Ch 3 Assigned Homework Solutions EXERCISE 3 1 15 20 minutes Apr 2 Cash 30 000 Equipment 14 000 Owner s Capital 44 000 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 5 100 Owner s Capital 5 100 EXERCISE 3 4 10 15 minutes OAKLEY CO Trial Balance June 30 2012 Debit Cash 2 870 360 65 65 3 100 Accounts Receivable 3 231 360 2 871 Supplies 800 500 300 Equipment 3 800 500 4 300 Credit Accounts Payable 2 666 206 260 2 200 Unearned Service Revenue 1 200 225 975 Common Stock 6 000 Dividends 575 Retained Earnings 3 000 Service Revenue 2 380 801 225 3 406 Salaries and Wages Expense 3 400 670 575 3 495 Office Expenses 940 15 581 15 581 EXERCISE 3 11 20 25 Minutes a CAVAMANLIS CO Income Statement For the Year Ended December 31 2012 Revenues Service revenue 12 590 Expenses Salaries and wages expense 6 840 Rent expense 2 760 Depreciation expense 145 Interest expense 83 Net Income 9 828 2 762 b CAVAMANLIS CO Statement of Retained Earnings For the Year Ended December 31 2012 Retained earnings January 1 11 310 Add Net income 2 762 Less Dividends 3 000 Retained earnings December 31 c 11 072 CAVAMANLIS CO Balance Sheet December 31 2012 Assets Current Assets Cash 18 972 Accounts receivable 6 920 Prepaid rent expense 2 280 Total current assets 28 172 Property plant and equipment Equipment 18 050 Less Accumulated depreciation Equipment Total assets 4 895 13 155 41 327 EXERCISE 3 11 Continued Liabilities and Stockholders Equity Current liabilities Notes payable 5 700 Accounts payable 4 472 Interest payable 83 Total current liabilities 10 255 Stockholders equity Common stock 20 000 Retained earnings 11 072 Total liabilities and stockholders equity 31 072 41 327 Beg Balance Net Income Dividends Ending Balance 11 310 2 762 3 000 11 072 EXERCISE 3 18 15 20 minutes CORINNE DUNBAR M D Conversion of Cash Basis to Accrual Basis For the Year 2012 Excess of cash collected over cash disbursed 142 600 60 470 82 130 Add increase in accounts receivable 11 250 15 927 4 677 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 88 178 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 2012 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 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 Expense 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 PROBLEM 3 4 Continued c BELLEMY FASHION CENTER Income Statement For the Year Ended November 30 2012 Sales revenue Sales Less Sales returns and allowances 757 200 4 200 Net sales 753 000 Cost of goods sold 495 400 Gross profit 257 600 Operating expenses Selling expenses Salaries and wages expense 140 000 X 70 98 000 Advertising expense 26 400 Rent expense 24 000 X 80 19 200 Freight Out 16 700 Utilities expense 14 000 X 80 11 200 Depreciation Expense 15 000 Supplies expense 4 000 Total selling expenses 190 500 Administrative expenses Salaries and wages expense 140 000 X 30 42 000 Maintenance and Repairs Expense 12 100 Rent expense 24 000 X 20 4 800 Utilities expense 14 000 X 20 2 800 Total admin expenses 61 700 Total oper expenses 252 200 Income from operations 5 400 Other expenses and losses Interest expense Net loss 11 000 5 600 PROBLEM 3 4 Continued BELLEMY FASHION CENTER Retained Earnings Statement For the Year Ended November 30 2012 Retained earnings December 1 2011 Less Net loss 8 000 5 600 Retained earnings November 30 2012 2 400 BELLEMY FASHION CENTER Balance Sheet November 30 2012 Assets Current assets Cash 28 700 Accounts receivable 33 700 Inventory 45 000 Supplies 1 500 Total current assets 108 900 Property plant and equipment Equipment 133 000 Accumulated depreciation equipment 39 000 Total assets Liabilities and Stockholders Equity 94 000 202 900 Current liabilities Notes payable due next year 30 000 Accounts payable 48 500 Interest payable 11 000 Total current liabilities 89 500 Long term liabilities Notes payable 21 000 Total liabilities 110 500 Stockholders equity Common stock 90 000 Retained earnings 2 400 Total liabilities and stockholders equity 92 400 202 900 PROBLEM 3 4 Continued d Nov 30 Sales Revenue 757 200 Income Summary 757 200 30 Income Summary 762 800 Sales Returns and Allowances 4 200 Cost of Goods Sold 495 400 Salaries and Wages Expense 140 000 Advertising Expense 26 400 Utilities Expense 14 000 Repair Expense 12 100 Freight Out 16 700 Rent Expense 24 000 Supplies Expense 4 000 Depreciation Expense 15 000 Interest Expense 11 000 30 Retained Earnings 5 600 Income Summary 5 600 e BELLEMY FASHION CENTER Post Closing Trial Balance November 30 2012 Debit Credit Cash 28 700 Accounts Receivable 33 700 Inventory 45 000 Supplies 1 500 Equipment 133 000 Accumulated Depreciation Equipment 39 000 Notes Payable 51 000 Accounts Payable 48 500 Interest Payable 11 000 Common Stock 90 000 Retained Earnings 2 400 241 900 241 900