ACCT 2301 Chapter 3 Interactive Presentations Homework PDF

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ACCT 2301 Chapter 3 Interactive Presentations Homework Interim financial statements: cover less than one year, usually spanning one-, three-, or six-month periods. Annual reporting periods can cover: a calendar year, a 52-week period, 12 consecutive months The primary difference between the accrual basis and the cash basis of accounting is: The accrual basis records revenues when services or products are delivered and records expenses when incurred; The cash basis records revenues when cash is received and records expenses when cash is paid. Aurora Corporation operated without insurance coverage for the first month of operations. Then, on February 1, the company paid the $4,800 premium on a two-year insurance policy with benefits beginning on that date. The company uses the accrual basis. How much insurance expense will be reported on the company’s income statement for their first year ended December 31? $2,200 Aurora Corporation operated without insurance coverage for the first month of operations. Then, on February 1, the company paid the $4,800 premium on a two-year insurance policy with benefits beginning on that date. The company uses the cash basis. How much insurance expense will be reported on the company’s income statement for their first year ended December 31? $4,800 The revenue recognition principle requires that revenue be recorded: When the goods or services are provided to customers Place the steps in the three-step adjusting process in the correct order: 1. Determine what the current account balance equals. 2. Determine what the correct account balance should equal. 3. Record an adjusting entry to get from step 1 to step 2. Adjusting entries affect: one or more balance sheet accounts and one or more income statement accounts. Prepaid expenses reflect transactions when cash is paid: before the related expense is recognized On January 1, the company purchased equipment that cost $10,000. The equipment is expected to be worth about (or has a salvage value of) $1,000 at the end of its useful life in five years. The company uses straight-line depreciation. It has not recorded any adjustments relating to this equipment during the current year. Complete the necessary December 31 journal entry by selecting the account names from the pull-down menus and entering dollar amounts in the debit and credit columns. N o 1

Date

General Journal

Debits

Dec. 31

Depreciation Expense Accumulated Depreciation

1800

Credits

1800

On November 1, the company rented space to another tenant. A check in the amount of $9,000, representing three months’ rent in advance, was received from the tenant on that date. The payment was recorded with a credit to the Unearned Rent Revenue account. Date Dec. 31

General Journal Unearned rent revenue

Debits 6000

Credits

Rent revenue

6000

The company employs a single employee who works all five weekdays and is paid on the following Monday. The employee works the entire week ending on Friday, December 30. The employee earns $800 per day. Date Dec. 31

General Journal Salaries expense Salaries payable

Debit 4000

Credit 4000

On Saturday, December 31, the company’s owner provided ten hours of service to a customer. The company bills $100 per hour for services provided on weekends. Payment has not yet been received. The owner did not stop in the office on Saturday; as such, on December 31, the services were unbilled and unrecorded. Date Dec. 31

General Journal Accounts receivable Services revenue

Debit 1000

Credit 1000

Before the adjusting entry for a deferral of an expense, the expenses will be _____ and the assets will be _____. Understated; Overstated. An adjusted trial balance includes which of the following accounts: all accounts and their balances Classify the following accounts into the correct financial statement using the drop-down list. Consulting Revenue Rent Expense Dividends

Income Statement Income Statement Statement of Retained Earnings

Classify the following accounts into the correct account type using the drop-down list. Accounts Receivable Unearned Revenue Accounts Payable

Asset Liability Liability

Place the steps in the four-step closing process in the correct order: 1 2 3 4

Close the revenue accounts. Close the expense accounts. Close the income summary account. Close the dividends account.

The company’s adjusted trial balance includes the following accounts balances: Cash, $15,000; Equipment, $85,000; Accumulated Depreciation, $25,000; Accounts Payable, $10,000; Retained Earnings, $59,000; Dividends, $2,000; Fees Revenue, $56,000; Depreciation Expense, $25,000; and Salaries Expense, $23,000. All accounts have normal balances.

Date Dec. 31

General Journal Fees revenue Income summary

Debit 56000

Income summary Retained earnings

8000

Credit 56000

8000

Identify the accounts that would appear on the post-closing trial balance. Cash Dividends Depreciation expense Retained earnings Income summary

Included Not Included Not Included Included Not Included

The accounting cycle consists of 10 steps. Identify the order in which the first five steps will be performed by selecting from the drop down items. 1 2 3 4 5

Analyze transactions Journalize Post Prepare unadjusted trial balance Adjust accounts

An unclassified balance sheet: broadly groups assets, liabilities and equity The company’s unclassified balance sheet reported the assets listed in the above table. The total current assets that would be reported on a classifies balance sheet prepared for the company are: $30,750...