ACC821 | Fall 2020
Problem Solving: Chapter 4
Page 206: EX. 4.3:
1- B 6- C
2- C 7- A (inventory sold; inventory bought)
3- B (considering its an asset) 8- C
4- C 9- B
5- A (sales revenue met with
commission)
Page 207: EX. 4.7:
1- Debit Computers 260K
Credit Cash 260K
2- Depreciation = Initial Cost – Salvage Value = 260K – 20K = 240K
3- 4 years = 48 months = 240K/48 = 5000
4- Debit Depreciation Expense 5000
Credit Accumulated Depreciation 5000
5- Carrying Value or Book Value = cost - depreciation
December 31: 6 months = 6*5000 = 30000
So, value of computers = 260K – 30K = 230K
Page 208: EX. 4.11:
1- Debit Cash 800K
Credit Ticket Fees collected in advance/unearned revenue 800K
2- Debit Ticket Fees collected in advance 0.75*800K= 600K (for 3 days: June 28, 29 and
30)
Credit Tickets Revenues 600K
3- Debit Ticket Fees collected in advance 200K
Credit Tickets Revenues 200K
EX. 4.13:
1- Debit Cash 100K
Credit NP 100K
2- Debit Interest Expense March 1K (100K*0.12*30/360)
Credit Interest Payable March 1K
Debit Interest Expense March April 1K
Credit Interest Payable April 1K (will pay it in may)
3- Debit NP 100K
Debit Interest Payable 2K
Debit interest Expense 1K (interest of May, paid directly in cash)
Credit Cash 103K
ACC821 | Fall 2020
Page 209: EX. 4.16:
1- Debit NR 60K
Credit Cash 60K
2- Debit Interest Receivable (60K*0.1*30/360) = 500
Credit Interest Revenue 500 (1 month passed so I’m allowed to record it)
3- Debit Cash 61K
Credit NR 60K
Credit Interest Receivable 500 (June)
Credit Interest Revenue (for July, he paid it directly)
Page 211: EX. 4.21:
1- Collect and analyze information from source documents
2- Journalize daily transactions
3- Post transactions to accounts in the ledger
4- Prepare a work sheet
5- Record and post adjusting entries
6- Prepare financial statements
7- Close the accounts
This is the correct order, in the slide it’s wrong
Page 213: EX. 4.27:
Debit Commission Earned (only Revenue account) 54K
Credit Income Summary 54K
Debit Income Summary 16194
Credit Real Estate
Credit Computer
Credit Depreciation
Credit Car
Credit Travel
Credit Insurance
Credit Advertising
Credit Office
Income Summary: Credit > Debit, so I need to debit it to close it
Debit Income Summary 37806 (54K – 16194)
Credit RE 37806
ACC821 | Fall 2020
Page 214: EX. 4.32:
1- July 1:
Debit Cash 50K
Credit NP 50K
July 31:
Debit Interest Expense 500 (50K*0.12*30/360)
Credit Interest Payable 500 (I pay them next month)
August 31:
Debit NP 50K
Debit Interest Payable 500
Debit Interest Expense 500 (for august, I pay it directly cash this month)
Credit Cash 51K
Page 218, 219: Problem. 4.9:
a. Debit Interest Expense (15K*0.08*30/360) = 100
Credit Interest Payable 100
b. Debit Supplies Expense (1280 +750 – 1370) = 660
Credit Supplies 660
c. Depreciation Expense per year is 9600, per month it’s 800.
Debit Depreciation Expense 800
Credit Accumulated Depreciation 800
d. Debit Wage Expense (950*6 days) = 5700
Credit Wages Payable 5700
e. Debit Cash (2500*6) = 15000
Credit Rent Received in Advance 15000
Debit Rent Received in Advance 2500
Credit Rent Revenue 2500
f. Debit Cash 4800
Credit Customer Deposit 4800
Debit Customer Deposit 1200
Credit Service Revenue 1200
g. Debit Tax Expense 3900
Credit Tax Payable 3900
