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Copyright 2013 John Wiley & Sons, Inc.

6,000

Kieso, Intermediate Accounting, 15/e, Solutions Manual


3,000
59,200

506,500

5,800

506,500

3,000

6,000

247,000

5,800

(For Instructor Use Only)

280,500

280,500

280,500

Cr.

259,500

259,500

14,000

80,000
120,000

3,900

4,200

37,400

Dr.

Taxes; (f) Accrued Interest Payable.

259,500

33,500

226,000

3,000

6,000

2,000

14,600
700
50,000
107,700

42,000

Cr.

Balance Sheet

Key: (a) Expired Insurance; (b) Supplies Used; (c) Depreciation Expensed; (d) Service Revenue Recognized; (e) Accrued Property

33,500

(e)

6,000

14,400

28,000

12,000

280,500

59,200

5,800

(f)

14,400

28,000

12,000

21,000

16,900

30,500
9,400

109,000

Dr.

Totals

(c)

14,400

28,000

6,000

21,000

16,900

2,000
280,500

14,600
700
50,000
107,700

42,000

Cr.

Income Statement

Net Income

Totals

Prop. Taxes Payable

Depreciation Expense

Interest Payable

(a)

(f)

(b)

491,700

Supplies Expense

491,700

Insurance Expense

Totals

Interest Expense

3,000

18,000

Prop. Tax Expense

(e)

16,900

Utilities Expenses

2,000

30,500
9,400

2,000
278,500
(d)

14,000

80,000
120,000

3,900

4,200

30,500
9,400

2,000

5,800

28,000

14,400

37,400

Dr.

109,000

(d)

(c)

(a)

(b)

Cr.

Adjusted Trial Balance

109,000

14,600
2,700
50,000
107,700

Dr.

Adjustments

For the Year Ended September 30, 2014

Worksheet

COOKE COMPANY

Accounts Payable
Unearned Service Rev.
Mortgage Payable
Common Stock
Dividends
Retained Earnings
Service Revenue
Sal. and Wages Exp.
Maintenance and
Repairs Expense
Advertising Expense

36,200

Cr.

Accum. Depr.-Equip.

14,000

80,000
120,000

31,900

Prepaid Insurance

Land
Equipment

18,600

Supplies

Dr.

Trial Balance

37,400

Account Titles

Cash

(a)

*PROBLEM 3-12

3-67

*PROBLEM 3-12 (Continued)


(b)

COOKE COMPANY
Balance Sheet
September 30, 2014
Assets
Current assets
Cash ..............................................
Supplies ........................................
Prepaid insurance ........................
Total current assets ............
Property, plant, and equipment
Land ..............................................
Equipment .....................................
Less: Accum. depreciation
equipment ...................................
Total assets .........................

$37,400
4,200
3,900
$ 45,500
80,000
$120,000
42,000

78,000

158,000
$203,500

Liabilities and Stockholders Equity


Current liabilities
Accounts payable ............................................. $14,600
Current maturity of long-term debt ................. 10,000
Interest payable ................................................
6,000
Property taxes payable ....................................
3,000
Unearned service revenue ...............................
700
Total current liabilities ............................
$ 34,300
Long-term liabilities
Mortgage payable .............................................
40,000
Total liabilities .........................................
74,300
Stockholders equity
Common stock
107,700
Retained earnings
($2,000 + $33,500 $14,000) .......................... 21,500
129,200
Total liabilities and owners equity ........
$203,500

3-68

Copyright 2013 John Wiley & Sons, Inc.

Kieso, Intermediate Accounting, 15/e, Solutions Manual

(For Instructor Use Only)

*PROBLEM 3-12 (Continued)


(c) Sep. 30 Insurance Expense ...............................
Prepaid Insurance ..........................

28,000

30 Supplies Expense .................................


Supplies..........................................

14,400

30 Depreciation Expense ...........................


Accum. Depreciation
Equipment ...................................

5,800

30 Unearned Service Revenue ..................


Service Revenue ............................

2,000

30 Property Tax Expense ..........................


Property Taxes Payable ................

3,000

30 Interest Expense ...................................


Interest Payable .............................

6,000

(d) Sep. 30 Service Revenue ...................................


Income Summary ...........................

280,500

30 Income Summary ..................................


Salaries and Wages Expense........
Maintenance and Repairs
Expense .......................................
Insurance Expense ........................
Property Tax Expense ...................
Supplies Expense ..........................
Utilities Expenses ..........................
Interest Expense ............................
Advertising Expense .....................
Depreciation Expense ...................

247,000

30 Income Summary .................................


Retained Earnings ........................

33,500

30 Retained Earnings ................................


Dividends.......................................

14,000

Copyright 2013 John Wiley & Sons, Inc.

Kieso, Intermediate Accounting, 15/e, Solutions Manual

28,000
14,400

5,800
2,000
3,000
6,000
280,500
109,000
30,500
28,000
21,000
14,400
16,900
12,000
9,400
5,800
33,500
14,000

(For Instructor Use Only)

3-69

*PROBLEM 3-12 (Continued)


(e)

COOKE COMPANY
Post-Closing Trial Balance
September 30, 2014
Debit
Cash ............................................................... $ 37,400
Supplies .........................................................
4,200
Prepaid Insurance .........................................
3,900
Land................................................................
80,000
Equipment ...................................................... 120,000
Accumulated Depreciation Equipment .....
Accounts Payable..........................................
Unearned Service Revenue ..........................
Interest Payable .............................................
Property Tax Payable ....................................
Mortgage Payable ..........................................
Common Stock ..............................................
Retained Earnings .........................................
$245,500

3-70

Copyright 2013 John Wiley & Sons, Inc.

Kieso, Intermediate Accounting, 15/e, Solutions Manual

Credit

$ 42,000
14,600
700
6,000
3,000
50,000
107,700
21,500
$245,500

(For Instructor Use Only)

FINANCIAL REPORTING PROBLEM


(a)

June 30, 2011 total assets: $138,354 million.


June 30, 2010 total assets: $128,172 million.

(b)

June 30, 2011 cash and cash equivalents: $2,768 million.

(c)

2011 research and development costs: $2,001 million.


2010 research and development costs: $1,950 million.

(d)

2011 net sales: $82,559 million.


2010 net sales: $78,938 million.

(e)

An adjusting entry for deferrals is necessary when the receipt/disbursement precedes the recognition in the financial statements. Accounts
such as prepaid insurance and prepaid rent may be included in the
Prepaid Expenses and Other Current Assets ($4,408 million at June 30,
2011). Both of these accounts would require an adjusting entry to
recognize the proper amount of expense incurred during the period.
In addition, depreciation expense is an adjusting entry related to a
deferral.
An adjusting entry for an accrual is necessary when recognition in the
financial statements precedes the cash receipt/disbursement, such as
interest or taxes payable. Other adjusting entries probably made by
P&G include interest revenue and expense and interest receivable and
interest payable. P&G reports $9,290 million of Accrued and Other
Liabilities at June 30, 2011.

(f)

2011 Depreciation and amortization expense: $2,838 million


2010 Depreciation and amortization expense: $3,108 million
2009 Depreciation and amortization expense: $3,082 million
(From the Statement of Cash Flows)

Copyright 2013 John Wiley & Sons, Inc.

Kieso, Intermediate Accounting, 15/e, Solutions Manual

(For Instructor Use Only)

3-71

COMPARATIVE ANALYSIS CASE


(a)

The Coca-Cola Company percentage increase is computed as follows:


Total assets (December 31, 2011) ............................................ $79,974
Total assets (December 31, 2010) ............................................ 72,921
Difference .................................................................................. $ 7,053
$7,053 $72,921 = 9.7%
PepsiCo, Inc.s percentage increase is computed as follows:
Total assets (December 29, 2011) ............................................ $72,882
Total assets (December 30, 2010) ............................................ 68,153
Difference .................................................................................. $ 4,729
$4,729 $68,153 = $6.9%
Coca-Cola Company had the larger increase.

(b)
5-Year Growth Rate
Net sales
Income from continuing
operations
(c)

3-72

The Coca-Cola Company


12.69%

PepsiCo, Inc.
13.92%

9.41%

3.30%

The Coca-Cola Company had depreciation and amortization expense


of $1,954 million; PepsiCo, Inc. had depreciation and amortization
expense of $2,737 million.

Copyright 2013 John Wiley & Sons, Inc.

Kieso, Intermediate Accounting, 15/e, Solutions Manual

(For Instructor Use Only)