E 3-10

a. Adjusting entries on August 31

1. August 31 Insurance Expense (¥ 4.500 x 3/12)………… 1.125

Prepaid Insurance…………………… 1.125

2. August 31 Supplies Expense (¥2.600 - 650)……………. 1.950

Supplies……………………………… 1.950

3. August 31 Depreciation Expense- Buildings…………… 1.080

Accumulated Depreciation- Buildings.. 1.080
((¥120.000-12.000) x 4% x 3/12)

August 31 Depreciation Expense- Equipment………….. 360

Accumulated Depreciation- Equipment.. 360
((¥16.000-1.600) x 10% x 3/12)

4. August 31 Unearned Rent Revenue……………………. 3.800

Rent Revenue……………………….. 3.800

5. August 31 Salaries and Wages Expense……………….. 375

Salaries and Wages Payable………… 375

6. August 31 Accounts Receivable………………………… 800

Rent Revenue………………………... 800

7. August 31 Interest Expense (¥50.000 x 8% x 3/12)…….. 1.000

Interest Payable……………………… 1.000

b. Adjusted Trial Balance on August 31

UHURA RESORT
 ADJUSTED TRIAL BALANCE
AUGUST 31, 2015

Debit Credit

Cash ¥ 19.600
Accounts Receivable 800
Prepaid Insurance 3.375
Supplies 650
Land 20.000
Buildings 120.000
Equipment 16.000
Accumulated Depreciation- Buildings ¥ 1.080
Accumulated Depreciation- Equipment 360
Accounts Payable 4.500
Salaries and Wages Payable 375
Interest Payable 1.000
Unearned Rent Revenue 800
Mortgage Payable 50.000
Share Capital- Ordinary 100.000
Retained Earnings 0
Dividends 5.000
Rent Revenue 90.800
Salaries and Wages Expense 45.175
Utilities Expense 9.200
Maintenance and Repairs Expense 3.600
Interest Expense 1.000
Insurance Expense 1.125
Supplies Expense 1.950
Depreciation Expense- Buildings 1.080
Depreciation Expense- Equipment 360
248.915 248.915

E 7- 9
 a. 4% of gross accounts receivable
Bad Debt Expense…………………………… 4.950
Allowance for Doubtful Accounts….. 4.950
(($80.000 x 4%) + $1.750)

b. 1% of net sale
Bad Debt Expense……………………………. 5.800
Allowance for Doubtful Accounts…... 5.800
($580.000 x 1%)

E 9- 8

a. Mt. Horeb’s biological asset (Alpaca Herd)

Biological Assets- Shearing Alpaca…………. 6.725
Unrealized Holding Gain or Loss- Income 6.725

b. Alpaca wool harvested

Inventory- Wool……………………………… 13.000
Unrealized Holding Gain or Loss- Income 13.000

c. Alpaca wool is sold for $14.500

Cash…………………………………………… 14.500
Sales Revenue………………………… 14.500
Cost of Goods Sold…………………………… 13.000
Inventory- Wool………………………. 13.000

d. 1. A female alpaca gives birth to a baby alpaca

May result in gain on the initial recognition of biological asset
2. An older alpaca can only be sheared once every other quarter due to irritation caused
by repeated shearing over its life
The fair value of the older alpaca will decrease and may loss their fair value

E 11- 27
a. January 1, 2014 Equipment……………………. 12.000
Cash.............................. 12.000

December 31, 2014 Depreciation Expense…………. 2.000

Accumulated Depreciation 2.000
(€12.000/6)

b. December 31, 2015 Depreciation Expense…………. 2.000

Accumulated Depreciation 2.000

Accumulated Depreciation……. 4.000

Loss on Impairment……………. 1.000
Equipment(€12.000-7.000) 5.000

c. The amount of depreciation expense that Falcetto will record on the equipment in 2016
€12.000−5.000
= € 1.750
4