FINANCIAL ACCT.FUND(LL)W/ACCESS>CUSTOM<
FINANCIAL ACCT.FUND(LL)W/ACCESS>CUSTOM<
6th Edition
ISBN: 9781260255119
Author: Wild
Publisher: MCG CUSTOM
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Chapter 3, Problem 3BP

1.

To determine

Set up T-accounts for the general ledger accounts with the unadjusted balances.

1.

Expert Solution
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Explanation of Solution

T-account: The condensed form of a ledger is referred to as T-account. The left-hand side of this account is known as debit, and the right hand side is known as credit.

Cash
DateDetailsDebit ($) DateDetailsCredit ($)
2017      
December 31Balance$60,000    
       

Table (1)

Accounts Receivable
DateDetailsDebit ($) DateDetailsCredit ($)
2017      
December 31Balance$0    
       

Table (2)

Teaching Supplies
DateDetailsDebit ($) DateDetailsCredit ($)
2017      
December 31Balance$70,000    
       

Table (3)

Prepaid Insurance
DateDetailsDebit ($) DateDetailsCredit ($)
2017      
December 31Balance$19,000    
       

Table (4)

Prepaid Rent
DateDetailsDebit ($) DateDetailsCredit ($)
2017      
December 31Balance$3,800    
       

Table (5)

Professional Library
DateDetailsDebit ($) DateDetailsCredit ($)
2017      
December 31Balance$12,000    
       

Table (6)

Accumulated Depreciation-Professional Library
DateDetailsDebit ($) DateDetailsCredit ($)
    2017  
    December 31Balance$2,500
       

Table (7)

Equipment
DateDetailsDebit ($) DateDetailsCredit ($)
2017      
December 31Balance$40,000    
       

Table (8)

Accumulated Depreciation-Equipment
DateDetailsDebit ($) DateDetailsCredit ($)
    2017  
    December 31Balance$20,000
       

Table (9)

Accounts Payable
DateDetailsDebit ($) DateDetailsCredit ($)
    2017  
    December 31Balance$11,200
       

Table (10)

Salaries Payable
DateDetailsDebit ($) DateDetailsCredit ($)
    2017  
    December 31Balance$0
       

Table (11)

Unearned Training Fees
DateDetailsDebit ($) DateDetailsCredit ($)
    2017  
    December 31Balance$28,600
       

Table (12)

Common Stock
DateDetailsDebit ($) DateDetailsCredit ($)
    2017  
    December 31Balance$11,000
       

Table (13)

Retained Earnings
DateDetailsDebit ($) DateDetailsCredit ($)
    2017  
    December 31Balance$60,500
       

Table (14)

Dividends
DateDetailsDebit ($) DateDetailsCredit ($)
2017      
December 31Balance$20,000    
       

Table (15)

Tuition Fees Earned
DateDetailsDebit ($) DateDetailsCredit ($)
    2017  
    December 31Balance$129,200
       

Table (16)

Training Fees Earned
DateDetailsDebit ($) DateDetailsCredit ($)
    2017  
    December 31Balance$68,000
       

Table (17)

Depreciation Expense-Professional Library
DateDetailsDebit ($) DateDetailsCredit ($)
2017      
December 31Balance$0    
       

Table (18)

Depreciation Expense-Equipment
DateDetailsDebit ($) DateDetailsCredit ($)
2017      
December 31Balance$0    
       

Table (19)

Salaries Expense
DateDetailsDebit ($) DateDetailsCredit ($)
2017      
December 31Balance$44,200    
       

Table (20)

Insurance Expense
DateDetailsDebit ($) DateDetailsCredit ($)
2017      
December 31Balance$0    
       

Table (21)

Rent Expense
DateDetailsDebit ($) DateDetailsCredit ($)
2017      
December 31Balance$29,600    
       

Table (22)

Teaching Supplies Expense
DateDetailsDebit ($) DateDetailsCredit ($)
2017      
December 31Balance$0    
       

Table (23)

Advertising Expense
DateDetailsDebit ($) DateDetailsCredit ($)
2017      
December 31Balance$19,000    
       

Table (24)

Utilities Expense
DateDetailsDebit ($) DateDetailsCredit ($)
2017      
December 31Balance$13,400    
       

Table (25)

2.

To determine

Journalize the adjusting entries.

2.

Expert Solution
Check Mark

Explanation of Solution

Adjusting entries: Adjusting entries are those entries which are recorded at the end of the year, to update the income statement accounts (revenue and expenses) and balance sheet accounts (assets, liabilities, and stockholders’ equity) to maintain the records according to accrual basis principle.

a.

DateAccount Titles and ExplanationsPost Ref.Debit ($)Credit ($)
2017    
December31Insurance Expense 9,500 
                  Prepaid Insurance  9,500
  (To record expired insurance coverage)   

Table (26)

b.

DateAccount Titles and ExplanationsPost Ref.Debit ($)Credit ($)
2017    
December31Teaching Supplies Expense 50,000 
           Teaching Supplies  50,000
  (To record used teaching supplies)   

Table (27)

c.

DateAccount Titles and ExplanationsPost Ref.Debit ($)Credit ($)
2017    
December31Depreciation Expense–Equipment 5,000 
     Accumulated Depreciation–Equipment  5,000
  (To record depreciation expense on equipment)   

Table (28)

d.

DateAccount Titles and ExplanationsPost Ref.Debit ($)Credit ($)
2017    
December31Depreciation Expense–Professional Library 2,400 
  

         Accumulated Depreciation–

         Professional Library

  2,400
  (To record depreciation expense on professional library)   

Table (29)

e.

DateAccount Titles and ExplanationsPost Ref.Debit ($)Credit ($)
2017    
December31Unearned Training Fees 28,600 
          Training Fees Earned  28,600
  (To record portion of advance training fees received $2,500 per month for 2 months)   

Table (30)

f.

DateAccount Titles and ExplanationsPost Ref.Debit ($)Credit ($)
2017    
December31Accounts Receivable 5,750 
          Tuition Fees Earned  5,750
  (To record accrued tuition fee earned)   

Table (31)

g.

DateAccount Titles and ExplanationsPost Ref.Debit ($)Credit ($)
2017    
December31Salaries Expense 450 
          Salaries Payable  450
  (To record accrued salaries)   

Table (32)

h.

DateAccount Titles and ExplanationsPost Ref.Debit ($)Credit ($)
2017    
December31Rent Expense 3,800 
                  Prepaid Rent  3,800
  (To record rent paid)   

Table (33)

Post these adjusting entries into respective accounts prepared in requirement 1.

Insurance Expense
DateDetailsDebit ($) DateDetailsCredit ($)
2017      
December 31Balance0    
December 31Prepaid insurance9,500    
December 31Balance$9,500    

Table (34)

Prepaid Insurance
DateDetailsDebit ($) DateDetailsCredit ($)
2017      
December 31Balance19,000 December 31Insurance expense9,500
December 31Balance$9,500    

Table (35)

Teaching Supplies Expense
DateDetailsDebit ($) DateDetailsCredit ($)
2017      
December 31Balance$0    
December 31Teaching supplies5,200    
December 31Balance$5,200    

Table (36)

Teaching Supplies
DateDetailsDebit ($) DateDetailsCredit ($)
2017      
December 31Balance$70,000 December 31Teaching supplies expense50,000
December 31Balance$20,000    

Table (37)

Depreciation Expense-Equipment
DateDetailsDebit ($) DateDetailsCredit ($)
2017      
December 31Balance$0    
December 31Accumulated depreciation-equipment5,000    
December 31Balance$13,200    

Table (38)

Accumulated Depreciation-Equipment
DateDetailsDebit ($) DateDetailsCredit ($)
    2017  
    December 31Balance$20,000
    December 31Depreciation expense-equipment5,000
    December 31Balance$25,000

Table (39)

Depreciation Expense-Professional Library
DateDetailsDebit ($) DateDetailsCredit ($)
2017      
December 31Balance$0    
December 31Accumulated depreciation-Professional library2,400    
December 31Balance$2,400    

Table (40)

Accumulated Depreciation-Professional Library
DateDetailsDebit ($) DateDetailsCredit ($)
    2017  
    December 31Balance$2,500
    December 31Depreciation expense-professional library2,400
    December 31Balance$4,900

Table (41)

Unearned Training Fees
DateDetailsDebit ($) DateDetailsCredit ($)
    2017  
December 31Training fees earned5,000 December 31Balance$12,500
    December 31Balance$7,500

Table (42)

Training Fees Earned
DateDetailsDebit ($) DateDetailsCredit ($)
    2017  
    December 31Balance$68,000
    December 31Unearned training fees earned28,600
    December 31Balance$96,600

Table (43)

Accounts Receivable
DateDetailsDebit ($) DateDetailsCredit ($)
2017      
December 31Balance$0    
December 31Tuition fees earned5,750    
December 31Balance$5,750    

Table (44)

Tuition Fees Earned
DateDetailsDebit ($) DateDetailsCredit ($)
    2017  
    December 31Balance$129,200
    December 31Accounts receivable5,750
    December 31Balance$134,950

Table (45)

Salaries Expense
DateDetailsDebit ($) DateDetailsCredit ($)
2017      
December 31Balance$44,200    
December 31Salaries payable450    
December 31Balance$44,650    

Table (46)

Salaries Payable
DateDetailsDebit ($) DateDetailsCredit ($)
    2017  
    December 31Balance$0
    December 31Salaries expense450
    December 31Balance$450

Table (47)

Rent Expense
DateDetailsDebit ($) DateDetailsCredit ($)
2017      
December 31Balance$29,600    
December 31Prepaid rent3,800    
December 31Balance$33,400    

Table (48)

Prepaid Rent
DateDetailsDebit ($) DateDetailsCredit ($)
2017      
December 31Balance$3,800 December 31Rent expense3,800
December 31Balance$0    

Table (49)

3.

To determine

Prepare an adjusted trial balance of A Institute as of December 31, 2017.

3.

Expert Solution
Check Mark

Explanation of Solution

Adjusted trial balance:

Adjusted trial balance is that statement which contains complete list of accounts with their adjusted balances, after all relevant adjustments have been made. This statement is prepared at the end of every financial period.

A Institute
Adjusted Trial Balance
December 31, 2017
Account TitlesDebit ($)Credit ($)
Cash60,000 
Accounts receivable5,750 
Teaching supplies20,000 
Prepaid insurance9,500 
Prepaid rent0 
Professional library12,000 
Accumulated depreciation-Professional library 4,900
Equipment40,000 
Accumulated depreciation-Equipment 25,000
Accounts payable 11,200
Salaries payable 450
Unearned training fees 0
Common stock 11,000
Retained earnings 60,500
Dividends20,000 
Tuition fees earned 134,950
Training fees earned 96,600
Depreciation expense–Professional library2,400 
Depreciation expense–Equipment5,000 
Salaries expense44,650 
Insurance expense9,500 
Rent expense33,400 
Teaching supplies expense50,000 
Advertising expense19,000 
Utilities expense13,400 
Total$344,600$344,600

Table (50)

4.

To determine

Prepare income statement, retained earnings and balance sheet of A Institute for the year ended December 31, 2017.

4.

Expert Solution
Check Mark

Explanation of Solution

Income statement: The financial statement which reports revenues and expenses from business operations and the result of those operations as net income or net loss for a particular time period is referred to as income statement.

A Institute
Income Statement
For the Year Ended December 31, 2017
Revenues  
   Tuition fees earned$134,950 
   Training fees earned96,600 
      Total revenues $231,550
Expenses  
   Depreciation expense–Professional library2,400 
   Depreciation expense–Equipment5,000 
   Salaries expense44,650 
   Insurance expense9,500 
   Rent expense33,400 
   Teaching supplies expense50,000 
   Advertising expense19,000 
   Utilities expense13,400 
      Total expenses 177,350
Net income $54,200

Table (51)

Retained earnings: Retained earnings are that portion of profits which are earned by a company but not distributed to stockholders in the form of dividends. These earnings are retained for various purposes like expansion activities, or funding any future plans.

Statement of retained earnings for A Institute for the year ended December 31, 2017:

A Institute
Statement of Retained Earnings
Year Ended December 31, 2017
Retained earnings, December 31, 2016$60,500
Add: Net income for the year54,200
 114,700
Less: Dividends(20,000)
Retained earnings, December 31, 2017$94,700

Table (52)

Balance sheet: This financial statement reports a company’s resources (assets) and claims of creditors (liabilities) and stockholders (stockholders’ equity) over those resources. The resources of the company are assets which include money contributed by stockholders and creditors. Hence, the main elements of the balance sheet are assets, liabilities, and stockholders’ equity.

Note: Refer to income statement for value and computation of net income.

The balance sheet of A Institute as of December 31, 2017:

A Institute
Balance Sheet
December 31, 2017
Assets
Cash $60,000
Accounts receivable 5,750
Teaching supplies 20,000
Prepaid insurance 9,500
Professional library$12,000 
Accumulated depreciation-Professional library(4,900)7,100
Equipment40,000 
Accumulated depreciation-Equipment(25,000)15,000
Total assets $117,350
Liabilities
Accounts payable$11,200 
Salaries payable450 
Unearned training fees11,650 
Total liabilities 11,650
Equity
Common stock11,000 
Retained earnings94,700105,700
Total liabilities and equity $117,350

Table (53)

Note: Refer to statement of retained earnings for value and computation of retained earnings value.

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Chapter 3 Solutions

FINANCIAL ACCT.FUND(LL)W/ACCESS>CUSTOM<

Ch. 3 - Prob. 6DQCh. 3 - Prob. 7DQCh. 3 - Prob. 8DQCh. 3 - Prob. 9DQCh. 3 - Prob. 10DQCh. 3 - Prob. 11DQCh. 3 - Prob. 12DQCh. 3 - Prob. 13DQCh. 3 - Prob. 14DQCh. 3 - Prob. 15DQCh. 3 - Prob. 16DQCh. 3 - Prob. 17DQCh. 3 - Prob. 18DQCh. 3 - Prob. 19DQCh. 3 - Prob. 20DQCh. 3 - Prob. 21DQCh. 3 - Prob. 22DQCh. 3 - Prob. 23DQCh. 3 - Prob. 24DQCh. 3 - Prob. 25DQCh. 3 - Prob. 26DQCh. 3 - Prob. 27DQCh. 3 - Prob. 28DQCh. 3 - Prob. 29DQCh. 3 - Prob. 1QSCh. 3 - Prob. 2QSCh. 3 - Prob. 3QSCh. 3 - Prob. 4QSCh. 3 - Prob. 5QSCh. 3 - Prob. 6QSCh. 3 - Prob. 7QSCh. 3 - Prob. 8QSCh. 3 - Prob. 9QSCh. 3 - Prob. 10QSCh. 3 - Prob. 11QSCh. 3 - Prob. 12QSCh. 3 - Prob. 13QSCh. 3 - Prob. 14QSCh. 3 - Prob. 15QSCh. 3 - Prob. 16QSCh. 3 - Prob. 17QSCh. 3 - Prob. 18QSCh. 3 - Prob. 19QSCh. 3 - Prob. 20QSCh. 3 - QS 3-21 Preparing closing entries from the...Ch. 3 - Prob. 22QSCh. 3 - QS 3-23 Identifying the accounting cycle List the...Ch. 3 - Prob. 24QSCh. 3 - Prob. 25QSCh. 3 - Prob. 26QSCh. 3 - Prob. 27QSCh. 3 - Prob. 28QSCh. 3 - Prob. 1ECh. 3 - Prob. 2ECh. 3 - Prob. 3ECh. 3 - Prob. 4ECh. 3 - Prob. 5ECh. 3 - Prob. 6ECh. 3 - Prob. 7ECh. 3 - Exercise 3-8 Preparing closing entries Following...Ch. 3 - Prob. 9ECh. 3 - Prob. 10ECh. 3 - Prob. 11ECh. 3 - Prob. 12ECh. 3 - Prob. 13ECh. 3 - Prob. 14ECh. 3 - Prob. 15ECh. 3 - Prob. 16ECh. 3 - Prob. 1APCh. 3 - Prob. 2APCh. 3 - Prob. 3APCh. 3 - Prob. 4APCh. 3 - Prob. 5APCh. 3 - Prob. 6APCh. 3 - Problem 3-7A Determining balance sheet...Ch. 3 - Prob. 8APCh. 3 - Prob. 1BPCh. 3 - Prob. 2BPCh. 3 - Prob. 3BPCh. 3 - Prob. 4BPCh. 3 - Prob. 5BPCh. 3 - Prob. 6BPCh. 3 - Prob. 7BPCh. 3 - Prob. 8BPCh. 3 - Prob. 3SPCh. 3 - Prob. 1BTNCh. 3 - Prob. 2BTNCh. 3 - Prob. 3BTNCh. 3 - Prob. 4BTNCh. 3 - Prob. 5BTNCh. 3 - Prob. 7BTNCh. 3 - Prob. 9BTN
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