Luong Corporation encounters the following situations:Identify what type of adjusting entry (prepaid expense, unearned revenue, accrued expense, oraccrued revenue) is needed in each situation at December 31, 2020.1. Luong collects $1,300 from a customer in 2020 for services to beperformed in 2021.2. Luong incurs utility expense which is not yet paid in cash or recorded.3. Luong's employees worked 3 days in 2020 but will not be paid until 2021.4. Luong performs services for customers but has not yet received cash orrecorded the transaction.5. Luong paid $2,800 rent on December 1 for the 4 months startingDecember 1.6. Luong received cash for future services and recorded a liability until theservice was performed.7. Luong performed consulting services for a client in December 2020. OnDecember 31, it had not billed the client for services provided of $1,200.8. Luong paid cash for an expense and recorded an asset until the item wasused up.9. Luong purchased $900 of supplies in 2020; at year-end, $400 of suppliesremain unused.10. Luong purchased equipment on January 1, 2020; the equipment will beused for 5 years.11. Luong borrowed $12,000 on October 1, 2020, signing an 8% one-yearnote payable.

The adjustment entries are prepared to adjust the revenue and expenses current period.

Answered: Luong Corporation encounters the…

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

Chapter3: Accrual Accounting

Section: Chapter Questions

Problem 2MCQ: In December 2019, Swanstrom Inc. receives a cash payment of $3,500 for services performed in...

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In December 2019, Swanstrom Inc. receives a cash payment of $3,500 for services performed in December 2019 and a cash payment of S4,500 for services to be performed in January 2020. Swanstrom also receives the December utility bill for S600 but does not pay this bill until 2020. For 2019, under the accrual basis of accounting, Swanstrom would recognize: a. $8,000 of revenue and $600 of expense. b. $8,000 of revenue and $0 of expense. c. $3,500 of revenue and $600 of expense. d. $3,500 Of revenue and $0 of expense.
On June 7,2019, Dilby Mechanical Corp completed $50,00 of servicing work for a client and billed them for that amount plus a GST of $2,500 and PST of $3,50; terms are N20. Required: a. Prepare the journal entry as it would appear in Dilby's accounting records. b. Assume the receivable established on June 7 was collected on June 27. Record the entry.
At the end of 2019, Framber Company received $8000 as a prepayment for renting a building to a tenant during 2020. The company erroneously recorded the transaction by debiting Cash and crediting Rent Revenue in 2019 instead of 2020. Upon discovery of this error in 2020, what correcting journal entry will Framber make? Ignore income taxes.
Santana Rey, owner of Business Solutions, realizes that she needs to begin accounting for bad debts expense. Assume that Business Solutions has total revenues of $44,000 during the first three months of 2020 and that the Accounts Receivable balance on March 31, 2020, is $22,867. Required 1. Prepare the adjusting entry to record bad debts expense on March 31, 2020, under each separate assumption. There is a zero unadjusted balance in the Allowance for Doubtful Accounts at March 31. a. Bad debts are estimated to be 1% of total revenues. b. Bad debts are estimated to be 2% of accounts receivable. (Round to the dollar.) 2. Assume that Business Solutions’s Accounts Receivable balance at June 30, 2020, is $20,250 and that one account of $100 has been written off against the Allowance for Doubtful Accounts since March 31, 2020. If Rey uses the method in part 1b, what adjusting journal entry is made to recognize bad debts expense on June 30, 2020? 3. Should Rey consider adopting the direct…
Stephen's Ontime Delivery (SOD) is a delivery company. On January 1, 2019, one of its customers paid $10,800 in cash to SOD for services to be provided over the course of the year (until December 31, 2019). The amount of work SOD will do for the customer will be spread evenly throughout the year. The company has a monthly accounting period. On January 1, 2019, SOD recorded the following incorrect entry to account for the $10,800 payment. • Increase cash by $10,800 • Increase revenue by $10,800 a) Has SOD overstated or understated revenue in January 2019? b) By how much has SOD overstated or understated revenue at January 31, 2019? $
From the following given data, prepare adjusting journal entries for the year ended December 31, 2021: Purchase of supplies for P3,000. At the end of the year, P1,000 cost of supplies were actually used. Expense method was used in payment of supplies. A P48,000 6%, 120-day note was received from a client dated November 1, 2021. The interest was not yet collected at the end of the accounting period. Before adjustments, the balance of laundry supplies inventory was P35,000. Physical count of supplies inventory was P15,000. An office equipment was acquired on May 31, 2021 for P150,000. The office equipment has an estimated life of 5 years without scrap value. A copying machine was rented on November 30, 2021 at P1.00/copy of production. It reported to have produced 300 copies as of December 31, 2021. No payment was made as of this date. Signed an advertising contract on December 1, 2021 with a radio station for P3,500. The contract will commence upon payment on December 15. 2021 and will…
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Charles Whyte commenced business on May 1 2019, making up his accounts to September 30 annually. The statement of the Profit or Loss Account for the first 17 months ended September 30,2020 is as follows: Gross Profit Less: Repairs and maintenance. Local transport and travelling Salaries and wages Provision for bad debts Preliminary expenses Depreciation Bank interest and charges Legal and professional charges General expenses (Allowable) Clearing expense on motor vehicle Bad debt Amounts written off Loan to absconded employee (ii) (iii) (iv) (1) You are also given the following additional information. Bad debt £ (v) £'000 30/10/2018 1/1/2019 1/5/2019 1,500 2,450 6,500 1,350 960 1,630 1,520 1,380 1,870 685 2,800 Building Motor Vehicle Furniture and fittings Legal and professional charges were: Salaries and wages: The following qualifying capital expenditures were acquired on: Fines for contravention of the law Legal expenses for tax appeal Audit and accountancy charges £'000 19,300…
The information necessary for preparing the 2021 year-end adjusting entries for Bearcat Personal Training Academy appears below. Bearcat’s fiscal year-end is December 31. 1. Depreciation on the equipment for the year is $7,000. 2. Salaries earned (but not paid) from December 16 through December 31, 2021, are $4,000. 3. On March 1, 2021, Bearcat lends an employee $20,000. The employee signs a note requiring principal and interest at 9% to be paid on February 28, 2022. 4. On April 1, 2021, Bearcat pays an insurance company $13,200 for a two-year fire insurance policy. The entire $13,200 is debited to Prepaid Insurance at the time of the purchase. 5. Bearcat uses $1,700 of supplies in 2021. 6. A customer pays Bearcat $2,700 on October 31, 2021, for three months of personal training to begin November 1, 2021. Bearcat credits Deferred Revenue at the time of cash receipt.7. On December 1, 2021, Bearcat pays $6,000 rent to the owner of the building. The payment represents rent for December…
Blossom Industries received its 2024 annual property tax bill for $21,300 on May 1. The taxes covered the period January-December, were payable by June 30 and were paid on that date. Blossom has a December 31 fiscal year end and makes annual adjusting entries. (a) Prepare the journal entry to record the receipt of the property tax bill on May 1. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No entry" for the account titles and enter O for the amounts. List debit entry before credit entry.) Date Account Titles and Explanation Debit Credit May 1
On July 1, 2020, Crane Co. pays $14,760 to Cheyenne Insurance Co. for a 3-year insurance policy. Both companies have fiscal years ending December 31. For Crane Co., journalize the entry on July 1 and the adjusting entry on December 31. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No entry" for the account titles and enter O for the amounts. Record journal entries in the order presented in the problem.)

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