Vol. 1, Chapter 3 - Accounting Adjustments

Transcription

1 Vol. 1, Chapter 3 - Accounting Adjustments Problem 1 1. ($20,000 2,000) 48 = $375 per month 2. Jan. 31 Depreciation Expense $375 Accumulated Depreciation Van $375 To record depreciation expense for January Problem 2 Cash register: Depreciation expense = 1, = 1,300 = / month (5 12) 60 $260 = (for Jan. Dec.) 10 8-top tables: Depreciation expense = 2, = 2,000 = / month (10 12) 120 $ = (for Mar. Dec.) Van: Range: Depreciation expense = 30,000 3,000 = 27,000 = 450 / month (5 12) 60 $2,700 = (for July Dec.) Depreciation expense = 4, = 3,700 = / month (7 12) = 1.47 / day = (for Oct. Dec.) = (for month of Sept.) $ = Problem 3 1. Prepaid Insurance $ 1,200 Cash $ 1,200 Payment of insurance premium for May 1 Oct There is no insurance expense for April because the insurance coverage does not begin until May. 3. $1,200 = $ Prepaid Insurance 4/24/XX $1, /31/XX $ , /30/XX Balance $ Accounting Adjustments 1

2 Problem 4 1. $182,500 = $500 / day in wages 365 $500 6 days = $3, Wages Expense $3,000 Accrued Wages Payable $3,000 Problem 5 1. June 15 Cash $ 400 Advance Deposits $ 400 To record receipt of deposit as unearned revenue 2. July 2 Accounts Receivable $ 100 Advance Deposits 200 Revenue $ 300 To record revenue earned July 3 Accounts Receivable $ 600 Advance Deposits 200 Revenue $ 800 To record revenue earned Problem 6 1. Interest expense = 80, (30 4) = $ Interest Expense $ Interest Payable $ July: 80, (31 / 365) = $ August: 80, (31 / 365) = $ Sept: 80, (30 / 365) = $ Oct: 80, (31 / 365) = $ Nov: 80, (30 / 365) = $ Dec: 80, (31 / 365) = $ Interest expense for July Dec. = = $2, Interest Expense $ Interest Payable $ Accounting Adjustments 2

3 Problem 7 1. Average Daily Pay $4,200 = $ Pay for the 26th, 27th, 28th, 29th, 30th, and 31st: 6 $300 = $1, Adjusting Entry Wages Expense $1,800 Accrued Wages Payable $1,800 To record wages payable at end of January Problem 8 Debit Account Credit Account Deferral or Accrual 1. Wage Expense Wages Payable or Accrued Wages Accrual 2. Unearned Revenue Revenue Deferral 3. Depreciation Expense Accumulated Depreciation Deferral 4. Rent Expense Prepaid Rent Deferral 5. Accrued Interest Receivable Interest Income Accrual 6. Electricity Expense Electricity Expense Payable Accrual Problem 9 1. Interest (March) = Principal Rate Time = $ 5, / 365 = $ Adjusting Entry Interest Expense $ Interest Payable $ Interest (April) = $ 5, / 365 = $ Interest Expense $ Interest Payable $ Interest (May) = $ 5, / 365 = $ Interest Expense $ Interest Payable Notes Payable Cash $ To record payment of quarterly interest and loan installment. Accounting Adjustments 3

4 Problem 10 (a) Insurance Expense $11,250 (1) Prepaid Insurance $11,250 (1) (b) Depreciation Expense $14,000 (2) Accumulated Depreciation, Equipment $14,000 (2) (c) Wages Expense $1,800 (3) Accrued Wages Payable $1,800 (3) (d) Interest Expense $4,000 (4) Interest Payable $4,000 (4) (e) Guest Deposits $800 Room Revenue $800 (1) 15,000 = 1,250 9 = 11, (2) 80,000 10,000 = 70,000 = 14, (3) 2,100 = = 1,800 7 (4) 50, = 4,000 Problem 11 Overstate or Understate Net Income Balance Sheet Effect 1. Overstate Assets and Owners Equity will be overstated. 2. Understate Liabilities will be overstated; Owners Equity will be understated. 3. Overstate Assets and Owners Equity will be overstated. 4. Understate Assets and Owners Equity will be understated. 5. Overstate Liabilities will be understated; Owners Equity will be overstated. 6. Understate Assets and Owners Equity will be understated. 7. Overstate Liabilities will be understated; Owners Equity will be overstated. 8. Overstate Liabilities will be understated; Owners Equity will be overstated. Accounting Adjustments 4

5 Problem Supplies Prepaid Insurance F&B Inventory $ 1,250 $ 1,000 $ 2,000 $ 150 f $ 500 b $ 350 a $ 1,100 $ 500 $ 1,650 Acc. Dep. Equipment Acc. Dep. Building Salaries Payable $ 4,000 $ 6,000 $ 200 e 1,500 c 2,500 d $ 200 $ 5,500 $ 8,500 Cost of F&B Sales Salaries Expense Dep. Expense Equipment $ 26,600 $ 1,000 c $ 1,500 a 350 e 200 $ 1,500 $ 26,950 $ 1,200 Dep. Expense Building Supplies Expense Insurance Expense d $ 2,500 $ 2,000 b $ 500 $ 2,500 f 150 $ 500 $ 2, Dec. 31 Cost of Food and Beverage Sales $ 350 Food and Beverage Inventory $ 350 Dec. 31 Insurance Expense $ 500 Prepaid Insurance $ 500 Dec. 31 Depreciation Expense Equipment $ 1,500 Accumulated Depreciation Equipment $ 1,500 Dec. 31 Depreciation Expense Building $ 2,500 Accumulated Depreciation Building $ 2,500 Dec. 31 Salaries Expense $ 200 Salaries Payable $ 200 Dec. 31 Supplies Expense $ 150 Supplies $ 150 Accounting Adjustments 5

6 Problem 13 Trial Balance Adjustments Adjusted Trial Balance Account Title Debit Credit Debit Credit Debit Credit Cash $ 3,000 $ 3,000 Accounts Receivable 5,000 5,000 Food Inventory 6,000 (b) $ 4,000 2,000 Equipment 25,000 25,000 Accumulated Depreciation $ 5,000 (c) 4,000 $ 9,000 Prepaid Insurance 6,000 (a) 3,000 3,000 Accounts Payable 4,000 4,000 SR, Capital 20,000 20,000 SR, Withdrawals 4,000 4,000 Sales 200, ,000 Salaries and Wages Expense 70,000 $ 1,350 (d) 71,350 Cost of Food Sold 60,000 60,000 Advertising Expenses 10,000 10,000 Other Operating Expenses 40,000 40,000 $229,000 $229,000 Insurance Expense 3,000 (a) 3,000 Food Expense 4,000 (b) 4,000 Depreciation Expense 4,000 (d) 4,000 Accrued Wages Payable 1,350 (c) 1,350 $12,350 $12,350 $234,350 $234,350 Adjusting Entries (1) 6,000 = 3,000 2 (2) 6,000 4,000 = 2,000 (3) 25,000 5,000 = 20,000 = 4, (4) 2,700 = 270 / day = 1, Insurance Expense $3,000 Prepaid Insurance $3, Food Expense $4,000 Food Inventory $4, Depreciation Expense $4,000 Accumulated Depreciation $4, Wages Expense $1,350 Accrued Wages Payable $1,350 Accounting Adjustments 6

7 Problem Dec. 31 Cost of Food and Beverage Sold $ 750 Food and Beverage Inventory $ Dec. 31 Office Supplies Expense $ 90 Office Supplies $ Dec. 31 Depreciation Expense Furniture $3,000 Accumulated Depreciation Furniture $3, Dec. 31 Depreciation Expense Equipment $4,000 Accumulated Depreciation Equipment $4, Dec. 31 Rent Expense $ 800 Prepaid Rent $ Dec. 31 Wages and Benefits $1,050 Accrued Wages $1, Dec. 31 Interest Expense $1,401 Interest Payable $1, Dec. 31 Repairs and Maintenance Expense $ 636 Accounts Payable $ Dec. 31 Advance Deposits $ 300 Food and Beverage Revenue $ 300 Accounting Adjustments 7

8 Problem Dec. 31 Insurance Expense $ 750 Prepaid Insurance $ Dec. 31 Cleaning Supplies Expense $ 1,500 Cleaning Supplies $ 1, Dec. 31 Depreciation Expense Furniture $10,000 Accumulated Depreciation Furniture $10, Dec. 31 Depreciation Expense Equipment $ 1,000 Accumulated Depreciation Equipment $ 1, Dec. 31 Depreciation Expense Building $20,000 Accumulated Depreciation Building $20, Dec. 31 Housekeeper Wages $ 200 Accrued Wages $ Dec. 31 Interest Receivable $ 176 Interest Income $ Dec. 31 Utilities Expense $ 500 Accounts Payable $ Dec. 31 Advertising Expense $ 240 Accounts Payable $ Dec. 31 Advance Deposits $ 650 Room Revenue $ Dec. 31 Accounts Receivable $ 300 Room Revenue $ 300 Accounting Adjustments 8