The following data at July 31, 2018, are given for RCO: a. Depreciation, $600. b. Prepaid rent expires, $200. c. Interest expense accrued, $700. d. Employee salaries owed for Monday through Thursday of a five-day workweek; weekly payroll, $8,000. e. Unearned revenue earned, $1,000. f. Office supplies used, $150. Requirements: 1. Journalize the adjusting entries needed on July 31, 2018. 2. Suppose the adjustments made in Requirement 1 were not made. Compute the overall overstatement or understatement of net income as a result of the omission of these adjustments.
> Protection Home provides house-sitting for people while they are away on vacation. Some of its customers pay immediately after the job is finished. Some customers ask that the business send them a bill. As of the end of the year, Protection Home has coll
> Compute the missing amount in the accounting equation for each entity from the financial information presented: Assets Liabilities Equity Hair Styles $ ? $ 36,000 $ 36,000 Style Cuts 90,000 48,000 Your Basket 101,000 68,000 ?
> The tobacco companies have paid billions because of smoking-related illnesses. In particular, Philip Morris, a leading cigarette manufacturer, paid more than $3,000,000,000 in settlement payments in one year. Requirements: 1. Suppose you are the chief f
> When is an adjusted trial balance prepared, and what is its purpose?
> What are the two basic categories of adjusting entries? Provide two examples of each.
> When are adjusting entries completed, and what is their purpose?
> Under the revenue recognition principle, when is revenue recorded?
> What is a worksheet, and how is it used to help prepare an adjusted trial balance?
> If a payment of a deferred expense was recorded under the alternative treatment, what account would be debited in the adjusting entry?
> If a payment of a deferred expense was recorded under the alternative treatment, what account would be debited at the time of payment?
> If an accrued expense is not recorded at the end of the year, what is the impact on the financial statements?
> What are the two rules to remember about adjusting entries?
> What is an accrued revenue? Provide an example.
> Consider the following accounting terms and definitions, and match each term to the definition: 1. Accounting equation a. An economic resource that is expected to be of benefit in the future 2. Asset b. Debts that are owed to creditors 3. Balance sh
> What is an accrued expense? Provide an example.
> What is a deferred revenue? Provide an example.
> How is book value calculated, and what does it represent?
> What does accumulated depreciation represent?
> In the recording of depreciation expense, which account is credited?
> What is a contra account?
> What is the process of allocating the cost of a plant asset over its useful life called?
> What is a deferred expense? Provide an example.
> Under the matching principle, when are expenses recorded?
> What is a fiscal year? Why might companies choose to use a fiscal year that is not a calendar year?
> Consider the following accounting terms and definitions, and match each term to the definition: //
> Which accounting concept or principle requires companies to divide their activities into small time segments such as months, quarters, or years?
> Which method of accounting (cash or accrual basis) is consistent with Generally Accepted Accounting Principles?
> What is the difference between cash basis accounting and accrual basis accounting?
> Sent It Pack’n Mail completed the following transactions during 2018: Requirements: 1. Journalize the transactions assuming that Sent It Pack’n Mail debits an asset account for prepaid expenses and credits a liabilit
> Galaxy Theater Production Company’s partially completed worksheet as of December 31, 2018, follows. Adjustment data at December 31 follow: a. As of December 31, Galaxy had performed $900 of service revenue but has not yet billed custo
> The unadjusted trial balance of Midway Inn Company at December 31, 2018, and the data needed for the adjustments follow. Adjustment data at December 31 follow: a. As of December 31, Midway Inn had $800 of Prepaid Insurance remaining. b. At the end of t
> The unadjusted trial balance of Avery Air Purification System at December 31, 2018, and the data needed for the adjustments follow. Adjustment data at December 31 follow: a. On December 15, Avery contracted to perform services for a client receiving $2
> Harrison Fishing Charters has collected the following data for the December 31 adjusting entries: a. The company received its electric bill on December 31 for $375 but will not pay it until January 5. (Use the Utilities Payable account.) b. Harrison pur
> Lopez Landscaping has the following data for the December 31 adjusting entries: a. Each Friday, Lopez pays employees for the current week’s work. The amount of the weekly payroll is $6,500 for a five-day workweek. This year, December 31 falls on a Wedne
> Rapid Way Pack’n Mail completed the following transactions during 2018: Requirements: 1. Journalize the transactions assuming that Rapid Way debits an asset account for prepaid expenses and credits a liability account for unearned rev
> For each of the users of accounting information, identify whether the user is anexternal decision maker (E) or an internal decision maker (I): a. customer b. company manager c. Internal Revenue Service d. lender e. investor f. controller g. cost account
> Greavy Theater Production Company’s partially completed worksheet as of December 31, 2018, follows. Adjustment data at December 31 follow: a. As of December 31, Greavy had performed $500 of service revenue but has not yet billed custo
> The unadjusted trial balance of Guthrie Inn Company at December 31, 2018, and the data needed for the adjustments follow. Adjustment data at December 31 follow: a. As of December 31, Guthrie had $700 of Prepaid Insurance remaining. b. At the end of the
> The unadjusted trial balance of Anniston Air Purification System at December 31, 2018, and the data needed for the adjustments follow. Adjustment data at December 31 follow: a. On December 15, Anniston contracted to perform services for a client receiv
> Griffin Fishing Charters has collected the following data for the December 31 adjustingentries: a. The company received its electric bill on December 31 for $375 but will not pay it until January 5. (Use the Utilities Payable account.) b. Griffin purcha
> Laughter Landscaping has collected the following data for the December 31 adjusting entries: a. Each Friday, Laughter pays employees for the current week’s work. The amount of the weekly payroll is $8,000 for a five-day workweek. This year, December 31 f
> This problem continues the Crystal Clear Cleaning situation from Chapter 2. Start from the unadjusted trial balance that Crystal Clear Cleaning prepared at November 30, 2018: Consider the following adjustment data: a. Cleaning supplies on hand at the e
> XM, Ltd. was a small engineering firm that built high-tech robotic devices for electronics manufacturers. One very complex device was partially completed at the end of 2018. Barb McLauren, head engineer, knew the experimental technology was a failure and
> Target Corporation—like all other businesses—makes adjusting entries at yearend in order to measure assets, liabilities, revenues, and expenses properly. Examine Target Corporation’s balance sheet and income statement in its Fiscal 2015 Annual Report. V
> At the beginning of the year, Modish Advertising owed customers $2,100 for unearned revenue collected in advance. During the year, Modish received advance cash receipts of $6,100 and earned $20,000 of service revenue (exclusive of any amount earned from
> At the beginning of the year, office supplies of $1,200 were on hand. During the year, Tempo Air Conditioning Service paid $4,000 for more office supplies. At the end of the year, Tempo has $800 of office supplies on hand. Requirements: 1. Record the ad
> What are the steps used when analyzing a business transaction?
> The worksheet of Macey’s Landscaping Services follows but is incomplete. Requirements: 1. Calculate and enter the adjusted account balances in the Adjusted Trial Balance columns. 2. Describe each adjusting entry. For example, a. Prepa
> The worksheet of Best Jobs Employment Service follows but is incomplete. The following data at April 30, 2018, are given for Best Jobs Employment Service: a. Service revenue accrued, $700. b. Office supplies used, $300. c. Depreciation on equipment, $1
> Austin Acoustics recorded the following transactions during October: a. Received $2,500 cash from customer for three months of service beginning October 1 and ending December 31. The company recorded a $2,500 debit to Cash and a $2,500 credit to Unearne
> The unadjusted trial balance for All Mopped Up Company, a cleaning service, is as follows: During the 12 months ended December 31, 2018, All Mopped Up: a. used office supplies of $1,700. b. used prepaid insurance of $580. c. depreciated equipment, $500.
> The unadjusted trial balance for All Mopped Up Company, a cleaning service, is as follows: During the 12 months ended December 31, 2018, All Mopped Up: a. used office supplies of $1,700. b. used prepaid insurance of $580. c. depreciated equipment, $500
> The accounting records of Mackay Architects include the following selected, unadjusted balances at March 31: Accounts Receivable, $1,500; Office Supplies, $700; Prepaid Rent, $2,240; Equipment, $8,000; Accumulated Depreciation—Equipment, $0; Salaries Pay
> Consider the following situations for Betterton Welding Services: a. Depreciation for the current year includes equipment, $2,100. b. Each Monday, Betterton pays employees for the previous week’s work. The amount of weekly payroll is $1,400 for a seven-
> Consider the following independent situations at December 31: a. On October 1, a business collected $3,000 rent in advance, debiting Cash and crediting Unearned Revenue. The tenant was paying one year’s rent in advance. On December 31, the business must
> Consider the following situations: a. Business receives $3,200 on January 1 for 10-month service contract for the period January 1 through October 31. b. Total salaries for all employees is $3,600 per month. Employees are paid on the 1stand 15th of the
> How is net income calculated? Define revenues and expenses.
> Consider the facts presented in the following table for Tropical View: Complete the table by filling in the missing values. Situation A B D Beginning Prepaid Rent $1,400 $1,000 $ 200 $ 700 Payments for Prepaid Rent during the year 700 1,800 f Total
> Chef’s Catering completed the following selected transactions during May 2018: Chef’s Catering completed the following selected transactions during May 2018: Requirements: 1. Show whether each transaction would be
> Momentous Occasions is a photography business that shoots videos at college parties. The freshman class pays $1,000 in advance on March 3 to guarantee services for its party to be held on April 2. The sophomore class promises a minimum of $2,800 for film
> The net income of Steinbach & Sons, a landscaping company, decreased sharply during 2018. Mort Steinbach, owner and manager of the company, anticipates the need for a bank loan in 2019. Late in 2018, Steinbach instructs the company’s accountant to record
> One year ago, Tyler Stasney founded Swift Classified Ads. Stasney remembers that you took an accounting course while in college and comes to you for advice. He wishes to know how much net income his business earned during the past year in order to decide
> This problem continues the Canyon Canoe Company situation from Chapter 2. You will need to use the unadjusted trial balance and posted T-accounts that you prepared in Chapter 2. At December 31, the business gathers the following information for the adjus
> In 75 words or fewer, explain adjusting journal entries.
> Part of the Fry’s Electronics, Inc.’s experience involves providing technical support to its customers. This includes in-home Installations of electronics and also computer support at their retail store locations. Requirements: 1. Suppose Fry’s Electron
> Roland Foster Optical Dispensary completed the following transactions during thelatter part of March: Requirements: 1. Journalize the transactions of Roland Foster Optical Dispensary. Include an Explanation with each journal entry. 2. Open the followin
> Harper Sales Consultants completed the following transactions during the latter part of January: Journalize the transactions of Harper Sales Consultants. Include an explanation with each journal entry. Jan. 22 Performed services for customers on ac
> How does retained earnings increase? What are the two ways that retained earnings decreases?
> John Daniel opened a medical practice in Sacramento, California, and had the following transactions during the month of January. Journalize the transactions of John Daniel, M.D. Include an explanation with each entry. The business received $34,000
> For each account, identify whether the changes would be recorded as a debit (DR) or credit (CR). a. Increase to Accounts Receivable b. Decrease to Unearned Revenue c. Decrease to Cash d. Increase to Interest Expense e. Increase to Salaries Payable f. De
> Smithson Floor Coverings reported the following summarized data at December 31, 2018. Accounts appear in no particular order, and all have normal balances. Prepare the trial balance of Smithson Floor Coverings at December 31, 2018. Service Revenue
> Aladdin Carpet Care had the following total assets, liabilities, and equity as of October 31: Assets ……………………………………………………………………….…$ 200,000 Liabilities …………………………………………………………….……………30,000 Equity ……………………………………………………………….…………….170,000 What is Aladdin Ca
> Accounts Payable 6,000 21,000 May 1 500 May 5 May 2 May 22 11,500 8,500 May 15 500 May 23
> For each account, identify whether the normal balance is a debit (DR) or credit (CR). a. Notes Payable b. Dividends c. Service Revenue d. Land e. Unearned Revenue f. Common Stock g. Utilities Expense h. Office Supplies i. Advertising Expense j. Interest
> Consider the following accounts and identify each account as an asset (A), liability (L), or equity (E). a. Notes Receivable b. Common Stock c. Prepaid Insurance d. Notes Payable e. Rent Revenue f. Taxes Payable g. Rent Expense h. Furniture i. Dividends
> What is involved in the posting process?
> Explain the five steps in journalizing and posting transactions.
> What does a ledger show? What’s the difference between a ledger and the chart of accounts?
> What is the accounting equation? Briefly explain each of the three parts.
> What is the difference between the trial balance and the balance sheet?
> What is the calculation for the debt ratio? Explain what the debt ratio evaluates.
> If total debits equal total credits on the trial balance, is the trial balance error-free? Explain your answer.
> What is the purpose of the trial balance?
> What are the four parts of a journal entry?
> Where are transactions initially recorded?
> What are source documents? Provide examples of source documents that a business might use.
> Identify which types of accounts have a normal debit balance and which types of accounts have a normal credit balance.
> When are credits increases? When are credits decreases?
> When are debits increases? When are debits decreases?
> Explain the role of the International Accounting Standards Board (IASB) in relation to International Financial Reporting Standards (IFRS).
> What is a T-account? On which side is the debit? On which side is the credit? Where does the account name go on a T-account?
> Accounting uses a double-entry system. Explain what this sentence means.
> What is the purpose of the chart of accounts? Explain the numbering typically associated with the accounts.
> Identify the three categories of the accounting equation, and list at least four accounts associated with each category.
> The trial balance as of July 31, 2018, for Sheila Sanchez, Registered Dietician, is presented below: Requirements: 1. Prepare the income statement for the month ended July 31, 2018. 2. Prepare the statement of retained earnings for the month ended July
> The trial balance of Love to Learn Child Care does not balance. The following errors are detected: a. Cash is understated by $1,800. b. A $3,800 debit to Accounts Receivable was posted as a credit. c. A $1,000 purchase of office supplies on account was
> The trial balance of John Menning, CPA, is dated March 31, 2018: During April, the business completed the following transactions: Requirements: 1. Record the April transactions in the journal using the following accounts: Cash;Accounts Receivable; Offi
> Theodore McMahon opened a law office on April 1, 2018. During the first month of operations, the business completed the following transactions: Requirements: 1. Record each transaction in the journal, using the following account titles: Cash; Accounts
> Beth Stewart started her practice as a design consultant on November 1, 2018. During the first month of operations, the business completed the following transactions: Requirements: 1. Record each transaction in the journal using the following account t
> Victor Yang practices medicine under the business title Victor Yang, M.D. During March, the medical practice completed the following transactions: The business uses the following accounts: Cash; Accounts Receivable; Office Supplies; Land; Accounts Paya
