Financial Accounting, Student Value Edition (5th Edition)
5th Edition
ISBN: 9780134728520
Author: Robert Kemp, Jeffrey Waybright
Publisher: PEARSON
expand_more
expand_more
format_list_bulleted
Textbook Question
Chapter 3, Problem 14AE
Exercises (Group A)
E3-14A. Adjusting
Suppose you started your own landscaping business. A customer paid you $120 in advance to mow his lawn while he was on vacation. You also performed landscaping services for a local business, but the business hasn't paid you the $390 fee yet. In addition, a customer paid you $130 cash for landscaping services. Answer the following questions about the correct way to account for your revenue under accrual accounting:
- 1. Name the accounts used to record these events.
- 2. Prepare the journal entries to record the three transactions.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solutionStudents have asked these similar questions
S1-3. (Learning Objective 2: Identify underlying accounting concepts, assumptions, andprinciples) Identify the accounting concept, assumption, or principle that best applies to eachof the following situations:a. Inflation has been about 2.5% for some time. Village Realtors is considering measuringits land values in inflation-adjusted amounts.b. You get an especially good buy on a laptop, paying only $300 when it normally costs$800. What is your accounting value for this laptop?c. Burger King, the restaurant chain, sold a store location to McDonald’s. How canBurger King determine the sale price of the store—by a professional appraisal, BurgerKing’s original cost, or the amount actually received from the sale?d. General Motors wants to determine which division of the company—Chevrolet orCadillac—is more profitable.
S3-11. (Learning Objective 3: Adjust the accounts for unearned revenue) Write aparagraph to explain why unearned revenues are liabilities instead of revenues. In your explanation, use the following actual example: The New York Times, a national newspaper, collects cashfrom subscribers in advance and later provides news content via print newspapers and onlineaccess to subscribers over a one-year period. Explain what happens to the unearned revenueover the course of a year as The New York Times delivers papers and online content to subscribers. Into what account does the earned subscription revenue go as The New York Times deliverspapers and online content? Give the journal entries that The New York Times would make to (a)collect $85,000 of subscription revenue in advance and (b) record earning $40,000 of subscription revenue. Include an explanation for each entry, as illustrated in the chapter.
Learning Objectives 4, 5: Journalize and post transactions; construct and use atrial balance) Olivia Matthews, Certified Public Accountant, operates as a professional corporation (P.C.). The business completed these transactions during the first part of May 2018:May Received $12,000 cash from Matthews, and issued common stock to her.Paid monthly oce rent, $500.Paid cash for a desktop computer, $1,800, with the computer expected toremain in service for five years.Purchased oce furniture on account, $6,000, with the furniture projectedto last for five years.Purchased supplies on account, $900.Performed tax services for a client and received cash for the full amountof $600.Received bill and paid utility expenses, $750.Performed consulting services for a client on account, $3,100.2234591218Requirements1. Journalize the transactions for Olivia Matthews, Certified Public Accountant. Explanationsare not required.2. Post to the T-accounts. Key all items by date and determine the ending balance…
Chapter 3 Solutions
Financial Accounting, Student Value Edition (5th Edition)
Ch. 3 - If XYZ Consulting performs a consulting service,...Ch. 3 - Prob. 2DQCh. 3 - Prob. 3DQCh. 3 - Prob. 4DQCh. 3 - Prob. 5DQCh. 3 - Prob. 6DQCh. 3 - Prob. 7DQCh. 3 - Prob. 8DQCh. 3 - What kind of account is accumulated depreciation?...Ch. 3 - Prob. 10DQ
Ch. 3 - Prob. 1SCCh. 3 - Adjusting the accounts is the process of a....Ch. 3 - Which of the following terms describes the types...Ch. 3 - Assume the weekly payroll of ASR, Inc., is 4,500....Ch. 3 - Prob. 5SCCh. 3 - Prob. 6SCCh. 3 - Prob. 7SCCh. 3 - What do closing entries accomplish? a. Bring the...Ch. 3 - Prob. 9SCCh. 3 - Which correctly represents the flow of information...Ch. 3 - Prob. 11SCCh. 3 - Prob. 12SCCh. 3 - Prob. 1SECh. 3 - Prob. 2SECh. 3 - Prob. 3SECh. 3 - Adjusting journal entryprepaid rent (Learning...Ch. 3 - Prob. 5SECh. 3 - Prob. 6SECh. 3 - Prob. 7SECh. 3 - Adjusting journal entrysalaries, accrued revenue,...Ch. 3 - Prob. 9SECh. 3 - Closing entries (Learning Objective 4) 5-10 min....Ch. 3 - Prob. 11SECh. 3 - Prob. 12SECh. 3 - Preparing a post-closing trial balance (Learning...Ch. 3 - Exercises (Group A) E3-14A. Adjusting journal...Ch. 3 - Adjusting journal entry-prepaid insurance...Ch. 3 - Common adjusting journal entries (Learning...Ch. 3 - Prob. 17AECh. 3 - Common adjusting journal entries (Learning...Ch. 3 - Prob. 19AECh. 3 - Prob. 20AECh. 3 - Prob. 21AECh. 3 - Prob. 22AECh. 3 - Preparing a financial statement (Learning...Ch. 3 - Prob. 24AECh. 3 - Prob. 25AECh. 3 - Prob. 26AECh. 3 - Prob. 27AECh. 3 - Prob. 28BECh. 3 - Prob. 29BECh. 3 - Prob. 30BECh. 3 - Analyzing errors (Learning Objective 2) 10-15 min....Ch. 3 - Common adjusting journal entries (Learning...Ch. 3 - Prob. 33BECh. 3 - Prob. 34BECh. 3 - Prob. 35BECh. 3 - Prob. 36BECh. 3 - Prob. 37BECh. 3 - Prob. 38BECh. 3 - Prob. 39BECh. 3 - Prob. 40BECh. 3 - Preparing closing entries (Learning Objective 4)...Ch. 3 - Problems (Group A) Common adjusting journal...Ch. 3 - Prob. 43APCh. 3 - Prob. 44APCh. 3 - Prob. 45APCh. 3 - Prob. 46APCh. 3 - Prob. 47APCh. 3 - Problems (Group B) Common adjusting journal...Ch. 3 - Re-creating adjusting journal entries from a trial...Ch. 3 - Preparing adjusting journal entries and an...Ch. 3 - Effects of adjusting journal entries on income...Ch. 3 - Preparing financial statements (Learning Objective...Ch. 3 - Preparing closing entries and a post-closing trial...Ch. 3 - This exercise continues the accounting process for...Ch. 3 - This problem continues the accounting process for...Ch. 3 - Prob. 1CFSAPCh. 3 - Prob. 1EIACh. 3 - Case 2. Brent Robertson and his banker were...Ch. 3 - Prob. 1FACh. 3 - Prob. 1IACh. 3 - Prob. 1SBACh. 3 - Written Communication You have received a letter...Ch. 3 - Journalizing, Posting, Adjusting, Preparing, and...
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
- S3-12. (Learning Objective 3: Adjust the accounts for prepaid rent) Due to the terms ofits lease, Hawke Services, Inc., pays the rent for its new office space in one annual payment of$26,800 on August 1, 2018. The lease covers the period of August 1, 2018, through July 31,2019. Hawke Services has a year-end of December 31. Assume that Hawke Services had noother prepaid rent transactions, nor did it have a Prepaid Rent beginning balance in 2018. Givethe journal entries that Hawke Services would make for (a) the annual rent payment of $26,800on August 1 and (b) the adjusting entry for rent expense on December 31, 2018. What is thebalance of Prepaid Rent at December 31, 2018?arrow_forwardS3-9. (Learning Objective 3: Adjust the accounts for interest expense) Trent Restaurantborrowed $110,000 on October 1 by signing a note payable to Hometown Bank. The interestexpense for each month is $825. The loan agreement requires Trent to pay interest on January 2for October, November, and December.1. Make Trent’s adjusting entry to accrue monthly interest expense at October 31, atNovember 30, and at December 31. Date each entry and include its explanation.2. Post all three entries to the Interest Payable account. You do not need to calculate thebalance of the account at the end of each month.3. Record the payment of three months’ interest on January 2.arrow_forwardE3-22A. (Learning Objectives 3, 4: Adjust the accounts for prepaid expenses; construct thefinancial statements) Dizzy Toys prepaid three years’ rent ($36,000) on January 1, 2018. AtDecember 31, 2018, Dizzy prepared a trial balance and then made the necessary adjusting entryat the end of the year. Dizzy adjusts its accounts once each year—on December 31.What amount appears for Prepaid Rent ona. Dizzy’s unadjusted trial balance at December 31, 2018?b. Dizzy’s adjusted trial balance at December 31, 2018?What amount appears for Rent Expense onc. Dizzy’s unadjusted trial balance at December 31, 2018?d. Dizzy’s adjusted trial balance at December 31, 2018?arrow_forward
- E3-33B. (Learning Objectives 3, 4: Adjust the accounts for prepaid expenses; construct thefinancial statements) Fairmount Co. prepaid three years’ rent ($31,500) on January 1, 2018. AtDecember 31, 2018, Fairmount prepared a trial balance and then made the necessary adjustingentry at the end of the year. Fairmount adjusts its accounts once each year—on December 31.What amount appears for Prepaid Rent ona. Fairmount’s unadjusted trial balance at December 31, 2018?b. Fairmount’s adjusted trial balance at December 31, 2018?What amount appears for Rent Expense onc. Fairmount’s unadjusted trial balance at December 31, 2018?d. Fairmount’s adjusted trial balance at December 31, 2018?arrow_forwardE3-21 Journalizing adjusting entries Learning Objective 3 Consider the following situations: Business receives $3,200 on January 1 for 10-month service contract for the period January 1 through October 31. Total salaries for all employees is $3,600 per month. Employees are paid on the 1st and 15th of the month. Work performed but not yet billed to customers for the month is $1,600. The company pays interest on its $16,000, 4% note payable of $53 on the first day of each month. Assume the company records adjusting entries monthly. Journalize the adjusting entries needed as of January 31.arrow_forward(Learning Objective 4: Record and report current liabilities) Travis Publishingcompleted the following transactions for one subscriber during 2018:Oct 1 Sold a one-year subscription, collecting cash of $1,800, plus sales tax of 10%.The subscription will begin on October 1.Nov 15 Remitted (paid) the sales tax to the state of South Carolina.Dec 31 Made the necessary adjustment at year-end.Requirement1. Journalize these transactions (explanations not required). Then report any liability on thecompany’s balance sheet at December 31, 2018.arrow_forward
- (Learning Objective 4: Journalize and post transactions) Orman Consulting performed services for a client who could not pay immediately. Orman expected to collect the$4,600 the following month. A month later, Orman received $2,100 cash from the client.1. Record the two transactions on the books of Orman Consulting. Include an explanation foreach transaction.2. Post to these T-accounts: Cash, Accounts Receivable, and Service Revenue. Compute eachaccount balance and denote it as Bal.arrow_forwardP3-58A. (Learning Objective 1: Explain how accrual accounting differs from cash-basisaccounting) Berkley Consulting had the following selected transactions in July:July 1 Prepaid insurance for July through September, $3,900.4 Purchased office furniture for cash, $3,000.5 Performed services and received cash, $1,800.8 Paid advertising expense, $300.11 Performed service on account, $3,100.19 Purchased computer on account, $1,600.24 Collected for July 11 service.26 Paid account payable from July 19.29 Paid salary expense, $1,100.31 Adjusted for July insurance expense (see July 1).31 Earned revenue of $400 that was collected in advance back31 Recorded July depreciation expense on all fixed assets, $408.in June.Requirements1. Show how each transaction would be handled (in terms of recognizing revenues andexpenses) using the cash basis and the accrual basis.2. Calculate July income (loss) before tax under each accounting method.3. Indicate which measure of net income or net loss is…arrow_forwardThe first project for the semester will involve the following items to turn in: 1) Journal entries for financial transactions I will provide you. 2) An adjusted trial balance. 3) An Income statement. 1) On December 1 of 2019 Harold Hammer deposited $ 15,100 in a bank account in the name of Huaning Corporation in exchange for shares of common stock in the corporation. 2) On December 1 of 2019 Huaning Corporation purchased supplies on account for $ 226 . 3) On December 4 of 2019 Huaning Corporation received cash of $ 384 for product sold to the customer. 4) On December 5 of 2019 Huaning Corporation paid the vendor for the December 1st purchase of supplies. 5) On December 6 of 2019 Huaning Corporation purchases supplies on account for $ 469 .6) On December 8 of 2019 Huaning Corporation sells product for $ 445 on account to a customer.7) On December 9 of 2019 Huaning Corporation sells product for $ 462 on account to a customer. 8) On December 10 of 2019 Huaning Corporation paid, in…arrow_forward
- P1-64A. (Learning Objectives 2, 3, 4: Apply underlying accounting concepts; evaluatebusiness operations; construct a balance sheet) Brandon Hilton is a realtor. He organized hisbusiness as a corporation on June 16, 2019. The business received $65,000 cash from Hiltonand issued common stock. Consider the following facts as of June 30, 2019:a. Hilton has $15,000 in his personal bank account and $55,000 in the business bank account.b. Hilton owes $3,400 on a personal charge account at a local department store.c. Hilton acquired business furniture for $30,000 on June 24. Of this amount, the businessowes $16,000 on accounts payable at June 30.d. Office supplies on hand at the real estate office total $8,000.e. Hilton’s business owes $112,000 on a note payable for some land acquired for a totalprice of $165,000.f. Hilton’s business spent $20,000 for a Realty Universe franchise, which entitles him torepresent himself as an agent. Realty Universe is a national affiliation of independentreal…arrow_forwardP3-66B. (Learning Objective 1: Explain how accrual accounting differs from cash-basisaccounting) Westchester Consulting had the following selected transactions in May:May 1 Prepaid insurance for May through July, $2,250.4 Purchased office furniture for cash, $4,000.5 Performed services and received cash, $1,000.8 Paid advertising expense, $300.11 Performed service on account, $3,500.19 Purchased computer on account, $2,000.24 Collected for May 11 service.26 Paid account payable from May 19.29 Paid salary expense, $1,000.31 Adjusted for May insurance expense (see May 1).31 Earned revenue of $1,000 that was collected in advance back31 Recorded May depreciation expense on all fixed assets, $108.in April.Requirements1. Show how each transaction would be handled (in terms of recognizing revenues andexpenses) using the cash basis and the accrual basis.2. Calculate May income (loss) before tax under each accounting method.3. Indicate which measure of net income or net loss is preferable. Use…arrow_forwardS3-3. (Learning Objective 2: Apply the revenue and expense recognition principles) Asthe controller of Chardon Consulting, you have hired a new employee, whom you must train.She objects to making an adjusting entry for accrued salaries at the end of the period. She reasons, “We will pay the salaries soon. Why not wait until payment to record the expense? In theend, the result will be the same.” Write a reply to explain to the employee why the adjustingentry is needed for accrued salary expense.arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
- AccountingAccountingISBN:9781337272094Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.Publisher:Cengage Learning,Accounting Information SystemsAccountingISBN:9781337619202Author:Hall, James A.Publisher:Cengage Learning,
- Horngren's Cost Accounting: A Managerial Emphasis...AccountingISBN:9780134475585Author:Srikant M. Datar, Madhav V. RajanPublisher:PEARSONIntermediate AccountingAccountingISBN:9781259722660Author:J. David Spiceland, Mark W. Nelson, Wayne M ThomasPublisher:McGraw-Hill EducationFinancial and Managerial AccountingAccountingISBN:9781259726705Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting PrinciplesPublisher:McGraw-Hill Education
Accounting
Accounting
ISBN:9781337272094
Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:Cengage Learning,
Accounting Information Systems
Accounting
ISBN:9781337619202
Author:Hall, James A.
Publisher:Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis...
Accounting
ISBN:9780134475585
Author:Srikant M. Datar, Madhav V. Rajan
Publisher:PEARSON
Intermediate Accounting
Accounting
ISBN:9781259722660
Author:J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:9781259726705
Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:McGraw-Hill Education
Accounting Basics Explained Through a Story; Author: Leila Gharani;https://www.youtube.com/watch?v=VYNTBWBqncU;License: Standard Youtube License