Ameriship - entries, thus it is done before preparing the...

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Ameriship December 31, 2011 Assets = Liabilit y + Stockho lders’ Equity Cash = Unearn. Rev. + Com. Stk. + Ret. Earn. Rev - Exp. = N e t . I n c . Cash Flows (36,000) (36,000) - (36,000) = ( 3 6 , 0 0 0 ) (36,000) OA (2-4A) West Coast Rentals
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December 31, 2011 Assets = Liabilit y + Stockho lders’ Equity Cash = Unearn. Rev. + Com. Stk. + Ret. Earn. Rev - Exp. = N e t . I n c . Cash Flows 36,000 36,000 36,000 - = 3 6 , 0 0 0 36,000 OA
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(2-5A) A) Identify the events that would require a year-end adjusting entry. Events: 1. Recognized revenue on account 2. Issued common stock 3. Paid cash to purchase supplies 4. Collected a cash advance for services that will be provided during the coming year 5. Paid a cash dividend to the stockholders 6. Paid cash for an insurance policy that provides coverage during the next year 7. Collected cash from accounts receivable 8. Paid cash for operating expenses 9. Paid cash to settle an account payable 10. Paid cash to purchase land B) Explain why adjusting entries are made at the end of the accounting period. Adjusting entries are made at the end of the accounting period because it is too complicated to be constantly adjusting
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Unformatted text preview: entries, thus it is done before preparing the financial statements at the end of the accounting period. (2-7A) Steve Chang received $500 in advance for tutoring fees when he agreed to help Jon Seng with his introductory accounting course. Upon receiving the cash, Steve mentioned that he would have to record the transaction as a liability on his books. Seng asked, “Why a liability? You don’t owe me any money, do you? Respond to Seng’s question regarding Chang’s liability. Liability does not mean I owe you money necessarily; it is viewed “as future obligations of the enterprise. To settle the obligations, the business will probably either relinquish some of its assets, provide services to its creditors, or accept other obligations” (McNair 12). In your case Seng, I am providing a service to you because I was paid in advanced so it is a liability....
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This document was uploaded on 10/19/2011.

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Ameriship - entries, thus it is done before preparing the...

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