Horngren's Financial & Managerial Accounting (5th Edition)
5th Edition
ISBN: 9780133866292
Author: Tracie L. Miller-Nobles, Brenda L. Mattison, Ella Mae Matsumura
Publisher: PEARSON
expand_more
expand_more
format_list_bulleted
Concept explainers
Videos
Textbook Question
Chapter 3, Problem 3.31E
Understanding the alternative treatment of prepaid expenses
At the beginning of the year, office supplies of $800 were on hand. During the year, Rocket Air Conditioning Service paid $6,000 for more office supplies. At the end of the year, Rocket has $500 of office supplies on hand.
Requirements
- 1. Record the
adjusting entry assuming that Rocket records the purchase of office supplies by initially debiting an asset account.Post the adjusting entry to the Office Supplies and Supplies Expense T-accounts. Make sure to include the beginning balance and purchase of office supplies in the Office Supplies T-account. - 2. Record the adjusting entry assuming that Rocket records the purchase of office supplies by initially debiting an expense account. Post the adjusting entry to the Office Supplies and Supplies Expense T-accounts. Make sure to include the beginning balance in the Office Supplies T-account and the purchase of office supplies in the Supplies Expense T-account.
- 3. Compare the ending balances of the T-accounts under both approaches. Are they the same?
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
The following are some of the transactions made by Luigi Gomez Cleaners during 2020:
Apr. 1 Acquired cleaning supplies in the amount of P260,000. A count of the
supplies on Dec. 31, 2020
Aug. 1 Received P360,000 from Cebu Manpower for cleaning janitorial uniforms
over the next 3 years.
Nov. 1 Paid P240,000 for annual rent.
Required:
1. Assume that Gomez records these transactions using the following accounts,
record the adjusting entries on Dec. 31, 2020:
a. Office Supplies
b. Prepaid Rent
c. Unearned Cleaning Revenues
2. Now, assume that Gomez records these transactions using the following accounts,
what will be the adjusting entries on Dec. 31, 2020?
a. Office Supplies Expense
b. Rent Expense
c. Cleaning Revenues
3. If Gomez were to use reversing entries, which set of entries, (1) or (2), would have
to be reversed? Why?
Can you please only do the part highlighted. Thank you
Suppose a customer rents a vehicle for three months from Franklin Rental on November 1, paying $3,750 ($1,250/month).
Required:
1.&2. Record the necessary entries in the Journal Entry Worksheet below.
3. Calculate the year-end adjusted balances of Deferred Revenue and Service Revenue (assuming the balance of Deferred Revenue at the beginning of the year is $0).
Chapter 3 Solutions
Horngren's Financial & Managerial Accounting (5th Edition)
Ch. 3 - Which of the following is true of accrual basis...Ch. 3 - Get Fit Now gains a client who prepays 540 for a...Ch. 3 - The revenue recognition principle requires a. time...Ch. 3 - Adjusting the accounts is the process of a....Ch. 3 - Which of the following is an example of a deferral...Ch. 3 - Assume that the weekly payroll of In the Woods...Ch. 3 - The adjusted trial balance shows a. amounts that...Ch. 3 - A D Window Cleaning performed 450 of services but...Ch. 3 - A worksheet a. is a journal used to record...Ch. 3 - On February 1, Clovis Wilson Law Firm contracted...
Ch. 3 - What is the difference between cash basis...Ch. 3 - Which method of accounting (cash or accrual basis)...Ch. 3 - Which accounting concept or principle requires...Ch. 3 - What is a fiscal year? Why might companies choose...Ch. 3 - Under the revenue recognition principle, when is...Ch. 3 - Prob. 6RQCh. 3 - When are adjusting entries completed, and what is...Ch. 3 - Prob. 8RQCh. 3 - Prob. 9RQCh. 3 - Prob. 10RQCh. 3 - Prob. 11RQCh. 3 - Prob. 12RQCh. 3 - Prob. 13RQCh. 3 - Prob. 14RQCh. 3 - Prob. 15RQCh. 3 - What is an accrued expense? Provide an example.Ch. 3 - What is an accrued revenue? Provide an example.Ch. 3 - Prob. 18RQCh. 3 - When is an adjusted trial balance prepared, and...Ch. 3 - If an accrued expense is not recorded at the end...Ch. 3 - What is a worksheet, and how is it used to help...Ch. 3 - If a payment of a deferred expense was recorded...Ch. 3 - If a payment of a deferred expense was recorded...Ch. 3 - Comparing cash and accrual basis accounting for...Ch. 3 - Comparing cash and accrual basis accounting for...Ch. 3 - Applying the revenue recognition principle South...Ch. 3 - Applying the matching principle Suppose on January...Ch. 3 - Identifying types of adjusting entries A select...Ch. 3 - Journalizing and posting adjusting entries for...Ch. 3 - Journalizing and posting an adjusting entry for...Ch. 3 - Journalizing and posting an adjusting entry for...Ch. 3 - Prob. 3.9SECh. 3 - Prob. 3.10SECh. 3 - Prob. 3.11SECh. 3 - Journalizing an adjusting entry for accrued...Ch. 3 - Prob. 3.13SECh. 3 - Determining the effects on financial statements In...Ch. 3 - Prob. 3.15SECh. 3 - Prob. 3.16SECh. 3 - Prob. 3.17SECh. 3 - Prob. 3.18ECh. 3 - Prob. 3.19ECh. 3 - Prob. 3.20ECh. 3 - Prob. 3.21ECh. 3 - Prob. 3.22ECh. 3 - Prob. 3.23ECh. 3 - Prob. 3.24ECh. 3 - Prob. 3.25ECh. 3 - Prob. 3.26ECh. 3 - Identifying the impact of adjusting entries on the...Ch. 3 - Journalizing adjusting entries and analyzing their...Ch. 3 - Prob. 3.29ECh. 3 - Prob. 3.30ECh. 3 - Understanding the alternative treatment of prepaid...Ch. 3 - Understanding the alternative treatment of...Ch. 3 - Journalizing adjusting entries and subsequent...Ch. 3 - Journalizing adjusting entries and identifying the...Ch. 3 - Journalizing and posting adjustments to the...Ch. 3 - Journalizing and posting adjustments to the...Ch. 3 - A Using the worksheet to record the adjusting...Ch. 3 - Understanding the alternative treatment of prepaid...Ch. 3 - Journalizing adjusting entries and subsequent...Ch. 3 - Journalizing adjusting entries and identifying the...Ch. 3 - Journalizing and posting adjustments to the...Ch. 3 - Journalizing and posting adjustments to the...Ch. 3 - Prob. 3.43BPCh. 3 - Understanding the alternative treatment of prepaid...Ch. 3 - Prob. 3.45CPCh. 3 - Prob. 3.46PSCh. 3 - One year ago, Tyler Stasney founded Swift...Ch. 3 - Prob. 3.1CTEICh. 3 - XM, Ltd. was a small engineering firm that built...Ch. 3 - Prob. 3.1CTFSCCh. 3 - In 75 words or fewer, explain adjusting journal...
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- Connors Company paid $700 cash to make a repair on equipment it sold under a oneyear warranty in the prior year. The entry to record the payment will debita. Accrued Warranty Payable and creditCash.b. Operating Expense and credit Cash.arrow_forwardPrepare journal entries to adjust the books of Raymond Corp. at December 31, 2020 based on the following information: " just 2. savir Interest earned during the month on a savings account totaled $300. a. b. Received the utility bill for December of $3,200, which will be paid on January 4th. C. The office supplies account at the beginning of 2020 was $800. During the year, Raymond Corp. made two purchases of office supplies for $3,000 and $4,000. Office supplies on hand at the end of the year totaled $400. Prepare the AJE (adjusting journal entry) to adjust the supplies account. d. On July 1, 2020, Raymond Corp. paid a two-year insurance premium in the amount of $6,000. This amount was debited to insurance expense when the premium was paid. Prepare the end-of-year adjusting entry. e. On October 1, 2020, Raymond Corp. received cash of $7,500 from a customer for work to be performed over the next few months. As of the end of the year, one-third of the work had been completed. Prepare the…arrow_forwardMarcellus Purse conduct cleaning business on the credit basis. He provides the collects the sccount receivable in 60 days. The Allowance October 2019 is $3,993. The following information is available Douchd D 1. The business uses aging of account receivable method to count the bad de 2. The accountant is required to update the balance of allowance of dosud des OURE at the end of each month 3. On 5 October 2019 a total of $1.997 ewed by Lucy Frone has been deemed w uncollectable and therefore written off 4. The total sales recorded during 1 October 2019 to 31 October 2019 is $812577 The balance in the Account receivable on 31 October 2019 is $198.300 5. 6. On 31 October 2019 the accountant estimates that 3% of the account receivable is estimated as doubtful. Q3 Required (a) Prepare the Accounting Entries for the transactions or events relating to bad debt for the month ended 31 October 2019, ignore GST ( (b) Prepare and balance the T-account for Allowance for Doubtful Debts accounts as…arrow_forward
- Need answer pleasearrow_forwardPrepare the journal entriesarrow_forwardSuppose a customer rents a vehicle for three months from Commodores Rental on November 1, paying $6,000 ($2,000/month). Required: 1.&2. Record the necessary entries in the Journal Entry Worksheet below. 3. Calculate the year-end adjusted balances of Deferred Revenue and Service Revenue (assuming the balance of Deferred Revenue at the beginning of the year is $0). 1 Record the rental of a vehicle to a customer for three months, receiving cash of $6,000 ($2,000/month) on November 1. 2 Record the adjusting entry for the rental on December 31.arrow_forward
- Collection of Amounts Previously Written Off Hannah purchased a laptop computer from Perry Corp. for $1,500. Hannahs receivable has been outstanding for over 180 days, and Perry determines that the total amount is uncollectible and writes off all of Hannahs debt. Hannah later receives a windfall and pays the amount of her balance to Perry Corp. Required: Make the appropriate journal entries (if any) to record the receipt of $450 by Perry Corp.arrow_forwardPrepare adjusting journal entries, as needed, considering the account balances excerpted from the unadjusted trial balance and the adjustment data. A. supplies actual count at year end, $6,500 B. remaining unexpired insurance, $6,000 C. remaining unearned service revenue, $1,200 D. salaries owed to employees, $2,400 E. depreciation on property plant and equipment, $18,000arrow_forwardGarcia Company rents out a portion of its building to Jerry Company for 1,000 per month. On August 1, Jerry paid Garcia 12,000 for 1 year of rent in advance. Prepare journal entries for Garcia to record the collection ofrent and the related year-end adjusting entry on December 31.arrow_forward
- The balance in Ashwood Companys accounts payable account at December 31, 2019, was 1,200,000 before any necessary year-end adjustment relating to the following: Goods were in transit from a vendor to Ashwood on December 31, 2019. The invoice cost was 85,000, and the goods were shipped FOB shipping point on December 29, 2019. The goods were received on January 2, 2020. Goods shipped FOB shipping point on December 20, 2019, from a vendor to Ashwood were lost in transit. The invoice cost was 40,000. On January 5, 2020, Ashwood filed a 40,000 claim against the common carrier. Goods shipped FOB destination on December 22, 2019, from a vendor to Ashwood were received on January 6, 2020. The invoice cost was 20,000, What amount should Ashwood report as accounts payable on its December 31,2019, balance sheet? a. 1,260,000 b. 1,285,000 c. 1,325,000 d. 1,345,000arrow_forwardPrepare adjusting journal entries, as needed, considering the account balances excerpted from the unadjusted trial balance and the adjustment data. A. amount due for employee salaries, $4,800 B. actual count of supplies inventory, $ 2,300 C. depreciation on equipment, $3,000arrow_forwardApply what you have learned Task 8: (Individual/Pair/Group Work) Snoopy enterprises provides collection services to its customers. year-end adjusting journal entries are prepared every Dec. 31 as its books are closed. make the appropriate adjusting entry for each of the ff items: 1. Uncollectible accounts at year-end is estimated to be P6,950. 2. Rent paid last April amounted to P400, 000, one fourth of which has already expired. This was initially recorded as prepaid rent upon payment. 3. Depreciation expense for its transportation equipment, P6,780 4. Supplies purchased during the year amounted to P4,290, of which one- third has been used during the year. 5. Unpaid salaries of its cleaners as of December 31 is P7,460. 6. Unearned interest has a balance of P3,120, of which P2,560 has already been earned during the year. the amount was initially credited to unearned interest upon collectionarrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Century 21 Accounting Multicolumn JournalAccountingISBN:9781337679503Author:GilbertsonPublisher:Cengage
Intermediate Accounting: Reporting And AnalysisAccountingISBN:9781337788281Author:James M. Wahlen, Jefferson P. Jones, Donald PagachPublisher:Cengage Learning- Principles of Accounting Volume 1AccountingISBN:9781947172685Author:OpenStaxPublisher:OpenStax College
Cornerstones of Financial AccountingAccountingISBN:9781337690881Author:Jay Rich, Jeff JonesPublisher:Cengage Learning
Century 21 Accounting Multicolumn Journal
Accounting
ISBN:9781337679503
Author:Gilbertson
Publisher:Cengage
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:Cengage Learning
Principles of Accounting Volume 1
Accounting
ISBN:9781947172685
Author:OpenStax
Publisher:OpenStax College
Cornerstones of Financial Accounting
Accounting
ISBN:9781337690881
Author:Jay Rich, Jeff Jones
Publisher:Cengage Learning
The accounting cycle; Author: Alanis Business academy;https://www.youtube.com/watch?v=XTspj8CtzPk;License: Standard YouTube License, CC-BY