25 Minutes, Strong
a. (1)
(3)
June 30 1,600
Accumulated Depreciation: Airplane 1,600
Prepaid Airport Rent 2,250
Unexpired Insurance 600
Passenger Revenue Earned 40,000
(3)
June.
Recognizing insurance expense for June.
Unearned Passenger Revenue
Recording portion of unearned revenue earned in
(4)
Insurance Expense
Airport Rent Expense
Recognizing rent expense for June.
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.
(2)
Useful life is given as 15 years, or 180 months.
Cost $288,000/180 months = $1,600 monthly depreciation expense
Accumulated depreciation $80,000/$1,600 monthly depreciation = 50 months.
30 Minutes, Medium
Aug. 31 18,240
Prepaid Film Rental 18,240
31 1,800
Interest Payable 1,800
31 600
31 2,700
Concessions Revenue 2,700
To record advance payment from YMCA earned in
(5)
Unearned Admissions Revenue (YMCA)
Concessions Revenue Receivable
To record accrued concessions revenue in August.
August ($1,800 x 1/3).
(6)
31 2,040
Salaries Payable 2,040
31 5,040
31
No adjusting entry required.
(9)
Income Taxes Expense
To record income taxes accrued in August.
PROBLEM 4.4A
CAMPUS THEATER
Interest Expense
(4)
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
Accumulated Depreciation: Buildings 840
Depreciation Expense: Fixtures and Equipment
Depreciation Expense: Buildings
To record August depreciation expense
($201,600 ÷ 240 months).
(2)
(3)
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
31 2,700
Salaries Payable 2,700
31 3,000
Income Taxes Payable 3,000
To record income taxes accrued in December.
(9)
Salaries Expense
Income Taxes Expense
To record income taxes accrued in December.
(8)
(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)
Fees Earned 2,500
31 300
Unexpired Insurance 300
31 1,000
Prepaid Rent 1,000
31 200
Office Supplies 200
Insurance Expense
To record Dec. rent expense ($3,000 ÷ 3 mo.).
(5)
($600 – $400).
Rent Expense
To record offices supplies used in December
Office Supplies Expense
(4)
earned revenue.
Unearned Revenue
To convert previously unearned revenue to
To record Dec. insurance exp. ($1,800 ÷ 6 mo.).
(3)
1. $ 75,000
1,500
2,500
$ 79,000
5. $ 780
200
$ 980
6. 4,800$
$ 6,000
80
$ 400
2,700
Add: Adjusting entry #8
Add: Adjusting entry #6
Equipment depreciation expense in Year 1
Add: Adjusting entry #7
Interest expense incurred in Year 1
Salaries expense incurred in Year 1
Income taxes expense incurred in Year 1
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)
2. $ 5,000
3. 2,980$
300
$ 3,280
4. $ 9,900
1,000
Rent expense (unadjusted)
Add: Adjusting entry #4
Insurance expense incurred in Year 1
Add: Adjusting entry #3
Travel expense (no adjustment required)
Insurance expense (unadjusted)
Rent expense incurred in Year 1
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
31 75
31 3,100
Salaries Payable 3,100
31 1,250
Income Taxes Expense
(9)
To record salaries accrued in December.
($10,000 x 9% x 1/12).
(8)
To record interest accrued in December.
Salaries Expense
Interest Expense
(7)
(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)
Client Revenue Earned 6,600
Unexpired Insurance 3,000
31 1,100
Prepaid Advertising 1,100
(3)
Unearned Client Revenue
To convert previously unearned revenue to
To record Dec. advertising expense.
Advertising Expense
earned revenue.
(4)
(2)
1. $ 13,900
5. $ 4,900
(2,900)
$ 2,000
6. 57,600$
7. $ 38,400
1,200
$ 39,600
8. –$
3,100
$ 3,100
9. $ 10,000
$ 225
1,250
12. $ 9,600
Notes payable (no adjustment required)
Add: Adjusting entry #9
Unearned client revenue (unadjusted)
Income taxes payable at December 31, Year 1
Salaries payable (unadjusted)
Salaries payable at December 31, Year 1
Add: Adjusting entry #8
Add: Adjusting entry #7
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)
2. 78,000
3. 18,000$
(3,000)
$ 15,000
4. $ 2,200
(1,100)
Unexpired insurance (unadjusted)
Less: Adjusting entry #3
Unexpired insurance at December 31, Year 1
Prepaid advertising (unadjusted)
Less: Adjusting entry #4
Add: Adjusting entry #1
Accounts receivable at December 31, Year 1
Accounts receivable (unadjusted)
Prepaid advertising at December 31, Year 1
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 2,400
Prepaid Studio Rent 2,400
31 1,800
Accumulated Depreciation: Rec. Eq. 1,800
(5)
($108,000 x 1/60).
Depreciation Expense: Recording Equipment
To record studio rent in December ($7,200 x 1/3).
To record depreciation expense in December
Studio Rent Expense
31 144
Interest Payable 144
31 4,320
Studio Revenue Earned 4,320
31 648
Salaries Payable 648
31 2,040
Income Taxes Payable 2,040
($23,520 – $21,480).
Income Taxes Expense
To record income taxes accrued in December.
(8)
To record salaries accrued in December.
(9)
Salaries Expense
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
Studio Supplies 840
($9,120 – $8,280).
To record studio supplies used in December
Supplies Expense
b.
138,000$
22,248$
2,280
c.
Monthly rent expense for the last two months of Year 1 was $2,400 ($7,200/3 months). The
Supplies Expense
Salaries Expense
PROBLEM 4.7A
KEN HENSLEY ENTERPRISES, INC. (continued)
Ken Hensley Enterprises, Inc.
For the Year Ended December 31, Year 1
Studio Revenue Earned
Income Statement
3,516
2,820
1,152
Income Tax Expense
Studio Rent Expense
Interest Expense
Insurance Expense
Utilities Expense
Depreciation Expense: Recording Equipment
Net Income
Total Expenses
d.
3,516$
e.
f.
Net Owners’
Revenue – Expenses = Income Assets = Liabilities + Equity
INE I I NE I
3.
2.
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.
Average monthly insurance expense for Jan.-July
@ $300/month
Less: Insurance expense for August through December
Insurance expense for January through July
months
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
31
31 12,600
Income Taxes Payable 12,600
To record income taxes accrued in December.
when it is earned. Entering into a contract does not
(8)
To record December insurance expense
(7)
constitute the earning of revenue.
No adjusting entry required. Revenue is recognized
($10,800 x 1/12).
Income Taxes Expense
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
31 3,200
Guest Fee Revenue 3,200
Membership Dues Earned 140,000
Accounts Receivable
To record guest fees owed by the Georgia State
earned in December.
(2)
Police.
(3)
Unearned Membership Dues
To record the portion of annual membership dues
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
2.
3.
4.
5.
6.
7.
8.
Accruing uncollected revenue.
Converting liabilities to revenue.
Converting assets to expenses.
Accruing unpaid expenses.
Converting assets to expenses.
No adjusting entry required.
Accruing unpaid expenses.
40 Minutes, Medium
a.
31 80
Interest Payable 80
31 3,000
Accumulated Depreciation: Buildings 3,000
31
Depreciation Expense: Buildings
To record December depreciation expense
(4)
($720,000 ÷ 20 years x 1/12).
No adjusting entry required. Revenue is recognized
when it is earned. Entering into a contract does not
constitute the earning of revenue.
31 1,515
Salaries Payable 1,515
31 2,700
Camper Revenue 2,700
31 1,500
Camper Revenue 1,500
31 810
Accounts Payable 810
31 6,600
Income Taxes Payable 6,600
Bus Rental Expense
To record revenue earned from campers that paid
(9)
Income Taxes Expense
Unearned Camper Revenue
($45 per day x 18 days).
To record accrued bus rental expense in December
(8)
in advance ($7,500 ÷ 5 months).
Interest Expense
PROBLEM 4.2B
(Adjusting Entries)
(1)
General Journal
BIG OAKS
(2)
(3)
Salaries Expense
To record accrued interest expense in December
($12,000 x 8% x 1/12).
To record accrued camper revenue earned in
Camper Revenue Receivable
December.
(5)
To record accrued salary expense in December.
(6)
Interest Revenue 425
Interest Receivable
To record accrued interest revenue.
b.
1.
c.
Owners’
Revenue –Expenses = Assets = Liabilities + Equity
e.
557,000$
December depreciation expense from part a …………………………..
Accumulated depreciation, buildings, December 31 ………………………………
Net book value at December 31 …………………………………………..
Original cost of buildings ………………………………………………
720,000$
Balance Sheet
Adjustment
Net
Income
Income Statement
BIG OAKS (concluded)
PROBLEM 4.2B
Accruing uncollected revenue.
2.
3.
4.
5.
6.
7.
8.
9.
Accruing unpaid expenses.
Converting liabilities to revenue.
Accruing unpaid expenses.
Accruing uncollected revenue.
Accruing unpaid expenses.
Accruing unpaid expenses.
Converting assets to expenses.
No adjusting entry required.
25 Minutes, Strong
a. (1)
(4)
Apr. 30 780
Accumulated Depreciation: Ferry 780
Passenger Revenue Earned 900
Prepaid Rent 4,320
To record expiration of insurance in April.
Unearned Passenger Revenue
To record earning of revenue from 150 ride
Insurance Expense
Rent Expense
To recognize rent expense for April.
tickets used in April (150 tickets x $6 = $900).
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.
(3)
Useful life is given as 12 years, or 144 months.
Cost $112,320/144 months = $780 monthly depreciation expense.
Accumulated depreciation $20,280/$780 monthly depreciation = 26 months.