Connect Access Card For Fundamental Accounting Principles
Connect Access Card For Fundamental Accounting Principles
24th Edition
ISBN: 9781260158526
Author: John J Wild
Publisher: McGraw-Hill Education
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Chapter 3, Problem 3GLP
To determine

Journal Entry:

Journal entry is a medium of recording the business transactions carried during a particular accounting period.

Trial Balance:

A trial balance is a statement consisting of all the ledger accounts which is prepared at the end of accounting period.

Four Column Accounts:

The four column accounts keeps track of the balance as transactions takes place. In case of assets and expense accounts, the increase in the expenses and assets are shown in the debit column and vice-versa. When there is increase in liabilities and revenues, it is shown on the credit side and vice-versa.

Income Statement:

The statement which shows the revenues earned and expenses incurred during a particular year is called Income statement.

Statement of Owner's Equity:

Statement of owner's equity is concerned with portion of owner's equity.

Balance Sheet:

A financial statement which shows the financial position of a company during specified accounting period is called a balance sheet.

Prepare journal entries to record the transactions, create financial statements, and assess the impact of each transaction on financial statements.

Expert Solution & Answer
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Answer to Problem 3GLP

Solution:

Journal entries

    Date
    Accounts
    Debit
    Credit




    Apr. 1
    Cash
    $80,000


    Office Equipment
    $26,000


    K. Tanner, Capital

    $106,000




    2
    Prepaid Rent
    $9,000


    Cash

    $9,000




    3
    Office Equipment
    $8,000


    Office Supplies
    $3,600


    Accounts Payable

    $11,600




    6
    Cash
    $4,000


    Service Revenue

    $4,000




    9
    Accounts Receivable
    $6,000


    Service Revenue

    $6,000




    13
    Accounts Payable
    $11,600


    Cash

    $11,600




    19
    Prepaid Insurance
    $2,400


    Cash

    $2,400




    22
    Cash
    $4,400


    Accounts Receivable

    $4,400




    25
    Accounts Receivable
    $2,890


    Service Revenue

    $2,890




    28
    K. Tanner, Withdrawals
    $5,500


    Cash

    $5,500




    29
    Office Supplies
    $600


    Accounts Payable

    $600




    30
    Utilities Expense
    $435


    Cash

    $435




Financial Statements

    KARLA TANNER CONSULTANCY
    Income Statement
    For the Month Ended April 30
    Revenues:

    Service Revenue
    $12,890


    Expenses:

    Utilities Expense
    $435


    Net Income
    $12,455
    KARLA TANNER CONSULTANCY
    Statement of Owner's Equity
    For the Month Ended April 30
    K. Tanner, Capital, April 1.
    $0
    Owner's contribution during the month
    $106,000
    Net income for the month
    $12,455
    Subtotal
    $118,455
    Owner's withdrawal
    ($5,500)
    K. Tanner, Capital, April 30.
    $112,955
    KARLA TANNER CONSULTANCY
    Balance Sheet
    For the Month Ended April 30
    Assets
    Current Asset:

    Cash
    $59,465
    Accounts Receivable
    $4,490
    Office Supplies
    $4,200
    Prepaid Insurance
    $2,400
    Prepaid Rent
    $9,000
    Total Current Assets
    $79,555


    Plant, Property and Equipment

    Office Equipment
    $34,000


    Total Assets
    $113,555


    Liabilities
    Current Liabilities

    Accounts Payable
    $600


    Total Liabilities
    $600


    Owner's Equity
    K. Tanner, Capital
    $112,955


    Total Liabilities and Owner's Equity
    $113,555


    Date
    Impact on financial statements
    1.
    The contribution of owner increases the assets "Cash account" and "Office Equipment" and equity of the owner in the equity section of the balance sheet.
    2.
    Prepaid rent is an assets and outflow of cash results in decrease of cash balance of the company.
    3.
    Purchase of office equipment and office supplies on credit increases the assets "Office Equipment" and "Office Supplies" and liabilities "Accounts Payable" at the same time.
    6.
    Service performed for cash will increase the cash balance and revenue in the income statement.
    9.
    Services performed on accounts for the client will increase the
    asset "Accounts Receivable" and revenue in the income statement of the company.
    13.
    Payment on accounts payable decreases the liabilities "Accounts Payable" and assets "Cash Account" at the same time.
    19.
    Insurance premium for 18 months is paid in advance increases the assets as it is a prepaid insurance and the outflow of cash will result in decrease of cash.
    22.
    Collections on accounts will decrease the assets of accounts receivable and increases the assets of cash accounts simultaneously.
    25.
    Debiting the Accounts Receivable increases the assets and crediting the Service Revenue increases the revenue of the company in the income statement.
    28.
    Withdrawal by the owner will result in decrease of equity and cash balance of the company.
    29.
    Purchase of additional office supplies on credit increases the assets "Office Supplies" and liabilities "Accounts Payable" at the same time.
    30.
    Utilities expense incurred increases the expenses in the income statement and decreases the assets of cash accounts as it results in outflow of cash.


Explanation of Solution

Ledger Accounts

    Cash

    Account no. 101
    Date
    Description
    Debit
    Credit
    Balance

    Beginning Balance


    -
    Apr. 1K. Tanner, Capital
    $80,000

    $80,000
    2Prepaid Rent

    $9,000
    $71,000
    6.Service Revenue
    $4,000

    $75,000
    13Accounts Payable

    $11,600
    $63,400
    19Prepaid Insurance

    $2,400
    $61,000
    22Accounts Receivable
    $4,400

    $65,400
    28K. Tanner, Withdrawals

    $5,500
    $59,900
    30Utilities Expense

    $435
    $59,465




    Accounts Receivable

    Account no. 106
    Date
    Description
    Debit
    Credit
    Balance

    Beginning Balance


    -
    Apr. 9Service Revenue
    $6,000

    $6,000
    22Cash

    $4,400
    $1,600
    25Service Revenue
    $2,890

    $4,490




    Office Supplies

    Account no. 124
    Date
    Description
    Debit
    Credit
    Balance

    Beginning Balance


    -
    Apr. 3Accounts Payable
    $3,600

    $3,600
    29Accounts Payable
    $600

    $4,200




    Prepaid Insurance

    Account no. 128
    Date
    Description
    Debit
    Credit
    Balance

    Beginning Balance


    -
    Apr. 19Cash
    $2,400

    $2,400
    Prepaid Rent

    Account no. 131
    Date
    Description
    Debit
    Credit
    Balance

    Beginning Balance


    -
    Apr. 2Cash
    $9,000

    $9,000
    Office Equipment

    Account no. 163
    Date
    Description
    Debit
    Credit
    Balance

    Beginning Balance


    -
    Apr. 1K. Tanner, Capital
    $26,000

    $26,000
    3Accounts Payable
    $8,000

    $34,000
    Accounts Payable

    Account no. 201
    Date
    Description
    Debit
    Credit
    Balance

    Beginning Balance


    -
    Apr. 3
    Office Equipment
    $8,000

    $8,000
    Office Supplies
    $3,600

    $11,600
    12Cash

    $11,600
    $0
    29Office Supplies

    $600
    $600




    K. Tanner, Capital

    Account no. 301
    Date
    Description
    Debit
    Credit
    Balance

    Beginning Balance


    -
    Apr. 1Cash

    $80,000
    $80,000

    Office Equipment

    $26,000
    $106,000





    K. Tanner, Withdrawals

    Account no. 302
    Date
    Description
    Debit
    Credit
    Balance

    Beginning Balance


    -
    Apr. 28Cash
    $5,500

    $5,500
    Service Revenue

    Account no. 403
    Date
    Description
    Debit
    Credit
    Balance

    Beginning Balance


    -
    Apr. 6Cash

    $4,000
    $4,000
    9Accounts Receivable

    $6,000
    $10,000
    25Accounts Receivable

    $2,890
    $12,890
    Utilities Expense

    Account no. 690
    Date
    Description
    Debit
    Credit
    Balance

    Beginning Balance


    -
    Apr. 30Cash
    $435

    $435




Trial Balance

    KARLA TANNER CONSULTANCY
    Trial Balance
    For the Month Ended April 30
    Cash
    $59,465

    Accounts Receivable
    $4,490

    Office Supplies
    $4,200

    Prepaid Insurance
    $2,400

    Prepaid Rent
    $9,000

    Office Equipment
    $34,000

    Accounts Payable

    $600
    K. Tanner, Capital

    $106,000
    K. Tanner, Withdrawals
    $5,500

    Service Revenue

    $12,890
    Utilities Expense
    $435




    Total $119,490$119,490
Conclusion

Karla Tanner's net income for the month ended April 30 is $12,455 and the total assets, liabilities and owner's equity is $113,555.

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Chapter 3 Solutions

Connect Access Card For 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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