Connect Access Card for Financial Accounting: Information and Decisions
8th Edition
ISBN: 9781259662966
Author: John J Wild
Publisher: McGraw-Hill Education
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Suppose a customer rents a vehicle for three months from Franklin Rental on November 1, paying $3,750 ($1,250/month).
Required:
1.&2. Record the necessary entries in the Journal Entry Worksheet below.
3. Calculate the year-end adjusted balances of Deferred Revenue and Service Revenue (assuming the balance of Deferred Revenue at the beginning of the year is $0).
The balance in the prepaid rent account before adjustment at the end of the year is $11,940, which represents 12 months' rent paid on December 1. The adjusting entry required on December 31 is
a-debit Rent Expense, $10,945, credit Prepaid Rent, $995
b-debit Rent Expense, $995, credit Prepaid Rent, $995
c-debit Prepaid Rent, $995, credit Rent Expense, $995
d-debit Prepaid Rent, $10,945, credit Rent Expense, $995
For each separate case below, follow the three-step process for adjusting the unearned revenue liability account at December 31. Step 1: Determine what the current account balance equals. Step 2: Determine what the current account balance should equal. Step 3: Record the December 31 adjusting entry to get from step 1 to step 2. Assume no other adjusting entries are made during the year. a. Unearned Rent Revenue. The Krug Company collected $6,000 rent in advance on November 1, debiting Cash and crediting Unearned Rent Revenue. The tenant was paying 12 months’ rent in advance and occupancy began November 1. b. Unearned Services Revenue. The company charges $75 per insect treatment. A customer paid $300 on October 1 in advance for four treatments, which was recorded with a debit to Cash and a credit to Unearned Services Revenue. At year-end, the company has applied three treatments for the customer. c. Unearned Rent Revenue. On September 1, a client paid the company $24,000 cash for six…
Chapter 3 Solutions
Connect Access Card for Financial Accounting: Information and Decisions
Ch. 3 - What is the difference between the cash basis and...Ch. 3 - Why is the accrual basis of accounting generally...Ch. 3 - What type of business is most likely to select a...Ch. 3 - What is a prepaid expense and where is it reported...Ch. 3 - Prob. 5DQCh. 3 - What contra account is used when recording...Ch. 3 - Prob. 7DQCh. 3 - Prob. 8DQCh. 3 - Prob. 9DQCh. 3 - Prob. 10DQ
Ch. 3 - Prob. 11DQCh. 3 - Prob. 12DQCh. 3 - What are the steps in recording closing entries?Ch. 3 - Prob. 14DQCh. 3 - Prob. 15DQCh. 3 - What is the purpose of the Income Summary account?Ch. 3 - Explain whether an error has occurred if a...Ch. 3 - Prob. 18DQCh. 3 - Prob. 19DQCh. 3 - Prob. 20DQCh. 3 - Prob. 21DQCh. 3 - Prob. 22DQCh. 3 - Prob. 23DQCh. 3 - Prob. 24DQCh. 3 - Prob. 25DQCh. 3 - Prob. 26DQCh. 3 - Prob. 27DQCh. 3 - Refer to Googles most recent balance sheet in...Ch. 3 - Prob. 29DQCh. 3 - Prob. 1QSCh. 3 - In its first year of operations, Roma Company...Ch. 3 - Classify the following adjusting entries as...Ch. 3 - Prob. 4QSCh. 3 - Prob. 5QSCh. 3 - Prob. 6QSCh. 3 - Prob. 7QSCh. 3 - Prob. 8QSCh. 3 - Prob. 9QSCh. 3 - For each separate case below, follow the...Ch. 3 - Prob. 11QSCh. 3 - Prob. 12QSCh. 3 - Prob. 13QSCh. 3 - Prob. 14QSCh. 3 - Prob. 15QSCh. 3 - In making adjusting entries at the end of its...Ch. 3 - Prob. 17QSCh. 3 - Prob. 18QSCh. 3 - Prob. 19QSCh. 3 - Prob. 20QSCh. 3 - Prob. 21QSCh. 3 - Prob. 22QSCh. 3 - Prob. 23QSCh. 3 - Prob. 24QSCh. 3 - Prob. 25QSCh. 3 - Extending accounts in a work sheet P7 The Adjusted...Ch. 3 - Prob. 27QSCh. 3 - Prob. 1ECh. 3 - Prob. 2ECh. 3 - Prob. 3ECh. 3 - Prob. 4ECh. 3 - Prob. 5ECh. 3 - Prob. 6ECh. 3 - Prob. 7ECh. 3 - Prob. 8ECh. 3 - Prob. 9ECh. 3 - Prob. 10ECh. 3 - Prob. 11ECh. 3 - Prob. 12ECh. 3 - Prob. 13ECh. 3 - Prob. 14ECh. 3 - Prob. 15ECh. 3 - Prob. 1PSACh. 3 - Prob. 2PSACh. 3 - Interpreting unadjusted and adjusted trial...Ch. 3 - Prob. 5PSACh. 3 - Prob. 6PSACh. 3 - Prob. 7PSACh. 3 - Prob. 8PSACh. 3 - Prob. 1PSBCh. 3 - Prob. 2PSBCh. 3 - Prob. 5PSBCh. 3 - Prob. 6PSBCh. 3 - Prob. 7PSBCh. 3 - The adjusted trial balance for Anara Co. as of...Ch. 3 - Prob. 3SPCh. 3 - Prob. 1BTNCh. 3 - Prob. 2BTNCh. 3 - Prob. 3BTNCh. 3 - Prob. 4BTNCh. 3 - Prob. 5BTNCh. 3 - Prob. 6BTNCh. 3 - Prob. 7BTNCh. 3 - Select a company that you can visit in person or...Ch. 3 - Prob. 9BTN
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- The balance in the prepaid rent account before adjustment at the end of the year is $14,035, which represents 9 months' rent paid on December 1. The adjusting entry required on December 31 is a. debit Rent Expense, $1,559; credit Prepaid Rent, $1,559 b. debit Prepaid Rent, $12,476; credit Rent Expense, $1,559 c. debit Rent Expense, $12,476; credit Prepaid Rent, $1,559 d. debit Prepaid Rent, $1,559; credit Rent Expense, $1,559arrow_forwardDuring the year ended 30 September 20X9, H recorded the following cash transactions: (1) A payment of an annual insurance premium of $6,000. This covered the period to 31 December 20X9. (2) Receipt of $3,000 in respect of rent from a tenant covering the three-month period to 30 November 20X9. What is the impact on profit and net assets of making the year-end adjustments for deferred income and prepayments at 30 September 20X9? Profit Net assets A. Decrease of $500 Increase of $500 B. Decrease of $1,000 Increase of $1,000 C. Decrease of $500 Decrease of $500 D. Increase of $1,000 Increase of $1,000arrow_forwardThe balance in the prepaid rent account before adjustment at the end of the year is $20,345, which represents 10 months' rent paid on December 1. The adjusting entry required on December 31 is a.debit Rent Expense, $2,035; credit Prepaid Rent, $2,035 b.debit Prepaid Rent, $18,310; credit Rent Expense, $2,035 c.debit Rent Expense, $18,310; credit Prepaid Rent, $2,035 d.debit Prepaid Rent, $2,035; credit Rent Expense, $2,035arrow_forward
- Cee Co.s fiscal year begins April 1. At the beginning of its fiscal year, Cee Co. estimates that it will owe 17,400 in property taxes for the year. On June 1, its property taxes are assessed at 17,000, which it pays immediately. Prepare the related journal entries for April 1, May 1, and June 1. Then compute the monthly property tax expense that Cee Co. would record during June through March.arrow_forwardThe balance in the prepaid rent account before adjustment at the end of the year is $12,864, which represents four months' rent paid on December 1. The adjusting entry required on December 31 is a. debit Rent Expense, $9,648, credit Prepaid Rent, $3,216 b. debit Rent Expense, $3,216, credit Prepaid Rent, $3,216 c. debit Prepaid Rent, $9,648, credit Rent Expense, $3,216 d. debit Prepaid Rent, $3,216, credit Rent Expense, $3,216arrow_forwardThe balance in the unearned rent account for Jones Co. as of December 31 is $1,200. If Jones Co. failed to record the adjusting entry for $600 of rent earned during December, the effect on the balance sheet and income statement for December would be: A. Assets understated by $600; net income overstated by $600. B. Liabilities understated by $600; net income understated by $600. C. Liabilities overstated by $600; net income understated by $600. D. Liabilities overstated by $600; net income overstated by $600.arrow_forward
- On August 1, Mitchell Company received $21,900 for six months of rent in advance. Required: 1. How much would be recognized as rent revenue by the end of the year? 2. How much will be in the Deferred Rent Revenue account by the end of the year, after the adjusting entries have been prepared and posted?arrow_forwardJournalize the adjusting entry for each of the following accrued expenses at the end of the current year:a. Product warranty cost, $26,800.b. Interest on the 19 remaining notes owed to Gallardo Co.arrow_forwardThe balance in the Prepaid Rent account before adjustment at the end of the year is $26100, which represents three months’ rent paid on December 1. The adjusting entry required on December 31 is to A) debit Prepaid Rent, $17400; credit Rent Expense, $17400. B) debit Rent Expense, $17400; credit Prepaid Rent $17400. C) debit Prepaid Rent, $8700; credit Rent Expense, $8700. D) debit Rent Expense, $8700; credit Prepaid Rent, $8700.arrow_forward
- On January 1, Newman Company estimated its property tax to be $3,120 for the year. a. How much should the company accrue each month for property taxes? b. Compute the balance in Property Tax Payable as of August 31. c. Journalize the adjusting journal entry for September. If an amount box does not require an entry, leave it blank. Property Tax Expense Property Tax Payablearrow_forwardThe balance in the prepaid rent account before adjustment at the end of the year is $13200 and represents three months rent paid on December 1. The adjusting entry required on December 31 is: debit Prepaid Rent, $8800; credit Rent Expense, $8800. debit Prepaid Rent, $4400; credit Rent Expense $4400. debit Rent Expense, $13200; credit Prepaid Rent, $13200. debit Rent Expense, $4400; credit Prepaid Rent, $4400.arrow_forwardthe krug company collected $16800 in rent in advance on november 1, debiting cash and crediting unearned rent revenue. the tenant was paying 12 months rent in advance and occupancy began on nove1arrow_forward
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