Accounting I SLO 1 - Accounting Cycl File Preview Selected entries and account balances at 12/31 BEFORE adjustment: A/R 6,500 Accum. Deprec. 4,000 Supplies 6/31 2,200 10/31 3,400 Bal. 5,600 Wages Payable 600 Prepaid Insurance 1/1 4,800 7/1 7,200 Bal. 12,000 Equipment 80,000 Fees Earned Supplies Expense 56,800 Unearned Revenue 12,000 Deprec. Expense Insurance Expense Wages Expense 22,100 The following information was obtained from the accounting records: 1. An inventory of supplies indicates supplies with a cost of $1,800 remain 2. The beginning balance of Prepaid insurance represents a one-year policy purchased the previous year. The July 1 amount represents the purchase of a one-year policy. 3. Of the Unearned Revenue, 40% remained unearned at year-end. 4. The Equipment has a ten-year life and is depreciated using the straight-line method. 5. Salaries are paid every two weeks on Friday (10 workdays). The next payroll cycle ends on January 2nd. Total payroll on that date will be $3,000. 6. Services rendered but unbilled at year end amounted to $3,500. Required: 1. Using the information above, prepare the necessary adjusting entries in "Adjusting Entries" tab and post to the T-accounts above; 2. Based on the adjusted balances above, prepare the necessary closing entries in "Closing Entries" tab and post to the T-accounts above 3. Please answer the following questions: A. What is the effect on Net Income of making Adjustments 1-6? B. If Adjusting entry #3 is omitted, which of the following financial statement items will be overstated or understated? Assets Liabilities Stockholder's Equity Revenue Expense Net Income C. Which accounting principles govern the recognition of revenue and expense in an accounting period? D. What is the Net Income for the period? What is the balance in Retained Earnings at 12/31?
Accounting I SLO 1 - Accounting Cycl File Preview Selected entries and account balances at 12/31 BEFORE adjustment: A/R 6,500 Accum. Deprec. 4,000 Supplies 6/31 2,200 10/31 3,400 Bal. 5,600 Wages Payable 600 Prepaid Insurance 1/1 4,800 7/1 7,200 Bal. 12,000 Equipment 80,000 Fees Earned Supplies Expense 56,800 Unearned Revenue 12,000 Deprec. Expense Insurance Expense Wages Expense 22,100 The following information was obtained from the accounting records: 1. An inventory of supplies indicates supplies with a cost of $1,800 remain 2. The beginning balance of Prepaid insurance represents a one-year policy purchased the previous year. The July 1 amount represents the purchase of a one-year policy. 3. Of the Unearned Revenue, 40% remained unearned at year-end. 4. The Equipment has a ten-year life and is depreciated using the straight-line method. 5. Salaries are paid every two weeks on Friday (10 workdays). The next payroll cycle ends on January 2nd. Total payroll on that date will be $3,000. 6. Services rendered but unbilled at year end amounted to $3,500. Required: 1. Using the information above, prepare the necessary adjusting entries in "Adjusting Entries" tab and post to the T-accounts above; 2. Based on the adjusted balances above, prepare the necessary closing entries in "Closing Entries" tab and post to the T-accounts above 3. Please answer the following questions: A. What is the effect on Net Income of making Adjustments 1-6? B. If Adjusting entry #3 is omitted, which of the following financial statement items will be overstated or understated? Assets Liabilities Stockholder's Equity Revenue Expense Net Income C. Which accounting principles govern the recognition of revenue and expense in an accounting period? D. What is the Net Income for the period? What is the balance in Retained Earnings at 12/31?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Transcribed Image Text:Accounting I
SLO 1 - Accounting Cycl
File Preview
Selected entries and account balances at 12/31 BEFORE adjustment:
A/R
6,500
Accum.
Deprec.
4,000
Supplies
6/31
2,200
10/31
3,400
Bal.
5,600
Wages Payable
600
Prepaid Insurance
1/1
4,800
7/1
7,200
Bal.
12,000
Equipment
80,000
Fees
Earned
Supplies Expense
56,800
Unearned Revenue
12,000
Deprec. Expense
Insurance Expense
Wages Expense
22,100
The following information was obtained from the accounting records:
1. An inventory of supplies indicates supplies with a cost of $1,800 remain
2. The beginning balance of Prepaid insurance represents a one-year policy purchased the previous year.
The July 1 amount represents the purchase of a one-year policy.
3. Of the Unearned Revenue, 40% remained unearned at year-end.
4. The Equipment has a ten-year life and is depreciated using the straight-line method.
5. Salaries are paid every two weeks on Friday (10 workdays). The next payroll cycle ends on January 2nd.
Total payroll on that date will be $3,000.
6. Services rendered but unbilled at year end amounted to $3,500.
Required:
1. Using the information above, prepare the necessary adjusting entries in "Adjusting Entries" tab and post to the T-accounts above;
2. Based on the adjusted balances above, prepare the necessary closing entries in "Closing Entries" tab and post to the T-accounts above
3. Please answer the following questions:
A. What is the effect on Net Income of making Adjustments 1-6?
B. If Adjusting entry #3 is omitted, which of the following financial statement items will be overstated or understated?
Assets
Liabilities
Stockholder's Equity
Revenue
Expense
Net Income
C. Which accounting principles govern the recognition of revenue and expense in an accounting period?
D. What is the Net Income for the period? What is the balance in Retained Earnings at 12/31?
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