the annual adjusting entries that were made. (b) Prepare an income statement and a retained earnings statement for the year ended December 31, and a classified balance sheet at December 31. (c) Identify which accounts should be closed on December 31. (d) If the note has been outstanding 9 months, what is the annual interest rate on that note? (e) If the company paid $48,000 in salaries and wages in 2014, what was the balance in Salaries and Wages Payable on December 31, 2013? c03BProblems.indd Page 7 07/12/12 2:22 PM user-f409 B Problems 7 4 5 6 7 P3-9B (Adjusting and Closing) Presented below is the trial balance of the ALI Golf and Tennis Club, Inc. as of December 31. The books are closed annually on December 31. ALI GOLF AND TENNIS CLUB, INC. TRIAL BALANCE DECEMBER 31 Debit Cash Accounts Receivable Allowance for Doubtful Accounts Prepaid Insurance Land Buildings Accumulated DepreciationBuildings Equipment Accumulated DepreciationEquipment Common Stock Retained Earnings Dues Revenue Green Fees Revenue Rent Revenue Utilities Expense Salaries and Wages Expense Maintenance and Repairs Expense Credit $ 9,500 23,500 $ 3,800 4,850 650,000 549,000 59,900 261,000 121,850 800,000 200,900 489,600 121,000 26,400 65,600 165,000 95,000 $1,823,450 $1,823,450 Instructions (a) Enter the balances in ledger accounts. Allow five lines for each account. (b) From the trial balance and the information given below, prepare annual adjusting entries and post to the ledger accounts. (Omit explanations.) 1. The buildings have an estimated life of 30 years with no salvage value (straight-line method). 2. The equipment is depreciated at 10% per year. 3. Insurance expired during the year $3,000. 4. The rent revenue represents the amount received for 11 months for dining facilities. The December rent has not yet been received. 5. It is estimated that 20% of the accounts receivable will be uncollectible. 6. Salaries and wages earned but not paid by December 31, $4,600. 7. Dues received in advance from members $16,600. (c) Prepare an adjusted trial balance. (d) Prepare closing entries and post. c03BProblems.indd Page 8 07/12/12 2:22 PM user-f409 8 Chapter 3 The Accounting Information System 4 5 6 7 P3-10B (Adjusting and Closing) Presented below is the December 31 trial balance of Juno Beach Clothing, Inc. JUNO BEACH CLOTHING, INC. TRIAL BALANCE DECEMBER 31 Debit Cash Accounts Receivable Allowance for Doubtful Accounts Inventory, December 31 Prepaid Insurance Equipment Accumulated DepreciationEquipment Notes Payable Accounts Payable Common Stock Retained Earnings Sales Revenue Cost of Goods Sold Salaries and Wages Expense (sales) Advertising Expense Salaries and Wages Expense (administrative) Supplies Expense Credit $ 23,850 16,000 $ 600 73,600 5,200 60,000 26,000 21,000 18,400 10,000 76,550 397,300 204,150 56,850 26,700 79,300 4,200 $549,850 $549,850 Instructions (a) Construct T-accounts and enter the balances shown. (b) Prepare adjusting journal entries for the following and post to the T-accounts. (Omit explanations.) Open additional T-accounts as necessary. (The books are closed yearly on December 31.) 1. Bad debt expense is estimated to be $1,600. 2. Equipment is depreciated based on a 8-year life (no salvage value). 3. Insurance expired during the year $3,650. 4. Interest accrued on notes payable $2,050. 5. Sales salaries and wages earned but not paid $2,750. 6. Advertising paid in advance $1,100. 7. Office supplies on hand $900, charged to Supplies Expense when purchased. (c) Prepare closing entries and post to the accounts. 8 P3-11B (Cash and Accrual Basis) On January 1, 2014, Linda Chop and Johnny Lamb formed a refrigeration sales and service enterprise by investing $50,000 cash. The new company, Lambchop Refrigeration Sales and Service, has the following transactions during January. 1. Pays $9,300 in advance for 3 months' rent of office, showroom, and repair space. 2. Purchases 10 deluxe kitchen refrigerators at an average cost of $1,500 each, and 20 standard kitchen refrigerators at an average cost of $900 each, paying cash upon delivery. 3. Sales, repair, and office employees earn $10,600 in salaries and wages during January, of which $4,100 was still payable at the end of January. 4. Sells 6 deluxe kitchen refrigerators at $3,100 each and 12 standard kitchen refrigerators for $1,450 each; $19,250 is received in cash in January, and $20,350 is sold on a deferred payment basis. 5. Other operating expenses of $2,200 are incurred and paid for during January; $850 of incurred expenses are payable at January 31. Instructions (a) Using the transaction data above, prepare (1) a cash-basis income statement and (2) an accrualbasis income statement for the month of January. (b) Using the transaction data above, prepare (1) a cash-basis balance sheet and (2) an accrual-basis balance sheet as of January 31, 2014. (c) Identify the items in the cash-basis financial statements that make cash-basis accounting inconsistent with the theory underlying the elements of financial statements. c03BProblems.indd Page 9 07/12/12 2:22 PM user-f409 B Problems 9 5 6 7 10 *P3-12B (Worksheet, Balance Sheet, Adjusting and Closing Entries) Young Company has a fiscal year ending on June 30. Selected data from the June 30 worksheet are presented below. YOUNG COMPANY For The Month Ended June 30, 2014 Cash Supplies Prepaid Insurance Land Equipment Accumulated Depreciation Equipment Accounts Payable Unearned Admissions Revenue Mortgage Payable Owner's Capital Owner's Drawings Admissions Revenue Salaries and Wages Expense Maintenance and Repairs Expense Advertising Expense Utilities Expenses Property Tax Expense Interest Expense Total Insurance Expense Supplies Expense Interest Payable Depreciation Expense Property Taxes Payable Totals Trial Balance Debit Credit 36,500 12,600 18,900 105,000 164,000 Adjusted Trial Balance Debit Credit 36,500 6,200 4,550 105,000 164,000 63,800 8,500 2,600 60,000 117,490 52,500 8,500 6,210 60,000 117,490 36,000 36,000 365,110 361,500 133,700 26,500 31,000 29,500 6,500 6,000 $ 606,200 133,700 26,500 31,000 29,500 9,000 9,000 $ 606,200 14,350 6,400 3,000 11,300 $ 623,000 2,500 $623,000 Instructions (a) Prepare a complete worksheet. (b) Prepare a classified balance sheet. (Note: $12,000 of the mortgage payable is due for payment in the next fiscal year.) (c) Journalize the adjusting entries using the worksheet as a basis. (d) Journalize the closing entries using the worksheet as a basis. (e) Prepare a post-closing trial balance