Cornerstones of Financial Accounting

4th Edition

ISBN: 9781337690881

Author: Jay Rich, Jeff Jones

Publisher: Cengage Learning

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The Effect Of Prepaid Taxes On Assets And Liabilities

Many businesses estimate tax liability and make payments throughout the year (often quarterly). When a company overestimates its tax liability, this results in the business paying a prepaid tax. Prepaid taxes will be reversed within one year but can resu…

Final Accounts

Financial accounting is one of the branches of accounting in which the transactions arising in the business over a particular period are recorded.

Ledger Posting

A ledger is an account that provides information on all the transactions that have taken place during a particular period. It is also known as General Ledger. For example, your bank account statement is a general ledger that gives information about the a…

Trial Balance and Final Accounts

In accounting we start with recording transaction with journal entries then we make separate ledger account for each type of transaction. It is very necessary to check and verify that the transaction transferred to ledgers from the journal are accurately…

Adjustment Entries

At the end of every accounting period Adjustment Entries are made in order to adjust the accounts precisely replicate the expenses and revenue of the current period. It is also known as end of period adjustment. It can also be referred as financial repor…

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Textbook Question

Chapter 3, Problem 32BE

Brief Exercise 3-32 Adjusting Entries-Deferrals

Tyndal Company had the following items that required adjustment at December 31, 2019.

Purchased equipment for $40,000 on January 1, 2019. Tyndal estimates annual depreciation to be $3,100.
Paid $2,400 for a 2-year insurance policy on July 1, 2019. The amount was debited to Pre-paid Insurance when paid.
Collected $1,200 rent for the period December 1, 2019 to March 30, 2020. The amount was credited to Unearned Service Revenue when received.

Required:

Prepare the adjusting entries needed at December 31.
CONCEPTUAL CONNECTION What is the effect on the financial statements if these adjusting entries were not made?

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Chapter 3 Solutions

Cornerstones of Financial Accounting

Ch. 3 - How does accural-basis net income differ from...Ch. 3 - Explain when revenue may be recognized and give an...Ch. 3 - What happens during the accounting cycle?Ch. 3 - Prob. 4DQ Ch. 3 - Why are adjusting entries needed?Ch. 3 - What accounting concepts require that adjusting...Ch. 3 - Prob. 7DQ Ch. 3 - Prob. 8DQ Ch. 3 - What is the difference between an accural and a...Ch. 3 - Prob. 10DQ

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Solution Summary: The author explains how to adjust accounts according to the accrual basis of accounting at the end of each accounting year.

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Chapter 3 Solutions