ANSWERS TO QUESTIONS

1. No. A worksheet is not a permanent accounting record. The use of a worksheet is an optional
step in the accounting cycle.

2. The worksheet is merely a device used to make it easier to prepare adjusting entries and the
financial statements.

3. The amount shown in the adjusted trial balance column for an account equals the account
balance in the ledger after adjusting entries have been journalized and posted.

4. The net income of ¥12,000 will appear in the income statement debit column and the statement
of financial position credit column. A net loss will appear in the income statement credit column
and the statement of financial position debit column.

5. Formal financial statements are needed because the columnar data are not properly arranged
and classified for statement purposes. For example, a drawing account is listed with assets.

6. (1) (Dr) Individual revenue accounts and (Cr) Income Summary.

(2) (Dr) Income Summary and (Cr) Individual expense accounts.
(3) (Dr) Income Summary and (Cr) Retained Earnings (for net income).
(4) (Dr) Retained Earnings and (Cr) Dividends.

7. Income Summary is a temporary account that is used in the closing process. The account is
debited for expenses and credited for revenues. The difference, either net income or net loss, is
then closed to the Retained Earnings account.

8. The post-closing trial balance contains only statement of financial position accounts. Its purpose
is to prove the equality of the permanent account balances that are carried forward into the next
accounting period.

9. The accounts that will not appear in the post-closing trial balance are Depreciation Expense;
Dividends; and Service Revenue.

10. A reversing entry is the exact opposite, both in amount and in account titles, of an adjusting entry
and is made at the beginning of the new accounting period. Reversing entries are an optional
step in the accounting cycle.

11. The steps that involve journalizing are: (1) journalize the transactions, (2) journalize the adjusting
entries, and (3) journalize the closing entries.

12. The three trial balances are the: (1) trial balance, (2) adjusted trial balance, and (3) post-closing
trial balance.

13. Correcting entries differ from adjusting entries because they: (1) are not a required part of the
accounting cycle, (2) may be made at any time, and (3) may affect any combination of accounts.

Copyright © 2019 WILEY Weygandt, Financial Accounting, IFRS 4/e, Solutions Manual (For Instructor Use Only) 4-1
Questions Chapter 4 (Continued)

*14. The standard classifications in a statement of financial position are:

Assets Equity and Liabilities
Intangible Assets
Property, Plant, and Equipment Equity
Long-term Investments Non-current Liabilities
Current Assets Current Liabilities

*15. The operating cycle of a company is the average time that it takes to purchase inventory, sell it on
account, and then collect cash from customers.

*16. Current assets are assets that a company expects to convert to cash or use up in one year. Some
companies use a period longer than one year to classify assets and liabilities as current because they
have an operating cycle longer than one year. Companies usually list current assets in the
reverse order in which they expect to convert them into cash.

*17. Long-term investments are generally investments in shares and bonds of other companies that
are normally held for many years. Property, plant, and equipment are assets with relatively long
useful lives that a company is currently using in operating the business.

*18. (a) The equity section for a corporation is called shareholders’ equity.
(b) The two accounts and the purpose of each are: (1) Share capital is used to record invest-
ments of assets in the business by the owners (shareholders). (2) Retained earnings is used
to record net income retained in the business.

*19.. TSMC’s current liabilities at December 31, 2016 and December 31, 2015 were NT$318,239,273
and NT$212,228,594 respectively. TSMC’s current liabilities were significantly lower than its current
assets in both years.

*20. After reversing entries have been made, the balances will be Interest Payable, zero balance;
Interest Expense, a credit balance.

*21. (a) Jan. 10 Salaries and Wages Expense ................................................... 8,000

Cash ................................................................................ 8,000

Because of the January 1 reversing entry that credited Salaries and Wages Expense for
€3,500, Salaries and Wages Expense will have a debit balance of €4,500 which equals the
expense for the current period.

(b) Jan. 10 Salaries and Wages Payable .................................................... 3,500

Salaries and Wages Expense ................................................... 4,500
Cash ................................................................................ 8,000

Note that Salaries and Wages Expense will again have a debit balance of €4,500.
 SOLUTIONS TO BRIEF EXERCISES
BRIEF EXERCISE 4.1

The steps in using a worksheet are performed in the following sequence: (1)
prepare a trial balance on the worksheet, (2) enter adjustment data,
(3) enter adjusted balances, (4) extend adjusted balances to appropriate
statement columns and (5) total the statement columns, compute net
income (loss), and complete the worksheet. Filling in the blanks, the
answers are 1, 3, 4, 5, 2.

The solution to BRIEF EXERCISE 4.2 is on page 4.9.

BRIEF EXERCISE 4.3

Statement of
Financial
Income Statement Position
Account Dr. Cr. Dr. Cr.
Accumulated Depreciation X
Depreciation Expense X
Share Capital—Ordinary X
Dividends X
Service Revenue X
Supplies X
Accounts Payable X

BRIEF EXERCISE 4.4

Dec. 31 Service Revenue .............................................. 58,000

Income Summary ..................................... 58,000

31 Income Summary ............................................. 46,000

Salaries and Wages Expense .................. 39,000
Supplies Expense..................................... 7,000

31 Income Summary ............................................. 12,000

Retained Earnings .................................... 12,000

31 Retained Earnings ........................................... 2,000

Dividends .................................................. 2,000

Copyright © 2019 WILEY Weygandt, Financial Accounting, IFRS 4/e, Solutions Manual (For Instructor Use Only) 4-3
 BRIEF EXERCISE 4.2
Copyright © 2019 WILEY
Weygandt, Financial Accounting, IFRS 4/e, Solutions Manual

WALTERS REPAIR SHOP

Worksheet

Adjusted Income Statement of

Trial Balance Adjustments Trial Balance Statement Financial
Position
Account Titles Dr. Cr. Dr. Cr. Dr. Cr. Dr. Cr. Dr. Cr.
Prepaid Insurance 3,000 (a) 1,800 1,200 1,200
Service Revenue 60,000 (b) 1,100 61,100 61,100
Salaries and Wages
Expense 25,000 (c) 900 25,900 25,900
Accounts Receivable (b) 1,100 1,100 1,100
Salaries and Wages
Payable (c) 900 900 900
Insurance Expense (a) 1,800 1,800 1,800
(For Instructor Use Only)
4-9
BRIEF EXERCISE 4.5

Salaries and Wages

Expense Income Summary Service Revenue
Bal. 39,000 (2) 39,000 (2) 46,000 (1) 58,000 (1) 58,000 Bal. 58,000
(3) 12,000
58,000 58,000

Supplies Expense Retained Earnings Dividends

Bal. 7,000 (2) 7,000 (4) 2,000 Bal. 30,000 Bal. 2,000 (4) 2,000
(3) 12,000
Bal. 40,000

BRIEF EXERCISE 4.6

July 31 Service Revenue ............................................... 17,800

Income Summary ...................................... 17,800

31 Income Summary.............................................. 12,100

Salaries and Wages Expense ................... 9,600
Maintenance and Repairs Expense ......... 2,500

Service Revenue
Date Explanation Ref. Debit Credit Balance
7/31 Balance 17,800 17,800
7/31 Closing entry 17,800 0

Salaries and Wages Expense

Date Explanation Ref. Debit Credit Balance
7/31 Balance 9,600 9,600
7/31 Closing entry 9,600 0

Copyright © 2019 WILEY Weygandt, Financial Accounting, IFRS 4/e, Solutions Manual (For Instructor Use Only) 4-5
BRIEF EXERCISE 4.6 (Continued)

Maintenance and Repairs Expense

Date Explanation Ref. Debit Credit Balance
7/31 Balance 2,500 2,500
7/31 Closing entry 2,500 0

BRIEF EXERCISE 4.7

The accounts that will appear in the post-closing trial balance are:

Accumulated Depreciation
Share Capital—Ordinary
Supplies
Accounts Payable

BRIEF EXERCISE 4.8

The proper sequencing of the required steps in the accounting cycle is as

follows:

1. Analyze business transactions.

2. Journalize the transactions.
3. Post to ledger accounts.
4. Prepare a trial balance.
5. Journalize and post adjusting entries.
6. Prepare an adjusted trial balance.
7. Prepare financial statements.
8. Journalize and post closing entries.
9. Prepare a post-closing trial balance.

Filling in the blanks, the answers are 4, 2, 8, 7, 5, 3, 9, 6, 1.

BRIEF EXERCISE 4.9

1. Service Revenue ................................................................. 870

Accounts Receivable .................................................. 870

2. Supplies (£1,150 – £1,510).................................................. 360

Accounts Payable ....................................................... 360

BRIEF EXERCISE 4.10

JOLIE COMPANY
Partial Statement of Financial Position

Current assets
Prepaid insurance................................................................... $ 4,500
Supplies .................................................................................. 5,200
Accounts receivable ............................................................... 12,500
Debt investments .................................................................... 7,600
Cash......................................................................................... 4,100
Total current assets ........................................................ $33,900

BRIEF EXERCISE 4.11

CL Accounts payable CL Income taxes payable

CA Accounts receivable LTI Debt investments (long-term)
PPE Accum. depreciation—buildings PPE Land
PPE Buildings CA Inventory
CA Cash IA Patents
IA Copyrights CA Supplies

*BRIEF EXERCISE 4.12

Nov. 1 Salaries and Wages Payable ..................................... 3,300

Salaries and Wages Expense............................. 3,300

The balances after posting the reversing entry are Salaries and Wages
Expense (Cr.) €3,300 and Salaries and Wages Payable €0.

Copyright © 2019 WILEY Weygandt, Financial Accounting, IFRS 4/e, Solutions Manual (For Instructor Use Only) 4-7
 SOLUTIONS FOR DO IT! EXERCISES
DO IT! 4.1

Income statement debit column—Utilities Expense

Income statement credit column—Service Revenue
Statement of financial position debit column—Accounts Receivable
Statement of financial position credit column—Notes Payable;
Statement of financial position credit column—Accumulated Depreciation;
Statement of financial position credit column—Share Capital—Ordinary

DO IT! 4.2

Dec. 31 Service Revenue ......................................... 108,000

Income Summary .................................. 108,000

Dec. 31 Income Summary ........................................ 72,000

Supplies Expense ................................. 6,000
Salaries and Wages Expense ............... 40,000
Utilities Expense ................................... 8,000
Rent Expense ........................................ 18,000

Dec. 31 Income Summary ........................................ 36,000

Retained Earnings ................................ 36,000

Dec. 31 Retained Earnings....................................... 22,000

Dividends............................................... 22,000

DO IT! 4.3

1. Supplies ....................................................... 650

Equipment ............................................... 210
Cash ......................................................... 440

2. Cash.............................................................. 400
Dividends ..................................................... 500
Salaries & Wages Expense ..................... 900

3. Accounts Payable ........................................ 540

Cash ......................................................... 540
DO IT! 4.4

NA Interest revenue E Share capital—ordinary

CL Utilities payable PPE Accumulated depreciation—equipment
CL Accounts payable PPE Equipment
CA Supplies NA Salaries and wages expense
NCL Bonds payable LTI Debt investments (long-term)
IA Goodwill CL Unearned rent revenue

Copyright © 2019 WILEY Weygandt, Financial Accounting, IFRS 4/e, Solutions Manual (For Instructor Use Only) 4-9
 SOLUTIONS TO EXERCISES

EXERCISE 4.1

LIM ACUPUNCTURE
Worksheet
For the Month Ended June 30, 2020
Statement of
Financial
Account Titles Trial Balance Adjustments Adj. Trial Balance Income Statement Position
Dr. Cr. Dr. Cr. Dr. Cr. Dr. Cr. Dr. Cr.
Cash 2,320 2,320 2,320
Accounts
Receivable 2,440 2,440 2,440
Supplies 1,880 (a) 1,380 500 500
Accounts Payable 1,120 1,120 1,120
Unearned Service
Revenue 240 (b) 140 100 100
Share Capital—
Ordinary 3,600 3,600 3,600
Service Revenue 2,400 (b) 140 2,540 2,540
Salaries and
Wages Expense 560 (c) 210 770 770
Miscellaneous
Expense 160 160 160
Totals 7,360 7,360
Supplies Expense (a) 1,380 1,380 1,380
Salaries and
Wages Payable (c) 210 210 210
Totals 1,730 1,730 7,570 7,570 2,310 2,540 5,260 5,030
Net Income 230 230
Totals 2,540 2,540 5,260 5,260
EXERCISE 4.2

TAI INTERIORS
(Partial) Worksheet
For the Month Ended April 30, 2020

Statement of
Adjusted Income Financial
Trial Balance Statement Position
Account Titles Dr. Cr. Dr. Cr. Dr. Cr.
Cash 10,000 10,000
Accounts Receivable 7,840 7,840
Prepaid Rent 2,280 2,280
Equipment 23,050 23,050
Accum. Depreciation—
Equipment 4,900 4,900
Notes Payable 5,700 5,700
Accounts Payable 4,920 4,920
Share Capital—
Ordinary 25,960 25,960
Dividends 3,650 3,650
Service Revenue 17,590 17,590
Salaries and
Wages Expense 10,840 10,840
Rent Expense 760 760
Depreciation Expense 650 650
Interest Expense 57 57
Interest Payable 57 57
Totals 59,127 59,127 12,307 17,590 46,820 41,537
Net Income 5,283 5,283
Totals 17,590 17,590 46,820 46,820

Copyright © 2019 WILEY Weygandt, Financial Accounting, IFRS 4/e, Solutions Manual (For Instructor Use Only) 4-11
EXERCISE 4.3

TAI INTERIORS
Income Statement
For the Month Ended April 30, 2020

Revenues
Service revenue........................................................ NT$17,590
Expenses
Salaries and wages expense ................................... NT$10,840
Rent expense ............................................................ 760
Depreciation expense .............................................. 650
Interest expense ....................................................... 57
Total expenses.................................................. 12,307
Net income ....................................................................... NT$ 5,283

TAI INTERIORS
Retained Earnings Statement
For the Month Ended April 30, 2020

Retained earnings, April 1 ........................................................ NT$ 0

Add: Net income ..................................................................... 5,283
5,283
Less: Dividends ....................................................................... 3,650
Retained earnings, April 30 ...................................................... NT$1,633

TAI INTERIORS
Statement of Financial Position
April 30, 2020

Assets
Property, plant, and equipment
Equipment ..................................................................... NT$23,050
Less: Accumulated depreciation—equipment ........ 4,900 NT$18,150
Current assets
Prepaid rent .................................................................. 2,280
Accounts receivable .................................................... 7,840
Cash ............................................................................... 10,000 20,120
Total assets ........................................................... NT$38,270
EXERCISE 4.3 (Continued)
TAI INTERIORS
Statement of Financial Position (Continued)
April 30, 2020

Equity and Liabilities

Equity
Share capital—ordinary ..................................... NT$25,960
Retained earnings............................................. 1,633 NT$27,593
Current liabilities
Notes payable ................................................... 5,700
Accounts payable ............................................. 4,920
Interest payable ................................................ 57 10,677
Total equity and liabilities ....................... NT$38,270

EXERCISE 4.4

(a) Apr. 30 Service Revenue ....................................... 17,590

Income Summary .............................. 17,590

30 Income Summary...................................... 12,307

Salaries and Wages Expense ........... 10,840
Rent Expense .................................... 760
Depreciation Expense....................... 650
Interest Expense ............................... 57

30 Income Summary...................................... 5,283

Retained Earnings ............................ 5,283

30 Retained Earnings .................................... 3,650

Dividends........................................... 3,650

(b)
Income Summary Retained Earnings
(2) 12,307 (1) 17,590 (4) 3,650 Bal. 0
(3) 5,283 (3) 5,283
17,590 17,590 Bal. 1,633

Copyright © 2019 WILEY Weygandt, Financial Accounting, IFRS 4/e, Solutions Manual (For Instructor Use Only) 4-13
EXERCISE 4.4 (Continued)

(c) TAI INTERIORS

Post-Closing Trial Balance
April 30, 2020

Debit Credit
Cash .................................................................... NT$10,000
Accounts Receivable ......................................... 7,840
Prepaid Rent ....................................................... 2,280
Equipment .......................................................... 23,050
Accumulated Depreciation—Equipment .......... NT$ 4,900
Notes Payable..................................................... 5,700
Accounts Payable .............................................. 4,920
Interest Payable .................................................. 57
Share Capital—Ordinary ..................................... 25,960
Retained Earnings .............................................. 1,633
NT$43,170NTNT$43,170

EXERCISE 4.5

(a) Accounts Receivable ......................................... 1,100

Service Revenue ......................................... 1,100

Insurance Expense ............................................ 300

Prepaid Insurance ...................................... 300

Depreciation Expense ........................................ 900

Accumulated Depreciation—Equipment ... 900

Salaries and Wages Expense ............................ 500

Salaries and Wages Payable ...................... 500
EXERCISE 4.5 (Continued)

(b) Income Statement Statement of

Financial Position
Dr. Cr. Dr. Cr.
Accounts Receivable X
Prepaid Insurance X
Accum. Depreciation—Equip. X
Salaries and Wages Payable X
Service Revenue X
Salaries and Wages Expense X
Insurance Expense X
Depreciation Expense X

EXERCISE 4.6

(a) Accounts Receivable—¥25,000 (¥34,000 – ¥9,000).

Supplies—¥2,500 (¥7,000 – ¥4,500).
Accumulated Depreciation—Equipment—¥22,000 (¥12,000 + ¥10,000).
Salaries and Wages Payable—¥0 No liability recorded until adjustments
are made.
Insurance Expense—¥6,000 (¥26,000 – ¥20,000).
Salaries and Wages Expense—¥43,400 (¥49,000 – ¥5,600).

(b) Accounts Receivable ................................................. 9,000

Service Revenue ................................................ 9,000

Insurance Expense .................................................... 6,000

Prepaid Insurance .............................................. 6,000

Supplies Expense ...................................................... 4,500

Supplies .............................................................. 4,500

Depreciation Expense ............................................... 10,000

Accumulated Depreciation—Equipment .......... 10,000

Salaries and Wages Expense ................................... 5,600

Salaries and Wages Payable ............................. 5,600

Copyright © 2019 WILEY Weygandt, Financial Accounting, IFRS 4/e, Solutions Manual (For Instructor Use Only) 4-15
EXERCISE 4.7

(a) Service Revenue ................................................... 4,300

Income Summary ............................................ 4,300

Income Summary .................................................. 3,416

Salaries and Wages Expense ......................... 1,260
Miscellaneous Expense .................................. 256
Supplies Expense ........................................... 1,900

Income Summary .................................................. 884

Retained Earnings ........................................... 884

Retained Earnings ................................................. 550

Dividends ......................................................... 550

(b) JEJU CONSULTANTS

Post-Closing Trial Balance
June 30, 2020

Account Titles Debit Credit

Cash ....................................................................... ₩3,712
Accounts Receivable ............................................ 3,904
Supplies ................................................................. 480
Accounts Payable ................................................. ₩1,382
Salaries and Wages Payable ................................ 460
Unearned Service Revenue .................................. 160
Share Capital—Ordinary ....................................... 4,100
Retained Earnings ................................................. 1,994
₩8,096 ₩8,096
EXERCISE 4.8

(a)
General Journal J15
Date Account Titles Ref. Debit Credit
July 31 Service Revenue ................................. 400 64,000
Rent Revenue ...................................... 429 6,500
Income Summary ....................... 350 70,500

31 Income Summary ................................ 350 78,600

Salaries and Wages Expense .... 726 55,700
Utilities Expense ........................ 732 14,900
Depreciation Expense ................ 711 8,000

31 Retained Earnings ............................... 320 8,100

Income Summary ....................... 350 8,100

31 Retained Earnings ............................... 320 16,000

Dividends .................................... 332 16,000

(b)

Retained Earnings No. 320

Date Explanation Ref. Debit Credit Balance
July 31 Balance ✓ 25,200
31 Close net loss J15 8,100 17,100
31 Close dividends J15 16,000 1,100

Income Summary No. 350

Date Explanation Ref. Debit Credit Balance
July 31 Close revenue J15 70,500 70,500
31 Close expenses J15 78,600 (8,100)
31 Close net loss J15 8,100 0

Copyright © 2019 WILEY Weygandt, Financial Accounting, IFRS 4/e, Solutions Manual (For Instructor Use Only) 4-17
EXERCISE 4.8 (Continued)

(c) HUANG AUTOMOTIVE

Post-Closing Trial Balance
July 31, 2020

Debit Credit
Cash .................................................................... NT$9,840
Accounts Receivable ......................................... 8,780
Equipment .......................................................... 15,900
Accumulated Depreciation—Equipment .......... NT$ 7,400
Accounts Payable .............................................. 4,220
Unearned Rent Revenue .................................... 1,800
Share Capital—Ordinary .................................... 20,000
Retained Earnings .............................................. 1,100
NT$34,520 NT$34,520

EXERCISE 4.9

(a) HUANG AUTOMOTIVE

Income Statement
For the Year Ended July 31, 2020

Revenues
Service revenue .......................................... NT$64,000
Rent revenue ............................................... __ 6,500
Total revenues ..................................... NT$70,500
Expenses
Salaries and wages expense ..................... 55,700
Utilities expense ......................................... 14,900
Depreciation expense ................................. __ 8,000
Total expenses .................................... __ _78,600
Net loss ............................................................... (NT$ 8,100)
EXERCISE 4.9 (Continued)

HUANG AUTOMOTIVE
Retained Earnings Statement
For the Year Ended July 31, 2020

Retained earnings, August 1, 2019 .................... NT$25,200

Less: Net loss .................................................... NT$ 8,100
Dividends ................................................. 16,000 __ _24,100
Retained earnings, July 31, 2020 ....................... NT$1,100

(b) HUANG AUTOMOTIVE

Statement of Financial Position
July 31, 2020

Assets
Property, plant, and equipment
Equipment ..................................................... NT$15,900
Less: Accumulated depreciation ................ 7,400 NT$8,500
Current assets
Accounts receivable ..................................... 8,780
Cash ............................................................... 9,840 18,620
Total assets............................................ NT$27,120

Equity and Liabilities

Equity
Share capital—ordinary ................................ NT$20,000
Retained earnings ......................................... 1,100 NT$21,100
Current liabilities
Accounts payable ......................................... 4,220
Unearned rent revenue ................................. 1,800 6,020
Total equity and liabilities ..................... NT$27,120

Copyright © 2019 WILEY Weygandt, Financial Accounting, IFRS 4/e, Solutions Manual (For Instructor Use Only) 4-19
EXERCISE 4.10

1. False “Analyze business transactions” is the first step in the accounting

cycle.
2. False. Reversing entries are an optional step in the accounting cycle.
3. True.
4. True.
5. True.
6. False. Steps 1–3 may occur daily in the accounting cycle. Steps 4–7 are
performed on a periodic basis. Steps 8 and 9 are usually prepared only
at the end of a company’s annual accounting period.
7. False. The step of “journalize the transactions” occurs before the step
of “post to the ledger accounts.”
8. False. Closing entries are prepared after financial statements are prepared.

EXERCISE 4.11

(a) June 30 Service Revenue .................................... 18,100

Income Summary ........................... 18,100

30 Income Summary ................................... 13,100

Salaries and Wages Expense ........ 8,800
Rent Expense ................................. 3,000
Supplies Expense .......................... 1,300

30 Income Summary ................................... 5,000

Retained Earnings .......................... 5,000

30 Retained Earnings ................................. 2,500

Dividends ........................................ 2,500

(b)
Income Summary
June 30 13,100 June 30 18,100
June 30 5,000
18,100 18,100
EXERCISE 4.12

(a) 1. Cash .................................................................. 700

Equipment ................................................ 700

Salaries and Wages Expense.......................... 700

Cash.......................................................... 700

2. Service Revenue .............................................. 150

Cash.......................................................... 150

Cash .................................................................. 1,500

Accounts Receivable............................... 1,500

3. Accounts Payable ........................................... 760

Equipment ............................................... 760

Equipment ....................................................... 670

Accounts Payable ................................... 670

(b) 1. Salaries and Wages Expense.......................... 700

Equipment ................................................ 700

2. Service Revenue .............................................. 150

Cash .................................................................. 1,350
Accounts Receivable............................... 1,500

3. Accounts Payable ............................................ 90

Equipment ................................................ 90

Copyright © 2019 WILEY Weygandt, Financial Accounting, IFRS 4/e, Solutions Manual (For Instructor Use Only) 4-21
EXERCISE 4.13

1. Accounts Payable ($750 – $570) ............................. 180

Cash................................................................... 180

2. Supplies .................................................................... 560

Equipment ......................................................... 56
Accounts Payable ............................................. 504

3. Dividends .................................................................. 500

Salaries and Wages Expense .......................... 500

EXERCISE 4.14

(a) TSAI BOWLING ALLEY

Statement of Financial Position
December 31, 2020

Assets
Property, plant, and equipment
Land ............................................. ¥65,000
Buildings ..................................... ¥128,800
Less: Acc. depr.—buildings...... 42,600 86,200
Equipment ................................... 62,400
Less: Acc. depr.—equipment ... 18,720 43,680 ¥194,880
Current assets
Prepaid insurance ...................... 4,680
Accounts receivable ................... 14,520
Cash............................................. 18,040 37,240
Total assets ..................... ¥232,120
EXERCISE 4.14 (Continued)

TSAI BOWLING ALLEY

Statement of Financial Position (Continued)
December 31, 2020

Equity and Liabilities

Equity
Share capital—ordinary ................................... ¥100,000
Retained earnings (¥13,000 + ¥5,240*) ............ 18,240 ¥118,240
Non-current liabilities
Notes payable ................................................... 67,780
Current liabilities
Notes payable(due 2021) .................... ¥30,000
Accounts payable ................................. 12,300
Interest payable .................................... 3,800 ¥46,100
Total liabilities........................................... 113,880
Total equity and liabilities .................... ¥232,120

*Net income = ¥17,180 – ¥780 – ¥7,360 – ¥3,800 = ¥5,240

(b) Current assets are less than current liabilities by ¥8,860 (¥37,240 –
¥46,100). However, approximately 50% of current assets are in the form
of cash. The company’s liquidity appears to be somewhat weak, so
some caution is needed.

EXERCISE 4.15

CL Accounts payable PPE Accumulated depreciation–

equipment
CA Accounts receivable PPE Buildings
CA Cash PPE Land
E Share capital—ordinary NCL Notes payable (due in
2 years)
IA Patents CA Supplies
CL Salaries and wages payable PPE Equipment
CA Inventory CA Prepaid expenses
CA Share investments (to be
sold in 7 months)

Copyright © 2019 WILEY Weygandt, Financial Accounting, IFRS 4/e, Solutions Manual (For Instructor Use Only) 4-23
EXERCISE 4.16

J. KUNG ENTERPRISES
Statement of Financial Position
December 31, 2020
(in thousands)
Assets
Property, plant, and equipment
Equipment .................................................. HK$11,500
Less: Accumulated depreciation—
equipment ........................................ (5,655) 5,845
Long-term investments ..................................... 264
Current assets
Prepaid insurance ..................................... 650
Inventory .................................................... 1,256
Accounts receivable .................................. 1,696
Short-term investments ............................ 3,690
Cash............................................................ 2,668 9,960
Total assets .................................... HK$16,069

Equity and Liabilities

Equity
Share capital—ordinary ............................ HK$11,455
Retained earnings ...................................... 1,500HK$12,955
Non-current liabilities
Long-term debt .............................. 1,000
Notes payable ................................ 400 1,400
Current liabilities
Notes payable (due in 2021).......... 500
Accounts payable .......................... 1,214 1,714
Total liabilities .................................... 3,114
Total equity and liabilities ............. HK$16,069
EXERCISE 4.17

(a)
BASTEN TAX SERVICES
Income Statement
For the Year Ended July 31, 2020

Revenues
Service revenue....................................... £63,000
Rent revenue ........................................... 8,500
Total revenues ................................. £71,500
Expenses
Salaries and wages expense .................. 48,700
Utilities expense ...................................... 22,600
Depreciation expense ............................. 4,000
Total expense .................................. 75,300
Net loss ........................................................... £ (3,800)

BASTEN TAX SERVICES

Retained Earnings Statement
For the Year Ended July 31, 2020

Retained earnings, August 1, 2019 ................ £31,200

Less: Net loss ................................................ £3,800
Dividends ............................................. 3,000 6,800
Retained earnings, July 31, 2020 ................... £24,400

Copyright © 2019 WILEY Weygandt, Financial Accounting, IFRS 4/e, Solutions Manual (For Instructor Use Only) 4-25
EXERCISE 4.17 (Continued)

(b)
BASTEN TAX SERVICES
Statement of Financial Position
July 31, 2020

Assets
Property, plant, and equipment
Equipment ...................................................... £34,400
Less: Accumulated depreciation—
equipment ............................................ 6,000 £28,400
Current assets
Accounts receivable ...................................... 9,780
Cash................................................................ 14,200 23,980
Total assets ....................................... £52,380

Equity and Liabilities

Equity
Share capital—ordinary ................................ £20,000
Retained earnings.......................................... 24,400 £44,400
Non-current liabilities
Notes payable ................................................ 1,800
Current liabilities
Accounts payable .................................. £4,100
Salaries and wages payable ................. 2,080 6,180
Total liabilities ........................................ 7,980
Total equity and liabilities ................ £52,380
*EXERCISE 4.18

(a) Dec. 31 Salaries and Wages Expense

($12,000 X 2/5) ..................................... 4,800
Salaries and Wages Payable .......... 4,800

Jan. 6 Salaries and Wages Payable ................. 4,800

Salaries and Wages Expense
($12,000 X 3/5) ..................................... 7,200
Cash................................................. 12,000

(b) Dec. 31 Salaries and Wages Expense ................ 4,800

Salaries and Wages Payable .......... 4,800

Jan. 1 Salaries and Wages Payable ................. 4,800

Salaries and Wages Expense ........ 4,800

Jan. 6 Salaries and Wages Expense ............... 12,000

Cash................................................. 12,000

*EXERCISE 4.19

(a) Dec. 31 Service Revenue .................................... 92,500

Income Summary ............................ 92,500

31 Income Summary ................................... 7,700

Interest Expense ............................. 7,700

(b) Jan. 1 Service Revenue .................................... 5,000

Accounts Receivable ...................... 5,000

1 Interest Payable ...................................... 2,200

Interest Expense ............................. 2,200

Copyright © 2019 WILEY Weygandt, Financial Accounting, IFRS 4/e, Solutions Manual (For Instructor Use Only) 4-27
*EXERCISE 4.19 (Continued)

(c) & (e)

Accounts Receivable
Dec. 31 Balance *19,500
31 Adjusting 5,000
24,500
Jan. 1 Reversing 5,000

*(NT$24,500 – NT$5,000)

Service Revenue
Dec. 31 Closing 92,500 Dec. 31 Balance 87,500*
31 Adjusting 5,000
92,500 92,500
Jan. 1 Reversing 5,000 Jan. 10 5,000

*(NT$92,500 – NT$5,000)

Interest Payable
Dec. 31 Adjusting 2,200
Jan. 1 Reversing 2,200

Interest Expense
Dec. 31 Balance *5,500 Dec. 31 Closing 7,700
31 Adjusting 2,200 .
7,700 7,700
Jan. 15 3,000 Jan. 1 Reversing 2,200

*(NT$7,700 – NT$2,200)

(d) (1)
Jan. 10 Cash ............................................................... 5,000
Service Revenue ................................... 5,000

(2)
15 Interest Expense ........................................... 3,000
Cash ....................................................... 3,000
Copyright © 2019 WILEY Weygandt, Financial Accounting, IFRS 4/e, Solutions Manual (For Instructor Use Only) 4-29