POA11e03 - CHAPTER 3Solutions MEASURING BUSINESS INCOME...

Info iconThis preview shows pages 1–5. Sign up to view the full content.

View Full Document Right Arrow Icon
Ch3 SE1 to SE5 CHAPTER 3—Solutions MEASURING BUSINESS INCOME Chapter 3, SE 1. 1. c 2. b 3. d 4. a Chapter 3, SE 2. Dec. 31 Insurance Expense 1,600 Prepaid Insurance 1,600 To record insurance expired during the year $920 + $2,080 $1,400 = $1,600 Chapter 3, SE 3. Dec. 31 Supplies Expense 1,840 Supplies 1,840 To record supplies used during the year $760 + $1,960 $880 = $1,840 Chapter 3, SE 4. Mar. 31 Depreciation Expense, Office Equipment 100 100 To record depreciation for the month Balance Sheet Presentation: Office equipment $1,900 Less accumulated depreciation 300 $1,600 Chapter 3, SE 5. June 30 Wages Expense 230 Wages Payable 230 To record wages accrued at the end of June ( $1,380 ÷ 6 1 = $230 Accumulated Depreciation Office Equipment ) x
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Ch3 SE6 to SE7 Chapter 3, SE 6. Aug. 31 Unearned Service Revenue 1,520 Service Revenue 1,520 To record service revenue earned during August on which advance deposits had been received Chapter 3, SE 7. Shimura Company Income Statement For the Month Ended December 31, 2010 Revenue Service revenue $1,300 Expenses Rent expense $200 Wages expense 450 Utilities expense 100 Telephone expense 25 Total expenses 775 Net income $ 525 Shimura Company Statement of Owner's Equity For the Month Ended December 31, 2010 J. Shimura, Capital, November 30, 2010 $4,300 Net income 525 Subtotal $4,825 Less J. Shimura, Withdrawals 175 J. Shimura, Capital, December 31, 2010 $4,650
Background image of page 2
Ch3 SE8 Chapter 3, SE 8. Unearned Revenue at December 31 $ 450 Service Revenue earned during December 2,550 Potential receipts from services provided during December $3,000 Less Unearned Revenue at November 30 650 Cash received during December for services provided $2,350
Background image of page 3

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Ch3 E1 to E3 Chapter 3, E 1. 1. When a company has net income, its owner's equity increases, but there is also an increase in assets and/or a decrease in liabilities. 2. Accrual accounting is more closely related to profitability because the pur- pose of accrual accounting is to measure net income. Cash accounting is more closely related to the goal of liquidity. 3. The carrying value will equal the market value of the asset only by coinci- dence because the goal of recording depreciation is to allocate the cost of the asset over its life, not to determine its market value. Chapter 3, E 2. 1. You would expect to find the amount expended in cash on the debit side of the Supplies T account. The amount expended in cash to purchase supplies represents an asset increase and is recorded by a debit to Supplies. The amount expensed during the period represents an asset decrease and is recorded by a credit to Supplies. 2. Net income is not a good measure of a company’s liquidity. Net income is calculated based on accrual accounting principles and is therefore more closely related to the profitability goal. Chapter 3, E 3.
Background image of page 4
Image of page 5
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 11/02/2011 for the course ACCT 210 taught by Professor Mcgonigal during the Spring '11 term at E. Washington.

Page1 / 42

POA11e03 - CHAPTER 3Solutions MEASURING BUSINESS INCOME...

This preview shows document pages 1 - 5. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online