ch 4 - CHAPTER 4 Accrual Accounting Concepts SOLUTIONS TO...

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Unformatted text preview: CHAPTER 4 Accrual Accounting Concepts SOLUTIONS TO BRIEF EXERCISES BRIEF EXERCISE 4-2 (a) Prepaid Insuranceto recognize insurance expired during the period. (b) Depreciation Expenseto account for the allocation of the cost of an asset to expense during its useful life. (c) Unearned Service Revenueto account for unearned revenue that has been earned during the period. (d) Interest Payableto recognize interest accrued but unpaid on notes payable. BRIEF EXERCISE 4-4 Dec. 31 Advertising Supplies Expense......................... 7,100 Advertising Supplies................................. 7,100 Advertising Supplies Advertising Supplies Expense 8,800 12/31 7,100 12/31 7,100 12/31 Bal. 1,700 BRIEF EXERCISE 4-5 Dec. 31 Depreciation ExpenseEquipment................ 2,700 Accumulated Depreciation Equipment.............................................. 2,700 Depreciation Expense Equipment Accumulated Depreciation Equipment 12/31 2,700 12/31 2,700 Balance Sheet: Equipment.............................................................. $22,000 Less: Accumulated Depreciation....................... 2,700 $19,300 4-1 BRIEF EXERCISE 4-7 July 1 Cash.................................................................... 14,800 Unearned Insurance Revenue.................. 14,800 Dec. 31 Unearned Insurance Revenue.......................... 3,700 Insurance Revenue ($14,800 X 6/24)....... 3,700 Unearned Insurance Revenue Insurance Revenue 12/31 3,700 7/1 14,800 12/31 3,700 12/31 Bal.11,100 BRIEF EXERCISE 4-8 (a) Dec. 31 Interest Expense........................................ 400 Interest Payable................................. 400 (b) 31 Accounts Receivable................................ 1,400 Service Revenue................................ 1,400 (c) 31 Salaries Expense....................................... 780 Salaries Payable................................ 780 BRIEF EXERCISE 4-12 Account (a) (b) (c) (d) (e) (f) (g) Accumulated Depreciation Depreciation Expense Retained Earnings Dividends Service Revenue Supplies Accounts Payable Balance Sheet Income Statement Retained Earnings Statement and Balance Sheet Retained Earnings Statement Income Statement Balance Sheet Balance Sheet 4-2 SOLUTIONS TO EXERCISES EXERCISE 4-2 (a) 8. Going concern assumption.Going concern assumption....
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ch 4 - CHAPTER 4 Accrual Accounting Concepts SOLUTIONS TO...

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