accounting these effects are recognized and reported in the time periods to

Accounting these effects are recognized and reported

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accounting, these effects are recognized and reported in the time periods to which they relate, regardless ofthe time of the receipt or payment of cash. Because no attempt is made under the cash basis of accountingto match revenues and the expenses associated with those revenues, cash basis financial statements are notin accordance with generally accepted accounting principles.*Ex. 3-68—Accrual basis.Sales salaries paid during 2001 were $50,000. Advances to salesmen were $1,100 on January 1, 2001, and$800 on December 31, 2001. Sales salaries accrued were $1,360 on January 1, 2001, and $1,380 onDecember 31, 2001. Show the computation of sales salaries on an accrual basis for 2001.*Solution 3-68$50,000 + $1,100 – $800 – $1,360 + $1,380 = $50,320.*Ex. 3-69—Accrual basis.The records for Todd Inc. showed the following for 2001:Jan. 1 Dec. 31Accrued expenses$1,800$3,150Prepaid expenses720870Cash paid during the year for expenses, $35,500Show the computation of the amount of expense that should be reported on the incomestatement.*Solution 3-69$35,500 – $1,800 + $3,150 + $720 – $870 = $36,700.*Ex. 3-70—Accrual basis.The records for Kiley Company showed the following for 2001:Jan. 1 Dec. 31Unearned revenue$2,600$2,160Accrued revenue1,260920Cash collected during the year for revenue, $80,000Show the computation of the amount of revenue that should be reported on the income statement.*Solution 3-70$80,000 + $2,600 – $2,160 – $1,260 + $920 = $80,100.*Ex. 3-71—Cash basis.
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Revenue on the income statement was $125,800. Accounts receivable were $4,500 on January 1 and$3,540 on December 31. Unearned revenue was $1,050 on January 1 and $1,670 on December 31.Show the computation of revenue for the year on a cash basis.*Solution 3-71$125,800 + $4,500 – $3,540 – $1,050 + $1,670 = $127,380.PROBLEMSPr. 3-72—Adjusting entries and account classification.Selected amounts from Trent Company's trial balance of 12/31/01 appear below:1.Accounts Payable$160,0002.Accounts Receivable150,0003.Accumulated Depreciation—Equipment200,0004.Allowance for Doubtful Accounts20,0005.Bonds Payable500,0006.Cash150,0007.Common Stock60,0008.Equipment720,0009.Insurance Expense30,00010.Interest Expense10,00011.Merchandise Inventory300,00012.Notes Payable (due 6/1/02)200,00013.Prepaid Rent140,00014.Retained Earnings130,000 15.Salaries and Wages Expense328,000(All of the above accounts have their standard or normal debit or credit balance.)Part A.Prepare adjusting journal entries at the year end, December 31, 2001, based on the followingsupplemental information. 2002.
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