Module 2- Chapter 3 : Exercise 3
1.Listed below are accounts to use for transactions (a) through (j), each identified by a number.Following this list are the transactions.You are to indicate for each transaction the accounts that should be debited and credited by placing the account number(s) in the appropriate box.
1.
Accounts Payable
2.
Accounts Receivable
3.
Accumulated Depreciation—Office Equipment
4.
Building
5.
Owner’s Capital
6.
Cash
7.
Depreciation Expense—Office Equipment
8.
Owner’s Drawing
9.
Fees Earned
10.
Insurance Expense
11.
Insurance Payable
12.
Interest Expense
13.
Interest Payable
14.
Interest Receivable
15.
Land
16.
Notes Payable
17.
Office Supplies
18.
Office Supplies Expense
19.
Prepaid Insurance
20.
Unearned Fees
21.
Utilities Expense
22.
Utilities Payable
​
Transactions
Account(s) Debited
Account(s) Credited
a. Utility bill is received; payment will be made in 10 days.
b. Paid the utility bill previously recorded in transaction (a).
c. Bought a three-year insurance policy and paid in full.
d. Made an entry to adjust for the expired portion of the insurance premium.
e. Received $7,000 from a contract to perform accounting services over the next two years.
f. Made an entry to adjust for half of the services performed in (e).
g. Purchased office supplies, paying part cash and charging the balance on account.
h. Borrowed money from a bank and signed a note payable due in six months.
i. Recorded one month’s accrued interest on the note payable.
j. Depreciation is recorded on office equipment.
2.Prepare adjusting entries for the following transactions:
(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 six 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 fifteenth of every month for work performed during the first half of the month and on the first 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 five-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.
3.REM Consulting is completing the accounting information processing at the end of the fiscal year, December 31.
The following trial balances are available.
Accounts
Unadjusted
Trial Balance
Adjusted
Debit
Credit
13,000
1,500
1,800
600
200
Supplies
3,800
3,000
Machines
30,000
Accumulated Depreciation
12,000
17,500
Wages Payable
900
6,700
6,500
24,000
4,800
25,000
25,500
Wages Expense
14,000
14,900
Depreciation Expense
5,500
Supplies Expense
800
400
67,700
74,400
(a) Reconstruct the adjusting entries and give a brief explanation of each.(b) What is the amount of net income?
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