Adjusting entries Adjusting entries are those entries which are made at the end of the accounting period, to record the revenues in the period of which they have been earned and to record the expenses in the period of which have been incurred, as well as to update all the balances of assets and liabilities accounts on the balance sheet , and to ascertain accurate amount of net income (loss) on the income statement to maintain the records according to the accrual basis principle. Accounting rules for journal entries : To record increase balance of account: Debit assets, expenses, losses and credit liabilities, capital, revenue and gains. To record decrease balance of account: Credit assets, expenses, losses and debit liabilities, capital, revenue and gains. Deferred expenses: Advance payment for future expenses is called as prepaid expenses. These prepaid expenses are considered as assets until they are expensed or used. For the portion of used assets, expenses would be recognized by way of passing an adjusting entry. Prepaid expenses are also known as deferred expenses, because at the time of making payment, expenses are not recognized but deferred until they are used up. Deferred revenues: Collection of cash in advance to render service, or to deliver goods in future is known as unearned revenues. These unearned revenues are considered as liabilities until they are earned. For the portion of rendered services or delivered goods, revenues would be recognized by way of passing an adjusting entry. Unearned revenue is also known as deferred revenues, because at the receiving of payment in advance, revenues are not recognized but deferred until they are earned. Accrued expenses: Accrued expenses are the expenses that have been incurred but have not been paid yet. These accrued expenses create accrued liabilities. For the portion of payment made, accrued liabilities would be reduced by way of passing an adjusting entry. Accrued revenues: Accrued revenues are the revenues that have been earned, but the cash has not yet been collected for the earned revenue. These accrued revenues create assets. For the portion of collection of cash, created assets would be reduced by way of passing an adjusting entry. To journalize: The transactions, assuming that SP mails debits an asset account for prepaid expense and credits a liability account for unearned revenues.

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Answer 1

Question

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

Chapter 3, Problem 3.44BP

(1)

To determine

Adjusting entries

Adjusting entries are those entries which are made at the end of the accounting period, to record the revenues in the period of which they have been earned and to record the expenses in the period of which have been incurred, as well as to update all the balances of assets and liabilities accounts on the balance sheet, and to ascertain accurate amount of net income (loss) on the income statement to maintain the records according to the accrual basis principle.

Accounting rules for journal entries:

To record increase balance of account: Debit assets, expenses, losses and credit liabilities, capital, revenue and gains.

To record decrease balance of account: Credit assets, expenses, losses and debit liabilities, capital, revenue and gains.

Deferred expenses:

Advance payment for future expenses is called as prepaid expenses. These prepaid expenses are considered as assets until they are expensed or used. For the portion of used assets, expenses would be recognized by way of passing an adjusting entry. Prepaid expenses are also known as deferred expenses, because at the time of making payment, expenses are not recognized but deferred until they are used up.

Deferred revenues:

Collection of cash in advance to render service, or to deliver goods in future is known as unearned revenues. These unearned revenues are considered as liabilities until they are earned. For the portion of rendered services or delivered goods, revenues would be recognized by way of passing an adjusting entry. Unearned revenue is also known as deferred revenues, because at the receiving of payment in advance, revenues are not recognized but deferred until they are earned.

Accrued expenses:

Accrued expenses are the expenses that have been incurred but have not been paid yet. These accrued expenses create accrued liabilities. For the portion of payment made, accrued liabilities would be reduced by way of passing an adjusting entry.

Accrued revenues:

Accrued revenues are the revenues that have been earned, but the cash has not yet been collected for the earned revenue. These accrued revenues create assets. For the portion of collection of cash, created assets would be reduced by way of passing an adjusting entry.

To journalize: The transactions, assuming that SP mails debits an asset account for prepaid expense and credits a liability account for unearned revenues.

(2)

To determine

To prepare: The related adjusting entries at December 31, 2018.

(3)

To determine

To post: The journal and adjusting entries to T-accounts (except cash account), and show their balances at December 31, 2018.

4

To determine

To repeat: The above three requirements, by debiting an expense account for prepaid expense and crediting a revenue account for unearned revenues.

5

To determine

To compare: The account balances in requirement 3 and 4.

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Entire chart at bottom needs filled in! Now assume that during 2024, Karane decides to buy a competitor's assets for a purchase price of $1,649,500. Compute the maximum 2024 cost recovery, including §179 expense and bonus depreciation. Karane purchased the following assets in 2024 for the lump-sum purchase price: Note: Round your final answers to the nearest whole dollar amount. Asset Cost Date Placed in Service Inventory $ 270,000 09/15 Office furniture 280,000 09/15 Machinery 300,000 09/15 Patent 243,000 09/15 Goodwill 6,500 09/15 Building 480,000 09/15 Land 70,000 09/15 Assume that Karane takes the maximum section 179 expense for the Assembly Equipment. Karane Enterprises, a calendar-year manufacturer based in College Station, Texas, began business in 2023. In the process of setting up the business, Karane has acquired various types of assets. Below is a list of assets acquired during 2023: Asset Cost Date Placed in Service Office furniture $ 400,000…

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Answer 2

Question

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

Chapter 3, Problem 3.44BP

(1)

To determine

Adjusting entries

Adjusting entries are those entries which are made at the end of the accounting period, to record the revenues in the period of which they have been earned and to record the expenses in the period of which have been incurred, as well as to update all the balances of assets and liabilities accounts on the balance sheet, and to ascertain accurate amount of net income (loss) on the income statement to maintain the records according to the accrual basis principle.

Accounting rules for journal entries:

To record increase balance of account: Debit assets, expenses, losses and credit liabilities, capital, revenue and gains.

To record decrease balance of account: Credit assets, expenses, losses and debit liabilities, capital, revenue and gains.

Deferred expenses:

Advance payment for future expenses is called as prepaid expenses. These prepaid expenses are considered as assets until they are expensed or used. For the portion of used assets, expenses would be recognized by way of passing an adjusting entry. Prepaid expenses are also known as deferred expenses, because at the time of making payment, expenses are not recognized but deferred until they are used up.

Deferred revenues:

Collection of cash in advance to render service, or to deliver goods in future is known as unearned revenues. These unearned revenues are considered as liabilities until they are earned. For the portion of rendered services or delivered goods, revenues would be recognized by way of passing an adjusting entry. Unearned revenue is also known as deferred revenues, because at the receiving of payment in advance, revenues are not recognized but deferred until they are earned.

Accrued expenses:

Accrued expenses are the expenses that have been incurred but have not been paid yet. These accrued expenses create accrued liabilities. For the portion of payment made, accrued liabilities would be reduced by way of passing an adjusting entry.

Accrued revenues:

Accrued revenues are the revenues that have been earned, but the cash has not yet been collected for the earned revenue. These accrued revenues create assets. For the portion of collection of cash, created assets would be reduced by way of passing an adjusting entry.

To journalize: The transactions, assuming that SP mails debits an asset account for prepaid expense and credits a liability account for unearned revenues.

(2)

To determine

To prepare: The related adjusting entries at December 31, 2018.

(3)

To determine

To post: The journal and adjusting entries to T-accounts (except cash account), and show their balances at December 31, 2018.

4

To determine

To repeat: The above three requirements, by debiting an expense account for prepaid expense and crediting a revenue account for unearned revenues.

5

To determine

To compare: The account balances in requirement 3 and 4.

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Answer 3

Question

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

Chapter 3, Problem 3.44BP

(1)

To determine

Adjusting entries

Adjusting entries are those entries which are made at the end of the accounting period, to record the revenues in the period of which they have been earned and to record the expenses in the period of which have been incurred, as well as to update all the balances of assets and liabilities accounts on the balance sheet, and to ascertain accurate amount of net income (loss) on the income statement to maintain the records according to the accrual basis principle.

Accounting rules for journal entries:

To record increase balance of account: Debit assets, expenses, losses and credit liabilities, capital, revenue and gains.

To record decrease balance of account: Credit assets, expenses, losses and debit liabilities, capital, revenue and gains.

Deferred expenses:

Advance payment for future expenses is called as prepaid expenses. These prepaid expenses are considered as assets until they are expensed or used. For the portion of used assets, expenses would be recognized by way of passing an adjusting entry. Prepaid expenses are also known as deferred expenses, because at the time of making payment, expenses are not recognized but deferred until they are used up.

Deferred revenues:

Collection of cash in advance to render service, or to deliver goods in future is known as unearned revenues. These unearned revenues are considered as liabilities until they are earned. For the portion of rendered services or delivered goods, revenues would be recognized by way of passing an adjusting entry. Unearned revenue is also known as deferred revenues, because at the receiving of payment in advance, revenues are not recognized but deferred until they are earned.

Accrued expenses:

Accrued expenses are the expenses that have been incurred but have not been paid yet. These accrued expenses create accrued liabilities. For the portion of payment made, accrued liabilities would be reduced by way of passing an adjusting entry.

Accrued revenues:

Accrued revenues are the revenues that have been earned, but the cash has not yet been collected for the earned revenue. These accrued revenues create assets. For the portion of collection of cash, created assets would be reduced by way of passing an adjusting entry.

To journalize: The transactions, assuming that SP mails debits an asset account for prepaid expense and credits a liability account for unearned revenues.

(2)

To determine

To prepare: The related adjusting entries at December 31, 2018.

(3)

To determine

To post: The journal and adjusting entries to T-accounts (except cash account), and show their balances at December 31, 2018.

4

To determine

To repeat: The above three requirements, by debiting an expense account for prepaid expense and crediting a revenue account for unearned revenues.

5

To determine

To compare: The account balances in requirement 3 and 4.

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Answer 4

Question

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

Chapter 3, Problem 3.44BP

(1)

To determine

Adjusting entries

Adjusting entries are those entries which are made at the end of the accounting period, to record the revenues in the period of which they have been earned and to record the expenses in the period of which have been incurred, as well as to update all the balances of assets and liabilities accounts on the balance sheet, and to ascertain accurate amount of net income (loss) on the income statement to maintain the records according to the accrual basis principle.

Accounting rules for journal entries:

To record increase balance of account: Debit assets, expenses, losses and credit liabilities, capital, revenue and gains.

To record decrease balance of account: Credit assets, expenses, losses and debit liabilities, capital, revenue and gains.

Deferred expenses:

Advance payment for future expenses is called as prepaid expenses. These prepaid expenses are considered as assets until they are expensed or used. For the portion of used assets, expenses would be recognized by way of passing an adjusting entry. Prepaid expenses are also known as deferred expenses, because at the time of making payment, expenses are not recognized but deferred until they are used up.

Deferred revenues:

Collection of cash in advance to render service, or to deliver goods in future is known as unearned revenues. These unearned revenues are considered as liabilities until they are earned. For the portion of rendered services or delivered goods, revenues would be recognized by way of passing an adjusting entry. Unearned revenue is also known as deferred revenues, because at the receiving of payment in advance, revenues are not recognized but deferred until they are earned.

Accrued expenses:

Accrued expenses are the expenses that have been incurred but have not been paid yet. These accrued expenses create accrued liabilities. For the portion of payment made, accrued liabilities would be reduced by way of passing an adjusting entry.

Accrued revenues:

Accrued revenues are the revenues that have been earned, but the cash has not yet been collected for the earned revenue. These accrued revenues create assets. For the portion of collection of cash, created assets would be reduced by way of passing an adjusting entry.

To journalize: The transactions, assuming that SP mails debits an asset account for prepaid expense and credits a liability account for unearned revenues.

(2)

To determine

To prepare: The related adjusting entries at December 31, 2018.

(3)

To determine

To post: The journal and adjusting entries to T-accounts (except cash account), and show their balances at December 31, 2018.

4

To determine

To repeat: The above three requirements, by debiting an expense account for prepaid expense and crediting a revenue account for unearned revenues.

5

To determine

To compare: The account balances in requirement 3 and 4.

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Answer 5

Chapter 3, Problem 3.44BP

(1)

To determine

Adjusting entries

Adjusting entries are those entries which are made at the end of the accounting period, to record the revenues in the period of which they have been earned and to record the expenses in the period of which have been incurred, as well as to update all the balances of assets and liabilities accounts on the balance sheet, and to ascertain accurate amount of net income (loss) on the income statement to maintain the records according to the accrual basis principle.

Accounting rules for journal entries:

To record increase balance of account: Debit assets, expenses, losses and credit liabilities, capital, revenue and gains.

To record decrease balance of account: Credit assets, expenses, losses and debit liabilities, capital, revenue and gains.

Deferred expenses:

Advance payment for future expenses is called as prepaid expenses. These prepaid expenses are considered as assets until they are expensed or used. For the portion of used assets, expenses would be recognized by way of passing an adjusting entry. Prepaid expenses are also known as deferred expenses, because at the time of making payment, expenses are not recognized but deferred until they are used up.

Deferred revenues:

Collection of cash in advance to render service, or to deliver goods in future is known as unearned revenues. These unearned revenues are considered as liabilities until they are earned. For the portion of rendered services or delivered goods, revenues would be recognized by way of passing an adjusting entry. Unearned revenue is also known as deferred revenues, because at the receiving of payment in advance, revenues are not recognized but deferred until they are earned.

Accrued expenses:

Accrued expenses are the expenses that have been incurred but have not been paid yet. These accrued expenses create accrued liabilities. For the portion of payment made, accrued liabilities would be reduced by way of passing an adjusting entry.

Accrued revenues:

Accrued revenues are the revenues that have been earned, but the cash has not yet been collected for the earned revenue. These accrued revenues create assets. For the portion of collection of cash, created assets would be reduced by way of passing an adjusting entry.

To journalize: The transactions, assuming that SP mails debits an asset account for prepaid expense and credits a liability account for unearned revenues.

(2)

To determine

To prepare: The related adjusting entries at December 31, 2018.

(3)

To determine

To post: The journal and adjusting entries to T-accounts (except cash account), and show their balances at December 31, 2018.

4

To determine

To repeat: The above three requirements, by debiting an expense account for prepaid expense and crediting a revenue account for unearned revenues.

5

To determine

To compare: The account balances in requirement 3 and 4.

Answer 6

Chapter 3, Problem 3.44BP

(1)

To determine

Adjusting entries

Adjusting entries are those entries which are made at the end of the accounting period, to record the revenues in the period of which they have been earned and to record the expenses in the period of which have been incurred, as well as to update all the balances of assets and liabilities accounts on the balance sheet, and to ascertain accurate amount of net income (loss) on the income statement to maintain the records according to the accrual basis principle.

Accounting rules for journal entries:

To record increase balance of account: Debit assets, expenses, losses and credit liabilities, capital, revenue and gains.

To record decrease balance of account: Credit assets, expenses, losses and debit liabilities, capital, revenue and gains.

Deferred expenses:

Advance payment for future expenses is called as prepaid expenses. These prepaid expenses are considered as assets until they are expensed or used. For the portion of used assets, expenses would be recognized by way of passing an adjusting entry. Prepaid expenses are also known as deferred expenses, because at the time of making payment, expenses are not recognized but deferred until they are used up.

Deferred revenues:

Collection of cash in advance to render service, or to deliver goods in future is known as unearned revenues. These unearned revenues are considered as liabilities until they are earned. For the portion of rendered services or delivered goods, revenues would be recognized by way of passing an adjusting entry. Unearned revenue is also known as deferred revenues, because at the receiving of payment in advance, revenues are not recognized but deferred until they are earned.

Accrued expenses:

Accrued expenses are the expenses that have been incurred but have not been paid yet. These accrued expenses create accrued liabilities. For the portion of payment made, accrued liabilities would be reduced by way of passing an adjusting entry.

Accrued revenues:

Accrued revenues are the revenues that have been earned, but the cash has not yet been collected for the earned revenue. These accrued revenues create assets. For the portion of collection of cash, created assets would be reduced by way of passing an adjusting entry.

To journalize: The transactions, assuming that SP mails debits an asset account for prepaid expense and credits a liability account for unearned revenues.

Answer 7

Chapter 3, Problem 3.44BP

(1)

To determine

Adjusting entries

Adjusting entries are those entries which are made at the end of the accounting period, to record the revenues in the period of which they have been earned and to record the expenses in the period of which have been incurred, as well as to update all the balances of assets and liabilities accounts on the balance sheet, and to ascertain accurate amount of net income (loss) on the income statement to maintain the records according to the accrual basis principle.

Accounting rules for journal entries:

To record increase balance of account: Debit assets, expenses, losses and credit liabilities, capital, revenue and gains.

To record decrease balance of account: Credit assets, expenses, losses and debit liabilities, capital, revenue and gains.

Deferred expenses:

Advance payment for future expenses is called as prepaid expenses. These prepaid expenses are considered as assets until they are expensed or used. For the portion of used assets, expenses would be recognized by way of passing an adjusting entry. Prepaid expenses are also known as deferred expenses, because at the time of making payment, expenses are not recognized but deferred until they are used up.

Deferred revenues:

Collection of cash in advance to render service, or to deliver goods in future is known as unearned revenues. These unearned revenues are considered as liabilities until they are earned. For the portion of rendered services or delivered goods, revenues would be recognized by way of passing an adjusting entry. Unearned revenue is also known as deferred revenues, because at the receiving of payment in advance, revenues are not recognized but deferred until they are earned.

Accrued expenses:

Accrued expenses are the expenses that have been incurred but have not been paid yet. These accrued expenses create accrued liabilities. For the portion of payment made, accrued liabilities would be reduced by way of passing an adjusting entry.

Accrued revenues:

Accrued revenues are the revenues that have been earned, but the cash has not yet been collected for the earned revenue. These accrued revenues create assets. For the portion of collection of cash, created assets would be reduced by way of passing an adjusting entry.

To journalize: The transactions, assuming that SP mails debits an asset account for prepaid expense and credits a liability account for unearned revenues.

Answer 8

(2)

To determine

To prepare: The related adjusting entries at December 31, 2018.

Answer 9

(2)

To determine

To prepare: The related adjusting entries at December 31, 2018.

Answer 10

(3)

To determine

To post: The journal and adjusting entries to T-accounts (except cash account), and show their balances at December 31, 2018.

Answer 11

(3)

To determine

To post: The journal and adjusting entries to T-accounts (except cash account), and show their balances at December 31, 2018.

Answer 12

4

To determine

To repeat: The above three requirements, by debiting an expense account for prepaid expense and crediting a revenue account for unearned revenues.

Answer 13

4

To determine

To repeat: The above three requirements, by debiting an expense account for prepaid expense and crediting a revenue account for unearned revenues.

Answer 14

5

To determine

To compare: The account balances in requirement 3 and 4.

Answer 15

5

To determine

To compare: The account balances in requirement 3 and 4.

Answer 16

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Answer 17

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Answer 18

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Answer 19

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...

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To prepare: The related adjusting entries at December 31, 2018.

To post: The journal and adjusting entries to T-accounts (except cash account), and show their balances at December 31, 2018.

To repeat: The above three requirements, by debiting an expense account for prepaid expense and crediting a revenue account for unearned revenues.

To compare: The account balances in requirement 3 and 4.

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