Intermediate Accounting
9th Edition
ISBN: 9781259722660
Author: J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher: McGraw-Hill Education
expand_more
expand_more
format_list_bulleted
Concept explainers
Videos
Textbook Question
Chapter 2, Problem 2.8E
• LO2–5
Prepare the necessary adjusting entries at December 31, 2018, for the Falwell Company for each of the following situations. Assume that no financial statements were prepared during the year and no adjusting entries were recorded.
1. A three-year fire insurance policy was purchased on July 1, 2018, for $12,000. The company debited insurance expense for the entire amount.
2.
3. Employee salaries of $18,000 for the month of December will be paid in early January 2019.
4. On November 1, 2018, the company borrowed $200,000 from a bank. The note requires principal and interest at 12% to be paid on April 30, 2019.
5. On December 1, 2018, the company received $3,000 in cash from another company that is renting office space in Falwell’s building. The payment, representing rent for December and January, was credited to deferred rent revenue.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Serial Problem Business Solutions LO P1, A1
Selected ledger account balances for Business Solutions follow.
For Three MonthsEnded December 31, 2019
For Three MonthsEnded March 31, 2020
Office equipment
$
8,100
$
8,100
Accumulated depreciation—Office equipment
405
810
Computer equipment
20,000
20,000
Accumulated depreciation—Computer equipment
1,250
2,500
Total revenue
31,334
44,900
Total assets
83,360
121,668
Required:1. Assume that Business Solutions does not acquire additional office equipment or computer equipment in 2020. Compute amounts for the year ended December 31, 2020, for Depreciation expense—Office equipment and for Depreciation expense—Computer equipment (assume use of the straight-line method).2. Given the assumptions in part 1, what is the book value of both the office equipment and the computer equipment as of December 31, 2020?3. Compute the three-month total asset turnover for Business…
PB 15. LO 4.4Prepare an adjusted trial balance from the following account information, considering the adjustment data provided (assume accounts have normal balances). Building and Equipment were recently purchased, so there is neither depreciation expense nor accumulated depreciation. Accounts Payable 3,600; Accounts Receivable 45,333; Building 156,000; Cash 50,480; Common Stock 110,000; Dividends 18,000; Equipment 33,500; Fees Earned Revenue 225,430; Land 18,000; Supplies Expense 5,123; Notes Payable 85,500; Retained Earnings 60,606; Salaries Expense 151,900; Supplies 6,800. Adjustments needed: Physical count of supplies inventory remaining at end of period, $3,300 Customer fees collected in advance (payments were recorded as Fees Earned), $18,500
Question 4
a)For each of the following material after reporting period events of Andrew Ltd state whether adjustment or disclosure is required in the 30 June 2022 financial statements. Give your reason(s). If adjustment is required, state the nature of the adjustment.
i)28 July 2022: One of the company’s four offices was damaged by a flood. Insurance will not cover the cost of repairs, estimated at $400,000
ii)30 July 2022: a debtor owing $ 150 000 was declared insolvent. The debtor had not made any payments in the last four months and half of the debt had already been treated as doubtful debt at year end
b)
Segments
Revenue(all external)
Profit/(Loss)
Assets
Liabilities
Mining
100000
(57000)
61000
39000
Food
13000
(7000)
31000
19000
Hotels
12000
2000
14000
7000
Travel
17000
3000
41000
20000
142000
(59000)
147000
85000
Use the materiality criterion in AASB 8 Operating Segments to determine which of…
Chapter 2 Solutions
Intermediate Accounting
Ch. 2 - Explain the difference between external events and...Ch. 2 - Each economic event or transaction will have a...Ch. 2 - What is the purpose of a journal? What is the...Ch. 2 - Explain the difference between permanent accounts...Ch. 2 - Describe how debits and credits affect assets,...Ch. 2 - Describe how debits and credits affect temporary...Ch. 2 - What is the first step in the accounting...Ch. 2 - Prob. 2.8QCh. 2 - Prob. 2.9QCh. 2 - Prob. 2.10Q
Ch. 2 - What is an unadjusted trial balance? An adjusted...Ch. 2 - Define adjusting entries and discuss their...Ch. 2 - Define closing entries and their purpose.Ch. 2 - Define prepaid expenses and provide at least two...Ch. 2 - Deferred revenues represent liabilities recorded...Ch. 2 - Define accrued liabilities. What adjusting journal...Ch. 2 - Prob. 2.17QCh. 2 - [Based on Appendix A] What is the purpose of a...Ch. 2 - [Based on Appendix B] Define reversing entries and...Ch. 2 - [Based on Appendix C] What is the purpose of...Ch. 2 - Prob. 2.21QCh. 2 - Transaction analysis LO21 The Marchetti Soup...Ch. 2 - Journal entries LO22 Prepare journal entries for...Ch. 2 - Prob. 2.3BECh. 2 - Journal entries LO22 Prepare journal entries for...Ch. 2 - Adjusting entries LO25 Prepare the necessary...Ch. 2 - Adjusting entries; income determination LO24,...Ch. 2 - Adjusting entries LO25 Prepare the necessary...Ch. 2 - Income determination LO24 If none of the...Ch. 2 - Adjusting entries LO25 Prepare the necessary...Ch. 2 - Financial statements LO26 The following account...Ch. 2 - Financial statements LO26 The following account...Ch. 2 - Closing entries LO27 The year-end adjusted trial...Ch. 2 - Prob. 2.13BECh. 2 - Transaction analysis LO21 The following...Ch. 2 - Journal entries LO22 Prepare journal entries to...Ch. 2 - T-accounts and trial balance LO23 Post the...Ch. 2 - Journal entries LO22 The following transactions...Ch. 2 - Prob. 2.5ECh. 2 - Debits and credits LO22 Indicate whether a debit...Ch. 2 - Transaction analysis; debits and credits LO22...Ch. 2 - Adjusting entries LO25 Prepare the necessary...Ch. 2 - Adjusting entries LO25 Prepare the necessary...Ch. 2 - Adjusting entries; solving for unknowns LO24,...Ch. 2 - Adjusting entries LO25 The Mazzanti Wholesale...Ch. 2 - Financial statements and closing entries LO26,...Ch. 2 - Closing entries LO27 American Chip Corporations...Ch. 2 - Prob. 2.14ECh. 2 - Cash versus accrual accounting; adjusting entries ...Ch. 2 - External transactions and adjusting entries LO22,...Ch. 2 - Accrual accounting income determination LO24,...Ch. 2 - Cash versus accrual accounting LO28 Stanley and...Ch. 2 - Prob. 2.19ECh. 2 - Worksheet Appendix 2A The December 31, 2018,...Ch. 2 - Reversing entries Appendix 2B The employees of...Ch. 2 - Reversing entries Appendix 2B Refer to E 29 and...Ch. 2 - Reversing entries Appendix 2B Refer to E 29 and...Ch. 2 - Special journals Appendix 2C The White Companys...Ch. 2 - Prob. 2.25ECh. 2 - Accounting cycle through unadjusted trial balance ...Ch. 2 - Accounting cycle through unadjusted trial balance ...Ch. 2 - Adjusting entries LO25 Pastina Company sells...Ch. 2 - Accounting cycle; adjusting entries through...Ch. 2 - Adjusting entries LO25 Howarth Companys fiscal...Ch. 2 - Accounting cycle LO22 through LO27 The general...Ch. 2 - Adjusting entries and income effects LO22, LO25...Ch. 2 - Adjusting entries LO25 Excalibur Corporation...Ch. 2 - Accounting cycle; unadjusted trial balance through...Ch. 2 - Prob. 2.10PCh. 2 - Prob. 2.11PCh. 2 - Cash versus accrual accounting LO28 Zambrano...Ch. 2 - Worksheet Appendix 2A Using the information from...Ch. 2 - Judgment Case 21 Cash versus accrual accounting;...Ch. 2 - Prob. 2.2BYPCh. 2 - Communication Case 23 Adjusting entries LO24 I...Ch. 2 - Continuing Cases Target Case LO24, LO28 Target...
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- Q.1.3 During the previous financial year, a competitor began litigation against Isomin Ltd regarding a dispute over a design. On 10 April 2021, a judge decided that Isomin Ltd should pay the competitor R45 000 without leave to appeal. Isomin Ltd had treated this matter as a contingent liability in the 31 March 2020 financials. For each of the events described above, discuss whether an adjusting or non‐adjusting event occurred. In order to get the mark allocated you will need to justify why you believe the event is either an adjusting or non‐adjusting event.Where the events are adjusting, describe the adjustment that must be made as well as the amount and where the events are non‐adjusting, discuss whether any disclosure needs to be made in the notes to the financial statements. Justify your answers.arrow_forwardQ:4 The geological consulting firm of Gilbert, Marsh, & Kester prepares adjusting entries on a monthly basis. Among the items requiring adjustment on December 31, 2011, are the following: The company has outstanding a $50,000, 9 percent, two-year note payable issued on July 1, 2010. Payment of the $50,000 note, plus all accrued interest for the two-year loan period, is due in full on June 30, 2012. The firm is providing consulting services to Texas Oil Company at an agreed-upon rate of $1,000 per day. At December 31, 10 days of unbilled consulting services have been provided. Required: Prepare the two adjusting entries required on December 31 to record the accrued interest expense and the accrued consulting revenue earned. Assume that the $50,000 note payable plus all accrued interest are paid in full on June 30, 2012. What portion of the total interest expense associated with this note will be reported in the firm’s 2012 income statement? Assume that on January 30, 2012,…arrow_forwardLedger accounts, adjusting entries, financial statements, and closing entries; optional end-of-period spreadsheet The unadjusted trial balance of Recessive Interiors at January 31, 2019, the end of the year, follows: The data needed to determine year-end adjustments are as follows: a. Supplies on hand at January 31 are 2,850. b. Insurance premiums expired during the year are 3,150. c. Depreciation of equipment during the year is 5,250. d. Depreciation of trucks during the year is 4,000. e. Wages accrued but not paid at January 31 are 900. Instructions 1. For each account listed in the unadjusted trial balance, enter the balance in the appropriate Balance column of a four-column account and place a check mark () in the Posting Reference column. 2. (Optional) Enter the unadjusted trial balance on an end-of-period spreadsheet and complete the spreadsheet. Add the accounts listed in part (3) as needed. 3. Journalize and post the adjusting entries, inserting balances in the accounts affected. a. Record the adjusting entries on Page 26 of the journal. The following additional accounts from Recessive Interiors' chart of accounts should be used: Wages Payable, 22; Depreciation ExpenseEquipment, 54; Supplies Expense, 55; Depreciation ExpenseTrucks, 56; Insurance Expense, 57. 4. Prepare an adjusted trial balance. 5. Prepare an income statement, a statement of owner's equity (no additional investments were made during the year), and a balance sheet. 6. Journalize and post the closing entries. Record the closing entries on Page 27 of the journal. Indicate closed accounts by inserting a line in both Balance columns opposite the closing entry. 7. Prepare a post-closing trial balance.arrow_forward
- Financial statements and closing entries Finders Investigative Services is an investigative services firm that is owned and operated by Stacy Tanner. On June 30, 2019, the end of the fiscal year, the accountant for Finders Investigative Services prepared an end-of-period spreadsheet, a part of which follows: Instructions 1.Prepare an income statement, a statement of owner's equity (no additional investments were made during the year), and a balance sheet. 2.Journalize the entries that were required to close the accounts at June 30. 3If Stacy Tanner, Capital has instead decreased 30,000 after the closing entries were posted, and the withdrawals remained the same, what would have been the amount of net income or net loss?arrow_forwardFinancial statements We-Sell Realty, organized August 1, 2019, is owned and operated by Omar Farah. How many errors can you find in the following statements for We-Sell Realty, prepared after its first month of operations?arrow_forwardAdjusting entries Good Note Company specializes in the repair of music equipment and is owned and operated by Robin Stahl. On November 30, 2019, the end of the current year, the accountant for Good Note prepared the following trial balances: Instructions Journalize the seven entries that adjusted the accounts at November 30. None of the accounts were affected by more than one adjusting entry.arrow_forward
- Working capital and current ratio Current assets and current liabilities for Brimstone Company follow: 2019 2018 Current assets 1,586,250 1,210,000 Current liabilities 705,000 550,000 a.Determine the working capital and current ratio for 2019 and 2018. b.Does the change in the current ratio from 2018 to 2019 indicate a favorable or an unfavorable change?arrow_forwardWorking capital and current ratio Current assets and current liabilities for HQ Properties Company follow: 2019 2018 Current assets 2,175,000 1,900,000 Current liabilities 1,500,000 1,250,000 a.Determine the working capital and current ratio for 2019 and 2018. b.Does the change in the current ratio from 2018 to 2019 indicate a favorable or an unfavorable change?arrow_forwardProblem 3-71B Preparing a Worksheet (Appendix 3A) Flint Inc. operates a cable television System. At December 31, 2019, the following unadjusted account balances were available: The following data are available for adjusting entries: At year end, $1,500 Of office supplies remain unused. Annual depreciation on the building is $20,000. Annual depreciation on the equipment is $150,000 The interest rate on the note is 8%. Four months' interest is unpaid and unrecorded at December 31, 2019. At December 31, 2019, services of $94,000 have performed but are unbilled and unrecorded. Utility bills of $2,800 are unpaid and unrecorded at December 31, 2019. Income taxes of $49,633 were unpaid and unrecorded at year end. Â Required: Prepare a worksheet for Flint. Prepare an income statement, a retained earnings statement, and a classified balance sheet for Flint. Prepare the closing entries.arrow_forward
- question 6 b) Labu Labi Sdn Bhd closes its accounts annually on 31 December. On 3 May 2022, the company disposed of a company car for RM60,000. The company acquired the car on a hire purchase basis on 1 July 2020 for RM200,000 for use by the managing director. The residual expenditure brought forward at 1 January 2022 was RM10,000. Required: b) Calculate the balancing adjustment which arises for Labu Labi Sdn Bhd on the disposal of the car on 3 May 2022 for the year of assessment 2022. c) Not all “factories” are considered as industrial buildings in tax law. Explain.arrow_forwardRequired information Exercise 5-19 (Algo) Prepaid expenses—insurance LO 10 Skip to question [The following information applies to the questions displayed below.] A company makes the payment of a one-year insurance premium of $4,440 on March 1, 2019. Exercise 5-19 (Algo) Part d d. If the premium had been $8,880 for a two-year period, how should the prepaid amount at December 31, 2019, be reported on the balance sheet?arrow_forwardPart B ( 7 marks) (Note this question IS related to Part A) SuperElectronics Limited Adjusted Trial Balance As at 30 June 2020 Debit Credit $ $ Cash 87,000 Accounts receivable 89,000 Allowance for Doubtful debts 4,300 Supplies 4,000 Plant & Equipment 218,000 Accumulated depreciation 64,000 Accounts Payable 38,000 Wages Payable 11,500 Loan payable ( not due until 2025) 50,000 Share capital 100,000 Retained Earnings 105,250 Dividends paid 10,000 Sales Revenue 368,000 Interest revenue 1,120 Doubtful debts expense 2,460 Depreciation expense 19,680 Rent & utilities expense 19,230 Wages and Salaries expense 281,000 Advertising expense 9,300 Interest expense 2,500 Totals 742,170 742,170 Required Prepare the Statement of Financial Position ( Balance…arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Cornerstones of Financial AccountingAccountingISBN:9781337690881Author:Jay Rich, Jeff JonesPublisher:Cengage Learning
AccountingAccountingISBN:9781337272094Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.Publisher:Cengage Learning,
Cornerstones of Financial Accounting
Accounting
ISBN:9781337690881
Author:Jay Rich, Jeff Jones
Publisher:Cengage Learning
Accounting
Accounting
ISBN:9781337272094
Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:Cengage Learning,
The KEY to Understanding Financial Statements; Author: Accounting Stuff;https://www.youtube.com/watch?v=_F6a0ddbjtI;License: Standard Youtube License