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Chapter 4 Homework Solutions

Chapter 4 Homework Solutions - Chapter 4 Homework Solutions...

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Chapter 4 Homework Solutions M4–4. (a ) 1. Deferred revenue 2. Unearned rent revenue ( - L) ........................... 200 Rent revenue (+R, +SE) ......................... 200 To record one month of rent revenue earned ($800 ÷ 4 months). (b ) 1. Deferred expense 2. Insurance expense (+E, - SE) ........................ 900 Prepaid insurance ( - A) ........................... 900 To record six months of insurance expense ($3,600 x 6/24). (c ) 1. Deferred expense 2. Depreciation expense (+E, - SE) .................... 3,000 Accumulated depreciation (+XA, - A) ...... 3,000 To record annual depreciation expense. M4–6. (a ) 1. Accrued expense 2. Utilities expense (+E, - SE) ............................ 320 Accrued utilities payable (+L) ................. 320 To record utilities expense incurred but not yet paid. (b ) 1. Accrued expense 2. Wages expense (+E, - SE) ............................. 4,500 Accrued wages payable (+L) .................. 4,500 To record wages expense incurred but not yet paid, calculated as 10 employees x 3 days x $150 each per day. (c ) 1. Accrued revenue
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2. Interest receivable (+A) ................................. 200 Interest revenue (+R, +SE) .................... 200 To record interest earned but not yet collected, calculated as $5,000 x 12% x 4/12.
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E4–6. Req. 1 and 2 a. Deferred expense -- cash paid before expense is incurred. Office supplies expense (+E, - SE) ................................ 850 Office supplies ( - A) .............................................. 850 Supplies used in 2007 ($350 + 800 - 300 = $850). b. Accrued expense -- expense incurred before cash is paid. Wages expense (+E, - SE) ............................................. 3,700 Wages payable (+L) ............................................ 3,700 Amount is given. c. Deferred revenue -- cash received before revenue is earned. Unearned rent revenue ( - L) ........................................... 3,000 Rent revenue (+R, +SE) ...................................... 3,000 Rent earned in 2007 ($9,000 x 2/6). d. Accrued revenue -- revenue earned before cash is collected. Rent receivable (+A) ...................................................... 1,640 Rent revenue (+R, +SE) ...................................... 1,640 ($820 x 2 months) e. Deferred expense -- cash paid for equipment before being used.
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