CAPÍTULO 2: EXENCIÓN DE IVA EN SERVICIOS AFECTOS AL IMPUESTO
2.4. P RINCIPALES EFECTOS DE LA NUEVA REDACCIÓN DE LA CONTRA EXCEPCIÓN
December 31, 2007 (in thousands of dollars)
Debit Credit
Cash 38
Accounts receivable 9
Prepaid insurance 1
Machinery 80
Accumulated depreciation 7
Accounts payable 9
Wages payable 5
Income taxes payable 9
Contributed capital 76
Retained earnings 22
Revenues (not detailed) 0
Expenses (not detailed) 0
Totals 128 128
PROBLEMS
Property, plant, and equipment 775
Accumulated depreciation $ 252
Selling, general, and administrative expenses 1,788
Research and development expense 272
Other expenses 38
Income tax expense 624
Totals $ 24,832 $ 24,832
Req. 2
Since debits are supposed to equal credits in a trial balance, the balance in Retained Earnings is determined as the amount in the debit column necessary to make debits equal credits (a “plugged” figure).
P4–2.
Req. 1
a. Deferred revenue e. Deferred expense
Req. 2
a. Unearned rent revenue (−L)... 4,800
Rent revenue (+R, +SE)... 4,800
$7,200 ÷ 6 months = $1,200 per month x 4 months. This entry reduces (debits) the liability for the amount earned and records a revenue.
b. Wage expense (+E, −SE)... 14,300
Wages payable (+L)... 14,300 Wage expense is increased (debited) because this expense was incurred in 2007. A liability (wages payable) is credited because this amount is owed to the employees.
c. Accounts receivable (+A)... 2,000
Service revenue (+R, +SE)... 2,000 This entry records an asset for the amount due from customers and recognizes the revenue because it was earned in 2007.
d. Interest expense (+E, −SE)... 600
Interest payable (+L)... 600 To accrue interest expense incurred but not paid,
$20,000 x 12% x 3/12 = $600.
e. Insurance expense (+E, −SE)... 1,000
Prepaid insurance (−A)... 1,000
$6,000 ÷ 12 months = $500 per month x 2 months of coverage. This entry reduces the asset (prepaid insurance) because part of it has been used and only $5,000 represents future benefits (an asset) to the company.
f. Depreciation expense (+E, −SE)... 1,500
Accumulated depreciation, service truck (+XA, −A) 1,500 To record depreciation expense to recognize the use of the truck during the year. Amount is given.
g. Unearned service revenue (−L)... 400
Service revenue (+R, +SE)... 400 To recognize revenue earned during the year ($2,400 x 2/12).
h. Property tax expense (+E, −SE)... 400
Property tax payable (+L)... 400 To record expense incurred but not paid.
P4–3.
Req. 1
a. Deferred expense e. Accrued revenue
b. Deferred expense f. Deferred expense
c. Accrued expense g. Accrued expense
d. Accrued expense h. Accrued expense
Req. 2
a. Insurance expense (+E, −SE)... 200
Prepaid insurance (−A)... 200
$1,200 ÷ 36 months x 6 months of coverage. This entry reduces the asset (prepaid insurance) because part of it has been used and only $1,000 represents future benefits (an asset) to the company.
b. Supplies expense (+E, −SE)... 700
Supplies (−A)... 700 Supplies inventory is decreased (credited) to record the use of supplies during the year because this expense was incurred in 2008, calculated as
Beg. Inventory of $200 + Purchases $800 – Ending Inventory $300.
c. Repairs and maintenance expense (+E, −SE)... 800
Accrued expenses payable (+L)... 800 Repairs and maintenance expense is increased (debited) because this expense was incurred in 2008. A liability (accrued expenses payable) is credited
because this amount is owed but will not be paid until 2009.
d. Property tax expense (+E, −SE)... 1,600
Property tax payable (+L)... 1,600 Property tax expense is increased (debited) because this expense was incurred in 2008. A liability (property tax payable) is credited because this amount is owed but will not be paid until 2009.
e. Accounts receivable (+A)... 8,000
Service revenue (+R, +SE)... 8,000 This entry records an asset for the amount due from the customer and
recognizes the revenue because it was earned in 2008.
f. Depreciation expense (+E, −SE)... 1,100
Accumulated depreciation, van (+XA, −A) 1,100 To record depreciation expense to recognize the use of the van during the
g. Interest expense (+E, −SE)... 300
Interest payable (+L)... 300 To accrue interest expense incurred but not paid,
$10,000 x 12% x 3/12 = $300.
h. Income tax expense (+E, −SE)... 9,990
Income tax payable (+L)... 9,990 To accrue income tax expense incurred but not paid:
Income before adjustments (given) $30,000
Effect of adjustments (a) through (g) +3,300 (-200 - 700 - 800 -1,600 Income before income taxes 33,300 +8,000 -1,100 -300)
Income tax rate x 30%
Income tax expense $ 9,990
P4–4.
Req. 1
a. Deferred revenue e. Deferred expense
b. Accrued expense f. Deferred expense
c. Accrued revenue g. Deferred revenue
d. Accrued expense h. Accrued expense
Req. 2
Balance Sheet Income Statement
Transaction Assets Liabilities Stockholders’
Equity Revenues Expenses Net Income
a. NE –4,800 +4,800 +4,800 NE +4,800
b. NE +14,300 –14,300 NE +14,300 –14,300
c. +2,000 NE +2,000 +2,000 NE +2,000
d. NE +600 –600 NE +600 –600
e. –1,000 NE –1,000 NE +1,000 –1,000
f. –1,500 NE –1,500 NE +1,500 –1,500
g. NE –400 +400 +400 NE +400
h. NE +400 –400 NE +400 –400
P4–5.
Req. 1
a. Deferred expense e. Accrued revenue
b. Deferred expense f. Deferred expense
c. Accrued expense g. Accrued expense
d. Accrued expense h. Accrued expense
Req. 2
Balance Sheet Income Statement
Transaction Assets Liabilities Stockholders’
Equity Revenues Expenses Net Income
a. − 200 NE − 200 NE + 200 − 200
b. − 700 NE − 700 NE + 700 – 700
c. NE + 800 − 800 NE + 800 − 800
d. NE + 1,600 − 1,600 NE + 1,600 − 1,600
e. + 8,000 NE + 8,000 + 8,000 NE + 8,000
f. − 1,100 NE − 1,100 NE + 1,100 − 1,100
g. NE + 300 − 300 NE + 300 − 300
h. NE + 9,990 − 9,990 NE + 9,990 − 9,990
Computations:
a. Six months of expired insurance during 2008: $1,200 x 6/36 = $200.
b. Supplies used during 2008: Beg. inventory, $200 + Purchases, $800 - Ending inventory, $300 = $700 used for the period.
c. Expense incurred during 2008 to be paid during January 2009.
d. Property taxes incurred in 2008 to be paid in 2009.
e. Accrued revenue: earned in 2008 but not yet collected or recorded; payable within 30 days.
f. Depreciation is given.
g. Interest expense accrued for 3 months: $10,000 x 12% x 3/12 = $300.
h. Adjusted income = $30,000 - 200 - 700 - 800 -1,600 + 8,000 -1,100 - 300 =
$33,300 x 30% tax rate = $9,990 income tax expense.
Account
1. Rent revenue $528,000 Income statement + $512,000
2. Salary expense 65,000 Income statement − 62,000
3. Maintenance supplies expense 9,300 Income statement No effect
4. Rent receivable 16,000 Balance sheet No effect
5. Receivables from employees 1,500 Balance sheet − 1,500
6. Maintenance supplies 1,700 Balance sheet − 8,000
7. Unearned rent revenue 12,000 Balance sheet +12,000
8. Salaries payable 3,000 Balance sheet − 4,000
(1)
P4–7.
Req. 1
December 31, 2006 Adjusting Entries
(1) Accounts receivable (+A)... 400 (b) Service revenue (+R, +SE) ... 400 (i) To record service fees earned, but not collected.
(2) Insurance expense (+E, −SE) ... 200 (l) Prepaid insurance (−A) ... 200 (c) To record insurance expired as an expense.
(3) Depreciation expense (+E, −SE)... 8,500 (k) Accumulated depreciation, equipment (+XA, −A) 8,500 (e) To record depreciation expense.
(4) Income tax expense (+E, −SE) ... 4,700 (m) Income taxes payable (+L) ... 4,700 (f) To record income taxes for 2006.
Req. 2
Amounts before
Adjusting Entries Amounts after Adjusting Entries Revenues:
Service revenue $46,000 $46,400
Expenses:
Net loss is $8,700 because this amount includes all revenues and all expenses (after the adjusting entries). This amount is correct because it incorporates the effects of the revenue and matching principles applied to all transactions whose effects extend beyond the period in which the transactions occurred. Net income of $4,300 was not correct because expenses of $13,400 and revenues of $400 were excluded that should have been recorded in 2006.
Req. 3
Req. 4
Net profit margin = Net income ÷ Net Sales = $(8,700) net loss ÷ $46,400 = (18.8)%
The net profit margin indicates that, for every $1 of service revenues, Wagonblatt actually lost $0.188 of net income. This ratio implies that Wagonblatt destroys
shareholder value in generating its sales and suggests that better management of its business (in terms of sales price or costs) is required.
Req. 5
Service revenue (−R)... 46,400 Retained earnings (−SE) ... 8,700
Salary expense (−E)... 41,700 Depreciation expense (−E)... 8,500 Insurance expense (−E)... 200 Income tax expense (−E)... 4,700 Req. 6
Wagonblatt Company Post-closing Trial Balance
December 31, 2006
Debit Credit
Cash 9,000
Accounts receivable 400
Prepaid insurance 400
Equipment 120,200
Accumulated depreciation, equipment 40,000
Income taxes payable 4,700
Contributed capital 80,000
Retained earnings 5,300
Service revenue 0
Salary expense 0
Depreciation expense 0
Insurance expense 0
P4–8.
Req. 1
December 31, 2007 Adjusting Entries:
(a) Supplies expense (+E, −SE) ... 500
Supplies (−A) ... 500 (b) Insurance expense (+E, −SE) ... 500
Prepaid insurance (−A) ... 500 (c) Depreciation expense (+E, −SE) ... 4,000
Accumulated depreciation, service
trucks (+XA, −A) ... 4,000 (d) Wages expense (+E, −SE)... 900
Wages payable (+L) ... 900 (e) Income tax expense (+E, −SE) ... 7,350
Income taxes payable (+L) ... 7,350
Req. 2