A.
Depreciation is an accounting method which is used to reduce the monetary value of fixed assets (except land), over a period of time due to use, wear and tear or obsolescence. It is also used to allocate the cost of asset over its life span.
Adjusting entries indicates those entries, which are passed in the books of accounts at the end of one accounting period. These entries are passed in the books of accounts as per the revenue recognition principle and the expenses recognition principle to adjust the revenue, and the expenses of a business in the period of their occurrence.
Rule of Debit and Credit:
Debit - Increase in all assets, expenses & dividends, and decrease in all liabilities and
Credit - Increase in all liabilities and stockholders’ equity, and decrease in all assets & expenses.
To prepare: The adjusting entry for depreciation expense.
B.
To identify: The items that would be erroneously stated on the income statement and on the
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Chapter 3 Solutions
FINANCIAL+MANG.-W/ACCESS PRACTICE SET
- Prepare adjusting journal entries, as needed, considering the account balances excerpted from the unadjusted trial balance and the adjustment data. A. amount due for employee salaries, $4,800 B. actual count of supplies inventory, $ 2,300 C. depreciation on equipment, $3,000arrow_forwardPrepare adjusting journal entries, as needed, considering the account balances excerpted from the unadjusted trial balance and the adjustment data. A. depreciation on fixed assets, $ 8,500 B. unexpired prepaid rent, $12,500 C. remaining balance of unearned revenue, $555arrow_forwardUsing the following information, A. Make the December 31 adjusting journal entry for depreciation. B. Determine the net book value (NBV) of the asset on December 31. Cost of asset, $195,000 Accumulated depreciation, beginning of year, $26,000 Current year depreciation, $13,000arrow_forward
- Adjustment for Depreciation The estimated amount of depreciation on equipment for the current year is $2,630. Journalize the adjusting entry to record the depreciation. If an amount box does not require an entry, leave it blank.arrow_forwardUse the following account T-balances (assume normal balances) and correct balance information to make the December 31 adjusting journal entries. Specifially for supplies, interest paybale, and accumlated depreciation.arrow_forwardPreparing and Journalizing Adjusting Entries For each of the following separate situations, prepare the necessary adjustments (a) using the finan- cial statement effects template, and (b) in journal entry form. 1. Unrecorded depreciation on equipment is $610. 2.Onthedateforpreparingfinancialstatements,anestimatedutilitiesexpenseof$390hasbeen incurred, but no utility bill has yet been received or paid. 3.Onthefirstdayofthecurrentperiod,rentforfourperiodswaspaidandrecordedasa$2,800 debit to Prepaid Rent and a $2,800 credit to Cash. 4.Ninemonthsago,the Hartford Financial Services Group soldaone-yearpolicytoacustomer andrecordedthereceiptofthepremiumbydebitingCashfor$624andcreditingContract Liabilitiesfor$624.Noadjustingentrieshavebeenpreparedduringthenine-monthperiod. Hartford’s annual financial statements are now being prepared. 5.Attheendoftheperiod,employeewagesof$965havebeenincurredbutnotyetpaidor recorded. 6. At the end of the period, $300 of interest income has been earned but not…arrow_forward
- Show all calculation notes a. Prepare the adjusting entry to account for the depreciation of the company's building and fixtures during December b. Prepare the adjusting entry to report the portion of unearned customer deposits that were earned during December c. Prepare the adjusting entry to account for income tax expense that accrued during Decemberarrow_forwardPrepare adjusting journal entries, as needed, considering the account balances excerpted fromthe unadjusted trial balance and the adjustment data. A. depreciation on fixed assets, $ 8,500B. unexpired prepaid rent, $12,500C. remaining balance of unearned revenue, $555arrow_forwardAdjusting Entries For each of the following unrelated situations, prepare the necessary adjusting entry in general journal form: a. Unrecorded depreciation on equipment is $910. b. The Supplies account has a balance of $3,290. Supplies on hand at the end of the period totaled $1,400. c. On the date for preparing financial statements, an estimated utilities expense of $690 has been incurred, but no utility bill has been received. Use the Utilities Payable account. d. On the first day of the current month, rent for four months was paid and recorded as a $3,100 debit to Prepaid Rent and a $3,100 credit to Cash. Monthly statements are now being prepared. Record Rent Expense for current month. e. Nine months ago, Solid Insurance Company sold a one-year policy to a customer and recorded the receipt of the premium by debiting Cash for $924 and crediting Unearned Premium Revenue $924. No adjusting entries have been prepared during the nine-month period. Annual financial statements are now…arrow_forward
- Prepare adjusting journal entries, as needed, considering the account balances excerpted from the unadjusted trial balance and the adjustment data. A. supplies actual count at year end, $6,500 B. remaining unexpired insurance, $6,000 C. remaining unearned service revenue, $1,200 D. salaries owed to employees, $2,400 E. depreciation on property plant and equipment, $18,000arrow_forwardAt December 31, the unadjusted trial balance of H&R Tacks reports Equipment of $30,000 andzero balances in Accumulated Depreciation—Equipment and Depreciation Expense. Depreciationfor the period is estimated to be $6,000. Prepare the adjusting journal entry on December 31. Inseparate T-accounts for each account, enter the unadjusted balances, post the adjusting journalentry, and report the adjusted balancearrow_forwardThe following accounts appear in the ledger of Sheldon Company on January 31, the end of this fiscal year. The data needed for adjustments on January 31 are as follows: ab.Merchandise inventory, January 31, 55,750. c.Insurance expired for the year, 1,285. d.Depreciation for the year, 5,482. e.Accrued wages on January 31, 1,556. f.Supplies used during the year 1,503. Required 1. Prepare a work sheet for the fiscal year ended January 31. Ignore this step if using QuickBooks or general ledger. 2. Prepare an income statement. 3. Prepare a statement of owners equity. No additional investments were made during the year. Ignore this step if using CLGL. 4. Prepare a balance sheet. 5. Journalize the adjusting entries. 6. Journalize the closing entries. Check Figure Net loss, 1,737arrow_forward
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