Module 2 Homework Answer Key
Wild Book
Module 2
CH 3 Exercise 2, 6, 7, 8, 9
Exercise 3-2 (25 minutes)
a.
Apr. 30 Legal Services Expense..................................... 3,500
Legal Services Payable............................... 3,500
Record accrued legal fees.
May 12 Legal Services Payable...................................... 3,500
Cash.............................................................. 3,500
Pay accrued legal fees.
b.
Apr. 30 Interest Expense................................................. 3,000
Interest Payable........................................... 3,000
Record accrued interest expense
($9,000 monthly interest x 10/30).
May 20 Interest Payable................................................... 3,000
Interest Expense*................................................ 6,000
Cash.............................................................. 9,000
Record payment of accrued and current interest.
*($9,000 monthly interest x 20/30)
c.
Apr. 30 Salaries Expense................................................. 4,000
Salaries Payable.......................................... 4,000
Record accrued salaries ($10,000 x 2/5 week).
May 3 Salaries Payable.................................................. 4,000
Salaries Expense*............................................... 6,000
Cash.............................................................. 10,000
Record payment of accrued and current
salaries. *($10,000 weekly salaries x 3/5 week)
1
Exercise 3-6 (20 minutes)
a. Accounts Receivable..................................................... 2,000
Revenue............................................................. 2,000
Record services provided but payment not yet received.
b. Wages Expense............................................................ 1,000
Wages Payable............................................... 1,000
Record wages expense accrued but not yet paid.
c. Interest Expense.......................................................... 400
Interest Payable................................................ 400
Record interest expense incurred but not yet paid.
d. Lawn Services Expense................................................. 500
Lawn Services Payable.................................. 500
Record lawn services incurred but not yet paid.
e. Interest Receivable...................................................... 200
Interest Revenue............................................ 200
Record interest revenue earned but not yet received.
f. Salary Expense............................................................... 900
Salary Payable................................................... 900
Record salary expense accrued but not yet paid.
2
Exercise 3-7 (20 minutes)
WILSON TRUCKING COMPANY
Income Statement
For Year Ended December 31, 2017
Trucking fees earned................................................ $130,000
Expenses
Depreciation expense—Trucks........................... $23,500
Salaries expense.................................................. 61,000
Office supplies expense...................................... 8,000
Repairs expense—Trucks................................... 12,000
Total expenses..................................................... 104,500
Net income................................................................. $ 25,500
WILSON TRUCKING COMPANY
Statement of Retained Earnings
For Year Ended December 31, 2017
Retained earnings, December 31, 2016................... $155,000
Add: Net income...................................................... 25,500
180,500
Less: Dividends........................................................ (20,000)
Retained earnings, December 31, 2017................... $160,500
3
Exercise 3-8 (10 minutes)
Mar. 31 Net Sales........................................................ 549,780
Income Summary.................................. 549,780
Close revenue account.
Mar. 31 Income Summary.......................................... 507,937
Cost of Sales.......................................... 335,196
Advertising Expense............................. 54,834
Other Expense, Net............................... 117,907
Close expense accounts.
Exercise 3-9 (20 minutes)
WILSON TRUCKING COMPANY
Balance Sheet
December 31, 2017
Assets
Current assets
Cash................................................................ $ 8,000
Accounts receivable..................................... 17,500
Office supplies............................................... 3,000
Total current assets...................................... 28,500
Plant assets
Trucks............................................................. $172,000
Accumulated depreciation-Trucks.............. (36,000) 136,000
Land................................................................ 85,000
Total plant assets.......................................... 221,000
Total assets...................................................... $249,500
Liabilities
Current liabilities
Accounts payable.......................................... $ 12,000
4
Interest payable............................................. 4,000
Total current liabilities.................................. 16,000
Long-term notes payable................................ 53,000
Total liabilities................................................. 69,000
Equity
Common stock................................................ 20,000
Retained earnings*.......................................... 160,500
Total equity...................................................... 180,500
Total liabilities and equity.............................. $249,500
*From Exercise 3-7
OR
*
Retained earnings computed as:
Beginning balance..................................................................................... $155,000
Plus: Net income ($130,000 - $23,500 - $61,000 - $8,000 - $12,000)....... 25,500
Less: Dividends.......................................................................................... (20,000)
Ending balance........................................................................................... $160,500
