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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 42
Chapter 04 - Adjustments, Financial Statements, and the Quality of Earnings
AP4–3.
Req. 1
a.
Deferred expense
e.
Deferred expense
b.
Accrued revenue
f.
Deferred expense
c.
Deferred expense
g.
Accrued revenue
d.
Accrued expense
h.
Accrued expense
Req. 2
a.
Supplies expense (+E,
SE)
..........................................
1,250
Supplies (
A)
........................................................
1,250
(Beg. Inventory of $450 + Purchases $1,200 – Ending Inventory $400)
b.
Accounts receivable (+A)
..............................................
7,500
Catering revenue (+R, +SE)
...............................
7,500
c.
Insurance expense (+E,
SE)
........................................
200
Prepaid insurance (
A)
.......................................
200
($1,200 x 2/12 months of coverage)
d.
Repairs expense (+E,
SE)
...........................................
600
Accounts payable (+L)
........................................
600
e.
Rent expense (+E,
SE)
................................................
700
Prepaid rent (
A)
....................................................
700
($2,100 x 1/3 months of rent used)
f.
Depreciation expense (+E,
SE)
...................................
2,600
Accumulated depreciation (+XA,
A)
...................
2,600
g.
Interest receivable (+A)
.................................................
80
Interest income (+R, +SE)
....................................
80
($4,000 x .12 x 2/12)
h.
Income tax expense (+E,
SE)
......................................
7,389
Income tax payable (+L)
.......................................
7,389
4-42
Page 43
Chapter 04 - Adjustments, Financial Statements, and the Quality of Earnings
To accrue income tax expense incurred but not paid:
Income before adjustments (given)
$22,400
Effect of adjustments (a) through (g)
+ 2,230
(-$1,250+$7,500
Income before income taxes
24,630
-$200-$600-$700
Income tax rate
x
30
%
-$2,600+$80)
Income tax expense
$ 7,389
AP4–4.
Req. 1
a.
Deferred expense
e.
Deferred revenue
b.
Deferred revenue
f.
Accrued expense
c.
Accrued expense
g.
Accrued expense
d.
Deferred expense
h.
Accrued revenue
Req. 2
Balance Sheet
Income Statement
Transaction
Assets
Liabilities
Stockholders’
Equity
Revenues
Expenses
Net
Income
a.
–1,600
NE
–1,600
NE
+1,600
–1,600
b.
NE
–225
+225
+225
NE
+225
c.
NE
+900
–900
NE
+900
–900
d.
–3,000
NE
–3,000
NE
+3,000
–3,000
e.
NE
–700
+700
+700
NE
+700
f.
NE
+675
–675
NE
+675
–675
g.
NE
+500
–500
NE
+500
–500
h.
+2,000
NE
+2,000
+2,000
NE
+2,000
4-43
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