(45-60 min

(45-60 min.) P 3-5A

Reqs. 1 and 2

Cash					Accounts Receivable
	7,100					19,780

Prepaid Rent				Supplies
	2,420	(b)	1,800		1,180	(c)	700
Bal.	620			Bal.	480

Furniture		Accumulated Depreciation
	19,740			3,630
			(d)	400
			Bal.	4,030

Accounts Payable			Salary Payable
		3,310		(f)	550
	(e)	610
	Bal.	3,920

Unearned Service Revenue				Milton Hupp, Capital
(a)	1,120		2,790		35,510
		Bal.	1,670

					Milton Hupp, Withdrawals
						5,350

(continued) P 3-5A

Reqs. 1 and 2

Service Revenue			Salary Expense
		15,700		3,800
	(a)	1,120	(f)	550
	Bal.	16,820	Bal.	4,350

Rent Expense					Depreciation Expense
(b)	1,800				(d)	400

Advertising Expense		Supplies Expense
	1,570	(c)	700
(e)	610
Bal.	2,180

(continued) P 3-5A

Req. 2

Journal
DATE		ACCOUNTS AND EXPLANATIONS	POST. REF.	DEBIT	CREDIT
		Adjusting Entries at August 31, 20X6

	a.	Unearned Service Revenue
		($2,790 ! $1,670)		1,120
		Commission Revenue			1,120

	b.	Rent Expense ($2,420 ! $620)		1,800
		Prepaid Rent			1,800

	c.	Supplies Expense		700
		Supplies			700

	d.	Depreciation Expense		400
		Accumulated Depreciation			400

	e.	Advertising Expense		610
		Accounts Payable			610

	f.	Salary Expense		550
		Salary Payable			550

(continued) P 3-5A

Req. 3

Liberty Duplicating Services
Adjusted Trial Balance
August 31, 20X6
ACCOUNT	DEBIT	CREDIT
Cash	$ 7,100
Accounts receivable	19,780
Prepaid rent	620
Supplies	480
Furniture	19,740
Accumulated depreciation		$ 4,030
Accounts payable		3,920
Salary payable		550
Unearned service revenue		1,670
Milton Hupp, capital		35,510
Milton Hupp, withdrawals	5,350
Service revenue		16,820
Salary expense	4,350
Rent expense	1,800
Depreciation expense	400
Advertising expense	2,180
Supplies expense	700	_________
Total	$62,500	$62,500

Req. 4

The company will use the adjusted trial balance to prepare its financial statements.

(20-30 min.) P 3-6A

Req. 1

Mastercraft Marble Cutters
Income Statement
Year Ended December 31, 20X8
Revenues:
Service revenue		$204,790
Expenses:
Salary expense	$87,800
Rent expense	12,000
Depreciation expense - equipment	11,300
Interest expense	4,200
Utilities expense	3,770
Insurance expense	3,150
Depreciation expense - office furniture	2,410
Supplies expense	1,690
Total expenses		126,320
Net income		$ 78,470

Mastercraft Marble Cutters
Statement of Owner’s Equity
Year Ended December 31, 20X8
B. Masters, capital, December 31, 20X7	$ 32,380
Add: Net income	78,470
	110,850
Less: Withdrawals	(48,000)
B. Masters, capital, December 31, 20X8	$ 62,850

(continued) P 3-6A

Req. 1

Mastercraft Marble Cutters
Balance Sheet
December 31, 20X8
ASSETS		LIABILITIES
Cash	$ 2,340	Accounts payable	$ 13,600
Accounts receivable	50,490	Unearned service
Prepaid rent	1,350	revenue	4,520
Supplies	970	Interest payable	2,130
		Salary payable	930
Equipment $75,690		Note payable	45,000
Less: Accum.		Total liabilities	66,180
deprec. (2,240)	53,450
Office furniture $24,100		OWNER’S EQUITY
Less: Accum.		B. Masters, capital	62,850
deprec. (3,670)	20,430	Total liabilities and	_______
Total assets	$129,030	owner’s equity	$129,030

Note: The Working Paper allows students to create a second dollar-amount column for assets if needed.

(continued) P 3-6A

Req. 2

a. Results of operations: Income statement

Results of operations were successful, as shown by the fact that Mastercraft Marble Cutters earned net income of $78,470 for the year.

b. Financial position: Balance sheet

Financial position looks strong, as shown by the fact that Mastercraft’s total assets ($129,030) far exceed total liabilities ($66,180). Mastercraft should have no trouble paying its bills.

Faculty Webserver - Disclaimer

Views expressed on this website are the views of the faculty member.