Class Notes (835,730)
Accounting (108)
ACCTG414 (10)
Lecture

Appendix In Class Questions_solutions.docx

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School
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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