Finance Chapter 4 The Unearned Ticket Revenue Represents Tickets Sold

subject Type Homework Help
subject Pages 11
subject Words 81
subject Authors Paul Kimmel; Jerry Weygandt; Donald Kieso

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Accrual Accounting Concepts
FOR INSTRUCTOR USE ONLY
4-81
Solution 263 (5 min.)
Ex. 264
Prepare adjusting entries for the following transactions. Omit explanations.
1. Depreciation on equipment is $1,340 for the accounting period.
2. Interest owed on a loan but not paid or recorded is $275.
3. There was no beginning balance of supplies and $550 of office supplies were purchased dur-
ing the period. At the end of the period $100 of supplies were on hand.
4. Prepaid rent had a $1,000 normal balance prior to adjustment. By year end $700 had ex-
pired.
5. Accrued salaries at the end of the period amounted to $900.
Solution 264 (10 min.)
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Test Bank for Accounting: Tools for Business Decision Making, Fifth Edition
FOR INSTRUCTOR USE ONLY
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Ex. 265
Prepare adjusting entries for the following transactions. Omit explanations.
1. Unrecorded interest accrued on savings bonds is $410.
2. Property taxes incurred but not paid or recorded amount to $800.
3. Unearned service revenue of $4,000 was collected in advance. By year end $700 was still
unearned.
4. Prepaid insurance had a $750 debit balance prior to adjustment. By year end, 60 percent
was still unexpired.
5. Salaries incurred by year end but not yet paid or recorded amounted to $650.
Solution 265 (10 min.)
Ex. 266
Prepare year-end adjustments for the following transactions. Omit explanations.
1. Accrued interest on notes receivable is $30.
2. $1,000 of unearned service revenue has been recognized.
3. Three years’ rent, totaling $45,000, was paid in advance at the beginning of the year.
4. Services totaling $2,900 had been performed but not yet billed at the end of the year.
5. Depreciation on equipment totaled $6,500 for the year.
6. Supplies purchased totaled $850. By year end, only $250 of supplies remained.
7. Salaries owed to employees at the end of the year total $960
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Accrual Accounting Concepts
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Solution 266 (10 min.)
Ex. 267
Janus Coat Company purchased a delivery truck on June 1 for $30,000, paying $10,000 cash and
signing a 6%, 2-month note for the remaining balance. The truck is expected to depreciate $6,000
each year. Janus Coat Company prepares monthly financial statements.
Instructions:
(a) Prepare the general journal entry to record the acquisition of the delivery truck on June 1st.
(b) Prepare any adjusting journal entries that should be made on June 30th.
(c) Show how the delivery truck will be reflected on Janus Coat Company's balance sheet on June
30th.
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Test Bank for Accounting: Tools for Business Decision Making, Fifth Edition
FOR INSTRUCTOR USE ONLY
4-84
Solution 267 (10 min.)
Accrual Accounting Concepts
FOR INSTRUCTOR USE ONLY
4-85
Ex. 268
Sunkan Company prepares monthly financial statements. Below are listed some selected accounts
and their balances on the September 30 trial balance before any adjustments have been made for
the month of September.
SUNKAN COMPANY
Trial Balance (Selected Accounts)
September 30, 2014
___________________________________________________________________________
Debit Credit
Supplies ................................................................................................ $ 2,700
Prepaid Insurance ................................................................................. 4,800
Equipment ............................................................................................. 16,200
Accumulated DepreciationEquipment ............................................... $ 1,000
Unearned Rent Revenue ...................................................................... 1,200
(Note: Debit column does not equal credit column because this is a partial listing of selected ac-
count balances.)
An analysis of the account balances by the company's accountant provided the following additional
information:
1. A physical count of office supplies revealed $1,000 on hand on September 30.
2. A two-year life insurance policy was purchased on June 1 for $4,800.
3. Office equipment depreciates $3,000 per year.
4. The amount of rent received in advance that remains unearned at September 30 is $300.
Instructions:
Using the information given, prepare the adjusting entries that should be made by Sunkan Company
on September 30.
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Test Bank for Accounting: Tools for Business Decision Making, Fifth Edition
FOR INSTRUCTOR USE ONLY
4-86
Solution 268 (10 min.)
Ex. 269
Prepare the required end-of-period adjusting entries for each independent case listed below.
Case 1
The Thoma Company began the year with a $3,000 balance in the Supplies account. During the
year, $8,500 of additional supplies were purchased. A physical count of supplies on hand at the end
of the year revealed that $8,300 worth of supplies had been used during the year. No adjusting entry
has been made until year end.
Case 2
The Leno Company has a calendar year-end accounting period. On July 1, the company purchased
office equipment for $30,000. It is estimated that the office equipment will depreciate $200 each
month. No adjusting entry has been made until year end.
Case 3
Yeats Realty is in the business of renting several apartment buildings and prepares monthly financial
statements. It has been determined that 2 tenants in $900 per month apartments and one tenant in
the $1,000 per month apartment had not paid their December rent as of December 31st.
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Accrual Accounting Concepts
FOR INSTRUCTOR USE ONLY
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Solution 269 (10 min.)
Test Bank for Accounting: Tools for Business Decision Making, Fifth Edition
FOR INSTRUCTOR USE ONLY
4-88
Ex. 270
Greenstream Insurance Agency prepares monthly financial statements. Presented below is an in-
come statement for the month of June that is correct on the basis of information considered.
GREENSTREAM INSURANCE AGENCY
Income Statement
For the Month Ended June 30
__________________________________________________________________________
Revenues
Service Revenue .......................................................................... $40,000
Expenses
Salaries and Wages Expense ...................................................... $12,000
Advertising Expense .................................................................... 800
Rent Expense ............................................................................... 4,200
Depreciation Expense .................................................................. 2,800
Total Expenses ............................................................................ 19,800
Net Income ............................................................................................ $20,200
Additional Data: When the income statement was prepared, the company accountant neglected to
take into consideration the following information:
1. A utility bill for $1,200 was received on the last day of the month for electric and gas service for
the month of June.
2. A company insurance salesman sold a life insurance policy to a client for a premium of $10,000.
The agency billed the client for the policy and is entitled to a commission of 20%.
3. Supplies on hand at the beginning of the month were $2,500. The agency purchased additional
supplies during the month for $1,500 in cash and $1,200 of supplies were on hand at June 30.
4. The agency purchased a new car at the beginning of the month for $24,000 cash. The car will
depreciate $6,000 per year.
5. Salaries owed to employees at the end of the month total $5,300. The salaries will be paid on
July 5.
Instructions:
Prepare a corrected income statement.
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Accrual Accounting Concepts
FOR INSTRUCTOR USE ONLY
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Solution 270 (15 min.)
Ex. 271
One part of an adjusting entry is given below.
Instructions:
Indicate the account title for the other part of the entry.
1. Unearned Service Revenue is debited.
2. Prepaid Rent is credited.
3. Accounts Receivable is debited.
4. Depreciation Expense on equipment is debited.
5. Utilities Expense is debited.
6. Interest Payable is credited.
7. Service Revenue is credited (give two possible debit accounts).
8. Interest Receivable is debited.
Solution 271 (5 min.)
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Test Bank for Accounting: Tools for Business Decision Making, Fifth Edition
FOR INSTRUCTOR USE ONLY
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Ex. 272
The following ledger accounts are used by the Heartland Race Track:
Accounts Receivable
Prepaid Advertising
Prepaid Rent
Unearned Sales Revenue
Sales Revenue
Advertising Expense
Rent Expense
Instructions:
For each of the following transactions below, prepare the journal entry (if one is required) to record
the initial transaction and then prepare the adjusting entry, if any, required on November 30, the end
of the fiscal year.
(a) On November 1, paid rent on the track facility for three months, $150,000.
(b) On November 1, sold season tickets for admission to the racetrack. The racing season is year-
round with 25 racing days each month. Season ticket sales totaled $960,000.
(c) On November 1, borrowed $250,000 from First National Bank by issuing a 6% note payable
due in three months.
(d) On November 5, programs for 20 racing days in November, 25 racing days in December and
15 racing days in January were printed for $3,000.
(e) The accountant for the concessions company reported that gross receipts for November were
$140,000. Ten percent is due to Heartland and will be remitted by December 10.
Solution 272 (15 min.)
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Accrual Accounting Concepts
FOR INSTRUCTOR USE ONLY
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Solution 272 (cont.)
Ex. 273
Dallison Company has an accounting fiscal year, which ends on June 30. The company also has a
policy of paying the weekly payroll on Friday. Payroll records indicate the following salary costs were
incurred.
Date Amount
Monday June 28 $3,200
Tuesday June 29 2,800
Wednesday June 30 2,900
Thursday July 1 3,000
Friday July 2 2,600
Instructions:
(a) Prepare any necessary adjusting journal entries that should be made at year end on June 30.
(b) Prepare the journal entry to record the payment of the weekly payroll on July 2.
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Test Bank for Accounting: Tools for Business Decision Making, Fifth Edition
FOR INSTRUCTOR USE ONLY
4-92
Solution 273 (10 min.)
Ex. 274
On Friday of each week, Prawn Company pays its personnel weekly wages amounting to $45,000
for a five-day work week.
Instructions:
(a) Prepare the necessary adjusting entry at year end, assuming December 31 falls on Wednes-
day.
(b) Prepare the journal entry for payment of the week's wages on the payday which is Friday, Jan-
uary 2 of the next year.
Solution 274 (5 min.)
Accrual Accounting Concepts
FOR INSTRUCTOR USE ONLY
4-93
Ex. 275
Presented below is the Trial Balance and Adjusted Trial Balance for Stabler Company on December
31.
STABLER COMPANY
Trial Balance
December 31
___________________________________________________________________________
Before Adjustment After Adjustment
Dr. Cr. Dr. Cr.
Cash $ 3,000 $ 3,000
Accounts Receivable 2,800 3,700
Prepaid Rent 2,100 1,500
Supplies 1,200 700
Equipment 18,000 18,000
Accumulated Depreciation
Equipment $ 1,300 $ 1,500
Accounts Payable 2,700 3,000
Notes Payable 10,000 10,000
Interest Payable 120
Salaries and Wages Payable 800
Unearned Service Revenue 4,460 4,060
Common Stock 8,200 8,200
Dividends 3,200 3,200
Service Revenue 8,000 9,300
Salaries and Wages Expense 2,060 2,860
Utilities Expense 1,800 2,100
Rent Expense 500 1,100
Supplies Expense 500
Depreciation Expense 200
Interest Expense 120
Totals $34,660 $34,660 $36,980 $36,980
Instructions:
Prepare in journal form, with explanations, the adjusting entries that explain the changes in the
balances from the trial balance to the adjusted trial balance.
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Test Bank for Accounting: Tools for Business Decision Making, Fifth Edition
FOR INSTRUCTOR USE ONLY
4-94
Solution 275 (20 min.)
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Accrual Accounting Concepts
FOR INSTRUCTOR USE ONLY
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Ex. 276
The Golden Petting Zoo operates a drive-through tourist attraction in Colorado. The company ad-
justs its accounts at the end of each month. The selected accounts appearing below reflect balances
after adjusting entries were prepared on April 30. The adjusted trial balance shows the following:
Prepaid Rent $ 18,000
Buildings 42,000
Accumulated DepreciationBuildings 5,500
Unearned Ticket Revenue 600
Other data:
1. Three months' rent had been prepaid on April 1.
2. The buildings are being depreciated at $6,000 per year.
3. The unearned ticket revenue represents tickets sold for future zoo visits. The tickets were sold at
$4.00 each on April 1. During April, twenty of the tickets were used by customers.
Instructions:
(a) Calculate the following:
1. Monthly rent expense.
2. The age of the fencing in months.
3. The number of tickets sold on April 1.
(b) Prepare the adjusting entries that were made by the Golden Petting Zoo on April 30.
Solution 276 (15 min.)
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Test Bank for Accounting: Tools for Business Decision Making, Fifth Edition
FOR INSTRUCTOR USE ONLY
4-96
Ex. 277
The adjusted trial balance of Nicks Financial Planners appears below and using the information from
the adjusted trial balance, you are to prepare for the month ending December 31:
1. an income statement;
2. a retained earnings statement; and
3. a balance sheet.
NICKS FINANCIAL PLANNERS
Adjusted Trial Balance
December 31, 2014
__________________________________________________________________________
Debit Credit
Cash ...................................................................................................... $ 15,400
Accounts Receivable ............................................................................ 2,200
Supplies ................................................................................................ 1,800
Equipment ............................................................................................. 15,500
Accumulated DepreciationEquipment ............................................... $ 4,000
Accounts Payable ................................................................................. 3,000
Unearned Service Revenue .................................................................. 5,000
Common Stock ...................................................................................... 15,000
Retained Earnings ................................................................................ 7,400
Dividends .............................................................................................. 3,500
Service Revenue ................................................................................... 9,500
Supplies Expense ................................................................................. 1,100
Depreciation Expense ........................................................................... 2,500
Rent Expense ....................................................................................... 1,900
$43,900 $43,900
Solution 277 (20 min.)
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Accrual Accounting Concepts
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Solution 277 (cont.)

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