Case 1 ex 3.

6
1. Depreciation on the company's furniture for the year is computed to be $11,000.
2. The Prepaid Rent account had a $8,000 debit balance at December 31 before adjusting for the costs of any
expired coverage. An analysis of the company's rental agreement showed that $3,500 of unexpired rent
remains.
3. The Supplies account had a $840 debit balance at the beginning of the year, and $2,500 of supplies were
purchased during the year. The December 31 physical count showed $650 of supplies available.
4. One-half of the work related to $10,000 of cash received in advance was performed this period.
5. Wage expenses of $5,000 have been incurred but are not paid as of December 31.

Requirements:
Prepare adjusting journal entries for the year ended December 31 for each separate situation.

General Journal
Transaction Account Debit Credit
1 Depreciation Expense 11,000 Calculations
Accumulated Depreciation 11,000
Beginning Balance
2 Rent Expense 4,500 Additions
Prepaid Rent 4,500 Ending Balance
Use
3 Supplies Expense 2,690
Supplies 2,690

4 Unearned Revenue 5,000

Service Revenue 5,000

5 Wages Expense 5,000

Wages Payable 5,000
or the costs of any
nexpired rent

of supplies were
able.
period.

on.

Prepaid Rent Supplies

8,000 840
2,500
3,500 650
4,500 2,690
Case 2 pr 3.2
Hamman Company's annual accounting period ends on December 31. The following information concerns the adjusting entries to be recorded as of that d
1. The Office Supplies account started the year with a $5,800 balance. During the year, the company purchased supplies for $16,500, which was added to t
account. The inventory of supplies available at December 31 totaled $4,600.
2. The Prepaid Insurance account had a $20,500 debit balance at December 31 before adjusting for the costs of any expired coverage for the year. An analy
shows that $18,100 of unexpired insurance coverage remains at year end.
3. The company has 10 employees, who earn a total of $1,250 in salaries each working day. They are paid each Monday for their work in the five-day work
previous Friday. Assuming that December 31 is a Tuesday, and all 10 employees worked the first two days of that week. Because New Year's Day is a paid h
salaries for five full days on Monday, January 6 of next year.
4. The company purchased a building at the beginning of this year. It cost $1,700,000 and is expected to have a $200,000 salvage value at the end of it's pre
Annual depreciation is $50,000.
5. Since the company is not large enough to occupy the entire building it owns, it rented space to a tenant at $4,400 per month, starting on November 1. T
time on November 1, and the amount received was credited to Rent Revenue. However, the tenant has not paid the December rent. The company has wor
with the tenant, who has promised to pay both December and January rent in full on January 31.
6. On November 1, the company rented space to another tenant for $5,000 per month. The tenant paid five months' rent in advance on that date. The pay
with a credit to the Unearned Revenue account. Assume no other adjusting entries are made during the year.

REQUIRED:
1. Use the information to prepare adjusting entries as of December 31.
2. Prepare journal entries to record the first subsequent cash transaction in January of the next year for transactions 3 and 5.

General Journal
Transaction Account Debit Credit
Adjusting Entries Calculations
1 Office Supplies Expense 17,700 Office Supplies Insurance
Office Supplies 17,700 Beginning Balance 5,800 20,500
Additions 16,500
2 Insurance Expense 2,400 Ending Balance 4,600 18,100
Prepaid Insurance 2,400 Use 17,700 2,400

3 Wages Expense 2,500 Wages

Wages Payable 2,500 number of employees 10
daily wage (EACH) 125
 4 Depreciation Expense 50,000 Days to accrue (Monday & Tuesday) 2
Accumulated Depreciation 50,000 Wages to accrue 2,500

5 Accounts Receivable 4,400

Rent Revenue 4,400
Unearned Revenue - EARNED
6 Unearned Revenue 10,000 Monthly Rent 5,000
Rent Revenue 10,000 Number of months USED 2
Rent Revenue Earned 10,000

Subsequent journal entries (January of the next year for 3 and 5)

3 Wages Payable 2,500 Wages
Wages Expense 3,750 number of employees 10
Cash 6,250 daily wage 125
Days to accrue (Monday & Tuesday) 2
5 Cash 8,800 Wages accrued (#3) 2,500
Accounts Receivable 4,400 Days in next year 3
Rent Revenue 4,400 Wages Expense next year 3,750
 ies to be recorded as of that date.
$16,500, which was added to the Office Supplies

coverage for the year. An analysis of prepaid insurance

their work in the five-day workweek ending on the

use New Year's Day is a paid holiday, they will be paid

vage value at the end of it's predicted 30-year life.

nth, starting on November 1. The rent was paid on

ber rent. The company has worked out an agreement

advance on that date. The payment was recorded

.
Case 3 pr 3.3

Grimes Training (GT), a school owned by T. Wells, provides training to individuals who pay tuition directly to the sch
expenses and unearned revenues in balance sheet accounts. It's unadjusted trial balance as of December 31 follow
31.

Additional Information Items

a. An analysis of GT's insurance policies shows that $5,600 of coverage has expired.
b. An review of supplies shows that teaching supplies costing $4,680 are available at year-end.
c. Annual depreciation on the equipment is $12,600.
d. Annual depreciation on the professional library is $8,600.
e. On September 1, GT agreed to do four training courses for a client for $2,500 each. Three courses will start imme
client paid $10,000 cash in advance for all four training courses on September 1, and GT credited Unearned Revenu

f. On October 15, GT agreed to teach a four-month class (beginning immediately) for an executive with payment du
by GT, but yet paid by the customer.
g. GT's four employees are paid weekly. As of the end of the year, three days' salaries have accrued at the rate of $
h. The balance in the Prepaid Rent account represents rent for December.

Grimes Training
Unadjusted Trial Balance
31-Dec
Cash $26,189
Accounts receivable 0
Teaching supplies 10,071
Prepaid insurance 15,110
Prepaid rent 2,015
Professional library 30,217
Accumulated depreciation - Professional library $9,066
Equipment 104,000
Accumulated depreciation - Equipment 16,117
Accounts payable 24,000
Salaries payable 0
Unearned revenue 13,000
T. Wells, Capital 107,902
T. Wells, withdrawals 40,291
Tuition revenue 102,740
Training revenue 38,275
Depreciation expense - Professional library 0
Depreciation expense - Equipment 0
Salaries expense 48,350
Insurance expense 0
Rent expense 22,165
Teaching supplies expense 0
Advertising expense 7,051
Utilities Expense 5,641
Totals $311,100 $311,100

Requirements
1. Post the balance from the unadjusted trial balance into the T-accounts.
2. Prepare the necessary adjusting journal entries for items a through h. Assume that adjusting entries are made on
3. Post the adjusting entries into the T-accounts.
4. Prepare an adjusted trial balance.
pay tuition directly to the school. GT also offers training to groups in off-site locations. GT initially records prepaid
ce as of December 31 follows, along with descriptions of items a through h that require adjusting entries on December

ar-end.

hree courses will start immediately and finish before the end of the year. One course will not begin until next year. The
T credited Unearned Revenue.

n executive with payment due at the end of the class. At December 31, $16,000 of the tuition revenue has been earned

have accrued at the rate of $200 per day for each employee.

1. General Journal
Transaction Account Debit Credit
a Insurance Expense 5,600
Prepaid Insurance 5,600

b Supplies Expense 5,391

Teaching Supplies 5,391

c Depreciation Expense - Equip 12,600

Accumulated Depr - Equipment 12,600

d Depreciation Expense - Libaray 8,600

Accumulated Depr - Library 8,600

e Unearned Revenue 7,500

Training Revenue 7,500

f Accounts Receivable 16,000

Training Revenue 16,000

g Salaries Expense 2,400

Salaries Payable 2,400

h Rent Expense 2,015

Prepaid Rent 2,015
djusting entries are made only at year-end.
 2 & 3. General Ledger (T-Accounts)

Cash balance Accounts Receivable balance

26,189 26,189 - -
26,189 16,000 16,000
26,189 16,000
26,189 16,000
26,189 16,000
26,189 16,000
26,189 16,000
26,189 16,000
26,189 16,000

Teaching Supplies balance Prepaid Insurance balance

10,071 10,071 15,110 15,110
5,391 4,680 5,600 9,510
4,680 9,510

Prepaid Rent balance Professional Library balance

2,015 2,015 30,217 30,217
2,015 - 30,217
- 30,217
Accumulated Depreciation -
Library balance Equipment balance
9,066 9,066 104,000 104,000
8,600 17,666 104,000
17,666 104,000

Accumulated Depreciation -
Equipment balance Accounts Payable balance
16,117 16,117 24,000 24,000
12,600 28,717 24,000
28,717 24,000

Salaries Payable balance Unearned Revenue balance

- - 13,000 13,000
2,400 2,400 7,500 5,500
2,400 5,500

T. Wells, Capital balance T. Wells Withdrawls balance

107,902 107,902 40,291 40,291
107,902 40,291
107,902 40,291

Tuition Revenue balance Training Revenue balance

102,740 102,740 38,275 38,275
102,740 7,500 45,775
102,740 16,000 61,775

Depreciation Expense - Depreciation Expense -

Library balance Equipment balance
- - - -
8,600 8,600 12,600 12,600
8,600 12,600

Salary Expense balance Insurance Expense balance

 48,350 48,350 5,600 5,600
2,400 50,750 5,600
50,750 5,600

Rent Expense balance Teaching Supplies Expense balance

22,165 22,165 5,391 5,391
2,015 24,180 5,391
24,180 5,391

Advertising Expense balance Utilities Expense balance

7,051 7,051 5,641 5,641
7,051 5,641
7,051 5,641
 4. Grimes Training
Adjusted Trial Balance
December 31
Account Debit Credit
Cash 26,189
Accounts Receivable 16,000
Teaching Supplies 4,680
Prepaid Insurance 9,510
Prepaid Rent -
Professional Library 30,217
Accumulated Depreciation - Library 17,666
Equipment 104,000
Accumulated Depreciation - Equipment 28,717
Accounts Payable 24,000
Salaries Payable 2,400
Unearned Revenue 5,500
T. Wells, Capital 107,902
T. Wells Withdrawls 40,291
Tuition Revenue 102,740
Training Revenue 61,775
Depreciation Expense - Library 8,600
Depreciation Expense - Equipment 12,600
Salary Expense 50,750
Insurance Expense 5,600
Rent Expense 24,180
Teaching Supplies Expense 5,391
Advertising Expense 7,051
Utilities Expense 5,641

Total 350,700 350,700

Case 4 pr 3.4
The adjusted trial balance for Chiara Company as of December 31 follows 1

Debit Credit
Cash $118,200
Accounts receivable 53,500
Interest receivable 23,000
Notes receivable (due in 90 days) 170,500
Office supplies 16,500
Automobiles 174,000
Accumulated depreciation - Automobiles $50,000
Equipment 146,000
Accumulated depreciation - Equipment 18,000
Land 82,000
Accounts payable 101,000
Interest payable 15,000
Salaries payable 25,000
Unearned revenue 42,000
Long-term notes payable 142,000
R. Chiara, Capital 275,800
R. Chiara, withdrawals 47,000
Services revenue 574,000
Interest revenue 32,000
Depreciation expenses - Automobiles 28,000
Depreciation expenses - Equipment 22,500
Salaries expense 189,000
Wages expense 42,000
Interest expense 35,600
Office supplies expense 35,400
Advertising expense 61,000
Repairs expense - Automobiles 30,600
Totals $1,274,800 $1,274,800
Requirements: Using the trial balance information above, complete the following for the year ending
December 31.

1. Prepare an income statement.

2. Prepare a statement of owner's equity (Note: R. Chaira, Capital at Dec 31 of the prior year was
$275,800 and there were no owner investments in the current year).
3. Prepare a balance sheet.
 Chiara Company 2 Chiara Company 3
Income Statement Statement of Owner's Equity
Revenues R. Chiara, Capital, Dec 31 prior yr $275,800
Services revenue $574,000 Add: investments by owner 0
interest revenue 32,000 Add: Net income $161,900
$606,000 $437,700
Total revenues Less: Withdrawals by owner 47,000
Expenses R. Chiara, Capital, Dec 31 current yr $390,700
Depreciation expense - Automobiles 28,000
Depreciation expense - Equipment 22,500
Salaries expense 189,000
Wages expense 42,000
Interest expense 35,600
Office supplies expense 35,400
Advertising expense 61,000
Repairs expense - Automobiles 30,600

Total expenses 444,100

Net income $161,900
nding

as
 Chiara Company
Balance Sheet
December 31
Assets
Cash $118,200
Accounts receivable 53,500
Interest receivable 23,000
Notes receivable 170,500
Office supplies 16,500
Automobiles 174,000
Accumulated depreciation - Automobiles -50,000 124,000
Equipment 146,000
Accumulated depreciation - Equipment -18,000 128,000
Land 82,000
Total assets $715,700
Liabilities
Accounts payable $101,000
Interest payable 15,000
Salaries payable 25,000
Unearned revenue 42,000
Long-term notes payable 142,000

Total liabilities $325,000

Equity
R. Chiara, Capital 390,700

Total liabilities and equity $715,700