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Unformatted text preview: Earned). This ac c ount, reported rec ently at $4.5 billion, is among the larges t liabilities appearing in the c ompany 's balanc e s heet. As s ume that, in a rec ent flight, pas s engers of the airline us ed tic k ets that they had purc has ed in advanc e for $200,000. Rec ord the entry Americ an Airlines would mak e upon c ompletion of this flight. (Om it the "$" sign in your re sponse .) General Journal Air tra ffic lia bility Pa sse nge r re ve nue e a rne d Debit 200,000 Credit 200,000 W orksheet Learning Objective: 04-02 Des cribe and prepare the four bas ic types of adjus ting entries . Learning Objective: 04-01 Explain the purpos e of adjus ting entries . Learning Objective: 04-04 Prepare adjus ting entries to convert liabilities to revenue. W hen Americ an Airlines s ells tic k ets for future flights , it debits Cas h and c redits an ac c ount entitled Air Traffic Liability (as oppos ed to c rediting Pas s enger Revenue Earned). This ac c ount, reported rec ently at $4.5 billion, is among the larges t liabilities appearing in the c ompany 's balanc e s heet. As s ume that, in a rec ent flight, pas s engers of the airline us ed tic k ets that they had purc has ed in advanc e for $200,000. Rec ord the entry Americ an Airlines would mak e upon c ompletion of this flight. (Om it the "$" sign in your re sponse .) General Journal Debit 200,000 Air traffic liability Pas s enger revenue earned 7. Credit 200,000 aw ar d: 1 out of 1.00 point Sweeney & As s oc iates , a large mark eting firm, adjus ts its ac c ounts at the end of eac h month. The following information is available for the y ear ending Dec ember 31, 2011: 1. A bank loan had been obtained on Dec ember 1. Ac c rued interes t on the loan at Dec ember 31 amounts to $1,200. No interes t ex pens e has y et been rec orded. 2. Deprec iation of the firm's offic e building is bas ed on an es timated life of 25 y ears . The building was purc has ed in 2007 for $330,000. 3. Ac c rued, but unbilled, revenue during Dec ember amounts to $64,000. 4. On Marc h 1, the firm paid $1,800 to renew a 12-month ins uranc e polic y . The entire amount was rec orded as Prepaid Ins uranc e. 5. The firm rec eived $14,000 from the King Bis c uit Company in advanc e of developing a s ix -month mark eting c ampaign. The entire amount was initially rec orded as Unearned Revenue. At Dec ember 31, $3,500 had ac tually been earned by the firm. 6. The c ompany 's polic y is to pay its employ ees every Friday . Sinc e Dec ember 31 fell on a W ednes day , there was an ac c rued liability for s alaries amounting to $2,400. a . Rec ord the nec es s ary adjus ting journal entries on Dec ember 31, 2011. (Do not round your inte rm e dia te ca lcula tions. Round your a nsw e rs to the ne a re st w hole dolla r. Om it the "$" sign in your re sponse .) General Journal 1. 2. 3. 4. 5. 6. Debit 1,200 Inte re st e x pe nse Inte re st pa ya ble Credit 1,200 De pre cia tion e x pe nse : Office building Accum ula te d de pre cia tion: Office building Accounts re ce iva ble Ma rke ting re ve nue e a rne d 1,100 1,100 64,000 64,000 Insura nce e x pe nse Pre pa id insura nce 150 150 Une a rne d re ve nue Ma rke ting re ve nue e a rne d 3,500 Sa la rie s e x pe nse Sa la rie s pa ya ble 2,400 3,5...
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This note was uploaded on 01/23/2014 for the course ACC 111 taught by Professor Angela during the Fall '08 term at Delaware County CC.

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