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25 Minutes, Strong
a. (1)
(3)
June 30 1,600
Accumulated Depreciation: Airplane 1,600
Depreciation Expense
To record June depreciation expense on airplane.
(2)
(Adjusting Entries)
(1)
General Journal
PROBLEM 4.3A
GUNFLINT ADVENTURES
At June 30, five months of the original insurance policy have expired (February
Age of airplane in months = accumulated depreciation/monthly depreciation.
30 Minutes, Medium
Aug. 31 18,240
Prepaid Film Rental 18,240
31 1,800
Interest Payable 1,800
31 2,040
Salaries Payable 2,040
PROBLEM 4.4A
CAMPUS THEATER
Interest Expense
(4)
Current Yr.
a.
(Adjusting Entries)
(1)
General Journal
(7)
(8)
Interest expense accrued in August.
Film Rental Expense
Film rental expense incurred in August.
To record accrued salary expense in August.
Salaries Expense
b. (1)
c.
Corporations must pay income taxes in several installments throughout the year. The
balance in the Income Taxes Expense account represents the total amount of income taxes
PROBLEM 4.4A
CAMPUS THEATER (concluded)
Eight months (bills received January through August). Utilities bills are recorded as
30 Minutes, Medium
Dec. 31 1,500
Fees Earned 1,500
31 500
Accumulated Depreciation: Equipment 500
31 80
Interest Payable 80
(6)
Depreciation Expense: Equipment
To record interest accrued in December
Interest Expense
($12,000 x 8% x 1/12).
(7)
($60,000 ÷ 120 mo.).
To record December depreciation expense
Year 1
Accounts Receivable
To record accrued but uncollected fees earned.
PROBLEM 4.5A
TERRIFIC TEMPS
a.
(Adjusting Entries)
General Journal
(1)
(2)
1. $ 75,000
1,500
2,500
$ 79,000
5. $ 780
200
$ 980
6. 4,800$
PROBLEM 4.5A
b.
TERRIFIC TEMPS (concluded)
Fees earned (unadjusted)
Add: Adjusting entry #1
Adjusting entry #2
Fees Earned in Year 1
Add: Adjusting entry #5
Office supplies expense incurred in Year 1
Office supplies expense (unadjusted)
Utilities expense (no adjustment required)
30 Minutes, Medium
Dec. 31 6,400
Client Revenue Earned 6,400
31 2,900
Climbing Supplies 2,900
31 1,200
Accumulated Dep.: Climbing Equipment 1,200
(5)
To recorded December depreciation expense
($4,900 - $2,000).
To record accrued but uncollected revenue.
Climbing Supplies Expense
a.
(Adjusting Entries)
General Journal
PROBLEM 4.6A
(6)
($57,600 ÷ 48 mo.).
Depreciation Expense: Climbing Equip.
To record climbing supplies used in December
ALPINE EXPEDITIONS
Year 1
Accounts Receivable
(1)
1. $ 13,900
5. $ 4,900
(2,900)
$ 2,000
6. 57,600$
7. $ 38,400
1,200
$ 39,600
Acc. Depreciation: climbing equip. at December 31, Year 1
PROBLEM 4.6A
b.
ALPINE EXPEDITIONS (continued)
Cash (no adjustment required)
Acc. Depreciation: climbing equip. (unadjusted)
Less: Adjusting entry #5
Climbing supplies (unadjusted)
Add: Adjusting entry #6
Climbing supplies at December 31, Year 1
Climbing equipment (no adjustment necessary)
c.
Deferred expenses are assets that eventually convert into expenses. For Alpine
PROBLEM 4.6A
ALPINE EXPEDITIONS (concluded)
60 Minutes, Strong
Dec. 31 5,280
Studio Revenue Earned 5,280
31 300
Unexpired Insurance 300
31 144
Interest Payable 144
31 4,320
Studio Revenue Earned 4,320
PROBLEM 4.7A
To record accrued studio revenue earned in
(4)
KEN HENSLEY ENTERPRISES, INC.
a.
(Adjusting Entries)
(1)
(2)
(3)
General Journal
To record advance collections earned in Dec.
Year 1
Insurance Expense
To record December insurance expense ($1800 x1/6).
Accounts Receivable
December.
Unearned Studio Revenue
December ($19,200 x 9% x 1/12).
(6)
(7)
To record accrued interest expense in
Interest Expense
b.
138,000$
22,248$
2,280
c.
Monthly rent expense for the last two months of Year 1 was $2,400 ($7,200/3 months). The
Supplies Expense
Salaries Expense
PROBLEM 4.7A
KEN HENSLEY ENTERPRISES, INC. (continued)
Ken Hensley Enterprises, Inc.
For the Year Ended December 31, Year 1
Studio Revenue Earned
Income Statement
d.
3,516$
e.
f.
Net Owners'
Revenue - Expenses = Income Assets = Liabilities + Equity
INE I I NE I
PROBLEM 4.7A
KEN HENSLEY ENTERPRISES, INC. (concluded)
December 31, Year 1
Adjustment
Insurance expense of $300 per month in the last 5 months of the year was $12 per month
more than the average monthly cost in the first 7 months of the year ($300 - $288).
Insurance expense for 12 months ended
Income Statement
Balance Sheet
1.
20 Minutes, Strong
a. NE O U NE NE NE
b. NE U O O NE O
PROBLEM 4.8A
COYNE CORPORATION
Error
Total
Revenue
Total
Expenses
Net
Income
Total
Assets
Total
Liabilities
Owners’
Equity
Recorded a dividend as
an expense reported in
the income statement.
Recorded the payment
of an account payable
as a debit to accounts
payable and a credit to
an expense account.
20 Minutes, Easy
Dec. 31 13,600
Salaries Payable 13,600
31 1,250
Accumulated Depreciation: Furn. & fixtures 1,250
31 400
Interest Payable 400
31 900
Insurance Expense
(6)
($60,000 x 8% x 1/12).
To record accrued interest expense in December
SOLUTIONS TO PROBLEMS SET B
a.
(Adjusting Entries)
(1)
To record accrued salaries at December 31.
PROBLEM 4.1B
GEORGIA GUN CLUB
Current Yr.
Salaries Expense
($120,000 ÷ 8 years x 1/12).
Interest Expense
(4)
(5)
Depreciation Expense: Furniture and Fixtures
To record December depreciation expense
b.
1.
c.
Accruing unpaid expenses.
PROBLEM 4.1B
GEORGIA GUN CLUB (concluded)
The clubhouse was built in 1956 and has been fully depreciated for financial accounting
40 Minutes, Medium
a.
31 80
Interest Payable 80
31 1,515
Salaries Payable 1,515
31 2,700
Camper Revenue 2,700
Interest Expense
PROBLEM 4.2B
(Adjusting Entries)
(1)
General Journal
BIG OAKS
(2)
(3)
Salaries Expense
To record accrued interest expense in December
($12,000 x 8% x 1/12).
To record accrued camper revenue earned in
Camper Revenue Receivable
December.
(5)
To record accrued salary expense in December.
(6)
b.
1.
c.
Owners’
Revenue -Expenses = Assets = Liabilities + Equity
e.
Original cost of buildings ………………………………………………
720,000$
Balance Sheet
Adjustment
Net
Income
Income Statement
BIG OAKS (concluded)
PROBLEM 4.2B
Accruing uncollected revenue.
25 Minutes, Strong
a. (1)
(4)
Apr. 30 780
Accumulated Depreciation: Ferry 780
b.
(Adjusting Entries)
(1)
Current Yr.
PROBLEM 4.3B
RIVER RAT
Age of the ferry in months = accumulated depreciation/monthly depreciation.
General Journal
Since 2 months of the 12-month life of the policy have expired, the $4,560 of
Depreciation Expense: Ferry
To record April depreciation expense on ferry.
