EXERCISE 3-10 (2530 minutes)

(a)

1. Aug. 31 Insurance Expense ($4,500 X 3/12) ............ 1,125

Prepaid Insurance ................................

1,125

2. Aug. 31 Supplies Expense ($2,600 $450) ............. 2,150

Supplies................................................

2,150

3. Aug. 31 Depreciation Expense ................................. 1,080

Accumulated Depreciation
Buildings ...........................................
($120,000 $12,000 = $108,000;
$108,000 X 4% = $4,320 per year;
$4,320 X 1/4 = $1,080)
Aug. 31 Depreciation Expense .................................
Accumulated Depreciation
Equipment .........................................
($16,000 $1,600 = $14,400;
$14,400 X 10% = $1,440;
$1,440 X 1/4 = $360)

360
360

4. Aug. 31 Unearned Rent Revenue ............................. 3,800

Rent Revenue .......................................
5. Aug. 31 Salaries and Wages Expense .....................
Salaries and Wages Payable ...............

375

6. Aug. 31 Accounts Receivable ..................................

Rent Revenue .......................................

800

Kieso, Intermediate Accounting, 15/e, Solutions Manual

3,800
375

7. Aug. 31 Interest Expense ......................................... 1,200

Interest Payable ...................................
[($60,000 X 8%) X 1/4]

Copyright 2013 John Wiley & Sons, Inc.

1,080

(For Instructor Use Only)

800
1,200

3-19

EXERCISE 3-10 (Continued)

(b)

Greco Resort
Adjusted Trial Balance
August 31, 2014
Debit

Cash .........................................................................
Accounts Receivable ..............................................
Prepaid Insurance ($4,500 $1,125) ......................
Supplies ($2,600 $2,150) ......................................
Land..........................................................................
Buildings ..................................................................
Accumulated DepreciationBuildings ..................
Equipment ................................................................
Accumulated DepreciationEquipment................
Accounts Payable....................................................
Unearned Rent Revenue ($4,600 $3,800) ............
Salaries and Wages Payable ..................................
Interest Payable .......................................................
Mortgage Payable ....................................................
Common Stock ........................................................
Retained Earnings ...................................................
Dividends .................................................................
Rent Revenue ($76,200 + $3,800 + $800)................
Salaries and Wages Expense ($44,800 + $375) .....
Utilities Expenses ....................................................
Maintenance and Repair Expense ..........................
Insurance Expense ..................................................
Supplies Expense ....................................................
Depreciation ExpenseBuildings .........................
Depreciation ExpenseEquipment .......................
Interest Expense ......................................................

3-20

Copyright 2013 John Wiley & Sons, Inc.

Credit

$ 19,600
800
3,375
450
20,000
120,000
$

1,080

16,000
360
4,500
800
375
1,200
60,000
91,000
9,000
5,000
80,800
45,175
9,200
3,600
1,125
2,150
1,080
360
1,200
$249,115

Kieso, Intermediate Accounting, 15/e, Solutions Manual

$249,115

(For Instructor Use Only)

EXERCISE 3-11 (2025 minutes)

(a)

ANDERSON COOPER CO.

Income Statement
For the Year Ended December 31, 2014

Revenues
Service revenue ...................................................
Expenses
Salaries and wages expense...............................
Rent expense .......................................................
Depreciation expense ..........................................
Interest expense ..................................................
Net Income ......................................................................
(b)

$11,590
$6,840
2,260
145
83

9,328
$ 2,262

ANDERSON COOPER CO.

Statement of Retained Earnings
For the Year Ended December 31, 2014

Retained earnings, January 1 ...........................................................

Add: Net income ................................................................................
Less: Dividends .................................................................................
Retained earnings, December 31 .....................................................
(c)

ANDERSON COOPER CO.

Balance Sheet
December 31, 2014

Assets
Current Assets
Cash ................................................................
Accounts receivable ......................................
Prepaid rent ....................................................
Total current assets..................................
Property, plant, and equipment
Equipment.......................................................
Accumulated depreciation
equipment .....................................................
Total assets ...................................................................

Copyright 2013 John Wiley & Sons, Inc.

$11,310
2,262
13,572
3,000
$10,572

Kieso, Intermediate Accounting, 15/e, Solutions Manual

$19,472
6,920
2,280
28,672
$18,050
(4,895)

13,155
$41,827

(For Instructor Use Only)

3-21

EXERCISE 3-11 (Continued)

Liabilities and Stockholders Equity
Current liabilities
Accounts payable .............................................
Interest payable ................................................
Notes payable ...................................................
Total current liabilities ................................
Stockholders equity
Common stock..................................................
Retained earnings ............................................
Total liabilities and stockholders equity ......................

$ 5,472
83
5,700
11,255
$20,000
10,572*

30,572
$41,827

*Beg. Balance + Net Income Dividends = Ending Balance

$11,310
+ $2,262 $3,000 =
$10,572
EXERCISE 3-12 (2025 Minutes)
(a)

SANTO DESIGN AGENCY

Income Statement
For the Year Ended December 31, 2014

Revenues
Service revenue .....................................................
Expenses
Salaries and wages expense .................................
Depreciation expense ............................................
Rent expense..........................................................
Supplies expense ...................................................
Insurance expense .................................................
Interest expense.....................................................
Total expenses ................................................
Net income ........................................................................

$61,500
$11,300
7,000
4,000
3,400
850
500
27,050
$34,450

SANTO DESIGN AGENCY

Statement of Retained Earnings
For the Year Ended December 31, 2014
Retained earnings, January 1 ............................................................
Add: Net income .................................................................................
Retained earnings, December 31 ......................................................
3-22

Copyright 2013 John Wiley & Sons, Inc.

Kieso, Intermediate Accounting, 15/e, Solutions Manual

$ 3,500
34,450
$37,950

(For Instructor Use Only)

EXERCISE 3-12 (Continued)

(a) Continued

SANTO DESIGN AGENCY

Balance Sheet
December 31, 2014

Assets
Cash ...................................................................................
Accounts receivable .........................................................
Supplies .............................................................................
Prepaid insurance .............................................................
Equipment..........................................................................
Less: Accumulated depreciation equipment ....................
Total assets..............................................................

$11,000
21,500
5,000
2,500
$60,000
35,000

25,000
$65,000

Liabilities and Stockholders Equity

Liabilities
Notes payable ..........................................................
Accounts payable ....................................................
Interest payable .......................................................
Unearned service revenue ......................................
Salaries and wages payable ...................................
Total liabilities...................................................
Stockholders equity
Common stock ........................................................
Retained earnings ...................................................
Total liabilities and stockholders equity ........

$ 5,000
5,000
150
5,600
1,300
$17,050
$10,000
37,950

47,950
$65,000

(b) (1) Based on interest payable at December 31, 2014, interest is $25 per
month or 0.5% of the note payable. 0.5% X 12 = 6% interest per year.
(2) Salaries and Wages Expense, $11,300 less Salaries and Wages
Payable 12/31/14, $1,300 = $10,000. Total payments, $17,500
$10,000 = $7,500 Salaries and Wages Payable 12/31/13.

Copyright 2013 John Wiley & Sons, Inc.

Kieso, Intermediate Accounting, 15/e, Solutions Manual

(For Instructor Use Only)

3-23

EXERCISE 3-13 (1015 minutes)

(a)

Sales revenue ........................................................

Less: Sales returns and allowances ....................
Sales discounts ...........................................
Net sales ................................................................

$800,000
$24,000
15,000

(b) Sales .......................................................................

Income Summary ...........................................

800,000

Income Summary...................................................
Sales Returns and Allowances .....................
Sales Discounts .............................................

39,000

39,000
$761,000
800,000
24,000
15,000

EXERCISE 3-14 (1015 minutes)

Sales Revenue .......................................................
Sales Returns and Allowances .....................
Sales Discounts .............................................
Income Summary ...........................................

350,000

Income Summary...................................................
Cost of Goods Sold ........................................
Delivery Expense ...........................................
Insurance Expense ........................................
Rent Expense .................................................
Salaries and Wages Expense ........................

308,000

Income Summary...................................................
Retained Earnings ..........................................

21,000

13,000
8,000
329,000
208,000
7,000
12,000
20,000
61,000
21,000

EXERCISE 3-15 (1015 minutes)

(a) $9,000
(b) $25,000
(c) $10,000

3-24

(d) $100,000
(e) $57,000

Copyright 2013 John Wiley & Sons, Inc.

Kieso, Intermediate Accounting, 15/e, Solutions Manual

(For Instructor Use Only)