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Ex. 4.4 a.
b. 2,000,000 2,000,000
c. 40,000,000 40,000,000
Customer Deposits …………………………………………
…
Prepaid Advertising is reported in the balance sheet as an asset. Customer Deposits
Advertising Expense …………………………………………
…
print.
Ex. 4.7 1,500 1,500
a. 1. Interest Expense …………………………………………………
Ex. 4.9 a. Ma
y
1 500,000
Notes Payable ……………………………. 500,000
Ma
y
31 3,750
b. Ma
y
1 72,000
Cash ………………………………………… 72,000
Cash …………………………………………………
…
Obtained a three-month loan from National Bank
at 9% interest
p
er
y
ear.
Interest Expense ……………………………………
…
Prepaid Rent …………………………………………
…
c.
Ex. 4.10
Ex. 4.11 a.
The New York Times Company: Unexpired Subscriptions
When the company receives cash from its customer prior to earning any revenue it
debits Cash and credits either Short-Term Unearned Revenue or Long-Term
considered long-term.
a. $102 billion ($90 billion book value + $12 billion accumulated depreciation)
America West Corporation: Air Traffic Liability
Royal Caribbean: Customer Deposits
Ex. 4.12 5,000
Fees Earned……………………………… 5,000
600
Unexpired Insurance…………………….. 600
To record expired portion of insurance policies.
1,800
Pre
p
aid Rent ………………………………
…
1,800
Insurance Expense…………………………………
Rent Expense …………………………………………
…
To record rent expense for December.
Accounts Receivable…………………………………
…
To record accrued but uncollected revenue.
Ex. 4.13 Ad
j
ustment Net Owners'
T
yp
e Revenue Ex
p
enses Income Assets Liabilities E
q
uit
y
Type I NE I D D NE D
Ex. 4.14 a.
Ex. 4.15 •
•
•
•
Other current assets
Property and equipment
Merchandise inventories
None (or Materiality). Accounting for immaterial items is not "wrong" or a
"violation" of generally accepted accounting principles; it is merely a waste
thus eliminating the need to record depreciation in the later periods.
Accounts requiring adjusting entries may include:
Receivables
Education.
20 Minutes, Easy
a.
Dec. 31 9,600
Salaries Pa
y
able 9,600
31 1,800
Green Fee Revenue 1,800
SOLUTIONS TO PROBLEMS SET A
FLORIDA PALMS COUNTRY CLUB
(Adjusting Entries)
(1)
(
2
)
PROBLEM 4.1A
General Journal
Accounts Receivable
FLORIDA PALMS COUNTRY CLUB
20__
Salaries Expense
To record accrued salaries at December 31.
b. 1.
2.
c.
The clubhouse was built in 1925 and has been fully depreciated for financial accounting
purposes. The net book value of an asset reported in the balance sheet does not reflect the
asset’s fair market value. Likewise, depreciation expense reported in the income statement does
not reflect a decline in fair market value, physical obsolescence, or wear-and-tear.
Accruing unpaid expenses.
Accruing uncollected revenue.
PROBLEM 4.1A
FLORIDA PALMS COUNTRY CLUB (concluded)
40 Minutes, Medium
Dec. 31 400
Interest Revenue 400
a.
(Adjusting Entries)
General Journal
December 31.
PROBLEM 4.2
A
ENCHANTED FOREST
Interest Receivable
To record accrued interest revenue on CDs at
(1)
b. 1.
2.
3.
c. Owners’
Revenue Ex
p
enses =
A
ssets = Liabilities + E
q
uit
y
INEII NEI
NE I D NE I D
d.
e.
PROBLEM 4.2
A
Accruing uncollected revenue.
Accruing unpaid expenses.
ENCHANTED FOREST (concluded)
Converting assets to expenses.
Net
Income
Income Statement Balance Sheet
$340 ($12,000 x 8.5% x 4/12).
1.
2.
Adjustment
Original cost of buildings …………………………………………
Accumulated depreciation: buildings (prior to adjusting
600,000$
25 Minutes, Strong
a. (1)
PROBLEM 4.3
A
GUNFLINT ADVENTURES
Age of airplane in months = accumulated depreciation/monthly depreciation.
Useful life is given as 15 years, or 180 months.
