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Concept explainers
Concept Introduction:
To Prepare:
1) T- Accounts (representing the ledger) with balances from the unadjusted trial balances.
2) Pass the necessary adjustment entries and post the same to the T- accounts.
3) Update balances in T-accounts and prepare an adjusted
4) The company’s income statement and statement of owner’s equity for the year 2017, and the
![Check Mark](/static/check-mark.png)
Explanation of Solution
1)
Cash Account
Particulars | Amount ($) | Particulars | Amount ($) |
To opening balance | 60,000 |
Particulars | Amount ($) | Particulars | Amount ($) |
To opening balance | 0 |
Teaching Supplies Account
Particulars | Amount ($) | Particulars | Amount ($) |
To opening balance | 70,000 |
Prepaid Insurance Account
Particulars | Amount ($) | Particulars | Amount ($) |
To opening balance | 19,000 |
Prepaid Rent Account
Particulars | Amount ($) | Particulars | Amount ($) |
To opening balance | 3,800 |
Professional Library Account
Particulars | Amount ($) | Particulars | Amount ($) |
To opening balance | 12,000 |
Particulars | Amount ($) | Particulars | Amount ($) |
By opening balance | 2,500 |
Equipment Account
Particulars | Amount ($) | Particulars | Amount ($) |
To opening balance | 40,000 |
Accumulated Depreciation- Equipment Account
Particulars | Amount ($) | Particulars | Amount ($) |
By opening balance | 20,000 |
Accounts Payable Account
Particulars | Amount ($) | Particulars | Amount ($) |
By opening balance | 11,200 |
Salaries Payable Account
Particulars | Amount ($) | Particulars | Amount ($) |
By opening balance | 0 |
Unearned training fees Account
Particulars | Amount ($) | Particulars | Amount ($) |
By opening balance | 28,600 |
C. Alonzo Capital Account
Particulars | Amount ($) | Particulars | Amount ($) |
By opening balance | 71,500 |
C. Alonzo Withdrawals Account
Particulars | Amount ($) | Particulars | Amount ($) |
To opening balance | 20,000 |
Tuition fees Earned Account
Particulars | Amount ($) | Particulars | Amount ($) |
By opening balance | 129,200 |
Training fees Earned Account
Particulars | Amount ($) | Particulars | Amount ($) |
By opening balance | 68,000 |
Depreciation expense – Professional library Account
Particulars | Amount ($) | Particulars | Amount ($) |
To opening balance | 0 |
Depreciation expense – Equipment Account
Particulars | Amount ($) | Particulars | Amount ($) |
To opening balance | 0 |
Salaries expense Account
Particulars | Amount ($) | Particulars | Amount ($) |
To opening balance | 44,200 |
Insurance expense Account
Particulars | Amount ($) | Particulars | Amount ($) |
To opening balance | 0 |
Rent expense Account
Particulars | Amount ($) | Particulars | Amount ($) |
To opening balance | 29,600 |
Teaching supplies expense Account
Particulars | Amount ($) | Particulars | Amount ($) |
To opening balance | 0 |
Advertising expense Account
Particulars | Amount ($) | Particulars | Amount ($) |
To opening balance | 19,000 |
Utilities expense Account
Particulars | Amount ($) | Particulars | Amount ($) |
To opening balance | 13,400 |
2) Adjustment entries
Journal Entries | |||
S. No. | Particulars | Debit ($) | Credit ($) |
a. | Insurance Expense To Prepaid Insurance |
9,500 | 9,500 |
b. | Teaching Supplies Expense To Teaching Supplies |
50,000 | 50,000 |
c. | Depreciation Expense-Equipment To Accumulated Depreciation-Equipment |
5,000 | 5,000 |
d. | Depreciation Expense-Professional Library To Accumulated Depreciation-Professional Library |
2,400 | 2,400 |
e. | Unearned Training Fees To Training Fees Earned |
28,600 | 28,600 |
f. | Accounts Receivable To Tuition Fees Earned |
5,750 | 5,750 |
g. | Salaries Expense To Salaries Payable |
450 | 450 |
h. | Rent Expense To Prepaid Rent |
3,800 | 3,800 |
3. Updated T- balances are as under: `
Cash Account
Particulars | Amount ($) | Particulars | Amount ($) |
To opening balance | 60,000 | By closing balance | 60,000 |
Accounts Receivable Account
Particulars | Amount ($) | Particulars | Amount ($) |
To opening balance | 0 | By closing balance | 5,750 |
To Tuition fees earned | 5,750 |
Teaching Supplies Account
Particulars | Amount ($) | Particulars | Amount ($) |
To opening balance | 70,000 | By Teaching Supplies expense | 50,000 |
By closing balance | 20,000 |
Prepaid Insurance Account
Particulars | Amount ($) | Particulars | Amount ($) |
To opening balance | 19,000 | By Insurance expense | 9,500 |
By closing balance | 9,500 |
Prepaid Rent Account
Particulars | Amount ($) | Particulars | Amount ($) |
To opening balance | 3,800 | By Rent expense | 3,800 |
By closing balance | 0 |
Professional Library Account
Particulars | Amount ($) | Particulars | Amount ($) |
To opening balance | 12,000 |
Accumulated Depreciation- Professional Library Account
Particulars | Amount ($) | Particulars | Amount ($) |
By opening balance | 2,500 | ||
To closing balance | 4,900 | By depreciation expense- Professional library | 2,400 |
Equipment Account
Particulars | Amount ($) | Particulars | Amount ($) |
To opening balance | 40,000 | By closing balance | 40,000 |
Accumulated Depreciation- Equipment Account
Particulars | Amount ($) | Particulars | Amount ($) |
By opening balance | 20,000 | ||
By closing balance | 25,000 | By Depreciation expense- Equipment | 5,000 |
Accounts Payable Account
Particulars | Amount ($) | Particulars | Amount ($) |
By closing balance | 11,200 | By opening balance | 11,200 |
Salaries Payable Account
Particulars | Amount ($) | Particulars | Amount ($) |
By closing balance | 450 | By opening balance | 0 |
By Salaries expense | 450 |
Unearned training fees Account
Particulars | Amount ($) | Particulars | Amount ($) |
To Training fees earned | 28,600 | By opening balance | 28,600 |
To closing balance | 0 |
C. Alonzo Capital Account
Particulars | Amount ($) | Particulars | Amount ($) |
To closing balance | 71,500 | By opening balance | 71,500 |
C. Alonzo Withdrawals Account
Particulars | Amount ($) | Particulars | Amount ($) |
To opening balance | 20,000 | By closing balance | 20,000 |
Tuition fees Earned Account
Particulars | Amount ($) | Particulars | Amount ($) |
By opening balance | 129,200 | ||
To closing balance | 134,950 | By Accounts receivable | 5,750 |
Training fees Earned Account
Particulars | Amount ($) | Particulars | Amount ($) |
By opening balance | 68,000 | ||
To closing balance | 96,600 | By unearned training fees | 28,600 |
Depreciation expense – Professional library Account
Particulars | Amount ($) | Particulars | Amount ($) |
To opening balance | 0 | ||
To Accumulated dep | 2,400 | By Profit & Loss | 2,400 |
Depreciation expense – Equipment Account
Particulars | Amount ($) | Particulars | Amount ($) |
To opening balance | 0 | ||
To Accumulated dep. | 5,000 | By Profit & Loss | 5,000 |
Salaries expense Account
Particulars | Amount ($) | Particulars | Amount ($) |
To opening balance | 44,200 | ||
To Salaries Payable | 450 | By Profit & Loss | 44,650 |
Insurance expense Account
Particulars | Amount ($) | Particulars | Amount ($) |
To opening balance | 0 | By Profit & Loss | 9,500 |
To Prepaid expense | 9,500 |
Rent expense Account
Particulars | Amount ($) | Particulars | Amount ($) |
To opening balance | 29,600 | ||
To Prepaid Rent | 3,800 | By Profit & Loss | 33,400 |
Teaching supplies expense Account
Particulars | Amount ($) | Particulars | Amount ($) |
To opening balance | 0 | ||
To Teaching supplies | 50,000 | By Profit & Loss | 50,000 |
Advertising expense Account
Particulars | Amount ($) | Particulars | Amount ($) |
To opening balance | 19,000 | By Profit & Loss | 19,000 |
Utilities expense Account
Particulars | Amount ($) | Particulars | Amount ($) |
To opening balance | 13,400 | By Profit & Loss | 13,400 |
Adjusted Trial balance
for the year ended December 31, 2017
S. No. | Particulars | Debit($) | Credit($) |
1. | Cash | 60,000 | |
2. | Accounts receivable | 5,750 | |
3. | Teaching supplies | 20,000 | |
4. | Prepaid Insurance | 9,500 | |
5. | Prepaid rent | 0 | |
6. | Professional Library | 12,000 | |
7. | Accumulated dep. – Professional library | 4,900 | |
8. | Equipment | 40,000 | |
9. | Accumulated dep. – Equipment | 25,000 | |
10. | Accounts Payable | 11,200 | |
11. | Salaries Payable | 450 | |
12. | Unearned training fees | 0 | |
13. | C. Alonzo capital | 71,500 | |
14. | C. Alonzo withdrawals | 20,000 | |
15. | Tuition fees Earned | 134,950 | |
16. | Training fees Earned | 96,600 | |
17. | Depreciation expense- Professional library | 2,400 | |
18. | Depreciation expense- Equipment | 5,000 | |
19. | Salaries expense | 44,650 | |
20. | Insurance expense | 9,500 | |
21. | Rent expense | 33,400 | |
22. | Teaching supplies expense | 50,000 | |
23. | Advertising expense | 19,000 | |
24. | Utilities expense | 13,400 | |
Totals | 344,600 | 344,600 | |
4.
Income statement
for the year ended December 31, 2017
Particulars | Amount ($) | Particulars | Amount ($) |
To depreciation expense- Professional library | 2,400 | By Tuition Fees Earned | 134,950 |
To depreciation expense- Equipment | 5,000 | By Training Fees Earned | 96,600 |
To Salaries expense | 44,650 | ||
To Insurance expense | 9,500 | ||
To Rent expense | 33,400 | ||
To Teaching supplies expense | 50,000 | ||
To Advertising expense | 19,000 | ||
To Utilities expense | 13,400 | ||
To Net Profit (balancing figure) | 54,200 | ||
Total | 231,550 | Total | 231,550 |
Statement of owner’s equity for the year 2017
Particulars | Amount ($) |
C. Alonzo capital at the beginning | 71,500 |
Less: C. Alonzo withdrawals | (20,000) |
Add: Net Profit | 54,200 |
C. Alonzo capital at the end | 105,700 |
Balance Sheet
as of December 31, 2017
Liabilities | Amount ($) | Assets | Amount ($) | |
C. Alonzo Capital | 105,700 | Non-current Assets | ||
Professional Library | 12,000 | |||
Current Liabilities | Less: Accumulated dep. – Professional library | (4,900) | 7,100 | |
Accounts Payable | 11,200 | Equipment | 40,000 | |
Salaries Payable | 450 | Less: Accumulated dep. – Equipment | (25,000) | 15,000 |
Current Assets | ||||
Cash | 60,000 | |||
Accounts receivable | 5,750 | |||
Teaching supplies | 20,000 | |||
Prepaid Insurance | 9,500 | |||
Totals | 117,350 | Totals | 117,350 | |
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Chapter 3 Solutions
Fundamental Accounting Principles
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