1. ACC211 Chapter 3
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*Brief Exercise 3-1
Transactions for Mehta Company for the month of May are presented below. Prepare journal
entries for each of these transactions.
Brief Exercise 3-3
Your answer is correct.
On July 1, 2014, Crowe Co. pays $27,000 to Zubin Insurance Co. for a 3-year insurance policy.
Both companies have fiscal years ending December 31. For Crowe Co., journalize the entry on
July 1 and the adjusting entry on December 31.
Brief Exercise 3-4
On July 1, 2014, Crowe Co. pays $9,000 to Zubin Insurance Co. for a 3-year insurance policy.
Both companies have fiscal years ending December 31. Journalize the entry on July 1 and the
adjusting entry on December 31 for Zubin Insurance Co. Zubin uses the accounts Unearned
Service Revenue and Service
Brief Exercise 3-5
Your answer is correct.
Assume that on February 1, Procter & Gamble (P&G) paid $733,000 in advance for 1 years’
insurance coverage. Prepare P&G’s February 1 journal entry and the annual adjusting entry on
June 30.
Brief Exercise 3-6
Your answer is correct.

2. LaBouche Corporation owns a warehouse. On November 1, it rented storage space to a lessee
(tenant) for 3 months for a total cash payment of $300 received in advance. Prepare LaBouche’s
November 1 journal entry and the December 31 annual adjusting entry
Brief Exercise 3-7
Your answer is correct.
Dresser Company’s weekly payroll, paid on Fridays, totals $6,970. Employees work a 5-day
week. Prepare Dresser’s adjusting entry on Wednesday, December 31, and the journal entry to
record the $6,970 cash payment on Friday, January 2.
Date
Account Titles and
Explanation
Debi
t
Credi
t
Dec.
31
Salaries and Wages Expense 4,182
Salaries and Wages Payable 4,182
Jan. 2 Salaries and Wages Expense 2,788
Salaries and Wages Payable 4,182
Cash 6,970
Brief Exercise 3-8
Your answer is correct.
Included in Gonzalez Company’s December 31 trial balance is a note receivable of $22,080.
The note is a 4-month, 10% note dated October 1. Prepare Gonzalez’s December 31 adjusting
entry to record $552 of accrued interest, and the February 1 journal entry to record receipt of
$22,816 from the borrower.
Brief Exercise 3-11
Your answer is correct.

3. Side Kicks has year-end account balances of Sales Revenue $821,430; Interest Revenue $24,980;
Cost of Goods Sold $568,730; Administrative Expenses $184,410; Income Tax Expense
$32,460; and Dividends $18,441. Prepare the year-end closing entries
Exercise 3-8
Your answer is correct.
Andy Roddick is the new owner of Ace Computer Services. At the end of August 2014, his first
month of ownership, Roddick is trying to prepare monthly financial statements. Below is some
information related to unrecorded expenses that the business incurred during August.
(a) At August 31, Roddick owed his employees $2,198 in salaries and wages that will be paid
on September 1.
(b
)
At the end of the month, he had not yet received the month’s utility bill. Based on past
experience, he estimated the bill would be approximately $710.
(c) On August 1, Roddick borrowed $30,000 from a local bank on a 15-year mortgage. The
annual interest rate is 8%.
(d
)
A telephone bill in the amount of $148 covering August charges is unpaid at August 31.
Prepare the adjusting journal entries as of August 31, 2014, suggested by the information above.
Exercise 3-10
Greco Resort opened for
business on June 1 with eight
air-conditioned units. Its trial
balance on August 31 is as
follows.
GRECO RESORT
TRIAL BALANCE
AUGUST 31, 2014
Cash
Prepaid Insurance
Supplies
Land
Buildings
Equipment

4. Accounts Payable
Unearned Rent Revenue
Mortgage Payable
Common Stock
Retained Earnings
Dividends
Rent Revenue
Salaries and Wages Expense
Utilities Expenses
Maintenance and Repairs Expense
Totals
Other data:
1
.
The balance in prepaid insurance is a one-year premium paid on June 1, 2014
2
.
An inventory count on August 31 shows $668 of supplies on hand.
3
.
Annual depreciation rates are
(a) buildings (4%)
(b) equipment (10%).
Salvage value is estimated to be
4
.
Unearned Rent Revenue of $4,131 was earned prior to August 31.
5
.
Salaries of $414 were unpaid at August 31.
6
.
Rentals of $839 were due from tenants at August 31. (Use Accounts Receivab
7
.
The mortgage interest rate is