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Module 2 Homework Answer Key

This document contains the answers to homework exercises for a Wild Book accounting module. It includes journal entries recording accrued expenses and revenues, income statements, statements of retained earnings, adjusting entries, and a balance sheet. The exercises cover topics such as accruing salaries, interest, legal fees, and recording and paying these accruals. They also include preparing financial statements for a trucking company.

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Mrinmay kundu
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Download as DOCX, PDF, TXT or read online on Scribd
223 views

Module 2 Homework Answer Key

This document contains the answers to homework exercises for a Wild Book accounting module. It includes journal entries recording accrued expenses and revenues, income statements, statements of retained earnings, adjusting entries, and a balance sheet. The exercises cover topics such as accruing salaries, interest, legal fees, and recording and paying these accruals. They also include preparing financial statements for a trucking company.

Uploaded by

Mrinmay kundu
Copyright
© © All Rights Reserved
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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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

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