GROUP ASSIGNMENT_ACC101

Group 2

Lê Viết Đạt - HE182054

Đỗ Duy Nghĩa - HE180687
Vũ Thế Hiển - HE182477
Nguyễn Thị Phương Anh - HE181488
Trần Thảo Nhi - HE181530
Phạm Nhật Tân - HE180833

-Hanoi, March 2024-

 Group3

Ex1

Watson Technical Institute (WTI), a school owned by Tom Watson, provides training to
individuals who pay tuition directly to the school. WTI also offers training to groups in off-site
locations. Its unadjusted trial balance as of December 31, 2011, follows. WTI initially records
prepaid expenses and unearned revenues in balance sheet accounts. Descriptions of items
a through h that require adjusting entries on December 31, 2011, follow.

Additional Information Items

a. An analysis of WTI’s insurance policies shows that $3,000 of coverage has expired.

b. An inventory count shows that teaching supplies costing $2,600 are available at year-end
2011.

c. Annual depreciation on the equipment is $12,000.

d. Annual depreciation on the professional library is $6,000.

e. On November 1, WTI agreed to do a special six-month course (starting immediately) for a

client. The contract calls for a monthly fee of $2,200, and the client paid the first five months’
fees in advance. When the cash was received, the Unearned Training Fees account was
credited. The fee for the sixth month will be recorded when it is collected in 2012.

f. On October 15, WTI agreed to teach a four-month class (beginning immediately) for an
individual for $3,000 tuition per month payable at the end of the class. The class started on
October 15, but no payment has yet been received. (WTI’s accruals are applied to the
nearest half-month; for example, October recognizes one-half month accrual.)

g. WTI’s two employees are paid weekly. As of the end of the year, two days’ salaries have
accrued at the rate of $100 per day for each employee.

h. The balance in the Prepaid Rent account represents rent for December.

Required

1. Prepare T-accounts (representing the ledger) with balances from the unadjusted trial
balance.

2. Prepare the necessary adjusting journal entries for items a through h and post them to the
T-accounts. Assume that adjusting entries are made only at year-end.

3. Update balances in the T-accounts for the adjusting entries and prepare an adjusted trial
balance.

4. Prepare Watson Technical Institute’s income statement and statement of owner’s equity
for the year 2011 and prepare its balance sheet as of December 31, 2011.
Ex1:

1-2.

Cash Unearned Training Fees

Debit Credit Debit Credit

Unadjusted 26 000 Unadjusted 11 000

e) $2200 x 2 =
$4400

Bal. 26 000 Bal. 5600

Account Receivable T. Watson, Capital

Debit Credit Debit Credit

Unadjusted 0 Unadjusted 63 600

f) $3000 x 2.5 =
$7500

Bal. 7500 Bal. 63600

Teaching Supplies T. Watson, Withdrawals

Debit Credit Debit Credit

Unadjusted 10 000 Unadjusted 40 000

b) 10 000 - 2600 =
7400

Bal. 2600 Bal. 40 000

Prepaid Insurance Tuition Fees Earned

Debit Credit Debit Credit

Unadjusted 15 000 Unadjusted 102 000

f) $3000 x 2.5 =
a) 3000 $7500
Bal. 12000 Bal. 109 500

Prepaid Rent Training Fees Earned

Debit Credit Debit Credit

Unadjusted 2000 Unadjusted 38 000

e) $2200 x 2 =
h) 2000 $4400

Bal. 0 Bal. 42 400

Depreciation Expense - Professional

Professional Library Library
Debit Credit Debit Credit

Unadjusted 30 000 Unadjusted 0

d) 6000

Bal. 30 000 Bal. 6000

Professional Library - Accumulated

Depreciation Depreciation Expense - Equipment
Debit Credit Debit Credit

Unadjusted 9000 Unadjusted 0

d) 6000 c) 12 000

Bal. 15 000 Bal. 12 000

Equipment Salaries Expense

Debit Credit Debit Credit

Unadjusted 70 000 Unadjusted 48 000

g) $100 x 2 x 2 =
$400
Bal. 70 000
Bal. 48 400
Accumulated Depreciation - Equipment Insurance expense
Debit Credit Debit Credit

Unadjusted 16 000 Unadjusted 0

c) 12 000 a) 3000

Bal. 28 000 Bal. 3000

Account Payable Rent Expense

Debit Credit Debit Credit

Unadjusted 36 000 Unadjusted 22 000

h) 2000
Bal. 36 000
Bal. 24 000

Salaries Payable Teaching Supplies Expense

Debit Credit Debit Credit

Unadjusted 0 Unadjusted 0
g) $100 x 2 x 2 = b) 10 000 - 2600 =
$400 7400

Bal. 400 Bal. 7400

Advertising Expense
Debit Credit

Unadjusted 7000

Bal. 7000

Utilities Expense
Debit Credit

Unadjusted 5600
 Bal. 5600

3.

Unadjusted Trial Balance Adjustments Adjusted Trial Balance

Debit
Account Title Debit (Dr) Credit (Cr) (Dr) Credit (Cr) Debit (Dr) Credit (Cr)
Cash 26000 26000
Accounts Receivable 0 7500 7500
Teaching Supplies 10000 2600 7400
Prepaid Insurance 15000 3000 12000
Prepaid Rent 2000 1500 500
Professional Library 30000 30000
Accum. Depreciation -
Library 9000 6000 15000
Equipment 70000 70000
Accum. Depreciation -
Equip. 16000 12000 28000
Accounts Payable 36000 36000
Salaries Payable 0 400 400
Unearned Training
Fees 11000 4400 6600
T. Watson, Capital 63600 63600
T. Watson, Withdrawals 40000 40000
Tuition Fees Earned 102000 7500 109500
Training Fees Earned
38000 4400 42400
Depreciation Expense
-Professional Library 0 6000 6000
Depreciation Expense
-Equipment 0 12000 12000
Salaries Expense 48000 400 48400
Insurance Expense 0 3000 3000
Rent Expense 22000 1500 23500
Teaching Supplies
Expense 0 2600 2600
Advertising Expense 7000 7000
Utilities Expense 5600 5600
Total 275600 275600 37400 37400 301500 301500
4.
Ex2:
Kroll Corporation reports the following components of stockholders’ equity on December 31,
2011.

Common stock — $25 par value, 40,000 shares authorized,

30,000 shares issued and outstanding ……………………………… $750,000
Paid - in capital in excess of par value, common stock ……………. 50,000
Retained earnings …………………………………………………… 260,000
Total stockholder’s equity …………………………………………… $1,060,000

In 2012, the following transactions affected its stockholders’ equity accounts.

Jan. 2 Purchased 2,000 shares of its own stock at $25 cash per share.
Jan. 7 Directors declared a $2 per share cash dividend payable on Feb. 28 to the
Feb. 9 stockholders of record.
Feb. 28 Paid the dividend declared on January 7.
July 9 Sold 500 of its treasury shares at $30 cash per share.
Aug. 27 Sold 1,500 of its treasury shares at $23 cash per share.
Sept. 9 Directors declared a $2 per share cash dividend payable on October 22 to the
September 23 stockholders of record.
Oct. 22 Paid the dividend declared on September 9.
Dec. 31 Closed the $8,000 credit balance (from net income) in the Income Summary
account to Retained Earnings.

Required
1. Prepare journal entries to record each of these transactions for 2012.
2. Prepare a statement of retained earnings for the year ended December 31, 2012.
3. Prepare the stockholders’ equity section of the company’s balance sheet as of December
31, 2012

1. Journal entries of these transactions for 2012

Date Dr Cr
02/01 Treasury Stock $50,000
Cash $50,000

07/01 Retained Earnings $56,000

Dividends Payable $56,000

28/02 Dividend payable $56,000

Cash $56,000

09/07 Cash $15,000

Treasury Stock common $12,500
Paid in capital Treasury Stock common $2,500
27/08 Cash $34,500
Treasury Stock common $37,500
Paid in capital Treasury Stock common $3000

09/09 Retained Earnings $30,000

Dividends Payable $30,000

22/10 Dividends Payable $30,000

Cash $30,000

31/12 Income Summary $8,000

Retained Earnings $8,000
 2. Retained earnings ended December 31, 2012
Retained Earnings, January 1, 2012 $260,000
Add: Net Income $8,000
Less: Dividends Declared $112,000
Retained Earnings, December 31,
2012 $156,000

3. Stockholders’ equity
Stockholders’ equity on December 31, 2012
Common Stock 750,000
Paid - in capital in excess of par value, common stock 50,000
Retained Earnings 156,000
Total stockholders’ equity 956,000

Ex3:

Why are warranty liabilities usually recognized on the balance sheet as liabilities even when
they are uncertain? What is an estimated liability?

1. Why are warranty liabilities usually recognized on the balance sheet as liabilities even
when they are uncertain?
Warranty is the guarantee given to customers by the seller which made them entitled
to have replacement given or repairs made when the products are found damaged or
defective upon purchase.
Warranty Liability is a liability resulting from the expected warranty services that
entities must provide in the future. This is also classified as a current liability.
Probable is when the event has a percentage of 75% and above of occurring.

Balance Sheet is a financial report that shows the finances of the firm including its
assets, liabilities, and equity. It gives users information about the company's finances,
such as their collectibles, the obligations that must be settled, and the remaining
capital that may be used.
In the balance sheet, we can often see that there is a warranty liability recorded
under the current liabilities of the firm. This represents the estimated warranty that
they might receive from their customers due to defective products or items.

Even though the warranty liability is uncertain in nature, it is recorded in the balance
sheet for the reason that is probable in occurrence and the amount can reasonably
be estimated based on the prior experiences of the firm when it comes to warranty
costs. By having an estimated warranty liability, the firm can allot funds to cover them
so they could avoid future losses.
Warranty liability is an obligation that represents the amount that is expected to be paid to
repair or replace the products sold. Although there is no certainty whether it will be paid or
not, it is still recognized in the balance sheet because based on past experience a certain
percentage based on sales is attributable to warranty expense; thus, it is only appropriate to
continue to recognize the same amount in the current period.

2. What is an estimated liability?

An estimated liability is a debt or obligation of an unknown amount that can be
reasonably estimated. In other words, it's a known liability that management knows
exists, but there is no way of knowing the exact amount of the liability. Instead, the
accountant must make an estimate based on the available data.

An estimated liability approximates an obligation owed since its total amount is uncertain.
Examples of estimated liabilities include warranties, retirements, and property taxes.