Ch 3 Assigned Homework Solutions EXERCISE 3 1 15 20 minutes Apr 2 Cash 32 000 Equipment 14 000 Owner s Capital 46 000 2 No entry not a transaction 3 Supplies 700 Accounts Payable 700 7 Rent Expense 600 Cash 600 11 Accounts Receivable 1 100 Service Revenue 1 100 12 Cash 3 200 Unearned Service Revenue 3 200 17 Cash 2 300 Service Revenue 2 300 21 Insurance Expense 110 Cash 110 30 Salaries and Wages Expense 1 160 Cash 1 160 30 Supplies Expense 120 Supplies 120 30 Equipment 6 100 Owner s Capital 6 100 EXERCISE 3 4 10 15 minutes Watteau Co Trial Balance June 30 2014 Debit Credit Cash 2 870 180 65 65 2 920 Accounts Receivable 3 231 180 3 051 Supplies 800 500 300 Equipment 3 800 500 4 300 Accounts Payable 2 666 206 260 2 200 Unearned Service Revenue 1 200 325 875 Common Stock 6 000 Dividends 575 Retained Earnings 3 000 Service Revenue 2 380 801 325 3 506 Salaries and Wages Expense 3 400 670 575 3 495 Office Expense 940 15 581 15 581 EXERCISE 3 11 20 25 minutes a ANDERSON COOPER CO Income Statement For the Year Ended December 31 2014 Revenues Service revenue 11 590 Expenses Salaries and wages expense 6 840 Rent expense 2 260 Depreciation expense 145 Interest expense 83 Net Income b 9 328 2 262 ANDERSON COOPER CO Statement of Retained Earnings For the Year Ended December 31 2014 Retained earnings January 1 11 310 Add Net income 2 262 13 572 Less Dividends 3 000 Retained earnings December 31 10 572 c ANDERSON COOPER CO Balance Sheet December 31 2014 Assets Current Assets Cash 19 472 Accounts receivable 6 920 Prepaid rent 2 280 Total current assets 28 672 Property plant and equipment Equipment 18 050 Accumulated depreciation equipment Total assets 4 895 13 155 41 827 EXERCISE 3 11 Continued Liabilities and Stockholders Equity Current liabilities Accounts payable 5 472 Interest payable 83 Notes payable 5 700 Total current liabilities 11 255 Stockholders equity Common stock 20 000 Retained earnings 10 572 Total liabilities and stockholders equity Beg Balance Net Income Dividends Ending Balance 11 310 2 262 3 000 10 572 30 572 41 827 EXERCISE 3 18 15 20 minutes Jill Accardo M D Conversion of Cash Basis to Accrual Basis For the Year 2014 Excess of cash collected over cash disbursed 142 600 55 470 87 130 Add increase in accounts receivable 9 250 15 927 6 677 Deduct increase in unearned service revenue 2 840 4 111 1 271 Add decrease in accrued liabilities 3 435 2 108 1 327 Add increase in prepaid expenses 1 917 3 232 1 315 Net income on an accrual basis 95 178 Alternate solution Jill Accardo M D Conversion of Income Statement Data from Cash Basis to Accrual Basis For the Year 2014 Cash Basis Collections from customers Adjustments Add 142 600 Accounts receivable Jan 1 Accounts receivable Dec 31 Deduct 9 250 15 927 Accrual Basis Unearned service revenue Jan 1 2 840 Unearned service revenue Dec 31 4 111 Service revenue Disbursements for expenses 148 006 55 470 Accrued liabilities Jan 1 3 435 Accrued liabilities Dec 31 2 108 Prepaid expenses Jan 1 1 917 Prepaid expenses Dec 31 3 232 Operating expenses Net income cash basis Net income accrual basis 52 828 87 130 95 178 PROBLEM 3 4 a Nov 30 Supplies Expense 4 000 Supplies 4 000 30 Depreciation Expense 15 000 Accumulated Depreciation Equipment 15 000 30 Interest Expense 11 000 Interest Payable 11 000 PROBLEM 3 4 Continued b BELLEMY FASHION CENTER Adjusted Trial Balance November 30 2014 Dr Cr Cash 28 700 Accounts Receivable 33 700 Inventory 45 000 Supplies 1 500 Equipment 133 000 Accumulated Depr Equipment 39 000 Notes Payable 51 000 Accounts Payable 48 500 Common Stock 90 000 Retained Earnings 8 000 Sales Revenue 757 200 Sales Returns and Allowances 4 200 Cost of Goods Sold 495 400 Salaries and Wages Expense 140 000 Advertising Expense 26 400 Utilities Expenses 14 000 Maintenance and Repairs Expense 12 100 Delivery Expense 16 700 Rent Expense 24 000 Supplies Expense 4 000 Depreciation Expense 15 000 Interest Expense 11 000 Interest Payable Totals 1 004 700 11 000 1 004 700