CHAPTER 4 - CHAPTER 4 HOMEWORK SOLUTIONS Questions: 1. A...

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CHAPTER 4 HOMEWORK SOLUTIONS Questions: 1. A trial balance is a list of the individual accounts, usually in financial statement order, with their debit or credit balances. It is used to provide a check on the equality of the debits and credits. 3. A contra-asset is an account related to an asset that is an offset or reduction to the asset's balance. Accumulated Depreciation is a contra-account to the equipment and buildings accounts. 10. Closing entries are made at the end of the accounting period to transfer the balances in the temporary income statement accounts to retained earnings. The closing entries reduce the revenue, gain, expense, and loss accounts to a zero balance so that they can be used for the accumulation process during the next period. Closing entries must be entered into the system through the journal and posted to the ledger accounts to state properly the temporary and permanent account balances (i.e., zero balances in the temporary accounts). Multiple Choice: 3. d) 5. d) 10. b)
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Mini-Exercises: M4–1. Puglisi Company Adjusted Trial Balance At June 30, 2007 Debit Credit Cash $ 120 Accounts receivable 350 Inventories 610 Prepaid expenses 40 Buildings and equipment 1,400 Accumulated depreciation $ 250 Land 200 Accounts payable 200 Accrued expenses payable 150 Income taxes payable 30 Unearned fees 100 Long-term debt 1,300 Contributed capital 300 Retained earnings 120 Sales revenue 2,400 Interest income 50 Cost of sales 820 Salaries expense 660 Rent expense 400 Depreciation expense 110 Interest expense 80 Income taxes expense 110 Totals $ 4,900 $ 4,900
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M4–4. (a ) 1. Deferred revenue 2. Unearned rent revenue ( - L). .......................... 200 Rent revenue (+R, +SE). ........................ 200 To record one month of rent revenue earned ($800 ÷ 4 months). (b ) 1. Deferred expense 2. Insurance expense (+E, - SE). ....................... 900 Prepaid insurance ( - A). .......................... 900 To record six months of insurance expense ($3,600 x 6/24). (c ) 1. Deferred expense 2. Depreciation expense (+E, - SE). ................... 3,000 Accumulated depreciation (+XA, - A). ..... 3,000 To record annual depreciation expense. M4–6. (a ) 1. Accrued expense 2. Utilities expense (+E, - SE). ........................... 320 Accrued utilities payable (+L). ................ 320 To record utilities expense incurred but not yet paid. (b ) 1. Accrued expense 2. Wages expense (+E, - SE). ............................ 4,500 Accrued wages payable (+L). ................. 4,500 To record wages expense incurred but not yet paid, calculated as 10 employees x 3 days x $150 each per day. (c ) 1. Accrued revenue 2. Interest receivable (+A). ................................ 200 Interest revenue (+R, +SE). ................... 200
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To record interest earned but not yet collected, calculated as $5,000 x 12% x 4/12.
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M4–8. MORGAN COMPANY
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This note was uploaded on 04/11/2008 for the course ACG 2021 taught by Professor Linkovich during the Spring '08 term at University of South Florida - Tampa.

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CHAPTER 4 - CHAPTER 4 HOMEWORK SOLUTIONS Questions: 1. A...

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