MGAB01H3 Chapter Notes - Chapter 3-4: Gross Profit, Asset, Accrual

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6 Jan 2016

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MGAB01H3 Full Course Notes

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1 and 2: accrued revenue -- revenue earned before cash is collected. Amount is given: deferred expense -- cash paid before expense is incurred. Advertising used in fiscal year 2015 (,200 x 9/12). Accrued expense -- expense incurred before cash is paid. Interest incurred from october 1 to november 30, 2015 (,000 principal x 0. 04 x 2/12) c: deferred revenue -- cash received before revenue is earned. Storage revenue earned in fiscal year 2015 (,500 x 1/6: deferred expense -- cash paid for equipment before being used. Deferred expense -- cash paid before expense is incurred. Supplies used in 2014 (,500 + ,000 - ,400) f. 0: accrued expense -- expense incurred before cash is paid. 1 adjusting entries that were or should have been made at december (a) entry that should have been made: Amount is given. (b) entry that should have been made: 15,000 (c) entry that should have been made:

Related Questions

Use the following information to answer questions1-5.

The Aggie Graphics Company was organized on January 1, 2017.

The trial balance before adjustment at December 31, 2017contained the following account balances:

Cash	$9,500
Accounts Receivable	4,000
Prepaid Insurance	1,800
Equipment	45,000
Accumulated Depreciation		4,500
Accounts Payable		3,500
Notes Payable		18,000
Common Stock		5,000
Retained Earnings		12,000
Dividend	2,000
Graphic Fees Earned		52,100
Consulting Fees Earned		5,000
Salaries Expense	30,000
Supplies Expense	2,700
Advertising Expense	1,900
Rent Expense	1,500
Utilities Expense	1,700

	$100,100	$100,100

Analysis reveals the following additional data: (Assume thebooks are only closed at year end)

(A) The $2,700 balance in Supplies Expenserepresents supplies purchased in January. At December31, there was $1,200 of supplies on hand.

(B) The note payable was issued on September1. It is a 3% 6-month note.

(D) Consulting Fees are credited to revenuewhen received. At December 31, consulting fees of $1,000 contractedfor January, 2017 have yet to be performed.

(E) The equipment was purchased on January 1,2017. It has a 10-year useful life and no salvage value.

The entry to record (A) above would include a debit to:(Assume the company is only making one adjusting entry to recordthis information)

	A.	Supplies for $1,500
	B.	Supplies for $1,200

	C.	Supply Expense for $1,200
	D.	Prepaid Supply Expense for $2,700

1 points

QUESTION 2

What is the balance in the interest payable accountafter adjustment?


	A.	$ 45
	B.	$180
	C.	$90
	D.	$270

1 points

QUESTION 3

The correct entry to record (E) above is:

	A.	DepreciationExpense 4,500 AccumulatedDepreciation 4,500
	B.	DepreciationExpense 9,000 AccumulatedDepreciation 9,000
	C.	DepreciationExpense 9,000 Equipment 9,000
	D.	DepreciationExpense 9,000 AccumulatedDepreciation 4,500 Equipment 4,500

please Help! :(

PART A: Nittany Lions Corporation adjusts itsaccounts only at year-end. The following information is availableas a source for preparing adjusting entries at December 31,2015.

On November 1, 2015, the company borrowed $120,000 for one yearat 9% interest and recorded a full yearof accrued interest expense. Interest is payable at maturity.

On October 1, 2015, Nittany Lions collected seven monthâs rentin the amount of $10,500 in advance from the renter. At that date,the company debited Cash and credited Unearned Rent Revenue for$10,500.

The Supplies Inventory account had a $4,500 balance at thebeginning of the year (January 1, 2015). During the year, $6,000 ofsupplies were acquired, with the Supplies Expense account debitedat the time of purchase. The supplies count at the end of the year(December 31, 2015) showed $5,000 of supplies is still on hand.

The company owes 6-month property taxes of $1,500 on land ownedfor 2015. The taxes will be paid when they are billed in February2016. No related expense has been recorded.

Required:

For each of the above numbered items, prepare the necessaryadjusting journal entry. If no adjusting entry is required, explainwhy. Put the adjusting journal entries in the worksheet titledâPart A Answers to Part A.â

If Nittany Lions failed to prepare necessaryadjusting entries like you did in Requirement A, indicate theeffect that each item will have on the companyâs financialstatements for the year ended December 31, 2015. UseO for overstated, U forunderstated, and NE for no effect. Organize youranswer in tabular form, using the column headings shown below andprovided in the worksheet titled âPart A Answers to Part B.â

Example 0: At year end, employees earned $4,000in wages which will be paid on the next payroll date in January2016. The adjusting journal entry will be:

Rent Expense (+E, -NI, -R/E,-SE) 4,000

Salaries Payable(+L) 4,000

sapphiregoose550

Cardonâs Boat Yard, Inc., repairs, stores, and cleans boats forcustomers. It is completing the accounting process for the yearjust ended, November 30, 2012. The transactions during 2012 havebeen journalized and posted. The following data with respect toadjusting entries are available:
a) Cardonâs winterized (cleaned and covered) three boats forcustomers at the end of November, but did not record the servicefor $2,700.
b) On October 1, 2012, Cardonâs paid $1,200 to the local newspaperfor an advertisement to run every Thursday for 12 weeks. All adshave been run except for three Thursdays in December to completethe 12-week contract.
c) Cardonâs borrowed $250,000 at a 12 percent annual interest rateon April 1, 2012, to expand its boat storage facility. The loanrequires Cardonâs to pay the interest quarterly until the note isrepaid in three years. Cardonâs paid quarterly interest on July 1and October 1.
d) The Johnson family paid Cardonâs $4,500 on November 1, 2012, tostore its sailboat for the winter until May 1, 2013. Cardonâscredited the full amount to Unearned Storage Revenue on November1.
e) Cardonâs used boat-lifting equipment that coast $220,000;$22,000 was the estimated depreciation for 2012.
f) Boat repair supplies on hand at December 1, 2011, totaled$16,500. Repair supplies purchased and debited to Supplies duringthe year amounted to $46,000. The year-end count showed $12,400 ofthe supplies on hand.
g) Wages earned by employees during November 2012, unpaid andunrecorded at November 30, 2012, amounted to $3,800. The nextpayroll date will be December 5, 2012.
Required:
1. Identify each of these transactions as a deferred revenue,deferred expense, accrued revenue, or accrued expense.
2. Prepare the adjusting entries that should be recorded forCardonâs at November 30, 2012.

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MGAB01H3 Chapter Notes - Chapter 3-4: Gross Profit, Asset, Accrual

MGAB01H3 Full Course Notes

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