FINANCIAL ACCT(HARDBK)+MYACCTGLAB>ICB<
W20 Edition
ISBN: 9780136615583
Author: REIMERS
Publisher: PEARSON C
expand_more
expand_more
format_list_bulleted
Question
Chapter 3, Problem 3FSA
1.
To determine
Indicate the current asset which would reflect the deferred expense and explain the defer expense and provide the adjustment for the
2.
To determine
Explain the reason why it is a liability and provide the transaction that would resulted in the liability.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solutionStudents have asked these similar questions
During 2022, its first year of operations as a delivery service, Shamrock Corp. entered into the following transactions. 1. 2. 3. 4. 5. 6. 7. 8. 9. Using the following tabular analysis, show the effect of each transaction on the accounting equation. Put explanations for changes to revenues or expenses in the right-hand margin. (If a transaction results in a decrease in Assets, Liabilities or Stockholders' Equity, place a negative sign (or parentheses) in front of the amount entered for the particular Asset, Liability or Equity item that was reduced.) (1) Issued shares of common stock to investors in exchange for $90,000 in cash. Borrowed $40,500 by issuing a note. Purchased delivery trucks for $54,000 cash. Performed services for customers for $14,400 cash. Purchased supplies for $4,230 on account. Paid rent of $4,680. Performed services on account for $9,000. Paid salaries of $25,200. Paid a dividend of $9,900 to shareholders. (2) $ Cash $ Accounts Receivable Assets + $ Supplies $…
Henry Josstick has just started his first accounting course and has prepared the following balance sheet and income statement for Omega Corp. Unfortunately, although the data for the individual items are correct, he is very confused as to whether an item should go in the balance sheet or income statement and whether it is an asset or liability.
BALANCE SHEET
Payables
$
39
Inventories
$
54
Less accumulated depreciation
124
Receivables
55
Total current assets
Total current liabilities
Long-term debt
$
370
Interest expense
$
29
Property, plant, and equipment
540
Total liabilities
Net fixed assets
Shareholders’ equity
$
106
Total assets
Total liabilities and shareholders’ equity
INCOME STATEMENT
Net sales
$
740
Cost of goods sold
600
Selling, general, and administrative expenses
42
EBIT
Debt due for repayment
$
29
Cash
19
Taxable income
Taxes
$
19…
Which of the following statements is TRUE?
If a company provides service and bills its client $20,000, the journal entry to record this transaction will cause Total Assets to increase.
If a company collects a cash deposit of $20,000 for services not yet performed, the journal entry to record this transaction will cause Net Income to increase.
If a company pays $20,000 for inventory previously purchased on account, the journal entry to record this payment will cause Total Liabilities to increase.
None of the above.
Chapter 3 Solutions
FINANCIAL ACCT(HARDBK)+MYACCTGLAB>ICB<
Ch. 3 - Prob. 1YTCh. 3 - Prob. 2YTCh. 3 - Prob. 3YTCh. 3 - Prob. 4YTCh. 3 - Prob. 5YTCh. 3 - Prob. 6YTCh. 3 - Prob. 7YTCh. 3 - How does accrual basis accounting differ from cash...Ch. 3 - Prob. 2QCh. 3 - Prob. 3Q
Ch. 3 - Prob. 4QCh. 3 - What are accrued expenses?Ch. 3 - Prob. 6QCh. 3 - Prob. 7QCh. 3 - Name two common deferred expenses.Ch. 3 - What does it mean to recognize revenue?Ch. 3 - How does matching relate to accruals and...Ch. 3 - What is depreciation?Ch. 3 - Why is depreciation necessary?Ch. 3 - Prob. 13QCh. 3 - Prob. 14QCh. 3 - Prob. 1MCQCh. 3 - Prob. 2MCQCh. 3 - Prob. 3MCQCh. 3 - Prob. 4MCQCh. 3 - Prob. 5MCQCh. 3 - Prob. 6MCQCh. 3 - Prob. 7MCQCh. 3 - Prob. 8MCQCh. 3 - When prepaid insurance has been used, the...Ch. 3 - Prob. 10MCQCh. 3 - Prob. 1SEACh. 3 - Prob. 2SEACh. 3 - Account for interest expense. (LO 1, 2). UMC...Ch. 3 - Prob. 4SEACh. 3 - Account for insurance expense. (LO 1, 3). Catrina...Ch. 3 - Prob. 6SEACh. 3 - Account for unearned revenue. (LO 1, 3). Able...Ch. 3 - Prob. 8SEACh. 3 - Prob. 9SEACh. 3 - Prob. 10SEACh. 3 - Calculate profit margin on sales ratio. (LO 5)....Ch. 3 - Prob. 12SEBCh. 3 - Prob. 13SEBCh. 3 - Prob. 14SEBCh. 3 - Prob. 15SEBCh. 3 - Prob. 16SEBCh. 3 - Prob. 17SEBCh. 3 - Prob. 18SEBCh. 3 - Prob. 19SEBCh. 3 - Calculate net income. (LO I, 4). Suppose a company...Ch. 3 - Prob. 21SEBCh. 3 - Prob. 22SEBCh. 3 - Prob. 23EACh. 3 - Prob. 24EACh. 3 - Prob. 25EACh. 3 - Prob. 26EACh. 3 - Prob. 27EACh. 3 - Prob. 28EACh. 3 - Account for insurance expense. (LO 1, 3). Yodel ...Ch. 3 - Prob. 30EACh. 3 - Prob. 31EACh. 3 - Prob. 32EACh. 3 - Prob. 33EACh. 3 - Prob. 34EACh. 3 - Southeast Pest Control, Inc., was started when its...Ch. 3 - Prob. 36EACh. 3 - Prob. 37EACh. 3 - Prob. 38EACh. 3 - Prob. 39EACh. 3 - Prob. 40EBCh. 3 - Prob. 41EBCh. 3 - Prob. 42EBCh. 3 - TJs Tavern paid 10,800 on February 1, 2010, for a...Ch. 3 - Prob. 44EBCh. 3 - Prob. 45EBCh. 3 - Account for insurance expense. (LO 1, 3). All...Ch. 3 - Prob. 47EBCh. 3 - Prob. 48EBCh. 3 - Prob. 49EBCh. 3 - Prob. 50EBCh. 3 - Prob. 51EBCh. 3 - Prob. 52EBCh. 3 - From the following list of accounts (1) identify...Ch. 3 - Prob. 54EBCh. 3 - Prob. 55EBCh. 3 - Prob. 56EBCh. 3 - Prob. 57PACh. 3 - Prob. 58PACh. 3 - Prob. 59PACh. 3 - Following is a partial list of financial statement...Ch. 3 - Prob. 61PACh. 3 - Record adjustments. (LO 1, 2, 3). The Gladiator...Ch. 3 - Prob. 63PACh. 3 - Transactions for Pops Company for 2011 were as...Ch. 3 - Record adjustments and prepare financial...Ch. 3 - Prob. 66PACh. 3 - Prob. 67PACh. 3 - Record adjustments and prepare income statement....Ch. 3 - Prob. 69PBCh. 3 - Prob. 70PBCh. 3 - Following is a partial list of financial statement...Ch. 3 - Prob. 72PBCh. 3 - Record adjustments. (LO 1, 2, 3). Summit Climbing...Ch. 3 - Prob. 74PBCh. 3 - Prob. 75PBCh. 3 - Record adjustments and prepare financial...Ch. 3 - Prob. 77PBCh. 3 - Prob. 78PBCh. 3 - Identify and explain accruals and deferrals. (LO...Ch. 3 - Prob. 2FSACh. 3 - Prob. 3FSACh. 3 - Prob. 1CTPCh. 3 - Prob. 1IECh. 3 - Prob. 3IECh. 3 - Prob. 4IE
Knowledge Booster
Similar questions
- The income statement for the year 2018 of Stellar Co. contains the following information: Revenues$70700Expenses: Salaries and Wages Expense$44800 Rent Expense12400 Advertising Expense9900 Supplies Expense5600 Utilities Expense2400 Insurance Expense2100 Total expenses77200Net income (loss)$ (6500) After the revenue and expense accounts have been closed, the balance in Income Summary will be a)a credit balance of $70700. b)a credit balance of $6500. c)a debit balance of $6500. d)$0.arrow_forwardHenry Josstick has just started his first accounting course and has prepared the following balance sheet and income statement for Omega Corporation. Unfortunately, although the data for the individual items are correct, he is very confused as to whether an item should go in the balance sheet or income statement and whether it is an asset or liability. BALANCE SHEET Payables $ 44 Inventories $ 59 Less accumulated depreciation 129 Receivables 80 Total current assets Total current liabilities Long-term debt $ 395 Interest expense $ 34 Property, plant, and equipment 565 Total liabilities Net fixed assets Shareholders’ equity $ 126 Total assets Total liabilities and shareholders’ equity INCOME STATEMENT Net sales $ 790 Cost of goods sold 625 Selling, general, and administrative expenses 47 EBIT Debt due for repayment $ 34 Cash 24 Taxable income Federal plus other taxes $ 24 Depreciation 21 Net income Prepare the balance sheet…arrow_forwardHow are revenues and expenses reported on the income statement under (a) the cash basis of accounting and (b) the accrual basis of accounting? Explain the purpose of the accounts Depreciation Expense and Accumulated Depreciation. Is it customary for the balances of the two accounts to be equal? (c) In what financial statements, if any, will each account appear? Why are adjustments needed at the end of an accounting period? Employees performed services in 20Y8, but the wages were not paid until 20Y9. During which year would the wages expense be reported on the income statement under (a) the cash basis? (b) the accrual basis?arrow_forward
- The following information was extracted from the records of Terra Ltd for the year ended 30 June 2024. TERRA LTD as at 30 lune 2024 Accounts receivable 70,000 Allowance for doubtful debts (15,000) Motor vehicles 280,000 Accumulated depreciation — motor vehicles (56,000) Prepaid insurance 34,000 Rent receivable 2,200 Bad debts expense 22,000 Interest payable 5,000 Rent revenue 7,800 Insurance Expense Ck 18,000 Deterred tax asset 2,100 Deferred tax liability 10,800 Additional information ✓ Estimated useful-life for tax purposes 10 years ✓ Estimated useful-life for accounting 15 years ✓ Rent received 5,000 ✓ Opening balance for prepaid insurance 29,500 ✓ Opening balance for the allowance for doubtful debts 7,000 ✓ Interest expenses 5,000 ✓ Tax rate 30% ✓ Profit before tax 245,300 Prepare the current tax worksheet and related journal entries. b. Prepare the deferred tax worksheet and related journal entries. Here is my question: I received the question you guys answered yesterday night,…arrow_forwardThe following information was extracted from the records of Terra Ltd for the year ended 30 June 2024. TERRA LTD as at 30 lune 2024 Accounts receivable 70,000 Allowance for doubtful debts (15,000) Motor vehicles 280,000 Accumulated depreciation — motor vehicles (56,000) Prepaid insurance 34,000 Rent receivable 2,200 Bad debts expense 22,000 Interest payable 5,000 Rent revenue 7,800 Insurance Expense Ck 18,000 Deterred tax asset 2,100 Deferred tax liability 10,800 Additional information ✓ Estimated useful-life for tax purposes 10 years ✓ Estimated useful-life for accounting 15 years ✓ Rent received 5,000 ✓ Opening balance for prepaid insurance 29,500 ✓ Opening balance for the allowance for doubtful debts 7,000 ✓ Interest expenses 5,000 ✓ Tax rate 30% ✓ Profit before tax 245,300 Prepare the current tax worksheet and related journal entries. b. Prepare the deferred tax worksheet and related journal entries.arrow_forward,give your opinion from the financial accounting perspective. ( You may refer to an appropriate accounting principle.) .Assume a financial year from 1st January -31st Dec 2022. The accountant had deliberately not disclosed that the business had lost Kshs.500,000 following a robbery that took place during that year and that the money was not insured.arrow_forward
- Best Company had the following items that require adjustment at year end. Cash for equipment rental in the amount of $3,800 was paid in advance. The $3,800 was debited to prepaid rent when paid. At year end, $2,950 of the prepaid rent had expired. Cash for insurance in the amount of $8,200 was paid in advance. The $8,200 was debited to prepaid insurance when paid. At year end, $1,850 of the prepaid insurance was still unused. Supplies at the beginning of the year showed a balance of $2,000. Best purchased supplies of $16,200 during the year. At the end of the year, a physical count of supplies showed $4,125 of supplies on hand. Required: 1. Prepare the adjusting journal entries needed at December 31. If an amount box does not require an entry, leave it blank. Dec. 31 Rent Expense fill in the blank 27781a0e1020040_2 fill in the blank 27781a0e1020040_3 Prepaid Rent fill in the blank 27781a0e1020040_5 fill in the blank 27781a0e1020040_6 Dec. 31 Insurance Expense…arrow_forwardListed below are the current Accounting Assumptions and Principles Economic Entity Assumption Monetary Unit Assumption Historical Cost Principle Going Concern Assumption Revenue Recognition Principle Full Disclosure Principle Time Period Assumption Matching Principle Required: For the following situations, identify whether the situation represents a violation or a correct application of GAAP, and which assumption/principle is applicable. a. In May 2021, Regent Corporation recorded as revenue $5,000 received in advance from a customer for a job that would be completed in June 2021. Violation: (Yes/No) Applicable Assumption/Principle: b. Sally Maze made sure to keep her personal expenditures separate from her marketing company books.…arrow_forwardListed below are the current Accounting Assumptions and Principles Economic Entity Assumption Monetary Unit Assumption Historical Cost Principle Going Concern Assumption Revenue Recognition Principle Full Disclosure Principle Time Period Assumption Matching Principle Required: For the following situations, identify whether the situation represents a violation or a correct application of GAAP, and which assumption/principle is applicable. h. Nixon Corp records and maintains their books at cost and/or current value, not at a liquidated value. Violation: (Yes/No) Applicable Assumption/Principle: i. Wages of $4,000 related to the last two days of July, were recorded as expense in July even though they were paid in August. Violation: (Yes/No) Applicable…arrow_forward
- Can you recheck the transaction on Feb. 12? It was said that the owner received P50,000 from customers, why did you deduct the P50,000 in accounts receivable? The cash came from the customers and not from the Nestle Corporation, does it? Should that P50,000 be added on the Capital? A revenue earned?arrow_forwardCory Company's bookkeeper is not familiar with accrual accounting concepts. He determined net income for 2022 to be P 79,800. In your audit of the company you determine the following: Accrued, but unpaid, wages at the end of 2022 amounted to P 45,750 and have not been recorded. Insurance premiums paid in 2022 totaled P 180,000, only 1/3 of which relate to coverage for 2022. The other 2/3 of which relate to coverage in future years. (The complete amount was expensed when paid.) Accounts receivable of P 500,000, which have been properly recorded, are expected to result in losses from uncollectibility of P 30,000. (No specific accounts have been written off as of the end of the year.) Cash of P 115,000, received in late 2022, was recorded as revenue, although the work to be performed under the related contract will take place in 2023. QUESTION: What is the revised net income figure for 2022?arrow_forwardExplain how the transactions below should be treated in the financial statements of Gidimadjor Catering Services in accordance to IAS 10; Events after the Reporting Period:i. Gidimadjor Catering Services has an investment worth GH¢1 million in its financial statements at 31 December 2018. Due to the continuing recession, the investment reduced in value to GH¢900,000 by 15, January 2019.ii. On 8 January 2019, one of the accountants left Gidimadjor Catering Services suddenly. On further investigation, the company realized that this employee had been paying himself money from the bank account in relation to false rental invoices. The amount of the overpayment was found to be GH¢86,000. With the help of the police, the accountant was tracked down and repaid all of the money on 18 January 2019.iii. On 10 January 2019, Gidimadjor Catering Services sold some inventory for GH¢80,000. This inventory had been included in the year-end inventory count at cost of GH¢100,000.iv. Gidimadjor Catering…arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
- Century 21 Accounting Multicolumn JournalAccountingISBN:9781337679503Author:GilbertsonPublisher:Cengage
Century 21 Accounting Multicolumn Journal
Accounting
ISBN:9781337679503
Author:Gilbertson
Publisher:Cengage