Problem 5-3A (90 minutes) Part 1 CHALLENGER CONSTRUCTION Work Sheet For Year Ended September 30, 2011

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1 Solution Manual for Chapter Problem 5-3A (90 minutes) Part 1 CHALLENGER CONSTRUCTION Work Sheet For Year Ended September 30, 2011 Unadjusted Trial Balance Adjustments Adjusted Trial Balance Income Statement Balance Sheet & Statement of Changes in Equity No. Account Debit Credit Debit Credit Debit Credit Debit Credit Debit Credit 101 Cash... 36,000 36,000 36, Supplies... 18,800 (a) 5,000 5, Prepaid insurance... 12,400 (b) 8,000 4,400 4, Land not currently used in op ,000 50,000 50, Equipment , , , Accum. deprec., equipment... 40,500 (c) 58,500 58, Copyright... 6,000 6,000 6, Accounts payable... 9,600 (d) ,400 10, Interest payable... (f) Wages payable... (e) 3,000 3,000 3, Long-term notes payable... 50,000 50,000 50, Chris Challenger, capital... 55,320 55,320 55, Chris Challenger, withdrawals... 72,000 72,000 72, Construction fees earned , , , Deprec. expense, equipment... (c) 18,000 18,000 18, Wages expense... 82,000 (e) 3,000 85,000 85, Interest expense... 3,000 (f) 500 3,500 3, Insurance expense... (b) 8,000 8,000 8, Rent expense... 26,400 26,400 26, Supplies expense... (a) 13,800 13,800 13, Business taxes expense... 10,000 10,000 10, Repairs expense... 5,020 5,020 5, Utilities expense... 7,800 (d) 800 8,600 8,600 13,800 18,000

2 Totals , ,420 44, ,72 457, , , , ,720 44,100 0 Net income , ,680 Totals , , , ,400

3 Problem 5-3A (continued) Part Adjusting entries: a) Sept. 30 Supplies Expense... 13,800 Supplies... 13,800 To record consumption of supplies. b) 30 Insurance expense... 8,000 Prepaid Insurance... 8,000 To record consumption of insurance coverage. c) 30 Depreciation Expense, Equipment... 18,000 Accumulated Depreciation, Equipment... 18,000 To record depreciation. d) 30 Utilities Expense Accounts Payable To record accrued utilities costs. e) 30 Wages Expense... 3,000 Wages Payable... 3,000 To record accrued wages. f) 30 Interest Expense Interest Payable To record accrued interest expense.

4 Problem 5-3A (continued) Part Closing entries: Sept. 30 Construction Fees Earned ,000 Income Summary ,000 To close the revenue account to the Income Summary account. 30 Income Summary ,320 Depreciation Expense, Equipment... 18,000 Wages Expense... 85,000 Interest Expense... 3,500 Insurance Expense... 8,000 Rent Expense... 26,400 Supplies Expense... 13,800 Business Taxes Expense... 10,000 Repairs Expense... 5,020 Utilities Expense... 8,600 To close the expense accounts to the Income Summary account. 30 Income Summary ,680 Chris Challenger, Capital ,680 To close the Income Summary account to capital. 30 Chris Challenger, Capital... 72,000 Chris Challenger, Withdrawals... 72,000 To close the withdrawals account to capital. 4 Fundamental Accounting Principles, Thirteenth Canadian Edition

5 Problem 5-3B (90 minutes) Part 1 WEBSTER DEMOLITION COMPANY Work Sheet For Year Ended June 30, 2011 Balance Sheet Adjusted and Unadjusted Trial Income Statement of Trial Balance Adjustments Balance Statement Changes in Equity No. Title Debit Credit Debit Credit. Debit Credit Debit Credit Debit Credit 101 Cash... 4,500 4,500 4, Supplies... 9,000 (a) 4,950 4,050 4, Prepaid insurance... 7,300 (b) 5,750 1,550 1, Equipment... 70,000 70,000 70, Accumulated deprec., equipment... 5,000 (c) 9,000 14,000 14, Accounts payable... 8,000 (d) 350 8,350 8, Interest payable... (f) Wages payable... (e) 1,100 1,100 1, Long-term notes payable... 45,000 45,000 45, Rusty Webster, capital... 33,450 33,450 33, Rusty Webster, withdrawals... 2,000 2,000 2, Demolition fees earned... 68,500 68,500 68, Depreciation expense, equipment... (c) 9,000 9,000 9, Wages expense... 25,700 (e) 1,100 26,800 26, Interest expense... 1,100 (f) 100 1,200 1, Insurance expense... (b) 5,750 5,750 5, Rent expense... 24,400 24,400 24, Supplies expense... (a) 4,950 4,950 4, Business tax expense... 4,200 4,200 4, Repairs expense... 3,350 3,350 3, Utilities expense... 8,400 (d) 350 8,750 8,750 Totals , ,950 21,250 21, , ,500 88,400 68,500 82, ,000 Net loss... 19,900 19,900 Totals... 88,400 88, , ,000

6 Problem 5-3B (continued) Part Adjusting entries: (a) June 30 Supplies Expense... 4,950 Supplies... 4,950 To record consumption of supplies. (b) 30 Insurance Expense... 5,750 Prepaid Insurance... 5,750 To record consumption of insurance coverage. (c) 30 Depreciation Expense, Equipment... 9,000 Accumulated Depreciation, Equipment... 9,000 To record depreciation. (d) 30 Utilities Expense Accounts Payable To record accrued utilities costs. (e) 30 Wages Expense... 1,100 Wages Payable... 1,100 To record accrued wages. (f) 30 Interest Expense Interest Payable To record accrued interest expense. 6 Fundamental Accounting Principles, ThirteenthCanadian Edition

7 Problem 5-3B (continued) Part Closing entries: June 30 Demolition Fees Earned... 68,500 Income Summary... 68,500 To close the revenue account. 30 Income Summary... 88,400 Depreciation Expense, Equipment... 9,000 Wages Expense... 26,800 Interest Expense... 1,200 Insurance Expense... 5,750 Rent Expense... 24,400 Supplies Expense... 4,950 Business Tax Expense... 4,200 Repairs Expense... 3,350 Utilities Expense... 8,750 To close the expense accounts. 30 Rusty Webster, Capital... 19,900 Income Summary... 19,900 To close the Income Summary account. 30 Rusty Webster, Capital... 2,000 Rusty Webster, Withdrawals... 2,000 To close the withdrawals account. Solutions Manual for Chapter 5 7

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