ACCTG 211 Lecture : Ch. 3.docx
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Question 16
Corresponds to CLO 3(d) Hemmingway Corporation paid salaries of$5,000 and advertising expense of $2,000. Which of the followingjournal entries correctly records these expenses?
Debit: Cash $7,000 | ||
Debit: Salaries/Wages Expense$5,000 | ||
Debit: Salaries/Wages Expense$5,000 | ||
Debit: Salaries/Wages Expense$5,000 |
3 points
Question 17
Corresponds to CLO 4(a) Which of the following statements iscorrect regarding accrued revenues and unearned revenues, beforeadjusting entries have been made?
Accrued revenues have not been earned and unearned revenues havebeen earned. | ||
Accrued revenues have been paid and unearned revenues havenot. | ||
Accrued revenues have not been recorded and unearned revenueshave been recorded. | ||
Accrued revenues have been recorded and unearned revenues havebeen recorded. |
3 points
Question 18
Corresponds to CLO 4(b) Hudson Law Corporation received $5,500cash for legal services to be rendered in the future. The fullamount was credited to the liability account Unearned ServiceRevenue. At the end of the period, Hudson determines that $3,000 ofthe legal services have been rendered. The appropriate adjustingjournal entry to be made at the end of the period is:
debit Unearned Service Revenue, $3,000; credit Cash, $3,000. | ||
debit Unearned Service Revenue, $3,000; credit Service Revenue,$3,000. | ||
debit Unearned Service Revenue, $2,500; credit Service Revenue,$2,500. | ||
debit Service Revenue, $2,500; credit Unearned Service Revenue,$2,500. |
3 points
Question 19
Corresponds to CLO 4(c) Ace Corporation purchased officesupplies costing $13,000 and debited Office Supplies for the fullamount. At the end of the accounting period, a physical count ofoffice supplies revealed $2,700 still on hand. The appropriateadjusting journal entry to be made at the end of the period is:
debit Office Supplies Expense, $10,300; credit Office Supplies,$10,300. | ||
debit Office Supplies, $10,300; credit Office Supplies Expense,$10,300. | ||
debit Office Supplies Expense, $2,700; credit Office Supplies,$2,700. | ||
debit Office Supplies, $2,700; credit Office Supplies Expense,$2,700. |
3 points
Question 20
Corresponds to CLO 4(d) On September 1, Northgate paid $18,000to Evans Management Company for 12 months of rent beginning onSeptember 1. The appropriate journal entry was made to record thistransaction. If financial statements are prepared for the 9 monthsended September 30, the adjusting entry to be made by Northgateis:
debit Rent Expense, $13,500; credit Prepaid Rent, $13,500. | ||
debit Prepaid Rent, $1,500; credit Rent Revenue, $1,500. | ||
debit Prepaid Rent, $1,500; credit Rent Expense, $1,500. | ||
debit Rent Expense, $1,500; credit Prepaid Rent, $1,500. |
3 points
Question 21
Corresponds to CLO 5(a) Lennox Corporation purchased a newdelivery truck for 35,000. The sales taxes are $2,700. The logo ispainted on the side of the truck for $800. The truck's annuallicense is $200. Annual insurance on the truck is $1,300. Whatshould Lennox record as the cost of the new truck?
$40,000 | ||
$38,500 | ||
$37,700 | ||
$35,000 |
3 points
Question 22
Corresponds to CLO 5(b) On April 1, 2013, Ballard Corporationpurchased equipment for $65,000. It is estimated that the equipmentwill have a $5,000 salvage value at the end of its 5 year usefullife. If Ballard uses the straight-line method of depreciation,what is the accumulated depreciation at December 31, 2013?
$13,000 | ||
$12,000 | ||
$9,750 | ||
$9,000 |
3 points
Question 23
Corresponds to CLO 5(c) Tyree Company purchased equipment with acost of $90,000 and an estimated salvage value of $18,000. Theequipment is expected to produce 150,000 units over its estimateduseful life of 10 years. If Tyree uses the units-of-activitymethod, what is the depreciation cost per unit to be used incalculating depreciation?
$1.67 | ||
$0.48 | ||
$2.08 | ||
$0.60 |
3 points
Question 24
Corresponds to CLO 5(d) Kerns Company purchased equipment with acost of $200,000 and an estimated salvage value of $10,000. Theequipment has an estimated useful life of 10 years. If Kerns usesthe double-declining balance method, what is the annualdepreciation rate to be used in calculating depreciation?
5% | ||
10% | ||
20% | ||
40% |
3 points
Question 25
Corresponds to CLO 6(a) Marshall Machinery made a sale for$150,000 on March 31. The customer is sent a statement on April 6and payment is received on April 15. Marshall prepares March'smonthly internal financial statements on April 20. Marshall followsGAAP and applies the revenue recognition principle. When is the$150,000 considered to be earned?
March 31 | ||
April 6 | ||
April 15 | ||
April 20 |
I have done all the adjusting entries and was wondering ifsomeone could take a look at them. I would really appreciate it ifyou could give me some feedback if any are wrong and how to fixthem. Two that I am real unsure about are "b." and "q." but againif you could look at them all I would be very grateful. ThankYou
DeeDee DoubleEntry, Incorporated | ||||||
End of Period Worksheet | ||||||
For the Year Ended December31, 2017 | ||||||
Unadjusted | Adjusted | |||||
Account Title | Trial Balance | Adjustments | Trial Balance | |||
DR | CR | DR | CR | DR | CR | |
Cash | 240,300 | - | 27,000 | 213,300 | ||
Restricted Cash | 27,000 | 27,000 | ||||
Accounts Receivable | 925,000 | - | 925,000 | |||
Allowance for Doubtful Accounts | - | 49,000 | 67,000 | 18,000 | ||
Interest Receivable | - | 688 | 688 | |||
Merchandise Inventory | 187,500 | - | 3,700 | 191,200 | ||
Prepaid Insurance | 9,000 | - | 5,211 | 3,789 | ||
Prepaid Advertising | - | - | 12,000 | 12,000 | ||
Prepaid Rent | - | - | 7,500 | 7,500 | ||
Office Supplies | 7,800 | - | 2,941 | 4,859 | ||
Note Receivable | 75,000 | - | 75,000 | |||
Available for Sale Securities | 380,000 | - | 380,000 | |||
Office Building | 4,250,000 | - | 4,250,000 | |||
Accumulated Depreciation - OfficeBuilding | - | 221,500 | 38,750 | 260,250 | ||
Storage Building | 1,650,000 | - | 1,650,000 | |||
Accumulated Depreciation - StorageBuilding | - | - | 46,667 | 46,667 | ||
Land | 450,000 | - | 450,000 | |||
Leasehold Improvements | 190,000 | - | 5,459 | 195,459 | ||
Accumulated Depreciation - LeaseholdImprovements | - | - | 728 | 728 | ||
Office Equipment | 125,000 | - | 125,000 | |||
Accumulated Depreciation - OfficeEquipment | - | 42,000 | 16,600 | 58,600 | ||
Patent | 250,000 | - | 250,000 | |||
Accumulated Amortization | 31,250 | 31,250 | ||||
Accounts Payable | - | 145,000 | 145,000 | |||
Sales Tax Payable | - | - | 19,821 | 19,821 | ||
Salaries Payable | - | - | 39,249 | 39,249 | ||
Payroll Taxes Payable | - | - | 3,251 | 3,251 | ||
Interest Payable | - | - | 127,750 | 127,750 | ||
Income Tax Payable | - | - | 245,756 | 245,756 | ||
Unearned Rent Revenue | - | 96,000 | 25,263 | 70,737 | ||
Loan Payable - Onstar Bank | - | 500,000 | 500,000 | |||
Loan Payable - Coldstar Bank | - | 2,250,000 | 2,250,000 | |||
Common Stock | - | 425,000 | 425,000 | |||
Additional Paid in Capital | - | 2,800,000 | 2,800,000 | |||
Retained Earnings | - | 1,379,420 | 1,379,420 | |||
Accumulated Other ComprehensiveIncome | - | 8,500 | 8,500 | |||
Dividends | 280,000 | - | 280,000 | |||
Sales | - | 4,380,250 | 19,821 | 4,360,429 | ||
Sales Returns and Allowances | 19,500 | - | 19,500 | |||
Sales Discounts | 14,600 | - | 14,600 | |||
Cost of Goods Sold | 1,817,900 | - | 3,700 | 1,814,200 | ||
Amortization Expense | 31,250 | 31,250 | ||||
Sales Salaries Expense | 676,400 | - | 25,500 | 701,900 | ||
Office Salaries Expense | 434,000 | - | 17,000 | 451,000 | ||
Advertising Expense | 54,000 | - | 12,000 | 42,000 | ||
Depreciation Expense - OfficeBuilding | - | - | 38,750 | 38,750 | ||
Depreciation Expense - StorageBuilding | 46,667 | 46,667 | ||||
Depreciation Expense - LeaseholdImprovements | - | - | 728 | 728 | ||
Depreciation Expense - OfficeEquipment | - | - | 16,600 | 16,600 | ||
Leasing Expense - Stores | 132,000 | - | 132,000 | |||
Miscellaneous Selling Expense | 16,950 | - | 5,459 | 11,491 | ||
Rent Expense - Storage Facility | 18,000 | - | 7,500 | 10,500 | ||
Insurance Expense | 2,000 | - | 5,211 | 7,211 | ||
Office Supplies Expense | 28,500 | - | 2,941 | 31,441 | ||
Warranty Expense | 5,000 | 5,709 | 10,709 | |||
Miscellaneous Administrative Expense | 9,220 | - | 9,220 | |||
Rent Revenue | - | - | 25,263 | 25,263 | ||
Interest Revenue on Note Receivable | - | - | 688 | 688 | ||
Dividend Revenue on AFS Securities | - | 18,000 | 18,000 | |||
Warranty Liability | 5,709 | 5,709 | ||||
Income Tax Expense | 245,756 | 245,756 | ||||
Interest Expense | 127,750 | 127,750 | ||||
Bad Debt Expense | 67,000 | - | 67,000 | |||
12,314,670 | 12,314,670 | 732,292 | 732,292 | 12,822,067 | 12,822,067 |
DeeDee DoubleEntry, Incorporated | |||
Adjusting Journal Entries | |||
For the Year Ended December31, 2017 | |||
Item | Account Title | Dr. | Cr. |
a. | Restricted Cash | 27,000 | |
Cash | 27,000 | ||
b. | Allowance for Doubtful Accounts | 67,000 | |
Bad Debt Expense | 67,000 | ||
c. | Office Supplies Expense | 2941 | |
Office Supplies | 2941 | ||
d. | Prepaid Rent | 7500 | |
Rent Expense - Storage Facility | 7500 | ||
e. | Interest Receivable | 688 | |
Interest Revenue on Note Receivable | 688 | ||
f. | Insurance Expense | 5211 | |
Prepaid Insurance | 5211 | ||
g. | Depreciation Expense - Office Building | 38750 | |
Accumulated Depreciation - Office Building | 38750 | ||
h. | Office Salaries Expense | 17000 | |
Sales Salaries Expense | 25500 | ||
Salaries Payable | 39249 | ||
Payroll Taxes Payable | 3251 | ||
i. | Prepaid Advertising | 12000 | |
Advertising Expense | 12000 | ||
j. | Unearned Rent Revenue | 25263 | |
Rent Revenue | 25263 | ||
k. | Accumulated Other Comprehensive Income | 89000 | |
Available for Sale Securities | 89000 | ||
l. | Depreciation Expense - Office Equipment | 16600 | |
Accumulated Depreciation - Office Equipment | 16600 | ||
m. | Sales | 19821 | |
Sales Tax Payable | 19821 | ||
n. | Amortization Expense | 31250 | |
Accumulated Amortization | 31250 | ||
o. | Depreciation Expense - Storage Building | 46667 | |
Accumulated Depreciation - Storage Building | 46667 | ||
p. | Leasehold Improvements | 5459 | |
Miscellaneous Selling Expense | 5459 | ||
Depreciation Expense - Leasehold Improvements | 728 | ||
Accumulated Depreciation - Leasehold Improvements | 728 | ||
q. | Interest Expense | 17500 | |
Interest Payable | 17500 | ||
Interest Expense | 110250 | ||
Interest Payable | 110250 | ||
r. | Warranty Expense | 5709 | |
Warranty Liability | 5709 | ||
s. | Merchandise Inventory | 3700 | |
Cost of Goods Sold | 3700 | ||
t. | Income Tax Expense | 245,756.00 | |
Income Tax Payable | 245,756.00 |
DeeDee does banking at three different financial institutions.The details are as DeeDee Double Entry
Bank | Account # | Balance |
Coterica | 123456 | 175,000 |
Coterica | 123457 | (10,000) |
4th BAnk | 345689 | 82,000 |
Bank Two | 397567 | (6,700) |
a. You also note the Board of Directors has restricted $27,000of cash for future expansion. This $27,000 is part of the cashbalance. The future expansion will not occur for several moreyears.
b. Based on your inquiries, you note that $67,000 of accountsreceivable had been written off during the year. The clerk haddebited bad debt expense for $67,000 and credited AccountsReceivable for $67,000. When $15,000 of accounts previously writtenoff had been collected, the accountant debited cash and creditedsales. The company uses the allowance method based on the aging ofaccounts receivable. Based on this method, DeeDee determines thatuncollectible accounts are $89,000 at the end of 2017. (Replace theX with the last digit of your student number).
c. Per a physical count of office supplies, $4,859 (enter thelast two digits of your student number) of supplies remained at theend of 2017. The balance on the worksheet in the office suppliesaccount represents last years ending balance. During the year,$28,500 of office supplies were purchased and immediatelyexpensed.
d. Because of strong demand and a need for additional inventory,DeeDee needed some temporary additional storage space so on June 1,2017 they rented a unit for an annual rate of $18,000 and they paidthe entire amount up front.
e. On November 1st, 2017, (Enter your birthday month) DeeDeeloaned a key supplier, $75,000. A promissory note was signed andissued. The agreed upon interest rate was 5.5% and the key supplierhas agreed to pay interest and $15,000 of the principle eachJanuary 1st. The note was recorded in Notes Receivableand is the only note outstanding.
f. On February 1, 2017, DeeDee renewed a 19 month insurancepolicy for $9,000. All cash was paid at the time the policy wassigned and prepaid insurance was increased. (Replace the X with thelast digit of your student number.) All other transactionsinvolving insurance were properly recorded.
g. The office building was bought in January 1, 2015 by DeeDeeand DeeDee originally planned to use the building for 40 years andestimated no salvage value. DeeDee depreciates the building on a straightline basis. Now in 2017, DeeDee estimates the total life to remain at 40 years,but believes the salvage will be $900,000. (Replace theX with the last digit of your student number.)
h. DeeDee is open seven days a week and has a daily payroll of$8500. Employees are paid every Friday, December 31 is a Wednesday.40% of the payroll is for office employees, 60% of payroll is forsales employees. The employer portion of FICA expense is 7.65% andno employee has reached the maximum. DeeDee records payroll taxexpenses in salary expense.
i. On December 1, 2017 DeeDee paid ABC Advertising $16,000 for afour month campaign of advertising services. Equal services areprovided each month. All other advertising paid forduring the year has been consumed.
j. On August 1, 2017, DeeDee rented a portion of one store toMarketing Majors Inc. The contract was for 19 (enter the last digitof your student number) months and DeeDee required all of the cashup front. The rent is being earned equally each month. This is theonly item in which rent is being earned by the company.
k. As of 12/31/2017 the Available for Sale Securities have afair value of $291,000 (enter the last digit of your student numberin place of the X). Due to the market conditions, the company doesnot plan on selling the assets in 2017, but their intent is to sellat some point in time. You can ignore the tax effect onunrealized gains and losses. (Hint: Unrealized Gains andLosses are closed to Accumulated Other Comprehensive Income at theend of the year.)
l. DeeDee uses the DDB method to depreciate office equipment. Nooffice equipment was added during 2017. It is estimated that theoffice equipment has a useful life of 10 years with a salvage valueof $2,000. Prior depreciation was correctly calculated based onperiod of time held.
m. After reviewing details of sales, you note that the salestaxes collected on the last week of Decemberâs sales were includedin sales revenue. Sales recorded the last week of December thatincluded the sales tax of 12% (enter your birthday month plus 1)amounted to $185,000.
n. On November 1, 2017 (enter your birthday month), DeeDeerecorded a patent in the amount of $250,000. The company paidoutside legal fees of $120,000 to have the patent registered. Theother $130,000 represents internal costs in developing the patent.The patent is good for 20 years, but the company estimates that thepatent will have a useful life of 8 years with no residual value.No one knows what to do with this information so no amortizationhas been recorded for 2017. Amortization is straight line and thecompany depreciates using partial years for intangible assets.
o. The storage building was self-constructed this year byDeeDee. The Company had their initial expenditure of $700,000 onJanuary 1. They paid an additional $500,000 on March 1st, $300,000 on June 1st, and then the final payment of$150,000 on August 1st. when the building was completedand occupancy occurred. Payments to contractor were properlycapitalized. The company has decided to use S/L method fordepreciation. The storage building is estimated to have a life of30 years and a savage value of $250,000. The companywill take a full year of depreciation in year of acquisition.
p. You note that Leasehold Improvements have not beendepreciated for this year. DeeDee started to lease some new retailspace in 2017 and added shelving and fixtures to this leased space.Based on your review of invoices, the previous accountantcapitalized the cost of fixtures but did not capitalize theshipping and installation costs of $5,459 ((enter the last threedigits of your student number in place of the XXX). . These costswere expensed and recorded as a miscellaneous administrativeexpense. DeeDee has decided to use double declining balance (DDB)depreciation for this item and to take a full year of depreciationin the year of acquisition. The leasehold improvements have auseful life of 15 years with a salvage value of$10,000.
q. DeeDee Double Entry has two loans outstanding as of12/31/2017. Interest is paid annually on January 1st. The facts on each loan are asfollows: Onstar Bank Loan â outstanding since January 1, 2017 with a 3.5%interest rate. This loan was taken out to finance the constructionof the Storage Building. Interest for the year and 15% of theprinciple will be paid to the bank on January 1, 2018. Except forrecording the initial cash received and loan, no additional entries have beenmade. Coldstar Bank Loan â also outstanding all of 2017 with a 4.9% interest rate (enter the last digit of your student number).Interest is due on January 1, 2018. Principle is due on January 1,2023. Since interest will not be paid to the Bank until 2018,DeeDeeâs office staff did not accrue any interest.
r. DeeDee added a one-year warranty to one of its computer gamesthis year. It is estimated that the total cost of servicing thewarranties on the 2017 sales will be $10,459 (enter the last threedigits of your student number). During 2017, $4,750 wasrefunded to customers for warranty issues on 2017 sales andrecorded as warranty expense.
s. DeeDee uses the FIFO Inventory Method in valuing inventory.The inventory balance of $187,500 was based on a physical count at12/31/2017. Based on your analysis, you have noted that $12,500 ofmarketing games that belonged to Marketing Majors Inc. was includedin the account. You also note that goods were in transit from avendor on December 31, 2017. The cost of the inventory was $16,200and the goods were shipped f.o.b. shipping point on December 29,2017.
t. DeeDee has a straight tax rate of 28%. Income tax expense isNet Income before taxes times 28%. (Hint: Prepare the IncomeStatement up to Net Income before Taxes and then record thisadjusting journal entry.
C(a) | The beginning balance of the supplies account was $245. During the month the company bought additional supplies in the amount of $735. At the end of the month a physical inventory showed $343 of unused supplies. |
(b) | The company has a 12% note payable in the amount of $17,000 due in 6 months. The interest expense of $170 for the month has not been recorded. |
(c) | The company has two employees. The manager is paid on the 15th of every month for work performed during the first half of the month and on the 1st of the following month for the work performed during the second half of the month. His monthly salary is $5,500. The other employee is paid $650 for each 5-day work week (Monday - Friday). The last day of the month fell on Thursday. |
(d) | The unearned fees account shows a balance of $46,000. According to the manager 60% of that amount has been earned. |
(e) | At the end of the month $5,700 of services had been performed but not yet billed. |
Required: | |
Prepare adjusting entries for the above transactions. Refer to the Chart of Accounts for exact wording of account titles.* The journal should have 10 rows. |
Chart of accounts.
CHART OF ACCOUNTS.
General Ledger
ASSETS | |
11 | Cash |
12 | Accounts Receivable |
13 | Supplies |
14 | Prepaid Rent |
16 | Office Equipment |
17 | Accumulated Depreciation |
LIABILITIES | |
21 | Accounts Payable |
22 | Notes Payable |
23 | Unearned Fees |
24 | Wages and Salary Payable |
25 | Interest Payable |
EQUITY | |
31 | Common Stock |
32 | Retained Earnings |
33 | Dividends |
REVENUE | |
41 | Fees Earned |
EXPENSES | |
51 | Advertising Expense |
52 | Insurance Expense |
53 | Interest Expense |
54 | Wages and Salary Expense |
55 | Supplies Expense |
56 | Utilities Expense |
57 | Depreciation Expense |
58 | Rent Expense |
59 | Miscellaneous Expense |