Chapter 3 - Homework

Adjusting Entry for Accrued Fees At the end of the current year, $10,530 of fees have been earned but have not been billed to clients. a. Journalize the adjusting entry to record the accrued fees. If an amount box does not require an entry, leave it blank. b. If the cash basis rather than the accrual basis had been used, would an adjusting entry have been necessary?

a. Accounts Receivable - 10,530 / 0 Fees Earned - 0 / 10,530 b. No

Adjusting Entries for Prepaid Insurance The balance in the prepaid insurance account, before adjustment at the end of the year, is $15,660. Journalize the adjusting entry required under each of the following alternatives for determining the amount of the adjustment: a. The amount of insurance expired during the year is $11,900. If an amount box does not require an entry, leave it blank. b. The amount of unexpired insurance applicable to future periods is $3,760. If an amount box does not require an entry, leave it blank.

(See Attachment) The unexpired amount is the ending balance to the account.

Adjusting Entries On May 31, the following data were accumulated to assist the accountant in preparing the adjusting entries for Oceanside Realty: - Fees accrued but unbilled at May 31 are $19,750. - The supplies account balance on May 31 is $12,300. The supplies on hand at May 31 are $4,150. - Wages accrued but not paid at May 31 are $2,700. - The unearned rent account balance at May 31 is $9,000, representing the receipt of an advance payment on May 1 of three months' rent from tenants. - Depreciation of office equipment is $3,200. What is the difference between adjusting entries and correcting entries? A.) Both adjusting entries and correcting entries are a planned part of the accounting process. B.) Adjusting entries are a planned part of the accounting process, correcting entries are not planned but arise when necessary to correct errors. C.) Both adjusting entries and correcting entries are not a planned part of the accounting process. D.) Correcting entries are a planned part of the accounting process, adjusting entries are not planned but arise when necessary to adjust errors.

(See attachment) B.) Adjusting entries are a planned part of the accounting process, correcting entries are not planned but arise when necessary to correct errors.

Adjusting Entries for Unearned and Accrued Fees The balance in the unearned fees account, before adjustment at the end of the year, is $109,770. Of these fees, $68,055 have been earned. In addition, $13,170 of fees have been earned but have not been billed. a. Journalize the adjusting entry to adjust the unearned fees account. If an amount box does not require an entry, leave it blank. b. Journalize the adjusting entry to record the accrued fees. If an amount box does not require an entry, leave it blank.

(See attachment) Consider the accounts involved in the recording of this transaction. Recall that unearned revenues are liabilities until they become earned revenues over time or during normal operations. Unearned fees decrease for the amount of the revenue that has been earned. At the end of an accounting period, there may be revenue that has been earned but has not been recorded. In such cases, the revenue is increased. What account is used when you are receiving cash later?

Adjusting Entries for Prepaid and Accrued Taxes A-Z Construction Company was organized on May 1 of the current year. On May 2, A-Z Construction prepaid $4,440 to the city for taxes (license fees) for the next 12 months and debited the prepaid taxes account. A-Z Construction is also required to pay in January an annual tax (on property) for the previous calendar year. The estimated amount of the property tax for the current year (May 1 to December 31) is $26,545. a. Journalize the two adjusting entries required to bring the accounts affected by the two taxes up to date as of December 31, the end of the current year. If an amount box does not require an entry, leave it blank. b. What is the amount of tax expense for the current year?

(See attachment) Determine the amount of prepaid city license that will expire each month. Then expense the expired amount that will occur from April 2 to December 31. Complete your adjusting entry by making sure that it affects at least one income statement account and one balance sheet account. The property tax requires increasing an expense account. Complete your adjusting entry by making sure that it affects at least one income statement account and one balance sheet account. Both city licenses and property taxes increase the company's tax expense.

Adjusting Entries for Accrued Salaries Paradise Realty Co. pays weekly salaries of $23,000 on Friday for a five-day workweek ending on that day. a. Journalize the necessary adjusting entry at the end of the accounting period assuming that the period ends on Tuesday. b. Journalize the necessary adjusting entry at the end of the accounting period assuming that the period ends on Thursday.

(See attachment) Determine the salaries per day based on a five-day work week. Then, multiply that amount by the number of day you need to accrue the wages for. Some types of services used in earning revenues are paid for after the service has been performed. In such cases, the expense is increased. When does the accounting period end? Multiply the daily amount times this number of days to obtain the accrual amount in each situation.

Adjusting Entries for Unearned Fees The balance in the unearned fees account, before adjustment at the end of the year, is $30,725. Journalize the adjusting entry required if the amount of unearned fees at the end of the year is $13,825. If an amount box does not require an entry, leave it blank.

(See attachment) Recall that unearned revenues are liabilities until they become earned revenues over time or during normal operations. Unearned fees decrease for the amount of the revenue that has been earned.

Adjusting Entry for Supplies The balance in the supplies account, before adjustment at the end of the year, is $1,592. Journalize the adjusting entry required if the amount of supplies on hand at the end of the year is $748.

(See example) Set up a Supplies T-account. Purchases are increases to the account. 'On hand' is what is left, or the ending supplies balance. The amount used decreases supplies and is the supplies expense amount. Solve for the expense by keeping in mind that the beginning balance plus purchases (none mentioned) minus the supplies (used) expense equals the ending balance of supplies. Complete your adjusting entry by making sure that it affects at least one income statement account and one balance sheet account.

Adjusting Entries for Prepaid Insurance The prepaid insurance account had a balance of $10,100 at the beginning of the year. The account was debited for $11,200 for premiums on policies purchased during the year. Journalize the adjusting entry required at the end of the year for each of the following situations: a. The amount of unexpired insurance applicable to future periods is $1,900. If an amount box does not require an entry, leave it blank. b. The amount of insurance expired during the year is $19,400. If an amount box does not require an entry, leave it blank.

10,100 + 11,200 - 1,900 = 19,400 (See attachement) The unexpired amount is the ending balance to the account.

Determining Wages Paid The wages payable and wages expense accounts at August 31, after adjusting entries have been posted at the end of the first month of operations, are shown in the following T accounts: Determine the amount of wages paid during the month.

Answer: 85,330 (See attachment) A company may not pay its employees until the next accounting period even though the employees have earned their wages in the current period. This means wages can appear in two different accounts. Consider how you would compute the amount of wages paid in cash.