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Copy of Chap004 1.doc
Copy_of_Chap004_1.doc
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Copy of Chap004 1.doc-Chapter 04 - Adjustments, Fi...
Copy_of_Chap004_1.doc-Chapter 04 - Adjustments, Financial Statements,
Copy of Chap004 1.doc-Chapter 04 - ...
Copy_of_Chap004_1.doc-Chapter 04 - Adjustments, Financial Statements,
Page 33
Chapter 04 - Adjustments, Financial Statements, and the Quality of Earnings
P4–3.
Req. 1
a.
Deferred expense
e.
Accrued revenue
b.
Deferred expense
f.
Deferred expense
c.
Accrued expense
g.
Accrued expense
d.
Accrued expense
h.
Accrued expense
Req. 2
a.
Depreciation expense (+E,
SE)
...................................
4,000
Accumulated depreciation (+XA,
A)
...................
4,000
b.
Supplies expense (+E,
SE)
..........................................
1,150
Supplies (
A)
........................................................
1,150
(Beg. Inventory of $400 + Purchases $1,000 – Ending Inventory $250)
c.
Repairs expense (+E,
SE)
...........................................
1,200
Accounts payable (+L)
........................................
1,200
d.
Property tax expense (+E,
SE)
....................................
1,500
Property tax payable (+L)
.....................................
1,500
e.
Accounts receivable (+A)
..............................................
6,000
Service revenue (+R, +SE)
.................................
6,000
f.
Insurance expense (+E,
SE)
........................................
200
Prepaid insurance (
A)
.......................................
200
($1,200 ÷ 36 months x 6 months of coverage)
g.
Interest expense (+E,
SE)
............................................
385
Interest payable (+L)
.............................................
385
($11,000 x .14 x 3/12)
h.
Income tax expense (+E,
SE)
......................................
8,270
Income tax payable (+L)
.......................................
8,270
To accrue income tax expense incurred but not paid:
Income before adjustments (given)
$30,000
Effect of adjustments (a) through (g)
(2,435)
(–$4,000–$1,150–$1,200
Income before income taxes
27,565
–$1,500+$6,000–$200–$385)
Income tax rate
x
30
%
Income tax expense
$ 8,270
(rounded)
4-33
Page 34
Chapter 04 - Adjustments, Financial Statements, and the Quality of Earnings
P4–4.
Req. 1
a.
Deferred revenue
e.
Deferred expense
b.
Accrued expense
f.
Accrued revenue
c.
Deferred expense
g.
Accrued expense
d.
Deferred revenue
h.
Accrued expense
Req. 2
Balance Sheet
Income Statement
Transaction
Assets
Liabilities
Stockholders’
Equity
Revenues
Expenses
Net
Income
a.
NE
–5,600
+5,600
+5,600
NE
+5,600
b.
NE
+540
–540
NE
+540
–540
c.
–2,500
NE
–2,500
NE
+2,500
–2,500
d.
NE
–500
+500
+500
NE
+500
e.
–1,500
NE
–1,500
NE
+1,500
–1,500
f.
+4,000
NE
+4,000
+4,000
NE
+4,000
g.
NE
+14,000
–14,000
NE
+14,000
–14,000
h.
NE
+500
–500
NE
+500
–500
Computations:
a.
$8,400 ÷ 6 months = $1,400 per month x 4 months = $5,600 earned
b.
$18,000 principal x .12 x 3/12 = $540 interest incurred
c.
Amount is given.
d.
$3,000 unearned x 2/12 = $500 earned
e.
$9,000 ÷ 12 months = $750 per month x 2 months of coverage = $1,500 incurred
f.
Amount is given.
g.
Amount is given.
h.
Amount is given.
4-34
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