Chapter_4_-_Class_Discussion_Solutions_Libby_4th_edition

Chapter_4_-_Class_Discussion_Solutions_Libby_4th_edition -...

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E4–3 Req. 1 (a) Deferred rent revenue ( - L). .................................................................. 500 Rent revenue (+R +SE). ......................................................... 500 To record one month of rent revenue earned ($1,500 ÷ 3 months). (b) Insurance expense (+E - SE). ............................................................ 900 Prepaid insurance ( - A). .............................................................. 900 To record six months of insurance expense ($1,800 x 6/12). (c) Depreciation expense (+E - SE). ........................................................ 1,600 Accumulated depreciation (+XA - A). ..................................... 1,600 To record annual depreciation expense [($10,000 – $2,000) ÷ 5 years]. Req. 2 Statement of Financial Position Income Statement Transaction Assets Liabilities Shareholders’ Equity Revenues Expenses Net Profit a. NE -500 +500 +500 NE +500 b. –900 NE –900 NE +900 –900 c. –1,600 NE –1,600 NE +1,600 –1,600 E4–7 Req. 1 and 2 a. Deferred expense -- cash paid before expense is incurred. Office supplies expense (+E - SE). .................................................................... 1,050 Office supplies inventory ( - A). .................................................................. 1,050 Supplies used in 2011 ($350 + 900 - 200 = $1,050). b. Accrued expense expense incurred before cash is paid. Wages expense (+E - SE). ................................................................................. 2,700 Wages payable (+L). .................................................................................. 2,700 Amount is given. c. Deferred revenue cash received before revenue is earned. Deferred rent revenue ( - L). .................................................................................. 2,400 Rent revenue (+R +SE). .......................................................................... 2,400 Rent earned in 2011 ($7,200 x 2/6) d. Accrued revenue revenue earned before cash is collected. Rent receivable (+A). ........................................................................................... 1,000 Rent revenue (+R +SE). .......................................................................... 1,000 ($500 x 2 months) e. Deferred expense cash paid for equipment before being used. Depreciation expense (+E - SE). ........................................................................ 6,500 Accumulated depreciation, delivery equipment (+XA - A) 6,500 ($30,000 - 4,000) ÷ 4 yrs) f. Deferred expense cash paid before expense is incurred. Insurance expense (+E - SE). ............................................................................. 900
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Chapter_4_-_Class_Discussion_Solutions_Libby_4th_edition -...

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