Chatper 4 Homework Solutions

Chatper 4 Homework Solutions - Chatper 4 Homework Solutions...

Info iconThis preview shows pages 1–5. Sign up to view the full content.

View Full Document Right Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: Chatper 4 Homework Solutions LO 5 EXERCISE 4-3 ACCRUALS AND DEFERRALS 1. AL 5. DE 2. DR 6. DR 3. AA 7. AL 4. DE 8. AA LO 5 EXERCISE 4-4 OFFICE SUPPLIES May 31 Office Supplies Expense 1,630 Office Supplies on Hand 1,630 To record office supplies used: $1,450 + $1,100 $920. Assets = Liabilities + Owners Equity 1,630 1,630 Net income for the month of May would be overstated by $1,630 if this adjusting entry were not recognized, because expenses would be understated. LO 5 EXERCISE 4-6 DEPRECIATION 1. July 1 Equipment 100,000 Cash 100,000 To record purchase of combine. Assets = Liabilities + Owners Equity +100,000 100,000 2. Purchase price $ 100,000 Less estimated salvage value (16,000 ) Depreciable cost $ 84,000 3. Monthly depreciation = depreciable cost/estimated life = $84,000/84 months = $1,000/month. 4. July 31 Depreciation Expense 1,000 Accumulated Depreciation 1,000 To record one months depreciation expense. Assets = Liabilities + Owners Equity 1,000 1,000 5. Equipment $100,000 Less: Accumulated depreciation (6 months $1,000/month) (6,000 ) Carrying value $ 94,000 LO 5 EXERCISE 4-7 PREPAID INSURANCEANNUAL ADJUSTMENTS 1. Monthly cost: $72,000/24 months = $3,000 . 2. April 1 Prepaid Insurance 72,000 Cash 72,000 To record purchase of 24-month policy. Assets = Liabilities + Owners Equity +72,000 72,000 3. Dec. 31 Insurance Expense 27,000 Prepaid Insurance 27,000 To record expiration of nine months of insurance. Assets = Liabilities + Owners Equity 27,000 27,000 4. Net income will be overstated by $27,000 if the accountant forgets to record an entry to recognize an expense. LO 5 EXERCISE 4-8 SUBSCRIPTIONS 1. August Cash 27,000 Subscriptions Received in Advance 27,000 To record collection of 900 subscriptions of $30 each. Assets = Liabilities + Owners Equity +27,000 +27,000 2. Aug. 31 Subscriptions Received in Advance 7,500 Subscription Revenue 7,500 To record subscriptions earned during August: $40,500 + $27,000 $60,000. Assets = Liabilities + Owners Equity 7,500 +7,500 3. Net income for the month would be understated by $7,500 if the accountant forgot to make the entry to recognize revenue earned. LO 5 EXERCISE 4-10 WAGES PAYABLE [GRADED] 1. Weekly payroll: $10 per hour 7 hours per day 5 days 50 employees = $17,500 2. Oct. 27 Wages Expense 17,500 Cash 17,500 To record payment of weekly payroll. Assets = Liabilities + Owners Equity 17,500 17,500 3. Oct. 31 Wages Expense 7,000 Wages Payable 7,000 To record accrual for two days wages: $17,500/5 days 2 days. Assets = Liabilities + Owners Equity +7,000 7,000 4. Nov. 3 Wages Expense 10,500 Wages Payable 7,000 Cash 17,500 To record payment of weekly payroll....
View Full Document

Page1 / 13

Chatper 4 Homework Solutions - Chatper 4 Homework Solutions...

This preview shows document pages 1 - 5. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online