chapter_4_solution - Homework#4 Chapter 4 Homework Problems...

Homework #4
Chapter 4 Homework Problems
E4-6 Recording Seven Typical Adjusting Entries LO2
SportLand is completing the accounting process for the year just ended, December 31,
2007. The transactions during 2007 have been journalized and posted. The following
data with respect to adjusting entries are available in requirement 1:
Required:
1. Identify each of these transactions as a deferred revenue, deferred expense,
accrued revenue, or accrued expense.
2. Using the process illustrated in the chapter, for each situation record the
adjusting entry that should be recorded for Heald’s at December 31, 2007.
1.
a. Office supplies on hand at January 1, 2007, was $150. Office supplies
purchased and debited to Office Supplies during the year amounted to $450.
The year-end count showed $225 of supplies on hand.
Deferred
expense
b. Wages earned by employees during December 2007, unpaid and unrecorded at
December 31, 2007, amounted to $3,900. The last payroll was December 28;
the next payroll will be January 6, 2004.
Accrued
expense
c. Three-fourths of the basement of the store is rented for $1,000 per month to
another merchant, MerchMart. MerchMart sells compatible, but not
competitive, merchandise. On November 1, 2007, the store collected six
months' rent in the amount of $6,000 in advance from MerchMart; it was
credited in full to Unearned Rent Revenue when collected.
Deferred
revenue
d. The remaining basement space is rented to Frothing & Sandalwood for $300
per month, payable monthly. On December 31, 2007, the rent for November
and December 2007 had not been collected or recorded. Collection is expected
January 10, 2004.
Accrued
revenue
e. The store used delivery equipment that cost $26,000 and $5,200 was the
estimated depreciation for 2007.
Deferred
expense
f. On July 1, 2007, a two-year insurance premium amounting to $3,900 was paid
in cash and debited in full to Prepaid Insurance. Coverage began on July 1,
2007.