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Copy of Chap004 1.doc
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Copy of Chap004 1.doc-Chapter 04 - Adjustments, Fi...
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Copy_of_Chap004_1.doc-Chapter 04 - Adjustments, Financial Statements,
Page 4
Chapter 04 - Adjustments, Financial Statements, and the Quality of Earnings
ANSWERS TO MULTIPLE CHOICE
1.
c
2.
b
3.
b
4.
a
5.
b
6.
c
7.
c
8.
d
9.
c
10.
a
4-4
Page 5
Chapter 04 - Adjustments, Financial Statements, and the Quality of Earnings
Authors' Recommended Solution Time
(Time in minutes)
Mini-exercises
Exercises
Problems
Alternate
Problems
Comprehensive
Problems
Cases and
Projects
No.
Time
No.
Time
No.
Time
No.
Time
No.
Time
No.
Time
1
5
1
10
1
15
1
15
1
60
1
25
2
5
2
10
2
20
2
20
2
60
2
25
3
3
3
10
3
20
3
20
3
25
4
5
4
15
4
20
4
20
4
20
5
5
5
10
5
20
5
20
5
25
6
5
6
20
6
25
6
25
6
40
7
5
7
20
7
30
7
30
7
45
8
5
8
20
8
35
9
5
9
15
9
50
10
5
10
20
10
25
11
5
11
10
11
*
12
3
12
20
13
15
14
15
15
20
16
20
17
20
18
20
19
10
20
15
*
Due to the nature of this project, it is very difficult to estimate the amount of time
students will need to complete the assignment.
As with any open-ended project, it is
possible for students to devote a large amount of time to these assignments.
While
students often benefit from the extra effort, we find that some become frustrated by the
perceived difficulty of the task.
You can reduce student frustration and anxiety by
making your expectations clear.
For example, when our goal is to sharpen research
skills, we devote class time to discussing research strategies.
When we want the
students to focus on a real accounting issue, we offer suggestions about possible
companies or industries.
4-5
Page 6
Chapter 04 - Adjustments, Financial Statements, and the Quality of Earnings
MINI-EXERCISES
M4–1.
Hagadorn Company
Adjusted Trial Balance
At June 30, 2011
Debit
Credit
Cash
$
175
Accounts receivable
420
Inventories
710
Prepaid expenses
30
Buildings and equipment
1,400
Accumulated depreciation
$
250
Land
300
Accounts payable
250
Accrued expenses payable
160
Income taxes payable
50
Unearned fees
90
Long-term debt
1,460
Contributed capital
400
Retained earnings
150
Sales revenue
2,400
Interest income
60
Cost of sales
780
Salaries expense
640
Rent expense
460
Depreciation expense
150
Interest expense
70
Income taxes expense
135
Totals
$
5,270
$
5,270
M4–2.
(1) D
(2) C
(3) A
(4) D
(5) A
(6) B
(7) B
(8) C
4-6
Page 7
Chapter 04 - Adjustments, Financial Statements, and the Quality of Earnings
M4–3.
(1) D
(2) C
(3) A
(4) B
M4–4.
(a)
1.
Rent revenue is now earned.
2.
Cash was received in the past – a deferred revenue was recorded.
3.
Amount: $1,000
4 months = $250 earned
Adjusting entry –
Unearned rent revenue (
L)
..........................
250
Rent revenue (+R, +SE)
.........................
250
(b)
1.
Depreciation Expense on the equipment is now incurred.
2.
Cash was paid in the past when the equipment was purchased -- a
deferred expense was recorded.
The net book value of the equipment is
overstated.
Accumulated Depreciation (the contra-account) needs to be
increased for the amount used during the period.
3.
Amount:
$3,000 given
Adjusting entry –
Depreciation expense (+E,
SE)
...................
3,000
Accumulated depreciation (+XA,
A)
......
3,000
(c)
1.
Insurance expense was incurred in the period.
2.
Cash was paid for the insurance in the past – a deferred expense was
recorded.
3.
Amount:
$4,200
x 6/24 = $1,050
Adjusting entry –
Insurance expense (+E,
SE)
........................
1,050
Prepaid insurance (
A)
...........................
1,050
4-7
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