ACC1002X Financial Accounting

Semester 2 of Academic Year 2015-2016

SOLUTIONS to Optional Questions
CHAPTER 3: 3-23, 3-28, 3-41, 3-43
3-23
Debit
a.
b.
c.
d.
e.

7
2, 12
13
1

Credit
Given
1
3, 11
1
2

f.
g.
h.
i.
j.

Debit
3
6
3
8
1

Credit
7
7
1
1
9

k.
l.
m.

Debit
13
13
13

Credit
5
1
6

3-28
(a)
(b)
(c)
(d)
(e)

3-41
1.

Dr. Cash
Cr. Paid-in capital

50,000

Dr. Inventory
Cr. Accounts payable

90,000

Dr. Accounts receivable

Cr. Sales

100,000

50,000
90,000
100,000

Dr. Cost of goods sold

Cr. Inventory

57,000

Dr. Accounts payable

Cr. Cash

18,000

57,000
18,000

Answers are in thousands of dollars.

a.

b.

c.

d.

Dr. Inventory
Cr. Accounts payable
Acquisition of inventories

550

Dr. Accounts receivable

Cr. Sales
Sales on account

810

Dr. Cost of goods sold

Cr. Inventory
Cost of inventory sold

445

550

810

445

Dr. Cash
80
Cr. Note payable
80
Borrowed from a supplier on June 1, 20X1. Four-year note, interest at 15%, and principal
payable at end of four years.
Page 1 of 6

e.

f.

g.

h.

i.

j.

k.

l.

m.

n.

o.

Dr. Prepaid rent

Cr. Cash
Paid rent in advance

25

Dr. Wages expense

Cr. Cash
Paid wages

165

Dr. Miscellaneous expenses

Cr. Cash
Paid miscellaneous expenses

25

165

75
75

Dr. Note receivable

20
Cr. Cash
Loan to office manager one-year note, 10% interest.
Dr. Cash
Cr. Accounts receivable
Collections on accounts

692

Dr. Accounts payable

Cr. Cash
Payments on accounts

472

Dr. Rent expense

Cr. Prepaid rent
To reduce prepaid rent to $3,000

20

692

472
26
26

Dr. Depreciation expense

6
Cr. Accumulated depreciation, store equipment
Depreciation for the year 20X1

Dr. Wages expense

Cr. Cash
Adjustment for wages

6
6

Dr. Interest expense

Cr. Cash
Adjustment: (.15 $80,000 7/12)

Dr. Cash
Cr. Interest revenue
Adjustment: (.10 $20,000 6/12)

Page 2 of 6

2.

**

Cash
24 (e)
80 (f)
692 (g)
1 (h)
(j)
(m)
(n)
27

*
(a)
**

Inventory
131 (c)
550
236

*
(e)
**

Prepaid Rent
4 (k)
25
3

*
(d)
(i)
(o)

25
165
75
20
472
6
7

Accounts Receivable
*
40 (i)
692
(b)
810
**
158

(h)

Note Receivable
20

445

(c)

26

Store Equipment
60

Accumulated Depreciation,
Store Equipment
*
24
(l)
6
**
30

Accounts Payable
(j)
472 *
(a)
**

116
550
194

Note Payable
(d)

80

Cost of Goods Sold

445

Paid-in Capital
*

40

(k)

Rent Expense
26

Retained Earnings
*

79

(l)

Depreciation Expense
6

(n)

Interest Expense
7

(f)
(m)
**

Wages Expense
165
6
171

Sales

(g)

(b)

810

Interest Revenue
(o)

Miscellaneous Expense
75

* Balance December 31, 20X0

** Balance December 31, 20X1

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3.

HARUI NURSERY
Trial Balance
December 31, 20X1
Account Title

Debits

Cash
$ 27
Accounts receivable
158
Note receivable
20
Inventory
236
Prepaid rent
3
Store equipment
60
Accumulated depreciation, store equipment
Accounts payable
Note payable
Paid-in capital
Retained earnings
Sales
Interest revenue
Cost of goods sold
445
Rent expense
26
Depreciation expense
6
Interest expense
7
Miscellaneous expenses
75
Wages expense
171
Total
$1,234

3-43

1.

Credits

30
194
80
40
79
810
1

$1,234

Amounts are in millions of dollars.

a.

b.

c.

d.

e.

f.

Dr. Cash
Cr. Revenue, company-owned restaurants
Cash sales

1,500
1,500

Dr. Accounts and notes receivable

Cr. Revenue from franchised restaurants
Fees due from independent owners of outlets

500

Dr. Inventories
Cr. Notes and accounts payable
Purchases on account

827

Dr. Cost of goods sold

Cr. Inventories
Inventories sold

820

Dr. Depreciation expense

Cr. Accumulated depreciation
Depreciation for year

226

Dr. Prepaid expenses

Cr. Cash
Rent and insurance premiums

500

827

820

226
42
42
Page 4 of 6

g.

h.

i.

j.

k.

l.

2.

Bal.
(a)
(i)

Bal.

Dr. Operating expenses

Cr. Prepaid expenses
Expirations of prepaid accounts

37

Dr. Other liabilities

Cr. Cash
Disbursements to reduce liabilities

148

Dr. Cash
Cr. Accounts and notes receivable
Collections on receivables

590

Dr. Notes and accounts payable

Cr. Cash
Disbursements to creditors

747

Dr. Interest expense

Cr. Cash
Disbursements for interest

100

148

590

747

100

Dr. Operating expenses

Cr. Cash
Outlays for miscellaneous expenses

1,010
1,010

Beginning balance is June 30, 2009. Ending balance is July 31, 2009. Double rules are not drawn
for accounts containing a lone number. That number automatically serves as the ending balance.
Cash
2,161 (f)
1,500 (h)
590 (j)
(k)
(l)
4,251
2,204

Accounts and
Notes Receivable
Bal.
930 (i)
(b)
500
Bal.
840

Bal.
(c)
Bal.

37

Inventories
103 (d)
827
110

42
148
747
100
1,010
2,047

(j)

590

(d)

820

Notes and
Accounts Payable
747 Bal.
(c)
Bal.

540
827
620

(h)

Other Liabilities
148 Bal. 15,423
Bal. 15,275

Paid-in Capital
Bal.
4,714

(g)
(l)
Bal.

Cost of Goods Sold

820

Operating Expense
37
1,010
1,047

Retained Earnings
Bal. 29,927

Other
Stockholders Equity
Bal. 21,397

Page 5 of 6

Prepaid Expenses
Bal.
403 (g)
(f)
42
Bal.
408

37

Property and
Equipment, at Cost
Bal. 32,210

Bal.

Revenue, CompanyOwned Restaurants

(a)
1,500

Depreciation Expense
(e)
226

(k)

Revenues From
Franchised Restaurants
(b)
500

Interest Expense
100

Other Assets
4,856

Accumulated Depreciation
Bal. 11,456
(e)
226
Bal. 11,682

3.

McDONALDS CORPORATION
Trial Balance
July 31, 2009
(In Millions of Dollars)
Account Title
Cash
Accounts and notes receivable
Inventories
Prepaid expenses
Property and equipment, at cost
Other assets
Accumulated depreciation
Notes and accounts payable
Other liabilities
Paid-in capital
Retained earnings
Other stockholders equity
Revenues, company-owned restaurants
Revenues from franchised restaurants
Cost of goods sold
Operating expenses
Depreciation expense
Interest expense
Totals

Debits
$ 2,204
840
110
408
32,210
4,856

Credits

$11,682
620
15,275
4,714
29,927
21,397
1,500
500
820
1,047
226
100
$64,218

$64,218

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