Financial accounting IFRS 3rd edition solutions manual

Financial Accounting IFRS 3rd Edition Solutions Manual Weygandt Kimmel Kieso CHAPTER Adjusting the Accounts ASSIGNMENT CLASSIFICATION TABLE Learning Objectives Questions *1 Explain the time period assumption *2 Brief Exercises A Problems B Problems 5, 6, 7, 8, 9, 10, 11, 12, 13, 15 1A, 2A, 3A, 4A, 5A, 6A 1B, 2B, 3B, 4B, 5B 5, 6, 7, 8, 9, 10, 11, 12, 13, 15 1A, 2A, 3A, 4A, 5A, 6A 1B, 2B, 3B, 4B, 5B 10, 11, 12, 1A, 2A, 3A, 1B, 2B, 3B, Do It! Exercises 1 Explain the accrual basis of accounting 2, 3, 4, 2, 3, 10,16 *3 Explain the reasons for adjusting entries 6, *4 Identify the major types of adjusting entries 8, 18 2, *5 Prepare adjusting entries for deferrals 8, 9, 10, 11, 12, 13, 18, 19, 20 2, 3, 4, 5, 6, *6 Prepare adjusting entries for accruals 8, 14, 15, 16, 17, 18, 19, 20 2, 7, *7 Describe the nature and 21 9, 10 Weygandt Financial Accounting IFRS 3e Solutions Manual 4, 6, 11 3-1 purpose of an adjusted trial balance 13, 14 5A, 6A 6A *8 Prepare adjusting entries for the alternative treatment of deferrals 22 11 17, 18 *9 Discuss financial reporting concepts 23, 24, 25, 26, 27, 28 12, 13 14, 15 19, 20, 21, 22, 23 5B *Note: All asterisked Questions, Exercises, and Problems relate to material contained in the appendix to the chapter Weygandt Financial Accounting IFRS 3e Solutions Manual 3-2 ASSIGNMENT CHARACTERISTICS TABLE Problem Number Description Difficulty Level Time Allotted (min.) 1A Prepare adjusting entries, post to ledger accounts, and prepare an adjusted trial balance Simple 40–50 2A Prepare adjusting entries, post, and prepare adjusted trial balance and financial statements Simple 50–60 3A Prepare adjusting entries and financial statements Moderate 40–50 4A Prepare adjusting entries Moderate 30–40 5A Journalize transactions and follow through accounting cycle to preparation of financial statements Moderate 60–70 Prepare adjusting entries, adjusted trial balance, and financial statements using appendix Moderate 40–50 *6A* 1B Prepare adjusting entries, post to ledger accounts, and prepare an adjusted trial balance Simple 40–50 2B Prepare adjusting entries, post, and prepare adjusted trial balance and financial statements Simple 50–60 3B Prepare adjusting entries and financial statements Moderate 40–50 4B Prepare adjusting entries Moderate 30–40 5B Journalize transactions and follow through accounting cycle to preparation of financial statements Moderate 60–70 Weygandt Financial Accounting IFRS 3e Solutions Manual 3-3 WEYGANDT FINANCIAL ACCOUNTING, IFRS EDITION, 3e CHAPTER ADJUSTING THE ACCOUNTS Number LO BT Difficulty Time (min.) BE1 C Simple 4–6 BE2 4–6 AN Moderate 6–8 BE3 AN Simple 3–5 BE4 AN Simple 3–5 BE5 AN Simple 2–4 BE6 AN Simple 2–4 BE7 AN Simple 4–6 BE8 4–6 AN Simple 5–7 BE9 AP Simple 4–6 BE10 AP Simple 2–4 BE11* AN Moderate 3–5 BE12* K Simple 3–5 BE13* K Simple 2–4 BE14* K Simple 2–4 BE15* K Simple 1–2 DI1 1, K Simple 2–4 DI2 AN Simple 6–8 DI3 AN Simple 4–6 DI4 AN Moderate 20–30 EX1 C Simple 3–5 EX2 E Moderate 10–15 EX3 AP Simple 6–8 EX4 AN Simple 5–6 EX5 5, AN Moderate 10–15 EX6 4–6 AN Moderate 10–12 EX7 5, AN Moderate 8–10 EX8 5, AN Moderate 8–10 EX9 5, AN Simple 8–10 EX10 2, 5–7 AN Moderate 8–10 EX11 4–7 AN Moderate 12–15 EX12 5–7 AN Moderate 8–10 Weygandt Financial Accounting IFRS 3e Solutions Manual 3-4 ADJUSTING THE ACCOUNTS (Continued) Number LO BT Difficulty EX13 5–7 AN Simple 8–10 EX14 AP Simple 12–15 EX15 5, AN, S Moderate 8–10 EX16 AN Moderate 8–10 EX17* AN Moderate 6–8 EX18* AN Moderate 10–12 EX19* K Simple 3–5 EX20* C Simple 3–5 EX21* K Simple 6–8 EX22* E Simple 10–20 EX23* E Simple 10–20 P1A 5–7 AN Simple 40–50 P2A 5–7 AN Simple 50–60 P3A 5–7 AN Moderate 40–50 P4A 5, AN Moderate 30–40 P5A 5–7 AN Moderate 60–70 P6A 5–8 AN Moderate 40–50 P1B 5–7 AN Simple 40–50 P2B 5–7 AN Simple 50–60 P3B 5–7 AN Moderate 40–50 P4B 5, AN Moderate 30–40 P5B 5–7 AN Moderate 60–70 BYP1 5, AN Simple 10–15 BYP2 — AN Simple 10–15 BYP3 2–7 S Moderate 15–20 BYP4 3–6 C Simple 10–15 BYP5 3–6 E Moderate 10–15 Weygandt Financial Accounting IFRS 3e Solutions Manual 3-5 Time (min.) Correlation Chart between Bloom’s Taxonomy, Learning Objectives and End-of-Chapter Exercises and Problems Knowledge Comprehension Application Analysis Synthesis *1 Explain the time period assumption DI3-1 Q3-1 E3-1 *2 Explain the accrual basis of accounting DI3-1 Q3-2 Q3-3 Q3-4 Q3-5 E3-3 *3 Explain the reasons for adjusting entries Q3-6 Q3-7 BE3-1 *4 Identify the major types of adjusting entries Q3-8 Q3-18 BE3-2 BE3-8 E3-4 E3-6 E3-11 *5 Prepare adjusting entries for deferrals Q3-8 Q3-9 Q3-10 Q3-11 Q3-12 Q3-13 Q3-19 Q3-20 Q3-18 BE3-2 BE3-3 BE3-4 BE3-5 BE3-6 BE3-8 DI3-2 E3-5 E3-6 E3-7 E3-8 E3-9 E3-10 E3-11 E3-12 E3-13 E3-15 P3-1A P3-2A P3-3A E3-15 P3-4A P3-5A P3-6A P3-1B P3-2B P3-3B P3-4B P3-5B *6 Prepare adjusting entries for accruals Q3-8 Q3-14 Q3-15 Q3-19 Q3-20 Q3-17 Q3-16 Q3-18 BE3-2 BE3-7 BE3-8 DI3-3 E3-5 E3-6 E3-7 E3-8 E3-9 E3-10 E3-11 E3-12 E3-13 E3-15 P3-1A P3-2A P3-3A P3-4A E3-15 P3-5A P3-6A P3-1B P3-2B P3-3B P3-4B P3-5B *7 Describe the nature and purpose of an adjusted trial balance Q3-21 BE3-9 BE3-10 E3-14 DI3-4 E3-10 E3-11 E3-12 E3-13 P3-1A P3-2A P3-3A P3-5A P3-6A P3-1B P3-2B P3-3B P3-5B *8 Prepare adjusting entries for the alternative treatment of deferrals Q3-22 BE3-11 E3-17 *9 Discuss financial reporting concepts Broadening Your Perspective Q3-23 BE3-12 BE3-13 BE3-14 BE3-15 E3-19 E3-21 Q3-24 Q3-25 Q3-26 Q3-27 Q3-28 E3-20 Communication E3-10 E3-16 Evaluation E3-2 E3-18 P3-6A E3-22 E3-23 Financial Reporting Decision-Making Ethics Case Comparative Analysis Across the Organization BLOOM’S TAXONOMY TABLE Learning Objective ANSWERS TO QUESTIONS (a) Under the time period assumption, an accountant is required to determine the relevance of each business transaction to specific accounting periods (b) An accounting time period of one year in length is referred to as a fiscal year A fiscal year that extends from January to December 31 is referred to as a calendar year Accounting periods of less than one year are called interim periods LO: 3.1 Difficulty: Easy BLOOMCODE: Comprehension AACSB: Reflective thinking The two principles that relate to adjusting the accounts are: The revenue recognition principle, which states that revenue should be recognized in the accounting period in which the performance obligation is satisfied The expense recognition principle, which states that efforts (expenses) should be matched with accomplishments (revenues) LO: 3.2 Difficulty: Easy BLOOMCODE: Comprehension AACSB: Reflective thinking The law firm should recognize the revenue in April When a company agrees to perform a service for a customer it has a performance obligation The revenue recognition principle states that revenue should be recognized in the accounting period in which the performance obligation is satisfied which is April in this case LO: 3.2 Difficulty: Easy BLOOMCODE: Comprehension AACSB: Reflective thinking Information presented on an accrual basis is more useful than on a cash basis because it reveals relationships that are likely to be important in predicting future results To illustrate, under accrual accounting, revenues are recognized when earned so they can be related to the economic environment in which they occur Trends in revenues are thus more meaningful LO: 3.2 Difficulty: Easy BLOOMCODE: Comprehension AACSB: Reflective thinking Expenses of £4,700 should be deducted from the revenues in April Under the expense recognition principle efforts (expenses) should be matched with accomplishments (revenues) LO: 3.1 Difficulty: Easy BLOOMCODE: Application AACSB: Reflective thinking Weygandt Financial Accounting IFRS 3e Solutions Manual 3-7 No, adjusting entries are required by the revenue recognition and expense recognition principles LO: 3.3 Difficulty: Easy BLOOMCODE: Comprehension AACSB: Reflective thinking A trial balance may not contain up-to-date information for financial statements because: (1) Some events are not journalized daily because it is not efficient to so (2) The expiration of some costs occurs with the passage of time rather than as a result of daily transactions (3) Some items may be unrecorded because the transaction data are not yet known LO: 3.3 Difficulty: Easy BLOOMCODE: Comprehension AACSB: Reflective thinking The two categories of adjusting entries are deferrals and accruals Deferrals consist of prepaid expenses and unearned revenues Accruals consist of accrued revenues and accrued expenses LO: 3.5, 3.6 Difficulty: Easy BLOOMCODE: Comprehension AACSB: Reflective thinking In the adjusting entry for a prepaid expense, an expense is debited and an asset is credited LO: 3.5 Difficulty: Easy BLOOMCODE: Comprehension AACSB: Reflective thinking 10 No Depreciation is the process of allocating the cost of an asset to expense over its useful life in a rational and systematic manner Depreciation results in the presentation of the book value of the asset, not its fair value LO: 3.5 Difficulty: Easy BLOOMCODE: Comprehension AACSB: Reflective thinking 11 Depreciation expense is an expense account whose normal balance is a debit This account shows the cost that has expired during the current accounting period Accumulated depreciation is a contra asset account whose normal balance is a credit The balance in this account is the depreciation that has been recognized from the date of acquisition to the statement of financial position date LO: 3.5 Difficulty: Easy BLOOMCODE: Comprehension AACSB: Reflective thinking Weygandt Financial Accounting IFRS 3e Solutions Manual 3-8 Questions Chapter (Continued) 12 Equipment Rs 18,000,000 Less: Accumulated Depreciation—Equipment 7,000,000 Rs 11,000,000 LO: 3.5 Difficulty: Easy BLOOMCODE: Comprehension AACSB: Reflective thinking *13 In the adjusting entry for an unearned revenue, a liability is debited and a revenue is credited LO: 3.5 Difficulty: Easy BLOOMCODE: Comprehension AACSB: Reflective thinking *14 Asset and revenue An asset would be debited and a revenue would be credited LO: 3.6 Difficulty: Easy BLOOMCODE: Comprehension AACSB: Reflective thinking *15 An expense is debited and a liability is credited in the adjusting entry LO: 3.1 Difficulty: Easy BLOOMCODE: Comprehension AACSB: Reflective thinking *16 Net income was understated NT$6,000 because prior to adjustment, revenues are understated by NT$27,000 and expenses are understated by NT$21,000 The difference in this case is NT$6,000 (NT$27,000 – NT$21,000) LO: 3.6 Difficulty: Medium BLOOMCODE: Analysis AACSB: Analytic *17 The entry is: Jan Error! Reference source not found.9 Salaries and Wages Payable Salaries and Wages Expense Cash 2,000 4,000 LO: 3.6 Difficulty: Easy BLOOMCODE: Application AACSB: Reflective thinking *18 (a) Accrued revenues (b) Unearned revenues (c) Accrued expenses Weygandt Financial Accounting IFRS 3e Solutions Manual (d) Accrued expenses or prepaid expenses (e) Prepaid expenses (f) Accrued revenues or unearned revenues 3-9 6,000 LO: 3.6 Difficulty: Medium BLOOMCODE: Analysis AACSB: Analytic *19 (a) Salaries and Wages Payable (b) Accumulated Depreciation (c) Interest Expense (d) Supplies Expense (e) Service Revenue (f) Service Revenue LO: 3.5, 3.6 Difficulty: Easy BLOOMCODE: Comprehension AACSB: Reflective thinking *20 Disagree An adjusting entry affects only one statement of financial position account and one income statement account LO: 3.5, 3.6 Difficulty: Easy BLOOMCODE: Comprehension AACSB: Reflective thinking *21 Financial statements can be prepared from an adjusted trial balance because the balances of all accounts have been adjusted to show the effects of all financial events that have occurred during the accounting period LO: 3.7 Difficulty: Easy BLOOMCODE: Comprehension AACSB: Reflective thinking *22 For Supplies Expense (prepaid expense): expenses are overstated and assets are understated The adjusting entry is: Assets (Supplies) XX Expenses (Supplies Expense) XX For Rent Revenue (unearned revenues): revenues are overstated and liabilities are understated The adjusting entry is: Revenues (Rent Revenue) XX Liabilities (Unearned Rent Revenue) XX LO: 3.8 Difficulty: Medium BLOOMCODE: Application AACSB: Reflective thinking *23 (a) The primary objective of financial reporting is to provide financial information that is useful to investors and creditors for making decisions about providing capital (b) The fundamental qualitative characteristics are relevance and faithful representation The enhancing qualities are comparabiIity, verifiability, timeliness, and understandability LO: 3.9 Difficulty: Easy BLOOMCODE: Knowledge Weygandt Financial Accounting IFRS 3e Solutions Manual 3-10 *EXERCISE 3-20 (a) This is a violation of the historical cost principle The inventory was written up to its fair value when it should have remained at cost (b) This is a violation of the economic entity assumption The treatment of the transaction treats Jay Rosman and Rosman Co as one entity when they are two separate entities Salaries and Wages Expense should not have been debited for the purchase of the truck The dividends account should have debited instead Weygandt Financial Accounting IFRS 3e Solutions Manual 3-38 *EXERCISE 3-20 (Continued) (c) This is a violation of the time period assumption This assumption states that the economic life of a business can be divided into artificial time periods (months, quarters, or a year) By adding two more weeks to the year, Rosman Co would be misleading financial statement readers In addition, 2017 results would not be comparable to previous years’ results The company should use a 52 week year LO: 3.9 Difficulty: Easy BLOOMCODE: Comprehension AACSB: Reflective thinking *EXERCISE 3-21 10 11 12 Comparability Going concern assumption Materiality Full disclosure principle Time period assumption Relevance Historical cost principle Consistency Economic entity assumption Faithful representation Monetary unit assumption Expense recognition principle LO: 3.9 Difficulty: Easy BLOOMCODE: Knowledge AACSB: Reflective thinking *EXERCISE 3-22 (a) The primary objective of financial reporting is to provide financial information that is useful to investors and creditors for making decisions about providing capital Since Net Nanny’s shares appear to be actively traded, investors must be capable of using the information made available by Net Nanny to make decisions about the company Weygandt Financial Accounting IFRS 3e Solutions Manual 3-39 (b) The investors must feel as if the company will show earnings in the future They must recognize that information relevant to their investment choice is indicated by more than Net Nanny’s net income (c) The change from Canadian dollars to U.S dollars for reporting purposes should make Net Nanny more comparable with companies traded on U.S stock exchanges LO: 3.9 Difficulty: Medium BLOOMCODE: Evaluation AACSB: Reflective thinking *EXERCISE 3-23 (a) Accounting information is the compilation and presentation of financial information for a company It provides information in the form of financial statements and additional disclosures that is useful for decision making The accounting rules and practices that have substantial authoritative support and are recognized as a general guide for financial reporting purposes are referred to as international financial reporting standards (IFRS) The biotechnology company that employs Ana will follow IFRS to report its assets, liabilities, equity, revenues, and expenses as it prepares financial statements (b) Ana is correct in her understanding that the low success rate for new biotech products will be a cause of concern for investors Her suggestion that detailed scientific findings be reported to prospective investors might offset some of their concerns but it probably won’t conform to the qualitative characteristics of accounting information These characteristics consist of relevance, faithful representation, comparability, and consistency, verifiability, timeliness, and understandability They apply to accounting information rather than the scientific findings that Ana wants to include LO: 3.9 Difficulty: Medium BLOOMCODE: Evaluation AACSB: Reflective thinking Weygandt Financial Accounting IFRS 3e Solutions Manual 3-40 SOLUTIONS TO PROBLEMS PROBLEM 3-1A (a) Date 2017 June 30 30 30 30 30 30 30 Account Titles and Explanation Ref Debit Supplies Expense Supplies (€1,600 – €340) 631 1,260 Utilities Expense Accounts Payable 732 201 185 Insurance Expense Prepaid Insurance (€3,000 ÷ 12 months) 722 250 Unearned Service Revenue Service Revenue 209 400 2,500 Salaries and Wages Expense Salaries and Wages Payable 726 1,600 Depreciation Expense Accumulated Depreciation— Equipment 711 Accounts Receivable Service Revenue 112 400 Weygandt Financial Accounting IFRS 3e Solutions Manual 3-41 126 J3 Credit 1,260 185 130 250 2,500 212 1,600 300 158 300 2,400 2,400 PROBLEM 3-1A (Continued) (b) Cash Date 2017 June 30 Explanation Balance Accounts Receivable Date Explanation 2017 June 30 Balance 30 Adjusting Supplies Date 2017 June 30 30 Explanation Balance Adjusting Prepaid Insurance Date Explanation 2017 June 30 Balance 30 Adjusting Equipment Date Explanation 2017 June 30 Balance Ref Credit  Ref  J3 Ref 6,200 Debit Ref 2,400 Debit Credit No 126 Balance 1,260 1,600 340 Credit No 130 Balance Debit  J3 Ref Credit 250 Debit Credit  3-42 No 112 Balance 6,000 8,400  J3 Accumulated Depreciation—Equipment Date Explanation Ref 2017 June 30 Adjusting J3 PROBLEM 3-1A (Continued) Weygandt Financial Accounting IFRS 3e Solutions Manual Debit No 101 Balance 3,000 2,750 No 157 Balance 14,400 Debit Credit 300 No 158 Balance 300 Accounts Payable Date Explanation 2017 June 30 Balance 30 Adjusting Unearned Service Revenue Date Explanation 2017 June 30 Balance 30 Adjusting Salaries and Wages Payable Date Explanation 2017 June 30 Adjusting Share Capital—Ordinary Date Explanation 2017 June 30 Balance Service Revenue Date Explanation 2017 June 30 Balance 30 Adjusting 30 Adjusting Weygandt Financial Accounting IFRS 3e Solutions Manual Ref Debit  J3 Ref  J3 Ref Debit 185 4,700 4,885 Credit No 209 Balance 2,500 4,000 1,500 Debit Credit No 212 Balance 1,600 1,600 Credit No 311 Balance J3 Ref Credit No 201 Balance Debit  Ref  J3 J3 3-43 20,000 Debit Credit No 400 Balance 2,500 2,400 7,900 10,400 12,800 PROBLEM 3-1A (Continued) Supplies Expense Date Explanation 2017 June 30 Adjusting Depreciation Expense Date Explanation 2017 June 30 Adjusting Insurance Expense Date Explanation 2017 June 30 Adjusting Salaries and Wages Expense Date Explanation 2017 June 30 Balance 30 Adjusting Rent Expense Date Explanation 2017 June 30 Balance Utilities Expense Date Explanation 2017 June 30 Adjusting Weygandt Financial Accounting IFRS 3e Solutions Manual Ref Debit J3 1,260 1,260 Ref Debit No 711 Balance J3 300 300 Ref Debit No 722 Balance J3 250 250 Debit No 726 Balance Ref  J3 Ref Credit No 631 Balance Credit Credit Credit 1,600 4,400 6,000 Debit No 729 Balance Credit  1,000 Ref Debit J3 185 3-44 Credit No 732 Balance 185 PROBLEM 3-1A (Continued) (c) CUONO COMPANY SpA Adjusted Trial Balance June 30, 2017 Cash Accounts Receivable Supplies Prepaid Insurance Equipment Accumulated Depreciation— Equipment Accounts Payable Unearned Service Revenue Salaries and Wages Payable Share Capital—Ordinary Service Revenue Supplies Expense Depreciation Expense Insurance Expense Salaries and Wages Expense Rent Expense Utilities Expense LO: 3.5, 3.6, 3.7 Difficulty: Hard BLOOMCODE: Analysis AACSB: Analytic Weygandt Financial Accounting IFRS 3e Solutions Manual 3-45 Debit € 6,200 8,400 340 2,750 14,400 Credit € 300 4,885 1,500 1,600 20,000 12,800 1,260 300 250 6,000 1,000 185 €41,085 €41,085 PROBLEM 3-2A (a) Date Aug 31 31 31 31 31 31 31 Account Titles and Explanation Insurance Expense (€400 X 3) Prepaid Insurance Ref 722 130 Debit 1,200 Supplies Expense (€3,300 – €900) Supplies 631 126 2,400 711 1,725 Depreciation Expense (€4,500 X 1/4) + (€2,400 X 1/4) Accumulated Depreciation— Buildings Accumulated Depreciation— Equipment J1 Credit 1,200 2,400 144 1,125 158 600 Unearned Rent Revenue Rent Revenue 208 429 4,100 Salaries and Wages Expense Salaries and Wages Payable 726 212 400 Accounts Receivable Rent Revenue 112 429 3,700 Interest Expense Interest Payable [(€80,000 X 9%) X 1/12] 718 600 4,100 400 3,700 230 600 (b) Cash Date Explanation Aug 31 Balance Ref  Weygandt Financial Accounting IFRS 3e Solutions Manual 3-46 Debit Credit No 101 Balance 19,600 PROBLEM 3-2A (Continued) Accounts Receivable Date Explanation Aug 31 Adjusting Supplies Date Explanation Aug 31 Balance 31 Adjusting Prepaid Insurance Date Explanation Aug 31 Balance 31 Adjusting Land Date Explanation Aug 31 Balance Buildings Date Explanation Aug 31 Balance Ref J1 Ref  J1 Ref  J1 Ref  Ref  Accumulated Depreciation—Buildings Date Explanation Ref Aug 31 Adjusting J1 Equipment Date Explanation Aug 31 Balance Ref  Weygandt Financial Accounting IFRS 3e Solutions Manual 3-47 Debit 3,700 Debit Credit Credit 2,400 Debit Credit 1,200 Debit Debit Debit Debit No 112 Balance 3,700 No 126 Balance 3,300 900 No 130 Balance 6,000 4,800 Credit No 140 Balance 25,000 Credit No 143 Balance 125,000 Credit 1,125 Credit No 144 Balance 1,125 No 157 Balance 26,000 PROBLEM 3-2A (Continued) Accumulated Depreciation—Equipment Date Explanation Ref Aug 31 Adjusting J1 Accounts Payable Date Explanation Aug 31 Balance Unearned Rent Revenue Date Explanation Aug 31 Balance 31 Adjusting Salaries and Wages Payable Date Explanation Aug 31 Adjusting Interest Payable Date Explanation Aug 31 Adjusting Mortgage Payable Date Explanation Aug 31 Balance Ref  Ref  J1 Ref J1 Ref J1 Ref  Share Capital—Ordinary Date Explanation Aug 31 Balance Ref  Weygandt Financial Accounting IFRS 3e Solutions Manual 3-48 Debit Debit Debit Credit 600 Credit Credit 4,100 Debit Debit Debit Debit No 158 Balance 600 No 201 Balance 6,500 No 208 Balance 7,400 3,300 Credit 400 No 212 Balance 400 Credit 600 No 230 Balance 600 Credit No 275 Balance 80,000 Credit No 311 Balance 100,000 PROBLEM 3-2A (Continued) Dividends Date Explanation Aug 31 Balance Rent Revenue Date Explanation Aug 31 Balance 31 Adjusting 31 Adjusting Ref  Ref  J1 J1 Maintenance and Repairs Expense Date Explanation Ref Aug 31 Balance  Supplies Expense Date Explanation Aug 31 Adjusting Depreciation Expense Date Explanation Aug 31 Adjusting Interest Expense Date Explanation Aug 31 Adjusting Insurance Expense Date Explanation Aug 31 Adjusting Ref J1 Ref J1 Ref J1 Ref J1 PROBLEM 3-2A (Continued) Weygandt Financial Accounting IFRS 3e Solutions Manual 3-49 Debit Debit Credit Credit 4,100 3,700 Debit Debit 2,400 Debit 1,725 Debit 600 Debit 1,200 No 332 Balance 5,000 No 429 Balance 80,000 84,100 87,800 Credit No 622 Balance 3,600 Credit No 631 Balance 2,400 Credit No 711 Balance 1,725 Credit No 718 Balance 600 Credit No 722 Balance 1,200 Salaries and Wages Expense Date Explanation Aug 31 Balance 31 Adjusting Utilities Expense Date Explanation Aug 31 Balance (c) Ref  J1 Ref  Debit Credit 400 Debit Credit No 726 Balance 51,000 51,400 No 732 Balance 9,400 LAZY RIVER RESORT, LTD Adjusted Trial Balance August 31, 2017 Cash Accounts Receivable Supplies Prepaid Insurance Land Buildings Accumulated Depreciation—Buildings Equipment Accumulated Depreciation—Equipment Accounts Payable Unearned Rent Revenue Salaries and Wages Payable Interest Payable Mortgage Payable Share Capital—Ordinary Dividends Rent Revenue Maintenance and Repairs Expense Supplies Expense Depreciation Expense Interest Expense Insurance Expense Salaries and Wages Expense Utilities Expense Weygandt Financial Accounting IFRS 3e Solutions Manual 3-50 Debit € 19,600 3,700 900 4,800 25,000 125,000 Credit € 1,125 26,000 600 6,500 3,300 400 600 80,000 100,000 5,000 87,800 3,600 2,400 1,725 600 1,200 51,400 9,400 €280,325 €280,325 PROBLEM 3-2A (Continued) (d) LAZY RIVER RESORT, LTD Income Statement For the Three Months Ended August 31, 2017 Revenues Rent revenue Expenses Salaries and wages expense Utilities expense Maintenance and repairs expense Supplies expense Depreciation expense Insurance expense Interest expense Total expenses Net income €87,800 €51,400 9,400 3,600 2,400 1,725 1,200 600 70,325 €17,475 LAZY RIVER RESORT, LTD Retained Earnings Statement For the Three Months Ended August 31, 2017 Retained Earnings, June Add: Net income Less: Dividends Retained Earnings, August 31 Weygandt Financial Accounting IFRS 3e Solutions Manual 3-51 € 17,475 17,475 5,000 €12,475 For full file 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