• Urban Outfitters achieved compounded annual sales growth of approximately 19% from 2005 to
2010, with sales of approximately $1.9 billion in fiscal 2010.
• The first Urban Outfitters store opened 1970 near the University of Pennsylvania campus in
Philadelphia.
• The company circulates nearly 40 million catalogs per year.
• The company employs 14,000 people; the number fluctuates based upon seasonal demand.
1. Debiting Allowance for Doubtful Accounts and Crediting Accounts Receivable.
2. To the Income Statement columns.
3. Dr. Uncollectible Accounts Expense, Cr. Allowance for Doubtful Accounts.
4. Transfers cost of asset to expense over life of asset.
5. Long-term assets whose usefulness is consumed over the life of the assets. (Buildings, furniture
and fixtures, machinery.)
6. a. Estimated selling price upon disposal of an asset. b. Cost of asset less salvage value. c. Number
of years that asset will be used. d. Equal amount of depreciation taken in each year of the asset’s
useful life.
7. Dr. Depreciation Exp.— Office Equipment., Cr. Accum. Depr.—Office Equipment.
8. An expense that does not yet appear in the accounts. (Accrued salaries, accrued payroll taxes, and
accrued interest on notes payable.)
9. Dr. Salaries Expense, Cr. Salaries Payable.
10. Item that has been paid for and recorded in the accounts in advance of its use. (Prepaid rent,
prepaid insurance, prepaid interest on notes payable.)
11. Dr. Prepaid Insurance, Cr. Cash.
12. Dr. Insurance Expense, Cr. Prepaid Insurance
Note to instructor : These questions are designed to check students’ understanding of new terms,
concepts, and procedures presented in the chapter.
Discussion Questions
Chapter Opener: Thinking Critically
ACCRUALS, DEFERRALS, AND THE WORKSHEET
CHAPTER 12
Students may assess that an unexpected decline in sales would mean surplus inventory which would have
to be reduced—most likely by selling the too sophisticated merchandise at lower prices. Expenses for
market research to determine a better merchandise strategy would also need to be recorded.
Fast Facts
Managerial Implications: Thinking Critically
Financial results and financial condition will be incorrectly stated.
13. Charge cost to expense account at the time cost is incurred. At end of period, amount still prepaid
is debited to prepaid expense account and credited to the expense account.
14. Income earned but not yet received in cash or recorded as a receivable. (Interest on notes
receivable.)
15. Dr. Interest Receivable, Cr. Interest Income.
16. Income for which payment has been received in advance, but which has not been earned. (Rent
income received in advance.)
17. Dr. Cash, Cr. Unearned Income.
18. Dr. Unearned Income, Cr. Income.
19. Record amount received in advance as income at the time it is received in cash. At period end,
unearned amount debited to Income and credited to Unearned Income.
20. Provides a single location for all information necessary to journalize adjusting entries and to
prepare the financial statements.
21. Liability.
Discussion Questions (continued)
POST.
REF.
1 2013 1
2 Dec. 31 Income Summary 121 0 0 0 00 2
3 Merchandise Inventory 121 0 0 0 00 3
4 4
5 31 Merchandise Inventory 102 5 1 9 00 5
6 Income Summary 102 5 1 9 00 6
7 7
Beginning Merchandise Inventory is $179,000 and ending Merchandise Inventory is $203,344.
POST.
REF.
1 2013 1
2 Dec. 31 Uncollectible Accounts Expense 5 6 4 6 00 2
3 Allowance for Doubtful Accounts 5 6 4 6 00 3
4 4
5 31 Depreciation Expense—Equipment 3 0 6 8 00 5
6 Accumulated Depreciation—Equipment 3 0 6 8 00 6
7 7
8 31 Wages Expense 6 5 4 6 00 8
9 Wages Payable 6 5 4 6 00 9
10 10
11 31 Payroll Taxes Expense 5 0 0 77 11
12 Social Security Tax Payable 4 0 5 85 12
13 Medicare Tax Payable 9 4 92 13
14 14
15 31 Payroll Taxes Expense 4 0 5 85 15
16 Federal Unemployment Tax Payable 5 2 37 16
17 State Unemployment Tax Payable 3 5 3 48 17
18 18
GENERAL JOURNAL PAGE
EXERCISE 12.1
DATE DESCRIPTION DEBIT CREDIT
EXERCISE 12.3
EXERCISE 12.2
DATE DESCRIPTION DEBIT CREDIT
GENERAL JOURNAL PAGE
POST.
REF.
1 2013 1
2 Dec. 31 Interest Expense 2 1 0 00 2
3 Interest Payable 2 1 0 00 3
4 4
5 31 Supplies Expense 4 4 3 3 00 5
6 Supplies 4 4 3 3 00 6
7 7
8 31 Insurance Expense 5 1 3 5 00 8
9 Prepaid Insurance 5 1 3 5 00 9
10 10
11 31 Advertising Expense 9 7 2 0 00 11
12 Prepaid Advertising 9 7 2 0 00 12
13 13
POST.
REF.
1 2013 1
2 Dec. 1 Cash 29 8 6 4 00 2
3 Prepaid Interest 1 1 3 6 00 3
4 Notes Payable 31 0 0 0 00 4
5 5
6 31 Interest Expense 2 8 4 00 6
7 Prepaid Interest 2 8 4 00 7
8 8
POST.
REF.
1 2013 1
2 Dec. 31 Interest Expense 3 9 0 00 2
3 Interest Payable 3 9 0 00 3
4 4
EXERCISE 12.4
EXERCISE 12.5
EXERCISE 12.6
GENERAL JOURNAL
DATE DESCRIPTION DEBIT CREDIT
GENERAL JOURNAL
PAGE
DATE DESCRIPTION DEBIT CREDIT
PAGE
DATE DESCRIPTION DEBIT CREDIT
GENERAL JOURNAL PAGE
POST.
REF.
1 2013 1
2 Dec. 31 Interest Receivable 6 4 0 00 2
3 Interest Income 6 4 0 00 3
4 4
5 31 Unearned Subscription Revenue 20 0 0 0 00 5
6 Subscription Revenue 20 0 0 0 00 6
7 7
8 31 Unearned Rent 16 0 0 0 00 8
9 Rent Income 16 0 0 0 00 9
10 10
11 31 Unearned Season Ticket Income 0 0 0 00 600 11
12 Season Ticket Income 600 0 0 0 00 12
13 13
PAGE
EXERCISE 12.7
DATE DESCRIPTION DEBIT CREDIT
GENERAL JOURNAL
POST.
REF.
1 2013 1
2 June 30 2
3 7 5 0 0 00 3
4 7 5 0 0 00 4
5 5
6 30 6
7 8 0 0 0 00 7
8 8 0 0 0 00 8
9 9
10 30 10
11 2 4 0 0 00 11
12 2 4 0 0 00 12
13 13
14 30 14
15 4 0 0 0 00 15
16 4 0 0 0 00 16
17 17
18 30 18
19 2 2 5 00 19
20 2 2 5 00 20
21 21
22 30 22
23 2 5 0 00 23
24 2 5 0 00 24
25 25
26 30 26
27 2 8 63 27
28 7 50 28
29 2 00 29
30 3 63 30
31 1 5 50 31
32 32
33 30 33
34 20 0 0 0 00 34
35 20 0 0 0 00 35
36 36
37 30 37
PROBLEM 12.1A
(Adjustment i)
State Unemployment Taxes Payable
Federal Unemployment Taxes Payable
(Adjustment h)
Uncollectible Accounts Expense
Allowance for Doubtful Accounts
(Adjustment f)
Wages Expense
Wages Payable
(Adjustment g)
Payroll Taxes Expense
Unearned Seminar Fees
Seminar Fees Income
Medicare Taxes Payable
Social Security Taxes Payable
Insurance Expense
Prepaid Insurance
(Adjustment e)
Depreciation Expense - Store Equipment
Accumulated Depreciation - Store Equipment
(Adjustment d)
Income Summary
Merchandise Inventory
(Adjustment b)
Merchandise Inventory
Income Summary
(Adjustment c)
GENERAL JOURNAL 18
(Adjustment a)
DATE DESCRIPTION DEBIT CREDIT
PAGE
PROBLEM 12.1A (continued)
POST.
REF.
41 30 41
42 2 5 0 00 42
43 2 5 0 00 43
44 44
45 30 45
46 3 5 00 46
47 3 5 00 47
Notes on calculations:
a.-b.
c.
d.
e.
f.
g. Amounts given.
h.
i.
j.
k.
$400 balance - $150 supplies on hand = $250 of supplies used.
DATE DESCRIPTION DEBIT CREDIT
Amounts given.
$6,600/6 months in policy = $1,100/month; $1,100 × 4 months expired = $4,400.
Interest Expense
Interest Payable
$6,000 cash received/5 seminars = $1,200/seminar.
$1,200/seminar × 2 seminars conducted = $2,400 earned.
$12,000/6 months in policy = $2,000/month.
$2,000/month × 2 months expired (May and June) = $4,000 insurance expense.
($5,000 cost - $500 salvage value)/60 months = $75/month depreciation.
$75/month × 3 months of use (April, May and June) = $225.
Amounts given.
$6,000 principal × 7% interest rate × 1/12 time factor = $35
Analyze: The balance of the Prepaid Rent account will be $2,200 ($6,600 - $4,400 expired).
$2,000,000 × 1% = $20,000
18
Supplies
(Adjustment k)
Supplies Expense
GENERAL JOURNAL PAGE
(Adjustment j)
POST.
REF.
1 2013 1
2 July 1 Prepaid Rent 13 2 0 0 00 2
3 Cash 13 2 0 0 00 3
4 4
5 1 Cash 23 0 4 0 00 5
6 Prepaid Interest 9 6 0 00 6
7 Notes Payable 24 0 0 0 00 7
8 8
9 1 Cash 72 0 0 0 00 9
10 Unearned Accounting Fees 72 0 0 0 00 10
11 11
12 1 Office Equipment 17 0 0 0 00 12
13 Notes Payable 17 0 0 0 00 13
14 14
15 1 Prepaid Insurance 1 6 2 0 00 15
16 Cash 1 6 2 0 00 16
17 17
18 3 Office Furniture 16 6 0 0 00 18
19 Cash 8 4 0 0 00 19
20 Accounts Payable 8 2 0 0 00 20
21 21
22 5 Supplies 1 8 1 0 00 22
23 Cash 1 8 1 0 00 23
24 24
PAGE
PROBLEM 12.2A
1
DATE DESCRIPTION DEBIT CREDIT
GENERAL JOURNAL
PROBLEM 12.2A (continued)
POST.
REF.
1 1
2 2013 2
3 July 31 2 2 0 0 00 3
4 2 2 0 0 00 4
5 5
6 31 2 4 0 00 6
7 2 4 0 00 7
8 8
9 31 6 0 0 0 00 9
10 6 0 0 0 00 10
11 11
12 31 1 7 0 00 12
13 1 7 0 00 13
14 14
15 31 2 2 0 00 15
16 2 2 0 00 16
17 17
18 31 1 3 5 00 18
19 1 3 5 00 19
20 20
21 31 2 6 0 00 21
22 2 6 0 00 22
23 23
24 31 1 0 1 0 00 24
25 1 0 1 0 00 25
26 26
Analyze:
Insurance Expense Prepaid Insurance
Depreciation Expense—Office Furniture Accumulated Depreciation—Office Furniture
Supplies Expense Supplies Accounting Fees
Interest Expense Interest Payable
Depreciation Expense—Office Equipment Accumulated Depreciation—Office Equipment
Adjusting Entries
The Unearned Accounting Fees account would be $66,000.
Rent Expense Prepaid Rent
Interest Expense Prepaid Interest Unearned Accounting Fees
2
DATE DESCRIPTION DEBIT CREDIT
GENERAL JOURNAL PAGE
PROBLEM 12.3A
Michael Brady, Consultant
Worksheet
Month Ended July 31, 2013
1 Cash 25 0 1 0 00
2 Accounts Receivable 1 3 4 0 00
3 Supplies 8 6 0 00 (a) 2 8 0 00
4 Prepaid Rent 9 0 0 0 00 (b) 1 5 0 0 00
5 Prepaid Insurance 1 6 2 0 00 (c) 1 3 5 00
6 Prepaid Interest 3 6 0 00 (d) 9 0 00
7 Office Furniture 12 0 5 0 00
8
9 (e) 1 2 5 00
10 Office Equipment 6 4 0 0 00
11 (f) 8 0 00
12 Notes Payable 16 7 0 0 00
13 Accounts Payable 4 5 0 0 00
14 Interest Payable (g) 5 2 00
15 4 8 0 0 00 (h) 4 0 0 00
16 28 2 2 0 00
17 2 0 0 0 00
18 Consulting Fees 8 0 0 0 00 (h) 4 0 0 00
19 Salaries Expense 3 2 0 0 00
20 Utilities Expense 2 2 0 00
21 Telephone Expense 1 6 0 00
22 Supplies Expense (a) 2 8 0 00
23 Rent Expense (b) 1 5 0 0 00
24 Insurance Expense (c) 1 3 5 00
25 (e) 1 2 5 00
26 (f) 8 0 00
27 Interest Expense (d) 9 0 00
28 (g) 5 2 00
29 Totals 62 2 2 0 00 62 2 2 0 00 2 6 6 2 00 2 6 6 2 00
30
Accumulated
Depreciation—Equipment
Unearned Consulting Fees
Michael Brady, Capital
Michael Brady, Drawing
Depreciation
Expense—Furniture
Depreciation
Expense—Equipment
Office Furniture
Accumulated
Depreciation—
ACCOUNT NAME
TRIAL BALANCE ADJUSTMENTS
DEBIT CREDIT DEBIT CREDIT
PROBLEM 12.3A Continued
25 0 1 0 00 1
1 3 4 0 00 2
5 8 0 00 3
7 5 0 0 00 4
1 4 8 5 00 5
2 7 0 00 6
12 0 5 0 00 7
8
1 2 5 00 9
6 4 0 0 00 10
8 0 00 11
16 7 0 0 00 12
4 5 0 0 00 13
5 2 00 14
4 4 0 0 00 15
28 2 2 0 00 16
2 0 0 0 00 17
8 4 0 0 00 18
3 2 0 0 00 19
2 2 0 00 20
1 6 0 00 21
2 8 0 00 22
1 5 0 0 00 23
1 3 5 00 24
1 2 5 00 25
8 0 00 26
9 0 00 27
5 2 00 28
62 4 7 7 00 62 4 7 7 00 29
30
Analyze: The expense accounts of the business were adjusted by $2,262 ($2,662 - $400).
ADJUSTED TRIAL BALANCE INCOME STATEMENT BALANCE SHEET
DEBIT CREDIT DEBIT CREDIT DEBIT CREDIT
PROBLEM 12.4A
1 5 7 0 0 00
2 2 6 0 0 00
3 5 2 00 (c) 2 1 0 00
4 11 3 0 0 00 (b) 12 3 2 1 00 (a) 11 3 0 0 00
5 1 2 0 0 00 (d) 9 2 5 00
6 9 6 0 00 (e) 4 8 0 00
7 8 1 0 0 00
8 1 5 0 0 00 (f) 1 5 0 0 00
9 1 6 0 0 00
10 2 8 0 00 (g) 2 8 0 00
11 2 6 2 5 00
12 4 3 0 00 (i) 1 1 3 46
13 9 8 00 (i) 2 6 54
14 (j) 1 4 64
15 (j) 9 8 82
16 (h) 1 8 3 0 00
17 25 4 5 7 00
18 20 0 0 0 00
19 90 0 4 8 00
20 1 1 0 0 00
21 46 4 0 0 00
22 4 3 0 00
23 6 0 0 0 00
24 5 9 0 00
25 14 1 0 0 00 (h) 1 8 3 0 00
26 1 2 7 0 00 (i) 1 4 0 00
27 (j) 1 1 3 46
28 (a) 11 3 0 0 00 (b) 12 3 2 1 00
29 (d) 9 2 5 00
30 (e) 4 8 0 00
31 (f) 1 5 0 0 00
32 (g) 2 8 0 00
33 120 9 2 0 00 120 9 2 0 00 28 8 8 9 46 29 0 9 9 46
34
Year Ended December 31, 2013 Worksheet
The Green Thumb Gallery
Totals Carried Forward Supplies Expense Advertising Expense
Depreciation expense—Store Equipment Depreciation expense—Office Equipment Salaries Expense
Payroll Taxes Expense
State Unemployment Tax Payable Salaries Payable
Beth Argo, Capital Beth Argo, Drawing
Income Summary Purchases
Purchases Returns & Allowances Rent Expense
Telephone Expense Sales
Sales Returns & Allowances Accounts Payable
Social Security Tax Payable Supplies
Prepaid Advertising Store Equipment
Accumulated Depr.—Store Equipment
Medicare Tax Payable
Federal Unemployment Tax Payable Office Equipment
Accumulated Depr.—Office Equipment Cash
Accounts Receivable
Allowance for Doubtful Accounts Merchandise Inventory
ADJUSTMENTS
DEBIT CREDIT DEBIT CREDIT
ACCOUNT NAME
TRIAL BALANCE
PROBLEM 12.4A (continued)
5 7 0 0 00 5 7 0 0 00 1
2 6 0 0 00 2 6 0 0 00 2
2 6 2 00 2 6 2 00 3
12 3 2 1 00 12 3 2 1 00 4
2 7 5 00 2 7 5 00 5
4 8 0 00 4 8 0 00 6
8 1 0 0 00 8 1 0 0 00 7
3 0 0 0 00 3 0 0 0 00 8
1 6 0 0 00 1 6 0 0 00 9
5 6 0 00 5 6 0 00 10
2 6 2 5 00 2 6 2 5 00 11
5 4 3 46 5 4 3 46 12
1 2 4 54 1 2 4 54 13
1 4 64 1 4 64 14
9 8 82 9 8 82 15
1 8 3 0 00 1 8 3 0 00 16
25 4 5 7 00 25 4 5 7 00 17
20 0 0 0 00 20 0 0 0 00 18
90 0 4 8 00 90 0 4 8 00 19
1 1 0 0 00 1 1 0 0 00 20
46 4 0 0 00 46 4 0 0 00 21
4 3 0 00 4 3 0 00 22
6 0 0 0 00 6 0 0 0 00 23
5 9 0 00 5 9 0 00 24
15 9 3 0 00 15 9 3 0 00 25
1 5 2 3 46 1 5 2 3 46 26
27
11 3 0 0 00 12 3 2 1 00 11 3 0 0 00 12 3 2 1 00 28
9 2 5 00 9 2 5 00 29
4 8 0 00 4 8 0 00 30
1 5 0 0 00 1 5 0 0 00 31
2 8 0 00 2 8 0 00 32
137 1 0 4 46 137 3 1 4 46 86 0 2 8 46 102 7 9 9 00 51 0 7 6 00 34 5 1 5 46 33 34
CREDIT DEBIT CREDIT
ADJUSTED TRIAL BALANCE INCOME STATEMENT BALANCE SHEET
DEBIT CREDIT DEBIT
PROBLEM 12.4A (continued)
The Green Thumb Gallery
Worksheet (Continued)
Year Ended December 31, 2013
1 120 9 2 0 00 120 9 2 0 00 28 8 8 9 46 29 0 9 9 46
2 (c) 2 1 0 00
3 120 9 2 0 00 120 9 2 0 00 29 0 9 9 46 29 0 9 9 46
4 5 6
Totals Brought Forward
Uncollectible Accounts Expense Totals
Net Income
ACCOUNT NAME
TRIAL BALANCE ADJUSTMENTS
DEBIT CREDIT DEBIT CREDIT
PROBLEM 12.4A (continued)
137 1 0 4 46 137 3 1 4 46 86 0 2 8 46 102 7 9 9 00 51 0 7 6 00 34 5 1 5 46 1
2 1 0 00 2 1 0 00 2
137 3 1 4 46 137 3 1 4 46 86 2 3 8 46 102 7 9 9 00 51 0 7 6 00 34 5 1 5 46 3
16 5 6 0 54 16 5 6 0 54 4
102 7 9 9 00 102 7 9 9 00 51 0 7 6 00 51 0 7 6 00 5 6
Analyze: The total assets (assets, less accumulated depreciation) were decreased $2,374 by
adjustments.
ADJUSTED TRIAL BALANCE INCOME STATEMENT BALANCE SHEET
DEBIT CREDIT DEBIT CREDIT DEBIT CREDIT
PROBLEM 12.5A
Worksheet
1 Cash 30 1 0 0 00
2 35 2 0 0 00
3 4 2 0 00 (c) 2 8 0 0 00
4 86 0 0 0 00 (b) 78 0 0 0 00 (a) 86 0 0 0 00
5 Supplies 10 4 0 0 00 (d) 9 2 2 0 00
6 5 4 0 0 00 (e) 3 6 0 0 00
7 8 3 0 0 00
8 2 6 5 0 00 (f) 1 3 2 5 00
9 28 0 0 0 00
10 9 6 0 0 00 (g) 4 8 0 0 00
11 32 0 0 0 00
12 12 2 0 0 00
13 (h) 6 4 0 00
14 1 6 8 0 00 (j) 3 1 0 00
15 3 8 8 00 (j) 7 2 50
16 (k) 4 0 00
17 (k) 2 7 0 00
18 (i) 5 0 0 0 00
19 108 6 8 4 00
20 56 0 0 0 00
21 Sales 653 7 7 8 00
22 10 0 0 0 00
23 Purchases 350 0 0 0 00
24 9 2 0 0 00
25 Income Summary (a) 86 0 0 0 00 (b) 78 0 0 0 00
26 Rent Expenses 36 0 0 0 00
27 Telephone Expense 2 2 0 0 00
28 Salaries Expense 160 0 0 0 00 (i) 5 0 0 0 00
29 Payroll Taxes Expense 13 0 0 0 00 (j) 3 8 2 50
30 (k) 3 1 0 00
31 Supplies Expense (d) 9 2 2 0 00
32 Insurance Expense (e) 3 6 0 0 00
33 Totals Carried Forward 830 6 0 0 00 830 6 0 0 00 182 5 1 2 50 192 0 7 7 50 Warehouse Equipment
Accumulated Depr.—Office ACCOUNT NAME
TRIAL BALANCE ADJUSTMENTS
DEBIT CREDIT DEBIT CREDIT
Office Equipment
Accumulated Depr.—Warehouse Equipment
Sales Returns and Allowances Phillip Tucker, Drawing Phillip Tucker, Capital Salaries Payable
State Unemployment Tax Payable Federal Unemployment Tax Payable Medicare Tax Payable
Social Security Tax Payable Prepaid Insurance
Interest Payable Accounts Payable
Purchases Returns and Allowance
Healthy Habits Foods Company Year Ended December 31, 2013
Merchandise Inventory
Allowance for Doubtful Accounts Accounts Receivable
Notes Payable—Bank
PROBLEM 12.5A (continued)
30 1 0 0 00 30 1 0 0 00 1
35 2 0 0 00 35 2 0 0 00 2
3 2 2 0 00 3 2 2 0 00 3
78 0 0 0 00 78 0 0 0 00 4
1 1 8 0 00 1 1 8 0 00 5
1 8 0 0 00 1 8 0 0 00 6
8 3 0 0 00 8 3 0 0 00 7
3 9 7 5 00 3 9 7 5 00 8
28 0 0 0 00 28 0 0 0 00 9
14 4 0 0 00 14 4 0 0 00 10
32 0 0 0 00 32 0 0 0 00 11
12 2 0 0 00 12 2 0 0 00 12
6 4 0 00 6 4 0 00 13
1 9 9 0 00 1 9 9 0 00 14
4 6 0 50 4 6 0 50 15
4 0 00 4 0 00 16
2 7 0 00 2 7 0 00 17
5 0 0 0 00 5 0 0 0 00 18
108 6 8 4 00 108 6 8 4 00 19
56 0 0 0 00 56 0 0 0 00 20
653 7 7 8 00 653 7 7 8 00 21
10 0 0 0 00 10 0 0 0 00 22
350 0 0 0 00 350 0 0 0 00 23
9 2 0 0 00 9 2 0 0 00 24
86 0 0 0 00 78 0 0 0 00 86 0 0 0 00 78 0 0 0 00 25
36 0 0 0 00 36 0 0 0 00 26
2 2 0 0 00 2 2 0 0 00 27
165 0 0 0 00 165 0 0 0 00 28
13 6 9 2 50 13 6 9 2 50 29
30
9 2 2 0 00 9 2 2 0 00 31
3 6 0 0 00 3 6 0 0 00 32
914 2 9 2 50 923 8 5 7 50 675 7 1 2 50 740 9 7 8 00 238 5 8 0 00 182 8 7 9 50 33 34
ADJUSTED TRIAL BALANCE INCOME STATEMENT BALANCE SHEET
DEBIT CREDIT DEBIT CREDIT DEBIT CREDIT
PROBLEM 12.5A (continued)
1 830 6 0 0 00 830 6 0 0 00 182 5 1 2 50 192 0 7 7 50
2 (f) 1 3 2 5 00
3 (g) 4 8 0 0 00
4 (c) 2 8 0 0 00
5 (h) 6 4 0 00
6 830 6 0 0 00 830 6 0 0 00 192 0 7 7 50 192 0 7 7 50
7 8 9
Totals Brought Forward
Depr. Expense—Office Equipment Depr. Expense—Warehouse Equipment
Uncollectible Accounts Expense Interest Expense
Totals Net Income
ACCOUNT NAME
TRIAL BALANCE ADJUSTMENTS
DEBIT CREDIT DEBIT CREDIT
PROBLEM 12.5A (continued)
914 2 9 2 50 923 8 5 7 50 675 7 1 2 50 740 9 7 8 00 238 5 8 0 00 182 8 7 9 50 1
1 3 2 5 00 1 3 2 5 00 2
4 8 0 0 00 4 8 0 0 00 3
2 8 0 0 00 2 8 0 0 00 4
6 4 0 00 6 4 0 00 5
923 8 5 7 50 923 8 5 7 50 685 2 7 7 50 740 9 7 8 00 238 5 8 0 00 182 8 7 9 50 6
55 7 0 0 50 55 7 0 0 50 7
740 9 7 8 00 740 9 7 8 00 238 5 8 0 00 238 5 8 0 00 8 9
Analyze: The net income will be $55,700.50.
BALANCE SHEET
CREDIT DEBIT CREDIT
DEBIT CREDIT DEBIT
ADJUSTED TRIAL BALANCE INCOME STATEMENT
PROBLEM 12.6A
The Wine Shop
Worksheet
1 Cash 28 3 8 6 00
2 Accounts Receivable 5 0 0 00
3 Prepaid Advertising 4 8 0 00 (c) 1 6 0 00
4 Supplies 3 0 0 00 (d) 2 0 0 00
5 Merchandise Inventory 15 0 0 0 00 (a) 12 0 0 0 00 15 0 0 0 00
6 Store Equipment 25 0 0 0 00 00
7 Accum. Depr., Store Equip. 3 0 0 0 00 (e) 3 1 2 5 00
8 Office Equipment 5 0 0 0 00
9 Accum. Depr., Office Equip. 1 5 0 0 00 (f) 1 0 0 0 00
10 Notes Payable, due 2014 20 0 0 0 00
11 Accounts Payable 2 7 0 5 00
12 Wages Payable (h) 5 0 0 00
13 Social Security Tax Payable (i) 3 1 00
14 Medicare Tax Payable 7 25
15 Unearned Seminar Fees 6 0 0 0 00 (g) 2 0 0 0 00
16 Interest Payable (j) 1 0 0 00
17 Vincent Arroyo, Capital 32 7 0 0 00
18 Vincent Arroyo, Drawing 14 1 1 0 00
19 Income Summary (b) 15 0 0 0 00 (a) 12 0 0 0 00
20 Sales 153 9 7 0 00
21 Sales Discounts 2 0 0 00
22 Seminar Fee Income (g) 2 0 0 0 00
23 Purchases 91 0 0 0 00
24 Purchases Returns & Allow. 1 0 0 0 00
25 Freight In 2 2 5 00
26 Rent Expense 13 2 0 0 00
27 Wages Expense 24 0 0 0 00 (h) 5 0 0 00
28 Payroll Taxes Expense 3 3 2 4 00 (i) 3 8 25
29 Depreciation Exp., Store Equip. (e) 3 1 2 5 00
30 Depreciation Exp., Office Equip. (f) 1 0 0 0 00
31 Advertising Expense (c) 1 6 0 00
32 Supplies Expense (d) 2 0 0 00
33 Interest Expense 1 5 0 00 (j) 1 0 0 00
34 220 8 7 5 00 220 8 7 5 00 34 1 2 3 25 34 1 2 3 25
Year Ended December 31, 2013
ACCOUNT NAME
TRIAL BALANCE ADJUSTMENTS
DEBIT CREDIT DEBIT CREDIT
PROBLEM 12.6A (continued)
28 3 8 6 00 28 3 8 6 00 1
5 0 0 00 5 0 0 00 2
3 2 0 00 3 2 0 00 3
1 0 0 00 1 0 0 00 4
12 0 0 0 00 12 0 0 0 00 5
25 0 0 0 00 25 0 0 0 00 6
6 1 2 5 00 6 1 2 5 00 7
5 0 0 0 00 5 0 0 0 00 8
2 5 0 0 00 2 5 0 0 00 9
20 0 0 0 00 20 0 0 0 00 10
2 7 0 5 00 2 7 0 5 00 11
5 0 0 00 5 0 0 00 12
3 1 00 3 1 00 13
7 25 7 25 14
4 0 0 0 00 4 0 0 0 00 15
1 0 0 00 1 0 0 00 16
32 7 0 0 00 14 1 1 0 00 32 7 0 0 00 17
14 1 1 0 00 18
15 0 0 0 00 12 0 0 0 00 15 0 0 0 00 12 0 0 0 00 19
153 9 7 0 00 153 9 7 0 00 20
2 0 0 00 2 0 0 00 21
2 0 0 0 00 2 0 0 0 00 22
91 0 0 0 00 91 0 0 0 00 23
1 0 0 0 00 1 0 0 0 00 24
2 2 5 00 2 2 5 00 25
13 2 0 0 00 13 2 0 0 00 26
24 5 0 0 00 24 5 0 0 00 27
3 3 6 2 25 3 3 6 2 25 28
3 1 2 5 00 3 1 2 5 00 29
1 0 0 0 00 1 0 0 0 00 30
1 6 0 00 1 6 0 00 31
2 0 0 00 2 0 0 00 32
2 5 0 00 2 5 0 00 33
237 6 3 8 25 237 6 3 8 25 152 2 2 2 25 168 9 7 0 00 85 4 1 6 00 68 6 6 8 25 34
16 7 4 7 75 16 7 4 7 75 35
168 9 7 0 00 168 9 7 0 00 85 4 1 6 00 85 4 1 6 00 36 CREDIT
BALANCE SHEET
DEBIT CREDIT DEBIT CREDIT DEBIT
ADJUSTED TRIAL BALANCE INCOME STATEMENT
PROBLEM 12.1B
POST.
REF.
1 2013 1
2 Dec 31 (Adjustment a) 2
3 Income Summary 9 0 0 0 00 3
4 Merchandise Inventory 9 0 0 0 00 4
5 5
6 31 (Adjustment b) 6
7 Merchandise Inventory 10 5 0 0 00 7
8 Income Summary 10 5 0 0 00 8
9 9
10 31 (Adjustment c) 10
11 Unearned Seminar Fees 7 5 0 0 00 11
12 Seminar Fees Income 7 5 0 0 00 12
13 13
14 31 (Adjustment d) 14
15 Insurance Expense 6 0 0 0 00 15
16 Prepaid Insurance 6 0 0 0 00 16
17 17
18 31 (Adjustment e) 18
19 Depreciation Expense - Store Equipment 3 0 0 00 19
20 Accumulated Depreciation - Store Equipment 3 0 0 00 20
21 21
22 31 (Adjustment f) 22
23 Wages Expense 5 0 0 00 23
24 Wages Payable 5 0 0 00 24
25 25
26 31 (Adjustment g) 26
27 Payroll Taxes Expense 5 7 25 27
28 State Unemployment Taxes Payable 1 5 00 28
29 Federal Unemployment Taxes Payable 4 00 29
30 Medicare Taxes Payable 7 25 30
31 Social Security Taxes Payable 3 1 00 31
32 32
33 31 (Adjustment h) 33
34 Uncollectible Accounts Expense 45 0 0 0 00 34
35 Allowance for Doubtful Accounts 45 0 0 0 00 35
18
DATE DESCRIPTION DEBIT CREDIT
GENERAL JOURNAL PAGE
PROBLEM 12.1B (continued)
POST.
REF.
37 31 (Adjustment i) 37
38 Rent Expense 6 6 0 0 00 38
39 Prepaid Rent 6 6 0 0 00 39
40 40
41 31 (Adjustment j) 41
42 Supplies Expense 2 7 5 00 42
43 Supplies 2 7 5 00 43
44 44
45 31 (Adjustment k) 45
46 Interest Expense 4 0 00 4 0 00 46
47 Interest Payable 47
Notes on calculations:
a.-b.
c.
d.
e.
f.
g. Amounts given.
h.
i.
j.
k.
earned).
The balance of the Unearned Seminar Fees account will be $2,500 ($10,000 - $7,500
$3,000,000 × 1.5% = $45,000
$13,200/6 months prepaid = $2,200/month; $2,200 × 3 months expired = $6,600.
$500 balance - $225 supplies on hand = $275 of supplies used.
$8,000 principal × 6% interest rate × 1/12 time factor = $40
$10,000 cash received /4 seminars = $2,500/seminar.
$2,500/seminar × 3 seminars conducted = $7,500 earned.
$12,000/6 months in policy = $2,000/month.
$2,000/month × 3 months expired (October, November and December) = $6,000 insurance expense.
($5,000 cost - $500 salvage value) /60 months = $75/month depreciation.
Analyze:
$75/month × 4 months of use (September, October, November and December) = $300.
Amounts given.
Amounts given.
18
DATE DESCRIPTION DEBIT CREDIT
GENERAL JOURNAL PAGE
PROBLEM 12.2B
POST.
REF.
1 2013 1
2 June 1 Prepaid Rent 18 0 0 0 00 2
3 Cash 18 0 0 0 00 3
4 4
5 1 Cash 17 5 5 0 00 5
6 Prepaid Interest 4 5 0 00 6
7 Notes Payable 18 0 0 0 00 7
8 8
9 1 Cash 54 6 0 0 00 9
10 Unearned Advertising Fees 54 6 0 0 00 10
11 11
12 1 Office Equipment 15 4 0 0 00 12
13 Notes Payable 15 4 0 0 00 13
14 14
15 1 Prepaid Insurance 1 9 4 4 00 15
16 Cash 1 9 4 4 00 16
17 17
18 3 Office Furniture 17 4 0 0 00 18
19 Accounts Payable 9 0 0 0 00 19
20 Cash 8 4 0 0 00 20
21 21
22 5 Office Supplies 2 8 1 0 00 22
23 Cash 2 8 1 0 00 23
24 24
1
DATE DESCRIPTION DEBIT CREDIT
GENERAL JOURNAL PAGE
PROBLEM 12.2B (continued)
POST.
REF.
1 1
2 2013 2
3 June 30 Rent Expense 3 0 0 0 00 3
4 Prepaid Rent 3 0 0 0 00 4
5 5
6 30 Interest Expense 1 5 0 00 6
7 Prepaid Interest 1 5 0 00 7
8 8
9 30 Unearned Advertising Fees 4 5 5 0 00 9
10 Advertising Fees 4 5 5 0 00 10
11 11
12 30 Interest Expense 1 5 4 00 12
13 Interest Payable 1 5 4 00 13
14 14
15 30 Depreciation Expense—Office Equipment 2 4 0 00 15
16 2 4 0 00 16
17 17
18 30 Insurance Expense 1 6 2 00 18
19 Prepaid Insurance 1 6 2 00 19
20 20
21 30 Depreciation Expense—Office Furniture 2 7 0 00 21
22 2 7 0 00 22
23 23
24 30 Office Supplies Expense 1 6 6 0 00 24
25 Office Supplies 1 6 6 0 00 25
26 26
Analyze: Total Rent expense will be $18,000 at the end of the year.
GENERAL JOURNAL PAGE
Adjusting Entries
Accumulated Depreciation—Office Equipment
Accumulated Depreciation—Office Furniture
2
DATE DESCRIPTION DEBIT CREDIT
PROBLEM 12.3B
Cross Timbers Company
Partial Worksheet
1 26 4 6 0 00
2 7 4 0 00 (a) 3 5 00
3 4 2 0 0 00 (b) 7 0 0 00
4 3 7 5 0 00 (c ) 6 2 5 00
5 4 5 0 00 (d) 1 5 0 00
6 4 8 4 0 00
7
8 (e) 7 5 00
9 9 0 0 0 00
10 (f) 1 3 0 00
11 20 2 5 0 00
12 4 4 0 0 00
13 (g) 3 5 00
14 22 0 0 0 00 (h) 7 0 0 0 00
15 6 7 3 0 00
16 2 0 0 0 00
17 (h) 7 0 0 0 00
18 1 6 0 0 00
19 1 2 0 00
20 2 2 0 00
21 (a) 3 5 00
22 (b) 7 0 0 00
23 (c) 6 2 5 00
24 (e) 7 5 00
25 (f) 1 3 0 00
26 (d) 1 5 0 00
27 (g) 3 5 00
28 53 3 8 0 00 53 3 8 0 00 8 7 5 0 00 8 7 5 0 00
29
Month Ended September 30, 2013
Notes Payable
Accounts Payable
Interest Payable
Unearned Course Fees
Advertising Expense
Depreciation
Expense—Furniture
Course Fees
Salaries Expense
Telephone Expense
Entertainment Expense
Scott Nelson, Capital
Depreciation
Expense—Equipment
Interest Expense
Totals
Scott Nelson, Drawing
Supplies Expense
Rent Expense
Cash
Supplies
Prepaid Rent
Prepaid Advertising
Prepaid Interest
Furniture
Accumulated
Depreciation—Office
Furniture
Accumulated
Depreciation—Equipment
ACCOUNT NAME
TRIAL BALANCE ADJUSTMENTS
DEBIT CREDIT DEBIT CREDIT
Equipment
PROBLEM 12.3B (continued)
26 4 6 0 00 1
7 0 5 00 2
3 5 0 0 00 3
3 1 2 5 00 4
3 0 0 00 5
4 8 4 0 00 6
7
7 5 00 8
9 0 0 0 00 9
1 3 0 00 10
20 2 5 0 00 11
4 4 0 0 00 12
3 5 00 13
15 0 0 0 00 14
6 7 3 0 00 15
2 0 0 0 00 16
7 0 0 0 00 17
1 6 0 0 00 18
1 2 0 00 19
2 2 0 00 20
3 5 00 21
7 0 0 00 22
6 2 5 00 23
7 5 00 24
1 3 0 00 25
1 8 5 00 26
27
53 6 2 0 00 53 6 2 0 00 28
29
CREDIT DEBIT CREDIT DEBIT
ADJUSTED TRIAL BALANCE INCOME STATEMENT
Analyze: The net dollar effect of the adjustments is an increase of $5,250.00 in income.
CREDIT BALANCE SHEET DEBIT
PROBLEM 12.4B
Fun Depot Worksheet
Year Ended December 31, 2013
1 Cash 26 4 0 0 00
2 Accounts Receivable 22 7 0 0 00
3 3 2 0 00 (c ) 3 0 8 0 00
4 Merchandise Inventory 138 0 0 0 00 (b)148 0 0 0 00 (a)138 0 0 0 00
5 Supplies 11 6 0 0 00 (d) 8 6 4 0 00
6 Prepaid Advertising 5 2 8 0 00 (e) 3 5 2 0 00
7 Store Equipment 32 5 0 0 00
8 5 7 6 0 00 (f) 5 7 6 0 00
9 Office Equipment 8 4 0 0 00
10 1 4 4 0 00 (g) 1 4 4 0 00
11 Accounts Payable 8 6 0 0 00
12 Social Security Tax Payable 5 9 2 0 00 (i) 4 9 6 00
13 Medicare Tax Payable 1 3 6 8 00 (i) 1 1 6 00
14 (j) 6 4 00
15 (j) 4 3 2 00
16 Salaries Payable (h) 8 0 0 0 00
17 Janie Fielder, Capital 112 2 5 0 00
18 Janie Fielder, Drawing 100 0 0 0 00
19 Sales 1,043 6 6 2 00
20 Sales Returns and Allowances 17 2 0 0 00
21 Purchases 507 6 0 0 00
22 5 0 4 0 00
23 Rent Expense 125 0 0 0 00
24 Telephone Expense 4 2 8 0 00
25 Salaries Expense 164 2 0 0 00 (h) 8 0 0 0 00
26 Payroll Taxes Expense 15 2 0 0 00 (i) 6 1 2 00
27 (j) 4 9 6 00
28 Income Summary (a)138 0 0 0 00 (b)148 0 0 0 00
29 Supplies Expense (d) 8 6 4 0 00
30 Advertising Expense 6 0 0 0 00 (e) 3 5 2 0 00
31 (f) 5 7 6 0 00
32 (g) 1 4 4 0 00
33 (c) 3 0 8 0 00
ACCOUNT NAME
TRIAL BALANCE ADJUSTMENTS
DEBIT CREDIT DEBIT CREDIT
Depreciation Expense—Office E iUncollectible Accounts Expense Accumulated Depr.—Store Equip.
Allowance for Doubtful Accounts
Purchases Returns and Allowances State Unemployment Tax Payable Federal Unemployment Tax Payable Accumulated Depr.—Office Equip.
Depreciation Expense—Store Equip.
PROBLEM 12.4B (continued)
26 4 0 0 00 26 4 0 0 00 1
22 7 0 0 00 22 7 0 0 00 2
3 4 0 0 00 3 4 0 0 00 3
148 0 0 0 00 148 0 0 0 00 4
2 9 6 0 00 2 9 6 0 00 5
1 7 6 0 00 1 7 6 0 00 6
32 5 0 0 00 32 5 0 0 00 7
11 5 2 0 00 11 5 2 0 00 8
8 4 0 0 00 8 4 0 0 00 9
2 8 8 0 00 2 8 8 0 00 10
8 6 0 0 00 8 6 0 0 00 11
6 4 1 6 00 6 4 1 6 00 12
1 4 8 4 00 1 4 8 4 00 13
6 4 00 6 4 00 14
4 3 2 00 4 3 2 00 15
8 0 0 0 00 8 0 0 0 00 16
112 2 5 0 00 112 2 5 0 00 17
100 0 0 0 00 100 0 0 0 00 18
1043 6 6 2 00 1043 6 6 2 00 19
17 2 0 0 00 17 2 0 0 00 20
507 6 0 0 00 507 6 0 0 00 21
5 0 4 0 00 5 0 4 0 00 22
125 0 0 0 00 125 0 0 0 00 23
4 2 8 0 00 4 2 8 0 00 24
172 2 0 0 00 172 2 0 0 00 25
16 3 0 8 00 16 3 0 8 00 26
27
138 0 0 0 00 148 0 0 0 00 138 0 0 0 00 148 0 0 0 00 28
8 6 4 0 00 8 6 4 0 00 29
9 5 2 0 00 9 5 2 0 00 30
5 7 6 0 00 5 7 6 0 00 31
1 4 4 0 00 1 4 4 0 00 32
3 0 8 0 00 3 0 8 0 00 33
1,351
7 4 8 00 7 4 8 00 1,0091,351 0 2 8 00 7 0 2 00 342 7 2 0 00 155 0 4 6 00 341,196
ADJUSTED TRIAL BALANCE INCOME STATEMENT BALANCE SHEET
DEBIT CREDIT DEBIT CREDIT DEBIT CREDIT
PROBLEM 12.4B (continued)
Fun Depot
Worksheet (Continued)
Year Ended December 31, 2013
1 1,184 3 6 0 00 1,184 3 6 0 00 317 5 4 8 00 317 5 4 8 00
2 1,184 3 6 0 00 1,184 3 6 0 00 317 5 4 8 00 317 5 4 8 00
3
4
5
Totals
Net Income
ACCOUNT NAME
Totals Brought Forward
TRIAL BALANCE ADJUSTMENTS
DEBIT CREDIT DEBIT CREDIT
PROBLEM 12.4B (continued)
1,351
7 4 8 00 1,351 7 4 8 00 1,009 0 2 8 00 1,196 7 0 2 00 342 7 2 0 00 155 0 4 6 00 1
187 6 7 4 00 187 6 7 4 00 2
1,196
7 0 2 00 1,196 7 0 2 00 342 7 2 0 00 342 7 2 0 00 3 4 5
Analyze: The resulting net income without the advertising adjustment would have been $191,194.
CREDIT BALANCE SHEET
DEBIT CREDIT DEBIT CREDIT DEBIT
ADJUSTED TRIAL BALANCE INCOME STATEMENT
PROBLEM 12.5B
Whatnots Worksheet
1 3 2 3 5 00
2 6 9 1 0 00
3 6 0 0 00 (c) 1 2 8 0 00
4 16 9 8 5 00 (b) 15 8 4 0 00 (a) 16 9 8 5 00
5 7 5 0 00 (d) 5 0 5 00
6 2 4 0 0 00 (e) 1 2 0 0 00
7 6 0 0 0 00
8
9 Equipment 2 0 0 0 00 (f) 1 0 0 0 00
10 15 7 6 0 00
11 4 1 0 0 00 (g) 2 0 5 0 00
12 4 0 0 0 00
13 6 0 0 00
14 (h) 9 0 00
15 (j) 8 9 90
16 (j) 2 1 03
17 (k) 1 4 50
18 (k) 7 2 50
19 (i) 1 4 5 0 00
20 39 7 8 0 00
21 8 0 0 0 00
22 236 5 6 0 00
23 6 0 0 0 00
24 160 0 0 0 00
25 2 0 0 0 00
26 18 0 0 0 00
27 2 4 0 0 00
28 40 0 0 0 00 (i) 1 4 5 0 00
29 3 2 0 0 00 (j) 1 1 0 93
30 (k) 8 7 00
31 (a) 16 9 8 5 00 (b) 15 8 4 0 00
32 (d) 5 0 5 00
33 (e) 1 2 0 0 00
34 289 6 4 0 00 289 6 4 0 00 36 1 7 7 93 40 5 9 7 93
Accumulated Depr.—Store Equipment Store Fixtures
Merchandise Inventory Supplies
Prepaid Insurance Store Equipment
TRIAL BALANCE ADJUSTMENTS
DEBIT CREDIT DEBIT CREDIT
ACCOUNT NAME Cash
Accounts Receivable
Allowance for Doubtful Accounts
Preston Allen, Drawing Sales
Accumulated Depr.—Store Fixtures Notes Payable
Accounts Payable Interest Payable
Social Security Tax Payable Medicare Tax Payable
Year Ended December 31, 2013
Income Summary Supplies Expense Insurance Expense Totals Carried Forward
Federal Unemployment Tax Payable State Unemployment Tax Payable
Telephone Expense Salaries Expense Payroll Taxes Expense Salaries Payable Preston Allen, Capital
Sales Returns and Allowances Purchases
Purchases Returns and Allowance Rent Expenses
PROBLEM 12.5B (continued)
3 2 3 5 00 3 2 3 5 00 1
6 9 1 0 00 6 9 1 0 00 2
1 8 8 0 00 1 8 8 0 00 3
15 8 4 0 00 15 8 4 0 00 4
2 4 5 00 2 4 5 00 5
1 2 0 0 00 1 2 0 0 00 6
6 0 0 0 00 6 0 0 0 00 7
8
3 0 0 0 00 3 0 0 0 00 9
15 7 6 0 00 15 7 6 0 00 10
6 1 5 0 00 6 1 5 0 00 11
4 0 0 0 00 4 0 0 0 00 12
6 0 0 00 6 0 0 00 13
9 0 00 9 0 00 14
8 9 90 8 9 90 15
2 1 03 2 1 03 16
1 4 50 1 4 50 17
7 2 50 7 2 50 18
1 4 5 0 00 1 4 5 0 00 19
39 7 8 0 00 39 7 8 0 00 20
8 0 0 0 00 8 0 0 0 00 21
236 5 6 0 00 236 5 6 0 00 22
6 0 0 0 00 6 0 0 0 00 23
160 0 0 0 00 160 0 0 0 00 24
2 0 0 0 00 2 0 0 0 00 25
18 0 0 0 00 18 0 0 0 00 26
2 4 0 0 00 2 4 0 0 00 27
41 4 5 0 00 41 4 5 0 00 28
3 3 9 7 93 3 3 9 7 93 29
30
16 9 8 5 00 15 8 4 0 00 16 9 8 5 00 15 8 4 0 00 31
5 0 5 00 5 0 5 00 32
1 2 0 0 00 1 2 0 0 00 33
307 1 2 7 93 311 5 4 7 93 249 9 3 7 93 254 4 0 0 00 57 1 9 0 00 57 1 4 7 93 34 CREDIT BALANCE SHEET
DEBIT CREDIT DEBIT CREDIT DEBIT
ADJUSTED TRIAL BALANCE INCOME STATEMENT
PROBLEM 12.5B (continued)
1 Totals Brought Forward 289 6 4 0 00 289 6 4 0 00 36 1 7 7 93 40 5 9 7 93
2 Depr. Expense—Store Equipment (f) 1 0 0 0 00
3 Depr. Expense—Store Fixtures (g) 2 0 5 0 00
4 Interest Expense (h) 9 0 00
5 Uncollectible Accounts Expense (c) 1 2 8 0 00
6 Totals 289 6 4 0 00 289 6 4 0 00 40 5 9 7 93 40 5 9 7 93
7 Net Income
8
9
ACCOUNT NAME
TRIAL BALANCE ADJUSTMENTS
DEBIT CREDIT DEBIT CREDIT
PROBLEM 12.5B (continued)
1 307 1 2 7 93 311 5 4 7 93 249 9 3 7 93 254 4 0 0 00 57 1 9 0 00 57 1 4 7 93 1
2 1 0 0 0 00 1 0 0 0 00 2
3 2 0 5 0 00 2 0 5 0 00 3
4 9 0 00 9 0 00 4
5 1 2 8 0 00 1 2 8 0 00 5
6 311 5 4 7 93 311 5 4 7 93 254 3 5 7 93 254 4 0 0 00 57 1 9 0 00 57 1 4 7 93 6
7 4 2 07 4 2 07 7
8 254 4 0 0 00 254 4 0 0 00 57 1 9 0 00 57 1 9 0 00 8
9 9
Analyze: The net book value of the company’s assets is $38,160. ($49,190 − $11,030).
ADJUSTED TRIAL BALANCE INCOME STATEMENT BALANCE SHEET
DEBIT CREDIT DEBIT CREDIT DEBIT CREDIT
PROBLEM 12.6B
The Game Place
Worksheet
1 Cash 32 4 6 5 00
2 Accounts Receivable 6 6 9 00
3 Prepaid Advertising 4 8 0 00 (c) 3 2 0 00
4 Supplies 4 2 5 00 (d) 2 7 5 00
5 Merchandise Inventory 18 5 0 0 00 (a) 20 0 0 0 00 (b) 18 5 0 0 00
6 Store Equipment 30 0 0 0 00
7 Accum. Depr., Store Equip. 3 0 0 0 00 (e) 4 5 0 0 00
8 Office Equipment 4 8 0 0 00
9 Accum. Depr., Office Equip. 1 5 0 0 00 (f) 1 5 0 0 00
10 Notes Payable, due 2014 22 5 0 0 00
11 Accounts Payable 3 7 2 5 00
12 Wages Payable (h) 8 0 0 00
13 Social Security Tax Payable (i) 4 9 60
14 Medicare Tax Payable (i) 1 1 60
15 Unearned Seminar Fees 7 5 0 0 00 (g) 6 0 0 0 00
16 Interest Payable (j) 1 5 0 00
17 Matt Huffman, Capital 43 0 0 0 00
18 Matt Huffman, Drawing 18 0 0 0 00
19 Income Summary (b) 18 5 0 0 00 (a) 20 0 0 0 00
20 Sales 162 6 6 0 00
21 Sales Discounts 1 8 0 00
22 Seminar Fee Income (g) 6 0 0 0 00
23 Purchases 92 5 0 0 00
24 Purchases Returns & Allow. 7 7 0 00
25 Freight In 2 7 5 00
26 Rent Expense 26 4 0 0 00
27 Wages Expense 18 0 0 0 00 (h) 8 0 0 00
28 Payroll Taxes Expense 1 8 1 1 00 (i) 6 1 20
29 Depreciation Exp., Store Equip. (e) 4 5 0 0 00
30 Depreciation Exp., Office Equip. (f) 1 5 0 0 00
31 Advertising Expense (c) 3 2 0 00
32 Supplies Expense (d) 2 7 5 00
33 Interest Expense 1 5 0 00 (j) 1 5 0 00
34 244 6 5 5 00 244 6 5 5 00 52 1 0 6 20 52 1 0 6 20
Year Ended December 31, 2013
ACCOUNT NAME
TRIAL BALANCE ADJUSTMENTS
DEBIT CREDIT DEBIT CREDIT
PROBLEM 12.6B (continued)
32 4 6 5 00 32 4 6 5 00 1
6 6 9 00 6 6 9 00 2
1 6 0 00 1 6 0 00 3
1 5 0 00 1 5 0 00 4
20 0 0 0 00 20 0 0 0 00 5
30 0 0 0 00 30 0 0 0 00 6
7 5 0 0 00 7 5 0 0 00 7
4 8 0 0 00 4 8 0 0 00 8
3 0 0 0 00 3 0 0 0 00 9
22 5 0 0 00 22 5 0 0 00 10
3 7 2 5 00 3 7 2 5 00 11
8 0 0 00 8 0 0 00 12
4 9 60 4 9 60 13
1 1 60 1 1 60 14
1 5 0 0 00 1 5 0 0 00 15
1 5 0 00 1 5 0 00 16
43 0 0 0 00 43 0 0 0 00 17
18 0 0 0 00 18 0 0 0 00 18
18 5 0 0 00 20 0 0 0 00 18 5 0 0 00 20 0 0 0 00 19
162 6 6 0 00 162 6 6 0 00 20
1 8 0 00 1 8 0 00 21
6 0 0 0 00 6 0 0 0 00 22
92 5 0 0 00 92 5 0 0 00 23
7 7 0 00 7 7 0 00 24
2 7 5 00 2 7 5 00 25
26 4 0 0 00 26 4 0 0 00 26
18 8 0 0 00 18 8 0 0 00 27
1 8 7 2 20 1 8 7 2 20 28
4 5 0 0 00 4 5 0 0 00 29
1 5 0 0 00 1 5 0 0 00 30
3 2 0 00 3 2 0 00 31
2 7 5 00 2 7 5 00 32
3 0 0 00 3 0 0 00 33
271 6 6 6 20 271 6 6 6 20 165 4 2 2 20 189 4 3 0 00 106 2 4 4 00 82 2 3 6 20 34
24 0 0 7 80 24 0 0 7 80 35
189 4 3 0 00 168 9 7 0 00 106 2 4 4 00 106 2 4 4 00 36
$18,500).
Analyze: The balance of merchandise inventory increased by $1,500 during 2013 ($20,000 -
BALANCE SHEET
DEBIT CREDIT DEBIT CREDIT DEBIT
ADJUSTED TRIAL BALANCE INCOME STATEMENT
CREDIT
CRITICAL THINKING PROBLEM 12.1
Ben’s Jewelers Worksheet
1 13 0 5 0 00
2 49 9 0 0 00
3 2 0 0 0 00 (c) 1 0 0 0 00
4 105 9 0 0 00 (b) 98 7 0 0 00 (a)105 9 0 0 00
5 4 2 3 0 00 (d) 3 6 0 5 00
6 2 9 5 0 00 (e) 2 6 4 5 00
7 113 5 9 0 00
8 13 0 1 0 00 (f) 11 3 6 0 00
9 27 6 4 0 00
10 4 9 3 0 00 (g) 3 3 0 0 00
11 4 3 9 0 00
12 (h) 5 0 0 0 00
13 (i) 3 2 6 00
14 (i) 7 6 00
15 (j) 5 6 00
16 (j) 2 7 0 00
17 166 3 1 0 00
18 30 0 0 0 00
19 (a)105 9 0 0 00 (b) 98 7 0 0 00
20 862 2 3 0 00
21 7 5 8 0 00
22 504 8 1 0 00
23 4 2 4 0 00
24 10 7 7 0 00
25 7 0 0 0 00
26 75 9 5 0 00 (h) 4 0 0 0 00
27 35 5 0 0 00
28 12 3 0 0 00
29 (d) 3 6 0 5 00
30 (f) 11 3 6 0 00
31 77 4 8 0 00 (h) 1 0 0 0 00
32 1,067 8 8 0 00 1,067 8 8 0 00 224 5 6 5 00 232 2 3 8 00
33
ADJUSTMENTS
DEBIT CREDIT DEBIT CREDIT
Store Supplies Office Supplies
ACCOUNT NAME
TRIAL BALANCE
Cash
Accounts Receivable
Allowance for Doubtful Accounts Merchandise Inventory
Accounts Payable
Medicare Tax Payable Social Security Tax Payable Salaries Payable
Store Equipment
Accumulated Depr.—Store Equip.
Office Equipment
Accumulated Depr.—Office Equip.
Salaries Expense—Sales Income Summary Sales
Sales Returns and Allowances Purchases
Federal Unemployment Tax Payable State Unemployment Tax Payable Ben Waites, Capital
Ben Waites, Drawing
Salaries Expense—Office Total Carried Forward
Year Ended December 31, 2013
Rent Expense Advertising Expense Store Supplies Expense
Depreciation Expense—Store Equip.
Purchases Returns and Allowances Purchases Discounts
Freight In
CRITICAL THINKING PROBLEM 12.1 (continued)
13 0 5 0 00 13 0 5 0 00 1
49 9 0 0 00 49 9 0 0 00 2
3 0 0 0 00 3 0 0 0 00 3
98 7 0 0 00 98 7 0 0 00 4
6 2 5 00 6 2 5 00 5
3 0 5 00 3 0 5 00 6
113 5 9 0 00 113 5 9 0 00 7
24 3 7 0 00 24 3 7 0 00 8
27 6 4 0 00 27 6 4 0 00 9
8 2 3 0 00 8 2 3 0 00 10
4 3 9 0 00 4 3 9 0 00 11
5 0 0 0 00 5 0 0 0 00 12
3 2 6 00 3 2 6 00 13
7 6 00 7 6 00 14
5 6 00 5 6 00 15
2 7 0 00 2 7 0 00 16
166 3 1 0 00 166 3 1 0 00 17
30 0 0 0 00 30 0 0 0 00 18
105 9 0 0 00 98 7 0 0 00 105 9 0 0 00 98 7 0 0 00 19
862 2 3 0 00 862 2 3 0 00 20
7 5 8 0 00 7 5 8 0 00 21
504 8 1 0 00 504 8 1 0 00 22
4 2 4 0 00 4 2 4 0 00 23
10 7 7 0 00 10 7 7 0 00 24
7 0 0 0 00 7 0 0 0 00 25
79 9 5 0 00 79 9 5 0 00 26
35 5 0 0 00 35 5 0 0 00 27
12 3 0 0 00 12 3 0 0 00 28
3 6 0 5 00 3 6 0 5 00 29
11 3 6 0 00 11 3 6 0 00 30
78 4 8 0 00 78 4 8 0 00 31
1,180
2 9 5 00 1,187 9 6 8 00 846 4 8 5 00 975 9 4 0 00 333 8 1 0 00 212 0 2 8 00 32 33 CREDIT BALANCE SHEET
DEBIT CREDIT DEBIT CREDIT DEBIT
ADJUSTED TRIAL BALANCE INCOME STATEMENT
CRITICAL THINKING PROBLEM 12.1 (continued)
Ben’s Jewelers Worksheet (Continued) Year Ended December 31, 2013
1 1,067 8 8 0 00 1,067 8 8 0 00 224 5 6 5 00 232 2 3 8 00
2 (e) 2 6 4 5 00
3 (g) 3 3 0 0 00
4 (c) 1 0 0 0 00
5 (i) 4 0 2 00
6 (j) 3 2 6 00
7 1,067 8 8 0 00 1,067 8 8 0 00 232 2 3 8 00 232 2 3 8 00
8 Net Income 9
ACCOUNT NAME
TRIAL BALANCE ADJUSTMENTS
DEBIT CREDIT DEBIT CREDIT
Totals Brought Forward Office Supplies Expense Depreciation Expense—Office Uncollectible Accounts Expense Payroll Taxes Expense
Totals
CRITICAL THINKING PROBLEM 12.1 (continued)
1,180
2 9 5 00 1,187 9 6 8 00 846 4 8 5 00 975 9 4 0 00 333 8 1 0 00 212 0 2 8 00 1
2 6 4 5 00 2 6 4 5 00 2
3 3 0 0 00 3 3 0 0 00 3
1 0 0 0 00 1 0 0 0 00 4
7 2 8 00 7 2 8 00 5
6 1,187
9 6 8 00 1,187 9 6 8 00 854 1 5 8 00 975 9 4 0 00 333 8 1 0 00 212 0 2 8 00 7
121 7 8 2 00 121 7 8 2 00 8
975 9 4 0 00 975 9 4 0 00 333 8 1 0 00 333 8 1 0 00 9
ADJUSTED TRIAL BALANCE INCOME STATEMENT BALANCE SHEET
DEBIT CREDIT DEBIT CREDIT DEBIT CREDIT
CRITICAL THINKING PROBLEM 12.1 (continued)
POST.
REF.
1 1
2 2013 Instruction 2 2
3 Dec. 31 Income Summary 105 9 0 0 00 3
4 Merchandise Inventory 105 9 0 0 00 4
5 5
6 31 Merchandise Inventory 98 7 0 0 00 6
7 Income Summary 98 7 0 0 00 7
8 8
9 31 Uncollectible Accounts Expense 1 0 0 0 00 9
10 Allowance for Doubtful Accounts 1 0 0 0 00 10
11 11
12 31 Store Supplies Expense 3 6 0 5 00 12
13 Store Supplies 3 6 0 5 00 13
14 14
15 31 Office Supplies Expense 2 6 4 5 00 15
16 Office Supplies 2 6 4 5 00 16
17 17
18 31 Depreciation Expense—Store Equipment 11 3 6 0 00 18
19 Accumulated Depreciation—Store Equipment 11 3 6 0 00 19
20 20
21 31 Depreciation Expense—Office Equipment 3 3 0 0 00 21
22 Accumulated Depreciation—Office Equipment 3 3 0 0 00 22
23 23
24 31 Salaries Expense—Sales 4 0 0 0 00 24
25 Salaries Expense—Office 1 0 0 0 00 25
26 Salaries Payable 5 0 0 0 00 26
27 27
28 31 Payroll Taxes Expense 4 0 2 00 28
29 Social Security Tax Payable 3 2 6 00 29
30 Medicare Tax Payable 7 6 00 30
31 31
32 31 Payroll Taxes Expenses 3 2 6 00 32
33 Federal Unemployment Tax Payable 5 6 00 33
34 State Unemployment Tax Payable 2 7 0 00 34
35 35
Adjusting Entries
30
DATE DESCRIPTION DEBIT CREDIT
GENERAL JOURNAL PAGE
CRITICAL THINKING PROBLEM 12.1 (continued)
POST.
REF.
1 1
2 2013 Instruction 3 2
3 Dec. 31 Sales 862 2 3 0 00 3
4 Purchases Returns and Allowances 4 2 4 0 00 4
5 Purchases Discounts 10 7 7 0 00 5
6 Income Summary 877 2 4 0 00 6
7 7
8 Dec. 31 Income Summary 748 2 5 8 00 8
9 Sales Returns and Allowances 7 5 8 0 00 9
10 Purchases 504 8 1 0 00 10
11 Freight In 7 0 0 0 00 11
12 Salaries Expense—Sales 79 9 5 0 00 12
13 Rent Expense 35 5 0 0 00 13
14 Advertising Expense 12 3 0 0 00 14
15 Store Supplies Expense 3 6 0 5 00 15
16 Depreciation Expense—Store Equipment 11 3 6 0 00 16
17 Office Salaries Expense 78 4 8 0 00 17
18 Uncollectible Accounts Expense 1 0 0 0 00 18
19 Depreciation Expense—Office Equipment 3 3 0 0 00 19
20 Office Supplies Expense 2 6 4 5 00 20
21 Payroll Taxes Expense 7 2 8 00 21
22 22
23 31 Income Summary 121 7 8 2 00 23
24 Ben Waites, Capital 121 7 8 2 00 24
25 25
26 31 Ben Waites, Capital 30 0 0 0 00 26
27 Ben Waites, Drawing 30 0 0 0 00 27
28 28
GENERAL JOURNAL PAGE 32
DATE DESCRIPTION DEBIT CREDIT
a. Net Sales Sales $862,230
Less Sales Returns and Allowances 7,580
Net Sales $854,650
b. Net Delivered Purchases $504,810
Cost of Purchases Freight In 7,000
Delivered Cost of Purchases $511,810
Less Purchases Returns and Allowances $4,240
Purchases Discounts 10,770 15,010
Net Delivered Cost of Purchases 496,800
c. Cost of Goods Sold Merchandise Inventory, January 1, 2013 $105,900
Net Delivered Cost of Purchases 496,800
Total Merchandise Available for Sale 602,700
Less Merchandise Inventory, December 31, 2013 98,700
Cost of Goods Sold $504,000
d. Net Income $121,782
(from worksheet)
e. Capital, Ben Waites, Capital, January 1, 2013 $166,310
December 31 Net Income for Year $121,782
Less Withdrawals for Year 30,000 91,782
Ben Waites, Capital, December 31, 2013 $258,092
CRITICAL THINKING PROBLEM 12.1 (continued)
Analyze: The changes shown in Ben Waites, Capital in the statement of owner’s equity
will be the net income, $121,782, and the withdrawal of $30,000.
CRITICAL THINKING PROBLEM 12.2
1.
2.
Increase in cash account $48,028
Net Income from income statement 19,100
Difference $28,928
Expense not requiring the use of cash:
Increase in Salaries Payable $12,360
Decrease in Prepaid Insurance 300
Decrease in Supplies 2,268
Depreciation Expense 14,000
Difference $28,928
Under the accrual basis of accounting, expenses are recorded when incurred and not necessarily when
paid. Thus, when a business reports expenses on the income statement that did not require the use of
cash during the accounting period, the increase in the cash account will be greater than the net income.
SOLUTIONS TO BUSINESS CONNECTIONS
Ethical Dilemma:
Financial Statement Analysis:
1.
2.
3.
Teamwork:
The student’s answer will depend on the search engine used. In general, several Excel spreadsheets
should be available to download.
Prepaid expenses and accumulated depreciation.
Prepaid expenses: debit the appropriate expense account and credit Prepaid Expenses.
Accumulated depreciation: debit Depreciation Expense and credit Accumulated Depreciation.
Inventories increased by 1.6 percent.
You should count the row only once. Counting a row twice will misrepresent the amount of
inventory and create false financial statements.
Since service companies will not have inventory, the inventory adjustment would not be needed.
Both types of companies would require an insurance and depreciation adjustment. Service
companies that deal only with cash customers would not require an uncollectible account
adjustment. A service company would need the accrued wages since the employee will be directly
producing the service income but paid weekly instead of daily.
Internet Connection:
SOLUTIONS TO PRACTICE TEST
Part A True-False
1. 14.
2. 15.
3. 16.
4. 17.
5. 18.
6. 19.
7. 20.
8. 21.
9. 22.
10. 23.
11. 24.
12. 25.
13.
Part B Exercises
POST.
REF.
1 1
2 2
3 3
4 2013 (Adjustment 1) 4
5 Dec. 31 Supplies Expense 1 2 0 0 00 5
6 Store Supplies 1 2 0 0 00 6
7 7
8 (Adjustment 2) 8
9 31 Interest Expense 2 0 00 9
10 Interest Payable 2 0 00 10
11 11
12 (Adjustment 3) 12
13 31 Interest Receivable 7 0 00 13
14 Interest Income 7 0 00 14
15 15
16 (Adjustment 4) 16
17 31 Insurance Expense 4 0 0 00 17
18 Prepaid Insurance 4 0 0 00 18
19 19
20 (Adjustment 5) 20
21 31 Unearned Season Tickets Income 360 0 0 0 00 21
22 Season Tickets Income 360 0 0 0 00 22
GENERAL JOURNAL
TRUE
TRUE
Adjusting Entries
PAGE
FALSE
TRUE
DATE DESCRIPTION DEBIT CREDIT
