Week Two Exercise Assignment Revenue and Expenses Essay

1483 Words Jul 5th, 2014 6 Pages
Week Two Exercise Assignment
Revenue and Expenses

1. Recognition of concepts. Jim Armstrong operates a small company that books enter¬tainers for theaters, parties, conventions, and so forth. The company’s fiscal year ends on June 30. Consider the following items and classify each as either (1) pre¬paid expense, (2) unearned revenue, (3) accrued expense, (4) accrued revenue, or (5) none of the foregoing. a Interest owed on the company's bank loan, to be paid in early July Prepaid Expense b Professional fees earned but not billed as of June 30 Accrued Revenue c Office supplies on hand at year-end Prepaid Expense d An advance payment from a client for a performance next month at a convention Unearned Revenue e The payment in
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A. Adjustment of unearned income. B. Unearned Revenue $750 Accrued Revenue $750 C. Increased Revenue $750
• Sally Corporation provided $1,500 of services to Artech Corporation; no billing had been made by December 31. D. Adjustment to record an accrued revenue B. Accounts Receivable $1500 Debit, Services Revenue Credit $1500. C. Increase to total revenue $1500
• Salaries owed to employees at year-end amounted to $1,000. C. Adjustment to record an accrued expense B. Wages Expense (accrued wages) $1000 Debit, Wages payable (credit) $1000 C. Increase of total expenses $1000
• The Supplies account revealed a balance of $8,800, yet only $3,300 of supplies were actually on hand at the end of the period. A. adjust¬ment of a prepaid expense B. Supplies Expense $5,500 (DR), (CR) Supplies $5,500. C. Increase to total expenses by $1650
• The company paid $18,000 on October 1 of the current year to Vantage Property Management. The payment was for 6 months’ rent of Sally Corporation’s headquarters, beginning on November 1. A. adjust¬ment of a prepaid expense B. (DR) Rent Expense $6000 (CR) Prepaid Rent $6000 C. Increase in total expenses
Sally Corporation’s accounting year ends on December 31.
Analyze the five preceding cases individually and determine the following:
a. The type of adjusting entry needed at year-end (Use the following codes: A, adjust¬ment of a prepaid expense; B, adjustment of an unearned revenue; C, adjustment to record an

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