Accounting Principles 10th Edition Weygandt Kimmel Chapter 3 PDF

Chapter 3, Adjusting Entries, pages 103 - 121
reference: Chapter 2, Recording Process, pages 63 - 72
Date
General Journal (pg 117)

Account Titles & Explantion
Debit
Credit
Adjusting Entries
1
10/31 Supplies Expense

Supplies ($2,500 -$1,000)
(to record supplies used)
10/31 Insurance Expense ($600 / 12 = $50)

PrePaid Insurance
(to record insurance expired)
10/31 Depreciation Expense ($4,800 / 120)

Accum Deprec - Equip
(to record monthly depreciation expense)
10/31 UnEarned Service Revenues

Service Revenues
(to record revenue earned)
10/31 Accounts Receivable

Service Revenues
10/31 Interest Expense

Interest Payable
(to record accrued interest
$5,000 X 12% X 1/12 = $50)
10/31 Salaries & Wage Expense

Salaries & Wage Payable
(to record accrued salaries)
1,500
1,500
50
50
40
40
400
400
200
200
50
50
1,200
1,200

General Ledger
Cash
Date
Debit(+) Credit(-) Balance
10/1/2013 $ 10,000
$ 10,000
10/2
1,200
11,200
10/3
900
10,300
10/4
600
9,700
10/20
500
9,200
10/26
4,000
5,200
10/31
10,000
$ 15,200
Supplies
Date
10/5/2013 $ 2,500
$ 2,500
1,500 $ 1,000
PrePaid Insur
Date
10/4/2013 $
600
$
600
50 $
550
Equipment
Date
Debit(+) Credit(-)
10/1/2013 $ 5,000
Balance
$ 5,000
Date
10/2/2013
10/31
UnEarn Ser Rev

Debit(-)
Credit(+)
Balance
$ 1,200 $
1,200
400
$
800
Date
10/31/2012
Accum Dep - Equip

Debit(+)
Credit(-)
Balance
$
40 $
40
Date
10/1/2013
Owner's Capital
Debit(-)
Credit(+)
Balance
$ 10,000 $
10,000
-Owner's Drawings
Date
Debit(+)
Credit(-)
10/20/2013 $
500
Date
10/31/2013
10/31
10/31
Balance
$
500
Service Revenues
Debit(-)
Credit(+)
Balance
$ 10,000 $
10,000
400
10,400
200 $
10,600
Date
10/1/2013
Notes Payable
Debit(-) Credit(+) Balance
$ 5,000 $ 5,000
-Sal & Wages Exp

Date
Debit(+)
Credit(-)
10/26/2013 $ 4,000
10/31
1,200
Balance
$
4,000
$
5,200
Date
10/5/2013
Accounts Payable
$ 2,500 $ 2,500
-Rent Exp
Date
Debit(+)
Credit(-)
10/3/2013 $
900
Balance
$
900

General Ledger
-Supplies Exp
Date
10/31/2012 $ 1,500
$ 1,500
-Insurance Exp
Date
Debit(+)
Credit(-)
10/31/2012 $
50
Balance
$
50
-Deprec Exp
Date
10/31/2012 $
40
$
40
Accounts Receivable
Date
Debit(+)
Credit(-)
10/31/2012 $
200
Balance
$
200
Interest Payable
$
50 $
50
-Interest Exp
Date
Debit(+)
Credit(-)
10/31/2012 $
50
Date
10/31/2012
Sal & Wages Payable

Date
10/31/2012
$ 1,200 $ 1,200
(adjustments in red)
20 Ledger Accounts
Balance
50

Pioneer Company
Adjusted Trial Balance, October 31, 2012
Adjusted Trial Balance
Account Title
1
2
3
4
5
6
7
8
9
10
11
Cash
Accounts Receivable
Supplies
PrePaid Insurance
Equipment
Debit
$
15,200
200
1,000
550
5,000
40
Notes Payable
Accounts Payable
UnEarned Service Revenue
Salary & Wage Payable
Interest Payable
5,000
2,500
800
1,200
50
12 Owner's Capital
13 Owner's Drawings
14
15
16
17
18
19
20
Credit
10,000
500
Service Revenue
Salaries & Wages Expense
Supplies Expense
Rent Expense
Insurance Expense
Interest Expense
Depreciation Expense
10,600
5,200
1,500
900
50
50
40
$
30,190 $ 30,190

Income Statement
month ending October 31, 2012
Revenues
Service Revenues
Expenses
Supplies Expense
Rent Expense
Insurance Expense
Interest Expense
Total Expenses
$ 10,600
(5,200)
(1,500)
(900)
(50)
(50)
(40)
(7,740)
Net Income
2,860
Owner's Equity Statement

Owner's Capital, October 1

Add: Investments
Add: Net Income
Less: Drawings
Owner's Capital, October 31
10,000
2,860
12,860
(500)
$ 12,360

Balance Sheet
Assets
Cash
Accounts Receivable
Supplies
PrePaid Insurance
Equipment
Less: Accumulated Depreciation
Total Assets
Liabilities & Owner's Equity
Liabilities
Notes Payable
Accounts Payable
UnEarned Service Revenues
Salaries & Wages Payable
Interest Payable
Total Liabilities
Owner's Equity
Owner's Capital
Total Liabilities & Owner's Equity
$ 15,200
200
1,000
550
5,000
(40)
4,960
$ 21,910
5,000
2,500
800
1,200
50
9,550
12,360
$ 21,910

Statement of CashFlows
Cash Flows from Operating Activities

cash receipts from revenues
cash payments for expenses
Net Cash Provided by Operating Activities
11,200
(5,500)
5,700
10,000
(500)
9,500
net change in cash
15,200
cash at beginning of period

cash at end of period
$
$
15,200
Cash Flow from Investing Activities

Purchase of Equipment
Cash Flow from Financing Activities

Investment by Owners
Drawings by Owners
Chapter 3, Recording Process, pages 63 - 72

the purpose of transaction analysis is to identify the type of account
involved, then to determine whether to make a debit or credit to the account
General Journal
Date
1
10/1/2013 Cash
Debit
$ 10,000
Owner's Capital
(owner's investment of cash in a business)
2
10/1 Equipment
10,000
$ 5,000
Notes Payable
(purchase of equipment on account)
(issued 3 month, 12% note for equip)
3
10/2 Cash
5,000
$ 1,200

(cash received for future service)
4
1,200
10/3 Rent Expense

Cash
(paid october rent)
900
10/4 PrePaid Insurance

Cash
(paid one year policy, effective October 1)
10/5 Supplies
$ 2,500
900
600
600
Accounts Payable
(purchased supplies on account)
7
2,500
10/20 Owner's Drawings

Cash
(withdrew cash for personal use)
10/26 Salaries &Wages Expense

Cash
(paid salaries to date)
$ 4,000
10/31 Cash
$ 10,000
Service Revenue
(received cash for services provided)
Credit
500
500
4,000
10,000

General Ledger
Date
10/1/2013
10/2
10/3
10/4
10/20
10/26
10/31
Cash
Debit(+)
Credit(-) Balance
$ 10,000
$ 10,000
1,200
11,200
900
10,300
600
9,700
500
9,200
4,000
5,200
10,000
$ 15,200
Date
10/2/2013
UnEarn Ser Rev

$ 1,200 $ 1,200
Date
10/1/2013
Owner's Capital
$ 10,000 $ 10,000
Supplies
Date
Debit(+)
Credit(-)
10/5/2013 $ 2,500
Balance
$ 2,500
PrePaid Insur
Date
Debit(+)
Credit(-)
10/4/2013 $
600
Balance
$
600
-Owner's Drawings
Date
Debit(+) Credit(-)
10/20/2013 $
500
Equipment
Date
Debit(+)
Credit(-)
10/1/2013 $ 5,000
Balance
$ 5,000
Date
10/31/2013
Balance
$
500
Service Revenues
$ 10,000 $ 10,000
Date
10/1/2013
Notes Payable
Debit(-)
Credit(+) Balance
$ 5,000 $ 5,000
-Sal & Wages Exp

Date
Debit(+) Credit(-)
10/26/2013 $ 4,000
Balance
$ 4,000
Date
10/5/2013
Accounts Payable
Debit(-)
Credit(+) Balance
$ 2,500 $ 2,500
-Rent Exp
Date
Debit(+) Credit(-)
10/3/2013 $
900
Balance
$
900

Pioneer Company
Trial Balance, October 31, 2012
Trial Balance
Account Title
Cash
Supplies
PrePaid Insurance
Equipment
Debit
$
Credit
15,200
2,500
600
5,000
Notes Payable
Accounts Payable
5,000
2,500
1,200
Owner's Capital
Owner's Drawings
10,000
500
Service Revenue
Rent Expense
10,000
4,000
900
$
28,700 $ 28,700
Chapter 3, P3-1A Adjusting Entries, page 137

McGEE COMPANY
Date
General Journal
Debit
Credit
Adjusting Entries
1
6/30/2012 Supplies Expense

Supplies ($2000 -$750)
1,250
1,250
6/30 Utility Expense

Accounts payable
(to record utility bill to be paid next month)
6/30 Insurance Expense ($3000/12)

PrePaid Insurance

Service Revenue
(to record service revenue earned)

6/30 Depreciation Expense ($15000/60)

(to record monthly depreciation expense)
6/30 Accounts receivable

Service Revenue
150
150
250
250
2,800
2,800
1,900
1,900
250
250
1,200
1,200

General Ledger
Date
Date
Date
Date
Date
Date
Cash
Debit(+)
Credit(-)
$7,150
Accounts Receivable
Debit(+)
Credit(-)
$
6,000
1,200
Balance
$7,150
Balance
6,000
7,200
Supplies
Debit(+)
Credit(-)
Balance
$
2,000
$
2,000
1,250
750
PrePaid Insur
Debit(+)
Credit(-)
Balance
$
3,000
$
3,000
250
2,750
Equipment
Debit(+)
Credit(-)
$ 15,000
Accounts Payable
Debit(-)
Credit(+)
$4,500
$
150
Balance
15,000
Balance
$4,500
4,650
Date
Date
Date
Date
Date
UnEarn Service Rev

Debit(-)
Credit(+)
Balance
$
4,000 $
4,000
2,800
1,200
Owner's Capital
Debit(-)
Credit(+)
Balance
$
21,750 $
21,750
Service Revenues
Debit(-)
Credit(+)
Balance
$
7,900 $
7,900
2,800
10,700
1,200
11,900
-Salaries & Wage Expen

Debit(+)
Credit(-)
$ 4,000
1,900
Balance
$
4,000
5,900
-Rent Expense
Debit(+)
Credit(-)
$ 1,000
Balance
1,000

General Ledger
Date
-Supplies Exp
Debit(+)
Credit(-)
$
1,250
Date
-Deprec Expense
Debit(+)
Credit(-)
$
250
Date
-Utility Expense
Debit(+)
Credit(-)
$
150
Balance
1,250
Balance
250
Balance
150
Date
-Insurance Exp
Debit(+)
Credit(-)
$
250
Balance
250
Date
Accu Deprec Equip

Debit(-)
Credit(+)
$
250
Balance
250
Date
Sal & Wage Payable

Debit(-)
Credit(+)
$
1,900
Balance
1,900

McGEE COMPANY
Adjusted Trial Balance, June 30, 2012
Account Title
1
2
3
4
5
6
Cash
Accounts Receivable
Supplies
PrePaid Insurance
Equipment
Accum Deprec - Equipment
Debit
Credit
$7,150
7,200
750
2,750
15,000
250
7 Accounts Payable
8 UnEarned Service Revenue
9 Salary & Wage Payable
4,650
1,200
1,900
10 Owner's Capital
21,750
11
12
13
14
15
16
17
11,900
Service Revenue
Rent Expense
Utilities Expense
Supplies Expense
Insurance Expense
5,900
1,000
150
1,250
250
250
$41,650
$ 41,650
Income Statement
month ending June 30, 2012
Revenues
Service Revenue
Expenses
Rent Expense
Utilities Expense
Supplies Expense
Insurance Expense
Total Expenses
11,900 $
5,900
1,000
150
1,250
250
250
8,800
Net Income
3,100

Owner's Capital, August 1

Add: Investments
Add: Net Income
21,750
3,100
24,850
Less: Drawings
Owner's Capital, June 30
$ 24,850
Balance Sheet
Assets
Cash
Accounts Receivable
Supplies
PrePaid Insurance
Equipment
Less:Accum Deprec - Equip
Total Assets
Liabilities
Accounts Payable
Mortgage Payable
Interest Payable
Total Liabilities
Owner's Equity
Owner's Capital
7,150
7,200
750
2,750
15,000
(250)
14,750
$ 32,600
4,650
1,200
1,900
7,750
24,850
$ 32,600

P3-1A Tony Masasi started his own consulting fi rm, McGee Company, on June 1, 2012. The
trial balance at June 30 is shown below.
McGEE COMPANY
Trial Balance, June 30, 2012
Trial Balance
Account Title
Debit
Cash
Accounts Receivable
Supplies
PrePaid Insurance
Equipment
Credit
$7,150
6,000
2,000
3,000
15,000
Accounts Payable
$4,500
4,000
Owner's Capital
Service Revenue
Salaries & Wage Expense
Rent Expense
21,750
7,900
4,000
1,000
$38,150
38,150
In addition to those accounts listed on the trial balance, the chart of accounts for McGee
Company also contains the following accounts and account numbers: No. 158 Accumulated
DepreciationEquipment, No. 212 Salaries and Wages Payable, No. 631 Supplies Expense,
No. 711 Depreciation Expense, No. 722 Insurance Expense, and No. 732 Utilities Expense.
Other data:
1. Supplies on hand at June 30 are $750.
2. A utility bill for $150 has not been recorded and will not be paid until next month.
3. The insurance policy is for a year.
4. $2,800 of unearned service revenue has been earned at the end of the month.
5. Salaries of $1,900 are accrued at June 30.
6. The equipment has a 5-year life with no salvage value. It is being depreciated at $250 per
month for 60 months.
7. Invoices representing $1,200 of services performed during the month have not been recorded
as of June 30.
Chapter 3, Adjusting Entries, P3-2A, pages 138-139

Melton River Resort
Date
General Journal
Debit
Credit
Adjusting Entries
1
8/31 Insurance Expense

Prepaid Insurance
($300x3, to record insurance expired)

Supplies ($3,300 -$800)
8/31 Depreciation Expense ($6,000x1/4)

Accum Deprec - Building
(to record deprec expens for 3 months)
8/31 Depreciation Expense ($2,400x1/4)

(to record deprec expens for 3 months)
8/31 UnEarned Rent Revenues

Rent Revenues
(to record rent revenue earned)


Rent Revenue

Interest Payable
$80,000 X 9% X 1/12 = $600)
900
900
2,500
2,500
1,500
1,500
600
600
4,800
4,800
400
400
4,000
4,000
600
600

General Ledger
Date
08/01/2012
8/31
UnEarn Rent Rev

Debit(-)
Credit(+)
Balance
$
7,400 $
7,400
4,800
$
2,600
Date
08/01/2012
Mortgage Payable
Debit(-)
Credit(+)
Balance
$
80,000 $ 80,000
PrePaid Insur
Date
Debit(+)
Credit(-)
Balance
08/01/2012 $ 6,000
$
6,000
8/31
900 $
5,100
Date
08/01/2012
Owner's Capital
Debit(-)
Credit(+)
Balance
$
100,000 $ 100,000
Land
Date
Debit(+)
Credit(-)
08/01/2012 $ 25,000
-Owner's Drawings
Date
Debit(+)
Credit(-)
08/01/2012 $ 5,000
Date
08/01/2012
Cash
Debit(+)
Credit(-)
$19,600
Supplies
Date
Debit(+)
08/01/2012 $ 3,300
8/31
Balance
$19,600
Credit(-)
$
2,500 $
Building
Date
Debit(+)
Credit(-)
08/01/2012 $ 125,000
Equipment
Date
Debit(+)
Credit(-)
08/01/2012 $ 26,000
Balance
3,300
800
Balance
$ 25,000
Balance
$ 125,000
Balance
$ 26,000
Accounts Payable
Debit(-)
Credit(+)
$6,500
Balance
$6,500
-Utilities Expen
Date
Debit(+)
Credit(-)
08/01/2012 $ 9,400
Balance
$
9,400
Date
08/01/2012
Date
08/01/2012
8/31
8/31
Balance
$
5,000
Rent Revenues
Debit(-)
Credit(+)
Balance
$
80,000 $ 80,000
4,800 $ 84,800
4,000 $ 88,800
-Maint & Repair Expense

Date
Debit(+)
Credit(-)
08/01/2012 $ 3,600
Balance
$
3,600

Date
Debit(+)
Credit(-)
08/01/2012 $ 51,000
8/31 $
400
Balance
$ 51,000
$ 51,400

General Ledger
-Supplies Exp
Date
Debit(+)
Credit(-)
8/31/2012 $ 2,500
-Deprec Expense
Date
Debit(+)
Credit(-)
8/31/2012 $ 1,500
8/31
600
Balance
$
2,500
Balance
$
1,500
2,100
Date
8/31/2012
Interest Payable
Debit(-)
Credit(+)
Balance
$
600 $
600
Date
8/31/2012
Sal & Wage Payable

Debit(-)
Credit(+)
Balance
$
400 $
400
Date
8/31/2012
Accu Deprec Equip

Debit(-)
Credit(+)
Balance
$
600 $
600
-Insurance Exp
Date
Debit(+)
Credit(-)
8/31/2012 $
900
Balance
$
900
Accounts Receivable
Date
Debit(+)
Credit(-)
8/31/2012 $ 4,000
Balance
$
4,000
-Interest Expense
Date
Debit(+)
Credit(-)
8/31/2012 $
600
Date
8/31/2012
Balance
600
Accu Deprec Build

Debit(-)
Credit(+)
Balance
$
1,500 $
1,500

Melton River Resort
Adjusted Trial Balance, August 31, 2012
1
2
3
4
5
6
7
8
9
10
11
12
13
14
Account Title
Debit
Cash
Accounts Receivable
Supplies
PrePaid Insurance
Land
Buildings
Equipment
$19,600
4,000
800
5,100
25,000
125,000
26,000
17
18
19
20
21
22
23
24
1,500
600
Accounts Payable
UnEarned Rent Revenue
Mortgage Payable
Interest Payable
15 Owner's Capital
16 Owner's Drawings
Rent Revenue
Maintenance & Repair Expense
Utilities Expense
Supplies Expense
Insurance Expense
Interest Expense
Credit
6,500
2,600
80,000
400
600
100,000
5,000
88,800
3,600
51,400
9,400
2,500
900
600
2,100
$281,000
$ 281,000
Income Statement
month ending August 31, 2012
Revenues
Rent Revenues
Expenses
Utilities Expense
Supplies Expense
Insurance Expense
Interest Expense
Total Expenses
$ 88,800
(3,600)
(51,400)
(9,400)
(2,500)
(900)
(600)
(2,100)
(70,500)
Net Income
$ 18,300


Add: Investments
Add: Net Income
Less: Drawings
100,000
18,300
118,300
(5,000)
$ 113,300
Balance Sheet
Assets
Cash
Accounts Receivable
Supplies
PrePaid Insurance
Land
Buildings
Less:Accum Deprec - Building
Equipment
Total Assets
Liabilities
Accounts Payable
Mortgage Payable
Interest Payable
Total Liabilities
Owner's Equity
Owner's Capital
$ 19,600
4,000
800
5,100
25,000
125,000
(1,500)
26,000
(600)
123,500
25,400
$ 203,400
6,500
2,600
80,000
400
600
$ 90,100
113,300
$ 203,400

Melton River Resort opened for business on June 1 with eight air-conditioned
units. Its trial balance before adjustment on August 31 is as follows.
Melton River Resort
Trial Balance, August 31, 2012
Trial Balance
Account Title
Debit
Cash
Supplies
PrePaid Insurance
Land
Buildings
Equipment
Credit
$19,600
3,300
6,000
25,000
125,000
26,000
Accounts Payable
Mortgage Payable
$6,500
7,400
80,000
Owner's Capital
Owner's Drawings
100,000
Rent Revenue
Utilities Expense
5,000
80,000
3,600
51,000
9,400
$273,900
273,900
In addition to those accounts listed on the trial balance, the chart of accounts for Melton River
Resort also contains the following accounts and account numbers: No. 112 Accounts Receivable,
No. 144 Accumulated DepreciationBuildings, No. 150 Accumulated DepreciationEquipment,
No. 212 Salaries and Wages Payable, No. 230 Interest Payable, No. 620 Depreciation Expense,
No. 631 Supplies Expense, No. 718 Interest Expense, and No. 722 Insurance Expense.
Other data:
1. Insurance expires at the rate of $300 per month.
2. A count on August 31 shows $800 of supplies on hand.
3. Annual depreciation is $6,000 on buildings and $2,400 on equipment.
4. Unearned rent revenue of $4,800 was earned prior to August 31.
5. Salaries of $400 were unpaid at August 31.
6. Rentals of $4,000 were due from tenants at August 31. (Use Accounts Receivable.)
7. The mortgage interest rate is 9% per year. (The mortgage was taken out on August 1.)
Chapter 3, Adjusting Entries, P3-3A , page 139

Minor Advertising Agency
Date
General Journal
Debit
Credit
Adjusting Entries
1
12/31/2012 Accounts Receivable (21,500-20,000)

Service Revenue

Supplies ($8600 -$4800)
12/31 Insurance Expense ($3350-2500)

PrePaid Insurance
12/31 Depreciation Expense ($34,000-28,000)

(to record deprec expense)
12/31 UnEarned Service Revenue (7,200-5,900)

Service Revenue
12/31 Interest Expense ($500-350)

Interest Payable
(to record accrued interest)
12/31 Salaries & Wage Expense (12,100-10,000)

1,500
1,500
3,800
3,800
850
850
6,000
6,000
1,300
1,300
150
150
2,100
2,100

General Ledger
Cash
Debit(+)
Credit(-)
$11,000
Balance
$11,000
Date
12/01/2012
Note Payable
Debit(-)
Credit(+)
Balance
$
5,000 $
5,000
Accounts Receivable
Date
Debit(+)
Credit(-)
12/01/2012 $
20,000
12/31
1,500
Balance
$ 20,000
21,500
Date
12/01/2012
12/31
UnEarn Service Revenue

Debit(-)
Credit(+)
Balance
$
7,200 $
7,200
1,300
5,900
Supplies
Date
Debit(+)
Credit(-)
Balance
12/01/2012 $
8,600
$
8,600
12/31
3,800 $
4,800
Date
12/01/2012
Owner's Capital
Debit(-)
Credit(+)
Balance
$
25,500 $
25,500
Date
12/01/2012
PrePaid Insurance
Date
Debit(+)
Credit(-)
Balance
12/01/2012 $
3,350
$
3,350
12/31
850
2,500
Equipment
Date
Debit(+)
Credit(-)
12/01/2012 $
60,000
Balance
$ 60,000
Accu Deprec Equipment

Date
Debit(-)
Credit(+)
Balance
12/01/2012
$ 28,000 $ 28,000
12/31
6,000
34,000
Date
12/01/2012
Accounts Payable
Debit(-)
Credit(+)
5,000
-Interest Expense
Date
Debit(+)
Credit(-)
12/01/2012 $
350
12/31 $
150
Balance
5,000
Balance
350
500
-Owner's Drawings
Date
Debit(+)
Credit(-)
12/01/2012 $ 12,000
Date
12/01/2012
12/31
12/31
Balance
$
12,000
Service Revenue
Debit(-)
Credit(+)
Balance
$
58,600 $
58,600
1,500
60,100
1,300
61,400

Date
Debit(+)
Credit(-)
12/01/2012 $ 10,000
12/31
2,100
$
$
Balance
10,000
12,100
-Rent Expense
Date
Debit(+)
Credit(-)
12/01/2012 $ 4,000
Balance
4,000

General Ledger
-Supplies Expense
Date
Debit(+)
Credit(-)
12/31 $
3,800
-Deprec Expense
Date
Debit(+)
Credit(-)
12/31 $
6,000
Balance
$
6,000
Date
12/31
Balance
3,800
Interest Payable
Debit(-)
Credit(+)
Balance
$
150 $
150
-Insurance Expense
Date
Debit(+)
Credit(-)
12/31 $
850
Date
12/31
Balance
850

Debit(-)
Credit(+)
Balance
$
2,100 $
2,100

Adjusted Trial Balance, December 31, 2012
Account Title
Debit
1
2
3
4
5
6
Cash
Accounts Receivable
Supplies
PrePaid Insurance
Equipment
$11,000
21,500
4,800
2,500
60,000
7
8
9
10
11
Accounts Payable
Note Payable
UnEarned service Revenue
Interest Payable
12 Owner's Capital
13 Owner's Drawings
14
15
16
17
18
19
20
Service Revenue
Rent Expense
Supplies Expense
Insurance Expense
Interest Expense
Credit
34,000
5,000
5,000
5,900
2,100
150
25,500
12,000
61,400
4,000
12,100
3,800
850
500
6,000
$139,050
$ 139,050
Income Statement
month ending December 31, 2012
Revenues
Service Revenue
Expenses
Supplies Expense
Insurance Expense
Rent Expense
Interest Expense
Total Expenses
$ 61,400
(12,100)
(3,800)
(850)
(4,000)
(500)
(6,000)
(27,250)
Net Income
$ 34,150

Owner's Capital, December 1

Add: Investments
Add: Net Income
Less: Drawings
25,500
34,150
59,650
(12,000)
$ 47,650
Balance Sheet
Assets
Cash
Accounts Receivable
Supplies
PrePaid Insurance
Equipment
Total Assets
Liabilities
Accounts Payable
Note Payable
Interest Payable
Total Liabilities
Owner's Equity
Owner's Capital
$11,000
21,500
4,800
2,500
60,000
(34,000)
26,000
$ 65,800
5,000
5,000
5,900
2,100
150
$ 18,150
47,650
$ 65,800
P3-A3 C
(c) Answer the following questions.
(1) If the note has been outstanding 6 months, what is the annual interest rate on that note?
Based on the balance in interest payable, interest is $50 per month or 1% of the note
1% X 6 = 6 % interest per year
(2) If the company paid $12,500 in salaries in 2012, what was the balance in Salaries and
Wages Payable on December 31, 2011?
Salaries
& Wage
Expense
is
$12,100
Less
Salaries
& Wage
Payable
on
12/31/12
is $1,500
=
$10,000.
Total
payment
s
=
$12,500
$10,000
= $2,500
Salaries
& Wage
Payable
on
12/31/11
P3-3A Minor Advertising Agency was founded by Brandon Minor in January of 2011. Presented
below are both the adjusted and unadjusted trial balances as of December 31, 2012.
Trial Balance, December 31, 2012
Account Title
Cash
Accounts Receivable
Supplies
PrePaid Insurance
Equipment
Trial Balance
Unadjusted
Debit
Credit
$11,000
20,000
8,600
3,350
60,000
Adjusted
Debit
$
Credit
11,000
21,500
4,800
2,500
60,000
28,000
1500
3800
850
$
34,000
Accounts Payable
Interest Payable
Notes Payable
5,000
0
5,000
7,200
0
5,000
150
5,000
5,900
2,100
Owner's Capital
Owner's Drawings
25,500
25,500
Service Revenue
Insurance Expense
Interest Expense
Supplies Expense
Rent Expense
12,000
150
1300
2100
12,000
58,600
61,400
10,000
12,100
850
500
6,000
3,800
4,000
350
4,000
$129,300
6000
129,300
139,050 $ 139,050
Instructions
(a) Journalize the annual adjusting entries that were made.
(b) Prepare an income statement and an owners equity statement for the year ending
December 31, 2012, and a 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 $12,500 in salaries in 2012, what was the balance in Salaries and
Wages Payable on December 31, 2011?
2800
2100
850
150
6,000
3,800
of the note payable ($ 5,000)
A review of the ledger of D. J. Moore Company at December 31, 2012, produces the following data pertaining to the preparatio
1. Salaries and Wages Payable $0. There are eight salaried employees. Salaries are paid every Friday for the current week. Fiv
2. Unearned Rent Revenue $224,676. The company began subleasing office space in its new building on November 1. At Dece
Term
Date
(in months)
Monthly Rent
Nov. 1
$5,184
Dec. 1
$8,355
3. Prepaid Advertising $16,301. This balance consists of payments on two advertising contracts. The contracts provide for mon
Contract
Date
A650
Amount
1-May
B974
$7,124
Oct. 1
9,177
The first advertisement runs in the month in which the contract is signed.
4. Notes Payable $122,000. This balance consists of a note for one year at an annual interest rate of9%, dated June 1.
No.
Date
Account Titles and

Explanation
Salaries and Wages

Payable
Debit
Credit
5 x $950x 2/5
3 x $680x 2/5
Rent Revenue
4x $5,184x 2
2x $8,355x 1
Prepaid Advertising
A650 $548per month for 8 months

B974 $437per month for 3 months
Interest Payable
($122,000x9% x 7/12)
g data pertaining to the preparation of annual adjusting entries.
ery Friday for the current week. Five employees receive a salary of $950each per week, and three employees earn $680each per week. Ass
w building on November 1. At December 31, the company had the following rental contracts that are paid in full for the entire term of the leas
Number of
Leases
4
2
cts. The contracts provide for monthly advertising in two trade magazines. The terms of the contracts are as follows.
Number of
Magazine
Issues
13
21
t rate of9%, dated June 1.
$1,900
816
$2,716
$41,472
16,710
$58,182
$4,384
1,311
$5,695
$6,405
es earn $680each per week. Assume December 31 is a Tuesday. Employees do not work weekends. All employees worked the last 2 days
full for the entire term of the lease.
employees worked the last 2 days of December.
Chapter 3, P3-5A Recording Process, page 140
General Journal
Date
9/8
9/10
Debit
Salaries and Wage expense
900
Salaries and Wage Payable

Cash
(paid salaries )
500
Cash
1,400
1,200
Accounts Receivable
(Received cash in payment on account)
3
9/12
Cash
1,200
3,400
Service Revenue
(Received cash for services provided)
4
9/15
Equipment
3,400
3,000
Accounts Payable
(Purchased equipment on account)
5
9/17
Supplies
3,000
1,200
Accounts Payable
(Purchased supplies on account)
6
9/20
9/22
9/25
Credit
1,200
Accounts payable
Cash
(paid cash on account)
Rent Expense
Cash
(paid rent for Sept)
Salaries &Wages Expense

Cash
4,500
4,500
500
500
1,250
1,250
(paid salaries)
9/27
Accounts Receivable
Service Revenue
2,100
2,100
(Received payment on account)
10
9/29
Cash
UnearnedService Revenue
(Received cash for future services)
650
650

General Ledger
Date
Date
Date
Date
Date
Date
Cash
Debit(+)
Credit(-)
$4,880
$ 1,400
$
1,200
$
3,400
$ 4,500
500
1,250
650
Balance
$4,880
3,480
4,680
8,080
3,580
3,080
1,830
$2,480
Accounts Receivable
Debit(+)
Credit(-)
Balance
$
3,520
$
3,520
1,200
2,320
2,100
4,420
Supplies
Debit(+)
Credit(-)
$
2,000
1,200
Equipment
Debit(+)
Credit(-)
$
15,000
3,000
Balance
$
2,000
3,200
Balance
$ 15,000
18,000
Date
Date
Date
Date

Debit(-)
Credit(+)
$1,500
Balance
$1,500
Date
Accounts Payable
Debit(-)
Credit(+)
3,400
$ 3,000
$
4,500
$ 1,200
Balance
3,400
6,400
1,900
3,100
Date
Owner's Capital
Debit(-)
Credit(+)
Balance
$
18,600 $
18,600

Debit(-)
Credit(+)
Balance
$
1,400 $
1,400
650
2,050

Debit(-)
Credit(+)
Balance
$
500
$
500
500
-
Service Revenue
Debit(-)
Credit(+)
Balance
$
3,400 $
3,400
2,100
5,500

Debit(+)
Credit(-)
$
900
1,250
-Rent Expense
Debit(+)
Credit(-)
$
500
Balance
900
2,150
Balance
$
500
Moore Equipment Inc.

Trial Balance
Account Title
Cash
Accounts Receivable
Supplies
Equipment
Accum Deprec Equipment
Debit
Credit
$2,480
4,420
3,200
18,000
$1,500
Accounts Payable
3,100
2,050
0
Owner's Capital
18,600
Service Revenue
Rent Expense
5,500
500
2,150
$30,750
30,750

Moore Equipment Repair Co.
Date
General Journal
Debit
Credit
Adjusting Entries
1
9/30 Supplies Expense ($3200-1300)

Supplies

9/30 Depreciation Expense

(to record deprec expense, 100/month)

Service Revenue
1,900
1,900
300
300
100
100
1,450
1,450

General Ledger
Cash
Debit(+)
Credit(-)
4880
1400
1200
3400
4500
500
1250
650
Date
Accounts Receivable
Debit(+)
Credit(-)
3520
1200
2100
Date
Balance
3520
2320
4420
Date
Date
Supplies
Debit(+)
Credit(-)
2000
1200
1,900
Balance
2000
3200
1,300
Date
Equipment
Debit(+)
Credit(-)
15000
3000
Balance
15000
18000
Date

Debit(-)
Credit(+)
1500
100
Balance
1500
1,600
Date
Date
Date
Date
Balance
4880
3480
4680
8080
3580
3080
1830
2480
Accounts Payable
Debit(-)
Credit(+)
3400
3000
4500
1200
Date
Balance
3400
6400
1900
3100
Owner's Capital
Debit(-)
Credit(+)
18600
Balance
18600

Debit(-)
Credit(+)
Balance
1400
1400
650
2050
$
1,450
$
600
Debit(-)
Credit(+)
500
500
300
Balance
500
0
300
Service Revenue
Debit(-)
Credit(+)
3400
2100
1,450
Balance
3400
5500
6,950

Debit(+)
Credit(-)
900
1250
$
300
Date
Balance
900
2150
$
2,450
-Rent Expense
Debit(+)
Credit(-)
500
Balance
500
-Deprec Expense
Debit(+)
Credit(-)
Balance

-Supplies Expense
Debit(+)
Credit(-)
Date
$
1,900
Balance
$
1,900
Date
$
100
100

Moore Equipment Repair Co.
Adjusted Trial Balance, September, 30, 2012
Account Title
1
2
3
4
5
Cash
Accounts Receivable
Supplies
Equipment
Debit
Credit
2,480
4,420
1,300
18,000
1,600
Accounts Payable
3,100
600
300
Owner's Capital
Service Revenue
Rent Expense
Supplies Expense
18,600
6,950
500
2,450
1,900
100
$31,150
31,150
Chapter 3, P3-5A - Adjusting Entries, page 140
Income Statement
month ending September 30, 2012
Revenues
Service Revenue
Expenses
Rent Expense
Supplies Expense
6,950
500
2,450
1,900
100
(4,950)
Total Expenses
Net Income
2,000

Owner's Capital, Sept 1

Add: Investments
Add: Net Income
18,600
2,000
20,600
Less: Drawings
20,600
Balance Sheet
Assets
Cash
Accounts Receivable
Supplies
Equipment
$2,480
4,420
1,300
18,000
(1,600)
$16,400
Total Assets
$24,600

Liabilities
Accounts Payable
Total Liabilities
Owner's Equity
Owner's Capital
3100
600
300
$
4,000
20,600
24,600

P3-5A On September 1, 2012, the account balances of Moore Equipment Repair were as
follows.
Debits
Credits
Cash
$4,880 Accum Deprec Equipment
$1,500
Accounts Receivable
3,520 Accounts Payable
3,400
Supplies
2,000 Unearned Service Revenue
1,400
Equipment
15,000 Salaries and Wages Payable
500
Owners Capital
18,600
$25,400
2
3
4
5
6
7
8
9
10
11
$25,400
During September, the following summary transactions were completed.

Sept. 8 Paid $1,400 for salaries due employees, of which $900 is for September.
10 Received $1,200 cash from customers on account.
12 Received $3,400 cash for services performed in September.
15 Purchased store equipment on account $3,000.
17 Purchased supplies on account $1,200.
20 Paid creditors $4,500 on account.
22 Paid September rent $500.
25 Paid salaries $1,250.
27 Performed services on account and billed customers for services provided $2,100.
29 Received $650 from customers for future service.
Adjustment data consist of:
1. Supplies on hand $1,300.
2. Accrued salaries payable $300.
3. Depreciation is $100 per month.
4. Unearned service revenue of $1,450 is earned.
Instructions
(a) Enter the September 1 balances in the ledger accounts.
(b) Journalize the September transactions.
(c) Post to the ledger accounts. Use J1 for the posting reference. Use the following additional accounts:
No. 407 Service Revenue, No. 615 Depreciation Expense, No. 631 Supplies Expense,
No. 726 Salaries and Wages Expense, and No. 729 Rent Expense
(d) Prepare a trial balance at September 30.
(e) Journalize and post adjusting entries.
(f) Prepare an adjusted trial balance.
(g) Prepare an income statement and an owners equity statement for September and a balance
sheet at September 30.
NOT DONE
Olsen Graphics Company
General Journal
Date
Debit
Credit
Adjusting Entries
1
1/31 Supplies
1,500
Supplies Expense
2
1,500
1/31 Interest Expense (20000, 9%, 6 month note)

Interest Payable
$20,000 X 9% X 1/12 = $150)
1/31 PrePaid Insurance ($2700/12*4months=900)

Insurance Expense
1/31 Service Revenues

UnEarnedService Revenues
(to record rent revenue earned)

Sales Revenues
(to record servicerevenue earned)
1/31 Depreciation Expense ($2250/12*6)

750
750
3
1,800
1,800
4
1,300
1,300
5
2,000
2,000
6
1,125
1,125

General Ledger
Date
01/01/2012
Cash
Debit(+)
Credit(-)
$8,600
Accounts Receivable
Date
Debit(+)
Credit(-)
1/1/2012 $ 14,000
2,000
Equipment
Date
Debit(+)
Credit(-)
1/1/2012 $ 45,000
1/31
Prepaid Insurance
Date
Debit(+)
Credit(-)
1/1/2012 $ 1,800
Date
1/1/2012
Note Payable
Debit(-)
Credit(+)
Balance
$20,000 $ 20,000
Date
1/1/2012
Accounts Payable
Debit(-)
Credit(+)
Balance
$
9,000 $
9,000
Balance
$45,000
Date
1/1/2012
Owner's Capital
Debit(-)
Credit(+)
Balance
$
22,000 $ 22,000
Balance
$1,800
Date
1/1/2012
Sales Revenue
Debit(+)
Credit(-)
Balance
$
52,100 $ 52,100
2,000 $ 54,100
Date
1/1/2012
Service Revenues
Debit(-)
Credit(+)
Balance
$
6,000 $
6,000
1,300
$
4,700
Balance
$8,600
Balance
$14,000
$ 16,000
Sal and Wage Expense

Date
Debit(+)
Credit(-)
1/1/2012 $ 30,000
Balance
$30,000
Supplies Expense
Debit(+)
Credit(-)
$3,700
1,500
Balance
$3,700
$2,200
Date
1/1/2012
Advertising Expense
Date
Debit(+)
Credit(-)
1/1/2012 $ 1,900
Balance
$1,900
-Rent Expen
Date
Debit(+)
Credit(-)
1/1/2012 $ 1,500
Balance
$1,500
-Utilities Expense
Date
Debit(+)
Credit(-)
1/1/2012 $ 1,700
Balance
$1,700
Supplies
Date
Debit(+)
Credit(-)
1/1/2012 $ 1,500
Balance
$1,500

General Ledger
-Deprec Expense
Date
Debit(+)
Credit(-)
1/31/2012 $ 1,125
Balance
1,125
Date
-Insurance Exp
Debit(+)
Credit(-)
Balance
1,800 $
1,800
Date
1/31/2012
Interest Payable
Debit(-)
Credit(+)
Balance
$
750 $
750
-Interest Expense
Date
Debit(+)
Credit(-)
1/31/2012 $
750
Date
1/31/2012
Accu Deprec Equip

Debit(-)
Credit(+)
Balance
$ 1,125 $
1,125

Date
Debit(-)
Credit(+)
Balance
1/31/2012
$
1,300 $
1,300
Balance
$
750

Olsen Graphics Company
Adjusted Trial Balance, August 31, 2012
Account Title
1 Cash
Accounts Receivable
Supplies
PrePaid Insurance
Equipment
Debit
Credit
$8,600
16,000
$1,500
$1,800
45,000
1,125
Note Payable
Accounts Payable
Interest Payable
20,000
9,000
750
1,300
Owner's Capital
Owner's Drawings
22,000
Sales Revenue
Service Revenue
54,100
4,700
Salary and Wage Exp

Advertising Expense
Utilities Expense
Supplies Expense
Insurance Expense
Interest Expense
Rent Expense
30,000
1,900
1,700
2,200
900
750
1,500
1,125
$112,975
$ 112,975
Income Statement
Revenues
Rent Revenues
Expenses
Utilities Expense
Supplies Expense
Insurance Expense
Interest Expense
Total Expenses
Net Income


Add: Investments
Add: Net Income
Less: Drawings
Balance Sheet
Assets
Cash
Accounts Receivable
Supplies
PrePaid Insurance
Land
Buildings
Equipment
Total Assets
Liabilities
Accounts Payable
Mortgage Payable
Interest Payable
Total Liabilities
Owner's Equity
Owner's Capital

* P3-6A Olsen Graphics Company was organized on January 1, 2012, by Gwen Olsen. At the
end of the fi rst 6 months of operations, the trial balance contained the accounts shown below.
Debits
Cash
Accounts Receivable
Equipment
Insurance Expense
Salaries and Wages Expense
Supplies Expense
Advertising Expense
Rent Expense
Utilities Expense
$8,600
14,000
45,000
2,700
30,000
$3,700
1,900
1,500
1,700
$109,100
Credits
Notes Payable
Accounts Payable
Owners Capital
Sales Revenue
Service Revenue
$20,000
9,000
22,000
52,100
6,000
$109,100
Analysis reveals the following additional data.

1. The $3,700 balance in Supplies Expense represents supplies purchased in January. At June 30,
$1,500 of supplies was on hand.
2. The note payable was issued on February 1. It is a 9%, 6-month note.
3. The balance in Insurance Expense is the premium on a one-year policy, dated March 1, 2012.
4. Service revenues are credited to revenue when received. At June 30, service revenue of $1,300
is unearned.
5. Sales revenue earned but unrecorded at June 30 totals $2,000.
6. Depreciation is $2,250 per year.
Instructions
(a) Journalize the adjusting entries at June 30. (Assume adjustments are recorded every 6
months.)
(b) Prepare an adjusted trial balance.
(c) Prepare an income statement and owners equity statement for the 6 months ended June 30
and a balance sheet at June 30.
(b) Adj. trial balance $112,975
(c) Net income $18,725
Ending capital $40,725
Total assets $71,775
Chapter 3, P3-1B Adjusting Entries, pages 141-142

Omiyale Consulting Inc.
Date
General Journal
Debit
Credit
Adjusting Entries
1

Supplies ($1900-900)
5/31 Utility Expense

Accounts payable
(to record utility bill to be paid next month)

Prepaid Insurance
( to record insurance expired)
1,000
1,000
250
250
150
150
8/31 UnEarned Service Revenues (2000-400)

Service Revenue
$1,600
1,600
8/31 Salaries & Wage Expense ((900 x 3/5 x 2)

8/31 Depreciation Expense (11,400/60)

Accum Deprec - Equip/Furniture
(to record deprec expens for 1 month)
8/31 Accounts receivable

Service Revenue
1,080
1,080
190
190
1,700
1,700

General Ledger
Date
05/01/2012
Cash
Debit(+)
Credit(-)
$4,500
Supplies
Date
Debit(+)
08/01/2012 $ 1,900
Balance
$4,500
Credit(-)
$
1,000 $
Balance
1,900
900
PrePaid Insur
Date
Debit(+)
Credit(-)
Balance
08/01/2012 $ 3,600
$
3,600
8/31
150 $
3,450
Accounts Receivable
Date
Debit(+)
Credit(-)
08/01/2012 $ 6,000
$ 1,700
Equipment
Date
Debit(+)
Credit(-)
08/01/2012 $ 11,400
Balance
$
6,000
$
7,700
Balance
11,400
Date
08/01/2012
Date
Date
08/01/2012
Date
Date
08/01/2012
UnEarn Service Rev

Debit(-)
Credit(+)
Balance
$2,000 $
2,000
$1,600
$
400
Accounts Payable
Debit(-)
Credit(+)
Balance
$
4,500 $
4,500
250 $
4,750
Owner's Capital
Debit(-)
Credit(+)
Balance
$
17,700 $ 17,700
-Rent Expense
Debit(+)
Credit(-)
$
900
Balance
$
900
Service Revenue
Debit(-)
Credit(+)
Balance
$
7,500 $
7,500
1,700 $
9,200
1,600 $ 10,800

Date
Debit(+)
Credit(-)
08/01/2012 $ 3,400
1,080
Balance
$
3,400
$
4,480

General Ledger
-Supplies Exp
Date
Debit(+)
Credit(-)
8/31/2012 $ 1,000
-Deprec Expense
Date
Debit(+)
Credit(-)
8/31/2012 $
190
8/31
Date
8/31/2012
Balance
$
1,000
Balance
$
190
190
Sal & Wage Payable

Debit(-)
Credit(+)
Balance
$ 1,080 $
1,080
-Utilities Expense
Date
Debit(+)
Credit(-)
8/31/2012 $
250
Date
8/31/2012
Balance
$
250
Accu Deprec Furniture

Debit(+)
Credit(-)
Balance
190 $
190
-Insurance Expense
Date
Debit(+)
Credit(-)
8/31/2012 $
150
Balance
150

Adjusted Trial Balance, May 31, 2012
Account Title
1
2
3
4
Cash
Accounts Receivable
Supplies
PrePaid Insurance
Equipment (furniture)
Debit
Credit
$4,500
7,700
900
3,450
11,400
190
Accounts Payable
4,750
400
1,080
Owner's Capital
Owner's Drawings
17,700
Service Revenue
Utilities Expense
Supplies Expense
Insurance Expense
Rent Expense
10,800
4,480
250
1,000
150
900
190
$34,920
$ 34,920
Income Statement
month ending May 31, 2012
Revenues
service Revenues
Expenses
Utilities Expense
Supplies Expense
Insurance Expense
Rent Expense
$ 10,800
4,480
250
1,000
150
900
190
Total Expenses
6,970
Net Income
3,830


Add: Investments
Add: Net Income
Less: Drawings
17,700
3,830
21,530
$ 21,530
Balance Sheet
Assets
Cash
Accounts Receivable
Supplies
PrePaid Insurance
Equipment (furniture)
$4,500
7,700
900
3,450
11,400
(190)
-
Total Assets
Liabilities
Accounts Payable
Interest Payable
Total Liabilities
Owner's Equity
Owner's Capital
$ 27,760
4,750
400
1,080
6,230
21,530
$ 27,760

Fran Omiyale started her own consulting fi rm, Omiyale Consulting, on May 1, 2012. The
trial balance at May 31 is as follows.
Trial Balance, May 31, 2012
Trial Balance
Account Title
Cash
Accounts Receivable
Supplies
PrePaid Insurance
Equipment
Debit
Credit
$4,500
6,000
1,900
3,600
11,400
Accounts Payable
4500
$2,000
Owner's Capital
Service Revenue
Rent Expense
17,700
7,500
3,400
900
$31,700
31,700
In addition to those accounts listed on the trial balance, the chart of accounts for Omiyale
Consulting also contains the following accounts and account numbers: No. 150 Accumulated
DepreciationEquipment, No. 212 Salaries and Wages Payable, No. 631 Supplies Expense,
No. 717 Depreciation Expense, No. 722 Insurance Expense, and No. 736 Utilities Expense.
Other data:
1. $900 of supplies have been used during the month.
2. Utilities expense incurred but not paid on May 31, 2012, $250.
3. The insurance policy is for 2 years.
4. $400 of the balance in the unearned service revenue account remains unearned at the end of
the month.
5. May 31 is a Wednesday, and employees are paid on Fridays. Omiyale Consulting has two
employees, who are paid $900 each for a 5-day work week.
6. The offi ce furniture has a 5-year life with no salvage value. It is being depreciated at $190 per
month for 60 months.
7. Invoices representing $1,700 of services performed during the month have not been recorded
as of May 31.
(c) Adj. trial balance $34,920 (adding 3220)
Chapter 3,Adjusting Entries, P3-2B, pages 142

The Bear Motel
Date
General Journal
Debit
Credit
Adjusting Entries
1

Prepaid Insurance
( to record insurance expired)
5/31 Supplies Expense (2080-750)

Supplies
5/31 Depreciation Expense ($3000x12)

(to record deprec expens for the month)
5/31 Depreciation Expense ($1500x12)

(to record deprec expens for the month)

Interest Payable
$40,000 X 12% X 1/12 = $400)
200
200
1,330
1,330
250
250
125
125
400
400
6
5/31 UnEarned Rent Revenues (3300/2/3rd)
Rent Revenue
$2,200
2,200
7
750
750

General Ledger
Date
05/01/2012
Cash
Debit(+)
Credit(-)
$3,500
Supplies
Date
Debit(+)
05/01/2012 $ 2,080
Balance
$3,500
Date
05/01/2012
UnEarn Rent Rev

Debit(-)
Credit(+)
Balance
$
3,300 $
3,300
$2,200
$
1,100
Date
05/01/2012
Mortgage Payable
Debit(-)
Credit(+)
Balance
$
40,000 $ 40,000
PrePaid Insur
Date
Debit(+)
Credit(-)
Balance
05/01/2012 $ 2,400
$
2,400
8/31
200 $
2,200
Date
05/01/2012
Owner's Capital
Debit(-)
Credit(+)
Balance
$
41,380 $ 41,380
Land
Date
Debit(+)
Credit(-)
05/01/2012 $ 12,000
Balance
$ 12,000
-Utilities Expen
Date
Debit(+)
Credit(-)
05/01/2012 $
900
Building
Date
Debit(+)
Credit(-)
05/01/2012 $ 60,000
Balance
$ 60,000
Date
05/01/2012
Credit(-)
$
1,330 $
Equipment
Date
Debit(+)
Credit(-)
05/01/2012 $ 15,000
Date
05/01/2012
Accounts Payable
Debit(+)
Credit(-)
$4,800
Balance
2,080
750
Balance
15,000
Balance
$4,800
Balance
$
900
Rent Revenues
Debit(-)
Credit(+)
Balance
$
10,300
2,200 $ 12,500
-
-Advertising Expense
Date
Debit(+)
Credit(-)
05/01/2012 $
600

Date
Debit(+)
Credit(-)
05/01/2012 $ 3,300
$
750
Balance
$
3,300
$
4,050
Balance
600

General Ledger
-Supplies Exp
Date
Debit(+)
Credit(-)
5/31/2012 $ 1,330
-Deprec Expense
Date
Debit(+)
Credit(-)
5/31/2012 $
250
5/31/2012
$125
Balance
$
250
375
Balance
1,330
Date
5/31/2012
Interest Payable
Debit(-)
Credit(+)
Balance
$
400 $
400
Date
5/31/2012
Sal & Wage Payable

Debit(-)
Credit(+)
Balance
$
750 $
750
-Insurance Exp
Date
Debit(+)
Credit(-)
5/31/2012 $
200
-Interest Expense
Date
Debit(+)
Credit(-)
5/31/2012 $
400
Balance
$
400
Balance
200
Date
5/31/2012
Accu Deprec Build

Debit(-)
Credit(+)
Balance
$
250 $
250
Date
5/31/2012
Accu Deprec Equip

Debit(-)
Credit(+)
Balance
$
125 $
125

The Bear Motel
Adjusted Trial Balance, May 31, 2012
Account Title
Cash
Supplies
Prepaid Insurance
Land
Buildings
Equipment
Debit
Credit
$3,500
750
2,200
12,000
60,000
15,000
250
125
Accounts Payable
Unearned Rent Revenue
Mortgage Payable
Interest Payable
$4,800
1,100
40,000
400
750
Owner's Capital
Owners's Drawing
41,380
-
Rent Revenue
Advertising Expense
Supplies Expense
Utilities Expense
Insurance Expense
Interest Expense
12,500
4,050
600
1,330
900
200
400
375
$101,305
$ 101,305
Income Statement
Revenues
Rent Revenues
$ 12,500
Expenses
Advertising Expense
Supplies Expense
Utilities Expense
Insurance Expense
Interest Expense
4,050
600
1,330
900
200
400
375
Total Expenses
7,855
Net Income
4,645


Add: Investments
Add: Net Income
41,380
4,645
46,025
Less: Drawings
$ 46,025
Balance Sheet
Assets
Cash
Supplies
Prepaid Insurance
Land
Buildings
Equipment
$3,500
750
2,200
12,000
60,000
15,000
(250)
(125)
Total Assets
$ 93,075

Liabilities
Accounts Payable
Mortgage Payable
Interest Payable
Total Liabilities
$4,800
$1,100
$40,000
$400
$750
$ 47,050
Owner's Equity
Owner's Capital
46,025
$ 93,075

P3-2B The Bear Motel opened for business on May 1, 2012. Its trial balance before adjustment
on May 31 is as follows.
The Bear Motel
Trial Balance, May 31, 2012
Trial Balance
Account Title
Cash
Supplies
Prepaid Insurance
Land
Buildings
Equipment
Debit
Credit
$3,500
2,080
2,400
12,000
60,000
15,000
Accounts Payable
Mortgage Payable
$4,800
3,300
40,000
Owner's Capital
Rent Revenue
Advertising Expense
Salaries and Wages Expense
Utilities Expense
14 accounts
41,380
10,300
600
3,300
900
$99,780
99,780
In addition to those accounts listed on the trial balance, the chart of accounts for Bear Motel
also contains the following accounts and account numbers: No. 142 Accumulated Depreciation
Buildings, No. 150 Accumulated DepreciationEquipment, No. 212 Salaries and Wages Payable,
No. 230 Interest Payable, No. 619 Depreciation Expense, No. 631 Supplies Expense, No. 718 Interest
Expense, and No. 722 Insurance Expense. ( 8 accounts)
Other data:
1. Prepaid insurance is a 1-year policy starting May 1, 2012.
2. A count of supplies shows $750 of unused supplies on May 31.
3. Annual depreciation is $3,000 on the buildings and $1,500 on equipment.
4. The mortgage interest rate is 12%. (The mortgage was taken out on May 1.)
5. Two-thirds of the unearned rent revenue has been earned.
6. Salaries of $750 are accrued and unpaid at May 31.
Chapter 3, Adjusting Entries, P3-3B , page 143

Pererman Co.
Date
General Journal
Debit
Credit
Adjusting Entries
1
12/31/2012 Accounts Receivable (11,500-10400)

Service Revenue
1,100
1,100
12/31 Supplies Expense (1500-650)

Supplies ($ )
12/31 Rent Expense ($2200-1200)

PrePaid Rent
12/31 Depreciation Expense ($ )

12/31 UnEarned Rent Revenue (1900-1050)

Rent Revenue
12/31 Interest Expense ($100-0)

Interest Payable
12/31 Salaries & Wage Expense (8725-8000)

850
850
1,000
1,000
700
700
850
850
100
100
725
725

General Ledger
Cash
Debit(+)
Credit(-)
$8,700
Balance
$
8,700
Date
12/01/2012
Note Payable
Debit(-)
Credit(+)
Balance
$
10,000 $
10,000
Accounts Receivable
Date
Debit(+)
Credit(-)
12/01/2012 $
10,400
12/31
1,100
Balance
$ 10,400
11,500
Date
12/01/2012
12/31
UnEarn Rent Revenue

Debit(-)
Credit(+)
Balance
$
1,900 $
1,900
850
1,050
Supplies
Date
Debit(+)
Credit(-)
Balance
12/01/2012 $
1,500
$
1,500
12/31
850 $
650
Date
12/01/2012
Owner's Capital
Debit(-)
Credit(+)
Balance
$
22,000 $
22,000
Date
12/01/2012
PrePaid Rent
Date
Debit(+)
Credit(-)
Balance
12/01/2012 $
2,200
$
2,200
12/31
1,000
1,200
Equipment
Date
Debit(+)
Credit(-)
12/01/2012 $
18,000
Date
12/01/2012
12/31
Balance
$ 18,000
Accounts Payable
Debit(-)
Credit(+)
Balance
2,500 $
2,500
2,500
-Utilities Expense
Date
Debit(+)
Credit(-)
12/01/2012 $
1,510
Balance
$
1,510
'-Accumulated Deprec expense

Date
Debit(+)
Credit(-)
Balance
12/01/2012
$ 0
$ 0
12/31
$700
700
-Owner's Drawings
Date
Debit(+)
Credit(-)
12/01/2012 $ 1,600
Balance
$
1,600
Date
12/01/2012
12/31
Service Revenue
Debit(-)
Credit(+)
Balance
$
16,000 $
16,000
1,100
17,100
Date
12/01/2012
12/31
Rent Revenue
Debit(-)
Credit(+)
Balance
$
1,410 $
1,410
850 $
2,260

Date
Debit(+)
Credit(-)
12/01/2012 $ 8,000
12/31
725
Balance
$
8,000
$
8,725
-Rent Expense
Date
Debit(+)
Credit(-)
12/01/2012 $ 1,900
$ 1,000
Balance
$
1,900
$
2,900

General Ledger
-Supplies Expense
Date
Debit(+)
Credit(-)
12/31 $
850
-Deprec Expense
Date
Debit(+)
Credit(-)
12/31 $
700
Balance
$
700
Date
12/31
Balance
850
Interest Payable
Debit(-)
Credit(+)
Balance
$
100 $
100
-Interest Expense
Date
Debit(+)
Credit(-)
12/31 $
100
Date
12/31
Balance
100

Debit(-)
Credit(+)
Balance
$
725 $
725
-Insurance Expense
Date
Debit(-)
Credit(+)
Balance
12/01/2012 $ 1,000 $
- $
1,000
12/31

Pererman Co.
Adjusted Trial Balance, September 30, 2012
Account Title
1
2
3
4
5
6
Cash
Accounts Receivable
Supplies
PrePaid Insurance
Equipment
7
8
9
10
11
Accounts Payable
Note Payable
Interest Payable
12 Owner's Capital
13 Owner's Drawings
Rent Revenue
14 Service Revenue
15 Rent Expense
16 Salaries & Wages Expense
17 Supplies Expense
18 Interest Expense
19 Depreciation Expense
20 Utility Expense
Debit
$
Credit
8,700
11,500
650
1,200
18,000
700
2,500
10,000
1,050
725
100
22,000
1,600
2,260
17,100
2,900
8,725
850
100
700
1,510
$56,435
$ 56,435
Income Statement
Revenues
Service Revenue
Expenses
Supplies Expense
Insurance Expense
Rent Expense
Interest Expense
Total Expenses
Net Income
2,260
$ 17,100
2,900
8,725
850
100
700
1,510
14,785
(14,785)
$
4,575


Add: Investments
Add: Net Income
Less: Drawings
22000
4,575
4575
26,575
(1,600)
$ 24,975
Balance Sheet
Assets
Cash
Accounts Receivable
Supplies
PrePaid Insurance
Equipment
$ 8,700
$ 11,500
$
650
$ 1,200
$ 18,000
(700)
Total Assets
$ 39,350

Liabilities
Accounts Payable
Note Payable
Interest Payable
Total Liabilities
$ 2,500
$ 10,000
$ 1,050
$
725
$
100
$ 14,375
Owner's Equity
Owner's Capital
24,975
$ 39,350
P3-3B Peterman Co. was organized on July 1, 2012. Quarterly financial statements are prepared.
The unadjusted and adjusted trial balances as of September 30 are shown below.
Pererman Co.
Trial Balance, September 30, 2012
Account Title
Cash
Accounts Receivable
Supplies
PrePaid Rent
Equipment
Trial Balance
Unadjusted
Debit
Credit
$8,700
10,400
1,500
2,200
18,000
Service Revenue
Rent Revenue
Rent Expense
Supplies Expense
Utilities Expense
Interest Expense
Adjusted
Credit
$8,700
11,500
650
1,200
18,000
1100
850
1000
$ 0
Notes Payable
Accounts Payable
Interest Payable
Owner's Capital
Owner's Drawings
Debit
10,000
2,500
0
0
1,900
22,000
1,600
700
10,000
2,500
725
100
1,050
725
100
850
22,000
1,600
16,000
1,410
8,000
1,900
17,100
2,260
8,725
2,900
700
850
1,510
100
1,510
$53,810
$700
53,810
$56,435
850
850
725
1000
700
850
100
Instructions
(a) Journalize the adjusting entries that were made.
(b) Prepare an income statement and an owners equity statement for the 3 months ending
September 30 and a balance sheet at September 30.
(c) If the note bears interest at 12%, how many months has it been outstanding?
Net income $4,575
56,435
P3-4B A review of the ledger of Roach Company at December 31, 2012, produces the following
data pertaining to the preparation of annual adjusting entries.
1. Prepaid Insurance $10,440. The company has separate insurance policies on its buildings and
its motor vehicles.
Policy B4564 on the building was purchased on April 1, 2011, for $7,920.
The policy has a term of 3 years.
Policy A2958 on the vehicles was purchased on January 1, 2012, for $4,500
This policy has a term of 2 years.
Date
Term in months Monthly Rent

No of Leases
1-Nov
1-Dec
Rent Revenue
Interest
Payable
9
6
5,000
8,500
5
5
5000 * 5 = 25,000 * 2 months ( Nov and Dec)

8,500 * 4 = 34,000 * 1 month ( DEC)
Total 84,000 Rent Revenue
($122,000x9% =
10,800 for 12 month.
For 1 month = 900
for 2 month Nov and
Dec = 1,800
Salaries and Wages Payable $0. There are eight salaried employees. Salaries are paid every
Friday for the current week. Five employees receive a salary of $700 each per week, and three
employees earn $500 each per week. Assume December 31 is a Tuesday. Employees do not
work weekends. All employees worked the last 2 days of December.
Salaries and
Wages Payable
5 x $700x 2/5 =
$1,400
3 x $500x 2/5 =
600
$2,000
7,920 for 3 years so 220 per month and for 2012 .. 12 months , it is 2640 + 2250 = 4890
4500 is for 2 years so for 1 year it is 2250
2640 + 2250 = 4890
2. Unearned Rent Revenue $429,000. The company began subleasing offi ce space in its new
building on November 1. 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
1-Nov
9
1-Dec
6
of Leases
ov and Dec)
ent Revenue
5 = number of leases
4 number of leases
Monthly Rent
5,000
8,500
No of Leases
5
5
40 + 2250 = 4890
e in its new
contracts
Chapter 3, Recording Process,P3-5B page 144
General Journal
Date
9/8
9/10
Debit
Salaries and Wage expense
1,000
Salaries and Wage Payable

Cash
(paid salaries )
700
Cash
1,700
3,420
Accounts Receivable
(Received cash in payment on account)
3
9/12
Cash
3,420
3,100
Service Revenue
(Received cash for services provided)
4
9/15
Equipment
3,100
2,000
Accounts Payable
(Purchased equipment on account)
5
9/17
Supplies
2,000
700
Accounts Payable
(Purchased supplies on account)
6
9/20
9/22
9/25
Credit
700
Accounts payable
Cash
(paid cash on account)
Rent Expense
Cash
(paid rent for Sept)
Salaries &Wages Expense

Cash
2,700
2,700
400
400
1,700
1,700
(paid salaries)
9/27
Accounts Receivable
Service Revenue
1,900
1,900
(Received payment on account)
10
9/29
Cash
UnearnedService Revenue
(Received cash for future services)
600
600

General Ledger
Date
Date
Date
Date
Date
Date
Cash
Debit(+)
Credit(-)
$2,400
$ 1,700
$
3,420
$
3,100
$ 2,700
400
1,700
600
Balance
$2,400
700
4,120
7,220
4,520
4,120
2,420
$3,020
Accounts Receivable
Debit(+)
Credit(-)
Balance
$
4,250
$
4,250
3,420
830
1,900
2,730
Supplies
Debit(+)
Credit(-)
$
1,800
700
Equipment
Debit(+)
Credit(-)
$
12,000
2,000
Balance
$
1,800
2,500
Balance
$ 12,000
14,000
Date
Date
Date
Date

Debit(-)
Credit(+)
$2,000
Balance
$2,000
Date
Accounts Payable
Debit(-)
Credit(+)
2,600
$ 2,000
$
2,700
$
700
Balance
2,600
4,600
1,900
2,600
Date
Owner's Capital
Debit(-)
Credit(+)
Balance
$
13,950 $
13,950

Debit(-)
Credit(+)
Balance
$
1,200 $
1,200
600
1,800

Debit(-)
Credit(+)
Balance
$
700
$
700
700
-
Service Revenue
Debit(-)
Credit(+)
Balance
$
3,100 $
3,100
1,900
5,000

Debit(+)
Credit(-)
$
1,000
1,700
-Rent Expense
Debit(+)
Credit(-)
$
400
Balance
1,000
2,700
Balance
$
400
Robinson Equipment Repair

Trial Balance
Account Title
Cash
Accounts Receivable
Supplies
Equipment
Debit
Credit
$3,020
2,730
2,500
14,000
$2,000
Accounts Payable
2,600
1,800
0
Owner's Capital
13,950
Service Revenue
Rent Expense
5,000
400
2,700
$25,350
25,350

Date
General Journal
Debit
Credit
Adjusting Entries
1
9/30 Supplies Expense ($2500-1400)

Supplies

9/30 Depreciation Expense

(to record deprec expense, 100/month)

Service Revenue
1,100
1,100
350
350
200
200
1,250
1,250

General Ledger
Cash
Debit(+)
Credit(-)
2400
1700
3420
3100
2700
400
1700
600
Date
Accounts Receivable
Debit(+)
Credit(-)
4250
3420
1900
Date
Balance
4250
830
2730
Date
Date
Supplies
Debit(+)
Credit(-)
1800
700
1,100
Balance
1800
2500
1,400
Date
Equipment
Debit(+)
Credit(-)
12000
2000
Balance
12000
14000
Date

Debit(-)
Credit(+)
2000
200
Balance
2000
2,200
Date
Date
Date
Date
Balance
2400
700
4120
7220
4520
4120
2420
3020
Accounts Payable
Debit(-)
Credit(+)
2600
2000
2700
700
Date
Balance
2600
4600
1900
2600
Owner's Capital
Debit(-)
Credit(+)
13,950
Balance
13950

Debit(-)
Credit(+)
Balance
1200
1200
600
1800
$
1,250
$
550
Debit(-)
Credit(+)
0
350
Balance
0
350
Service Revenue
Debit(-)
Credit(+)
3100
1900
1,250
Debit(+)
Credit(-)
1000
1700
$
350
Date
Balance
3100
5000
6,250
Balance
1000
2700
$
3,050
-Rent Expense
Debit(+)
Credit(-)
400
Balance
400
-Deprec Expense
Debit(+)
Credit(-)
Balance

-Supplies Expense
Debit(+)
Credit(-)
Date
$
1,100
Balance
$
1,100
Date
$
200
200

Adjusted Trial Balance, September, 30, 2012
Account Title
1
2
3
4
5
Cash
Accounts Receivable
Supplies
Equipment
Debit
3,020
2,730
1,400
14,000
2,200
Accounts Payable
2,600
550
350
Owner's Capital
Service Revenue
Rent Expense
Supplies Expense
Credit
13,950
6,250
400
3,050
1,100
200
25,900 $
25,900
Income Statement
Revenues
Service Revenue
Expenses
Rent Expense
Supplies Expense
400
3,050
1,100
200
4,750
6,250
(4,750)
Total Expenses
Net Income
1,500


Add: Investments
Add: Net Income
13,950
1,500
15,450
Less: Drawings
15,450
Balance Sheet
Assets
Cash
Accounts Receivable
Supplies
Equipment
3,020
2,730
1,400
14,000
(2,200)
Total Assets
$18,950

Liabilities
Accounts Payable
Total Liabilities
Owner's Equity
Owner's Capital
2,600
550
350
$
3,500
15,450
18,950

P3-5B On November 1, 2012, the account balances of Robinson Equipment Repair were as
follows.
Debits
Credits
Cash
$2,400 Accum Deprec Equipment
$2,000
Accounts Receivable
4,250 Accounts Payable
2,600
Supplies
1,800 Unearned Service Revenue
1,200
Equipment
12,000 Salaries and Wages Payable
700
Owners Capital
13,950
$25,400
2
3
4
5
6
7
8
9
10
11
$25,400
During November, the following summary transactions were completed.

Nov. 8 Paid $1,700 for salaries due employees, of which $700 is for October salaries.
10 Received $3,420 cash from customers on account.
12 Received $3,100 cash for services performed in November.
15 Purchased equipment on account $2,000.
17 Purchased supplies on account $700.
20 Paid creditors on account $2,700.
22 Paid November rent $400.
25 Paid salaries $1,700.
27 Performed services on account and billed customers for services provided $1,900.
29 Received $600 from customers for future service.
Adjustment data consist of:
1. Supplies on hand $1,400.
2. Accrued salaries payable $350.
3. Depreciation for the month is $200.
4. Unearned service revenue of $1,250 is earned.
Instructions
(a) Enter the November 1 balances in the ledger accounts.
(b) Journalize the November transactions.
(c) Post to the ledger accounts. Use J1 for the posting reference. Use the following additional accounts:
No. 407 Service Revenue, No. 615 Depreciation Expense, No. 631 Supplies Expense,
No. 726 Salaries and Wages Expense, and No. 729 Rent Expense.
(d) Prepare a trial balance at November 30.
(e) Journalize and post adjusting entries.
(f) Prepare an adjusted trial balance.
(g) Prepare an income statement and an owners equity statement for November and a balance
sheet at November 30.
Trial balance $25,350
Adj. trial balance $25,900
Net income $1,500;

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Chapter 3, Adjusting Entries, pages 103 - 121

reference: Chapter 2, Recording Process, pages 63 - 72

General Journal (pg 117)

10/31 Supplies Expense

10/31 Insurance Expense ($600 / 12 = $50)

10/31 Depreciation Expense ($4,800 / 120)

10/31 UnEarned Service Revenues

10/31 Accounts Receivable

10/31 Interest Expense

10/31 Salaries & Wage Expense

Chapter 3, Adjusting Entries, pages 103 - 121

UnEarn Ser Rev

Accum Dep - Equip

-Sal & Wages Exp

Chapter 3, Adjusting Entries, pages 103 - 121

Sal & Wages Payable

Chapter 3, Adjusting Entries, pages 103 - 121

Chapter 3, Adjusting Entries, pages 103 - 121

Owner's Equity Statement

Owner's Capital, October 1

Chapter 3, Adjusting Entries, pages 103 - 121

Chapter 3, Adjusting Entries, pages 103 - 121

Cash Flows from Operating Activities

net change in cash

cash at beginning of period

Cash Flow from Investing Activities

Cash Flow from Financing Activities

Chapter 3, Recording Process, pages 63 - 72

UnEarned Service Revenue

10/3 Rent Expense

10/4 PrePaid Insurance

10/20 Owner's Drawings

10/26 Salaries &Wages Expense

Chapter 2, Recording Process, pages 63 - 72

UnEarn Ser Rev

-Sal & Wages Exp

Chapter 2, Recording Process, pages 63 - 72

Chapter 3, P3-1A Adjusting Entries, page 137

6/30/2012 Supplies Expense

6/30 Utility Expense

6/30 Insurance Expense ($3000/12)

6/30 UnEarned Service Revenues

6/30 Salaries & Wage Expense

6/30 Depreciation Expense ($15000/60)

6/30 Accounts receivable

Chapter 3, P3-1A Adjusting Entries, page 137

UnEarn Service Rev

-Salaries & Wage Expen

Chapter 3, P3-1A Adjusting Entries, page 137

Accu Deprec Equip

Sal & Wage Payable

Chapter 3, P3-1A Adjusting Entries, page 137

Chapter 3, Adjusting Entries, pages 103 - 121

Owner's Equity Statement

Owner's Capital, August 1

Chapter 3, P3-1A Adjusting Entries, page 137

Chapter 3, P3-1A Adjusting Entries, page 137

Chapter 3, Adjusting Entries, P3-2A, pages 138-139

8/31 Insurance Expense

8/31 Supplies Expense

8/31 Depreciation Expense ($6,000x1/4)

8/31 Depreciation Expense ($2,400x1/4)

8/31 UnEarned Rent Revenues