Ch0.3_questions - BUSI1002R_ Introduction to...

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BUSI1002R_ Introduction to accounting_Ch.3_solutions P.1 Chapter 3 Adjusting accounts and preparing financial statements (Discussion: QS 3-10, Ex 3-8, Assignment: P3-2A. P3-4A) Quick Study 3-10 Preparing adjusting entries In making adjusting entries at the end of its accounting period, Chao Consulting failed to record $1,600 of insurance coverage that had expired. This $1,600 cost had been initially debited to the Prepaid Insurance account. The company also failed to record accrued salaries expense of $1,000. As a result of these two oversights, the financial statements for the reporting period will [choose one] (1) understate assets by $1,600; (2) understate expenses by $2,600; (3) understate net income by $1,000; or (4) overstate liabilities by $1,000. Exercise 3-8 Analyzing and preparing adjusting entries Following are two income statement for Vix Co. for the year ended December 31. The left column is prepared before any adjusting entries are recorded, and the right column includes the effects of adjusting entries. The company records cash receipts and payments related to unearned and prepaid items in balance sheet accounts. Analyze the statements and prepare the ten adjusting entries that likely were recorded. (Note: 30% of the $6,600 adjustment for Fees Earned has been earned but not billed, and the other 70% had been earned by performing services that were paid for in advance.) VIX CO.
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This note was uploaded on 04/20/2010 for the course BUSI BUSI1002 taught by Professor Drjasmine during the Spring '10 term at HKU.

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Ch0.3_questions - BUSI1002R_ Introduction to...

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