MINI EXERCISES

M3-12 (20 minutes)

Balance Sheet
Transactio
n
Cash
CS

Income Statement

Net
Cash
Noncash
LiabilContrib. Earned RevExpen+
=
+
+

= Incom
Asset
Assets
ities
Capital
Capital enues
ses
e

12,000
12,000

Cash
12,000
CS
12,000

June 1.
Invested
$12,000
cash

+12,00
0

+12,000
=

Common
Stock

Cash

RNE
950
Cash
950
RNE
950
Cash
950

PPE
AP

6,400
6,400

PPE
6,400
AP
6,400

SUP
3,800
Cash
1,800
AP
2,000
SUP
3,800
Cash
1,800
AP
2,000

June 2. Paid
-950
$950 cash
Cash
for June rent

June 3.
Purchased
$6,400 of
office
equipment
on credit

June 6.
Purchased
$3,800 of
-1,800
supplies;
Cash
$1,800 cash,
$2,000 on
account

-950
=

+6,400
Office
Equipment

+3,800
Supplies

+950

Retained
Earnings

Rent
Expense

-950

+6,400
= Account
s
Payable

+2,000
= Account
s
Payable

AR
4,700
Rev
4,700
AR
4,700
Rev
4,700

June 11.
$4,700 billed
for services

+4,700
+4,700
Accounts
Receivable

+4,700
=

Retained
Earnings

Service
Fees

Earned
((Revenue)

= +4,700

Cambridge Business Publishers, 2008

3-4

Financial Accounting for MBAs, 3rd Edition

M3-12continued.
Balance Sheet
Cash
Noncash
+
=
Asset
Assets

Transaction
Cash
AR

Income Statement

LiabilContrib. Earned RevExpenNet

+
+

=
ities
Capital
Capital enues
ses
Income

3,250
3,250

Cash
3,250
AR
3,250

AP
3,000
Cash
3,000
AP
3,000
Cash
3,000

June 17.
Collect
$3,250 on
accounts

+3,250
Cash

June 19.
Paid $3,000
on office
equipment
account

-3,000

June 25.
Paid cash
dividend of
$900

-900

June 30.
Paid $350
utilities

-350

Cash

-3,250
Accounts
Receivable

-3,000
= Accounts
Payable

RE
900
Cash
900
RE
900
Cash
900

Cash

-900
=

Retained
Earnings

Retained
Earnings

Retained
Earnings

UE
350
Cash
350
UE
350
Cash
350

Cash

-350

+350

Utility
expense

-350

WE
2,500
Cash
2,500
WE
2,500
Cash
2,500

June 30.
Paid $2,500
salaries

Solutions Manual, Module 3

-2,500
Cash

-2,500

+2,500

Wages
expense

= -2,500

Cambridge Business Publishers, 2008

3-5

M3-14 (40 minutes)

Balance Sheet
Transaction
Cash
CS

Income Statement

Cash
Noncash
LiabilContrib. Earned Rev+
=
+
+

Asset
Assets
ities
Capital
Capital enues

ExpenNet
=
ses
Income

9,000
9,000

Cash
9,000
CS
9,000

April 1.
+9,000
Invested
Cash
$9,000 in cash

+9,000
=

Common
Stock

PPRNT 2,850
Cash
2,850
PPRNT
2,850
Cash
2,850

Cash
NP

April 2. Paid
$2,850 cash
for lease

-2,850
Cash

+2,850
Prepaid
Van Lease

10,000
10,000

Cash
10,000
NP
10,000

April 3.
Borrow
$10,000

+10,000

+10,000

Cash

Note
Payable

PPE
5,500
Cash
2,500
AP
3,000
PPE
5,500
Cash
2,500
AP
3,000

April 4.
Purchase
$5,500
equipment for -2,500
Cash
$2,500 cash
with rest on
account

+5,500
Equipment

+3,000
= Accounts

Payable

SUP
4,300
Cash
4,300
SUP
4,300
Cash
4,300

April 5. Paid
$4,300 cash
for supplies

-4,300

+4,300

Cash

Supplies

Cambridge Business Publishers, 2008

3-8

Financial Accounting for MBAs, 3rd Edition

M3-14Continued
AE
350
Cash

350

AE
350
Cash
350

April 7.
Paid $350
cash for
ad.

-350

-350

Cash

+350
Advertising =

Retained
Earnings

-350

Expense

AR
3,500
Rev
3,500
AR
3,500
Rev
3,500

AP
3,000
Cash
3,000
AP
3,000
Cash
3,000

Cash
AR

+3,500

April 21.
Billed
$3,500 for
services

April 23.
Paid
$3,000
cash on
account

+3,500
Accounts
Receivable

+3,500
=

Retained
Earnings

-3,000
= Accounts

-3,000
Cash

Cleaning
Fees
Earned
((Revenue)

= +3,500

Payable

2,300
2,300

Cash
2,300
AR
2,300

RE
1,000
Cash
1,000
RE
1,000
Cash
1,000

WE
1,750
Cash
1, 750
WE
1,750
Cash
1,750

April 28.
Collect
$2,300 on
account

+2,300
Cash

April 29.
Paid
$1,000
cash
dividend

-1,000

April 30.
Paid
$1,750
cash for
salaries

-1,750

April 30.
Paid $995
cash for
gas

-995

Cash

Cash

-2,300
Accounts
Receivable

-1,000
=

Retained
Earnings

Retained
Earnings

Retained
Earnings

-1,750

+1,750

Wages
Expense

Van Fuel
(Operating)
Expense

-1,750

OE
995
Cash
995
OE
995
Cash
995

Cash

Solutions Manual, Module 3

+995

-995

-995

Cambridge Business Publishers, 2008

3-9

E3-30 (15 minutes)

a. Balance, January 1 = $960 + $800 $620 = $1,140.
b. Amount of premium = $82 12 = $984.
Therefore, five months' premium ($984 $574 = $410) has expired by
January 31. The policy term began on September 1 of the previous year.
c. Wages paid in January = $3,200 $500 = $2,700.
d. Monthly depreciation expense = $8,700 / 60 months = $145.
Bloomfield has owned the truck for 18 months ($2,610 / $145 = 18).
E3-31 (25 minutes)
Balance Sheet
Transaction
RNTE
475
PPRNT
475
RNTE
475
PPRNT
475

AE
210
PPDA
210
AE
210
PPDA
210

SUPE
SUP

SUP
1,900

b. 7/31
Adjusting
entry for
advertising
expense

- 475
Prepaid
Rent

- 210
Prepaid
Advertising

-475
=

Retained
Earnings

Retained
Earnings

ExpenNet
=
ses
Income

+475

-210

-475

+210
Advertising =

-210

Rent
Expense

Expense

7/31
Adjusting
entry for
supplies
expense

-1,900
Supplies

-1,900
=

+1,900
Supplies = -1,900

Retained
Earnings

expense

800
800

AR
800
Rev
800

UR
Rev

a. 7/31
Adjusting
entry for rent
expense

LiabilContrib. Earned Rev+

+

ities
Capital
Capital enues

1,900
1,900 c.

SUPE
1,900

AR
Rev

Cash
Noncash
+
=
Asset
Assets

Income Statement

d. 7/31
Adjusting
entry for
fees revenue

+800
Fees
(Accounts)
Receivable

+800
=

+800

Retained Refinish.
Earnings Revenue

+800

+300

300
300

UR
300
Rev
300

e. 7/31
Adjusting
entry for
fees revenue

-300
=

Unearned
Refinish.
Fees
(Revenue)

+300

+300

Retained Refinish.
Earnings Revenue

Cambridge Business Publishers, 2008

3-24

Financial Accounting for MBAs, 3rd Edition