EXERCISE 3-16 (1015 minutes)

Sales Revenue ..........................................................

Cost of Goods Sold...........................................
Sales Returns and Allowances ........................
Sales Discounts ................................................
Selling Expenses ..............................................
Administrative Expenses .................................
Income Tax Expense.........................................
Income Summary ..............................................

410,000
225,700
12,000
15,000
16,000
38,000
30,000
73,300

(or)
Sales Revenue ..........................................................
Income Summary ..............................................

410,000

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

Cost of Goods Sold...........................................
Sales Returns and Allowances ........................
Sales Discounts ................................................
Selling Expenses ..............................................
Administrative Expenses .................................
Income Tax Expense.........................................

336,700

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

Retained Earnings.............................................

73,300

Retained Earnings ....................................................

Dividends ...........................................................

18,000

Copyright 2013 John Wiley & Sons, Inc.

Kieso, Intermediate Accounting, 15/e, Solutions Manual

410,000
225,700
12,000
15,000
16,000
38,000
30,000
73,300
18,000

(For Instructor Use Only)

3-25

EXERCISE 3-17 (1015 minutes)

Date
Mar.

Account Titles and Explanation

Ref.

1 Cash

Debit
50,000

Common Stock
(Investment of cash in business)
3 Land
Buildings
Equipment
Cash
(Purchased Michelle Wies Golf Land)

50,000

10,000
22,000
6,000
38,000

5 Advertising Expense
Cash
(Paid for advertising)

1,600

6 Prepaid Insurance
Cash
(Paid for one-year insurance policy)

1,480

10 Equipment
Accounts Payable
(Purchased equipment on account)

2,500

18 Cash

1,200

1,600

1,480

2,500

Service Revenue
(Received cash for services performed)

1,200

25 Dividends
Cash
(Declared and paid a $500 cash dividend)

500

30 Salaries and Wages Expense

Cash
(Paid wages expense)

900

30 Accounts Payable
Cash
(Paid creditor on account)
31 Cash

500

900

2,500
2,500

750
Service Revenue
(Received cash for services performed)

3-26

J1
Credit

Copyright 2013 John Wiley & Sons, Inc.

Kieso, Intermediate Accounting, 15/e, Solutions Manual

750

(For Instructor Use Only)

*EXERCISE 3-18 (1520 minutes)

Jill Accardo, M.D.
Conversion of Cash Basis to Accrual Basis
For the Year 2014
Excess of cash collected over cash disbursed ($142,600
$55,470)
Add increase in accounts receivable ($9,250 $15, 927)
Deduct increase in unearned service revenue ($2,840 $4,111)
Add decrease in accrued liabilities ($3,435 $2,108)
Add increase in prepaid expenses ($1,917 $3,232)
Net income on an accrual basis

$87,130
6,677
(1,271)
1,327
1,315
$95,178

Alternate solution:
Jill Accardo, M.D.
Conversion of Income Statement Data
from Cash Basis to Accrual Basis
For the Year 2014
Cash
Adjustments
Basis
Add
Deduct
Collections from customers:
Accounts receivable, Jan. 1
+Accounts receivable, Dec. 31
+Unearned service revenue, Jan. 1
Unearned service revenue, Dec. 31
Service revenue
Disbursements for expenses:
Accrued liabilities, Jan. 1
+Accrued liabilities, Dec. 31
+Prepaid expenses, Jan. 1
Prepaid expenses, Dec. 31
Operating expenses
Net incomecash basis
Net incomeaccrual basis

Copyright 2013 John Wiley & Sons, Inc.

Accrual
Basis

$142,600
$9,250
$15,927
2,840
4,111
$148,006
55,470
3,435
2,108
1,917
3,232
$ 87,130

Kieso, Intermediate Accounting, 15/e, Solutions Manual

52,828
$ 95,178

(For Instructor Use Only)

3-27

*EXERCISE 3-19 (1015 minutes)

(a)

Wayne Rogers Corp.

Income Statement (Cash Basis)
For the Year Ended December 31,
2013
$295,000
225,000
$ 70,000

Sales revenue
Expenses
Net income
(b)

2014
$515,000
272,000
$243,000

Wayne Rogers Corp.

Income Statement (Accrual Basis)
For the Year Ended December 31,
2013
$485,000
277,000
$208,000

Sales* revenue
Expenses**
Net income
*2013:
2014:
**2013:
2014:

2014
$445,000
255,000
$190,000

$295,000 + $160,000 + $30,000 = $485,000

$355,000 + $90,000 = $445,000
$185,000 + $67,000 + $25,000 = $277,000
$40,000 + $160,000 + $55,000 = $255,000

*EXERCISE 3-20 (2025 minutes)

(a)

Adjusting Entries:
1. Insurance Expense ($5,280 X 5/24) ....................
Prepaid Insurance ........................................
2.
3.
4.

3-28

1,100
1,100

Rent Revenue ($1,800 X 1/3) ...............................

Unearned Rent Revenue ..............................

600

Supplies ...............................................................
Advertising Expense....................................

290

Interest Expense..................................................
Interest Payable ...........................................

770

Copyright 2013 John Wiley & Sons, Inc.

Kieso, Intermediate Accounting, 15/e, Solutions Manual

600
290
770

(For Instructor Use Only)

*EXERCISE 3-20 (Continued)

(b)

Reversing Entries:
1. No reversing entry required.
2.
3.
4.

Unearned Rent Revenue .....................................

Rental Revenue ............................................

600

Advertising Expense ...........................................

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

290

Interest Payable...................................................
Interest Expense ..........................................

770

600
290
770

*EXERCISE 3-21 (1015 minutes)

Adjusted Trial
Balance

Accounts
Cash
Inventory
Sales Revenue
Sales Returns and
Allowances
Sales Discounts
Cost of Goods Sold

Dr.
9,000
80,000

Cr.

Income
Statement
Dr.

450,000
10,000
5,000
250,000

Copyright 2013 John Wiley & Sons, Inc.

Balance Sheet

Cr.

Dr.
9,000
80,000

Cr.

450,000
10,000
5,000
250,000

Kieso, Intermediate Accounting, 15/e, Solutions Manual

(For Instructor Use Only)

3-29

*EXERCISE 3-22 (2025 minutes)

Ed Bradley Co.
Worksheet (partial)
For the Month Ended April 30, 2014

Account Titles
Cash
Accounts Receivable
Prepaid Rent
Equipment
Accum. Depreciation
Equipment
Notes Payable
Accounts Payable
Common Stock
Retained Earnings
Dividends
Service Revenue
Salaries and Wages
Expense
Rent Expense
Depreciation Expense
Interest Expense
Interest Payable
Totals
Net income
Totals

3-30

Adjusted Trial
Balance

Income
Statement

Dr.
18,972
6,920
2,280
18,050

Dr.

Cr.

Cr.

Balance Sheet
Dr.
18,972
6,920
2,280
18,050

4,895
5,700
4,472
34,960
1,000

4,895
5,700
4,472
34,960
1,000

6,650

6,650
12,590

6,840
3,760
145
83
63,700

Copyright 2013 John Wiley & Sons, Inc.

Cr.

12,590
6,840
3,760
145
83

83
83
63,700 10,828 12,590 52,872 50,110
1,762
1,762
12,590 12,590 52,872 52,872

Kieso, Intermediate Accounting, 15/e, Solutions Manual

(For Instructor Use Only)