Connect - another Financial Accounting, Chapter 3

1.

1. Wages of $12,000 are earned by workers but not paid as of December 31, 2017.
2. Depreciation on the company's equipment for 2017 is $11,680.
3. The Office Supplies account had a $350 debit balance on December 31, 2016. During 2017, $4,676 of office supplies are purchased. A physical count of supplies at December 31, 2017, shows $518 of supplies available.
4. The Prepaid Insurance account had a $5,000 balance on December 31, 2016. An analysis of insurance policies shows that $2,200 of unexpired insurance benefits remain at December 31, 2017.
5. The company has earned (but not recorded) $850 of interest from investments in CDs for the year ended December 31, 2017. The interest revenue will be received on January 10, 2018.
6. The company has a bank loan and has incurred (but not recorded) interest expense of $4,500 for the year ended December 31, 2017. The company must pay the interest on January 2, 2018.

For each of the above separate cases, prepare adjusting entries required of financial statements for the year ended (date of) December 31, 2017. 

No	Transaction	General Journal	Debit	Credit
1	a.	Wages expenseselected answer correct	12,000selected answer correct	not attempted
		Wages payableselected answer correct	not attempted	12,000selected answer correct
2	b.	Depreciation expense—Equipmentselected answer correct	11,680selected answer correct	not attempted
		Accumulated depreciation—Equipmentselected answer correct	not attempted	11,680selected answer correct
3	c.	Supplies expenseselected answer correct	4,508selected answer correct	not attempted
		Suppliesselected answer correct	not attempted	4,508selected answer correct
4	d.	Insurance expenseselected answer correct	2,800selected answer correct	not attempted
		Prepaid insuranceselected answer correct	not attempted	2,800selected answer correct
5	e.	Interest receivableselected answer correct	850selected answer correct	not attempted
		Interest revenueselected answer correct	not attempted	850selected answer correct
6	f.	Interest expenseselected answer correct	4,500selected answer correct	not attempted
		Interest payableselected answer correct	not attempted	4,500selected answer correct

c=350+4676-518
d=5000-2200

----------------------------------------------------------------------------------- 2. Following are two income statements for Alexis Co. for the year ended December 31. The left number column is prepared before any adjusting entries are recorded, and the right column includes the effects of adjusting entries. The company records cash receipts and payments related to unearned and prepaid items in balance sheet accounts. The middle column shows a blank space for each income statement effect of the eight adjusting entries a through g (the balance sheet part of the entries is not shown here). ALEXIS CO. Income Statements For Year Ended December 31   Unadjusted   Adjustments   Adjusted Revenues                     Fees earned $ 24,000       a.     $ 30,000 Commissions earned   42,500               42,500 Total revenues $ 66,500               72,500 Expenses                     Depreciation expense—Computers   0       b.       1,500 Depreciation expense—Office furniture   0       c.       1,750 Salaries expense   12,500       d.       14,950 Insurance expense   0       e.       1,300 Rent expense   4,500               4,500 Office supplies expense   0       f.       480 Advertising expense   3,000               3,000 Utilities expense   1,250       g.       1,320 Total expenses   21,250               28,800 Net income $ 45,250             $ 43,700 Analyze the statements and prepare the eight adjusting entries a through g that likely were recorded. Note: Answer for a has two entries 30% of (i) the $6,000 adjustment for Fees Earned has been earned but not billed, and (ii) the other 70% has been earned by performing services that were paid for in advance.    No Transaction General Journal Debit Credit 1 a1. Accounts receivableselected answer correct 1,800selected answer correct not attempted Fees earnedselected answer correct not attempted 1,800selected answer correct 2 a2. Unearned feesselected answer correct 4,200selected answer correct not attempted Fees earnedselected answer correct not attempted 4,200selected answer correct 3 b. Depreciation expense—Computersselected answer correct 1,500selected answer correct not attempted Accumulated depreciation—Computersselected answer correct not attempted 1,500selected answer correct 4 c. Depreciation expense—Office furnitureselected answer correct 1,750selected answer correct not attempted Accumulated depreciation—Office furnitureselected answer correct not attempted 1,750selected answer correct 5 d. Salaries expenseselected answer correct 2,450selected answer correct not attempted Salaries payableselected answer correct not attempted 2,450selected answer correct 6 e. Insurance expenseselected answer correct 1,300selected answer correct not attempted Prepaid insuranceselected answer correct not attempted 1,300selected answer correct 7 f. Office supplies expenseselected answer correct 480selected answer correct not attempted Office suppliesselected answer correct not attempted 480selected answer correct 8 g. Utilities expenseselected answer correct 70selected answer correct not attempted Utilities payableselected answer correct not attempted 70selected answer correct a1=6000*30% a2=6000*70% ----------------------------------------------------------------------------------- 3. The following is the adjusted trial balance of Wilson Trucking Company. Account Title Debit   Credit Cash $ 9,200         Accounts receivable   16,500         Office supplies   2,000         Trucks   197,000         Accumulated depreciation—Trucks       $ 40,582   Land   75,000         Accounts payable         13,200   Interest payable         3,000   Long-term notes payable         52,000   Common stock         17,000   Retained earnings         169,301   Dividends   19,000         Trucking fees earned         126,500   Depreciation expense—Trucks   26,175         Salaries expense   59,329         Office supplies expense   6,500         Repairs expense—Trucks   10,879         Totals $ 421,583   $ 421,583   The Retained Earnings account balance is $169,301 at December 31, 2016. (1) Prepare the income statement for the year ended December 31, 2017. (2) Prepare the statement of retained earnings for the year ended December 31, 2017. ----------------------------------------------------------------------------------- 4. Following are Nintendo's revenue and expense accounts for a recent March 31 fiscal year-end (yen in millions). (Enter answers in millions.)         Net sales ¥ 1,948,622   Cost of sales   1,184,981   Advertising expense   118,608   Other expense, net   397,944   Prepare the company's closing entries for its revenues and its expenses. No Date General Journal Debit Credit 1 March 31 Net salesselected answer correct 1,948,622selected answer correct not attempted Income summaryselected answer correct not attempted 1,948,622selected answer correct 2 March 31 Income summaryselected answer correct 1,701,533selected answer correct not attempted Cost of salesselected answer correct not attempted 1,184,981selected answer correct Advertising expenseselected answer correct not attempted 118,608selected answer correct Other expense, netselected answer correct not attempted 397,944selected answer correct ----------------------------------------------------------------------------------- 5. Account Title Debit   Credit Cash $ 7,400         Accounts receivable   15,500         Office supplies   6,160         Trucks   173,000         Accumulated depreciation—Trucks       $ 35,638   Land   46,000         Accounts payable         11,400   Interest payable         18,000   Long-term notes payable         47,000   Common stock         16,000   Retained earnings         99,169   Dividends   12,000         Trucking fees earned         123,000   Depreciation expense—Trucks   22,987         Salaries expense   52,528         Office supplies expense   5,000         Repairs expense—Trucks   9,632         Totals $ 350,207   $ 350,207   Use the above adjusted trial balance to prepare Wilson Trucking Company's classified balance sheet as of December 31, 2017. Retained earnings is computed as:           Beginning balance $ 99,169     Plus: Net income ($123,000 – $22,987 – $52,528 – $5,000 – $9,632)   32,853     Less: Dividends   (12,000 )   Ending balance $ 120,022