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

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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.
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