Adjusting entries are required to adjust the accounts according to the accrual basis of accounting at the end of the every accounting period. For example: Recording the depreciation expense on depreciable assets at the end of each accounting year. The business activity for each type of adjusting entry is explained as follows: Accrued revenue: The adjusting entry for Accrued revenue is prepared to record the revenue earned during the period. Accrued Expense: The adjusting entry for Accrued expense is prepared to record the expenses incurred during the period. Deferred Revenue: The adjusting entry for Deferred revenue is prepared to defer the revenue that belong to next period. Deferred expenses: The adjusting entry for Deferred expense is prepared to defer the expense that belong to next period. Depreciation: The adjusting entry for depreciation expense is prepared to record the depreciation expense that belong to current period. Requirement-1: To prepare: The adjusting entries as on Dec. 31 for the given transactions.

Question

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Answer 1

Question

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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 53E

To determine

Concept Introduction:

Adjusting entries are required to adjust the accounts according to the accrual basis of accounting at the end of the every accounting period. For example: Recording the depreciation expense on depreciable assets at the end of each accounting year.

The business activity for each type of adjusting entry is explained as follows:

Accrued revenue: The adjusting entry for Accrued revenue is prepared to record the revenue earned during the period.

Accrued Expense: The adjusting entry for Accrued expense is prepared to record the expenses incurred during the period.

Deferred Revenue: The adjusting entry for Deferred revenue is prepared to defer the revenue that belong to next period.

Deferred expenses: The adjusting entry for Deferred expense is prepared to defer the expense that belong to next period.

Depreciation: The adjusting entry for depreciation expense is prepared to record the depreciation expense that belong to current period.
Requirement-1:

To prepare:

The adjusting entries as on Dec. 31 for the given transactions.

Expert Solution

Answer to Problem 53E

The adjusting entries as on Dec. 31 for the given transactions are as follows:

Reynold Computer Service
Adjusting entries
As on Dec. 31, 2019
#	Date	Account titles	Debit	Credit

a.	Dec. 31	Depreciation Expense- Equipment	$ 132,500
		Accumulated Depreciation- Equipment		$ 132,500

b.	Dec. 31	Insurance Expense	$ 2,040
		Prepaid Insurance		$ 2,040

c.	Dec. 31	Accounts Receivables	$ 5,450
		Service Revenue		$ 5,450

c.	Dec. 31	Rent Expense	$390
		Rent Payable		$390

d.	Dec. 31	Unearned Rent Revenue	$ 1,810
		Rent Revenue		$ 1,810

Explanation of Solution

The adjusting entries as on Dec. 31 for the given transactions are explained as follows:

Reynold Computer Service
Adjusting entries
As on Dec. 31, 2019
#	Date	Account titles	Debit	Credit

a.	Dec. 31	Depreciation Expense- Equipment	$ 132,500
		Accumulated Depreciation- Equipment		$ 132,500
		(being adjustment made for the expense accrued)

b.	Dec. 31	Insurance Expense (12240*4/24)	$ 2,040
		Prepaid Insurance		$ 2,040
		(being adjustment made for the expense accrued)

c.	Dec. 31	Accounts Receivables	$ 5,450
		Service Revenue		$ 5,450
		(being adjustment made for the revenue accrued)

c.	Dec. 31	Rent Expense (12*65/2)	$390
		Rent Payable		$390
		(being adjustment made for the expense accrued)

d.	Dec. 31	Unearned Rent Revenue	$ 1,810
		Rent Revenue		$ 1,810
		(being adjustment made for the revenue accrued)

To determine

Concept Introduction:

Adjusting entries are required to adjust the accounts according to the accrual basis of accounting at the end of the every accounting period. For example: Recording the depreciation expense on depreciable assets at the end of each accounting year.

The business activity for each type of adjusting entry is explained as follows:

Accrued revenue: The adjusting entry for Accrued revenue is prepared to record the revenue earned during the period.

Accrued Expense: The adjusting entry for Accrued expense is prepared to record the expenses incurred during the period.

Deferred Revenue: The adjusting entry for Deferred revenue is prepared to defer the revenue that belong to next period.

Deferred expenses: The adjusting entry for Deferred expense is prepared to defer the expense that belong to next period.

Depreciation: The adjusting entry for depreciation expense is prepared to record the depreciation expense that belong to current period.
Requirement-2:

To Indicate:

The effect of omission of the above adjusting entry on balance sheet and income statement.

Expert Solution

Answer to Problem 53E

The effect of omission of the above adjusting entry on balance sheet and income statement is as follows:

#	Effect of Omission

a.	Understatement of Expense
	Overstatement of Assets


b.	Understatement of Expense
	Overstatement of Assets


c.	Understatement of Assets
	Understatement of Revenue


c.	Understatement of Expenses
	Understatement of Liabilities


d.	Overstatement of Liabilities
	Understatement of Revenue

Explanation of Solution

The effect of omission of the above adjusting entry on balance sheet and income statement is explained as follows:

Reynold Computer Service
Adjusting entries
As on Dec. 31, 2019
#	Date	Account titles	Debit	Credit	Effect of Omission

a.	Dec. 31	Depreciation Expense- Equipment	$ 132,500		Understatement of Expense
		Accumulated Depreciation- Equipment		$ 132,500	Overstatement of Assets
		(being adjustment made for the expense accrued)

b.	Dec. 31	Insurance Expense (12240*4/24)	$ 2,040		Understatement of Expense
		Prepaid Insurance		$ 2,040	Overstatement of Assets
		(being adjustment made for the expense accrued)

c.	Dec. 31	Accounts Receivables	$ 5,450		Understatement of Assets
		Service Revenue		$ 5,450	Understatement of Revenue
		(being adjustment made for the revenue accrued)

c.	Dec. 31	Rent Expense (12*65/2)	$390		Understatement of Expenses
		Rent Payable		$390	Understatement of Liabilities
		(being adjustment made for the expense accrued)

d.	Dec. 31	Unearned Rent Revenue	$ 1,810		Overstatement of Liabilities
		Rent Revenue		$ 1,810	Understatement of Revenue
		(being adjustment made for the revenue accrued)

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Answer 2

Question

100%

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 53E

To determine

Concept Introduction:

Adjusting entries are required to adjust the accounts according to the accrual basis of accounting at the end of the every accounting period. For example: Recording the depreciation expense on depreciable assets at the end of each accounting year.

The business activity for each type of adjusting entry is explained as follows:

Accrued revenue: The adjusting entry for Accrued revenue is prepared to record the revenue earned during the period.

Accrued Expense: The adjusting entry for Accrued expense is prepared to record the expenses incurred during the period.

Deferred Revenue: The adjusting entry for Deferred revenue is prepared to defer the revenue that belong to next period.

Deferred expenses: The adjusting entry for Deferred expense is prepared to defer the expense that belong to next period.

Depreciation: The adjusting entry for depreciation expense is prepared to record the depreciation expense that belong to current period.
Requirement-1:

To prepare:

The adjusting entries as on Dec. 31 for the given transactions.

Expert Solution

Answer to Problem 53E

The adjusting entries as on Dec. 31 for the given transactions are as follows:

Reynold Computer Service
Adjusting entries
As on Dec. 31, 2019
#	Date	Account titles	Debit	Credit

a.	Dec. 31	Depreciation Expense- Equipment	$ 132,500
		Accumulated Depreciation- Equipment		$ 132,500

b.	Dec. 31	Insurance Expense	$ 2,040
		Prepaid Insurance		$ 2,040

c.	Dec. 31	Accounts Receivables	$ 5,450
		Service Revenue		$ 5,450

c.	Dec. 31	Rent Expense	$390
		Rent Payable		$390

d.	Dec. 31	Unearned Rent Revenue	$ 1,810
		Rent Revenue		$ 1,810

Explanation of Solution

The adjusting entries as on Dec. 31 for the given transactions are explained as follows:

Reynold Computer Service
Adjusting entries
As on Dec. 31, 2019
#	Date	Account titles	Debit	Credit

a.	Dec. 31	Depreciation Expense- Equipment	$ 132,500
		Accumulated Depreciation- Equipment		$ 132,500
		(being adjustment made for the expense accrued)

b.	Dec. 31	Insurance Expense (12240*4/24)	$ 2,040
		Prepaid Insurance		$ 2,040
		(being adjustment made for the expense accrued)

c.	Dec. 31	Accounts Receivables	$ 5,450
		Service Revenue		$ 5,450
		(being adjustment made for the revenue accrued)

c.	Dec. 31	Rent Expense (12*65/2)	$390
		Rent Payable		$390
		(being adjustment made for the expense accrued)

d.	Dec. 31	Unearned Rent Revenue	$ 1,810
		Rent Revenue		$ 1,810
		(being adjustment made for the revenue accrued)

To determine

Concept Introduction:

Adjusting entries are required to adjust the accounts according to the accrual basis of accounting at the end of the every accounting period. For example: Recording the depreciation expense on depreciable assets at the end of each accounting year.

The business activity for each type of adjusting entry is explained as follows:

Accrued revenue: The adjusting entry for Accrued revenue is prepared to record the revenue earned during the period.

Accrued Expense: The adjusting entry for Accrued expense is prepared to record the expenses incurred during the period.

Deferred Revenue: The adjusting entry for Deferred revenue is prepared to defer the revenue that belong to next period.

Deferred expenses: The adjusting entry for Deferred expense is prepared to defer the expense that belong to next period.

Depreciation: The adjusting entry for depreciation expense is prepared to record the depreciation expense that belong to current period.
Requirement-2:

To Indicate:

The effect of omission of the above adjusting entry on balance sheet and income statement.

Expert Solution

Answer to Problem 53E

The effect of omission of the above adjusting entry on balance sheet and income statement is as follows:

#	Effect of Omission

a.	Understatement of Expense
	Overstatement of Assets


b.	Understatement of Expense
	Overstatement of Assets


c.	Understatement of Assets
	Understatement of Revenue


c.	Understatement of Expenses
	Understatement of Liabilities


d.	Overstatement of Liabilities
	Understatement of Revenue

Explanation of Solution

The effect of omission of the above adjusting entry on balance sheet and income statement is explained as follows:

Reynold Computer Service
Adjusting entries
As on Dec. 31, 2019
#	Date	Account titles	Debit	Credit	Effect of Omission

a.	Dec. 31	Depreciation Expense- Equipment	$ 132,500		Understatement of Expense
		Accumulated Depreciation- Equipment		$ 132,500	Overstatement of Assets
		(being adjustment made for the expense accrued)

b.	Dec. 31	Insurance Expense (12240*4/24)	$ 2,040		Understatement of Expense
		Prepaid Insurance		$ 2,040	Overstatement of Assets
		(being adjustment made for the expense accrued)

c.	Dec. 31	Accounts Receivables	$ 5,450		Understatement of Assets
		Service Revenue		$ 5,450	Understatement of Revenue
		(being adjustment made for the revenue accrued)

c.	Dec. 31	Rent Expense (12*65/2)	$390		Understatement of Expenses
		Rent Payable		$390	Understatement of Liabilities
		(being adjustment made for the expense accrued)

d.	Dec. 31	Unearned Rent Revenue	$ 1,810		Overstatement of Liabilities
		Rent Revenue		$ 1,810	Understatement of Revenue
		(being adjustment made for the revenue accrued)

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Answer 3

Question

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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 53E

To determine

Concept Introduction:

Adjusting entries are required to adjust the accounts according to the accrual basis of accounting at the end of the every accounting period. For example: Recording the depreciation expense on depreciable assets at the end of each accounting year.

The business activity for each type of adjusting entry is explained as follows:

Accrued revenue: The adjusting entry for Accrued revenue is prepared to record the revenue earned during the period.

Accrued Expense: The adjusting entry for Accrued expense is prepared to record the expenses incurred during the period.

Deferred Revenue: The adjusting entry for Deferred revenue is prepared to defer the revenue that belong to next period.

Deferred expenses: The adjusting entry for Deferred expense is prepared to defer the expense that belong to next period.

Depreciation: The adjusting entry for depreciation expense is prepared to record the depreciation expense that belong to current period.
Requirement-1:

To prepare:

The adjusting entries as on Dec. 31 for the given transactions.

Expert Solution

Answer to Problem 53E

The adjusting entries as on Dec. 31 for the given transactions are as follows:

Reynold Computer Service
Adjusting entries
As on Dec. 31, 2019
#	Date	Account titles	Debit	Credit

a.	Dec. 31	Depreciation Expense- Equipment	$ 132,500
		Accumulated Depreciation- Equipment		$ 132,500

b.	Dec. 31	Insurance Expense	$ 2,040
		Prepaid Insurance		$ 2,040

c.	Dec. 31	Accounts Receivables	$ 5,450
		Service Revenue		$ 5,450

c.	Dec. 31	Rent Expense	$390
		Rent Payable		$390

d.	Dec. 31	Unearned Rent Revenue	$ 1,810
		Rent Revenue		$ 1,810

Explanation of Solution

The adjusting entries as on Dec. 31 for the given transactions are explained as follows:

Reynold Computer Service
Adjusting entries
As on Dec. 31, 2019
#	Date	Account titles	Debit	Credit

a.	Dec. 31	Depreciation Expense- Equipment	$ 132,500
		Accumulated Depreciation- Equipment		$ 132,500
		(being adjustment made for the expense accrued)

b.	Dec. 31	Insurance Expense (12240*4/24)	$ 2,040
		Prepaid Insurance		$ 2,040
		(being adjustment made for the expense accrued)

c.	Dec. 31	Accounts Receivables	$ 5,450
		Service Revenue		$ 5,450
		(being adjustment made for the revenue accrued)

c.	Dec. 31	Rent Expense (12*65/2)	$390
		Rent Payable		$390
		(being adjustment made for the expense accrued)

d.	Dec. 31	Unearned Rent Revenue	$ 1,810
		Rent Revenue		$ 1,810
		(being adjustment made for the revenue accrued)

To determine

Concept Introduction:

Adjusting entries are required to adjust the accounts according to the accrual basis of accounting at the end of the every accounting period. For example: Recording the depreciation expense on depreciable assets at the end of each accounting year.

The business activity for each type of adjusting entry is explained as follows:

Accrued revenue: The adjusting entry for Accrued revenue is prepared to record the revenue earned during the period.

Accrued Expense: The adjusting entry for Accrued expense is prepared to record the expenses incurred during the period.

Deferred Revenue: The adjusting entry for Deferred revenue is prepared to defer the revenue that belong to next period.

Deferred expenses: The adjusting entry for Deferred expense is prepared to defer the expense that belong to next period.

Depreciation: The adjusting entry for depreciation expense is prepared to record the depreciation expense that belong to current period.
Requirement-2:

To Indicate:

The effect of omission of the above adjusting entry on balance sheet and income statement.

Expert Solution

Answer to Problem 53E

The effect of omission of the above adjusting entry on balance sheet and income statement is as follows:

#	Effect of Omission

a.	Understatement of Expense
	Overstatement of Assets


b.	Understatement of Expense
	Overstatement of Assets


c.	Understatement of Assets
	Understatement of Revenue


c.	Understatement of Expenses
	Understatement of Liabilities


d.	Overstatement of Liabilities
	Understatement of Revenue

Explanation of Solution

The effect of omission of the above adjusting entry on balance sheet and income statement is explained as follows:

Reynold Computer Service
Adjusting entries
As on Dec. 31, 2019
#	Date	Account titles	Debit	Credit	Effect of Omission

a.	Dec. 31	Depreciation Expense- Equipment	$ 132,500		Understatement of Expense
		Accumulated Depreciation- Equipment		$ 132,500	Overstatement of Assets
		(being adjustment made for the expense accrued)

b.	Dec. 31	Insurance Expense (12240*4/24)	$ 2,040		Understatement of Expense
		Prepaid Insurance		$ 2,040	Overstatement of Assets
		(being adjustment made for the expense accrued)

c.	Dec. 31	Accounts Receivables	$ 5,450		Understatement of Assets
		Service Revenue		$ 5,450	Understatement of Revenue
		(being adjustment made for the revenue accrued)

c.	Dec. 31	Rent Expense (12*65/2)	$390		Understatement of Expenses
		Rent Payable		$390	Understatement of Liabilities
		(being adjustment made for the expense accrued)

d.	Dec. 31	Unearned Rent Revenue	$ 1,810		Overstatement of Liabilities
		Rent Revenue		$ 1,810	Understatement of Revenue
		(being adjustment made for the revenue accrued)

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Answer 4

Question

100%

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 53E

To determine

Concept Introduction:

Adjusting entries are required to adjust the accounts according to the accrual basis of accounting at the end of the every accounting period. For example: Recording the depreciation expense on depreciable assets at the end of each accounting year.

The business activity for each type of adjusting entry is explained as follows:

Accrued revenue: The adjusting entry for Accrued revenue is prepared to record the revenue earned during the period.

Accrued Expense: The adjusting entry for Accrued expense is prepared to record the expenses incurred during the period.

Deferred Revenue: The adjusting entry for Deferred revenue is prepared to defer the revenue that belong to next period.

Deferred expenses: The adjusting entry for Deferred expense is prepared to defer the expense that belong to next period.

Depreciation: The adjusting entry for depreciation expense is prepared to record the depreciation expense that belong to current period.
Requirement-1:

To prepare:

The adjusting entries as on Dec. 31 for the given transactions.

Expert Solution

Answer to Problem 53E

The adjusting entries as on Dec. 31 for the given transactions are as follows:

Reynold Computer Service
Adjusting entries
As on Dec. 31, 2019
#	Date	Account titles	Debit	Credit

a.	Dec. 31	Depreciation Expense- Equipment	$ 132,500
		Accumulated Depreciation- Equipment		$ 132,500

b.	Dec. 31	Insurance Expense	$ 2,040
		Prepaid Insurance		$ 2,040

c.	Dec. 31	Accounts Receivables	$ 5,450
		Service Revenue		$ 5,450

c.	Dec. 31	Rent Expense	$390
		Rent Payable		$390

d.	Dec. 31	Unearned Rent Revenue	$ 1,810
		Rent Revenue		$ 1,810

Explanation of Solution

The adjusting entries as on Dec. 31 for the given transactions are explained as follows:

Reynold Computer Service
Adjusting entries
As on Dec. 31, 2019
#	Date	Account titles	Debit	Credit

a.	Dec. 31	Depreciation Expense- Equipment	$ 132,500
		Accumulated Depreciation- Equipment		$ 132,500
		(being adjustment made for the expense accrued)

b.	Dec. 31	Insurance Expense (12240*4/24)	$ 2,040
		Prepaid Insurance		$ 2,040
		(being adjustment made for the expense accrued)

c.	Dec. 31	Accounts Receivables	$ 5,450
		Service Revenue		$ 5,450
		(being adjustment made for the revenue accrued)

c.	Dec. 31	Rent Expense (12*65/2)	$390
		Rent Payable		$390
		(being adjustment made for the expense accrued)

d.	Dec. 31	Unearned Rent Revenue	$ 1,810
		Rent Revenue		$ 1,810
		(being adjustment made for the revenue accrued)

To determine

Concept Introduction:

Adjusting entries are required to adjust the accounts according to the accrual basis of accounting at the end of the every accounting period. For example: Recording the depreciation expense on depreciable assets at the end of each accounting year.

The business activity for each type of adjusting entry is explained as follows:

Accrued revenue: The adjusting entry for Accrued revenue is prepared to record the revenue earned during the period.

Accrued Expense: The adjusting entry for Accrued expense is prepared to record the expenses incurred during the period.

Deferred Revenue: The adjusting entry for Deferred revenue is prepared to defer the revenue that belong to next period.

Deferred expenses: The adjusting entry for Deferred expense is prepared to defer the expense that belong to next period.

Depreciation: The adjusting entry for depreciation expense is prepared to record the depreciation expense that belong to current period.
Requirement-2:

To Indicate:

The effect of omission of the above adjusting entry on balance sheet and income statement.

Expert Solution

Answer to Problem 53E

The effect of omission of the above adjusting entry on balance sheet and income statement is as follows:

#	Effect of Omission

a.	Understatement of Expense
	Overstatement of Assets


b.	Understatement of Expense
	Overstatement of Assets


c.	Understatement of Assets
	Understatement of Revenue


c.	Understatement of Expenses
	Understatement of Liabilities


d.	Overstatement of Liabilities
	Understatement of Revenue

Explanation of Solution

The effect of omission of the above adjusting entry on balance sheet and income statement is explained as follows:

Reynold Computer Service
Adjusting entries
As on Dec. 31, 2019
#	Date	Account titles	Debit	Credit	Effect of Omission

a.	Dec. 31	Depreciation Expense- Equipment	$ 132,500		Understatement of Expense
		Accumulated Depreciation- Equipment		$ 132,500	Overstatement of Assets
		(being adjustment made for the expense accrued)

b.	Dec. 31	Insurance Expense (12240*4/24)	$ 2,040		Understatement of Expense
		Prepaid Insurance		$ 2,040	Overstatement of Assets
		(being adjustment made for the expense accrued)

c.	Dec. 31	Accounts Receivables	$ 5,450		Understatement of Assets
		Service Revenue		$ 5,450	Understatement of Revenue
		(being adjustment made for the revenue accrued)

c.	Dec. 31	Rent Expense (12*65/2)	$390		Understatement of Expenses
		Rent Payable		$390	Understatement of Liabilities
		(being adjustment made for the expense accrued)

d.	Dec. 31	Unearned Rent Revenue	$ 1,810		Overstatement of Liabilities
		Rent Revenue		$ 1,810	Understatement of Revenue
		(being adjustment made for the revenue accrued)

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Answer 5

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Answer 6

Question

100%

Answer 7

Chapter 3, Problem 53E

To determine

Concept Introduction:

Adjusting entries are required to adjust the accounts according to the accrual basis of accounting at the end of the every accounting period. For example: Recording the depreciation expense on depreciable assets at the end of each accounting year.

The business activity for each type of adjusting entry is explained as follows:

Accrued revenue: The adjusting entry for Accrued revenue is prepared to record the revenue earned during the period.

Accrued Expense: The adjusting entry for Accrued expense is prepared to record the expenses incurred during the period.

Deferred Revenue: The adjusting entry for Deferred revenue is prepared to defer the revenue that belong to next period.

Deferred expenses: The adjusting entry for Deferred expense is prepared to defer the expense that belong to next period.

Depreciation: The adjusting entry for depreciation expense is prepared to record the depreciation expense that belong to current period.
Requirement-1:

To prepare:

The adjusting entries as on Dec. 31 for the given transactions.

Expert Solution

Answer to Problem 53E

The adjusting entries as on Dec. 31 for the given transactions are as follows:

Reynold Computer Service
Adjusting entries
As on Dec. 31, 2019
#	Date	Account titles	Debit	Credit

a.	Dec. 31	Depreciation Expense- Equipment	$ 132,500
		Accumulated Depreciation- Equipment		$ 132,500

b.	Dec. 31	Insurance Expense	$ 2,040
		Prepaid Insurance		$ 2,040

c.	Dec. 31	Accounts Receivables	$ 5,450
		Service Revenue		$ 5,450

c.	Dec. 31	Rent Expense	$390
		Rent Payable		$390

d.	Dec. 31	Unearned Rent Revenue	$ 1,810
		Rent Revenue		$ 1,810

Explanation of Solution

The adjusting entries as on Dec. 31 for the given transactions are explained as follows:

Reynold Computer Service
Adjusting entries
As on Dec. 31, 2019
#	Date	Account titles	Debit	Credit

a.	Dec. 31	Depreciation Expense- Equipment	$ 132,500
		Accumulated Depreciation- Equipment		$ 132,500
		(being adjustment made for the expense accrued)

b.	Dec. 31	Insurance Expense (12240*4/24)	$ 2,040
		Prepaid Insurance		$ 2,040
		(being adjustment made for the expense accrued)

c.	Dec. 31	Accounts Receivables	$ 5,450
		Service Revenue		$ 5,450
		(being adjustment made for the revenue accrued)

c.	Dec. 31	Rent Expense (12*65/2)	$390
		Rent Payable		$390
		(being adjustment made for the expense accrued)

d.	Dec. 31	Unearned Rent Revenue	$ 1,810
		Rent Revenue		$ 1,810
		(being adjustment made for the revenue accrued)

To determine

Concept Introduction:

Adjusting entries are required to adjust the accounts according to the accrual basis of accounting at the end of the every accounting period. For example: Recording the depreciation expense on depreciable assets at the end of each accounting year.

The business activity for each type of adjusting entry is explained as follows:

Accrued revenue: The adjusting entry for Accrued revenue is prepared to record the revenue earned during the period.

Accrued Expense: The adjusting entry for Accrued expense is prepared to record the expenses incurred during the period.

Deferred Revenue: The adjusting entry for Deferred revenue is prepared to defer the revenue that belong to next period.

Deferred expenses: The adjusting entry for Deferred expense is prepared to defer the expense that belong to next period.

Depreciation: The adjusting entry for depreciation expense is prepared to record the depreciation expense that belong to current period.
Requirement-2:

To Indicate:

The effect of omission of the above adjusting entry on balance sheet and income statement.

Expert Solution

Answer to Problem 53E

The effect of omission of the above adjusting entry on balance sheet and income statement is as follows:

#	Effect of Omission

a.	Understatement of Expense
	Overstatement of Assets


b.	Understatement of Expense
	Overstatement of Assets


c.	Understatement of Assets
	Understatement of Revenue


c.	Understatement of Expenses
	Understatement of Liabilities


d.	Overstatement of Liabilities
	Understatement of Revenue

Explanation of Solution

The effect of omission of the above adjusting entry on balance sheet and income statement is explained as follows:

Reynold Computer Service
Adjusting entries
As on Dec. 31, 2019
#	Date	Account titles	Debit	Credit	Effect of Omission

a.	Dec. 31	Depreciation Expense- Equipment	$ 132,500		Understatement of Expense
		Accumulated Depreciation- Equipment		$ 132,500	Overstatement of Assets
		(being adjustment made for the expense accrued)

b.	Dec. 31	Insurance Expense (12240*4/24)	$ 2,040		Understatement of Expense
		Prepaid Insurance		$ 2,040	Overstatement of Assets
		(being adjustment made for the expense accrued)

c.	Dec. 31	Accounts Receivables	$ 5,450		Understatement of Assets
		Service Revenue		$ 5,450	Understatement of Revenue
		(being adjustment made for the revenue accrued)

c.	Dec. 31	Rent Expense (12*65/2)	$390		Understatement of Expenses
		Rent Payable		$390	Understatement of Liabilities
		(being adjustment made for the expense accrued)

d.	Dec. 31	Unearned Rent Revenue	$ 1,810		Overstatement of Liabilities
		Rent Revenue		$ 1,810	Understatement of Revenue
		(being adjustment made for the revenue accrued)

Answer 8

Chapter 3, Problem 53E

To determine

Concept Introduction:

Adjusting entries are required to adjust the accounts according to the accrual basis of accounting at the end of the every accounting period. For example: Recording the depreciation expense on depreciable assets at the end of each accounting year.

The business activity for each type of adjusting entry is explained as follows:

Accrued revenue: The adjusting entry for Accrued revenue is prepared to record the revenue earned during the period.

Accrued Expense: The adjusting entry for Accrued expense is prepared to record the expenses incurred during the period.

Deferred Revenue: The adjusting entry for Deferred revenue is prepared to defer the revenue that belong to next period.

Deferred expenses: The adjusting entry for Deferred expense is prepared to defer the expense that belong to next period.

Depreciation: The adjusting entry for depreciation expense is prepared to record the depreciation expense that belong to current period.
Requirement-1:

To prepare:

The adjusting entries as on Dec. 31 for the given transactions.

Expert Solution

Answer to Problem 53E

The adjusting entries as on Dec. 31 for the given transactions are as follows:

Reynold Computer Service
Adjusting entries
As on Dec. 31, 2019
#	Date	Account titles	Debit	Credit

a.	Dec. 31	Depreciation Expense- Equipment	$ 132,500
		Accumulated Depreciation- Equipment		$ 132,500

b.	Dec. 31	Insurance Expense	$ 2,040
		Prepaid Insurance		$ 2,040

c.	Dec. 31	Accounts Receivables	$ 5,450
		Service Revenue		$ 5,450

c.	Dec. 31	Rent Expense	$390
		Rent Payable		$390

d.	Dec. 31	Unearned Rent Revenue	$ 1,810
		Rent Revenue		$ 1,810

Explanation of Solution

The adjusting entries as on Dec. 31 for the given transactions are explained as follows:

Reynold Computer Service
Adjusting entries
As on Dec. 31, 2019
#	Date	Account titles	Debit	Credit

a.	Dec. 31	Depreciation Expense- Equipment	$ 132,500
		Accumulated Depreciation- Equipment		$ 132,500
		(being adjustment made for the expense accrued)

b.	Dec. 31	Insurance Expense (12240*4/24)	$ 2,040
		Prepaid Insurance		$ 2,040
		(being adjustment made for the expense accrued)

c.	Dec. 31	Accounts Receivables	$ 5,450
		Service Revenue		$ 5,450
		(being adjustment made for the revenue accrued)

c.	Dec. 31	Rent Expense (12*65/2)	$390
		Rent Payable		$390
		(being adjustment made for the expense accrued)

d.	Dec. 31	Unearned Rent Revenue	$ 1,810
		Rent Revenue		$ 1,810
		(being adjustment made for the revenue accrued)

Answer 9

Chapter 3, Problem 53E

To determine

Concept Introduction:

Adjusting entries are required to adjust the accounts according to the accrual basis of accounting at the end of the every accounting period. For example: Recording the depreciation expense on depreciable assets at the end of each accounting year.

The business activity for each type of adjusting entry is explained as follows:

Accrued revenue: The adjusting entry for Accrued revenue is prepared to record the revenue earned during the period.

Accrued Expense: The adjusting entry for Accrued expense is prepared to record the expenses incurred during the period.

Deferred Revenue: The adjusting entry for Deferred revenue is prepared to defer the revenue that belong to next period.

Deferred expenses: The adjusting entry for Deferred expense is prepared to defer the expense that belong to next period.

Depreciation: The adjusting entry for depreciation expense is prepared to record the depreciation expense that belong to current period.
Requirement-1:

To prepare:

The adjusting entries as on Dec. 31 for the given transactions.

Answer 10

Expert Solution

Answer to Problem 53E

The adjusting entries as on Dec. 31 for the given transactions are as follows:

Reynold Computer Service
Adjusting entries
As on Dec. 31, 2019
#	Date	Account titles	Debit	Credit

a.	Dec. 31	Depreciation Expense- Equipment	$ 132,500
		Accumulated Depreciation- Equipment		$ 132,500

b.	Dec. 31	Insurance Expense	$ 2,040
		Prepaid Insurance		$ 2,040

c.	Dec. 31	Accounts Receivables	$ 5,450
		Service Revenue		$ 5,450

c.	Dec. 31	Rent Expense	$390
		Rent Payable		$390

d.	Dec. 31	Unearned Rent Revenue	$ 1,810
		Rent Revenue		$ 1,810

Answer 11

Expert Solution

Answer 12

Expert Solution

Answer 13

Expert Solution

Answer 14

Explanation of Solution

The adjusting entries as on Dec. 31 for the given transactions are explained as follows:

Reynold Computer Service
Adjusting entries
As on Dec. 31, 2019
#	Date	Account titles	Debit	Credit

a.	Dec. 31	Depreciation Expense- Equipment	$ 132,500
		Accumulated Depreciation- Equipment		$ 132,500
		(being adjustment made for the expense accrued)

b.	Dec. 31	Insurance Expense (12240*4/24)	$ 2,040
		Prepaid Insurance		$ 2,040
		(being adjustment made for the expense accrued)

c.	Dec. 31	Accounts Receivables	$ 5,450
		Service Revenue		$ 5,450
		(being adjustment made for the revenue accrued)

c.	Dec. 31	Rent Expense (12*65/2)	$390
		Rent Payable		$390
		(being adjustment made for the expense accrued)

d.	Dec. 31	Unearned Rent Revenue	$ 1,810
		Rent Revenue		$ 1,810
		(being adjustment made for the revenue accrued)

Answer 15

To determine

Concept Introduction:

Adjusting entries are required to adjust the accounts according to the accrual basis of accounting at the end of the every accounting period. For example: Recording the depreciation expense on depreciable assets at the end of each accounting year.

The business activity for each type of adjusting entry is explained as follows:

Accrued revenue: The adjusting entry for Accrued revenue is prepared to record the revenue earned during the period.

Accrued Expense: The adjusting entry for Accrued expense is prepared to record the expenses incurred during the period.

Deferred Revenue: The adjusting entry for Deferred revenue is prepared to defer the revenue that belong to next period.

Deferred expenses: The adjusting entry for Deferred expense is prepared to defer the expense that belong to next period.

Depreciation: The adjusting entry for depreciation expense is prepared to record the depreciation expense that belong to current period.
Requirement-2:

To Indicate:

The effect of omission of the above adjusting entry on balance sheet and income statement.

Expert Solution

Answer to Problem 53E

The effect of omission of the above adjusting entry on balance sheet and income statement is as follows:

#	Effect of Omission

a.	Understatement of Expense
	Overstatement of Assets


b.	Understatement of Expense
	Overstatement of Assets


c.	Understatement of Assets
	Understatement of Revenue


c.	Understatement of Expenses
	Understatement of Liabilities


d.	Overstatement of Liabilities
	Understatement of Revenue

Explanation of Solution

The effect of omission of the above adjusting entry on balance sheet and income statement is explained as follows:

Reynold Computer Service
Adjusting entries
As on Dec. 31, 2019
#	Date	Account titles	Debit	Credit	Effect of Omission

a.	Dec. 31	Depreciation Expense- Equipment	$ 132,500		Understatement of Expense
		Accumulated Depreciation- Equipment		$ 132,500	Overstatement of Assets
		(being adjustment made for the expense accrued)

b.	Dec. 31	Insurance Expense (12240*4/24)	$ 2,040		Understatement of Expense
		Prepaid Insurance		$ 2,040	Overstatement of Assets
		(being adjustment made for the expense accrued)

c.	Dec. 31	Accounts Receivables	$ 5,450		Understatement of Assets
		Service Revenue		$ 5,450	Understatement of Revenue
		(being adjustment made for the revenue accrued)

c.	Dec. 31	Rent Expense (12*65/2)	$390		Understatement of Expenses
		Rent Payable		$390	Understatement of Liabilities
		(being adjustment made for the expense accrued)

d.	Dec. 31	Unearned Rent Revenue	$ 1,810		Overstatement of Liabilities
		Rent Revenue		$ 1,810	Understatement of Revenue
		(being adjustment made for the revenue accrued)

Answer 16

To determine

Concept Introduction:

Adjusting entries are required to adjust the accounts according to the accrual basis of accounting at the end of the every accounting period. For example: Recording the depreciation expense on depreciable assets at the end of each accounting year.

The business activity for each type of adjusting entry is explained as follows:

Accrued revenue: The adjusting entry for Accrued revenue is prepared to record the revenue earned during the period.

Accrued Expense: The adjusting entry for Accrued expense is prepared to record the expenses incurred during the period.

Deferred Revenue: The adjusting entry for Deferred revenue is prepared to defer the revenue that belong to next period.

Deferred expenses: The adjusting entry for Deferred expense is prepared to defer the expense that belong to next period.

Depreciation: The adjusting entry for depreciation expense is prepared to record the depreciation expense that belong to current period.
Requirement-2:

To Indicate:

The effect of omission of the above adjusting entry on balance sheet and income statement.

Answer 17

Expert Solution

Answer to Problem 53E

The effect of omission of the above adjusting entry on balance sheet and income statement is as follows:

#	Effect of Omission

a.	Understatement of Expense
	Overstatement of Assets


b.	Understatement of Expense
	Overstatement of Assets


c.	Understatement of Assets
	Understatement of Revenue


c.	Understatement of Expenses
	Understatement of Liabilities


d.	Overstatement of Liabilities
	Understatement of Revenue

Answer 18

Expert Solution

Answer 19

Expert Solution

Answer 20

Expert Solution

Answer 21

Explanation of Solution

The effect of omission of the above adjusting entry on balance sheet and income statement is explained as follows:

Reynold Computer Service
Adjusting entries
As on Dec. 31, 2019
#	Date	Account titles	Debit	Credit	Effect of Omission

a.	Dec. 31	Depreciation Expense- Equipment	$ 132,500		Understatement of Expense
		Accumulated Depreciation- Equipment		$ 132,500	Overstatement of Assets
		(being adjustment made for the expense accrued)

b.	Dec. 31	Insurance Expense (12240*4/24)	$ 2,040		Understatement of Expense
		Prepaid Insurance		$ 2,040	Overstatement of Assets
		(being adjustment made for the expense accrued)

c.	Dec. 31	Accounts Receivables	$ 5,450		Understatement of Assets
		Service Revenue		$ 5,450	Understatement of Revenue
		(being adjustment made for the revenue accrued)

c.	Dec. 31	Rent Expense (12*65/2)	$390		Understatement of Expenses
		Rent Payable		$390	Understatement of Liabilities
		(being adjustment made for the expense accrued)

d.	Dec. 31	Unearned Rent Revenue	$ 1,810		Overstatement of Liabilities
		Rent Revenue		$ 1,810	Understatement of Revenue
		(being adjustment made for the revenue accrued)

Answer 22

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

Concept explainers

Answer to Problem 53E

Explanation of Solution

Answer to Problem 53E

Explanation of Solution

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