Model Solution Exercises Chapter 3 PDF

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Ejercicios de deberes...

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Exercise 3.40 Journal, Ledger, and Trial Balance Robert Kapela owned and managed a franchise of Ithaca Espresso, Incorporated. The company’s balance sheet accounts had the following balances on September 1, 20X0, the beginning of a fiscal year:

Ithaca Espresso

B al alance ance SSheet heet A Acco cco ccouu nt ntss , SSept ept eptember ember 11,, 2200x0 Cash Accounts receivable Merchandise inventory Prepaid rent Store equipment Accumulated depreciation, store equipment Accounts payable Paid-in capital Retained earnings

13,000 5,200 77,800 4,000 21,000 6,150 40,000 30,000 44,850 121,000 121,000

Summarized transactions for September were as follows: a. Acquisitions of merchandise inventory on account, $41,000. b. Sales for cash, $74,250. c. Payments to creditors, $29,000. d. Sales on account, $3,000. e. Advertising in newspapers, paid in cash, $3,000. f. Cost of goods sold, $45,000. g. Collections on account, $6,000. h. Miscellaneous expenses paid in cash, $8,000. i. Wages paid in cash, $9,000. j. Entry for rent expense. (Rent was paid quarterly in advance, $6,000 per quarter. Payments were due on February 1, May 1, August 1, and November 1.) k. Depreciation of store equipment, $250. Required 1. Enter the September 1 balances in T-accounts in a general ledger. 2. Prepare journal entries for each transaction. 3. Post the journal entries to the ledger. Key your postings by transaction letter. 4. Prepare the ttrri al bbal al alan an ancc e , then an income statement for September and a balance sheet as of September 30, 20X0. %%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%% 1

Solution 3-40

1 and 3.

Cash

Accounts Payable

Bal.*

13,000

(c)

29,000

(b)

74,250

(e)

(g)

6,000

Bal.*

40,000

3,000

(a)

41,000

(h)

8,000

Bal.

52,000

(i)

9,000

93,250 Bal.

(c)

29,000

49,000

44,250

Accounts Receivable Bal.*

5,200

(d)

3,000

Bal.

2,200

(g)

Paid-in Capital 6,000

Retained Earnings

Bal.* 30,000

Merchandise Inventory

Bal.*

Cost of Goods Sold 45,000

(f)

44,850

Sales

Bal.*

77,800 (f)

(a)

41,000

(d) 3,000

Bal. 0

73,800

Bal. 77,25

Prepaid Rent Bal.* Bal.

4,000 2,000

(j)

21,000

(b) 74,250

Rent Expense 2,000

(j)

Store Equipment Expense Bal.*

45,000

2,000

Advertising Expense (e)

Depreciation Expense (k)

250

3,000

Wages (i)

9,000

2

Accumulated Depreciation, Store Equipment Bal.* (k)

Bal.

Miscellaneous Expense 6,150

(h)

8,000

250

6,400

* Balances denoted with an asterisk are as of September 1; balances without an asterisk

are as of September 30. Double underscores are used here, and the balances are drawn for all balance sheet accounts that contain more than a single number. A single number automatically serves as the ending balance. There are several other acceptable procedures for dealing with balances in accounts.

3

3-40

(cont.)

2.

(a)

Merchandise inventory

41,000

Accounts payable

41,000

Bought merchandise on account.

(b)

Cash

74,250

Sales

74,250

To record cash sales.

(c)

Accounts payable

29,000

Cash

29,000

Payments to creditors.

(d)

Accounts receivable

3,000

Sales

3,000

To record credit sales.

(e)

Advertising expense

3,000

Cash

3,000

Purchase of advertising.

(f)

Cost of goods sold

45,000

Merchandise inventory

45,000

To record the cost of merchandise sold.

(g)

Cash

6,000

Accounts receivable

6,000

To record collections from credit customers.

(h)

Miscellaneous expense Cash

8,000 8,000

To record miscellaneous expenses.

4

(i)

Wages expense

9,000

Cash

9,000

Payment of wages.

(j)

Rent expense

2,000

Prepaid rent

2,000

To record the rent expense for September.

(k)

Depreciation expense

250

Accumulated depreciation, store equipment

250

To record depreciation for month

3.

Answered in conjunction with Requirement 1.

5

3-40

(cont.)

4.

The following trial balance helps detect errors before the final financial statements are prepared.

ITHACA ESPRESSO Trial Balance September 30, 20X0

Debit Cash Accounts receivable Merchandise inventory Prepaid rent Store equipment

Credit

$ 44,250 2,200 73,800 2,000 21,000

Accumulated depreciation, store equipment

$ 6,400

Accounts payable

52,000

Paid-in capital

30,000

Retained earnings

44,850

Sales

77,250

Cost of goods sold Rent expense Depreciation expense

45,000 2,000 250

Wages expense

9,000

Advertising expense

3,000

Miscellaneous expense

8,000

Totals

$210,500

$210,500

6

ITHACA ESPRESSO Income Statement For the Month Ended September 30, 20X0 Sales

$77,250

Expenses: Cost of goods sold Rent expense Depreciation expense

$45,000 2,000 250

Wages expense

9,000

Advertising expense

3,000

Miscellaneous expense

8,000

Total Net income

67,250 $10,000

7

3-40

(cont.)

ITHACA ESPRESSO Balance Sheet September 30, 20X0

Assets Cash

Liabilities and Stockholders’ Equity $ 44,250

Accounts receivable Merchandise inventory Prepaid rent Store equipment, net Total assets

2,200 73,800

Accounts payable

$ 52,000

Paid-in capital

30,000

Retained earnings

54,850

2,000 14,600* $136,850

Total liabilities and stockholders’ equity

$136,850

*($21,000 – $6,400) = $14,600

The following analysis of retained earnings is useful in preparing the balance sheet: Retained earnings, September 1, 20X0 Net income Retained earnings, September 30, 20X0

$44,850 10,000 $54,850

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