a.
To prepare: A four part table by using the given information. Items (a)-(f) are independent of one another.
a.
Explanation of Solution
The four part table is shown below:
(1) | On January 22, 2015, MSM received $24,000 cash from customers for one–year subscriptions to the magazine for February 2015 – January 2016. | ||||||||||
(2) | Assets | = | Liabilities | + | |||||||
Cash +$24,000 |
Unearned Revenue +$24,000 |
||||||||||
(3) | Account Names | Debit ($) | Credit ($) | ||||||||
Cash (+A) | 24,000 | ||||||||||
Unearned Revenue (+R, +SE) | 24,000 | ||||||||||
(To record the unearned revenue) | |||||||||||
(4) | Cash account | Unearned Revenue account | |||||||||
$24,000 | $24,000 | ||||||||||
b.
To prepare: A four part table by using the given information. Items (a)-(f) are independent of one another.
b.
Explanation of Solution
The four part table is shown below:
(1) | Company MSM received Utilities services on account at a cost of $3,000. | ||||||||||
(2) | Assets | = | Liabilities | + | Stockholders’ Equity | ||||||
Accounts payable +$3,000 |
Utilities expense (+E) -$3,000 | ||||||||||
(3) | Account Names | Debit ($) | Credit ($) | ||||||||
Utilities expense(+E, -SE) | 3,000 | ||||||||||
Accounts payable (+L) | 3,000 | ||||||||||
(To record the utilities expense) | |||||||||||
(4) | Accounts payable account | Utilities expense account | |||||||||
$3,000 | $3,000 | ||||||||||
c.
To prepare: A four part table by using the given information. Items (a)-(f) are independent of one another.
c.
Explanation of Solution
The four part table is shown below:
(1) | Company MSM provided $2,000 of subscriptions for which it had been received the payment previously. | ||||||||||
(2) | Assets | = | Liabilities | + | Stockholders’ Equity | ||||||
Unearned Revenue -$2,000 |
Subscription revenue (+R) +$2,000 | ||||||||||
(3) | Account Names | Debit ($) | Credit ($) | ||||||||
Unearned revenue (-L) | 2,000 | ||||||||||
Subscription Revenue (+R, +SE) | 2,000 | ||||||||||
(To record the subscription revenue) | |||||||||||
(4) | Unearned Revenue account | Subscription revenue account | |||||||||
$2,000 | $2,000 | ||||||||||
d.
To prepare: A four part table by using the given information. Items (a)-(f) are independent of one another.
d.
Explanation of Solution
The four part table is shown below:
(1) | On March 31, 2015, Company MSM recorded an |
||||||||||||
(2) | Assets | = | Liabilities | + | Stockholders’ Equity | ||||||||
Accumulated | Depreciation | ||||||||||||
Depreciation–Equipment (+xA) –$10,000 | Expense (+E) –$10,000 | ||||||||||||
(3) | Account Names | Debit ($) | Credit ($) | ||||||||||
Depreciation Expense (+E, –SE) | 10,000 | ||||||||||||
|
10,000 | ||||||||||||
(To record accumulated depreciation) | |||||||||||||
(4) | Accumulated Depreciation–Equipment account | Depreciation Expense account | |||||||||||
$10,000 | $10,000 |
e.
To prepare: A four part table by using the given information. Items (a)-(f) are independent of one another.
e.
Explanation of Solution
The four part table is shown below:
(1) | On April 1, Company MSM paid $5,000 rent in advance of obtaining its benefits. | ||||||||||
(2) | Assets | = | Liabilities | + | Stockholders’ Equity | ||||||
Cash –$5,000 | |||||||||||
Prepaid Rent +$5,000 | |||||||||||
(3) | Account Names | Debit ($) | Credit($) | ||||||||
Prepaid Rent (+A) | 5,000 | ||||||||||
Cash (–A) | 5,000 | ||||||||||
(To record prepaid rent) | |||||||||||
(4) | Cash account | Prepaid Rent account | |||||||||
$5,000 | $5,000 | ||||||||||
f.
To prepare: A four part table by using the given information. Items (a)-(f) are independent of one another.
f.
Explanation of Solution
The four part table is shown below:
(1) | On April 30, 2015, Company MSM billed customers for $10,000 of advertising services provided on account. | |||||||||
(2) | Assets | = | Liabilities | + | Stockholders’ Equity | |||||
Accounts | Service | |||||||||
Receivable +$10,000 | Revenue (+R) +$10,000 | |||||||||
(3) | Account Names | Debit ($) | Credit ($) | |||||||
10,000 | ||||||||||
Service Revenue (+R, +SE) | 10,000 | |||||||||
(To record providing services on account) | ||||||||||
(4) | Accounts Receivable account | Service Revenue account | ||||||||
$10,000 | $10,000 | |||||||||
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Chapter 4 Solutions
FUND OF FIN ACCTG W/ CONNECT (LL) >BI<
- List the classification of each of the following accounts as A (asset), L (liability), OE (owners equity), R (revenue), or E (expense). Write Debit or Credit to indicate the increase side, the decrease side, and the normal balance side. PART 1: The Accounting Cycle for a Service Business: Analyzing Business Transactionsarrow_forwardRead each definition below and write the number of the definition in the blank beside the appropriate term. The quiz solutions appear at the end of the chapter. Event External event Internal event Transaction Source document Account Chart of accounts General ledger Debit Credit Double-entry system Journal Posting Journalizing General journal Trial balance A numerical list of all accounts used by a company. A list of each account and its balance; used to prove equality of debits and credits. A happening of consequence to an entity. An entry on the right side of an account. An event occurring entirely within an entity. A piece of paper that is used as evidence to record a transaction. The act of recording journal entries. An entry on the left side of an account. The process of transferring amounts from a journal to the ledger accounts. An event involving interaction between an entity and its environment. A record used to accumulate amounts for each individual asset, liability, revenue, expense, and component of stockholders equity. A book, a file, a hard drive, or another device containing all of the accounts. A chronological record of transactions. Any event that is recognized in a set of financial statements. The journal used in place of a specialized journal. A system of accounting in which every transaction is recorded with equal debits and credits and the accounting equation is kept in balance.arrow_forwardThe following information pertains to Crossroads Consulting, Inc. Match each of the following parts of Crossroads accounting information system in the left-hand column with the appropriate item(s) from the right-hand column. You may use items in the right-hand column more than once or not at all. There may be several answers for each item in the left-hand column. You may choose items in the right-hand column more than once.arrow_forward
- This problem is designed to enable you to apply the knowledge you have acquired in the preceding chapters. In accounting, the ultimate test is being able to handle data in real life situations. This problem will give you valuable experience. CHART OF ACCOUNTS You are to record transactions in a two-column general journal. Assume that the fiscal period is one month. You will then be able to complete all of the steps in the accounting cycle. When you are analyzing the transactions, think them through by visualizing the T accounts or by writing them down on scratch paper. For unfamiliar types of transactions, specific instructions for recording them are included. However, reason them out for yourself as well. Check off each transaction as it is recorded. Required 1. Journalize the transactions. (Start on page 1 of the general journal if using Excel or Working Papers.) 2. Post the transactions to the ledger accounts. (Skip this step if using CLGL.) 3. Prepare a trial balance. (If using a work sheet, use the first two columns.) 4. Data for the adjustments are as follows: a. Insurance expired during the month, 1,000. b. Depreciation of pool structure for the month, 715. c. Depreciation of fan system for the month, 260. d. Depreciation of sailboats for the month, 900. e. Wages accrued at June 30, 810. Your instructor may want you to use a work sheet for these adjustments. 5. Journalize adjusting entries. 6. Post adjusting entries to the ledger accounts. (Skip this step if using CLGL.) 7. Prepare an adjusted trial balance 8. Prepare the income statement 9. Prepare the statement of owners equity. 10. Prepare the balance sheet. 11. Journalize closing entries. 12. Post closing entries to the ledger accounts. (Skip this step if using CLGL.) 13. Prepare a post-dosing trial balance. Check Figure Trial balance total, 281,858; net income, 7,143; post-dosing trial balance total, 263,341arrow_forwardThis problem is designed to enable you to apply the knowledge you have acquired in the preceding chapters. In accounting, the ultimate test is being able to handle data in real-life situations. This problem will give you valuable experience. CHART OF ACCOUNTS You are to record transactions in a two-column general journal. Assume that the fiscal period is one month. You will then be able to complete all of the steps in the accounting cycle. When you are analyzing the transactions, think them through by visualizing the T accounts or by writing them down on scratch paper. For unfamiliar types of transactions, specific instructions for recording them are included. However, reason them out for yourself as well. Check off each transaction as it is recorded. Required 1. Journalize the transactions. (Start on page 1 of the general journal if using Excel or Working Papers.) 2. Post the transactions to the ledger accounts. (Skip this step if using CLGL.) 3. Prepare a trial balance. (If using a work sheet, use the first two columns.) 4. Data for the adjustments are as follows: a. Insurance expired during the month, 1,020. b. Depreciation of building for the month, 480. c. Depreciation of pool/slide facility for the month, 675. d. Depreciation of pool furniture for the month, 220. e. Wages accrued at July 31, 920. Your instructor may want you to use a work sheet for these adjustments. 5. Journalize adjusting entries. 6. Post adjusting entries to the ledger accounts. (Skip this step if using CLGL.) 7. Prepare an adjusted trial balance. 8. Prepare the income statement. 9. Prepare the statement of owners equity. 10. Prepare the balance sheet. 11. Journalize closing entries. 12. Post closing entries to the ledger accounts. (Skip this step if using CLGL.) 13. Prepare a post-closing trial balance. Check Figure Trial balance total, 601,941; net income, 16,293; post-closing trial balance total, 569,614arrow_forwardACCOUNTING PROCESS Match the following steps of the accounting process with their definitions. Analyzinga. Telling the results Recordingb. Looking at events that have taken place and thinking about how they affect the business Classifying Summarizingc. Deciding the importance of the various reports Reportingd. Aggregating many similar events to provide information that is easy to understand Interpretinge. Sorting and grouping like items together f. Entering financial information into the accounting systemarrow_forward
- PURPOSE OF ACCOUNTING Match the following users with the information needed. 1. Ownersa. Whether the firm can pay its bills on time 2. Managersb. Detailed, up-to-date information to measure business performance (and plan for future operations) 3. Creditorsc. To determine taxes to be paid and whether other regulations are met 4. Government agenciesd. The firms current financial conditionarrow_forwardThe step-by-step process to record business activities and events to keep financial records up to date is ________. A. day-to-day cycle B. accounting cycle C. general ledger D. journalarrow_forwardFollowing is the chart of accounts of Smith Financial Services: Smith completed the following transactions during June (the first month of business): Required 1. Journalize the transactions for June in the general journal. 2. Post the entries to the general ledger accounts. (Skip this step if you are using CLGL.) 3. Prepare a trial balance as of June 30, 20. 4. Prepare an income statement for the month ended June 30, 20. 5. Prepare a statement of owners equity for the month ended June 30, 20. 6. Prepare a balance sheet as of June 30, 20.arrow_forward
- Create your own company describing the nature of the company and what it provides (should be providing services and assume it is a sole proprietorship) . Show in details the Accounting cycle (journalizing in general journal, posting in general ledger and preparing financial statements ) taking into consideration the following : Transaction to start with not less than 25 transactions ( including at least one unearned and one prepaid transactions ) Use the coding for the accounts used During the adjusting period please make sure you have covered all six categories discussed in class Make sure to show the method used to calculate the depreciation highlighting over the reason on choosing this specific method Assume you are using the allowance method in estimating the uncollectible accounts for Accounts receivables . Question Question 4 : Assume that Swann Company uses a periodic inventory system and has these account balances: Purchases $630,000; Purchase Returns and Allowances…arrow_forwardCreate your own company describing the nature of the company and what it provides (should be providing services and assume it is a sole proprietorship) . Show in details the Accounting cycle (journalizing in general journal, posting in general ledger and preparing financial statements ) taking into consideration the following : Transaction to start with not less than 25 transactions ( including at least one unearned and one prepaid transactions ) Use the coding for the accounts used During the adjusting period please make sure you have covered all six categories discussed in class Make sure to show the method used to calculate the depreciation highlighting over the reason on choosing this specific method Assume you are using the allowance method in estimating the uncollectible accounts for Accounts receivables . Question Two : Reineman Supply Company uses a periodic inventory system. During September, the following transactions and events occurred. Sept.3 Purchased 90…arrow_forwardJanis Engle has prepared the following list of statements about the accounting cycle. 1. “Journalize the transactions” is the first step in the accounting cycle. 2. Reversing entries are a required step in the accounting cycle. 3. Correcting entries do not have to be part of the accounting cycle. 4. If a worksheet is prepared, some steps of the accounting cycle are incorporated into the worksheet. 5. The accounting cycle begins with the analysis of business transactions and ends with the preparation of a post-closing trial balance. 6. All steps of the accounting cycle occur daily during the accounting period. 7. The step of “post to the ledger accounts” occurs before the step of “journalize the transactions.” 8. Closing entries must be prepared before financial statements can be prepared. Instructions Identify each statement as true or false. If false, indicate how to correct the statement. Please answer it with proper explanationarrow_forward
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