ACC 205 Week 2 Exercise Assignment- Revenue and Expenses
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- Recognition of concepts. Jim Armstrong operates a small company that books entertainers 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) prepaid 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
b Professional fees earned but not billed as of June 30
c Office supplies on hand at year-end
d An advance payment from a client for a performance next month at a convention
e The payment in part (d) from the client's point of view
f Amounts paid on June 30 for a 1-year insurance policy
g The bank loan payable in part (a)
h Repairs to the firm's copy machine, incurred and paid in June
- Understanding the closing process. Examine the following list of accounts:
Accumulated Depreciation: Building
Alex Kenzy, Drawing
Which of the preceding accounts
- Adjusting entries and financial statements. The following information pertains to Sally Corporation:
- The company previously collected $1,500 as an advance payment for services to be rendered in the future. By the end of December, one half of this amount had been earned.
- Sally Corporation provided $1,500 of services to Artech Corporation; no billing had been made by December 31.
- Salaries owed to employees at year-end amounted to $1,000.
- 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.
- 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.
Sally Corporation’s accounting year ends on December 31.
Analyze the five preceding cases individually and determine the following:
- type of adjusting entry needed at year-end (Use the following codes: A, adjustment of a prepaid expense; B, adjustment of an unearned revenue; C, adjustment to record an accrued expense; or D, adjustment to record an accrued revenue.)
- Adjusting entries. You have been retained to examine the records of Mary’s Day Care Center as of December 31, 20X3, the close of the current reporting period. In the course of your examination, you discover the following:
- On January 1, 20X3, the Supplies account had a balance of $1,350. During the year, $5,520 worth of supplies was purchased, and a balance of $1,620 remained unused on December 31.
- Unrecorded interest owed to the center totaled $275 as of December 31.
- All clients pay tuition in advance, and their payments are credited to the Unearned Tuition Revenue account. The account was credited for $65,500 on August 31. With the exception of $15,500 all amounts were for the current semester ending on December 31.
- Depreciation on the school’s van was $3,000 for the year.
- On August 1, the center began to pay rent in 6-month installments of $24,000. Mary wrote a check to the owner of the building and recorded the check in Prepaid Rent, a new account.
- Two salaried employees earn $400 each for a 5-day week. The employees are paid every Friday, and December 31 falls on a Thursday.
- Mary’s Day Care paid insurance premiums as follows, each time debiting Prepaid Insurance: