FUNDAMENTAL ACCOUNTING PRINCIPLES
FUNDAMENTAL ACCOUNTING PRINCIPLES
24th Edition
ISBN: 9781264044375
Author: Wild
Publisher: McGraw-Hil
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Chapter 3, Problem 3APSA
To determine

Ledger account A general ledger represent account for company's financial statement with debit and credit account records validated by trial balance.

Computation of necessary T accounts (representing the ledger) with balances from the unadjusted trial balance of Wells Technical Institute.

Expert Solution
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Explanation of Solution

Cash
Particulars Amount ($) Particulars Amount ($)
Unadjusted balance 34,000
Adjusted balance 34,000
Equipment
Particulars Amount ($) Particulars Amount ($)
Unadjusted balance 80,000
Adjusted balance 80,000
Accounts Receiveable
Particulars Amount ($) Particulars Amount ($)
Unadjusted balance 0
Adjusted balance 0
Accumulated Depreciation-Equipment
Particulars Amount ($) Particulars Amount ($)
Unadjusted balance 15,000
Adjusted balance 15,000
Teaching Supplies
Particulars Amount ($) Particulars Amount ($)
Unadjusted balance 8,000
Adjusted balance 8,000
Accounts Payable
Particulars Amount ($) Particulars Amount ($)
Unadjusted balance 26,000
Adjusted balance 26,000
Prepaid Insurance
Particulars Amount ($) Particulars Amount ($)
Unadjusted balance 12,000
Adjusted balance 12,000
Salaries Payable
Particulars Amount ($) Particulars Amount ($)
Unadjusted balance 0
Adjusted balance 0
Prepaid Rent
Particulars Amount ($) Particulars Amount ($)
Unadjusted balance 3,000
Adjusted balance 3,000 0
Unearned Training Fees
Particulars Amount ($) Particulars Amount ($)
Unadjusted balance 12,500
Adjusted balance 12,500
Professional Library
Particulars Amount ($) Particulars Amount ($)
Unadjusted balance 35,000
Adjusted balance 35,000
T Wells, Capital
Particulars Amount ($) Particulars Amount ($)
Unadjusted balance 90,000
Adjusted balance 90,000
Accumulated Depreciation-Professional Library
Particulars Amount ($) Particulars Amount ($)
Unadjusted balance 10,000
Adjusted balance 10,000
T Wells, Withdrawal
Particulars Amount ($) Particulars Amount ($)
Unadjusted balance 50,000
Adjusted balance 50,000
Tuition Fees Earned
Particulars Amount ($) Particulars Amount ($)
Unadjusted balance 1,23,900
Adjusted balance 1,23,900
Insurance Expenses
Particulars Amount ($) Particulars Amount ($)
Unadjusted balance 0
Adjusted balance 0
Training Fees Earned
Particulars Amount ($) Particulars Amount ($)
Unadjusted balance 40,000
Adjusted balance 40,000
Rent Expense
Particulars Amount ($) Particulars Amount ($)
Unadjusted balance 33,000
Adjusted balance 33,000
Depreciation Expense-Professional Library
Particulars Amount ($) Particulars Amount ($)
Unadjusted balance 0
Adjusted balance 0
Teacing Supplies Expense
Particulars Amount ($) Particulars Amount ($)
Unadjusted balance 0
Adjusted balance 0
Depreciation Expense-Equipment
Particulars Amount ($) Particulars Amount ($)
Unadjusted balance 0
Adjusted balance 0
Advertising Expense
Particulars Amount ($) Particulars Amount ($)
Unadjusted balance 6,000
Adjusted balance 6,000
Salaries Expense
Particulars Amount ($) Particulars Amount ($)
Unadjusted balance 50,000
Adjusted balance 50,000
Utilities Expense
Particulars Amount ($) Particulars Amount ($)
Unadjusted balance 6,400
Adjusted balance 6,400
To determine

Journal Entries

A journal entry is the record of the transaction entered into journal. Journal entries record all the financial details of the business and reflects which accounts are affected through the transactions.

Accounting rules for journal entries:

  • To increase balance of the account: Debit assets, expenses, losses and credit all liabilities, capital, revenue and gains.
  • To decrease balance of the account: Credit assets, expenses, losses and debit all liabilities, capital, revenue and gains.
  • The necessary adjusting journal entries assuming that adjusting entries are made only at year end.

Expert Solution
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Explanation of Solution

Recording of insurance expense:

Date Account Title and Explanation Post Ref. Debit($) Credit($)
December-31 Insurance expense 2,400
Prepaid expense 2,400
(recording of insurance expense)
  • Since, insurance is an expense and expense is increased. Hence, insurance expense account is debited.
  • Since, prepaid expense is an asset and asset is decreased. Hence, prepaid expense account is credited.
  • Recording of supplies expense:

    Date Account Title and Explanation Post Ref. Debit($) Credit($)
    December-31 Teaching supplies expense 5,200
    Teaching supplies 5,200
    (to record the expense of teaching supplies)
    • Since, teaching supplies is an expense and expense is increased. Hence, teaching supplies expense account is debited.
    • Since, teaching supplies account is a liability and liability is increased. Hence, teaching supplies account is credited.
    • Recording of depreciation expense:

      Date Account Title and Explanation Post Ref. Debit($) Credit($)
      December-31 Depreciation expense - equipment 13,200
      Accumulated depreciation − equipment 13,200
      (to record depreciation expense)
      • Since, depreciation is an expense and expense is increased. Hence, depreciation expense account is debited.
      • Since, accumulated depreciation is a liability and liability is increased. Hence, accumulated depreciation account is credited.
      • Recording of depreciation expense:

        Date Account Title and Explanation Post Ref. Debit($) Credit($)
        December-31 Depreciation expense−professional library 7,200
        Accumulated depreciation−professional library 7,200
        (to record depreciation expense)
        • Since, depreciation is an expense and expense is increased. Hence, depreciation expense account is debited.
        • Since, accumulated depreciation is a liability and liability is increased. Hence, accumulated depreciation account is credited.
        • Recording of training fees earned:

          Date Account Title and Explanation Post Ref. Debit($) Credit($)
          December-31 Unearned training fees 5,000
          Training fees earned 5,000
          (to record the training fees earned)
          • Since, unearned training fees is a liability and liability is decreased. Hence, Unearned training fees account is debited.
          • Since, training fees earned is an income and income is increased. Hence, training fees earned account is credited.
          • Recording of fees earned:

            Date Account Title and Explanation Post Ref. Debit($) Credit($)
            December-31 Accounts receiveable 7,500
            Tuition fees earned 7,500
            (to record the sale of service)
            • Since, accounts receiveable is an asset and asset is increased. Hence, accounts receiveable account is debited.
            • Since, tuition fees earned is an income and income is increased. Hence, tuition fees earned account is credited.
            • Recording of salary expense:

              Date Account Title and Explanation Post Ref. Debit($) Credit($)
              December-31 Salary expense 400
              Salary payable 400
              (to record the expense of salary)
              • Since, salary is an expense and expense is increased. Hence, salary expense account is debited.
              • Since, salary payable is a liability and liability is increased. Hence, salary payable account is credited.
              • Recording of rent expense:

                Date Account Title and Explanation Post Ref. Debit($) Credit($)
                December-31 Rent expense 3,000
                Prepaid rent 3,000
                (to record the expense of rent)
                • Since, rent is an expense and expense is increased. Hence, rent expense account is debited.
                • Since, prepaid rent is an asset and asset is decreased. Hence, prepaid rent account is credited.
To determine

Ledger account:

A ledger is used to post various financial transactions of the business from the journal. Ledger sorts and arrange various transactions in the financial book with debit and credit amount which is validated by trial balance.

Trial balance:

A trial balance is a statement of all debits and credits maintained in a double entry accounting system where total of debits and credits are equal.

The necessary balance in the ledger account for the adjusting entries and an adjusted trial balance.

Expert Solution
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Explanation of Solution

Salaries Expense
Particulars Amount ($) Particulars Amount ($)
Unadjusted balance 50,000
Salaries payable 400
Adjusted balance 50,400
Depreciation Expense-Equipment
Particulars Amount ($) Particulars Amount ($)
Unadjusted balance 0
Accumulated depreciation-Equipment 13,200
Adjusted balance 13,200
Teacing Supplies Expense
Particulars Amount ($) Particulars Amount ($)
Unadjusted balance 0
Teaching supplies 5,200
Adjusted balance 5,200
Depreciation Expense-Professional Library
Particulars Amount ($) Particulars Amount ($)
Unadjusted balance 0
Accumulated depreciation-Professional library 7,200
Adjusted balance 7,200
Rent Expense
Particulars Amount ($) Particulars Amount ($)
Unadjusted balance 33,000
Prepaid rent 3,000
Adjusted balance 36,000
Training Fees Earned
Particulars Amount ($) Particulars Amount ($)
Unadjusted balance 40,000
Unearned training fees 5,000
Adjusted balance 45,000
Insurance Expenses
Particulars Amount ($) Particulars Amount ($)
Unadjusted balance 0
Prepaid Insurance 2,400
Adjusted balance 2,400
Tuition Fees Earned
Particulars Amount ($) Particulars Amount ($)
Unadjusted balance 123,900
Accounts receiveable 7,500
Adjusted balance 131,400
Accumulated Depreciation-Professional Library
Particulars Amount ($) Particulars Amount ($)
Unadjusted balance 10,000
Depreciation expense-Professional library 7,200
Adjusted balance 17,200
Unearned Training Fees
Particulars Amount ($) Particulars Amount ($)
Unadjusted balance 12,500
Training fees earned 5,000
Adjusted balance 7,500
Prepaid Rent
Particulars Amount ($) Particulars Amount ($)
Unadjusted balance 3,000 Rent expense 3,000
Adjusted balance 0 0
Salaries Payable
Particulars Amount ($) Particulars Amount ($)
Unadjusted balance 0
Salaries expense 400
Adjusted balance 400
Prepaid Insurance
Particulars Amount ($) Particulars Amount ($)
Unadjusted balance 12,000 Insurance expense 2,400
Adjusted balance 9,600
Teaching Supplies
Particulars Amount ($) Particulars Amount ($)
Unadjusted balance 8,000 Teaching supplies expense 5,200
Adjusted balance 2,800
Accumulated Depreciation-Equipment
Particulars Amount ($) Particulars Amount ($)
Unadjusted balance 15,000
Depreciation expense-Equipment 13,200
Adjusted balance 28,200
Accounts Receiveable
Particulars Amount ($) Particulars Amount ($)
Unadjusted balance 0
Tuition fees earned 7,500
Adjusted balance 7,500

The adjusted trial balance total for Company WTI are $3,45,700.

Company WTI
Adjusted Trial Balance,For the year ended December 31
Debit($) Credit($)
Cash 34,000
Accounts receiveable 7,500
Teaching supplies 2,800
Prepaid insurance 9,600
Professional library 35,000
Accumulated depreciation- Professional library 17,200
Equipment 80,000
Accumulated depreciation- Equipment 28,200
Accounts payable 26,000
Salaries payable 400
Unearned training fees 7,500
T.Wells, capital 90,000
T.Wells, withdrawal 50,000
Tuition fees earned 131,400
Training fees earned 45,000
Depreciation expense-Professional library 7,200
Depreciation expense-Equipment 13,200
Salaries expense 50,400
Insurance expense 2,400
Rent expense 36,000
Teaching supplies expense 5,200
Advertising expense 6,000
Utilities expense 6,400
Total 345,700 345,700

4.

To determine

Income Statement:

A income statement is one of the financial statement of the company and shows the company's profit and loss for a particular period of time.

Statement of Owner'sEquity:

A statement of owner's equity reflects changes in capital balance of a business over a reporting period.

Balance Sheet:

A balance sheet is a statement of financial position of a business which states the assets, liabilities and owner's equity over a particular period of time.

WTI's income statement, statement of owner's equity and balance sheet as of December, 31.

4.

Expert Solution
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Explanation of Solution

Company WTI
Income Statement For the year ended December 31
Debit($) Credit($)
Revenues:
Tuition fees earned 131,400
Training fees earned 45,000
Total Revenue 176,400
Expenses:
Depreciation expense-Professional library 7,200
Depreciation expense-Equipment 13,200
Salaries expense 50,400
Insurance expense 2,400
Rent expense 36,000
Teaching supplies expense 5,200
Advertising expense 6,000
Utilities expense 6,400
Total Expense: 126,800
Net Income: 49,600

The statement of owner's equity for Company WTI shows the closing balance of $89,600.

Company WTI
Statement of Owner's Equity
Amount ($) Amount($)
Owner's Equity opening balance 90,000
Add: Net income 49,600
Total 139,600
Less: Withdrawals (50,000)
Closing Balance 89,600

The balance sheet for Company WTI shows a total of $1,23,500.

Wells Technical Institute
Balance Sheet as at December 31
Amount Amount
Liabilities and Owners Equity
Accounts payable $26,000
Salary payable $400
Unearned training fees $7,500
Total Liabilities $33,900
Owners Equity $89,600
Total Liabilities and Owners Equity $123,500
Current Assets, Loans & Advances
Cash $34,000
Accounts receiveable $7,500
Teaching supplies $2,800
Prepaid insurance $9,600
Total Current Assets, Loans & Advances $53,900
Property, Plant and Equipment
Professional library $17,800
Equipment $51,800
Total Property, Plant and Equipment $69,600
Total Assets $123,500

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Chapter 3 Solutions

FUNDAMENTAL ACCOUNTING PRINCIPLES

Ch. 3 - Prob. 11DQCh. 3 - Prob. 12DQCh. 3 - Periodic reporting C1 Choose from the following...Ch. 3 - Prob. 2QSCh. 3 - Identifying accounting adjustments Classify the...Ch. 3 - Concepts 0f adjusting entries During the year, a...Ch. 3 - Prepaid (deferred) expenses adjustments Pl For...Ch. 3 - Prepaid (deferred) expenses adjustments For each...Ch. 3 - Prob. 7QSCh. 3 - Accumulated depreciation adjustments Pl For each...Ch. 3 - Adjusting for depreciation P1 For each separate...Ch. 3 - Unearned (deferred) revenues adjustments For each...Ch. 3 - Adjusting for unearned (deferred) revenues P2 For...Ch. 3 - Accrued expenses adjustments Pl For each separate...Ch. 3 - Prob. 13QSCh. 3 - Accrued revenues adjustments P4 For each separate...Ch. 3 - Recording and analysing adjusting entries A1...Ch. 3 - QS3-16 Determining effects of adjusting...Ch. 3 - Preparing an adjusted trial balance P5 Following...Ch. 3 - Prob. 18QSCh. 3 - Prob. 19QSCh. 3 - Prob. 20QSCh. 3 - Preparing adjusting entries P4 Garcia Company had...Ch. 3 - Preparing adjusting entries P4 Cal Consulting...Ch. 3 - Prob. 1ECh. 3 - Exercise 3.2 Classifying adjusting entries C3 In...Ch. 3 - Exercise 3-3 Adjusting and paying accrued wages P3...Ch. 3 - Prob. 4ECh. 3 - Exercise 3-5 Adjusting and paying accrued expenses...Ch. 3 - Exercise 3-6 Preparing adjusting entries P1 P2 P3...Ch. 3 - Exercise 3-7 Preparing adjusting entries P1 P3 P4...Ch. 3 - Exercise 3-8 Analyzing and preparing adjusting...Ch. 3 - Prob. 9ECh. 3 - Preparing financial statements from a trial...Ch. 3 - Prob. 11ECh. 3 - Exercise 3-11 Adjusting for prepaid recorded as...Ch. 3 - Prob. 13ECh. 3 - Exercise 3-14 Preparing adjusting entries P1 P2 P3...Ch. 3 - Problem 3-1A Identifying adjusting entries with...Ch. 3 - Problem 3-2B Preparing adjusting and subsequent...Ch. 3 - Problem 3-3A Preparing adjusting entries, adjusted...Ch. 3 - Problem 3-4A Interpreting unadjusted and adjusted...Ch. 3 - Problem 3-5A Preparing financial statements from...Ch. 3 - Problem 3-6A Recording prepaid expenses and...Ch. 3 - Prob. 1BPSBCh. 3 - Problem 3-2B Preparing adjusting and subsequent...Ch. 3 - Problem 3-3B Preparing adjusting entries, adjusted...Ch. 3 - Prolme 3-4B Interpreting unadjusted and adjusted...Ch. 3 - Problem 3-5B Preparing financial statements from...Ch. 3 - Problem 3-6B Recording prepaid expenses and...Ch. 3 - Prob. 3SPCh. 3 - Prob. 1GLPCh. 3 - Using transactions from the following assignments,...Ch. 3 - Using transactions from the following assignments,...Ch. 3 - Prob. 4GLPCh. 3 - Prob. 5GLPCh. 3 - Prob. 1AACh. 3 - Key figures for the recent two years of both Apple...Ch. 3 - Key comparative figures for Samsung. Apple, and...Ch. 3 - Prob. 1BTNCh. 3 - Prob. 2BTNCh. 3 - Access EDGAR online (SEC.gov) and locate the...Ch. 3 - Prob. 4BTNCh. 3 - BTN 3-5 Access EDGAR online (SEC.gov) and locate...Ch. 3 - Prob. 6BTN
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