Survey of Accounting (Accounting I)
8th Edition
ISBN: 9781305961883
Author: Carl Warren
Publisher: Cengage Learning
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Question
Chapter 3, Problem 3.2P
To determine
The adjusting entries are recorded at the end to each accounting period to adjust the account as per the accrual concept of accounting. The adjusting entries include adjustment of
To Prepare:
The adjusting entries
Expert Solution & Answer
Answer to Problem 3.2P
The adjusting entries are as follows:
San Mateo Care Inc. | |||
Adjusting entries | |||
# | Account Title | Debit | Credit |
1 | Insurance Expense | $ 900 | |
Prepaid Insurance | $ 900 | ||
2 | Supplies Expense | $ 1,000 | |
Supplies | $ 1,000 | ||
3 | Depreciation Expense- Building | $ 2,300 | |
$ 2,300 | |||
4 | Unearned Service Revenue | $ 3,000 | |
Service Revenue | $ 3,000 | ||
5 | Wages expense | $ 2,900 | |
Wages payable | $ 2,900 | ||
6 | Accounts Receivables | $ 5,000 | |
Service Revenue | $ 5,000 |
The adjusting entries are explained as follows:
San Mateo Care Inc. | |||
Adjusting entries | |||
# | Account Title | Debit | Credit |
1 | Insurance Expense | $ 900 | |
Prepaid Insurance | $ 900 | ||
(Being adjustment made for prepaid Insurance) | |||
2 | Supplies Expense | $ 1,000 | |
Supplies | $ 1,000 | ||
(Being adjustment made for Supplies used) | |||
3 | Depreciation Expense- Building | $ 2,300 | |
Accumulated Depreciation- Building | $ 2,300 | ||
(Being adjustment made for depreciation) | |||
4 | Unearned Service Revenue | $ 3,000 | |
Service Revenue | $ 3,000 | ||
(Being adjustment made for revenue earned) | |||
5 | Wages expense | $ 2,900 | |
Wages payable | $ 2,900 | ||
(Being adjustment made for the wages accrued) | |||
6 | Accounts Receivables | $ 5,000 | |
Service Revenue | $ 5,000 | ||
(Being adjustment made for the revenue earned) |
Explanation of Solution
The adjusting entries are explained as follows:
San Mateo Care Inc. | |||
Adjusting entries | |||
# | Account Title | Debit | Credit |
1 | Insurance Expense | $ 900 | |
Prepaid Insurance | $ 900 | ||
(Being adjustment made for prepaid Insurance) | |||
2 | Supplies Expense | $ 1,000 | |
Supplies | $ 1,000 | ||
(Being adjustment made for Supplies used) | |||
3 | Depreciation Expense- Building | $ 2,300 | |
Accumulated Depreciation- Building | $ 2,300 | ||
(Being adjustment made for depreciation) | |||
4 | Unearned Service Revenue | $ 3,000 | |
Service Revenue | $ 3,000 | ||
(Being adjustment made for revenue earned) | |||
5 | Wages expense | $ 2,900 | |
Wages payable | $ 2,900 | ||
(Being adjustment made for the wages accrued) | |||
6 | Accounts Receivables | $ 5,000 | |
Service Revenue | $ 5,000 | ||
(Being adjustment made for the revenue earned) |
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Students have asked these similar questions
7
As Perry Materials Supply was preparing for the year-end close, their balances were as follows:
Accounts Receivable - $146000 (dr)
Allowance for uncollectible accounts - $6200 (dr)
Uncollected Account Expense - $0
Perry Materials uses the aging method and has completed the following analysis of the accounts receivable:
Customer
1-30 Days
31-60 Days 61-90 Days
Over 90 Days
Total
Balance
Johnson
$4,600
$3,200
$7,800
Hot Pots, Inc.
800
1,000
1,800
Potter
40,000
550
40,550
Harrison
3,600
900
4,500
Marx
2,000
50
2,050
Younger
65,000
65,000
Merry Maids
5,900
5,900
Acher
12,000
6,400
18,400
Totals
$127,500
$13,750
$3,700
$1,050
$146,000
Uncollectible percentage
2%
10%
20%
40%
Estimated uncollectible amount
$2,550
$1,375
$740
$420
$5,085
Required:
How much will the…
Ernie Upshaw is the supervising manager of Sleep Tight Bedding. At the end of the year, the company’s accounting manager provides Ernie with the following information, before any adjustment.
Accounts receivable
$ 518,000
Estimated percent uncollectible
9%
Allowance for uncollectible accounts
$ 21,800
(debit)
Operating income
$ 338,000
In the previous year, Sleep Tight Bedding reported operating income (after adjustment) of $293,000. Ernie knows that it’s important to report an upward trend in earnings. This is important not only for Ernie’s compensation and employment, but also for the company’s stock price. If investors see a decline in earnings, the stock price could drop significantly, and Ernie owns a large amount of the company’s stock. This has caused Ernie many sleepless nights.
Required:1. Record the adjusting entry for uncollectible accounts using the accounting manager’s estimate of 9% of accounts receivable.
2-a. After the adjusting entry is recorded…
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Survey of Accounting (Accounting I)
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