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EXERCISE 3-1B
EXERCISE 3-2B
EXERCISE 3-3B
1. Prepaid expense.
2. Accrued expense.
3. Accrued expense.
4. Accrued revenue.
5. Unearned revenue.
6. Prepaid expense.
7. Accrued revenue.
8. Prepaid expense.
9. Unearned revenue.
10. Prepaid expense.
11. Accrued expense.
(a) (b)
Item Type of Adjustment Accounts before Adjustment
1. Prepaid Expenses Assets Overstated
Expenses Understated
EXERCISE 3-6B
EXERCISE 3-8B
2. 31 Insurance Expense............................................... 75
Prepaid Insurance........................................ 75
EXERCISE 3-9B
BENNING CO.
Income Statement
For the Month Ended July 31, 2008
Revenues
Service revenue ($6,700 + $650) ................................... $7,350
Expenses
Wages expense ($2,500 + $350).................................... $2,850
Supplies expense ($1,700 – $250) ................................ 1,450
Depreciation expense....................................................... 225
Insurance expense ............................................................ 600
Utilities expense................................................................. 500
Total expenses........................................................... 5,625
Net income .................................................................................... $1,725
EXERCISE 3-10B
Answer Computation
Purchase date = June 1, 2007 Purchase date: On Jan. 31, there are
4 months’ coverage remaining ($500 X 4).
Thus, the purchase date was 8 months
earlier on June 1, 2007.
EXERCISE 3-11B
EXERCISE 3-13B
VASQUEZ COMPANY
Income Statement
For the Year Ended August 31, 2008
Revenues
Service revenue.................................................................. $39,300
Rent revenue ....................................................................... 13,100
Total revenues ........................................................... 52,400
Expenses
Salaries expense................................................................ $17,400
Rent expense ...................................................................... 14,000
Office supplies expense .................................................. 1,900
Insurance expense ............................................................ 1,400
Depreciation expense....................................................... 800
Total expenses........................................................... 35,500
Net income .................................................................................... $16,900
VASQUEZ COMPANY
Retained Earnings Statement
For the Year Ended August 31, 2008
VASQUEZ COMPANY
Balance Sheet
August 31, 2008
Assets
Cash................................................................................................ $ 7,700
Accounts receivable ................................................................. 13,300
Office supplies ............................................................................ 900
Prepaid insurance...................................................................... 2,800
Office equipment........................................................................ $16,000
Less: Accum. depreciation—office equipment............... 4,800 11,200
Total assets ................................................................ $35,900
*EXERCISE 3-15B
PROBLEM 3-1C
(a)
J4
Date Account Titles Ref. Debit Credit
2008
May 31 Supplies Expense..................................... 560 900
Supplies ............................................ 130 900
(b)
Debit Credit
Cash................................................................................. $ 5,700
Accounts Receivable ................................................. 7,200
Prepaid Insurance ....................................................... 3,450
Supplies.......................................................................... 1,000
Office Furniture ............................................................ 10,200
Accumulated Depreciation—Office
Furniture .................................................................... $ 170
Accounts Payable ....................................................... 4,500
Travel Payable .............................................................. 250
Salaries Payable .......................................................... 960
Unearned Service Revenue...................................... 400
Common Stock............................................................. 17,700
Service Revenue.......................................................... 10,300
Salaries Expense ......................................................... 4,360
Rent Expense................................................................ 900
Depreciation Expense................................................ 170
Insurance Expense ..................................................... 150
Travel Expense............................................................. 250
Supplies Expense........................................................ 900
$34,280 $34,280
(a)
J1
Date Account Titles Ref. Debit Credit
May 31 Insurance Expense.................................... 722 190
Prepaid Insurance ........................... 130 190
($2,280 X 1/12)
(b)
Debit Credit
Cash ............................................................................ $ 3,500
Supplies ..................................................................... 750
Prepaid Insurance................................................... 2,090
Land............................................................................. 12,000
Lodge .......................................................................... 60,000
Accumulated Depreciation—Lodge.................. $ 250
Furniture .................................................................... 15,000
Accumulated Depreciation—Furniture............ 225
Accounts Payable................................................... 4,800
Unearned Rent ......................................................... 1,100
Salaries Payable...................................................... 750
Interest Payable....................................................... 350
Mortgage Payable ................................................... 35,000
Common Stock ........................................................ 46,380
Rent Revenue........................................................... 12,500
Advertising Expense.............................................. 600
Depreciation Expense—Lodge........................... 250
Depreciation Expense—Furniture..................... 225
Supplies Expense ................................................... 1,450
Interest Expense ..................................................... 350
Insurance Expense................................................. 190
Salaries Expense .................................................... 4,050
Utilities Expense ..................................................... 900
$101,355 $101,355
Revenues
Rent revenue ............................................................ $12,500
Expenses
Salaries expense..................................................... $4,050
Supplies expense ................................................... 1,450
Utilities expense...................................................... 900
Advertising expense .............................................. 600
Interest expense...................................................... 350
Depreciation expense—lodge ............................ 250
Depreciation expense—furniture ...................... 225
Insurance expense ................................................. 190
Total expenses................................................ 8,015
Net income ......................................................................... $ 4,485
Assets
Cash................................................................................ $ 3,500
Supplies......................................................................... 750
Prepaid insurance...................................................... 2,090
Land................................................................................ 12,000
Lodge ............................................................................. $60,000
Less: Accumulated depreciation—lodge.......... 250 59,750
Furniture........................................................................ 15,000
Less: Accumulated depreciation—furniture ....... 225 14,775
Total assets ................................................ $92,865
Revenues
Commission revenue.................................................. $16,800
Rent revenue ................................................................. 2,260
Total revenues ..................................................... 19,060
Expenses
Salaries expense.......................................................... $8,725
Rent expense................................................................. 2,800
Utilities expense........................................................... 1,510
Supplies expense ........................................................ 600
Depreciation expense................................................. 500
Interest expense........................................................... 100
Total expenses..................................................... 14,235
Net income .............................................................................. $ 4,825
POBLANO CO.
Retained Earnings Statement
For the Quarter Ended September 30, 2008
POBLANO CO.
Balance Sheet
September 30, 2008
Assets
Cash.......................................................................................... $ 8,700
Accounts receivable............................................................ 11,200
Supplies................................................................................... 900
Prepaid rent............................................................................ 1,300
Equipment .............................................................................. $18,000
Less: Accum. depreciation—equipment..................... 500 17,500
Total assets .......................................................... $39,600
(c) Interest of 12% per year equals a monthly rate of 1%; monthly interest
is $100 ($10,000 X 1%). Since total interest expense is $100, the note
has been outstanding one month.
A review of the ledger of Obi Company at December 31, 2008, produces the
following data pertaining to the preparation of annual adjusting entries.
(b)
General Journal J1
Date Account Titles and Explanation Ref. Debit Credit
Nov. 8 Salaries Payable ........................................ 212 700
Salaries Expense ....................................... 726 1,000
Cash ...................................................... 101 1,700
Before After
Adjustment Adjustment
Dr. Cr. Dr. Cr.
Cash.................................................... $ 3,020 $ 3,020
Accounts Receivable .................... 1,730 1,730
Supplies............................................. 2,500 1,200
Store Equipment............................. 14,000 14,000
Accumulated Depreciation.......... $ 2,000 $ 2,200
Accounts Payable .......................... 2,600 2,600
Unearned Service Revenue......... 1,800 550
Salaries Payable ............................. 400
Common Stock................................ 10,000 10,000
Retained Earnings.......................... 3,950 3,950
Service Revenue............................. 4,000 5,250
Depreciation Expense................... 200
Supplies Expense........................... 1,300
Salaries Expense ............................ 2,700 3,100
Rent Expense................................... 400 400
$24,350 $24,350 $24,950 $24,950
Revenues
Service revenue ....................................................... $5,250
Expenses
Salaries expense ..................................................... $3,100
Supplies expense.................................................... 1,300
Rent expense ............................................................ 400
Depreciation expense ............................................ 200
Total expenses ................................................ 5,000
Net Income.......................................................................... $ 250
Assets
Cash ........................................................................................... $ 3,020
Accounts receivable ............................................................. 1,730
Supplies .................................................................................... 1,200
Equipment ................................................................................ $14,000
Less: Accumulated depreciation—
equipment............................................................... 2,200 11,800
Total assets..................................................................... $17,750