Accounting cycle problems and solutions

5 Verify, for the first time, the equality of debits and credits in the ledger.

___ Account for timing differences between cash flow and accrual basis measurements.

___ Determine the appropriate journal entry (if any) for the event.

___ Extract, from the accounting information system, the balance sheet and related documents.

___ Prepare the accounting information system for a new fiscal period.

___ Reorganize the data in the accounting information system from chronological to account-based.

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Level Three: Apply

In each of the following independent situations, prepare the appropriate adjusting entry.

a) At the beginning of April 20x4, TNG Corporation had $250 supplies on hand. During April, TNG

purchased an additional $350 worth of supplies. At the end of April, supplies inventory totaled

$200.

b) At the beginning of May 20x4, YSC Corporation’s general ledger showed a credit balance in

Allowance for Bad Debts of $300. During May, YSC wrote off $120 in bad debts; sales on

account for that month totaled $7000. YSC estimates bad debt expense at 1% of total credit

sales.

c) THR Corporation’s weekly payroll totals $10,500; employees are paid every Friday for the current

week’s work. The last day of THR’s fiscal period in 20x4 fell on Wednesday. THR employees

work five days per week.

d) On July 1, 20x4, DJS Corporation received $15,000 from a customer for an upcoming consulting

engagement. By the end of July 20x4, the engagement was 30% complete.

e) TGG purchased equipment with a list price of $4,000 on July 1, 20x4; TGG made a down

payment of $3,000 and financed the remainder via accounts payable. The equipment vendor’s

usual list price for the equipment was $5,000. TGG paid $1,000 to prepare the equipment for

use; its estimated life is 3 years, after which the equipment will have no salvage value. TGG uses

straight-line depreciation; the adjusting entry is recorded at the end of December 20x4.