Birch park senior center has a weekly payroll of 12500

ACC 205 Chapter 3 Solution (Horngren’s Accounting)

Which of the following is true of accrual basis accounting and cash basis​ accounting?

A. Accrual accounting records revenue only when it is earned.

B. Accrual accounting is not allowed under GAAP.

C. Cash basis accounting records all transactions.

D. All of the above are true.

The revenue recognition principle requires

A. expenses to be matched with revenue of the period.

B. revenue to be recorded only after the business has satisfied its performance obligation.

C. time to be divided into annual periods to measure revenue properly.

D. revenue to be recorded only after the cash is received.

Adjusting the accounts is the process of

A. updating the accounts at the end of the period.

B. subtracting expenses from revenues to measure net income.

C. zeroing out account balances to prepare for the next period.

D. recording transactions as they occur during the period.

Which of the following is an example of a deferral​ (or prepaid) adjusting​ entry?

A. Recording salaries expense for employees not yet paid.

B. Recording the usage of office supplies during the period.

C. Recording interest expense incurred on a notes payable not due until next year.

D. Recording revenue that has been earned but not yet received.

The adjusted trial balance shows

A. amounts that may be out of balance.

B. assets and liabilities only.

C. revenues and expenses only.

D. account balances after adjustments.

A​ & D Window Cleaning performed​ $450 of services but has not yet billed customers for the month. If A​ & D fails to record the adjusting​ entry, what is the impact on the financial​ statements?

A. balance​ sheet: liabilities​ overstated; equity understated

income​ statement: revenues understated

B. balance​ sheet: assets​ understated; equity overstated

income​ statement: expense understated

C. balance​ sheet: assets​ understated, equity understated

income​ statement: revenues understated

D. balance​ sheet: assets​ overstated, equity understated

income​ statement: expenses understated

A worksheet

A. is an internal document that helps summarize data for the preparation of financial statements.

B. is a ledger listing the account balances and changes in those accounts.

C. is a journal used to record transactions.

D. is a financial statement that reports net income during the period.

On September ​1, Big Fan of Toledo prepaid six months of​ rent, $ 3,300

Requirement 1. Record the journal entry for the September 1 payment. ​(Record debits​ first, then credits. Select the explanation on the last line of the journal entry​ table.)

Requirement 2. Record the adjusting entry required at September 30.

​(Record debits​ first, then credits. Select the explanation on the last line of the journal entry​ table.)

Requirement 3. Using​ T-accounts, post the journal entry and adjusting entry to the accounts involved and show their balances at September 30. ​(Ignore the Cash​ account.)

Post the journal entry and adjusting entry to the two accounts using the dates as posting​ references, and then calculate and enter the ending balance of the accounts using a​ "Bal." posting reference.

On November​ 1, Carlisle Equipment had a beginning balance in the Office Supplies account of

$ 600. During the​ month, Carlisle purchased $ 2,300 of office supplies. At November​ 30, Carlisle Equipment had $ 500 of office supplies on hand.

Requirement 1. The Office Supplies​ T-account has been opened for you. Enter the beginning balance and purchase of office supplies. ​(Use "Nov.​ 1" as a posting reference to enter the beginning balance and​ "Nov. purchases" as a posting reference to post the purchase of office supplies during the​ month.)

Requirement 2. Record the adjusting entry required at November 30. ​(Record debits​ first, then credits. Select the explanation on the last line of the journal entry​ table.)

Requirement 3. Post the adjusting entry to the two accounts involved and show their balances at November 30.

Select the account name of the other account affected by the Office Supplies adjustment. Post the adjustment to the two accounts using a​ "Nov. 30" posting​ reference, and then calculate and enter the ending balance of the accounts using a​ "Bal." posting reference.

On October ​1, Orlando Gold Exchange paid cash of $ 57,600 for computers that are expected to remain useful for three years. At the end of three ​years, the value of the computers is expected to be zero.

Requirement 1. Calculate the amount of depreciation for the month of October using the​ straight-line depreciation method. Begin by selecting the​ labels, than enter the amounts and compute the amount of depreciation for the month of October.

​(Abbreviation used; Acc. Depreciation​ = Accumulated Depreciation. Enter a​ "0" for any zero​ balances.)

Requirement 2. Record the adjusting entry for depreciation on October 31. ​(Record debits​ first, then credits. Select the explanation on the last line of the journal entry​ table.)

Requirement 3. Post the purchase of October 1 and the depreciation on October 31 to​ T-accounts for the following​ accounts: Computer​ Equipment, Accumulated Depreciationlong dash Computer ​Equipment, and Depreciation Expenselong dash Computer Equipment. Show their balances at

October 31. ​(Use dates as posting references to post the transactions. Use a​ "Bal." posting reference to show the ending balance of each​ account.)

Requirement 4. Calculate the computer​ equipment's book value at October 31.

Magazine collects cash from subscribers in advance and then mails the magazines to subscribers over a​ one-year period.

.

Requirement 1. Record the journal entry to record the original receipt of $ 180,000 cash. ​(Record debits​ first, then credits. Select the explanation on the last line of the journal entry​ table.)

Requirement 2. Record the adjusting entry that Eastside Magazine makes to record the earning of

$ 8,000 of subscription revenue that was collected in advance. ​(Record debits​ first, then credits. Select the explanation on the last line of the journal entry​ table.)

Requirement 3. Using​ T-accounts, post the journal entry and adjusting entry to the accounts involved and show their balances after adjustments.​ (Ignore the Cash​ account.) ​(Use a​ "Bal." posting reference to show the ending balance on the appropriate side of each​ account.)

Park Senior Center has a weekly payroll of $ 12,500. December 31 falls on Wednesday​, and

Birch Park Senior Center will pay its employees the following Monday​ (January 5​) for the previous full week. Assume Birch Park Senior Center has a​ five-day workweek and has an unadjusted balance in Salaries Expense of $ 620,000.

Requirement 1. Record the adjusting entry for accrued salaries on December 31. ​(Record debits​ first, then credits. Select the explanation on the last line of the journal entry​ table.)

Requirement 2. Post the adjusting entry to the accounts​ involved, and show their balances after adjustments.

Post the adjustment to the two accounts using a​ "Dec. 31" posting​ reference, and then calculate and enter the ending balance of the accounts using a​ "Bal." posting reference on the appropriate side of each account.

Requirement 3. Record the journal entry for payment of salaries made on January 5.

​(Record debits​ first, then credits. Select the explanation on the last line of the journal entry​ table.)

Travel borrowed $ 33,000 on September ​1, 2018​, by signing a​ one-year note payable to State One Bank. Resort​'s interest expense on the note payable for the remainder of the fiscal year

​(September through November​) is $ 355

Requirements

1.

Record the adjusting entry to accrue interest expense at

November 30, 2018.

2.

Post the adjusting entry to the​ T-accounts of the two accounts affected by the adjustment.

Requirement 1. Record the adjusting entry to accrue interest expense at November 30​, 2018

​(Record debits​ first, then credits. Select the explanation on the last line of the journal entry​ table.)

Requirement 2. Post the adjusting entry to the​ T-accounts of the two accounts affected by the adjustment.

Post the adjustment to the two accounts using a ​"Nov. 30​" posting​ reference, and then calculate and enter the ending balance of the accounts using a​ "Bal." posting reference.

At the end of​ June, Gerber Dental had performed $ 9,000 of dental services but has not yet billed customers. Record the adjusting entry for accrued revenue. ​(Record debits​ first, then credits. Select the explanation on the last line of the journal entry​ table.)

Consider the following independent situations at December​ 31:

Journalize the adjusting entry needed on December 31 for each situation. Use the letters to label the journal entries. ​(Record debits​ first, then credits. Select the explanation on the last line of the journal entry​ table.)

a. On July ​1, a business collected $ 6,000 rent in​ advance, debiting Cash and crediting Unearned Revenue. The tenant was paying one​ year's rent in advance. At December​ 31, the business must account for the amount of rent it has earned.

b. Salaries expense is $ 1,700 per daylong dash Monday through Friday long dash and the business pays employees each Friday. This year December 31 falls on a Thursday

c. The unadjusted balance of the Office Supplies account is $ 3,300.

Office supplies on hand total $ 1.400

d. Equipment depreciation was $ 450

e. On October ​1, when the business prepaid $ 6.600 for a​ two-year insurance​ policy, the business debited Prepaid Insurance and credited Cash.

Consider the following situations for Galestown Welding​ Services:

Journalize the adjusting entry needed on December 31 for each situation. Use the letters to label the journal entries. ​(Record debits​ first, then credits. Select the explanation on the last line of the journal entry​ table.)

a. Depreciation for the current year includes​ Equipment, $ 2,900

b. Each​ Monday, Galestown pays employees for the previous​ week's work. The amount of weekly payroll is $ 2.100 for a​ seven-day workweek​ (Monday to​ Sunday). This​ year, December 31 falls on Thursday.

. The beginning balance of Office Supplies was $ 2,000. During the​ year, Galestown purchased office supplies for $ 3,200​, and at December 31 the office supplies on hand totaled $ 2,000.

​(Assume that Galestown debits an asset account when supplies are​ purchased.)

d. Galestown prepaid a two full​ years' insurance on July 1 of the current​ year, $ 5,760.

Record insurance expense for the year ended December 31. ​(When the policy was purchased on

July ​1, assume that Galestown debited an asset​ account.)

e

. Galestown had earned $ 3,500 of unearned revenue. ​(When the cash was​ received, assume that a liability account was​ credited.)

f. Galestown had incurred​ (but not​ recorded) $ 170 of interest expense on a note payable. The interest will not be paid until February 28.

g. Galestown billed customers $ 7,000 for welding services performed.

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​:

Requirements 1. and 2. Calculate and enter the adjustment amounts directly in the Adjustments columns. Use letters a through d to label the four adjustments. Calculate and enter the adjusted account balances in the Adjusted Trial Balance columns.

The account names and unadjusted trial balance amounts as provided in the question have been entered into the worksheet for you. Finish the partial worksheet by completing the adjustments and adjusted trial balance columns. Complete the Adjustments columns by using the letters a through d to label the four adjustments.

Requirement 3. Prepare each adjusting journal entry calculated in Requirement 1. Date the entries and include explanations. ​(Record debits​ first, then credits. Select the explanation on the last line of the journal entry​ table.)

a. Service revenue​ accrued, $ 700.

b. Office supplies​ used, $ 300. ​(Assume that Best Jobs Employment Service debits an asset account when supplies are​ purchased.)

c. Depreciation on​ equipment, $ 1,300.

d. Salaries owed to​ employees, $ 1,400.

The unadjusted trial balance of Anniston Air Purification System at December​ 31, 2018, and the data needed for the adjustments follow.

Requirement 1. Journalize the adjusting entries on December 31. ​(Record debits​ first, then credits. Select the explanation on the last line of the journal entry​ table.)

a. On December​ 15, Anniston contracted to perform services for a client receiving $ 3,100 in advance.

Anniston recorded this receipt of cash as Unearned Revenue. As of December​ 31, Anniston

has completed $ 2,100 of the services.

b. Anniston prepaid two months of rent on December 1.​ (Assume the Prepaid Rent balance as shown on the unadjusted trial balance represents the two months of rent prepaid on December​ 1.)

c. Anniston used $ 750 of office supplies.

d. Depreciation for the equipment is $ 850.

e. Anniston received a bill for​ December's online​ advertising, $ 1,100. Anniston will not pay the bill until January.​ (Use Accounts​ Payable.)

f. Anniston pays its employees on Monday for the previous​ week's wages. Its employees earn

$ 3,500 for a​ five-day work week. December 31 falls on Wednesday this year.

g. On October​ 1, Anniston agreed to provide a​ four-month air system check​ (beginning October​ 1) for a customer for $ 3,400.

Anniston has completed the system check every month but payment has not yet been received and no entries have been made.

Requirement 2. The​ T-accounts, along with their unadjusted balances have been opened for you. Post the adjusting entries to the​ T-accounts.

The​ T-accounts, along with their unadjusted​ balances, if​ applicable, have been opened for you. Post the adjusting entries to the​ T-accounts using the corresponding letters​ (a) through​ (g) as posting references. Use a​ "Bal." posting reference to show the ending balance of each account.

Review the adjusting journal entries you prepared in Requirement 1.

Requirement 3. Prepare the adjusted trial balance. Review the T-accounts you prepared in Requirement 2.

Requirement 4. How will Anniston Air Purification System use the adjusted trial​ balance?

Theater Production​ Company's partially completed worksheet as of December​ 31, 2018 and adjustment data at December 31 follow.

Requirement 1. Complete the worksheet. Use letters a through e to label the five adjustments. The account names and unadjusted trial balance amounts as provided in the question have been entered into the worksheet for you. Finish the partial worksheet by completing the adjustments and adjusted trial balance columns. Complete the Adjustments columns by using the letters a through e to label the five adjustments. ​(Abbreviation used: Equip.​ = Equipment.)

Requirement 2. Journalize the adjusting entries. ​(Record debits​ first, then credits. Select the explanation on the last line of the journal entry​ table.)

a. As of December​ 31, Greavy had performed $ 500 of service revenue but has not yet billed customers.

b. At the end of the​ month, Greavy had $ 700 of office supplies remaining.

c. Prepaid Insurance of $ 3,900 remained.

d. Depreciation​ expense, $ 4,000.

e. Accrued salaries expense of $ 200 that​ hasn't been paid yet.