Financial Accounting Connect Access Card
Financial Accounting Connect Access Card
5th Edition
ISBN: 9781260159622
Author: J. David Spiceland
Publisher: Mcgraw-Hill
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Chapter 3, Problem 9PB

1.

To determine

Prepare T-accounts and enter the beginning balance from the trial balance.

1.

Expert Solution
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Explanation of Solution

T-account:

The condensed form of a ledger is referred to as T-account. The left-hand side of this account is known as debit, and the right hand side is known as credit.

The T-accounts of given item in trial balance are as follows:

Cash
Jan. 1$41,500
Bal.$41,500
Land
Jan. 1$110,800
Bal.$110,800
Retained earnings
Jan. 1$32,700
Bal.$32,700

Accounts receivables

Jan. 1$25,700
Bal.$25,700
Accounts payable
Jan.1$15,300
Bal.$15,300
Notes payable
Jan. 1$30,000
Bal.$30,000
Common stock
Jan. 1$100,000
Bal.$100,000

Table (1)

2.

To determine

Record the journal entries for given transactions.

2.

Expert Solution
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Explanation of Solution

Journal entry:

Journal entry is a set of economic events which can be measured in monetary terms. These are recorded chronologically and systematically.

Rules of Debit and Credit:

Following rules are followed for debiting and crediting different accounts while they occur in business transactions:

  • Debit, all increase in assets, expenses and dividends, all decrease in liabilities, revenues and stockholders’ equities.
  • Credit, all increase in liabilities, revenues, and stockholders’ equities, all decrease in assets, expenses.

The journal entries for given transactions of Company J are as follows:

DateAccount Title and ExplanationDebit($)Credit($)
January 12, 2021Accounts receivable62,400 
      Service revenue 62,400
 (To record the recognized service revenue on account )  
    
February 25,2021Cash75,300 
      Service revenue 75,300
 (To record cash collection from customer)  
    
April 30, 2021Cash30,000 
      Common stock 30,000
 (To record the cash received from issuance of common stock)  
    

June 16,

2021

Supplies12,100 
      Accounts payable 12,100
 (To record the purchase of supplies on account)  
    
July 7, 2021Accounts payable11,300 
      Cash 11,300
 (To record the payment of  cash on account)  
    
September 30, 2021Salary expense64,200 
      Cash 10,000
 (To record payment of salaries for work in the current period)  
    
December 30,2021Dividends2,900 
      Cash 2,900
 (To record the payment of dividends)  

Table (2)

3.

To determine

Post the transactions to T-accounts.

3.

Expert Solution
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Explanation of Solution

T-accounts of above transactions are as follows:

Cash
Jan.1$41,500July.7$11,300
Feb.25$75,300Sep.30$64,200
Mar.19$45,700Nov.22$22,500
Apr.30$30,000Dec.30$2,900
Total$192,500Total100,900
Bal.$91,600
Land
Jan.1$110,800
Bal.$110,800
Retained earnings
   Jan.1$32,700
  Bal.$32,700
Salaries expenses
Jan.1$0  
Bal.$64,200  
Accounts receivable
Jan. 1$25,700  
Jan. 12$62,400Mar.19$45,700
Bal.$42,400  

Accounts payable

  Jan.1$15,300
Jul. 7$11,300Jun.16$12,100
  Bal.$16,100
Notes payable
  Jan. 1$30,000
  Bal.$30,000
Dividends
Jan.1$0  
Dec.30$2,900  
Bal.$2,900  
Advertising expense
Jan. 1$0  
Nov.22$22,500  
Bal.$22,500  
Supplies
Jan.1$0  
Jun.16$12,100  
Bal.$12,100  
Salaries payable
  Jan. 1$0
  Dec.31$1,500
Common stock
  Jan. 1$100,000
  Apr.30$30,000
  Bal.$130,000

Service revenue

  Jan.1$0
  Jan.12$62,400
  Feb.25$75,300
  Bal.137,700

Table (3)

4.

To determine

Prepare the unadjusted trial balance of Company J.

4.

Expert Solution
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Explanation of Solution

Company J
Unadjusted Trial Balance
December 31, 2021
AccountsDebit Amount($)

Credit

Amount($)

Cash91,600 
Accounts Receivable42,400 
Supplies12,100 
Land110,800 
Accounts payable 16,100
Salaries payable 0
Interest  payable 0
Notes payable 30,000
Common stock 130,000
Retained earnings 32,700
Dividends2,900 
Service revenue 137,700
Salaries expense64,200 
Advertising  expense22,500 
Interest expense0
Supplies expense0
Totals$346,500$346,500

Table (4)

Therefore, the total of debit, and credit columns of unadjusted trial balance is $346,500.

5.

To determine

Record the given adjusting entries of Company J.

5.

Expert Solution
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Explanation of Solution

Adjusting entries:

Adjusting entries are those entries which are recorded at the end of the year, to update the income statement accounts (revenue and expenses) and balance sheet accounts (assets, liabilities, and stockholders’ equity) to maintain the records according to accrual basis principle.

Rules of Debit and Credit:

Following rules are followed for debiting and crediting different accounts while they occur in business transactions:

  • Debit, all increase in assets, expenses and dividends, all decrease in liabilities, revenues and stockholders’ equities.
  • Credit, all increase in liabilities, revenues, and stockholders’ equities, all decrease in assets, expenses.

Adjusting entries of Company P are as follows:

Depreciation expense:

DateAccounts title and explanationDebit ($)Credit ($)
December 31, 2021Interest Expense2,500 
 Interest payable 2,500
 (To record the amount of accrue interest on notes payable)  

Table (5)

Following is the rule of debit and credit of above transaction:

  • Interest expense is an expense, and it decreased the value of stockholder’s equity. Therefore, it is debited.
  • Interest payable is a liability. There is a increase in the value of liability. Therefore it is credited.

Office supplies expense:

DateAccounts title and explanationDebit ($)Credit ($)
December 31, 2021Supplies expense9,800 
 

Supplies (1)

 9,800
 (To record the supplies expense incurred at the end of the accounting year)  

Table (6)

Following is the rule of debit and credit of above transaction:

  • Supplies expense is an expense, and it decreased the value of stockholder’s equity. Therefore, it is debited.
  • Supplies are an asset account. There is a decrease in assets, therefore it is credited.

Deferred revenue:

DateAccounts title and explanationDebit ($)Credit ($)
December 31, 2021Salaries expense1,500 
 Salaries payable 1,500
 (To record the salary payable for the current period)  

Table (7)

Following is the rules of debit and credit of above transaction:

  • Salaries expense is an expense. There is a decrease in the value of stockholder’s equity. Therefore, it is debited.
  • Salaries payable is a liability. There is an increase in the value of liability. Therefore it is credited

Working note:

Calculate the supplies used during the year:

Suppliesusedduringtheyear}={Openingbalance+purchase-Closingbalance}=$0+$12,100-$2,300=$9,800 (1)

6.

To determine

Post the adjusting entries to appropriate T-accounts.

6.

Expert Solution
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Explanation of Solution

Cash
Jan.1$41,500July.7$11,300
Feb.25$75,300Sep.30$64,200
Mar.19$45,700Nov.22$22,500
Apr.30$30,000Dec.30$2,900
Total$192,500Total100,900
Bal.$91,600
Land
Jan.1$110,800
Bal.$110,800
Interest payable
Jan.1$0
Dec.31$2,500
Bal.$2,500
Retained earnings
Jan.1$32,700
Bal.$32,700
Salaries Expense
Jan.1$0
Sep.30$64,200
Dec.30$1,500
Bal.$65,700
Supplies Expense
Jan.1$0
Dec.31$9,800
Bal.$9,800
Accounts payable
Jan.1$15,300
Jul. 7$11,300Jun.16$12,100
Bal.$16,100
Notes payable
Jan. 1$30,000
Bal.$30,000
Dividends
Jan.1$0
Dec.30$2,900
Bal.$2,900
Advertising expense
Jan. 1$0
Nov.22$22,500
Bal.$22,500
Supplies
Jan.1$0
Jun.16$12,100Dec.31$9,800
Bal.$2,300
Common stock
Jan. 1$100,000
Apr.30$30,000
Bal.$130,000

Service revenue

Jan.1$0
Jan.12$62,400
Feb.25$75,300
Bal.$137,700
Interest expense
Jan.1$0  
Dec.30$2,500  
Bal.$2,500  

Table (8)

7.

To determine

Prepare the adjusted trial balance of Company J.

7.

Expert Solution
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Explanation of Solution

Adjusted trial balance:

Adjusted trial balance is that statement which contains complete list of accounts with their adjusted balances, after all relevant adjustments have been made. This statement is prepared at the end of every financial period.

Adjusted trial balance of Company J is as follows:

Company J
Adjusted Trial Balance
December 31, 2021
AccountsDebit Amount($)

Credit

Amount($)

Cash91,600 
Accounts Receivable42,400 
Supplies12,100 
Land110,800 
Accounts payable 16,100
Salaries payable 1,500
Interest  payable 2,200
Notes payable 30,000
Common stock 130,000
Retained earnings 32,700
Dividends2,900 
Service revenue 137,700
Salaries expense64,200 
Advertising  expense22,500 
Interest expense2,500
Supplies expense9,800
Totals$350,500$350,500

Table (9)

Therefore, the total of debit, and credit columns of adjusted trial balance is $350,500.

8.

To determine

Prepare an income statement for 2021 and classified balance sheet as on December 31, 2021.

8.

Expert Solution
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Explanation of Solution

Income statement of Company J is as follows:

Company J
 Income statement
 For the year ended December 31, 2021
 ParticularsAmount in $Amount in $
 Service revenue (A)137,700
 Expenses:
 Salaries expense65,700
 Utilities expense22,500
 Depreciation expense2,500
 Supplies expense9,800
 Total expense (B)100,500
 Net income (AB)37,200

Table (10)

Therefore, the net income of Company J is $37,200.

Classified balance sheet of Company J is as follows:

Financial Accounting Connect Access Card, Chapter 3, Problem 9PB

Figure (1)

Therefore, the total assets of Company P are $247,100, and the total liabilities and stockholders’ equity are $247,100.

Working note:

Calculation of ending balance retained earnings

Retained earnings = (Beginning retained earnings + Net income Dividends)=$32,700+$37,200$2,900=$67,00 (2)

9.

To determine

Record the necessary closing entries of Company J.

9.

Expert Solution
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Explanation of Solution

Closing entries of Company J is as follows:

DateAccount Title and Explanation

Post

Ref.

Debit

($)

Credit

($)

December 31, 2021Service revenue137,700
Retained earnings137,700
(To close all revenue account)
December 31, 2021Retained earnings100,500
    Salaries expense65,700
    Advertising  expense22,500
    Interest expense2,500
    Supplies expense9,800
(To close all the expenses account)
December 31,2021Retained earnings2,900
    Dividends2,900
(To close the dividends account)

Table (11)

10.

To determine

Post the closing entries to the T-accounts.

10.

Expert Solution
Check Mark

Explanation of Solution

Post the closing entries to the T-accounts.

Cash
Jan.1$41,500July.7$11,300
Feb.25$75,300Sep.30$64,200
Mar.19$45,700Nov.22$22,500
Apr.30$30,000Dec.30$2,900
Total$192,500Total100,900
Bal.$91,600
Land
Jan.1$110,800
Bal.$110,800
Interest payable
Jan.1$0
Dec.31$2,500
Bal.$2,500
Retained earnings
Jan.1$32,700
Dec.31100,500Dec.31137,700
Dec.312,900
Bal.$32,700
Salaries Expense
Jan.1$0
Sep.30$64,200
Dec.30$1,500
Bal.$65,700
Supplies Expense
Jan.1$0
Dec.31$9,800Dec.31$9,800
Bal.$0
Accounts receivable
Jan.1$25,700
Jan.12$62,400Mar.19$45,700
Bal.42,400
Accounts payable
Jan.1$15,300
Jul.7$11,300Jun.16$12,100
Bal.

$16,100

Notes payable

Jan. 1$30,000
Bal.$30,000
Dividends
Jan.1$0
Dec.30$2,900Dec.31$2,900
Bal.$2,900
Advertising expense
Jan. 1$0
Nov.22$22,500Dec.31$22,500
Bal.$0
Supplies
Jan.1$0
Jun.16$12,100
Bal.$9,800
Total$2,300
Salaries payable
Jan. 1$0
Dec.31$1,500
Common stock
Jan. 1$100,000
Apr.30$30,000
Bal.$130,000

Service revenue

Jan.1$0
Jan.12$62,400
Dec.31137,700Feb.25$75,300
Bal.$0
Interest expense
Jan.1$0  
Dec.30$2,500Dec.31$2,500
Bal.$0  

Table (12)

11.

To determine

Prepare a post-closing trial balance of Company J.

11.

Expert Solution
Check Mark

Explanation of Solution

Post-closing trial balance of Company J is as follows:

Company J
Adjusted Trial Balance
December 31, 2021
AccountsDebit Amount($)Credit Amount($)
Cash91,600 
Accounts Receivable42,400 
Supplies2,300 
Land110,800 
Account payable 16,000
Salaries payable 1,500
Interest  payable 2,500
Notes payable 30,000
Common stock 130,000
Retained earnings 67,000
Total$247,100$247,100

Table (13)

Therefore, the total of debit, and credit columns of post-closing trial balance is $247,100.

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Chapter 3 Solutions

Financial Accounting Connect Access Card

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