Theadjus tingproc es s is c ov eredinchapter4 2 awar

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Unformatted text preview: .mhe c loud.mc gr a w- hill.c om/hm_a c c ounting.tpx? todo= pr intvie w 5/7 11/18/13 Assignme nt Pr int Vie w following information is av ailable 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, rev enue during Dec ember amounts to $64,000. 4. On Marc h 1, the firm paid $1,800 to renew a 12­month ins uranc e polic y . The entire amount was rec orded as Prepaid Ins uranc e. 5. The firm rec eiv ed $14,000 from the King Bis c uit Company in adv anc e of dev eloping a s ix ­month mark eting c ampaign. The entire amount was initially rec orded as Unearned Rev enue. 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 ev ery Friday . Sinc e Dec ember 31 fell on a Wednes day , there was an ac c rued liability for s alaries amounting to $2,400. a. Rec ord the nec es s ary adjus ting journal entries on Dec ember 31, 2011. (Do not round your interm ediate calculations. Round your answers to the nearest whole dollar. Om it the "$" sign in your response.) General J ournal 1. Interest expense Interest payable 2. Depreciation expense: Office building Accum ulated depreciation: Office building 3. Accounts receivable Unearned revenue 4. Insurance expense Prepaid insurance 5. Marketing revenue earned Accounts receivable 6. Salaries expense Salaries payable Debit Credit 0 330,000 1,200 0 0 150 64,000 1,800 14,000 3,600 0 2,400 b. By how muc h did Sweeney & As s oc iates ' net inc ome inc reas e or dec reas e as a res ult of the adjus ting entries performed in part a? (Ignore inc ome tax es .) (Om it the "$" sign in your response.) Net inc ome increase $ 278,350 rev: 10_04_2011 Worksheet Learning Objective: 04­03 Prepare adjusting entries to convert assets to expenses. Learning Objective: 04­06 Prepare adjusting entries to accrue uncollected revenue. Learning Objective: 04­01 Explain the purpose of adjusting entries. Learning Objective: 04­04 Prepare adjusting entries to convert liabilities to revenue. Learning Objective: 04­09 Prepare an adjusted trial balance and describe its purpose. Learning Objective: 04­02 Describe and prepare the four basic types of adjusting entries. Learning Objective: 04­05 Prepare adjusting entries to accrue unpaid expenses. 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 av ailable 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. Depre...
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This document was uploaded on 03/03/2014 for the course MGMT ACCOU 2300 at Rensselaer Polytechnic Institute.

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