EXERCISE Continued Blues Traveler Corporation Trial by alicejenny

VIEWS: 3 PAGES: 26

									EXERCISE 3-4 (Continued)

                       Blues Traveler Corporation
                        Trial Balance (corrected)
                                 April 30

                                                     Debit    Credit
Cash                                                $06,172
Accounts Receivable                                   4,790
Supplies on Hand                                      2,967
Furniture and Equipment                               9,300
Accounts Payable                                              $07,044
Common Stock                                                    8,000
Retained Earnings                                               2,000
Revenue from Fees                                               7,305
Office Expense                                      001,120
                                                    $24,349   $24,349



EXERCISE 3-5 (15-18 minutes)

                            Antoine Watteau
                             Trial Balance
                             June 30, 1999

                                                     Debit    Credit
Cash ($2,870 + $180 – $65 – $65)                    $02,920
Fees Receivable ($3,231 – $180)                       3,051
Supplies ($800 – $500)                                  300
Equipment ($3,800 + $500)                             4,300
Accounts Payable ($2,666 – $206 – $260)                       $02,200
Unearned Fees ($1,200 – $325)                                     875
Common Stock                                                    6,000
Retained Earnings ($3,000 – $575)                               2,425
Fees Earned ($2,380 + $801 + $325)                              3,506
Wages Expense ($3,400 + $670 – $575)                  3,495
Office Expense                                      000,940
                                                    $15,006   $15,006




                                  3-17
EXERCISE 3-6 (10-12 minutes)

1.                              August 31, 1998
     Wages Expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .        1,900
       Wages Payable . . . . . . . . . . . . . . . . . . . . . . . . . . . .                  1,900
         (To record wages payable at 8/31)

2.                                August 31, 1998
     Utilities Expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . .       600
         Accounts Payable . . . . . . . . . . . . . . . . . . . . . . . . .                    600
            (To record utility expense for August)

3.                               August 31, 1998
     Interest Expense ($30,000 X 8% X 1/12) . . . . . . . . . . . .                    200
         Interest Payable . . . . . . . . . . . . . . . . . . . . . . . . . . .                200
           (To record interest expense for August)

4.                            August 31, 1998
     Telephone Expense . . . . . . . . . . . . . . . . . . . . . . . . . . .           117
        Accounts Payable . . . . . . . . . . . . . . . . . . . . . . . . .                     117
          (To record telephone expense for August)


EXERCISE 3-7 (15-18 minutes)

(a) 10/15      Salaries Expense . . . . . . . . . . . . . . . . . . . . . . .          800
                  Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .             800
                     (To record payment of October 15
                     payroll)

     10/17     Fees Receivable . . . . . . . . . . . . . . . . . . . . . . . .        2,400
                  Fees Earned . . . . . . . . . . . . . . . . . . . . . . . .                 2,400
                    (To record fees earned for which
                    payment has not yet been received)

     10/20     Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    650
                  Unearned Fees . . . . . . . . . . . . . . . . . . . . . .                    650
                   (To record receipt of cash for services
                   not yet performed)




                                                 3-18
EXERCISE 3-7 (Continued)

(b) 10/31      Supplies Expense . . . . . . . . . . . . . . . . . . . . . .         470
                  Supplies . . . . . . . . . . . . . . . . . . . . . . . . . . .            470
                    (To record the use of supplies during
                    October)

     10/31     Fees Receivable . . . . . . . . . . . . . . . . . . . . . . . .     1,650
                  Fees Earned . . . . . . . . . . . . . . . . . . . . . . . .              1,650
                    (To record fees earned for which
                    payment has not yet been received)

     10/31     Salaries Expense . . . . . . . . . . . . . . . . . . . . . . .       600
                  Salaries Payable . . . . . . . . . . . . . . . . . . . . .                600
                     (To record liability for payroll)

     10/31     Unearned Fees . . . . . . . . . . . . . . . . . . . . . . . . .      400
                  Fees Earned . . . . . . . . . . . . . . . . . . . . . . . .               400
                    (To reduce the Unearned Fees liability
                    for services that have been performed)


EXERCISE 3-8 (10-12 minutes)

1.   Mar. 31      Depreciation Expense ($600 X 3) . . . . . . . . .                1,800
                     Accumulated Depreciation—
                       Delivery Equipment . . . . . . . . . . . . . . .                    1,800

2.       31       Unearned Rent (1/3 X $9,600) . . . . . . . . . . . .             3,200
                     Rent Revenue . . . . . . . . . . . . . . . . . . . . .                3,200

3.       31       Wages Expense . . . . . . . . . . . . . . . . . . . . . .        2,300
                    Wages Payable . . . . . . . . . . . . . . . . . . . .                  2,300

4.       31       Interest Expense . . . . . . . . . . . . . . . . . . . . .        400
                      Interest Payable . . . . . . . . . . . . . . . . . . .                400

5.       31       Supplies Expense ($2,800 – $650) . . . . . . . .                 2,150
                     Supplies . . . . . . . . . . . . . . . . . . . . . . . . .            2,150

6.       31       Insurance Expense ($200 X 3) . . . . . . . . . . .                600
                     Prepaid Insurance . . . . . . . . . . . . . . . . .                    600

                                                3-19
EXERCISE 3-10 (20-25 minutes)

1.   Interest Receivable . . . . . . . . . . . . . . . . . . . .        300.00
       ($15,000 X .12 X 2/12)
          Interest Revenue . . . . . . . . . . . . . . . . . . .                    300.00

2.   Retained Earnings . . . . . . . . . . . . . . . . . . . . .       5,000.00
         Inventory . . . . . . . . . . . . . . . . . . . . . . . . .               5,000.00

3.   Insurance Expense . . . . . . . . . . . . . . . . . . . .         3,440.00
       ($5,520 X 12/24) + ($2,040 X 2/6)
         Prepaid Insurance . . . . . . . . . . . . . . . . . .                     3,440.00

4.   Depreciation Expense—Equipment . . . . . . . .                    7,200.00*
         Accumulated Depreciation—
           Equipment . . . . . . . . . . . . . . . . . . . . . .                   7,200.00

     Depreciation Expense—Building . . . . . . . . . .                 3,000.00
       ($180,000 – $60,000) ÷ 40
         Accumulated Depreciation—
           Building . . . . . . . . . . . . . . . . . . . . . . . .                3,000.00

5.   Salaries Expense . . . . . . . . . . . . . . . . . . . . . .      4,000.00
         Salaries Payable . . . . . . . . . . . . . . . . . . .                    4,000.00

6.   Interest Expense . . . . . . . . . . . . . . . . . . . . . .      2,250.00
          Interest Payable . . . . . . . . . . . . . . . . . . .                   2,250.00

7.   Unearned Revenue . . . . . . . . . . . . . . . . . . . . .        7,500.00
        Rental Revenue . . . . . . . . . . . . . . . . . . . .                     7,500.00

8.   Bad Debt Expense . . . . . . . . . . . . . . . . . . . . .        1,880.00
       ($35,600 X .05) + $100
         Allowance for Doubtful Accounts . . . . . .                               1,880.00

     *($50,000 – 000,000) X .20 X 6/12 = $5,000 depr. for 1997
     *($50,000 – 0$5,000) X .20 X 0/00 = $9,000 depr. for 1998
     *($50,000 – $14,000) X .20 X 0/00 = $7,200 depr. for 1999




                                                3-22
                         SOLUTIONS TO PROBLEMS

                                       PROBLEM 3-1


(a) (Explanations are omitted.) and (d)

                     Cash                                         Furniture and Equipment
Sept. 1         20,000 Sept. 4           680           Sept. 2         17,280
      8          1,690       5           942
     20            980      10           430                         Isao Aoki, Capital
                            18         3,600
                            19         3,000           Sept. 19       3,000 Sept. 1           20,000
                            30         1,400                 30 Bal. 22,707      30           05,707
                            30            85                         25,707                   25,707
                                                                            Oct. 1            22,707
                             30 Bal. 12,533
                22,670               22,670                          Accounts Payable
Oct.    1       12,533
                                                       Sept. 18       3,600 Sept. 2           17,280
                                                             30 Bal. 13,680
                Rent Expense                                         17,280                   17,280
Sept. 4            680 Sept. 30           680                               Oct. 1            13,680

              Supplies on Hand                                    Revenue from Services
Sept. 5            942 Sept. 30           330          Sept. 30         8,920 Sept. 8          1,690
                             30 Bal.      612                                      14          5,120
                   942                    942                                      25          2,110
Oct.    1          612                                                  8,920                  8,920

       Miscellaneous Office Expense                           Accumulated Depreciation
Sept. 10           430 Sept. 30           515                                   Sept. 30        288
      30           085
                   515                    515

            Office Salaries Expense                                Accounts Receivable
Sept. 30         1,400 Sept. 30        1,400           Sept. 14         5,120 Sept. 20           980
                                                             25         2,110       30 Bal.    6,250
                                                                        7,230                  7,230
              Supplies Expense
                                                       Oct.   1         6,250
Sept. 30           330 Sept. 30           330



                                                3-45
PROBLEM 3-1 (Continued)

           Depreciation Expense                             Income Summary
Sept. 30         288 Sept. 30      288          Sept. 30          680 Sept. 30    8,920
                                                      30          515
                                                      30        1,400
                                                      30          330
                                                      30          288
                                                      30 Inc.   5,707
                                                                8,920             8,920




(b)                                Isao Aoki, D.D.S.
                            Trial Balance Before Closing
                                     September 30

                                                                     Debit       Credit
      Cash                                                          12,533
      Accounts Receivable                                            6,250
      Supplies on Hand                                                 612
      Furniture and Equipment                                       17,280
      Accumulated Depreciation                                                      288
      Accounts Payable                                                           13,680
      Isao Aoki, Capital                                                         17,000
      Revenue from Services                                                       8,920
      Rent Expense                                                     680
      Miscellaneous Office Expense                                     515
      Office Salaries Expense                                        1,400
      Supplies Expense                                                 330
      Depreciation Expense                                          00,288
                                                                    39,888       39,888




                                         3-46
PROBLEM 3-1 (Continued)

(c)                                Isao Aoki, D.D.S.
                                  Income Statement
                             For the Month of September

      Gross revenue from services                                        $8,920
      Expenses:
         Rent expense                                      $00,680
         Supplies expense                                      330
         Office salaries expense                             1,400
         Depreciation expense                                  288
         Miscellaneous expense                             000,515
             Total expenses                                              03,213
      Net income                                                         $5,707



                                 Isao Aoki, D.D.S.
                                   Balance Sheet
                                As of September 30

                   Assets                      Liabilities and Owner's Equity
      Cash                       $12,533     Accounts payable           $13,680
      Accounts receivable          6,250     Isao Aoki, Capital          22,707
      Supplies                       612
      Furniture and equip.        17,280
      Accum. depreciation           (288)       Total liabilities and
         Total assets            $36,387          owner's equity        $36,387



                              Isao Aoki, D.D.S.
            Statement of Owner's Equity for the Month of September

      Aoki, Capital September 1                                         $20,000
      Add net income for September                                      005,707
                                                                         25,707
      Deduct withdrawal by owner                                        003,000
      Aoki, Capital September 30                                        $22,707




                                      3-47
PROBLEM 3-1 (Continued)

(e)                            Isao Aoki, D.D.S.
                   Post-closing Trial Balance, September 30

                                                       Debit    Credit
      Cash                                             12,533
      Accounts Receivable                               6,250
      Supplies on Hand                                    612
      Furniture and Equipment                          17,280
      Accumulated Depreciation                                     288
      Accounts Payable                                          13,680
      Isao Aoki, Capital                                        22,707
          Totals                                       36,675   36,675




                                   3-48
                                             PROBLEM 3-2


(a), (b), (d)


                  Cash                      Accounts Receivable                   Notes Receivable
 Bal.       3,900     1-11      76   Bal.       4,985   1-2      1,230   1-30         812
 1-2        1,230     1-21     552   1-4        1,534   1-15       600
 1-4        1,786     1-29   2,107   1-19         812   1-30       812
                                                                                Furniture and Fixtures
 1-15         600     Bal.   7,131                      Bal.     4,689
 1-25       2,350                               7,331            7,331   Bal.       6,600
            9,866            9,866   2-1        4,689
 2-1        7,131


                Inventory                     Office Equipment            Accum. Depr.—Furn. & Fixt.
 Bal.       3,300     1-31   3,300   Bal.       4,800                                       Bal.      2,200
 1-31       2,640     Bal.   2,640   1-27       0,879   Bal.     5,679   Bal.       2,269   1-31      0,069
            5,940            5,940                                                  2,269             2,269
 2-1        2,640                    2-1        5,679                                       2-1       2,269


         Accounts Payable              Accum. Depr.—Off. Equip.                    Common Stock
 1-11          34     Bal.   2,985                      Bal.     1,440                      Bal.     10,000
 1-29       2,150     1-3    2,184   Bal.       1,490   1-31     0,050
 Bal.       4,590     1-4       75              1,490            1,490
                                                                                 Retained Earnings
                      1-9      651                      2-1      1,490
                      1-27   0,879                                                          Bal.      2,960
            6,774            6,774                                       Bal.       5,162   1-31      2,202
                                               Notes Payable
                      2-1    4,590                                                  5,162             5,162
                                                        Bal.     4,000                      2-1       5,162


                 Sales                        Interest Payable                  Advertising Expense
 1-31       6,482     1-4    1,534                      1-31        40   1-4           75   1-31         75
                      1-4    1,786
                      1-19     812
                                                 Purchases
                      1-25   2,350
            6,482            6,482   1-3        2,184   1-31     2,835
                                     1-9        0,651
                                                2,835            2,835


         Transportation-In                    Salary Expense                    Purchase Allowances
 1-11            76   1-31     76    1-21        552    1-31       552   1-31          34   1-11         34


        Purchase Discounts                  Depreciation Expense                  Interest Expense
 1-31            43   1-29     43    1-31        119    1-31       119   1-31          40   1-31         40




                                                    3-49
PROBLEM 3-2 (Continued)

                Cost of Goods Sold                                         Income Summary
 Inv.              3,300   Purch. Allow.      34          CGS               3,494   Sales   6,482
 Purch.            2,835   Purch. Disc.       43          Advertising          75
 Trans.-In            76   Inv.            2,640          Clerk's Salary      552
                           To Inc. Sum.    3,494          Depr. Exp.          119
                   6,211                   6,211          Interest Exp.        40
                                                          To Ret. Earn.     2,202
                                                                            6,482           6,482

Explanations:

January 29—2% X ($2,184 – $34) = $43 Purchase Discounts

January 31—Depreciation: Office Equipment                         $04,800
                         Furniture and Fixtures                   006,600
                           Total                                  $11,400

                           ($11,400 ÷ 8) X 1/12 = $119

January 31—Interest: $4,000 X 12% X 1/12 = $40




                                                   3-50
PROBLEM 3-2 (Continued)

(c)                           Verbeek Company
                            Adjusted Trial Balance
                              January 31, 1999

                                                     Debit    Credit
      Cash                                            7,131
      Accounts Receivable                             4,689
      Notes Receivable                                  812
      Inventory                                       3,300
      Office Equipment                                5,679
      Accumulated Depreciation—Office Equip.                   1,490
      Furniture and Fixtures                          6,600
      Accumulated Depreciation—Furn. & Fixt.                   2,269
      Accounts Payable                                         4,590
      Notes Payable                                            4,000
      Interest Payable                                            40
      Common Stock                                            10,000
      Retained Earnings                                        2,960
      Sales                                                    6,482
      Purchases                                       2,835
      Advertising Expense                                75
      Transportation-In                                  76
      Salary Expense                                    552
      Depreciation Expense                              119
      Interest Expense                                   40
      Purchase Allowances                                         34
      Purchase Discounts                                      00,043
                                                     31,908   31,908




                                   3-51
PROBLEM 3-2 (Continued)

(e)                              Verbeek Company
                                   Balance Sheet
                                 January 31, 1999

                Assets                             Liabilities and Stockholders' Equity
Cash                             $07,131          Notes payable                     $04,000
Accounts receivable                4,689          Accounts payable                    4,590
Notes receivable                     812          Interest payable                  000,040
Inventory                          2,640              Total liabilities               8,630
Office equipment        $5,679                    Common stock            10,000
Less: Acc. depr.—                                 Retained earnings       05,162a   015,162
        off. equip.     01,490     4,189
Furniture & fixtures     6,600                       Total liabilities and
Less: Acc. depr.—                                      stockholders' equity         $23,792
        furn. & fixt.   02,269   004,331
   Total assets                  $23,792

aBeginning balance               $02,960
0Net income                      002,202
0Ending balance                  $05,162




                                           3-52
PROBLEM 3-2 (Continued)

                            Verbeek Company
                            Income Statement
                  For the Month Ended January 31, 1999

Revenue from sales                                                   $6,482
Cost of goods sold:
   Inventory, January 1                                     $3,300
   Purchases                                       $2,835
       Less: Allowances                      $34
              Discounts                      043   00,077
          Net purchases                             2,758
   Transportation-In                               00,076
          Net cost of purchases                             02,834
   Cost of goods available for sale                          6,134
   Inventory, January 31                                    02,640
          Cost of goods sold                                         03,494
Gross profit                                                          2,988
Expenses:
   Salary expense                                              552
   Advertising expense                                          75
   Depreciation expense                                        119
   Interest expense                                         00,040   00,786
Net income                                                           $2,202




                                      3-53
PROBLEM 3-2 (Continued)

(f)                           Verbeek Company
                          Post-Closing Trial Balance
                              January 31, 1999

                                                       Debit    Credit
      Cash                                              7,131
      Accounts Receivable                               4,689
      Notes Receivable                                    812
      Inventory                                         2,640
      Office Equipment                                  5,679
      Accumulated Depreciation                                   1,490
      Furniture and Fixtures                            6,600
      Accumulated Depreciation                                   2,269
      Accounts Payable                                           4,590
      Notes Payable                                              4,000
      Interest Payable                                              40
      Common Stock                                              10,000
      Retained Earnings                                         05,162
          Totals                                       27,551   27,551




                                   3-54
                                     PROBLEM 3-5


(a) Dec. 31    Fees Receivable . . . . . . . . . . . . . . . . . . . . . .    3,000
                  Advertising Fees . . . . . . . . . . . . . . . . . . .                3,000

          31   Unearned Advertising Fees . . . . . . . . . . . . . .          1,400
                  Advertising Fees . . . . . . . . . . . . . . . . . . .                1,400

          31   Art Supplies Expense . . . . . . . . . . . . . . . . . .       3,000
                   Art Supplies . . . . . . . . . . . . . . . . . . . . . .             3,000

          31   Depreciation Expense . . . . . . . . . . . . . . . . . .       6,750
                  Accumulated Depreciation—Printing
                    Equipment . . . . . . . . . . . . . . . . . . . . . .               6,750

          31   Interest Expense . . . . . . . . . . . . . . . . . . . . . .     150
                   Interest Payable . . . . . . . . . . . . . . . . . . . .              150

          31   Insurance Expense . . . . . . . . . . . . . . . . . . . .        750
                  Prepaid Expense . . . . . . . . . . . . . . . . . . .                  750

          31   Salaries Expense . . . . . . . . . . . . . . . . . . . . .     1,500
                  Salaries Payable . . . . . . . . . . . . . . . . . . .                1,500


(b)                 ANA ALICIA ADVERTISING CORPORATION
                               Income Statement
                     For the Year Ended December 31, 1999

      Revenues
         Advertising fees                                                             $63,000
      Expenses
         Salaries expense                                             $11,500
         Art supplies expense                                           8,000
         Depreciation expense                                           6,750
         Rent expense                                                   4,000
         Insurance expense                                                750
         Interest expense                                             000,500
             Total expenses                                                           031,500
      Net income                                                                      $31,500


                                            3-59
PROBLEM 3-5 (Continued)

                  ANA ALICIA ADVERTISING CORPORATION
                      Statement of Retained Earnings
                   For the Year Ended December 31, 1999

    Retained Earnings, January 1                                     $04,500
    Add: Net Income                                                  031,500
    Retained Earnings, December 31                                   $36,000


                  ANA ALICIA ADVERTISING CORPORATION
                              Balance Sheet
                            December 31, 1999

                                     Assets
    Cash                                                             $07,000
    Fees receivable                                                   22,000
    Art supplies                                                       5,500
    Prepaid insurance                                                  2,500
    Printing equipment                                    $60,000
    Less: Accum. depr.—printing equipment                 033,750    026,250
               Total assets                                          $63,250

                      Liabilities and Stockholders' Equity
    Liabilities
       Accounts payable                                              $05,000
       Interest payable                                                  150
       Notes payable                                                   5,000
       Unearned advertising fees                                       5,600
       Salaries payable                                              001,500
                Total liabilities                                     17,250
    Stockholders' equity
       Common stock                                        $10,000
       Retained earnings                                   036,000
                Total stockholders' equity                           046,000
                Total liabilities and stockholders' equity           $63,250


(c) (1) Total depreciable cost = $6,750 X 8 = $54,000.
        Salvage value = cost $60,000 less depreciable cost $54,000 = $6,000.


                                    3-60
PROBLEM 3-5 (Continued)

   (2) Interest is $50 per month or 1% of the note payable.
       1% X 12 = 12% interest per year.

   (3) Salaries Expense, $11,500 less Salaries Payable 12/31/99, $1,500 =
       $10,000. Total payments, $12,500 – $10,000 = $2,500 Salaries Pay-
       able 12/31/98.




                                  3-61
                                             PROBLEM 3-7


(a), (b), (d)


                  Cash                       Unexpired Insurance                  Salaries Expense
 Bal.     15,000                      Bal.      9,000   Adj.       3,500   Bal.    80,000   Close 83,600
                                                                           Adj.    03,600
                                                                                   83,600            83,600
                                               Common Stock
                                                                                            Rev.      3,600
                                                        Bal.    400,000


          Dues Receivable                     Retained Earnings                     Maintenance
 Bal.     13,000                                        Bal.      82,000   Bal.    24,000   Close 24,000
                                                        Inc.      30,250


    Allow. for Doubtful Accts.               Revenue from Dues               Depr. Expense—Buildings
                     Bal.     1,100   Adj.      8,900   Bal.    200,000    Adj.     4,800   Close     4,800
                     Adj.       850   Cls.    191,100
                                              200,000           200,000
                                                        Rev.      8,900


                  Land                  Revenue from Green Fees             Depr. Expense—Equipment
 Bal.    350,000                      Close     8,100   Bal.       8,100   Adj.    15,000   Close 15,000


                Buildings                      Rental Revenue               Accum. Depr. of Equipment
 Bal.    120,000                      Close 16,800      Bal.      15,400                    Bal.     70,000
                                                        Adj.      01,400                    Adj.     15,000
                                               16,800             16,800
                                      Rev.      1,400


   Accum. Depr. of Buildings                  Utilities Expense                   Insurance Expense
                     Bal.    38,400   Bal.     54,000   Close 54,000       Adj.     3,500   Close     3,500
                     Adj.     4,800


          Rent Receivable                    Bad Debts Expense                    Income Summary
 Adj.     $1,400     Rev.     1,400   Adj.        850   Close       850    Exp. 185,750     Inc.    216,000
                                                                           Cap. 030,250
                                                                                216,000             216,000
                                                 Unearned
          Salaries Payable                   Revenue from Dues                       Equipment
 Rev.       3,600    Adj.     3,600   Rev.      8,900   Adj.       8,900   Bal.   150,000




                                                    3-64
PROBLEM 3-7 (Continued)

(b)                                -1-
      Depreciation Expense—Buildings              4,800
         Accumulated Depreciation of Buildings             4,800
           (1/25 X $120,000)

                                   -2-
      Depreciation Expense—Equipment             15,000
         Accumulated Depreciation of Equipment            15,000
           (10% X $150,000)

                                   -3-
      Insurance Expense                           3,500
         Unexpired Insurance                               3,500

                                   -4-
      Rent Receivable                             1,400
         Rental Revenue                                    1,400
           (1/11 X $15,400)

                                   -5-
      Bad Debts Expense                            850
         Allowance for Doubtful Accounts                    850
           (15% X $13,000) – $1,100

                                   -6-
      Salaries Expense                            3,600
         Salaries Payable                                  3,600

                                   -7-
      Revenue from Dues                           8,900
         Unearned Revenue from Dues                        8,900




                                   3-65
PROBLEM 3-7 (Continued)

(c), (f)                 Platteville Golf Club, Inc.
                               Trial Balances
                                          Adjusted               Post-Closing
                                        Trial Balance            Trial Balance
                                       Dr.         Cr.          Dr.        Cr.
Cash                                  15,000                    15,000
Dues Receivable                       13,000                    13,000
Allowance for Doubtful Accounts                        1,950               1,950
Land                                 350,000                   350,000
Building                             120,000                   120,000
Accum. Depreciation of Buildings                   43,200                 43,200
Rent Receivable                         1,400
Salaries Payable                                       3,600
Equipment                            150,000                   150,000
Unexpired Insurance                    5,500                     5,500
Common Stock                                     400,000                 400,000
Retained Earnings                                 82,000                 112,250
Revenue from Dues                                191,100                   8,900
Revenue from Green Fees                            8,100
Rental Revenue                                    16,800         1,400
Utilities Expense                     54,000
Bad Debts Expense                        850
Unearned Revenue from Dues                             8,900
Salaries Expense                      83,600                               3,600
Maintenance                           24,000
Depreciation Exp.—Buildings            4,800
Depreciation Exp.—Equipment           15,000
Accum. Depreciation of Equipment                   85,000                 85,000
Insurance Expense                    003,500
                                     840,650     840,650       654,900   654,900




                                    3-66
PROBLEM 3-7 (Continued)

(d)                             -Dec. 31-
      Revenue from Dues                      191,100
      Revenue from Green Fees                  8,100
      Rental Revenue                          16,800
         Income Summary                                216,000

                                   -31-
      Income Summary                         185,750
         Utilities Expense                              54,000
         Bad Debts Expense                                 850
         Salaries Expense                               83,600
         Maintenance                                    24,000
         Depreciation Expense—Buildings                  4,800
         Depreciation Expense—Equipment                 15,000
         Insurance Expense                               3,500

                                   -31-
      Income Summary                          30,250
         Retained Earnings                              30,250


(e)                             - Jan. 1 -
      Rental Revenue                           1,400
         Rent Receivable                                 1,400

      Salaries Payable                         3,600
         Salaries Expense                                3,600

      Unearned Revenue from Dues               8,900
         Revenue from Dues                               8,900




                                   3-67
                                            PROBLEM 3-8


(a), (b), (c)

                  Cash                  Accounts Receivable             Allow. for Doubtful Accts.
  Bal.     18,500                    Bal.     42,000                                      Bal.       700
                                                                                          Adj.     1,400

                Inventory              Furniture & Equipment              Accum. Depr. of F. & E.
  Bal.     78,000 CGS       78,000   Bal.     84,000                                      Bal.   35,000
  CGS      80,000                                                                         Adj.   14,000

         Prepaid Insurance                    Notes Payable                        Purchases
  Bal.      5,100 Adj.       2,550                     Bal.   28,000    Bal. 400,000 CGS 400,000

      Nancy Drew, Capital                         Sales                  Admin. Salaries Expense
                     Bal.   90,600   Cls. 600,000 Bal. 600,000          Bal.     65,000 Cls.     65,000
                     I.S.   53,790

    Sales Salaries Expense              Advertising Expense                    Insurance Expense
  Bal.     50,000 Close 52,400       Bal.      6,700 Adj.         700   Adj.      2,550 Close      2,550
  Adj.     02,400                                    Close      6,000
           52,400       52,400                 6,700            6,700

         Bad Debts Expense                    Office Expense                    Interest Expense
  Adj.      1,400 Close      1,400   Bal.      5,000 Adj.       1,500   Adj.      3,360 Close      3,360
                                                     Close      3,500
                                               5,000            5,000

          Interest Payable           Depr. Exp.—Furn. & Equip.                 Prepaid Advertising
                     Adj.    3,360   Adj.     14,000 Cls.     14,000    Adj.        700

    Office Supplies on Hand                  Salaries Payable                   Income Summary
  Adj.      1,500                                      Adj.     2,400   Exp. 546,210 Sale 600,000
                                                                        Cap. 053,790
                                                                             600,000      600,000

                                            Cost of Goods Sold
                                     Inv.  78,000 Inv.  80,000
                                     Pur. 400,000 Cls. 398,000
                                          478,000      478,000

                                                   3-68
PROBLEM 3-8 (Continued)

(b)                                 -1-
      Bad Debts Expense ($42,000 X .05) – $700         1,400
         Allowance for Doubtful Accounts                         1,400

                                   -2-
      Depreciation Expense—Furniture and Equipment    14,000
         Accum. Depr.—Furniture and Equipment                   14,000

                                    -3-
      Insurance Expense                                2,550
         Prepaid Insurance                                       2,550

                                    -4-
      Interest Expense                                 3,360
          Interest Payable                                       3,360

                                    -5-
      Sales Salaries Expense                           2,400
         Salaries Payable                                        2,400

                                    -6-
      Prepaid Advertising                               700
         Advertising Expense                                      700

                                    -7-
      Office Supplies on Hand                          1,500
          Office Expense                                         1,500



(c)                               Dec. 31
      Inventory (Ending)                              80,000
      Cost of Goods Sold                             398,000
         Inventory (Beginning)                                  78,000
         Purchases                                             400,000




                                    3-69
PROBLEM 3-8 (Continued)

                             Dec. 31
   Income Summary                                546,210
      Cost of Goods Sold                                   398,000
      Advertising Expense                                    6,000
      Administrative Salaries Expense                       65,000
      Sales Salaries Expense                                52,400
      Office Expense                                         3,500
      Insurance Expense                                      2,550
      Bad Debts Expense                                      1,400
      Depreciation Expense—Furniture and Equipment          14,000
      Interest Expense                                       3,360

                             Dec. 31
   Sales                                         600,000
      Income Summary                                       600,000

                             Dec. 31
   Income Summary                                 53,790
      Nancy Drew, Capital                                   53,790




                               3-70
                               PROBLEM 3-10


(a) 1.   Rental Revenue                             6,800
            Unearned Rent                                     6,800
              ($10,200 X 4/6 = $6,800)

    2.   Sales                                      2,000
            Accounts Receivable                               2,000

         Bad Debt Expense                           1,600
            Allowance for Doubtful Accounts                   1,600
              .05 ($49,000 – $2,000) – $750

    3.   Inventory (Ending)                        67,000
         Purchase Discounts                         2,400
         Cost of Goods Sold                       162,100
            Inventory (Beginning)                            58,000
            Transportation-In                                 3,500
            Purchases                                       170,000

    4.   Insurance Expense                           625
            Prepaid Insurance                                  625
              ($1,320 X 4/24) + ($1,620 X 9/36)

    5.   Depreciation Expense                       9,600
            Accumulated Depreciation                          9,600
              ($88,000 X .10) + ($16,000 X .05)

    6.   a. Interest Expense                        1,375
                Interest Payable                              1,375
                  ($50,000 X 11% X 3/12)

         b. Interest Expense                         113
                Discount on Bonds Payable                      113
                  ($1,500/10 X 9/12)

    7.   Interest Receivable                         975
             Interest Revenue                                  975
               ($18,000 X .13 X 5/12)



                                        3-80
PROBLEM 3-10 (Continued)

    8.   Rent Expense                          11,550
            Prepaid Rent                                11,550
              ($1,650 X 7, or $13,200 X 7/8)

(b) Reverse: 1, 6a, and 7.




                                    3-81

								
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