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# 11 - P4-2 a DEFERRED REVENUE Unearned Revenue 4,800 Revenue...

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P4-2 a. DEFERRED REVENUE Unearned Revenue 4,800 Revenue 4,800 b. ACCRUED EXPENSE Wages Expense 14,300 Wages Payable 14,300 c. ACCRUED REVENUE Accounts Receivable 2,000 Service Revenue 2,000 d. ACCRUED EXPENSE Interest Expense 600 Accrued Expense Payable 600 e. DEFERRED EXPENSE Insurance Expense 1,000 Prepaid Insurance 1,000 f. DEFERRED EXPENSE Depreciation Expense 1,500 Accumulated Depreciation 1,500 g. DEFERRED REVENUE Service Revenue 400 Unearned Service Revenue 400 h. ACCRUED EXPENSE Income Tax Expense 400 Income Tax Payable 400 P4-7 1a. Accounts Receivable 400 Service Revenue 400 Since the company performed the service & has a note saying it will be paid, the transaction is recorded. 1b. Insurance Expense 200 Prepaid Insurance 200 Since a year has gone by, the company used a portion of their insurance costing \$200 1c. Depreciation Expense 8,500 Accumulated Dep. 8,500 Since the depreciation accumulates at the end of each year, it gets recorded as an

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adjustment each December. 1d. Income Tax Expense 4,700 Income Taxes Payable 4,700 Since the income tax is incurred at the end of each period, the adjustment takes place in December. 2. The amount of income before the adjusting entries is \$4,300 compared to ( \$8,700) after the adjusting entries. The correct amount of income is (8,700) because this takes into account all of the revenues and expenses that occurred in the period that were not previously recorded. 3. Earnings per Share = Net Income / Outstanding Shares EPS = (8,700) / 3,000 = ( \$2,90) 4. Net Profit Margin = Net Income / Net Sales NPM = (8.700) / 46,400 = (18.8)% 5. Service Revenue (-R) 46,400 Retained Earnings (-SE) 8,700 Salary Expense (-E) 41,700 Depreciation Expense (-E) 8,500 Insurance Expense (-E) 200 Income Tax Expense (-E) 4,700 6.
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11 - P4-2 a DEFERRED REVENUE Unearned Revenue 4,800 Revenue...

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