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pg_0036 - b $8,000 c $12,000.1 $20,000 e $24,000 4 On...

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Unformatted text preview: b. $8,000 c. $12,000 .1 $20,000 e. $24,000 4. On November 1, 2009, Stockton Co. receives $3,600 cash from Hans Co. for consulting services to be provided evenly over the period November 1, 2009 to April 30, 2010—at which time Stockton credited $3,500 to Unearned Consulting Fees. The adjusting entry on December 31, 2009 (Stockton's year—end) would include a a. Debitto Unearned Consulting Fees for $1,200. I). Debitto Unearned Consulting Fees for $2,400. 0. Credit to Consulting Fees Earned for $2,400. d. Debitto Consulting Fees Earned for $1,200. c. Creditto Cash for $3,600. 5. If a company had $15,000 in net income for the year, and its sales were $300,000 for the same year, what is its profit margin? 3. 20% b. 2,DDD% c. $285,000 .1 $315,000 e. 5% Discussion Questions Emmy-fiat letter-A (B) denotes assignments based on Murder 3A (33). 1. What is the difference between the cash basis and the accrual basis of accounting? 2. 1 Why is the accrual basis of accounting generally preferred over the cash basis? 3. Whattype ofbusiness is most likely to select a fiscal year that corresponds to its natural business year instead ofthe calendar year? 4. What is a prepaid expense and where is it reported in the financial statements? 5. 1 What type of assets require adjusting entries to record depreciation? 6. 1 What contra account is used when recording and reporting the effects of depreciation? Why is it used? 7. What is unearned revenue and where is it reported in financial statements? 8. What is an accrued revenue? Give an example. 9. A If a company initially records prepaid expenses with debits to expense accounts, what type of account is debited in the adjusting entries for those prepaid expenses? 10. 1 Review the balance sheet of Best: Buy in Awdix A. Identify the asset accounts that require adjustment before annual financial statements can be prepared. What would be the effect on the income statement if these asset accounts were not adjusted? 11. x Review the balance sheet of Circuit City in Awdix A. Identify two accounts (either assets or liabilities) requiring adjusting entries. 0” 12. 1 Refer to Apple's balance sheet in Afldix A. If it made an adjustment for unpaid wages at year—end, where would the accrued wages be reported on its balance sheet? 6 13. What accounts are affected by closing entries? What accounts are not affected? ...
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