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On October 1, Year 1, Josh Smith, attorney, accepted an $33,000 cash advance from his client, James Company, for services to be performed over the next six months. Required a. Record the deferral and the related December 31, Year 1, adjustment for Josh Smith in an accounting equation. (Do not round intermediate calculations. Enter any decreases to account balances with a minus sign.) JOSH SMITH ATTORNEY-YEAR 1 Event Assets Liabilities + Stockholders' Equity Unearned Cash Revenue Cash collected Revenue earned Common Stock Retained Earnings

On October 1, Year 1, Josh Smith, attorney, accepted an $33,000 cash advance from his client, James Company, for services to be performed over the next six months. Required a. Record the deferral and the related December 31, Year 1, adjustment for Josh Smith in an accounting equation. (Do not round intermediate calculations. Enter any decreases to account balances with a minus sign.) JOSH SMITH ATTORNEY-YEAR 1 Event Assets Liabilities + Stockholders' Equity Unearned Cash Revenue Cash collected Revenue earned Common Stock Retained Earnings

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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### Understanding Deferrals and Adjustments in Accounting On October 1, Year 1, Josh Smith, an attorney, accepted a $33,000 cash advance from his client, James Company, for services to be performed over the next six months. #### Required: **a.** Record the deferral and the related December 31, Year 1, adjustment for Josh Smith in an accounting equation. (Do not round intermediate calculations. Enter any decreases to account balances with a minus sign.) #### Josh Smith Attorney - Year 1 <table style="width:100%; border: 1px solid black; border-collapse: collapse;"> <tr> <th style="border: 1px solid black; padding: 5px; background-color: #f2f2f2;">Event</th> <th style="border: 1px solid black; padding: 5px; background-color: #f2f2f2;">Assets</th> <th style="border: 1px solid black; padding: 5px; background-color: #f2f2f2;">= Liabilities</th> <th style="border: 1px solid black; padding: 5px; background-color: #f2f2f2;">+ Stockholders' Equity</th> </tr> <tr> <td style="border: 1px solid black; padding: 5px;"></td> <td style="border: 1px solid black; padding: 5px;"> <table style="width:100%; border: none; border-collapse: collapse;"> <tr> <td style="border: none; padding: 5px;"></td> <td style="border: none; padding: 5px;">Cash</td> </tr> </table> </td> <td style="border: 1px solid black; padding: 5px;"> <table style="width:100%; border: none; border-collapse: collapse;"> <tr> <td style="border: none; padding: 5px;">Unearned Revenue</td> <td style="border: none; padding: 5px;"></td> </tr> </table> </td> <td style="border: 1px solid black; padding:
Transcribed Image Text:### Understanding Deferrals and Adjustments in Accounting On October 1, Year 1, Josh Smith, an attorney, accepted a $33,000 cash advance from his client, James Company, for services to be performed over the next six months. #### Required: **a.** Record the deferral and the related December 31, Year 1, adjustment for Josh Smith in an accounting equation. (Do not round intermediate calculations. Enter any decreases to account balances with a minus sign.) #### Josh Smith Attorney - Year 1 <table style="width:100%; border: 1px solid black; border-collapse: collapse;"> <tr> <th style="border: 1px solid black; padding: 5px; background-color: #f2f2f2;">Event</th> <th style="border: 1px solid black; padding: 5px; background-color: #f2f2f2;">Assets</th> <th style="border: 1px solid black; padding: 5px; background-color: #f2f2f2;">= Liabilities</th> <th style="border: 1px solid black; padding: 5px; background-color: #f2f2f2;">+ Stockholders' Equity</th> </tr> <tr> <td style="border: 1px solid black; padding: 5px;"></td> <td style="border: 1px solid black; padding: 5px;"> <table style="width:100%; border: none; border-collapse: collapse;"> <tr> <td style="border: none; padding: 5px;"></td> <td style="border: none; padding: 5px;">Cash</td> </tr> </table> </td> <td style="border: 1px solid black; padding: 5px;"> <table style="width:100%; border: none; border-collapse: collapse;"> <tr> <td style="border: none; padding: 5px;">Unearned Revenue</td> <td style="border: none; padding: 5px;"></td> </tr> </table> </td> <td style="border: 1px solid black; padding:
**Accounting Adjustments - James Company, Year 1** ### Recording Deferrals and Adjustments **Instruction:** - Record the deferral and the related December 31, Year 1, adjustment for James Company in an accounting equation. - Do not round intermediate calculations. - Enter any decreases to account balances with a minus sign. ### James Company - Year 1 Accounting Equation #### Table: Accounting Events and Adjustments | Event | Assets | Liabilities | Stockholders' Equity | |--------------|----------------------------------------------|-------------|--------------------------------| | | Cash | Prepaid Legal Fees | | Common Stock | Retained Earnings | |--------------|---------------|------------------------------|-------------|-------------------------------| | Cash paid | | | | | | Service used | | | | | --- **Explanation:** This table is designed to record and visualize the accounting adjustments related to deferrals and services used by the company. Here's what each column represents in the table: - **Assets:** - **Cash:** Records any cash transactions. - **Prepaid Legal Fees:** Reflects any prepayments for legal services. - **Liabilities:** - This column would reflect any outstanding obligations of the company. - **Stockholders' Equity:** - **Common Stock:** Represents the equity capital contributed by shareholders. - **Retained Earnings:** Reflects the accumulated earnings of the company after dividends. --- For educational purposes, remember: 1. **Deferral Adjustment** typically involves moving expenses or revenue to the correct period. 2. The **Cash Paid** entry affects assets (specifically cash). 3. The **Service Used** entry adjusts for expenses consumed during the period from retained earnings. Record transactions by ensuring each event correctly reflects in assets, liabilities, and equity. Make sure to signify decreases with a minus sign.
Transcribed Image Text:**Accounting Adjustments - James Company, Year 1** ### Recording Deferrals and Adjustments **Instruction:** - Record the deferral and the related December 31, Year 1, adjustment for James Company in an accounting equation. - Do not round intermediate calculations. - Enter any decreases to account balances with a minus sign. ### James Company - Year 1 Accounting Equation #### Table: Accounting Events and Adjustments | Event | Assets | Liabilities | Stockholders' Equity | |--------------|----------------------------------------------|-------------|--------------------------------| | | Cash | Prepaid Legal Fees | | Common Stock | Retained Earnings | |--------------|---------------|------------------------------|-------------|-------------------------------| | Cash paid | | | | | | Service used | | | | | --- **Explanation:** This table is designed to record and visualize the accounting adjustments related to deferrals and services used by the company. Here's what each column represents in the table: - **Assets:** - **Cash:** Records any cash transactions. - **Prepaid Legal Fees:** Reflects any prepayments for legal services. - **Liabilities:** - This column would reflect any outstanding obligations of the company. - **Stockholders' Equity:** - **Common Stock:** Represents the equity capital contributed by shareholders. - **Retained Earnings:** Reflects the accumulated earnings of the company after dividends. --- For educational purposes, remember: 1. **Deferral Adjustment** typically involves moving expenses or revenue to the correct period. 2. The **Cash Paid** entry affects assets (specifically cash). 3. The **Service Used** entry adjusts for expenses consumed during the period from retained earnings. Record transactions by ensuring each event correctly reflects in assets, liabilities, and equity. Make sure to signify decreases with a minus sign.
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