Brief Exercise 3-4
Your answer is correct.
On July 1, 2017, Bridgeport Co. pays $14,280 to Indigo Insurance Co. for a 3-year insurance
policy. Both companies have fiscal years ending December 31. Journalize the entry on July 1 and
the adjusting entry on December 31 for Indigo Insurance Co. Indigo uses the accounts Unearned
Service Revenue and Service Revenue. (Credit account titles are automatically indented
when amount is entered. Do not indent manually. If no entry is required, select "No
entry" for the account titles and enter 0 for the amounts. Record journal entries in the
order presented in the problem.)
Date
Account Titles and Explanation
Debit
Question 2
Your answer is correct.
Do the following events represent business transactions?
(a) A computer is purchased on account.
(b)
A customer returns merchandise and is given credit on
account.
(c) A prospective employee is interviewed.
(d)
The owner of the business withdraws cash from the
business for personal use.
(e) Merchandise is ordered for delivery next month.
Exercise 3-8
Credit
Andy Roddick is the new owner of Sunland Computer Services. At the end of August 2017, his
first month of ownership, Roddick is trying to prepare monthly financial statements. Below is
some information related to unrecorded expenses that the business incurred during August.
(a) At August 31, Roddick owed his employees $1,878 in wages that will be paid on September
1.
(b) At the end of the month, he had not yet received the month’s utility bill. Based on past
experience, he estimated the bill would be approximately $540.
(c) On August 1, Roddick borrowed $31,200 from a local bank on a 15-year mortgage. The
annual interest rate is 8%.
(d) A telephone bill in the amount of $127 covering August charges is unpaid at August 31.
Prepare the adjusting journal entries as of August 31, 2017, suggested by the information
above. (Credit account titles are automatically indented when amount is entered. Do
not indent manually. If no entry is required, select "No entry" for the account titles
and enter 0 for the amounts.)
No.
Date
Account Titles and Explanation
Debit
Credit
(a) Aug. 31
(b) Aug. 31
(c) Aug. 31
(d) Aug. 31
Exercise 3-11
The adjusted trial balance of Flint Cooper Co. as of December 31, 2017, contains the following.
FLINT COOPER CO.
ADJUSTED TRIAL BALANCE
DECEMBER 31, 2017
Debit
Cash
$20,342
Accounts Receivable
7,790
Prepaid Rent
3,150
Equipment
Accumulated Depreciation-Equipment
Credit
18,920
$5,765
Notes Payable
6,570
Accounts Payable
6,342
Common Stock
20,870
Retained Earnings
12,180
Dividends
3,870
Service Revenue
12,460
Salaries and Wages Expense
7,710
Rent Expense
2,194
Depreciation Expense
211
Interest Expense
149
Interest Payable
149
$64,336
$64,336
Your answer is correct.
Prepare an income statement. (Enter loss using either a negative sign preceding the
number e.g. -45 or parentheses e.g. (45).)
FLINT COOPER CO.
Income Statement
$
$
$
Your answer is correct.
Prepare a statement of retained earnings. (List items that increase retained earnings
first.)
FLINT COOPER CO.
Statement of Retained Earnings
$
:
:
$
Your answer is correct.
Prepare a classified balance sheet. (List current assets in order of liquidity.)
FLINT COOPER CO.
Balance Sheet
Assets
$
$
:
$
Liabilities and Stockholders' Equity
$
$
$
Problem 3-4
The trial balance of Sheffield Fashion Center contained the following accounts at November 30,
the end of the company’s fiscal year.
SHEFFIELD FASHION CENTER
TRIAL BALANCE
NOVEMBER 30, 2017
Debit
Cash
$33,150
Accounts Receivable
37,000
Inventory
48,300
Supplies
Equipment
Accumulated Depreciation-Equipment
Notes Payable
Credit
8,800
139,600
$26,300
54,300
Accounts Payable
51,800
Common Stock
93,300
Retained Earnings
11,300
Sales Revenue
764,950
Sales Returns and Allowances
4,200
Cost of Goods Sold
495,400
Salaries and Wages Expense
138,600
Advertising Expense
27,550
Utilities Expenses
15,400
Maintenance and Repairs Expense
12,100
Delivery Expense
16,700
Rent Expense
25,150
Totals
$1,001,950
$1,001,950
Adjustment data:
1. Supplies on hand totaled $4,800.
2. Depreciation is $16,725 on the equipment.
3. Interest of $10,990 is accrued on notes payable at November 30.
Other data:
1. Salaries expense is 70% selling and 30% administrative.
2. Rent expense and utilities expenses are 80% selling and 20% administrative.
3. $30,000 of notes payable are due for payment next year.
4. Maintenance and repairs expense is 100% administrative.
Your answer is correct.
Journalize the adjusting entries. (Credit account titles are automatically indented when
amount is entered. Do not indent manually. If no entry is required, select "No entry"
for the account titles and enter 0 for the amounts. Record journal entries in the order
presented in the problem.)
No.
Date
1.
Nov. 30
2.
Nov. 30
Account Titles and Explanation
Debit
Credit
3.
Nov. 30
Your answer is correct.
Prepare an adjusted trial balance.
SHEFFIELD FASHION CENTER
Adjusted Trial Balance
November 30, 2017
Debit
Credit
$
$
Total
$
$
Your answer is correct.
Prepare a multiple-step income statement for the year. (Enter loss using either a negative
sign preceding the number e.g. -45 or parentheses e.g. (45).)
SHEFFIELD FASHION CENTER
Income Statement
$
:
Selling expenses
$
$
Administrative expenses
$
Your answer is correct.
Prepare retained earnings statement for the year.
SHEFFIELD FASHION CENTER
Retained Earnings Statement
$
:
$
Your answer is correct.
Prepare a classified balance sheet as of November 30, 2017. (List current assets in order of
liquidity.)
SHEFFIELD FASHION CENTER
Balance Sheet
Assets
$
$
:
$
Liabilities and Stockholders' Equity
$
$
$
Your answer is correct.
Journalize the closing entries. (Credit account titles are automatically indented when
amount is entered. Do not indent manually. If no entry is required, select "No entry"
for the account titles and enter 0 for the amounts.)
No.
1.
Date
Nov. 30
Account Titles and Explanation
Debit
Credit
(To close accounts with credit balances.)
2.
Nov. 30
(To close accounts with debit balances.)
3.
Nov. 30
(To close net income / (loss).)
Your answer is correct.
Prepare a post-closing trial balance.
SHEFFIELD FASHION CENTER
Post-Closing Trial Balance
November 30, 2017
Debit
Credit
$
$
$
$