FA – Chapter 4

29.)

1. c
2. f
3. i
4. e
5. j
6. c
7. h

30.)

2006 2007
1 Understated Overstated
2 Understated Overstated
3 Overstated Understated
4 Overstated Understated

31.)

a Equipment Dr
3,000
Accounts Payable Cr
3,000
b Fuel Expense Dr 700
Fuel on Hand Cr 700
C Prepaid Insurance Dr
1,000
Insurance Expense Cr
1,000
D Rent Expense Dr
1,2000
Prepaid Rent Cr
1,200
E Prepaid Repairs and Dr 675
Maintenance
R&M Expense Cr 675
F Interest Expense Dr 3.75
Accrued Interest Cr 3.75
Payable
G Unearned Subscription Dr
Revenue 14,000
Subscription Cr
Revenue 14,000
H Inventory Dr
1,000
 Equipment and Cr
Machine 1,000
I Accrued Interest Dr
Receivable 266.67
Interest Receivable Cr
266.67
39.)

A Rent Paid Prepaid Cash -6

Expense +6
Prepaid Expense Dr 6
Cash Cr 6
B Rent Expired Rent Expense Prepaid Exp +6
-3
Rent Expense Dr 3
Prepaid Rent Cr 3
C Unearned Revenue ATL +2 Cash +2
Cash Dr 2
ATL Cr 2
D Earned Revenue Passenger Rev ATL -1
+1
ATL Dr 1
Passenger Cr 1
Rev
E Revenue Earned but Interest Accrued interest
not received Revenue +1.6 Revenue -1.6
AIR Dr 1.6
IR Cr 1.6
F Wages to be Paid Wage Expense Accrued Wages -30
+30
F Wage Expense Dr 30
Vacation and Cr 30
Taxes

Air Traffice Liability = 236 +2 – 1 = 237 million

43.)

Rockwell Wholesalers Inc

Income Statement

Year ended Dec 31, 2003

A Salaries $129,500
B Interest Revenue $600
C Rent Revenue $1,600
D Depreciation $6,100
E Cash Dividends Declared $60,000
F Income Taxes @ 40% `$40,560
Net Income $60,840
B.)

RW Inc

Statement of Retained Earnings

Year Ended Dec 31, 2003

Retained Earnings Jan 1, 2003 $164,000

+ Net income for 2003 $60,840
Total $224,840
- Cash Dividends Declared ($60,000)
Retained Earnings, Dec 31 2003 $164,840

C.

a. Accrued Salaries payable $5,200

b. Interest Receivable $600

c. Unearned Rent receivable $3,200

d. Building Accrued Depreciation $26,100

e. Dividend payable $60,000

f. Income tax payable $40,560

Total: $966,300