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ACG 2021 Lecture Notes - Lecture 4: Deferral, Deferred Income, Asset

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plumtrout443
30 Sep 2017
School
UCF
Department
Accounting General
Course
ACG 2021
Professor
Jeffrey Reinking

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Document Summary

1 calculate amount of depreciation expense for the period and debit to depreciation expense: calculation method, straight-line depreciation expense calculation: asset cost/useful life of asset. 2 credit accumulated depreciation in the same account. Accumulated depreciation account: cu(cid:373)ulati(cid:448)e su(cid:373) of all dep(cid:396)e(cid:272)iatio(cid:374) e(cid:454)pe(cid:374)se. I(cid:374)(cid:272)(cid:396)eases o(cid:448)e(cid:396) pla(cid:374)t asset(cid:859)s life: contra- asset account, always has a companion account, normal balance is opposite the companion account, book value cost of plant asset less accumulated depreciation. Adjusting entries- deferred revenue: received cash first from customer before revenue is earned. Record as a liability when original cash payment is received: once product/service is provided, revenue can be recorded and obligation to the customer is reduced, steps: 1 calculate amount of revenue to recognize and debit deferred revenue. 2 credit revenue in same amount to recognize revenue earned. Adjusting entries accrued revenues: steps, calculate the amount of revenue earned but not recorded, and debit receivable account, credit the revenue account in the same amount.

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Related Questions

Please include the answer for the depreciation expense and accumulated depreciation. i noticed other posts with this similar questions didnt have the answer to those

Required: #1. Prepare journal entries to record the December transactions in the General Journal Tab in the excel template file "Accounting Cycle Excel Template.xlsx". Use the following accounts as appropriate: Cash, Accounts Receivable, Supplies, Prepaid Insurance, Equipment, Accumulated Depreciation, Accounts Payable, Wages Payable, Common Stock, Retained Earnings, Dividends, Service Revenue, Depreciation Expense, Wages Expense, Supplies Expense, Rent Expense, and Insurance Expense.
1-Dec Began business by depositing $10500 in a bank account in the name of the company in exchange for
1050 shares of $10 per share common stock.
1-Dec Paid the rent for the current month, $1450 .
1-Dec Paid the premium on a one-year insurance policy, $1320 .
1-Dec Purchased Equipment for $4200 cash.
5-Dec Purchased office supplies from XYZ Company on account, $300 .
15-Dec Provided services to customers for $9200 cash.
16-Dec Provided service to customers ABC Inc. on account, $8200 .
21-Dec Received $3400 cash from ABC Inc., customer on account.
23-Dec Paid $170 to XYZ company for supplies purchased on account on December 5 .
28-Dec Paid wages for the period December 1 through December 28, $5040 .
30-Dec Declared and paid dividend to stockholders $200 .
#2. Post all of the December transactions from the “General Journal” tab to the T-accounts under the “T-Accounts” tab in the excel template file "Accounting Cycle Excel Template.xlsx". Assume there are no beginning balances in any of the accounts.
#3. Compute the balance for each T-account after all of the entries have been posted. These are the unadjusted balance as of December 31.
#4. Prepare the unadjusted trial balance under the “Unadjusted Trial Balance” tab in the excel template file "Accounting Cycle Excel Template.xlsx" .
Provide the total of the credit column from the Unadjusted Trial Balance
#5. Record the following four transactions as adjusting entries under the “General Journal” tab.
31-Dec One month’s insurance has been used by the company $110.
31-Dec The remaining inventory of unused office supplies is $90.
31-Dec The estimated depreciation on equipment is $70.
31-Dec Wages incurred from December 29 to December 31 but not yet paid or recorded total $540.
#6. Post all of the adjusting entries to the T-accounts under the “T-Accounts” tab. Compute the balance for each T-account after all of the adjusting entries have been posted. These are the adjusted balance as of December 31.
#7. Prepare the adjusted trial balance under the “Adjusted Trial Balance” tab as of December 31 in the excel template file "Accounting Cycle Excel Template.xlsx" .
Provide the following accounts balances from the Adjusted Trial Balance:
Cash
Accounts Receivable
Supplies
Prepaid Insurance
Equipment
Accumulated Depreciation
Accounts Payable
Wages Payable
Common Stock
Retained Earnings
#8. Prepare Income Statement, Statement of Stockholder’s Equity, and Classified Balance Sheet under the “Financial Statements” tab for the month ended December 31, 20XX in the excel template file "Accounting Cycle Excel Template.xlsx".
Provide the following amount from the Income Statement:
Service Revenue
Depreciation Expense
Wages Expense
Supplies Expense
Rent Expense
Insurance Expense
Net Income
Provide the following account balance from the Statement of Stockholders' Equity:
Dividends
Provide the following account balances from the Balance Sheet:
Current Assets
Long-Term Assets
Total Liabilities
Total Stockholder’s Equity
Cash
#9. Record the closing entries under the “General Journal” tab.
#10. Post all of the closing entries to the T-accounts under the “T-Accounts” tab. Compute the balance for each T-account after all of the closing entries have been posted.
Provide the ending balance of Cash at December 31 from the T-account
Provide the balance of the Retained Earnings T-account after closing entries have been posted.
Does the ending balance of the Retained Earnings T-account agree with the balance of Retained Earnings on the Balance Sheet?
Check Point: Total Assets $ 20,950.00

HELP WITH THESE QUESTIONS!

1.Which basic principle of accounting states that assets areinitially recorded at the amounts paid to acquire the assets?

Select one:

A. Objectivity principle

B. Cost principle

C. Measuring unit concept

D. Going concern concept

E. None of the above

2.Urbana Company signed a one-year lease on April 1, 2016, andpaid the $22,800 total year’s rent in advance. Urbana recorded thetransaction as a debit to Prepaid Rent and a credit toCash.

What adjusting entry should Urbana make on December 31, 2016 (noprevious adjustment has been made)?

Select one:

A.

Rent Expense

17,100
Prepaid Rent

17,100

B.

Prepaid Rent

17,100
Rent Expense

17,100

C.

Rent Expense

5,700
Prepaid Rent

5,700

D.

Prepaid Rent

5,700
Rent Expense

5,700

3.On January 1, 2016, Sirius Black Corporation's retainedearnings account had a balance of $1,570,000. During 2016 thecompany had revenues of $270,000 and expenses of $186,000. OnDecember 31, the company’s retained earnings had a balance of$1,601,000.

Determine the amount of dividends paid during 2016.

Select one:

A. $85,000

B. $53,000

C. $26,500

D. $61,500

4.Which one of the following is not a reason for whichadjusting entries are made?

Select one:

A. To accrue expenses to reflect expenses incurred in the periodthat are not yet paid or recorded

B. To allocate the earned portion of unearned revenue to reflectrevenues earned during the period

C. To close the income statement accounts and prepare them forthe following year's activity

D. To allocate used or expired assets to reflect expensesincurred in the period

5.A trial balance that balances is useful because it indicateswith certainty that:

Select one:

A. All entries into accounts during the period were madecorrectly.

B. All accounts have normal balances.

C. Total debits in the general ledger equal total credits.

D. All of the above

Please build the answer based on following text from studyingbook:

Expense Accounts. Expenses are costs incurredby an organization in the process of earning revenue during a givenperiod of time. Typical expense accounts related to payroll wouldinclude such items as wages, salaries, employer payroll expenses,and group insurance benefit expenses. Payroll expenses have adirect impact on the profitability of an organization.

In an expense account, debit entries increase the expensebalance and credit entries decrease the expense balance. Amounts inthe expense accounts are cleared to zero (or restarted at zero) atthe fiscal year-end. This is the same way the employees’ totals inthe payroll register are cleared to zero at the taxationyear-end.

Expense accounts include expenses incurred by an organization inthe process of earning revenue during a given time period. Thesalary expense account details the debits (for example, employeesalaries and wages) and credits (for example, accrual reversals,recalls and cancelled pays) posted on the journal entries for theperiod. Entries are posted to the General Ledger at theorganization or department total level, rather than with theindividual employee details.

Since expense accounts continue to build over time and are notcleared until the end of the fiscal period, the most commonreconciliation methods used for theseaccounts are:
- reasonableness
- year-over-year comparison

A reasonableness test requires anindividual to examine the General Ledger account in detail and toensure that all the postings are in balance and seem valid.

By examining the payroll register or other reports providingdetails of the total amount posted to an account, it should beanalyzed whether the amount shown in the account is correct.Recalled pays, cancelled cheques and manual cheques should berecorded as they occur so that accounts reflect the most currentdata.

Cost accounting plays a significant role in expense accountreconciliation as well. An organization that uses cost accountingwill charge expenses to a department, a project or a contract,according to their internal requirements. If an employee istransferred from one department or branch to another, and thepaperwork is not processed when the change is effective, theemployee’s salary, and any associated employer expenses, will beexpensed incorrectly. A journal entry will be required to move theexpenses to the correct accounts.

As expense accounts normally have a debit balance, to reduce theexpense you credit the account and to increase the expense youdebit the account.

A year-over-year comparison wouldcompare each expense account for a certain time frame to determineif there have been material changes.

Question :

List three expense accounts related to payroll.Describe when you would expect the account to be cleared to zero.Explain the methods you could use to reconcile theseaccounts.