Chapter Three Homework

Student: Mingyue Jiang Assignment: Chapter Three Homework
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1.
Correct answer:
Dec. 31 Insurance Expense 800
Prepaid Insurance 800
To record insurance expired during the year
Your answer:
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Short Exercise 3-2

Adjustment for Prepaid Insurance
The Prepaid Insurance account began the year with a balance of $460. During the year, insurance in the amount of $1,040 was purchased. At the end of the year (December 31),
the amount of insurance still unexpired was $700.
Prepare the year-end journal entry to record the adjustment for insurance expense for the year.
Dec. 31 Insurance Expense 800
To record insurance expired during the year

2.
Correct answer:
Dec. 31 Supplies Expense 920
Supplies 920
To record supplies used during the year
Your answer:
Short Exercise 3-3

Adjustment for Supplies
The Supplies account began the year with a balance of $380. During the year, supplies in the amount of $980 were purchased. At the end of the year (December 31), the
inventory of supplies on hand was $440.
Prepare the year-end journal entry to record the adjustment for supplies expense for the year.
Dec. 31 Supplies Expense 920
Supplies 920
To record supplies used during the year
3.
Correct answer:
Mar. 31 Depreciation Expense - Office Equipment 100
Accumulated Depreciation - Office Equipment 100
To record depreciation for the month
Balance Sheet-Partial
Office equipment $ 1900
Less accumulated depreciation 300 $ 1600
Your answer:
Short Exercise 3-4

Adjustment for Depreciation
The depreciation expense on office equipment for the month of March is $100. This is the third month that the office equipment, which cost $1,900, has been owned.
Prepare the adjusting entry to record depreciation for March.
Mar. 31 Depreciation Expense - Office Equipment 100
To record depreciation for the month
Show the balance sheet presentation for office equipment and related accounts after the March 31 adjustment.
Balance Sheet-Partial
Less accumulated depreciation 300 $ 1600

4.
Correct answer:
June 30 Wages Expense 230
Wages Payable 230
To record wages accrued at the end of June
Your answer:
Short Exercise 3-5

Adjustment for Accrued Wages
Wages are paid each Saturday for a six-day workweek. Wages are currently $1,380 per week.
Prepare the adjusting entry required on June 30, assuming July 1 falls on a Tuesday.
June 30 Wages Expense 230
Wages Payable 230
To record wages accrued at the end of June
5.
Correct answer:
Aug. 31 Unearned Service Revenue 760
Service Revenue 760
To record service revenue earned during August on which advance deposits had been received
Your answer:
Short Exercise 3-6

Adjustment for Unearned Revenue
During the month of August, deposits in the amount of $1,100 were received for services to be performed. By the end of the month, services in the amount of $760 had been
performed.
Prepare the necessary adjustment for Service Revenue at the end of the month.
Aug. 31 Unearned Service Revenue 760
Service Revenue 760
To record service revenue earned during August on which advance deposits had been received
6.
Correct answer:
Shah Corporation
Income Statement
For the Month Ended December 31, 2014
Revenue
Service revenue $ 2600
Expenses
Rent expense $ 400
Wages expense 900
Utilities expense 200
Telephone expense 50
Income taxes expense 350
Total expenses 1900
Net income $ 700
Shah Corporation
Statement of Retained Earnings
Retained earnings, November 30, 2014 $ 8600
Net income 700
Subtotal $ 9300
Less dividends 350
Retained earnings, December 31, 2014 $ 8950
Your answer:
Short Exercise 3-7

Preparation of an Income Statement and Statement of Retained Earnings from an Adjusted Trial Balance
Shah Corporation's adjusted trial balance on December 31, 2014, contains the following accounts and balances: Retained Earnings, $8,600; Dividends, $350; Service Revenue,
$2,600; Rent Expense, $400; Wages Expense, $900; Utilities Expense, $200; Telephone Expense, $50 and Income Taxes Expense, $350.
Prepare an income statement for the month of December.
Shah Corporation
Income Statement
Revenue
Service revenue $ 2600
Expenses
Rent expense $ 400
Wages expense 900
Utilities expense 200
Total expenses 1900
Net income $ 700

Prepare a statement of retained earnings for the month of December.
Shah Corporation
Retained earnings, November 30, 2014 $ 8600
Net income 700
Subtotal $ 9300
Less dividends 350
7.
Correct answer:
Your answer:
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Short Exercise 3-10

Determination of Cash Flows
Unearned Revenue had a balance of $1,120 at the end of November and $890 at the end of December. Service Revenue was $4,600 for the month of December.
How much cash was received for services provided during December?
$
4370
8.
Correct answer:
Insurance Expense 5345
To record expired insurance
Your answer:
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Exercise 3-4
Adjusting Entries for Prepaid Insurance
An examination of the Prepaid Insurance account shows a balance of $10,280 at the end of an accounting period, before adjustment.
1. Prepare the journal entry to record the insurance expense for the period under the assumption that an examination of the insurance policies shows unexpired insurance
that cost $4,935 at the end of the period.
2. Prepare the journal entry to record the insurance expense for the period under the assumption that an examination of the insurance policies shows insurance that cost
$1,735 has expired during the period.

9.
Correct answer:
May 31 Salaries Expense 28000
Salaries Payable 28000
To accrue salaries owed but not paid at month end
June 3 Salaries Expense 42000
Cash 70000
To pay weekly salaries
Your answer:
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Exercise 3-6
Adjusting Entry for Accrued Salaries
Kiddle Incorporated has a five-day workweek and pays salaries of $70,000 each Friday.
1. Prepare the adjusting entry required on May 31, assuming that June 1 falls on a Wednesday.
May 31 Salaries Expense 28000
To accrue salaries owed but not paid at month end
2. Prepare the journal entry to pay the salaries on June 3, including the amount of salaries payable from requirement 1. For a compound transaction, if an amount box does
not require an entry, leave it blank.
June 3 Salaries Expense 42000 blank
Salaries Payable 28000 blank
Cash blank 70000
To pay weekly salaries
10.
Correct answer:
g.
a.
b.
c.
f.
d.
e.
h.
f.
g.
e.
b.
a.
c.
d.
h.
Kinokawa Consultants Corporation
Adjusted Trial Balance
December 31, 2014
Cash 12786 0
Accounts Receivable 25440 0
Office Supplies 86 0
Prepaid Rent 700 0
Office Equipment 6700 0
Accumulated Depreciation-Office Equipment 0 2200
Accounts Payable 0 1820
Notes Payable 0 10000
Unearned Service Revenue 0 1410
Interest Payable 0 600
Salaries Payable 0 200
Income Taxes Payable 0 2120
Common Stock 0 10000
Retained Earnings 0 19387
Dividends 15000 0
Service Revenue 0 60550
Salaries Expense 33200 0
Utilities Expense 1750 0
Rent Expense 8400 0
Office Supplies Expense 905 0
Depreciation Expense-Office Equipment 600 0
Interest Expense 600 0
Income Taxes Expense 2120 0
108287 108287
*;
Your answer:
Problem 3-3
Determining Adjusting Entries, Posting to T Accounts, and Preparing an Adjusted Trial Balance
Kinokawa Consultants Corporation’s trial balance on December 31, 2014, follows.
Trial Balance
December 31, 2014
Cash 12,786
Accounts Receivable 24,840
Office Supplies 991
Prepaid Rent 1,400
Office Equipment 6,700
Accumulated Depreciation - Office Equipment 1,600
Accounts Payable 1,820
Notes Payable 10,000
Unearned Service Revenue 2,860
Common Stock 10,000
Retained Earnings 19,387
Dividends 15,000
Service Revenue 58,500
Salaries Expense 33,000
Utilities Expense 1,750
Rent Expense 7,700
104,167 104,167
The following information is also available:
a. Ending inventory of office supplies, $86.

b. Prepaid rent expired, $700.
c. Depreciation of office equipment for the period, $600.
d. Interest accrued on the note payable, $600.
e. Salaries accrued at the end of the period, $200.
f. Service revenue still unearned at the end of the period, $1,410.
g. Service revenue earned but not billed, $600.
h. Estimated federal income taxes for the period, $2,120.
1. & 2. Open T accounts for the accounts in the trial balance plus the following: Interest Payable; Salaries Payable; Income Taxes Payable; Office Supplies Expense;
Depreciation Expense—Office Equipment; Interest Expense; and Income Taxes Expense. Enter the account balances. Determine the adjusting entries and post them directly to
the T accounts.
Cash
Bal. 12786
Accounts Receivable
Bal. 24840
g. 600
Bal. 25440
Office Supplies
Bal. 991 a. blank
Bal. 991
Prepaid Rent
Bal. 1400 b. 700
Bal. 700
Office Equipment
Bal. 6700
Accumulated Depreciation-Office Equipment

Bal. 1600
c. 600
Bal. 2200
Accounts Payable
Bal. 1820
Notes Payable
Bal. 10000
Unearned Service Revenue
f. blank Bal. 2860
Bal. 2860
Interest Payable
d. 600
Salaries Payable
e. 200
Income Taxes Payable
h. 2120
Common Stock
Bal. 10000
Retained Earnings
Bal. 19387
Dividends
Bal. 15000
Service Revenue
Bal. 58500
f. blank
g. 600
Bal. 59100
Salaries Expense
Bal. 33000
e. 200
Bal. 32800
Utilities Expense
Bal. 1750
Rent Expense
Bal. 7700
b. 700
Bal. 8400
Office Supplies Expense
a. blank
Depreciation Expense-Office Equipment
c. 600
Interest Expense
d. 600
Income Taxes Expense
h. 2120
3. Prepare an adjusted trial balance. List all accounts in the order of Assets, Liabilities, Stockholders’ equity, Revenues, and Expenses. If no entry is required, enter "0" or
leave it box blank.
December 31, 2014
Cash 12786 blank
Accounts Receivable 25440 blank
Office Supplies 991 blank
Prepaid Rent 700 blank
Office Equipment 6700 blank
Accumulated Depreciation-Office Equipment blank 2200
Accounts Payable blank 1820
Notes Payable blank 10000
Unearned Service Revenue blank 2860
Interest Payable blank 600
Salaries Payable blank 200
Income Taxes Payable blank 2120
Common Stock blank 10000
Retained Earnings blank 19387
Dividends 15000 blank
Service Revenue blank 59100
Salaries Expense 32800 blank
Utilities Expense 1750 blank
Rent Expense 8400 blank
Office Supplies Expense blank blank
Depreciation Expense-Office Equipment 600 blank
Interest Expense 600 blank
Income Taxes Expense 2120 blank
108287 108287
4. Which financial statements do each of the above adjustments affect? What financial statement is not affected by the adjustments?
The input in the box below will not be graded, but may be reviewed and considered by your instructor.
Balance sheet; income statement
11.
Correct answer:
b.
a.
c.
d.
e.
f.
e.
d.
a.
b.
c.
f.
Steven Tax Service, Inc.
December 31, 2014
Cash 2268 0
Accounts Receivable 1031 0
Prepaid Insurance 120 0
Office Supplies 227 0
Office Equipment 7100 0
Accumulated Depreciation-Office Equipment 0 1540
Accounts Payable 0 654
Income Taxes Payable 0 2160
Common Stock 0 3000
Retained Earnings 0 2439
Dividends 6000 0
Tax Fees Revenue 0 22145
Office Salaries Expense 8300 0
Advertising Expense 650 0
Rent Expense 2400 0
Telephone Expense 237 0
Office Supplies Expense 555 0
Insurance Expense 120 0
Depreciation Expense-Office Equipment 770 0
Income Taxes Expense 2160 0
31938 31938
Income Statement
For the Year Ended December 31, 2014
Revenue
Tax fees revenue $ 22145
Expenses
Office salaries expense $ 8300
Advertising expense 650
Rent expense 2400
Office supplies expense 555
Insurance expense 120
Depreciation expense-office equipment 770
Total expenses 15192
Net income $ 6953
Net income 6953
Subtotal $ 9392
Less dividends 6000

Balance Sheet
December 31, 2014
Assets
Cash $ 2268
Accounts receivable 1031
Prepaid insurance 120
Office supplies 227
Less accumulated depreciation 1540 5560
Total assets $ 9206
Liabilities
Accounts payable $ 654
Income taxes payable 2160
Total liabilities $ 2814
Stockholders' Equity
Common stock $ 3000
Retained earnings 3392
Total stockholders' equity 6392
Total liabilities and stockholders' equity $ 9206
Your answer:
Problem 3-8
Determining Adjusting Entries and Tracing Their Effects to Financial Statements
Steven Tax Service, Inc.’s trial balance at the end of its second year of operation is as follows.
Trial Balance
December 31, 2014
Cash 2,268
Accounts Receivable 1,031
Office Supplies 782
Office Equipment 7,100
Accounts Payable 635
Unearned Tax Fees 219
Common Stock 3,000
Retained Earnings 2,439
Dividends 6,000
Tax Fees Revenue 21,926
Office Salaries Expense 8,300
Advertising Expense 650
Rent Expense 2,400
Telephone Expense 218
28,989 28,989
The following information is also available:
a. Office supplies on hand, December 31, 2014, $227.

b. Insurance still unexpired, $120.
c. Estimated depreciation of office equipment, $770.
d. Telephone expense for December, $19; the bill was received but not recorded.
e. The services for all unearned tax fees had been performed by the end of the year.
f. Estimated federal income taxes for the year, $2,160
1. & 2. Open T accounts for the accounts in the trial balance plus the following: Income Taxes Payable; Office Supplies Expense; Insurance Expense; Depreciation Expense–
Office Equipment; and Income Taxes Expense. Record the balances shown in the trial balance. Determine the adjusting entries and post them directly to the T accounts. If a
balance is zero, enter “0”.
Cash
Bal. 2268
Accounts Receivable
Bal. 1031
Prepaid Insurance
Bal. 240 b. 120
Bal. 120
Office Supplies
Bal. 782 a. blank
Bal. 782
Office Equipment
Bal. 7100
Accumulated Depreciation—Office Equipment
Bal. 770
c. 770
Bal. 1540
Accounts Payable
Bal. 635
d. 19
Bal. 654
Unearned Tax Fees
e. blank Bal. 219
Bal. 219
Income Taxes Payable
f. 2160
Common Stock
Bal. 3000
Retained Earnings
Bal. 2439
Dividends
Bal. 6000
Tax Fees Revenue
Bal. 21926
e. blank
Bal. 21926
Office Salaries Expense
Bal. 8300
Advertising Expense
Bal. 650
Rent Expense
Bal. 2400
Telephone Expense
Bal. 218
d. 19
Bal. 237
Office Supplies Expense
a. 555
Insurance Expense
b. 120
Depreciation Expense—Office Equipment

c. 770
Income Taxes Expense
f. 2160
3. Prepare an adjusted trial balance for Steven Tax Service, Inc. List all accounts in the order of Assets, Liabilities, Stockholders’ equity, Revenues, and Expenses. If an
amount box does not require an entry, leave it blank.
December 31, 2014
Cash 2268 blank
Accounts Receivable 1031 blank
Prepaid Insurance 120 blank
Office Supplies 782 blank
Office Equipment 7100 blank
Accumulated Depreciation-Office Equipment blank 1540
Accounts Payable blank 654
Income Taxes Payable blank 2160
Common Stock blank 3000
Retained Earnings blank 2439
Dividends 6000 blank
Tax Fees Revenue blank 21926
Office Salaries Expense 8300 blank
Advertising Expense 650 blank
Rent Expense 2400 blank
Telephone Expense 237 blank
Office Supplies Expense 555 blank
Insurance Expense 120 blank
Depreciation Expense-Office Equipment 770 blank
Income Taxes Expense 2160 blank
32493 32493
Prepare an income statement for Steven Tax Service, Inc.
Income Statement
Revenue
Tax fees revenue $ 21926
Expenses
Office salaries expense $ 8300
Advertising expense 650
Rent expense 2400
Office supplies expense 555
Insurance expense 120
Depreciation expense-office equipment 770
Total expenses 15192
Net income $ 6734
Prepare a statement of retained earnings for Steven Tax Service, Inc.
Net income 6734
Subtotal $ blank
Less dividends 6000

Prepare a balance sheet for Steven Tax Service, Inc.
Balance Sheet
December 31, 2014
Assets
Cash $ 2268
Accounts receivable 1031
Prepaid insurance 120
Office supplies 782
Less accumulated depreciation 1540 5560
Total assets $ 9761
Liabilities
Accounts payable $ blank
Income taxes payable 2160
Total liabilities $ blank
Stockholders' Equity
Common stock $ 3000
Retained earnings blank
Total stockholders' equity blank
Total liabilities and stockholders' equity $ blank
4. Why is it not necessary to show the effects of the above transactions on the statement of cash flows?
The input in the box below will not be graded, but may be reviewed and considered by your instructor.
blank

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Student: Mingyue Jiang Assignment: Chapter Three Homework

Dec. 31 Insurance Expense 800

Prepaid Insurance 800

To record insurance expired during the year

Short Exercise 3-2

Dec. 31 Insurance Expense 800

Prepaid Insurance 800

To record insurance expired during the year

Dec. 31 Supplies Expense 920

To record supplies used during the year

Short Exercise 3-3

Dec. 31 Supplies Expense 920

To record supplies used during the year

Mar. 31 Depreciation Expense - Office Equipment 100

Accumulated Depreciation - Office Equipment 100

To record depreciation for the month

Office equipment $ 1900

Less accumulated depreciation 300 $ 1600

Short Exercise 3-4

Prepare the adjusting entry to record depreciation for March.

Mar. 31 Depreciation Expense - Office Equipment 100

Accumulated Depreciation - Office Equipment 100

To record depreciation for the month

Office equipment $ 1900

Less accumulated depreciation 300 $ 1600

June 30 Wages Expense 230

Wages Payable 230

To record wages accrued at the end of June

Short Exercise 3-5

June 30 Wages Expense 230

Wages Payable 230

To record wages accrued at the end of June

Aug. 31 Unearned Service Revenue 760

Service Revenue 760

Short Exercise 3-6

Aug. 31 Unearned Service Revenue 760

Service Revenue 760

For the Month Ended December 31, 2014

Service revenue $ 2600

Rent expense $ 400

Wages expense 900

Utilities expense 200

Income taxes expense 350

Total expenses 1900

Net income $ 700

Statement of Retained Earnings

For the Month Ended December 31, 2014

Retained earnings, November 30, 2014 $ 8600

Net income 700

Less dividends 350

Retained earnings, December 31, 2014 $ 8950

Short Exercise 3-7

Prepare an income statement for the month of December.

For the Month Ended December 31, 2014

Service revenue $ 2600

Rent expense $ 400

Wages expense 900

Utilities expense 200

Income taxes expense 350

Total expenses 1900

Net income $ 700

Statement of Retained Earnings

For the Month Ended December 31, 2014