Unlock document.
This document is partially blurred.
Unlock all pages and 1 million more documents.
Get Access
DQ1.
DQ2.
Discussion Questions
CHAPTER 3—Solutions
ADJUSTING THE ACCOUNTS
The carrying value will equal the market value of the asset only by coincidence
accounting period.
When a company has net income, there is an increase in assets and/or a decrease
in liabilities.
because the goal of recording depreciation is to allocate the cost of the asset over
3-1
© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
1.
31 800
Dec. 31 920
June 30 230
Wages Expense
SE5. Adjustment for Accrued Wages
SE3. Adjustment for Supplies
Supplies Expense
SE2. Adjustment for Prepaid Insurance
Dec.
Insurance Expense
Short Exercises
c
SE1. Accrual Accounting Concepts
3-2
© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
31 Unearned Service Revenue 760
To record service revenue earned
during August on which advance
deposits had been received
SE6. Adjustment for Unearned Revenue
Shah Company
Income Statement
SE7. Preparation of an Income Statement and Statement of Owner’s Equity from an Adjusted Trial
Balance
Aug.
For the Month Ended December 31, 2014
Revenues:
3-3
© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
$ 6,300
Malesherbes Company
Income Statement
For the Month Ended June 30, 2014
SE8. Preparation of an Income Statement and Statement of Owner’s Equity from an
Adjusted Trial Balance
Revenues:
Service revenue
Expenses:
3-4
© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
1.
2.
a.
generate discussion.
Note to the Instructor: Because more than one concept may apply to a particular action,
which concept is most applicable is a matter of judgment. This exercise is intended to
a
c
Exercises: Set A
E2A. Application of Conditions for Revenue Recognition
Services have not been rendered.
To record expired insurance
E3A. Adjusting Entry for Unearned Revenue
2014
E1A. Applications of Accounting Concepts Related to Accrual Accounting
3-5
© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
1.
bcd
2.
2.
To record royalties earned for the last half
of 2014, to be received on May 1, 2015
In Kozuch Company's records:
2014
Adjusting entry for column a
Amounts indicated by the question marks are in italics
a
E5A. Adjusting Entries for Supplies: Missing Data
3-6
© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
2.
been earned. Unearned Legal Fees is a liability of $54,000 on the balance
sheet.
Revenue on the income statement includes the $18,000 in legal fees that have
E9A. Adjusting Entries
E8A. Accounting for Revenue Received in Advance
To record service revenue earned but not billed
3-7
© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
Revenues:
E10A. Preparation of Financial Statements
For the Month Ended August 31, 2014
Krishna Cleaning Company
Income Statement
3-8
© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.
