PROBLEM 3-1B
(a)
Date
Account Titles
2014
May 31 Supplies Expense ................................
Supplies .......................................
Ref.
Debit
631
126
500
31 Utilities Expense ..................................
Accounts Payable .......................
736
201
200
31 Insurance Expense ..............................
Prepaid Insurance
(R$2,400 ÷ 24 months) ............
722
100
31 Unearned Service Revenue ................
Service Revenue
( R$2,600 – R$1,000) ...............
209
31 Salaries and Wages Expense .............
Salaries and Wages Payable
[(3/5 X R$500) X
2 employees] ...........................
726
31 Depreciation Expense .........................
Accumulated Depreciation—
Equipment ...............................
711
31 Accounts Receivable ...........................
Service Revenue .........................
112
400
J4
Credit
500
200
130
100
1,600
400
1,600
600
600
212
200
158
200
1,400
1,400
(b)
Cash
Date
Explanation
2012
May 31 Balance
Ref.

Debit
Credit
No. 101
Balance
7,700
PROBLEM 3-1B (Continued)
Accounts Receivable
Date
Explanation
2014
May 31 Balance
31 Adjusting
Supplies
Date
Explanation
2014
May 31 Balance
31 Adjusting
No. 112
Ref.

J4
Ref.
Debit
Credit
1,400
4,000
5,400
Debit
Credit
No. 126
Balance
500
1,500
1,000

J4
Prepaid Insurance
Date
Explanation
2014
May 31 Balance
31 Adjusting
Equipment
Date
Explanation
2014
May 31 Balance
Balance
No. 130
Ref.
Debit

J4
Ref.
Debit
Credit
Balance
100
2,400
2,300
Credit
No. 157
Balance

Accumulated Depreciation—Equipment
Date
Explanation
Ref.
2014
May 31 Adjusting
J4
12,000
Debit
Credit
No. 158
Balance
200
200
PROBLEM 3-1B (Continued)
Accounts Payable
Date
Explanation
2014
May 31 Balance
31 Adjusting
Unearned Service Revenue
Date
Explanation
2014
May 31 Balance
31 Adjusting
Salaries and Wages Payable
Date
Explanation
2014
May 31 Adjusting
No. 201
Ref.
Debit

J4
Ref.

J4
Ref.
Debit
Credit
Balance
200
4,500
4,700
Credit
No. 209
Balance
1,600
2,600
1,000
Debit
Credit
No. 212
Balance
600
600
J4
Share Capital—Ordinary
Date
Explanation
2014
May 31 Balance
Service Revenue
Date
Explanation
2014
May 31 Balance
31 Adjusting
31 Adjusting
No. 311
Ref.
Debit
Credit

Ref.
16,000
Debit

J4
J4
Credit
No. 400
Balance
1,600
1,400
8,500
10,100
11,500
Supplies Expense
Date
Explanation
Balance
No. 631
Ref.
Debit
Credit
Balance
2014
May 31
Adjusting
J4
500
500
Debit
No. 711
Balance
PROBLEM 3-1B (Continued)
Depreciation Expense
Date
Explanation
2014
May 31 Adjusting
Insurance Expense
Date
Explanation
2014
May 31 Adjusting
Ref.
J4
Ref.
J4
Credit
200
200
Debit
No. 722
Balance
Credit
100
100
Salaries and Wages Expense
Date
Explanation
2014
May 31 Balance
31 Adjusting
Rent Expense
Date
Explanation
2014
May 31 Balance
Utilities Expense
Date
Explanation
2014
May 31 Adjusting
726
Ref.

J4
Ref.
Debit
Credit
600
3,000
3,600
Debit
No. 729
Balance
Credit

Ref.
J4
Balance
1,000
Debit
200
Credit
No. 732
Balance
200
PROBLEM 3-1B (Continued)
(c)
LIRA CONSULTING, INC.
Adjusted Trial Balance
May 31, 2014
Cash .......................................................................
Accounts Receivable ...........................................
Supplies ................................................................
Prepaid Insurance ................................................
Equipment .............................................................
Accumulated Depreciation—
Equipment .........................................................
Accounts Payable ................................................
Unearned Service Revenue .................................
Salaries and Wages Payable ...............................
Share Capital—Ordinary......................................
Service Revenue ..................................................
Salaries and Wages Expense .............................
Rent Expense........................................................
Depreciation Expense ..........................................
Insurance Expense ..............................................
Utilities Expense ..................................................
Supplies Expense ................................................
Debit
Credit
R$ 7,700
5,400
Prepaid
1,000 Insurance
2,300
12,000
R$ 200
4,700
1,000
600
16,000
11,500
3,600
1,000
200
100
200
500
R$34,000
R$34,000
PROBLEM 3-2B
(a)
Date
May 31
31
31
31
31
31
Account Titles
Insurance Expense ...............................
Prepaid Insurance
($2,400 X 1/12) ..........................
Ref.
722
Supplies Expense .................................
Supplies ($1,520 – $350) .............
631
126
1,170
711
345
Depreciation Expense
($2,640 X 1/12) + ($1,500 X 1/12) ......
Accumulated Depreciation—
Buildings ..................................
Accumulated Depreciation—
Equipment ................................
Debit
200
130
J1
Credit
200
1,170
142
220
158
125
Interest Expense ...................................
Interest Payable
[($38,000 X 12%) X 1/12] ............
718
Unearned Rent Revenue ......................
Rent Revenue
(2/3 X $3,300) ...........................
208
Salaries and Wages Expense ..............
Salaries and Wages Payable ......
726
212
380
230
380
2,200
429
2,200
750
750
(b)
Cash
Date
Explanation
May 31 Balance
No. 101
Ref.

Debit
Credit
Balance
2,500
PROBLEM 3-2B (Continued)
Supplies
Date
Explanation
May 31 Balance
31 Adjusting
Prepaid Insurance
Date
Explanation
May 31 Balance
31 Adjusting
Land
Date
Explanation
May 31 Balance
No. 126
Ref.

J1
Ref.

J1
Ref.

Debit
Credit
1,170
Debit
Credit
200
Debit
Credit
Buildings
Date
Explanation
May 31 Balance
Equipment
Date
Explanation
May 31 Balance
Ref.

Debit
Credit
No. 140
Balance
14,000
Ref.
J1
Ref.

Ref.
J1
Balance
58,000
No. 142
Debit
Debit
Credit
220
Balance
220
Credit
No. 157
Balance
15,000
Accumulated Depreciation—Equipment
Date
Explanation
May 31 Adjusting
No. 130
Balance
2,400
2,200
No. 141
Accumulated Depreciation—Buildings
Date
Explanation
May 31 Adjusting
Balance
1,520
350
No. 158
Debit
Credit
125
Balance
125
PROBLEM 3-2B (Continued)
Accounts Payable
Date
Explanation
May 31 Balance
No. 201
Ref.

Debit
Credit
Unearned Rent Revenue
Date
Explanation
May 31 Balance
31 Adjusting
No. 208
Ref.

J1
Debit
Credit
2,200
Salaries and Wages Payable
Date
Explanation
May 31 Adjusting
Interest Payable
Date
Explanation
May 31 Adjusting
Mortgage Payable
Date
Explanation
May 31 Balance
Rent Revenue
Date
Explanation
May 31 Balance
31 Adjusting
Balance
3,300
1,100
No. 212
Ref.
J1
Ref.
J1
Ref.

Debit
Debit
Debit
Credit
750
Balance
750
Credit
380
No. 230
Balance
380
Credit
Share Capital—Ordinary
Date
Explanation
May 31 Balance
Balance
4,800
No. 275
Balance
38,000
No. 311
Ref.

Ref.

J1
Debit
Debit
Credit
Credit
2,200
Balance
40,000
No. 429
Balance
12,300
14,500
PROBLEM 3-2B (Continued)
Advertising Expense
Date
Explanation
May 31 Balance
No. 610
Ref.

Debit
Credit
Supplies Expense
Date
May 31
Explanation
Adjusting
No. 631
Ref.
J1
Debit
1,170
Credit
Depreciation Expense
Date
Explanation
May 31 Adjusting
Interest Expense
Date
Explanation
May 31 Adjusting
Insurance Expense
Date
Explanation
May 31 Adjusting
Salaries and Wages Expense
Date
Explanation
May 31 Balance
31 Adjusting
Explanation
Balance
Balance
1,170
No. 711
Ref.
J1
Ref.
J1
Ref.
J1
Ref.

J1
Debit
345
Debit
380
Debit
200
Debit
Credit
Balance
345
Credit
No. 718
Balance
380
Credit
No. 722
Balance
200
Credit
750
Utilities Expense
Date
May 31
Balance
780
No. 726
Balance
3,300
4,050
No. 732
Ref.

Debit
Credit
Balance
900
PROBLEM 3-2B (Continued)
(c)
BADGER MOTEL, INC.
Adjusted Trial Balance
May 31, 2014
Cash .......................................................................
Supplies ................................................................
Prepaid Insurance ................................................
Land .......................................................................
Buildings ...............................................................
Accumulated Depreciation—Buildings .............
Equipment .............................................................
Accumulated Depreciation—Equipment ...........
Accounts Payable ................................................
Unearned Rent Revenue......................................
Salaries and Wages Payable ...............................
Interest Payable ....................................................
Mortgage Payable ................................................
Share Capital—Ordinary......................................
Rent Revenue .......................................................
Advertising Expense ............................................
Supplies Expense ................................................
Depreciation Expense ..........................................
Interest Expense ..................................................
Insurance Expense ..............................................
Salaries and Wages Expense .............................
Utilities Expense ..................................................
Debit
$ 2,500
350
2,200
14,000
58,000
Credit
$
220
15,000
125
4,800
1,100
750
380
38,000
40,000
14,500
780
1,170
345
380
200
4,050
900
$99,875
$99,875
PROBLEM 3-2B (Continued)
(d)
BADGER MOTEL, INC.
Income Statement
For the Month Ended May 31, 2014
Revenues
Rent revenue ....................................................
Expenses
Salaries and wages expense ..........................
Supplies expense ............................................
Utilities expense ..............................................
Advertising expense........................................
Interest expense ..............................................
Depreciation expense .....................................
Insurance expense ..........................................
Total expenses .........................................
Net income ...............................................................
$14,500
$4,050
1,170
900
780
380
345
200
7,825
$ 6,675
BADGER MOTEL, INC.
Retained Earnings Statement
For the Month Ended May 31, 2014
Retained Earnings, May 1 .........................................................
Add: Net income ......................................................................
Retained Earnings, May 31 .......................................................
$
0
6,675
$6,675
PROBLEM 3-2B (Continued)
BADGER MOTEL, INC.
Statement of Financial Position
May 31, 2014
Assets
Land ......................................................................
Buildings ..............................................................
Less: Accumulated depreciation— ..................
buildings .............................................
Equipment ............................................................
Less: Accumulated depreciation—
equipment............................................
Prepaid insurance ...............................................
Supplies ................................................................
Cash ......................................................................
Total assets ..........................................
$14,000
$58,000
220
15,000
57,780
125
14,875
2,200
350
2,500
$91,705
Equity and Liabilities
Equity
Share capital—ordinary ..............................
Retained earnings........................................
Liabilities
Accounts payable ........................................
Mortgage payable ........................................
Unearned rent revenue ...............................
Salaries and wages payable .......................
Interest payable ...........................................
Total equity and liabilities.....................................
$40,000
6,675
4,800
38,000
1,100
750
380
$46,675
45,030
$91,705
PROBLEM 3-3B
(a) Sept. 30
30
30
30
30
30
30
(b)
Accounts Receivable ...............................
Service Revenue .................................
1,100
Rent Expense ............................................
Prepaid Rent .......................................
1,000
Supplies Expense.....................................
Supplies ...............................................
1,250
Depreciation Expense ..............................
Accum. Depreciation—Equipment .....
1,125
Interest Expense.......................................
Interest Payable ..................................
100
Unearned Rent Revenue ..........................
Rent Revenue ......................................
850
Salaries and Wages Expense .................
Salaries and Wages Payable .............
725
1,100
1,000
1,250
1,125
100
850
725
LAUSANNE CO., INC.
Income Statement
For the Quarter Ended September 30, 2014
Revenues
Service revenue ...................................................
CHF17,900
Rent revenue ........................................................
2,560
Total revenues ..............................................
20,460
Expenses
Salaries and wages expense .............................. CHF8,725
Rent expense .......................................................
2,900
Utilities expense ..................................................
1,510
Supplies expense ................................................
1,250
Depreciation expense .........................................
1,125
Interest expense ..................................................
100
Total expenses .............................................
15,610
Net income ...................................................................
4,850
CHF
PROBLEM 3-3B (Continued)
LAUSANNE CO., INC.
Retained Earnings Statement
For the Quarter Ended September 30, 2014
Retained Earnings, July 1, 2014 .............................................. CHF
0
Add: Net income ......................................................................
4,850
4,850
Less: Dividends ........................................................................
1,000
Retained Earnings, September 30, 2014 ................................. CHF 3,850
LAUSANNE CO., INC.
Statement of Financial Position
September 30, 2014
Assets
Equipment ............................................................ CHF20,000
Less: Accum. depreciation—equipment..........
1,125 CHF18,875
Prepaid rent ..........................................................
1,200
Supplies ................................................................
650
Accounts receivable............................................
11,500
Cash ......................................................................
8,700
Total assets ..........................................
CHF40,925
Equity and Liabilities
Equity
Share capital—ordinary ............................. CHF22,000
Retained earnings.......................................
3,850
Total equity ..........................................
CHF25,850
Liabilities
Notes payable .............................................
10,000
Accounts payable .......................................
3,200
Salaries and wages payable ......................
725
Unearned rent revenue ..............................
1,050
Interest payable ..........................................
100
Total liabilities .....................................
15,075
Total equity and liabilities .................................
CHF40,925
(c) Interest of 12% per year equals a monthly rate of 1%; monthly
interest is CHF100 (CHF10,000 X 1%). Since total interest
expense is CHF100, the note has been outstanding one month.
PROBLEM 3-4B
1.
2.
3.
4.
Dec. 31
Dec. 31
Dec. 31
Dec. 31
Insurance Expense ........................................
Prepaid Insurance ..................................
[(€6,000 ÷ 3) = €2,000
[(€4,800 ÷ 2) = 2,400
€4,400]
4,400
Unearned Rent Revenue ...............................
Rent Revenue .........................................
[Nov. 5 X €5,000 X 2 = €50,000
[Dec. 4 X €8,500 X 1 =
34,000
€84,000
84,000
Interest Expense ............................................
Interest Payable
(€120,000 X 9% X 2/12).......................
1,800
Salaries and Wages Expense .......................
Salaries and Wages Payable ................
[5 X €640 X 3/5 = €1,920
[3 X €500 X 3/5 =
900
€2,820]
2,820
4,400
84,000
1,800
2,820
PROBLEM 3-5B
(a), (c) & (e)
Cash
Date
Nov.
No. 101
1
8
10
12
20
22
25
29
Explanation
Balance
Accounts Receivable
Date
Explanation
Nov. 1 Balance
10
27
Supplies
Date
Explanation
Nov. 1 Balance
17
30 Adjusting
Ref.

J1
J1
J1
J1
J1
J1
J1
Ref.

J1
J1
Ref.

J1
J1
Debit
Credit
1,500
3,420
3,100
2,700
500
1,500
350
Debit
Credit
3,420
1,900
Debit
Credit
700
1,100
Equipment
Date
Nov.
1
15
Explanation
Balance
Balance
2,400
900
4,320
7,420
4,720
4,220
2,720
3,070
No. 112
Balance
4,450
1,030
2,930
No. 126
Balance
1,800
2,500
1,400
No. 157
Ref.

J1
Debit
2,000
Credit
Balance
16,000
18,000
PROBLEM 3-5B (Continued)
Accumulated Depreciation—Equipment
Date
Nov.
1
30
Explanation
Balance
Adjusting
Accounts Payable
Date
Explanation
Nov. 1 Balance
15
17
20
Ref.

J1
Ref.

J1
J1
J1
No. 158
Debit
Credit
200
Debit
Credit
2,000
700
2,700
Unearned Service Revenue
Date
Nov.
1
29
30
Explanation
Balance
Adjusting
1
8
30
Explanation
Balance
Adjusting
Ref.

J1
J1
Debit
Credit
350
1,380
1
Explanation
Balance
Ref.

J1
J1
Debit
Credit
700
350
Explanation
Balance
700
0
350
No. 311
Ref.

Debit
Credit
Retained Earnings
Date
Balance
1,360
1,710
330
No. 212
Share Capital—Ordinary
Date
Nov.
No. 201
Balance
2,600
4,600
5,300
2,600
No. 209
Salaries and Wages Payable
Date
Nov.
Balance
2,000
2,200
Balance
10,000
No. 320
Ref.
Debit
Credit
Balance
Nov.
1
Balance

7,990
PROBLEM 3-5B (Continued)
Service Revenue
Date
Nov. 12
27
30
Explanation
Adjusting
Supplies Expense
Date
Explanation
Nov. 30 Adjusting
Depreciation Expense
Date
Explanation
Nov. 30 Adjusting
Salaries and Wages Expense
Date
Explanation
Nov. 8
25
30 Adjusting
Rent Expense
Date
Explanation
Nov. 22
No. 400
Ref.
J1
J1
J1
Ref.
J1
Ref.
J1
Ref.
J1
J1
J1
Ref.
J1
Debit
Debit
1,100
Debit
200
Debit
800
1,500
350
Debit
500
Credit
3,100
1,900
1,380
Balance
3,100
5,000
6,380
Credit
No. 631
Balance
1,100
Credit
No. 711
Balance
200
Credit
Credit
No. 726
Balance
800
2,300
2,650
No. 729
Balance
500
PROBLEM 3-5B (Continued)
(b)
Date
Nov.
General Journal
8
10
12
15
17
20
22
25
27
29
Account Titles and Explanation
Salaries and Wages Payable..............
Salaries and Wages Expense ............
Cash ..............................................
Ref.
212
726
101
Debit
700
800
Cash ......................................................
Accounts Receivable ..................
101
112
3,420
Cash ......................................................
Service Revenue .........................
101
400
3,100
Equipment ............................................
Accounts Payable .......................
157
201
2,000
Supplies ...............................................
Accounts Payable .......................
126
201
700
Accounts Payable ...............................
Cash..............................................
201
101
2,700
Rent Expense ......................................
Cash..............................................
729
101
500
Salaries and Wages Expense ............
Cash..............................................
726
101
1,500
Accounts Receivable ..........................
Service Revenue .........................
112
400
1,900
Cash ......................................................
Unearned Service Revenue ........
101
209
350
J1
Credit
1,500
3,420
3,100
2,000
700
2,700
500
1,500
1,900
350
PROBLEM 3-5B (Continued)
(d) & (f)
SAMONE EQUIPMENT REPAIR, INC.
Trial Balances
November 30, 2014
Cash .............................................
Accounts Receivable .................
Supplies ......................................
Equipment ...................................
Accumulated Depreciation—
Equipment ................................
Accounts Payable ......................
Unearned Service Revenue .......
Salaries and Wages Payable .....
Share Capital—Ordinary............
Retained Earnings ......................
Service Revenue ........................
Depreciation Expense ................
Supplies Expense ......................
Salaries and Wages Expense ...
Rent Expense..............................
(e) 1. Nov. 30
2.
3.
30
30
Before
Adjustment
Dr.
Cr.
$ 3,070
2,930
2,500
18,000
After
Adjustment
Dr.
Cr.
$ 3,070
2,930
1,400
18,000
$ 2,000
2,600
1,710
–0–
10,000
7,990
5,000
$ 2,200
2,600
330
350
10,000
7,990
6,380
200
1,100
2,300
2,650
500
500
$29,300 $29,300 $29,850
$29,850
Supplies Expense.........................
Supplies ($2,500 – $1,400) ....
631
126
1,100
Salaries and Wages Expense .....
Salaries and Wages
Payable .................................
726
350
Depreciation Expense ..................
Accumulated Depreciation—
Equipment ...........................
711
1,100
212
158
350
200
200
4.
30
Unearned Service Revenue .........
Service Revenue ....................
209
400
1,380
1,380
PROBLEM 3-5B (Continued)
(g)
SAMONE EQUIPMENT REPAIR, INC.
Income Statement
For the Month Ended November 30, 2014
Revenues
Service revenue ...............................................
Expenses
Salaries and wages expense ..........................
Supplies expense ............................................
Rent expense ...................................................
Depreciation expense .....................................
Total expenses .........................................
Net Income ...............................................................
$6,380
$2,650
1,100
500
200
4,450
$1,930
SAMONE EQUIPMENT REPAIR, INC.
Retained Earnings Statement
For the Month Ended November 30, 2014
Retained Earnings, November 1 ..............................................
Plus: Net income .....................................................................
Retained Earnings, November 30 ............................................
$7,990
1,930
$9,920
PROBLEM 3-5B (Continued)
SAMONE EQUIPMENT REPAIR, INC.
Statement of Financial Position
November 30, 2014
Assets
Equipment ...............................................................
Less: Accumulated depreciation—
equipment ..............................................
Supplies ...................................................................
Accounts receivable...............................................
Cash .........................................................................
Total assets .....................................................
$18,000
2,200
$15,800
1,400
2,930
3,070
$23,200
Equity and Liabilities
Equity
Share capital—ordinary .................................
Retained earnings...........................................
Liabilities
Accounts payable ...........................................
Unearned service revenue .............................
Salaries and wages payable ..........................
Total equity and liabilities .....................................
$10,000
9,920
2,600
330
350
$19,920
3,280
$23,200