Explanation Adjusting entries: Adjusting entries are the journal entries which are recorded at the end of the accounting period to correct or adjust the revenue and expense accounts, to concede with the accrual principle of accounting. Rules of Debit and Credit: Following rules are followed for debiting and crediting different accounts while they occur in business transactions: Debit , all increase in assets, expenses and dividends, all decrease in liabilities, revenues and stockholders’ equities . Credit, all increase in liabilities, revenues, and stockholders’ equities, all decrease in assets, expenses. The Journal entry for accrued interest revenue as on July 31, is as follows: Date Account Title Post ref. Debit ($) Credit ($) July 31 Interest receivable 100 Interest revenue (1) 100 (To record the accrued interest on the notes receivable) Table (1) Description: Interest receivable is an asset which is increased, hence debit interest receivable account with $100. Interest revenue is revenue account which increases the shareholder’s equity, hence credit interest revenue account with $100. Working Note: Calculate the interest receivable on the note. Interest receivable on note } = [ Face value × Annual interest × Time in terms of Note rate of year ] = $20,000 × 6% × 1month 12months = $100 (1) The Journal entry to record the supplies utilized as on July 31, is as follows: Date Account Title Post ref. Debit ($) Credit ($) July 31 Supplies expenses 5,400.00 Supplies (2) 5,400.00 (To record the actual amount of supplies utilized in the month) Table (2) Description: Supplies expenses is an expense, which decreases the Shareholder’s equity, hence debit supplies expenses account with $5,400. Supplies is an asset which is decreased, hence credit supplies account with $5,400. Working Note: Calculate the supplies utilized. Supplies Utilised = [ Supplies before - Supplies in hand adjustment on July 31 ] = $24,000 − $ 18 , 600 = $5,400 (2) The Journal entry to record the rent paid as on July 31, is as follows: Date Account Title Post ref. Debit ($) Credit ($) July 31 Rent expenses 900.00 Prepaid rent (3) 900.00 (To record the rent expense for July) Table (3) Description: Rent expenses is an expense, which decreases the Shareholder’s equity, hence debit rent expenses account with $900. Prepaid rent is an asset which is decreased; hence credit prepaid rent account with $900

7th Edition

ISBN: 9781119769736

Author: Kimmel

Publisher: WILEY

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Chapter 4, Problem 12E

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Record the adjusting entries for the given transactions.

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Chapter 4, Problem 11E

Chapter 4, Problem 13E

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Good Times Restaurant estimates the following costs for next year: fixed costs $120,000, variable cost per meal $15. If they want to earn a profit of $90,000 and charge $35 per meal, calculate the required number of meals. Accounting 23

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Chapter 4 Solutions

ACCOUNTING(LL)

Ch. 4 - Prob. 1Q Ch. 4 - Prob. 2Q Ch. 4 - Prob. 3Q Ch. 4 - Prob. 4Q Ch. 4 - Prob. 5Q Ch. 4 - Prob. 6Q Ch. 4 - Prob. 7Q Ch. 4 - Prob. 8Q Ch. 4 - Prob. 9Q Ch. 4 - Prob. 10Q

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