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Department
Accounting
Course
ACCTG414
Professor
Jocelyn King
Semester
Fall

Description
A7 1. CaseA Rent revenue.................................................5,250................ Rent collected in advance............................................ 5,250 $12,600 x 5/12 = $5,250 unearned at end of current year. Case B Rent collected in advance....................................7,350......... Rent revenue..........................................................7,350. $12,600 x 7/12 = $7,350 earned during current year. 2. CaseA Maintenance supplies expense.................................9,600.... Maintenance supplies inventory.................................. 9,600 $4,200 + $9,000 – $3,600 = $9,600 used. Case B Maintenance supplies expense...................................600.... Maintenance supplies inventory.................................. 600 $3,600 – $4,200 = $600 decrease in inventory. 3. CaseA Insurance expense.............................................................. 24,600 Prepaid insurance....................................................24,600 $50,400 x 9/24 = $18,900 for new two-year policy _5,700 for 3 months on old policy $24,600 expense Case B Prepaid insurance.............................................................. 25,800 Insurance expense....................................................25,800 $50,400 x 15/24 = $31,500; $31,500 - $5,700 A9 a) See end b) Interest expense.......................................................3,000............. Interest payable...................................................................3,000 $200,000 x 6% x 3/12 = $3,000. c) Prepaid property tax ($19,200 x 8/12)..................................... 12,800 Property tax expense............................................................ 12,800 d) Bad debt expense.......................................................5,000.......... Allowance for doubtful accounts......................................... 5,000 $8,000 - $3,000 e) Cost of good sold (or pilferage expense)...............................8,000 Merchandise inventory......................................................... 8,000 f) Sales.......................................................................................... 30,000 Accounts receivable............................................................. 30,000 g) Depreciation expense................................................................ 16,400 Accumulated depreciation.................................................... 16,400 h) Accounting fees expense................................................7,600...... Dividends..........................................................................7,600 i) Unearned revenue..................................................................... 50,000 Revenue..........................................................................50,000 j) Insurance expense ($2,240 x 12/14).....................................1,920 Prepaid insurance................................................................. 1,920 Prepaid insurance ($4,770 x 11/18).....................................2,915 Insurance expense................................................................. 2,915 The two entries may be combined Income tax: Income tax expense................................................................... 60,949 Income tax payable...............................................................60,949 Revised earnings: $250,000 -$3,000 + $12,800 -$5,000 - $8,000 -$30,000 - $16,400 - $7,600 +$50,000 - $1,920 + $2,915 = $243,795; $243,795 x .25 = $60,949 A-12 Requirement 1 a. Interest expense ($50,000
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