Classify the following items as (a) deferred expense (prepaid expense), (b) deferred revenue (unearned revenue), (c) accrued expense (accrued liability), or (d) accrued revenue (accrued asset). Use CAPITAL LETTERS. A two-year premium paid on a fire insurance policy Electric bill owed but not yet paid Office Supplies on hand Wages owed but not yet paid Telephone bill owed but payable in the following period Subscriptions collected in advance by a newspaper publisher Service Revenue collected but not yet earned Service Revenue already earned but not yet received Interest paid in advance from a bank loan Rent received in advance Services rendered but not yet collected Advertising contract paid in advance for one year Income collected but not yet earned Rent paid in advance Interest collected in advance by the creditor 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15.

Classify the following items as (a) deferred expense (prepaid expense), (b) deferred revenue (unearned revenue), (c) accrued expense (accrued liability), or (d) accrued revenue (accrued asset). Use CAPITAL LETTERS. A two-year premium paid on a fire insurance policy Electric bill owed but not yet paid Office Supplies on hand Wages owed but not yet paid Telephone bill owed but payable in the following period Subscriptions collected in advance by a newspaper publisher Service Revenue collected but not yet earned Service Revenue already earned but not yet received Interest paid in advance from a bank loan Rent received in advance Services rendered but not yet collected Advertising contract paid in advance for one year Income collected but not yet earned Rent paid in advance Interest collected in advance by the creditor 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Entries for Installment Note Transactions On January 1, Year 1, Wedekind Company issued a $66,000, 4-year, 8% installment note to Shannon Bank. The note requires annual payments of $19,927, beginning on December 31, Year 1. Journalize the entries to record the following: Year 1 Jan. 1 Issued the note for cash at its face amount. Dec. 31 Paid the annual payment on the note, which consisted of interest of $5,280 and principal of $14,647. Year 4 Dec. 31 Paid the annual payment on the note, including $1,476 of interest. The remainder of the payment reduced the principal balance on the note. Issued the note for cash at its face amount. If an amount box does not require an entry, leave it blank. Year 1, Jan. 1 Paid the annual payment on the note, which consisted of interest of $5,280 and principal of $14,647. If an amount box does not require an entry, leave it blank. Year 1, Dec. 31 12:09
State whether each situation is a prepaid expense, unearned revenue, accrued revenue or an accrued expense. 1. 2. 3. 4. Unrecorded interest on savings bonds is is $245. Property taxes that have been incurred but that have not yet been paid or recorded amount to $300. Legal fees of $1,000 were collected in advance. By year end 60 percent were still unearned. Prepaid insurance had a $500 balance prior to adjustment. By year end, 40 percent was still unexpired.
Journalize the following entries on the books of the borrower and creditor. Label accordingly. (Assume a 360-day year is used for interest calculations.) June 1 James Co. purchased merchandise on account from O’Leary Co., $90,000, terms n/30. The cost of merchandise sold was $54,000. 30 James Co. issued a 60-day, 5% note for $90,000 on account. Aug. 29 James Co. paid the amount due.