Concept explainers
Exercise 3-6 Preparing
Prepare adjusting
a. Depreciation on the company's equipment for the year is computed to be $I8,000.
b. The Prepaid Insurance account had a $6,000 debit balance at December 31 before adjusting for the costs of any expired coverage. An analysis of the company's insurance policies showed that $1, 100 of unexpired insurance coverage remains.
C. The Supplies account had a $700 debit balance at the beginning of the year; and $3,480 of supplies were purchased during the year. The December 31 physical count showed $300 of supplies available.
Check (c) Dr. Supplies Expense, $3,880 Page113
d. Two-thirds of the work related to $15,000 of cash received in advance was performed this period.
e. The Prepaid Rent account had a $6,800 debit balance at December 31 before adjusting for the costs of expired prepaid rent. An analysis of the rental agreement showed that $5,800 of prepaid rent had expired.
(e) Dr. Rent Expense, $5,SCO
f. Wage expenses of $3,200 have been incurred but are not paid as of December 31.
Page 114
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Fundamental Accounting Principles
- Exercise 3-55 Effect of Adjustments on the Financial Statements VanBrush Enterprises, a painting contractor, prepared the following adjusting entries at year end: a. Wages Expense ................ 2,550 Wages Payable 2,550 b. Accounts Receivable ....... 8,110 Service Revenue .............. 8,110 c. Unearned Service Revenue ………………… 5,245 Service Revenue ………..... 5.245 d. Rent Expense ............. 3,820 Prepaid Rem .......... 3,820 Required: 1. Show the effect of these adjustments on assets, liabilities, equity, revenues, expenses, and net Income. 2. CONCEPTUAL CONNECTION If these adjustments were made with estimates that were considered conservative, how would this affect your interpretation of earnings quality?arrow_forwardProblem 3-68B Inferring Adjusting Entries from Account Balance Changes The following schedule shows all the accounts of Eagle Imports that received year end adjusting entries: Required: Calculate the missing amounts identified by the letters (a) through (e). Prepare the five adjusting entries that must have been made to cause the account changes as indicated.arrow_forwardCornerstone Exercise 3-17 Accrued Revenue Adjusting Entries Powers Rental Service had the following items that require adjustment at year end. Earned $9,880 of revenue from the rental of equipment for which the customer had not yet paid. Interest of S650 on a note receivable has been earned but not yet received. Required: Prepare the adjusting entries needed at December 31. What is the effect on the financial statements if these adjusting entries are not made?arrow_forward
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- Exercise 3-54 Recreating Adjusting Entries Selected balance sheet accounts for Gardner Company are presented below. Required: Analyze each account and recreate the journal entries that are made. For deferrals, be sure to include the original journal entry as well as the adjusting journal entry. Month end is May 31, 2019.arrow_forwardAdjusting entry for supplies The balance in the supplies account, before adjustment at the end of the year, is 4,850. Journalize the adjusting entry required if the amount of supplies on hand at the end of the year is 880.arrow_forward
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