Horngren's Accounting (11th Edition)
11th Edition
ISBN: 9780133856781
Author: Tracie L. Miller-Nobles, Brenda L. Mattison, Ella Mae Matsumura
Publisher: PEARSON
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Textbook Question
Chapter 3, Problem P3A.44BPGB
Understanding the alternative treatment of prepaid expenses and unearned revenues
Speedy I’ack’n Mail completed the following transactions during 2016:
Nov. 1 Paid $5,200 store rent covering the lour-month period ending February 28, 2017.
I Paid $9,600 insurance covering the six-rnonlh period ending April 30, 2017.
Dec I Collected $5,400 cash in advance from customers. The service
revenue will be earned S 1,800 monthly over the three-month period ending February 28, 2017.
1 Collected $ 10.000 cash in advance from customers. The service revenue will be earned $2,000 monthly over the five-month period ending April 30, 2017.
Requirements
- Journalize die transactions assuming that Speedy Pack’n Mail debits an asser account for prepaid expenses and credits a liability account for unearned revenues.
- Journalize the related
adjusting entries at December 31,2016. - Posr the journal and adjusting entries to the T-accounrs, and show their balances at December 31, 2016. (Ignore the Cash account.)
- Repeat Requirements 1-3. This rime debit an expense account fur prepaid expenses and credit a revenue account for unearned revenues.
- Compare rhe account balances in Requirements 3 and 4, They should be equal.
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The following information has been presented to you for 2018 by Wonder Projects Limited:
September
October
November
Rand
Rand
Rand
Cash revenue
200 000
220 000
240 000
Credit revenue
120 000
180 000
190 000
Purchases (all credit)
130 000
140 000
120 000
Additional information:
Collection of credit revenue: 50% in the month of invoice 30% one month after invoice
15% two months after invoice and the balance written off as irrecoverable.
Purchases are on credit and are paid for one month after the purchase, less 5%
Rent income amounts to R10 000 per The rent will increase by 8% on 1 October 2018.
A fixed deposit of R150 000 will mature on 31 October 2018. Interest of R15 000 will also be received on this
A new computer will be purchased on 3 September 2018 for R25 000
Salaries amount to R20 000 per A 10% increase will take effect on 1 October 2018.
The owner is expected to take R5 000 cash from the business on 20 October…
Calculate the average daily balance (in $) for October for a revolving credit account with a previous month's balance of $130 and the following activity. (Round your answer to the nearest cent.)
Date
Activity
Amount
October 3
Cash advance
$50.00
October 7
Payment
$75.00
October 10
Purchase
$28.59
October 16
Credit
$20.00
October 25
Purchase
$122.60
average daily balance = $ ___
Computing the collection period for receivables
Unique Media Sign Incorporated sells on the account. Recently, Unique reported the following figures;
2018 2017
Net credit sales $594,920 $602,000
Net receivable at the end of the year $38,500 $47,100
Requirements
Compute Unique’s days’ sales in receivables for 2018. (Round to the nearest day)
Suppose Unique’s normal credit terms for a sale on account are 2/10, net 30. How well docs Unique’s collection period compared to the company’s credit terms? Is this good or bad for Unique?
Chapter 3 Solutions
Horngren's Accounting (11th Edition)
Ch. 3 - Prob. 1QCCh. 3 - Get Fit Now gains a client who prepays S540 for a...Ch. 3 - The revenue recognition principle requires...Ch. 3 - Adjusting the accounts is the process of Learning...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 - Prob. 7QCCh. 3 - A equity overstated income statement: expense...Ch. 3 - A worksheet Learning Objective 6 is a journal used...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 - Prob. 3RQCh. 3 - What is a fiscal year? Why might companies choose...Ch. 3 - Under the revenue recognition principle, when is...Ch. 3 - Under the matching principle, when are expenses...Ch. 3 - When are adjusting entries completed and what is...Ch. 3 - What are the two basic categories of adjusting...Ch. 3 - What is a deferred expense? Provide an example.Ch. 3 - What is the process of allocating the cost of a...Ch. 3 - What is a contra account?Ch. 3 - Prob. 12RQCh. 3 - What does accumulated depreciation represent?Ch. 3 - Prob. 14RQCh. 3 - What is a deferred revenue? Provide an example.Ch. 3 - What is an accrued expense? Provide an example.Ch. 3 - What is an accrued revenue? Provide an example.Ch. 3 - What are the two rules to remember about adjusting...Ch. 3 - When is an adjusted trial balance prepared, and...Ch. 3 - Prob. 20RQCh. 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 - Prob. S3.1SECh. 3 - Prob. S3.2SECh. 3 - Prob. S3.3SECh. 3 - Prob. S3.4SECh. 3 - S3-5 Identifying types of adjusting entries...Ch. 3 -
S3-6 Journalizing and posting adjusting entries...Ch. 3 - Prob. S3.7SECh. 3 - Prob. S3.8SECh. 3 - Prob. S3.9SECh. 3 - Prob. S3.10SECh. 3 - Prob. S3.11SECh. 3 - Journalizing an adjusting entry for accrued...Ch. 3 - Prob. S3.13SECh. 3 - Determining the effects on financial statements...Ch. 3 - Prob. S3.15SECh. 3 - Prob. S3A.16SECh. 3 - Prob. S3A.17SECh. 3 - E3-18 Comparing cash and accrual basis accounting...Ch. 3 - Comparing cash and accrual basis accounting and...Ch. 3 - Prob. E3.20ECh. 3 - Prob. E3.21ECh. 3 -
E3-22) Journalizing adjusting entries
Consider...Ch. 3 - Prob. E3.23ECh. 3 - Journalizing adjusting entries and posting to...Ch. 3 - Journalizing adjusting entries and posting to...Ch. 3 - Prob. E3.26ECh. 3 - Prob. E3.27ECh. 3 - Journalizing adjusting entries and analyzing their...Ch. 3 - Prob. E3.29ECh. 3 - Prob. E3.30ECh. 3 - Prob. E3A.31ECh. 3 - Prob. E3A.32ECh. 3 - Prob. P3.33APGACh. 3 - Prob. P3.34APGACh. 3 - Prob. P3.35APGACh. 3 - Prob. P3.36APGACh. 3 - Prob. P3.37APGACh. 3 - Prob. P3A.38APGACh. 3 - Prob. P3.39BPGBCh. 3 - Prob. P3.40BPGBCh. 3 - Prob. P3.41BPGBCh. 3 - Prob. P3.42BPGBCh. 3 - Prob. P3.43BPGBCh. 3 - Understanding the alternative treatment of prepaid...Ch. 3 - Prob. P3.45CPCh. 3 - Prob. P3.46PSCh. 3 - One year ago, Tyler Stasney founded Swift...Ch. 3 - Prob. 3.1EICh. 3 - Prob. 3.1FCCh. 3 - Prob. 3.1FSC
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