Patron Week2 Lab1 - Problems Group B (15-20 min.) P 3-1B...

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Problems Group B (15-20 min.) P 3-1B Req. 1 Amount of Revenue (Expense) for January Date Revenue (Expense) Accrual-Basis Amount Jan. 1 Expense $ 0 4 Revenue 4,000 5 Expense 0 8 Expense (450) 11 Expense 0 19 Revenue 700 24 Revenue 0 26 Expense 0 29 Expense (900) 31 Expense $600 3 = (200) 31 Revenue 600 Req. 2 Net income……………………………………… $3,750 Req. 3 The accrual basis of accounting is preferable because it accounts for revenues and expenses when they occur, not necessarily when they are received or paid in cash.
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(10-15 min.) P 3-2B DATE: _______________ TO: New Bookkeeper FROM: Student Name, Controller SUBJECT: Why the adjusting entry for salary expense is needed. At the end of the period, we must make an adjusting entry for accrued salary expense to record all our salary expense of the period. Our salary expense includes both the amounts we pay employees plus the amounts they have earned but we have not yet paid. The unpaid salary expense is our liability to employees. If we fail to make this adjustment, we understate both expenses and liabilities. As a result, we would overstate net income and owners’ equity on our financial statements. Student responses may vary.
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(15-25 min.) P 3-3B Journal DATE ACCOUNT S AND EXPLANAT IONS POST. REF. DEBIT CREDIT a. Dec. 31 Salary Expense ($5,000 × 4/5) 4,000 Salary Payable 4,000 To accrue salary expense. b. 31 Insurance Expense ($3,000 × 8/12) 2,000 Prepaid Insurance 2,000 To record insurance expense. c. 31 Interest Receivable 170 Interest Revenue 170 To accrue interest revenue. d. 31 Supplies Expense 6,400 Supplies ($3,800 + $5,500 – $2,900) 6,400 To record supplies expense.
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Patron Week2 Lab1 - Problems Group B (15-20 min.) P 3-1B...

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