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Chapter 4 hw - M4-1 Puglisi Company Trial Balance At...

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M4-1 Puglisi Company Trial Balance At June 30, 2010 Dollars Unadjusted Trial Balance Debit Credit Cash $150 Accounts receivable 370 Inventories 660 Prepaid expenses 30 Buildings and Equipment 1400 Land 300 Accumulated Depreciation 250 Accounts Payable 200 Accrued Expenses Payable 160 Income Taxes Payable 50 Unearned Fees 90 Long-Term Debt 1360 Contributed Capital 400 Retained Earning 150 Sales Revenue 2,500 Interest Income 60 Cost of Sales 880 Salaries Expenses 640 Rent Expenses 460 Depreciation expenses 150 Interest Expenses 70 Income Taxes Expenses 110 Total $5,220 $5,220 M4-2 1. A 2. B 3. A 4. C 5. D 6. B
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7. B 8. C M4-3 1. D 2. C 3. B 4. A M4-4 a. Step 1: Unearned Revenue – Unearned Rent Revenue Step 2: Amount: Amount given at $1,000. Liability overstated by $250, and Rent Fee Revenue understated $250 Step 3: AJE Unearned Rent Fee (-L) $250 Rent Fee Revenue (+R, +SE) $250 Debit equals Credit Assets = Liabilities + Stockholders’ Equity Unearned Rent Fee -250 Rent Fee Revenue +250 b. Step 1: Prepaid Expenses – Prepaid Insurance Step 2: Amount: Amount 6 months has expired for two year insurance payment Insurance - $3,800 x 6/24 = $950 for six months. Prepaid Insurance overstated by $950 but will remain overstated, and Insurance Expenses understated but will remain understated. Step 3: AJE Insurance Expenses (+E, -SE) $950 Prepaid Insurance (-A) $950 Debit equals Credit Assets = Liabilities + Stockholders’ Equity Prepaid Insurance -950 Insurance Expenses +950 c. Step 1: Prepaid Expenses – Property and Equipment Step 2: Amount: Annual depreciation at $3,000 for a $32,000 machine Step 3: AJE Depreciation Expense (+E, -SE) $3,000 Accumulated Depreciation (+XA, - A) $3,000 Debit equals Credit.
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Assets = Liabilities + Stockholders’ Equity Accumulated Depreciation -3,000 Depreciation Expense -3,000 E4-3 1. Annual reporting period ends at December 31. 2. (a) Step 1: Accrued account at December 31, 2010: Accrued Expenses- Wage payable for January 6, 2011. Step 2: Amount: $6,000 Wages entry has not been included in the books. Step 3: AJE Salaries Expenses (+E, -SE) $6,000 Accrued Expenses Payable (+L) $6,000 Debit equals Credit. Liabilities and income statement understated. Through labor, revenue may have been generated so expenses for salaries have been generated.
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