Solutions manual for Intermediate Accounting (volume 1) 13th Canadian edition

CHAPTER 0 Accounting Cycle Review SOLUTIONS TO BRIEF EXERCISES BRIEF EXERCISE 0.1 Assets Liabilities Shareholders’ Equity (a) (b) (c) + + – + NE NE NE + – LO 1 BT: C Difficulty: Easy TOT: 2 min. AACSB: None AICPA FC: Reporting BRIEF EXERCISE 0.2 Assets = Liabilities + Shareholders’ Equity Cash + Accounts Receivable + Supplies = Accounts Payable + Bonds Payable+ Common Shares + Retained Earnings (1) +$60,000 +$60,000 (2) –9,000 –$9,000 Paid div. (3) +13,000 –$13,000 (4) +$3,100 +$3,100 LO 1 BT: AP Difficulty: Medium TOT: 5 min. AACSB: Analytic AICPA FC: Reporting Copyright © 2022 John Wiley & Sons Canada, Ltd.. Kieso et al., Intermediate Accounting, 13Ce, Solutions Manual 0-2 BRIEF EXERCISE 0.3 Assets = Liabilities + Shareholders’ Equity Cash + Inventory +Equipment = Accounts Payable + Common Shares + Retained Earnings (1) -$286,176 +$286,176 (2) +137,590 +$137,590 Issued shares (3) +$68,480 +$68,480 LO 1 BT: AP Difficulty: Medium TOT: 3 min. AACSB: Analytic AICPA FC: Reporting BRIEF EXERCISE 0.4 Debit Effect Credit Effect Normal Balance (a) (b) (c) (d) (e) (f) Accounts Payable Advertising Expense Service Revenue Accounts Receivable Retained Earnings Dividends Decrease Increase Decrease Increase Decrease Increase Increase Decrease Increase Decrease Increase Decrease Credit Debit Credit Debit Credit Debit LO 2 BT: K Difficulty: Medium TOT: 4 min. AACSB: None AICPA FC: Reporting Copyright © 2022 John Wiley & Sons Canada, Ltd.. Kieso et al., Intermediate Accounting, 13Ce, Solutions Manual 0-3 BRIEF EXERCISE 0.5 Account Debited Account Credited June 1 2 3 12 Cash Equipment Rent Expense Accounts Receivable Common Shares Accounts Payable Cash Service Revenue LO 2 BT: C Difficulty: Medium TOT: 3 min. AACSB: None AICPA FC: Reporting BRIEF EXERCISE 0.6 June 1 Cash ................................................................................... 5,000 Common Shares ....................................................... 5,000 2 Equipment.......................................................................... 1,100 Accounts Payable..................................................... 1,100 3 Rent Expense..................................................................... 740 Cash........................................................................... 740 12 Accounts Receivable ........................................................ 700 Service Revenue....................................................... 700 LO 2 BT: AP Difficulty: Medium TOT: 4 min. AACSB: Analytic AICPA FC: Reporting BRIEF EXERCISE 0.7 (a) Basic Analysis (b) Debit-Credit Analysis Aug. 1 The asset Cash is increased; the shareholders’ equity account Common Shares is increased. Debits increase assets: debit Cash $10,000. Credits increase shareholders’ equity: credit Common Shares $10,000. 4 The asset Prepaid Insurance is increased; the asset Cash is decreased. Debits increase assets: debit Prepaid Insurance $1,500. Credits decrease assets: credit Cash $1,500. Copyright © 2022 John Wiley & Sons Canada, Ltd.. Kieso et al., Intermediate Accounting, 13Ce, Solutions Manual 0-4 BE 0.7 (Continued) 16 The asset Cash is increased; the revenue Service Revenue is increased. Debits increase assets: debit Cash $900. Credits increase revenues: credit Service Revenue $900. 27 The expense Salaries and Wages Expense is increased; the asset Cash is decreased. Debits increase expenses: debit Salaries and Wages Expense $620. Credits decrease assets: credit Cash $620. LO 2 BT: C Difficulty: Medium TOT: 8 min. AACSB: None AICPA FC: Reporting BRIEF EXERCISE 0.8 Aug. 1 Cash .................................................................................... 10,000 Common Shares........................................................ 10,000 4 Prepaid Insurance .............................................................. 1,500 Cash ........................................................................... 1,500 16 Cash .................................................................................... 900 Service Revenue........................................................ 900 27 Salaries and Wages Expense............................................ 620 Cash ........................................................................... 620 LO 2 BT: AP Difficulty: Medium TOT: 5 min. AACSB: Analytic AICPA FC: Reporting Copyright © 2022 John Wiley & Sons Canada, Ltd.. Kieso et al., Intermediate Accounting, 13Ce, Solutions Manual 0-5 BRIEF EXERCISE 0.9 Cash Service Revenue 5/12 1,600 5/15 2,000 5/5 3,800 5/15 2,000 Accounts Receivable 5/5 3,800 5/12 1,600 LO 3 BT: AP Difficulty: Medium TOT: 4 min. AACSB: Analytic AICPA FC: Reporting BRIEF EXERCISE 0.10 PEETE COMPANY Trial Balance June 30, 20X2 Debit Credit Cash........................................................................................... Accounts receivable................................................................. Equipment ................................................................................. Accounts payable ..................................................................... Common shares........................................................................ Dividends................................................................................... Service revenue ........................................................................ Salaries and wages expense ................................................... Rent expense ............................................................................ $ 5,400 3,000 13,000 1,200 4,000 1,000 $27,600 $ 1,000 18,000 8,600 $27,600 (Total of debit account balances = Total of credit account balances) LO 4 BT: AP Difficulty: Medium TOT: 6 min. AACSB: Analytic AICPA FC: Reporting Copyright © 2022 John Wiley & Sons Canada, Ltd.. Kieso et al., Intermediate Accounting, 13Ce, Solutions Manual 0-6 BRIEF EXERCISE 0.11 BIRELLIE COMPANY Trial Balance December 31, 20X2 Debit Credit Cash........................................................................................... Prepaid insurance..................................................................... Accounts payable ..................................................................... Unearned revenue .................................................................... Common shares........................................................................ Retained earnings..................................................................... Dividends................................................................................... Service revenue ........................................................................ Salaries and wages expense ................................................... Rent expense ............................................................................ $20,800 3,500 5,000 14,600 2,600 $46,500 $ 2,500 1,800 10,000 6,600 25,600 $46,500 (Assets, expenses, and dividends have debit balances) LO 4 BT: AN Difficulty: Medium TOT: 6 min. AACSB: Analytic AICPA FC: Reporting BRIEF EXERCISE 0.12 Cash Net Income (a) (b) (c) (d) (e) (f) $–100 0 0 +800 –2,500 0 $0 –20 +1,300 0 0 –600 LO 5 BT: C Difficulty: Medium TOT: 4 min. AACSB: None AICPA FC: Reporting Copyright © 2022 John Wiley & Sons Canada, Ltd.. Kieso et al., Intermediate Accounting, 13Ce, Solutions Manual 0-7 BRIEF EXERCISE 0.13 (a) Prepaid Insurance—to recognize insurance expired during the period. (b) Depreciation Expense—to allocate the cost of an asset to expense during the current period. (c) Unearned Revenue—to account for unearned revenue for which services were provided during the period. (d) Interest Payable—to recognize interest accrued but unpaid on notes payable during the current period. LO 5 BT: C Difficulty: Medium TOT: 4 min. AACSB: None AICPA FC: Reporting BRIEF EXERCISE 0.14 Item (1) Type of Adjustment (2) Accounts Before Adjustment (a) Prepaid Expenses Assets Overstated Expenses Understated (b) Accrued Revenues Assets Understated Revenues Understated (c) Accrued Expenses Expenses Understated Liabilities Understated (d) Unearned Revenues Liabilities Overstated Revenues Understated LO 5 BT: AN Difficulty: Hard TOT: 6 min. AACSB: Analytic AICPA FC: Reporting Copyright © 2022 John Wiley & Sons Canada, Ltd.. Kieso et al., Intermediate Accounting, 13Ce, Solutions Manual 0-8 BRIEF EXERCISE 0.15 Dec. 31 Supplies Expense......................................................... 7,700 Supplies ............................................................... 7,700 Supplies Supplies Expense 8,800 12/31 7,700 12/31 7,700 12/31 Bal. 1,100 LO 5 BT: AP Difficulty: Medium TOT: 5 min. AACSB: Analytic AICPA FC: Reporting BRIEF EXERCISE 0.16 Dec. 31 Depreciation Expense.................................................. 2,750 Accumulated Depreciation— Equipment........................................................ 2,750 Depreciation Expense Accumulated Depreciation— Equipment 12/31 2,750 12/31 2,750 Balance Sheet: Equipment ................................................................................ $22,000 Less: Accumulated depreciation—equipment ..................... 2,750 $19,250 LO 5 BT: AP Difficulty: Medium TOT: 6 min. AACSB: Analytic AICPA FC: Reporting BRIEF EXERCISE 0.17 July 1 Prepaid Insurance ........................................................ 12,400 Cash...................................................................... 12,400 Dec. 31 Insurance Expense ($12,400 X 6/24)........................... 3,100 Prepaid Insurance ............................................... 3,100 Prepaid Insurance Insurance Expense 7/1 12,400 12/31 3,100 12/31 3,100 12/31 Bal. 9,300 LO 5 BT: AP Difficulty: Medium TOT: 5 min. AACSB: Analytic AICPA FC: Reporting Copyright © 2022 John Wiley & Sons Canada, Ltd.. Kieso et al., Intermediate Accounting, 13Ce, Solutions Manual 0-9 BRIEF EXERCISE 0.18 July 1 Cash .............................................................................. 12,400 Unearned Revenue.............................................. 12,400 Dec. 31 Unearned Revenue....................................................... 3,100 Service Revenue ($12,400 X 6/24) ...................... 3,100 Unearned Revenue Service Revenue 12/31 3,100 7/1 12,400 12/31 3,100 12/31 Bal. 9,300 LO 5 BT: AP Difficulty: Medium TOT: 5 min. AACSB: Analytic AICPA FC: Reporting BRIEF EXERCISE 0.19 (a) Dec. 31 Interest Expense.................................................. 300 Interest Payable.......................................... 300 (b) 31 Accounts Receivable .......................................... 1,700 Service Revenue......................................... 1,700 (c) 31 Salaries and Wages Expense ............................. 780 Salaries and Wages Payable ..................... 780 LO 5 BT: AP Difficulty: Medium TOT: 5 min. AACSB: Analytic AICPA FC: Reporting Copyright © 2022 John Wiley & Sons Canada, Ltd.. Kieso et al., Intermediate Accounting, 13Ce, Solutions Manual 0-10 BRIEF EXERCISE 0.20 LEVIN CORPORATION Income Statement For the Year Ended December 31, 20X2 Revenues Service revenue .................................................................. $32,000 Expenses Salaries and wages expense.............................................. $14,000 Rent expense....................................................................... 3,900 Insurance expense.............................................................. 1,800 Supplies expense................................................................ 1,500 Depreciation expense......................................................... 1,000 Total expenses............................................................................. 22,200 Net income.................................................................................... $ 9,800 [Revenues – Expenses = Net income or (loss)] LO 7 BT: AP Difficulty: Medium TOT: 5 min. AACSB: Analytic AICPA FC: Reporting BRIEF EXERCISE 0.21 LEVIN CORPORATION Statement of Retained Earnings For the Year Ended December 31, 20X2 Retained earnings, January 1 ........................................................................... $17,200 Add: Net income / (Loss)................................................................................. 10,400 27,600 Less: Dividends ................................................................................................ 6,000 Retained earnings, December 31...................................................................... $21,600 (Beginning retained earnings ± Changes to retained earnings = Ending retained earnings) LO 7 BT: AP Difficulty: Medium TOT: 5 min. AACSB: Analytic AICPA FC: Reporting Copyright © 2022 John Wiley & Sons Canada, Ltd.. Kieso et al., Intermediate Accounting, 13Ce, Solutions Manual 0-11 BRIEF EXERCISE 0.22 Account (a) (b) (c) (d) (e) (f) (g) Accumulated Depreciation Depreciation Expense Retained Earnings (beginning) Dividends Service Revenue Supplies Accounts Payable Balance Sheet Income Statement Statement of Retained Earnings Statement of Retained Earnings Income Statement Balance Sheet Balance Sheet LO 7 BT: K Difficulty: Easy TOT: 3 min. AACSB: None AICPA FC: Reporting BRIEF EXERCISE 0.23 (a) Closing Entries July 31 Service Revenue.................................................. 16,000 Income Summary ........................................ 16,000 (To close revenue account) Income Summary ................................................ 11,900 Salaries and Wages Expense ..................... 8,400 Repairs and Maintenance Expense............ 2,500 Income Tax Expense................................... 1,000 (To close expense accounts) Income Summary ................................................ 4,100 Retained Earnings....................................... 4,100 (To close net income to retained earnings) Retained Earnings............................................... 1,300 Dividends ..................................................... 1,300 (To close dividends to retained .earnings) (Income statement accounts are closed to the Income Summary account) (b) Retained Earnings 1,300 7/1 Bal. 20,000 4,100 7/31 Bal. 22,800 LO 8 BT: AP Difficulty: Medium TOT: 8 min. AACSB: Analytic AICPA FC: Reporting Copyright © 2022 John Wiley & Sons Canada, Ltd.. Kieso et al., Intermediate Accounting, 13Ce, Solutions Manual 0-12 BRIEF EXERCISE 0.24 The accounts that will appear in the post-closing trial balance are: Accumulated Depreciation Retained Earnings (ending) Supplies Accounts Payable LO 9 BT: K Difficulty: Easy TOT: 2 min. AACSB: None AICPA FC: Reporting Copyright © 2022 John Wiley & Sons Canada, Ltd.. Kieso et al., Intermediate Accounting, 13Ce, Solutions Manual 0-13 SOLUTIONS TO DO IT! REVIEW EXERCISES DO IT! 0.1 Assets = Liabilities + Shareholders’ Equity Cash + Accounts Receivable = Accounts Payable + Common Shares + Retained Earnings Revenues – Expenses – Dividends (1) +$20,000 +$20,000 (2) +$20,000 –20,000 (3) +$1,800 –$1,800 (4) –3,000 –$3,000 LO 1 BT: AP Difficulty: Medium TOT: 3 min. AACSB: Analytic AICPA FC: Reporting DO IT! 0.2 Boyd would likely need the following accounts in which to record the transactions necessary to ready his photography studio for opening day: Cash (debit balance) Equipment (debit balance) Supplies (debit balance) Accounts Payable (credit balance) Notes Payable (credit balance) Common Shares (credit balance) LO 2 BT: C Difficulty: Easy TOT: 2 min. AACSB: None AICPA FC: Reporting DO IT! 0.3 Each transaction that is recorded is entered in the general journal. The three activities would be recorded as follows: 1. Cash ....................................................................................... 8,000 Common Shares............................................................ 8,000 2. Supplies ............................................................................... 950 Accounts Payable ......................................................... 550 Cash ............................................................................... 400 3. No entry because no transaction has occurred. LO 2 BT: AP Difficulty: Medium TOT: 4 min. AACSB: Analytic AICPA FC: Reporting Copyright © 2022 John Wiley & Sons Canada, Ltd.. Kieso et al., Intermediate Accounting, 13Ce, Solutions Manual 0-14 DO IT! 0.4 Cash 4/1 1,900 4/3 3,400 4/16 500 4/20 300 4/30 4,500 LO 3 BT: AP Difficulty: Easy TOT: 3 min. AACSB: Analytic AICPA FC: Reporting DO IT! 0.5 CHILLIN’ COMPANY Trial Balance December 31, 20X2 Debit Credit Cash........................................................................................... $ 6,000 Accounts receivable ................................................................. 8,000 Supplies..................................................................................... 5,000 Equipment ................................................................................. 76,000 Notes payable............................................................................ $ 20,000 Accounts payable ..................................................................... 9,000 Salaries and wages payable..................................................... 3,000 Common shares........................................................................ 25,000 Dividends................................................................................... 8,000 Service revenue ........................................................................ 86,000 Rent expense............................................................................. 2,000 Salaries and wages expense.................................................... 38,000 $143,000 $143,000 (Liabilities, Common shares, and Revenues have credit balances) LO 4 BT: AP Difficulty: Medium TOT: 8 min. AACSB: Analytic AICPA FC: Reporting Copyright © 2022 John Wiley & Sons Canada, Ltd.. Kieso et al., Intermediate Accounting, 13Ce, Solutions Manual 0-15 DO IT! 0.6 1. c. 2. e. 3. h. 4. c. LO 5 BT: C Difficulty: Easy TOT: 3 min. AACSB: None AICPA FC: Reporting DO IT! 0.7 1. Insurance Expense ....................................................................... 300 Prepaid Insurance ................................................................. 300 (To record insurance expired) 2. Supplies Expense ......................................................................... 1,600 Supplies ................................................................................. 1,600 (To record supplies used) 3. Depreciation Expense................................................................... 200 Accumulated Depreciation—Equipment ............................ 200 (To record monthly depreciation) 4. Unearned Revenue ....................................................................... 4,000 Service Revenue.................................................................... 4,000 (To record revenue for services provided) LO 5 BT: AP Difficulty: Medium TOT: 6 min. AACSB: Analytic AICPA FC: Reporting DO IT! 0.8 1. Salaries and Wages Expense....................................................... 1,100 Salaries and Wages Payable ................................................ 1,100 (To record accrued salaries) 2. Interest Expense ($20,000 X .09 X 1/12) ...................................... 150 Interest Payable..................................................................... 150 (To record accrued interest) 3. Accounts Receivable ................................................................... 1,600 Service Revenue.................................................................... 1,600 (To record revenue for service provided) LO 5 BT: AP Difficulty: Medium TOT: 6 min. AACSB: Analytic AICPA FC: Reporting Copyright © 2022 John Wiley & Sons Canada, Ltd.. Kieso et al., Intermediate Accounting, 13Ce, Solutions Manual 0-16 DO IT! 0.9a Income statement: Service Revenue, Utilities Expense Balance sheet: Accounts Receivable, Accumulated Depreciation, Notes Payable, Common Shares. LO 7 BT: C Difficulty: Easy TOT: 3 min. AACSB: None AICPA FC: Reporting DO IT! 0.10a Dec. 31 Service Revenue..................................................................... 108,000 Income Summary............................................................ 108,000 (To close revenue to income summary) Dec. 31 Income Summary.................................................................... 72,000 Salaries and Wages Expense ........................................ 40,000 Rent Expense.................................................................. 18,000 Utilities Expense............................................................. 8,000 Supplies Expense........................................................... 6,000 (To close expenses to income summary) Dec. 31 Income Summary.................................................................... 36,000 Retained Earnings.......................................................... 36,000 (To close net income to retained earnings) Dec. 31 Retained Earnings.................................................................. 22,000 Dividends ........................................................................ 22,000 (To close dividends to retained earnings) LO 8 BT: AP Difficulty: Medium TOT: 6 min. AACSB: Analytic AICPA FC: Reporting Copyright © 2022 John Wiley & Sons Canada, Ltd.. Kieso et al., Intermediate Accounting, 13Ce, Solutions Manual 0-17 SOLUTIONS TO EXERCISES EXERCISE 0.1 1. Increase in assets and increase in shareholders’ equity. 2. Decrease in assets and decrease in shareholders’ equity. 3. Increase in assets and increase in shareholders’ equity. 4. Increase in assets and increase in shareholders’ equity. 5. Decrease in assets and decrease in shareholders’ equity. 6. Increase in liabilities and decrease in shareholders’ equity. 7. Increase in assets and decrease in assets. 8. Increase in assets and decrease in assets. 9. Increase in assets and increase in liabilities. LO 1 BT: C Difficulty: Medium TOT: 5 min. AACSB: None AICPA FC: Reporting EXERCISE 0.2 Assets = Liabilities + Shareholders’ Equity Cash + Accounts Receivable + Equipment = Accounts Payable + Common Shares + Retained Earnings Revenues – Expenses (1) +$40,000 +$40,000 Issued Shares (2) +$30,000 +$30,000 (3) –4,000 –$4,000 Rent Expense (4) +$19,000 +$19,000 Service Revenue (5) +5,000 +5,000 Service Revenue (6) –8,000 –8,000 Utilities Expense (7) –30,000 –30,000 (8) +1,300 –1,300 Advertising Expense (9) +12,000 –12,000 $15,000 + $7,000 + $30,000 = $ 1,300 + $40,000 + $24,000 – $13,300 $52,000 $52,000 LO 1 BT: AP Difficulty: Medium TOT: 8 min. AACSB: Analytic AICPA FC: Reporting Exercise 0.3 LO 1 BT: AP Difficulty: Medium TOT: 10 min. AACSB: Analytic AICPA FC: Reporting Assets = Liabilities + Shareholders’ Equity Cash + Accounts Receivable + Supplies + Equipment = Accounts Payable + Bonds Payable + Common Shares + Retained Earnings Revenues – Expenses – Dividends (1) +$100,000 +$100,000 Issued Shares (2) +45,000 +$45,000 (3) –60,000 +$60,000 (4) +16,000 +$16,000 Service Revenue (5) +$4,700 +$4,700 (6) –5,200 –$5,200 Rent Expense (7) +$10,000 +10,000 Service Revenue (8) –28,000 –28,000 Salaries and Wages Expense (9) –11,000 –$11,000 Dividends $ 56,800 + $10,000 + $4,700 + $60,000 $4,700 + $45,000 + $100,000 + +$26,000 – $33,200 – $11,000 $131,500 $131,500 Copyright © 2022 John Wiley & Sons Canada, Ltd.. Kieso et al., Intermediate Accounting, 13Ce, Solutions Manual 0-19 EXERCISE 0.4 (Essay) 1. Shareholders invested $20,000 cash in the business. 2. Purchased equipment for $5,000, paying $1,000 in cash and the balance of $4,000 on account. 3. Paid $750 cash for supplies. 4. Earned $9,500 in revenue, receiving $4,100 cash and $5,400 on account. 5. Paid $1,500 cash on accounts payable. 6. Paid $2,000 cash dividends to shareholders. 7. Paid $800 cash for rent. 8. Collected $450 cash from customers on account. 9. Paid salaries of $3,000. 10. Incurred $300 of utilities expense on account. EXERCISE 0.4 b. Issued common shares ........................................................................... $20,000 Service revenue ....................................................................................... 9,500 Dividends.................................................................................................. (2,000) Rent expense............................................................................................ (800) Salaries and wages expense................................................................... (3,000) Utilities expense....................................................................................... (300) Increase in shareholders’ equity ............................................................ $23,400 [Revenues – Expenses = Net income or (loss)] (Changes in shareholders’ equity = Additional investment – dividends ± Net income or Loss) c. Service revenue ....................................................................................... $9,500 Rent expense............................................................................................ (800) Salaries and wages expense................................................................... (3,000) Utilities expense....................................................................................... (300) Net income................................................................................................ $ 5,400 LO 1 BT: AP Difficulty: Medium TOT. 12 min. AACSB: Analytic AICPA FC: Reporting Copyright © 2022 John Wiley & Sons Canada, Ltd.. Kieso et al., Intermediate Accounting, 13Ce, Solutions Manual 0-20 EXERCISE 0.5 Account a. Normal Balance Debit or Credit b. Balance Sheet or Income Statement Accounts payable Credit Balance sheet Accounts receivable Debit Balance sheet Common shares Credit Balance sheet Depreciation expense Debit Income statement Interest expense Debit Income statement Interest income Credit Income statement Inventories Debit Balance sheet Prepaid expenses Debit Balance sheet Property and equipment Debit Balance sheet Revenues Credit Income statement LO 2 BT: K Difficulty: Easy TOT: 5 min. AACSB: None AICPA FC: Reporting a. Account Debited Account Credited Trans - action a. Basic Type b. Specific Account c. Effect c. Normal Balance a. Basic Type b. Specific Account c. Effect c. Normal Balance 1. Asset Cash Increase Debit Shareholders’ Equity Common Share s Increase Credit 2. Asset Equipment Increase Debit Asset Cash Decrease Debit 3. Asset Supplies Increase Debit Liability Accounts Payable Increase Credit 4. Asset Accounts Receivable Increase Debit Shareholders’ Equity Service Revenue Increase Credit 5. Shareholders’ Equity Advertising Expense Increase Debit Asset Cash Decrease Debit 6. Asset Cash Increase Debit Asset Accounts Receivable Decrease Debit 7. Liability Accounts Payable Decrease Credit Asset Cash Decrease Debit 8. Shareholders’ Equity Dividends Increase Debit Asset Cash Decrease Debit 3-18 Copyright © 2016 John Wiley & Sons, Inc. Kimmel, Financial Accounting, 8/e, Solutions Manual (For Instructor Use Only) EXERCISE 0-06 Copyright © 2022 John Wiley & Sons Canada, Ltd.. Kieso et al., Intermediate Accounting, 13Ce, Solutions Manual 0-22 EXERCISE 0.6 (Continued) b. General Journal Trans. Account Titles Debit Credit 1. Cash .............................................................................. Common Shares .................................................. 15,000 15,000 2. Equipment..................................................................... Cash...................................................................... 10,000 10,000 3. Supplies ........................................................................ Accounts Payable................................................ 300 300 4. Accounts Receivable ................................................... Service Revenue.................................................. 3,700 3,700 5. Advertising Expense.................................................... Cash...................................................................... 200 200 6. Cash .............................................................................. Accounts Receivable .......................................... 1,100 1,100 7. Accounts Payable......................................................... Cash...................................................................... 300 300 8. Dividends ...................................................................... Cash...................................................................... 400 400 LO 2 BT: AP Difficulty: Medium TOT: 15 AACSB: Analytic AICPA FC: Reporting EXERCISE 0.7 Oct. 1 Debits increase assets: debit Cash $30,000. Credits increase shareholders’ equity: credit Common Shares $30,000. 2 No accounting transaction. 3 Debits increase assets: debit Equipment $3,800. Credits increase liabilities: credit Accounts Payable $3,800. Copyright © 2022 John Wiley & Sons Canada, Ltd.. Kieso et al., Intermediate Accounting, 13Ce, Solutions Manual 0-23 EXERCISE 0.7 (Continued) Oct. 6 Debits increase assets: debit Accounts Receivable $10,800. Credits increase revenues: credit Service Revenue $10,800. 10 Debits increase assets: debit Cash $140. Credits increase revenues: credit Service Revenue $140. 27 Debits decrease liabilities: debit Accounts Payable $700. Credits decrease assets: credit Cash $700. 30 Debits increase expenses: debit Salaries and Wages Expense $3,000. Credits decrease assets: credit Cash $3,000. LO 2 BT: C Difficulty: Medium TOT: 10 min. AACSB: None AICPA FC: Reporting EXERCISE 0.8 General Journal Date Account Titles Debit Credit Oct. 1 Cash............................................................................. Common Shares................................................. 30,000 30,000 2 No entry. 3 Equipment ................................................................... Accounts Payable .............................................. 3,800 3,800 6 Accounts Receivable.................................................. Service Revenue ................................................ 10,800 10,800 10 Cash............................................................................. Service Revenue ................................................ 140 140 27 Accounts Payable ....................................................... Cash .................................................................... 700 700 30 Salaries and Wages Expense..................................... Cash .................................................................... 3,000 3,000 LO 2 BT: AP Difficulty: Medium TOT: 5 min. AACSB: Analytic AICPA FC: Reporting Copyright © 2022 John Wiley & Sons Canada, Ltd.. Kieso et al., Intermediate Accounting, 13Ce, Solutions Manual 0-24 EXERCISE 0.9 General Journal Date Account Titles Debit Credit May 4 Accounts Payable ....................................................... Cash .................................................................... 700 700 7 Accounts Receivable.................................................. Service Revenue ................................................ 6,800 6,800 8 Supplies....................................................................... Accounts Payable .............................................. 850 850 9 Equipment ................................................................... Cash .................................................................... 1,000 1,000 17 Salaries and Wages Expense..................................... Cash .................................................................... 530 530 22 Repairs and Maintenance Expense ........................... Accounts Payable .............................................. 900 900 29 Prepaid Insurance....................................................... Cash .................................................................... 1,200 1,200 LO 2 BT: AP Difficulty: Medium TOT: 8 min. AACSB: Analytic AICPA FC: Reporting Copyright © 2022 John Wiley & Sons Canada, Ltd.. Kieso et al., Intermediate Accounting, 13Ce, Solutions Manual 0-25 EXERCISE 0.10 General Journal Date Account Titles Debit Credit March 1 Rent Expense.............................................................. Cash.................................................................... 1,200 1,200 3 Accounts Receivable.................................................. Service Revenue ................................................ 140 140 5 Cash............................................................................. Service Revenue ................................................ 75 75 8 Equipment ................................................................... Cash.................................................................... Accounts Payable.............................................. 600 80 520 12 Cash............................................................................. Accounts Receivable......................................... 140 140 14 Salaries and Wages Expense .................................... Cash.................................................................... 525 525 22 Utilities Expense......................................................... Cash.................................................................... 72 72 24 Cash............................................................................. Notes Payable .................................................... 1,500 1,500 27 Repairs and Maintenance Expense........................... Cash.................................................................... 220 220 28 Accounts Payable....................................................... Cash.................................................................... 520 520 30 Prepaid Insurance....................................................... Cash.................................................................... 1,800 1,800 LO 2 BT: AP Difficulty: Medium TOT: 8 min. AACSB: Analytic AICPA FC: Reporting Copyright © 2022 John Wiley & Sons Canada, Ltd.. Kieso et al., Intermediate Accounting, 13Ce, Solutions Manual 0-26 EXERCISE 0.11 General Journal Trans. Account Titles Debit Credit 1. Cash .............................................................................. Common Shares .................................................. 24,000 24,000 2. Cash .............................................................................. Notes Payable...................................................... 7,000 7,000 3. Equipment..................................................................... Cash...................................................................... 11,000 11,000 4. Rent Expense................................................................ Cash...................................................................... 1,200 1,200 5. Supplies ........................................................................ Cash...................................................................... 1,450 1,450 6. Advertising Expense.................................................... Accounts Payable................................................ 600 600 7. Cash .............................................................................. Accounts Receivable ................................................... Service Revenue.................................................. 2,000 16,000 18,000 8. Dividends ...................................................................... Cash...................................................................... 400 400 9. Utilities Expense........................................................... Cash...................................................................... 2,000 2,000 10. Accounts Payable......................................................... Cash...................................................................... 600 600 11. Interest Expense........................................................... Cash...................................................................... 40 40 12. Salaries and Wages Expense ...................................... Cash...................................................................... 6,400 6,400 13. Cash .............................................................................. Accounts Receivable .......................................... 12,000 12,000 14. Income Tax Expense.................................................... Cash...................................................................... 1,500 1,500 Copyright © 2022 John Wiley & Sons Canada, Ltd.. Kieso et al., Intermediate Accounting, 13Ce, Solutions Manual 0-27 LO 2 BT: AP Difficulty: Medium TOT: 10 min. AACSB: Analytic AICPA FC: Reporting EXERCISE 0.12 a. Assets = Liabilities + Shareholders’ Equity Cash + Accounts Receivable + Equipment = Accounts Payable + Common Shares + Revenues – Exp. – Div. Sept. 1 +$20,000 +$20,000 Issued shares 5 –3,000 +$9,000 +$ 6,000 8 +$18,000 +$18,000 Ser. Rev. 14 –1,200 –$1,200 Salar. Exp. 25 –4,000 –4,000 30 –500 –$500 Dividends $ 11,300 + $18,000 + $9,000 = $ 2,000+ + $20,000 + $18,000 – $1,200 – $500 $38,300 .. $38,300 b. General Journal J1 Date Account Titles Debit Credit Sept.1 Cash ........................................................................... Common Shares ............................................... 20,000 20,000 5 Equipment.................................................................. Accounts Payable............................................. Cash................................................................... 9,000 6,000 3,000 8 Accounts Receivable ................................................ 18,000 Service Revenue............................................... 18,000 14 Salaries and Wages Expense ................................... 1,200 Cash................................................................... 1,200 25 Accounts Payable...................................................... Cash................................................................... 4,000 4,000 30 Dividends ................................................................... Cash................................................................... 500 500 Retained Earnings Copyright © 2022 John Wiley & Sons Canada, Ltd.. Kieso et al., Intermediate Accounting, 13Ce, Solutions Manual 0-28 EXERCISE 0.12 (Continued) c. Cash 9/1 20,000 9/5 3,000 9/14 1,200 9/25 4,000 9/30 500 Bal. 11,300 Accounts Receivable 9/8 18,000 Bal. 18,000 Equipment 9/5 9,000 Bal. 9,000 Accounts Payable 9/25 4,000 9/5 6,000 Bal. 2,000 Common Shares 9/1 20,000 Bal. 20,000 Dividends 9/30 500 Bal. 500 Service Revenue 9/8 18,000 Bal. 18,000 Salaries and Wages Expense 9/14 1,200 Bal. 1,200 Copyright © 2022 John Wiley & Sons Canada, Ltd.. Kieso et al., Intermediate Accounting, 13Ce, Solutions Manual 0-29 LO 3 BT: AP Difficulty: Hard TOT:20 min. AACSB: Analytic AICPA FC: Reporting EXERCISE 0.13 a. Cash Accounts Payable Oct. 1 30,000 Oct. 27 700 Oct. 27 700 Oct. 3 3,800 ,000 Bal. 3,100 Bal. 26,440 Common Shares Accounts Receivable Oct. 1 30,000 Oct. 6 10,800 Bal. 30,000 Bal. 10,800 Service Revenue Equipment Oct. 6 10,800 Oct. 3 3, Bal. 3,800 Bal. 10,940 Salaries and Wages Expense Oct. 30 3,000 Bal. 3,000 b. MCCALL REAL ESTATE AGENCY Trial Balance October 31, 20X2 Debit Credit Cash .................................................................................. Accounts receivable ........................................................ Equipment......................................................................... Accounts payable ............................................................ Common shares ............................................................... Service revenue................................................................ Salaries and wages expense........................................... $26,440 10,800 3,800 3,000 $44,040 $ 3,100 30,000 10,940 . $44,040 (Total of debit account balances = Total of credit account balances) LO 4, BT: AP Difficulty: Medium TOT: 12 min. AACSB: Analytic AICPA FC: Reporting Copyright © 2022 John Wiley & Sons Canada, Ltd.. Kieso et al., Intermediate Accounting, 13Ce, Solutions Manual 0-30 EXERCISE 0.14 a. General Journal Date Account Titles and Explanation Debit Credit Apr. 1 Cash............................................................................. Common Shares................................................. (Issued shares for cash) 15,000 15,000 4 Supplies....................................................................... Accounts Payable .............................................. (Purchased supplies on account) 5,200 5,200 7 Accounts Receivable.................................................. Service Revenue ................................................ (Billed clients for services rendered) 3,400 3,400 12 Cash............................................................................. Service Revenue ................................................ (Received cash for revenue earned) 700 700 15 Salaries and Wages Expense..................................... Cash .................................................................... (Paid salaries) 800 800 25 Accounts Payable ....................................................... Cash .................................................................... (Paid creditors on account) 3,500 3,500 29 Cash............................................................................. Accounts Receivable ......................................... (Received cash in payment of account) 800 800 30 Cash............................................................................. Unearned Revenue............................................. (Received cash for future services) 900 900 Copyright © 2022 John Wiley & Sons Canada, Ltd.. Kieso et al., Intermediate Accounting, 13Ce, Solutions Manual 0-31 Copyright © 2022 John Wiley & Sons Canada, Ltd.. Kieso et al., Intermediate Accounting, 13Ce, Solutions Manual 0-32 EXERCISE 0.14 (Continued) b. SALVADOR’s GARDENING COMPANY, INC. Trial Balance April 30, 20X2 Debit Credit Cash .................................................................................. Accounts receivable ........................................................ Supplies ............................................................................ Accounts payable ............................................................ Unearned revenue............................................................ Common shares ............................................................... Service revenue................................................................ Salaries and wages expense........................................... $13,100 2,600 5,200 800 $21,700 $ 1,700 900 15,000 4,100 $21,700 (Assets and Expenses have debit balances) LO 4 BT: AN Difficulty: Medium TOT: 15 min. AACSB: Analytic AICPA FC: Reporting Copyright © 2022 John Wiley & Sons Canada, Ltd.. Kieso et al., Intermediate Accounting, 13Ce, Solutions Manual 0-33 EXERCISE 0.15 a. Cash Aug. 1 8,000 10 1,700 31 600 Aug. 12 1,200 Bal. 9,100 Accounts Receivable Aug. 25 3,400 Aug. 31 600 Bal. 2,800 Equipment Aug. 12 6,200 Bal. 6,200 Notes Payable Aug. 12 5,000 Bal. 5,000 Common Shares Aug. 1 8,000 Bal. 8,000 Service Revenue Aug. 10 1,700 25 3,400 Bal. 5,100 b. BAYLEE INC. Trial Balance August 31, 20X2 Debit Credit Cash .................................................................................. Accounts receivable ........................................................ Equipment......................................................................... Notes payable................................................................... Common shares ............................................................... Service revenue................................................................ $ 9,100 2,800 6,200 $18,100 $ 5,000 8,000 5,100 $18,100 (Liabilities, Common shares, and Revenues have credit balances) LO 4, BT: AP Difficulty: Medium TOT: 12 min. AACSB: Analytic AICPA FC: Reporting Copyright © 2022 John Wiley & Sons Canada, Ltd.. Kieso et al., Intermediate Accounting, 13Ce, Solutions Manual 0-34 EXERCISE 0.16 a. Oct. 1 Cash ............................................................................ 7,000 Common Shares................................................ 7,000 (Issued shares for cash) 10 Cash ............................................................................ 980 Service Revenue................................................ 980 (Received cash for services provided) 10 Cash ............................................................................ 8,000 Notes Payable.................................................... 8,000 (Issued note payable for cash) 20 Cash ............................................................................ 700 Accounts Receivable ........................................ 700 (Received cash in payment of account) 20 Accounts Receivable ................................................. 920 Service Revenue................................................ 920 (Billed clients for services provided) Copyright © 2022 John Wiley & Sons Canada, Ltd.. Kieso et al., Intermediate Accounting, 13Ce, Solutions Manual 0-35 EXERCISE 0.16 (Continued) b. KRISCOE CO. Trial Balance October 31, 20X2 Debit Credit Cash .................................................................................. Accounts receivable ........................................................ Supplies ............................................................................ Equipment......................................................................... Notes payable................................................................... Accounts payable ............................................................ Common shares ............................................................... Dividends.......................................................................... Service revenue................................................................ Salaries and wages expense........................................... Supplies expense............................................................. Rent expense.................................................................... $15,730 1,020 220 3,000 300 500 180 250 $21,200 $ 8,000 1,500 9,000 2,700 $21,200 (Liabilities, Common shares, and Service revenues have credit balances) LO 4 BT: AN Difficulty: Medium TOT: 12 min. AACSB: Analytic AICPA FC: Reporting Copyright © 2022 John Wiley & Sons Canada, Ltd.. Kieso et al., Intermediate Accounting, 13Ce, Solutions Manual 0-36 EXERCISE 0.17 a. General Journal Date Account Titles Debit Credit Oct. 1 Cash............................................................................. Common Shares ................................................ 66,000 66,000 2 No entry 4 Rent Expense.............................................................. Cash.................................................................... 2,000 2,000 7 Equipment ................................................................... Cash.................................................................... Accounts Payable.............................................. 18,000 4,000 14,000 8 Advertising Expense .................................................. Cash.................................................................... 500 500 10 Repairs and Maintenance Expense........................... Accounts Payable.............................................. 390 390 12 Accounts Receivable.................................................. Service Revenue ................................................ 3,200 3,200 16 Supplies....................................................................... Accounts Payable.............................................. 410 410 21 Accounts Payable....................................................... Cash.................................................................... 14,000 14,000 24 Utilities Expense......................................................... Cash.................................................................... 148 148 27 Cash............................................................................. Accounts Receivable......................................... 3,200 3,200 31 Salaries and Wages Expense .................................... Cash.................................................................... 5,100 5,100 Copyright © 2022 John Wiley & Sons Canada, Ltd.. Kieso et al., Intermediate Accounting, 13Ce, Solutions Manual 0-37 EXERCISE 0.17 (Continued) b. Cash 10/1 66,000 10/27 3,200 10/4 2,000 10/7 4,000 10/8 500 10/21 14,000 10/24 148 10/31 5,100 Bal. 43,452 Accounts Receivable 10/12 3,200 10/27 3,200 Supplies 10/16 410 Bal. 410 Equipment 10/7 18,000 Bal. 18,000 Accounts Payable 10/21 14,000 10/7 14,000 10/10 390 10/16 410 Bal. 800 Common Shares 10/1 66,000 Bal. 66,000 Service Revenue 10/12 3,200 Bal. 3,200 Advertising Expense 10/8 500 Bal. 500 Salaries and Wages Expense 10/31 5,100 Bal. 5,100 Repairs and Maintenance Expense 10/10 390 Bal. 390 Rent Expense 10/4 2,000 Bal. 2,000 Utilities Expense 10/24 148 Bal. 148 Copyright © 2022 John Wiley & Sons Canada, Ltd.. Kieso et al., Intermediate Accounting, 13Ce, Solutions Manual 0-38 EXERCISE 0.17 (Continued) c. BEYERS CORPORATION Trial Balance October 31, 20X2 Debit Credit Cash .................................................................................. Supplies ............................................................................ Equipment......................................................................... Accounts payable ............................................................ Common shares ............................................................... Service revenue................................................................ Advertising expense ........................................................ Salaries and wages expense........................................... Repairs and maintenance expense ................................ Rent expense.................................................................... Utilities expense............................................................... $43,452 410 18,000 500 5,100 390 2,000 148 $70,000 $800 66,000 3,200 $70,000 (Total of debit account balances = Total of credit account balances) LO 4 BT: AP Difficulty: Hard TOT: 20 min. AACSB: Analytic AICPA FC: Reporting EXERCISE 0.18 Error a. In Balance b. Difference c. Larger Column 1. 2. 3. 4. 5. 6. No Yes Yes No Yes No $400 — — $300 — $36 Debit — — Credit — Credit LO 4 BT: AN Difficulty: Hard TOT: 12 min. AACSB: Analytic AICPA FC: Reporting Copyright © 2022 John Wiley & Sons Canada, Ltd.. Kieso et al., Intermediate Accounting, 13Ce, Solutions Manual 0-39 EXERCISE 0.19 The revenue recognition principle requires that companies recognize revenue in the accounting period in which the performance obligation is satisfied. a. Since the sales effort is not complete until the flight actually occurs, revenue should not be recognized until December. WestJet Airlines should recognize the revenue in December when the customer has been provided with the flight. b. Sales revenue should be recognized at the time of delivery. c. Revenue should be recognized on a per game basis over the season from April through October. c. Interest revenue should be accrued and recognized by RBC evenly over the term of the loan. e. Revenue should be recognized when the sweater is shipped to the customer in September. LO 5 BT: C Difficulty: Medium TOT: 10 min. AACSB: None AICPA FC: Measurement EXERCISE 0.20 a. 8. Going concern assumption. b. 1. Economic entity assumption. c. 7. Full disclosure principle. d. 3. Monetary unit assumption. e. 6. Materiality. f. 4. Periodicity assumption. g. 2. Expense recognition principle. h. 5. Historical cost principle. LO 5 BT: K Difficulty: Easy TOT: 5 min. AACSB: None AICPA FC: Reporting Copyright © 2022 John Wiley & Sons Canada, Ltd.. Kieso et al., Intermediate Accounting, 13Ce, Solutions Manual 0-40 EXERCISE 0.21 a. Revenue recognition principle. b. Periodicity assumption. c. No violation. c. Going concern assumption. e. Historical cost principle. f. Economic entity assumption. LO 5 BT: C Difficulty: Medium TOT: 10 min. AACSB: None AICPA FC: Reporting EXERCISE 0.22 $ 33,640 Cash basis earnings. + 3,400 Accounts receivable arise from sales that have been made, thus revenue must be recognized for balance outstanding at the end of the current year. – 2,800 Accounts receivable collected in current year, for sales made in previous year must be deducted from earnings. + 1,300 Supplies on hand at year end should be set up as an asset rather than expensed, this increases earnings. – 1,460 Supplies on hand at the end of the previous year should be expensed this year, this decreases earnings. – 2,000 Wages owing at the end of the current year should be accrued, thus reducing earnings. + 2,400 Wages owed at the end of the previous year should not be deducted from the current year’s earnings, thus increasing earnings. – 1,400 Other unpaid amounts owed at the end of the current year should be accrued, thus reducing earnings. + 1,100 Other unpaid amounts owed at the end of the previous year should not be deducted from the current year’s earnings, thus increasing earnings. $ 34,180 Accrual basis earnings. LO 5 BT: AP Difficulty: Hard TOT: 12 min. AACSB: Analytic AICPA FC: Reporting Copyright © 2022 John Wiley & Sons Canada, Ltd.. Kieso et al., Intermediate Accounting, 13Ce, Solutions Manual 0-41 EXERCISE 0.23 a. Cash Basis Accrual Basis Service Revenue – Operating Expenses – Insurance Expense Net Income $22,000 12,000 2,400 $ 7,600 $28,000 15,800 — $12,200 b. The accrual basis of accounting provides more useful information for decision makers because it recognizes revenues when the performance obligation is satisfied and expenses when incurred. LO 5 BT: AP Difficulty: Medium TOT: 5 min. AACSB: Analytic AICPA FC: Reporting EXERCISE 0.24 a. Event Cash Accounting Accrual Accounting 180-day financing for customers Revenue is recorded as cash is received. Revenue is recorded when the performance obligation is satisfied. BizCon records revenue (and a receivable) as soon as services are provided but may wait up to 180 days to receive cash. Payment to equipment suppliers upon delivery of goods Equipment expense is recorded as an expense as soon as equipment is received and paid for. Equipment is recorded as an asset and depreciated. Prepayment for 2 years of insurance coverage Insurance expense is recorded as soon as payment is made. Prepayment is recorded as an asset and recognized as an expense as time passes. One month’s salaries owed at year-end No salary expense is recorded until salaries are paid. Salary expense is recorded as employees perform work. Amounts owed at year-end would be recorded as a liability. Copyright © 2022 John Wiley & Sons Canada, Ltd.. Kieso et al., Intermediate Accounting, 13Ce, Solutions Manual 0-42 Proper accrual accounting would require adjusting entries for depreciation, prepaid insurance, and accrued salaries. Copyright © 2022 John Wiley & Sons Canada, Ltd.. Kieso et al., Intermediate Accounting, 13Ce, Solutions Manual 0-43 EXERCISE 0.24 (Continued) b. Accrual accounting rules require that revenue be recognized as a company performs services and expenses be matched with the revenue they help produce. Receipt or payment of cash does not influence the calculation of net income. BizCon has provided many services during the year and thus has positive net income. Since BizCon allowed its largest customers to take up to 180 days to pay, but was forced to pay cash for all purchases, it is likely that the company has very little cash at year-end. New companies frequently experience cash shortages because they extend credit to attract customers but are unable to receive credit from their suppliers. As time passes, the cash supply should increase as payments on accounts receivable come in and offset current purchases. LO 5 BT: C Difficulty: Hard TOT: 20 min. AACSB: Analytic AICPA FC: Measurement AICPA FC: Reporting EXERCISE 0.25 Item (1) Type of Adjustment (2) Accounts Before Adjustment a. Accrued Revenues Assets Understated Revenues Understated b. Prepaid Expenses Assets Overstated Expenses Understated c. Accrued Expenses Expenses Understated Liabilities Understated d. Unearned Revenues Liabilities Overstated Revenues Understated e. Accrued Expenses Expenses Understated Liabilities Understated f. Prepaid Expenses Assets Overstated Expenses Understated LO 5 BT: AN Difficulty: Hard TOT: 15 min. AACSB: Analytic AICPA FC: Reporting Copyright © 2022 John Wiley & Sons Canada, Ltd.. Kieso et al., Intermediate Accounting, 13Ce, Solutions Manual 0-44 EXERCISE 0.26 1. Mar. 31 Depreciation Expense ($280 X 3).............................. 840 Accumulated Depreciation— Equipment ..................................................... 840 2. 31 Unearned Rent Revenue ........................................... 6,200 Rent Revenue ($12,400 X 1/2) .......................... 6,200 3. 31 Interest Expense ........................................................ 400 Interest Payable ................................................ 400 4. 31 Supplies Expense...................................................... 2,150 Supplies ($3,000 – $850)................................... 2,150 5. 31 Insurance Expense ($400 X 3) .................................. 1,200 Prepaid Insurance............................................. 1,200 LO 5 BT: AP Difficulty: Medium TOT: 10 min. AACSB: Analytic AICPA FC: Reporting EXERCISE 0.27 1. Jan. 31 Accounts Receivable................................................. 760 Service Revenue ............................................... 760 2. 31 Utilities Expense........................................................ 450 Accounts Payable............................................. 450 3. 31 Depreciation Expense ............................................... 400 Accumulated Depreciation— Equipment ..................................................... 400 31 Interest Expense ........................................................ 500 Interest Payable ................................................ 500 4. 31 Insurance Expense ($24,000 ÷ 12)............................ 2,000 Prepaid Insurance............................................. 2,000 5. 31 Supplies Expense ($1,750 – $550)............................ 1,200 Supplies............................................................. 1,200 LO 5 BT: AP Difficulty: Medium TOT: 10 min. AACSB: Analytic AICPA FC: Reporting Copyright © 2022 John Wiley & Sons Canada, Ltd.. Kieso et al., Intermediate Accounting, 13Ce, Solutions Manual 0-45 EXERCISE 0.28 1. Oct. 31 Supplies Expense...................................................... 2,000 Supplies ($2,500 – $500)................................... 2,000 2. 31 Insurance Expense .................................................... 100 Prepaid Insurance............................................. 100 3. 31 Depreciation Expense ............................................... 75 Accumulated Depreciation— Equipment ..................................................... 75 4. 31 Unearned Revenue .................................................... 800 Service Revenue ............................................... 800 5. 31 Accounts Receivable................................................. 280 Service Revenue ............................................... 280 6. 31 Interest Expense ........................................................ 70 Interest Payable ................................................ 70 7. 31 Salaries and Wages Expense ................................... 1,400 Salaries and Wages Payable............................ 1,400 LO 5 BT: AP Difficulty: Medium TOT: 15 min. AACSB: Analytic AICPA FC: Reporting Copyright © 2022 John Wiley & Sons Canada, Ltd.. Kieso et al., Intermediate Accounting, 13Ce, Solutions Manual 0-46 EXERCISE 0.29 Date Account Titles Debit Credit July 31 Interest Receivable ($20,000  .06  1/12) .................... Interest Revenue ................................................... 100 100 31 Supplies Expense ($24,000 – $18,600)......................... Supplies................................................................. 5,400 5,400 31 Rent Expense ($3,600  4)............................................. Prepaid Rent.......................................................... 900 900 31 Salaries and Wages Expense........................................ Salaries and Wages Payable................................ 3,100 3,100 31 Depreciation Expense ($6,000  12) ............................. Accumulated Depreciation—Buildings............... 500 500 31 Unearned Revenue ........................................................ Service Revenue ................................................... 4,700 4,700 31 Repairs and Maintenance Expense .............................. Accounts Payable ................................................. 2,300 2,300 LO 5 BT: AP Difficulty: Medium TOT: 15 min. AACSB: Analytic AICPA FC: Reporting Copyright © 2022 John Wiley & Sons Canada, Ltd.. Kieso et al., Intermediate Accounting, 13Ce, Solutions Manual 0-47 EXERCISE 0.30 a. July 10 Supplies...................................................................... 200 Cash................................................................... 200 14 Cash............................................................................ 3,800 Service Revenue ............................................... 3,800 15 Salaries and Wages Expense ................................... 1,000 Cash................................................................... 1,000 20 Cash............................................................................ 600 Unearned Revenue ........................................... 600 Copyright © 2022 John Wiley & Sons Canada, Ltd.. Kieso et al., Intermediate Accounting, 13Ce, Solutions Manual 0-48 EXERCISE 0.30 (Continued) b. July 31 Supplies Expense...................................................... 750 Supplies............................................................. 750 31 Accounts Receivable................................................. 500 Service Revenue ............................................... 500 31 Salaries and Wages Expense ................................... 1,000 Salaries and Wages Payable............................ 1,000 31 Unearned Revenue .................................................... 900 Service Revenue ............................................... 900 LO 5 BT: AN Difficulty: Medium TOT: 15 min. AACSB: Analytic AICPA FC: Reporting EXERCISE 0.31 Answer Computation a. Supplies balance = $1,350 Supplies expense $ 950) Add: Supplies (1/31) 700) Less: Supplies purchased (300) Supplies (1/1) $1,350) b. Total premium = $6,240 Total premium = Monthly premium X 12; $520 X 12 = $6,240 Purchase date = May 1, 20X1 Purchase date: On Jan. 31, there are 3 months coverage remaining ($520 X 3). Thus, the purchase date was 9 months earlier on May 1, 20X1. Copyright © 2022 John Wiley & Sons Canada, Ltd.. Kieso et al., Intermediate Accou