Summary ACCT 211 Connect Homework Chapter 3 Problems Liberty University answers complete solutions (latest 2022/2023) Problem 3-2A Preparing adjusting and subsequent journal entries LO C1, A1, P1 a. Arnez Co. follows the practice of recording prepaid expenses an

ACCT 211 Connect Homework Chapter 3 Problems Liberty University answers complete solutions (latest 2022/2023) Problem 3-2A Preparing adjusting and subsequent journal entries LO C1, A1, P1 a. Arnez Co. follows the practice of recording prepaid expenses and unearned revenues in balance sheet accounts. The company’s annual accounting period ends on December 31, 2013. The following information concerns the adjusting entries to be recorded as of that date. b. The Office Supplies account started the year with a $4,075 balance. During 2013, the company purchased supplies for $16,830, which was added to the Office Supplies account. The inventory of supplies available at December 31, 2013, totaled $3,586. An analysis of the company's insurance policies provided the following facts. Policy Date of Purchase Months of Coverage Cost Police Date of Purchase Mothers of Coverage Cost A April 1 2012 24 $ 11,256 B April 1 2013 36 $10,080 C April 1 2013 12 $8,856 The total premium for each policy was paid in full (for all months) at the purchase date, and the Prepaid Insurance account was debited for the full cost. (Year-end adjusting entries for Prepaid Insurance were properly recorded in all prior years.) c. The company has 15 employees, who earn a total of $1,700 in salaries each working day. They are paid each Monday for their work in the five-day workweek ending on the previous Friday. Assume that December 31, 2013, is a Tuesday, and all 15 employees worked the first two days of that week. Because New Year’s Day is a paid holiday, they will be paid salaries for five full days on Monday, January 6, 2014. d. The company purchased a building on January 1, 2013. It cost $955,000 and is expected to have a $45,000 salvage value at the end of its predicted 30-year life. Annual depreciation is $30,333. e. Since the company is not large enough to occupy the entire building it owns, it rented space to a tenant at $3,300 per month, starting on November 1, 2013. The rent was paid on time on November 1, and the amount received was credited to the Rent Earned account. However, the tenant has not paid the December rent. The company has worked out an agreement with the tenant, who has promised to pay both December and January rent in full on January 15. The tenant has agreed not to fall behind again. f. On November 1, the company rented space to another tenant for $2,990 per month. The tenant paid five months' rent in advance on that date. The payment was recorded with a credit to the Unearned Rent account. Required: 1. Use the information to prepare adjusting entries as of December 31, 2013. Adjusting entries (all dated December 31, 2013). Problem 3-3A Preparing adjusting entries, adjusted trial balance, and financial statements LO A1, P1, P2, P3 [The following information applies to the questions displayed below.] Wells Technical Institute (WTI), a school owned by Tristana Wells, provides training to individuals who pay tuition directly to the school. WTI also offers training to groups in off-site locations. Its unadjusted trial balance as of December 31, 2013, follows. WTI initially records prepaid expenses and unearned revenues in balance sheet accounts. Descriptions of items a through h that require adjusting entries on December 31, 2013, follow. Additional Information Items a. An analysis of WTI's insurance policies shows that $3,864 of coverage has expired. b. An inventory count shows that teaching supplies costing $3,349 are available at year-end 2013. c. Annual depreciation on the equipment is $15,458. d. Annual depreciation on the professional library is $7,729. e. On November 1, WTI agreed to do a special six-month course (starting immediately) for a client. The contract calls for a monthly fee of $3,000, and the client paid the first five months' fees in advance. When the cash was received, the Unearned Training Fees account was credited. The fee for the sixth month will be recorded when it is collected in 2014. f. On October 15, WTI agreed to teach a four-month class (beginning immediately) for an individual for $4,600 tuition per month payable at the end of the class. The class started on October 15, but no payment has yet been received. (WTI's accruals are applied to the nearest half-month; for example, October recognizes one-half month accrual.) g. WTI's two employees are paid weekly. As of the end of the year, two days' salaries have accrued at the rate of $100 per day for each employee. h. The balance in the Prepaid Rent account represents rent for December. WELLS TECHNICAL INSTITUTE Unadjusted Trial Balance December 31, 2013 Debit Credit Cash 27,094 Accounts receivable 0 Teaching supplies 10,420 Prepaid insurance 15,632 Prepaid rent 2,085 Professional library 31,262 Accumulated depreciation—Professional library 9,380 Equipment 72,934 Accumulated depreciation—Equipment 16,675 Accounts payable 33,976 Salaries payable 0 Unearned training fees 15,000 T. Wells, Capital 66,277 T. Wells, Withdrawals 41,684 Tuition fees earned 106,293 Training fees earned 39,599 Depreciation expense—Professional library 0 Depreciation expense—Equipment 0 Salaries expense 50,022 Insurance expense 0 Rent expense 22,936 Teaching supplies expense 0 Advertising expense 7,295 Utilities expense 5,836 ________________________________________ ________________________________________ Totals 287,200 287,200 Required: 2. Prepare the necessary adjusting journal entries for items a through h. Assume that adjusting entries are made only at year-end. Adjusting entries (all dated Dec. 31, 2013). Explanation: Adjustment b: To record supplies used ($10,420 – $3,349) = $7,071 Adjustment f: To record tuition fees earned ($4,600 × 2 1/2 months) = $11,500 Adjustment g: To record accrued salaries (2 days × $100 × 2) = $400 Problem 3-3A Part 3 3.1 Post the balance from the unadjusted trial balance and the adjusting entries in to the T-accounts. Record the adjusting entry related to insurance 3.2 Prepare an adjusted trial balance. Problem 3-3A Part 4 4.1 Prepare Wells Technical Institute's income statement for the year 2013. Problem 3-5A Preparing financial statements from the adjusted trial balance and calculating profit margin LO P3, A1, A2 [The following information applies to the questions displayed below.] The adjusted trial balance for Chiara Company as of December 31, 2013, follows. Debit Credit Cash $ 214,400 Accounts receivable 52,500 Interest receivable 18,800 Notes receivable (due in 90 days) 170,500 Office supplies 16,500 Automobiles 169,000 Accumulated depreciation—Automobiles $ 85,000 Equipment 140,000 Accumulated depreciation—Equipment 18,000 Land 77,000 Accounts payable 100,000 Interest payable 40,000 Salaries payable 18,000 Unearned fees 30,000 Long-term notes payable 146,000 R. Chiara, Capital 315,800 R. Chiara, Withdrawals 45,000 Fees earned 564,000 Interest earned 26,000 Depreciation expense—Automobiles 25,000 Depreciation expense—Equipment 21,000 Salaries expense 189,000 Wages expense 43,000 Interest expense 32,200 Office supplies expense 33,400 Advertising expense 63,500 Repairs expense—Automobiles 32,000 ________________________________________ ________________________________________ ________________________________________ ________________________________________ Totals $ 1,342,800 $ 1,342,800 ________________________________________________________________________________ ________________________________________________________________________________ ________________________________________________________________________________ Problem 3-5A Part 1 Required: 1(a) Prepare the income statement for the year ended December 31, 2013. 1(b) Prepare the statement of owner's equity for the year ended December 31, 2013. 1(c) Prepare Chiara Company's balance sheet as of December 31, 2013 Problem 3-5A Part 2 2. Calculate the profit margin for year 2013. Explanation: Profit margin = $150,900 / $564,000 = 26.8% The company purchased a building on January 1, 2013. It cost $840,000 and is expected to have a $45,000 salvage value at the end of its predicted 25-year life. Annual depreciation is $31,800. A building cost $840,000 and is expected to have a $45,000 salvage value after 25 years. The annual depreciation is $31,800.