Financial and Managerial Accounting: Information for Decisions
6th Edition
ISBN: 9780078025761
Author: John J Wild, Ken Shaw Accounting Professor, Barbara Chiappetta Fundamental Accounting Principles
Publisher: McGraw-Hill Education
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Textbook Question
Chapter 3, Problem 20QS
A preparing
Cal Consulting follows the practice that prepayments are debited to expense when paid and unearned revenues are credited to revenue when cash is received. Given this company’s accounting practices, which one of the following applies to the preparations of adjusting entries at the end of its first accounting period?
- Unearned fees (on which cash was received in advance earlier in the period) are recorded with a debit to Consulting Fees Earned of $500 and credit to Unearned Consulting Fees of $500.
- Unpaid salaries of $400 are recorded with a debit to Prepaid Salaries of $400.
- Office supplies purchased for the period $1,000. The cost of unused office supplies of $650 is recorded with a debit to Supplies Expense of $650 and a credit to Office Supplies of $650.
- Earned but untitled (and unrecorded) consulting fees for the period were $1,200, which are recorded with a debit to Unearned Consulting Fees of $1,200 and a credit to Consulting Fees Earned of $1,200.
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Businesses using the allowance method for the recognition of uncollectible accounts expense commonly experience four accounting
events:
a. Recognition of uncollectible accounts expense through a year-end adjusting entry.
b. Write-off of uncollectible accounts.
c. Recognition of revenue on account.
d. Collection of cash from accounts receivable.
Required
Show the effect of each event on the elements of the financial statements, using a horizontal statements model like the one shown
here. Use the following coding scheme to record your answers: increase is +, decrease is –, leave the cell blank for not affected. In the
cash flow column, indicate whether the item is an operating activity (OA), investing activity (IA), or financing activity (FA). The first
transaction is entered as an example.
Effect of Events on the Financial Statements
Balance Sheet
Income Statement
Stockholders'
Net
Event
Assets
Liabilities
Revenue
Expense
Cash Flow
Equity
Income
1.
%3D
+
2.
3.
4.
+
Current Attempt in Progress
The bookkeeper for Sandhill Company asks you to prepare the following accrual adjusting entries at December 31. Use these account
titles: Service Revenue, Accounts Receivable, Interest Expense, Interest Payable, Salaries and Wages Expense, and Salaries and Wages
Payable. (List all debit entries before credit entries. If no entry is required, select "No Entry" for the account titles and enter o for the amounts.
Credit account titles are automatically indented when the amount is entered. Do not indent manually.)
a.
b..
C
No.
a.
b.
C.
D
Interest on notes payable of $420 should be accrued.
Services performed but unbilled totals $1,780.
Salaries of $750 earned by employees have not been recorded or paid.
Date Account Titles and Explanation
Dec. 31
Dec. 31
Dec. 31
Debit
Credit
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Chapter 3 Solutions
Financial and Managerial Accounting: Information for Decisions
Ch. 3 - Prob. 1MCQCh. 3 - Prior to recording adjusting entries, the Supplies...Ch. 3 - Prob. 3MCQCh. 3 - Prob. 4MCQCh. 3 - If a company had $ 15,000 in net income for the...Ch. 3 - What is the difference between the cash basis and...Ch. 3 - Why is the accrual basis of accounting generally...Ch. 3 - What type of business is most likely to select a...Ch. 3 - Prob. 4DQCh. 3 - Prob. 5DQ
Ch. 3 - Prob. 6DQCh. 3 - Prob. 7DQCh. 3 - Prob. 8DQCh. 3 - A If a company initially records prepaid expenses...Ch. 3 - Prob. 10DQCh. 3 - Prob. 11DQCh. 3 - Prob. 12DQCh. 3 - Prob. 13DQCh. 3 - Prob. 14DQCh. 3 - Prob. 15DQCh. 3 - Prob. 16DQCh. 3 - Prob. 17DQCh. 3 - Prob. 18DQCh. 3 - Prob. 19DQCh. 3 - Prob. 20DQCh. 3 - Prob. 21DQCh. 3 - Prob. 22DQCh. 3 - Prob. 23DQCh. 3 - Prob. 24DQCh. 3 - Prob. 25DQCh. 3 - Prob. 26DQCh. 3 - Prob. 27DQCh. 3 - Prob. 28DQCh. 3 - Prob. 29DQCh. 3 - Periodic reporting C1 Choose from the following...Ch. 3 - Computing accrual and cash income C1 In its first...Ch. 3 - Identifying accounting adjustments P1 Classify the...Ch. 3 - Prob. 4QSCh. 3 - Prepaid (deferred) expenses adjustments P1 For...Ch. 3 - Prepaid (deferred) expense adjustments P1 For each...Ch. 3 - Prob. 7QSCh. 3 - Prob. 8QSCh. 3 - Prob. 9QSCh. 3 - Prob. 10QSCh. 3 - Prob. 11QSCh. 3 - Prob. 12QSCh. 3 - Prob. 13QSCh. 3 - Prob. 14QSCh. 3 - Recording and analyzing adjusting entries P1...Ch. 3 - Prob. 16QSCh. 3 - Prob. 17QSCh. 3 - Prob. 18QSCh. 3 - Prob. 19QSCh. 3 - A preparing adjusting entries P4 Cal Consulting...Ch. 3 - Preparing closing entries from the ledger P4 The...Ch. 3 - Identifying post-closing accounts P5 Identify...Ch. 3 - identifying the accounting cycle C2 List the...Ch. 3 - Classifying balance sheet items C3 The following...Ch. 3 - Identifying current accounts and computing the...Ch. 3 - Prob. 26QSCh. 3 - Prob. 27QSCh. 3 - Prob. 1ECh. 3 - Exercise 3-2 Adjusting and paying accrued expenses...Ch. 3 - Prob. 3ECh. 3 - Prob. 4ECh. 3 - Prob. 5ECh. 3 - Prob. 6ECh. 3 - Prob. 7ECh. 3 - Prob. 8ECh. 3 - Prob. 9ECh. 3 - Prob. 10ECh. 3 - Prob. 11ECh. 3 - Prob. 12ECh. 3 - Prob. 13ECh. 3 - Prob. 14ECh. 3 - Prob. 15ECh. 3 - Prob. 1PSACh. 3 - Prob. 2PSACh. 3 - Prob. 3PSACh. 3 - Prob. 4PSACh. 3 - Prob. 5PSACh. 3 - Prob. 6PSACh. 3 - Prob. 7PSACh. 3 - Prob. 8PSACh. 3 - Prob. 1PSBCh. 3 - Prob. 2PSBCh. 3 - Prob. 3PSBCh. 3 - Prob. 4PSBCh. 3 - Prob. 5PSBCh. 3 - Prob. 6PSBCh. 3 - Prob. 7PSBCh. 3 - Prob. 8PSBCh. 3 - Prob. 3SPCh. 3 - Prob. 1GLPCh. 3 - Prob. 2GLPCh. 3 - Prob. 3GLPCh. 3 - Prob. 4GLPCh. 3 - Prob. 5GLPCh. 3 - Prob. 6GLPCh. 3 - Prob. 1BTNCh. 3 - Prob. 2BTNCh. 3 - Prob. 3BTNCh. 3 - Prob. 4BTNCh. 3 - Prob. 5BTNCh. 3 - Prob. 6BTNCh. 3 - Prob. 7BTNCh. 3 - Prob. 8BTNCh. 3 - Prob. 9BTN
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