PS_02_Solution_(APSCW_F2009)

PS_02_Solution_(APSCW_F2009) - FINANCIALACCOUNTING...

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BUSI W3013 Solution to Problem Set 02 | Page 1 F INANCIAL A CCOUNTING BUSI W3013 | F ALL 2009 S OLUTION TO P ROBLEM S ET 02 P ROFESSOR A NDREW S CHMIDT I. Adjusting Entry Analysis Selected T-account balances for YYZ Company are shown below as of January 31, 2010; accounting adjustments have already been posted but temporary accounts have not been closed. The firm uses a calendar-year accounting period but prepares monthly accounting adjustments. Supplies Supplies Expense 01/31 800 01/31 960 Prepaid Insurance Insurance Expense 01/31 574 01/31 82 Wages Payable Wages Expense 01/31 500 01/31 3,200 Truck Accumulated Depreciation-Truck 01/31 8,700 01/31 2,610 1. If the amount in Supplies Expense represents the January 31 adjustment for the supplies used in January, and $620 worth of supplies were purchased during January, what was the January 1 beginning balance of Supplies? 2. The amount in the Insurance Expense account represents the adjustment made at January 31 for January insurance expense. If the original insurance premium was for one year (12 months), what was the original amount of the premium and on what date did the insurance policy start? 3. If we assume that no beginning balance existed in either Wages Payable or Wages Expense on January 1, how much cash was paid as wages during January? 4. If the truck has no salvage value and a useful life of five years (60 months), what is the monthly amount of depreciation expense and how many months has YYZ owned the truck?
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