Financial Accounting
9th Edition
ISBN: 9781259738692
Author: Libby
Publisher: MCG
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Chapter 4, Problem 4.3P
1.
To determine
Identify each of these transactions as deferred revenue, deferred expense, accrued revenue, or accrued expense.
2.
To determine
Prepare the
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Adjustment for Depreciation
Cowley Company just completed its first year of operations. The December 31 equipment account has a
balance of $20,000. There is no balance in the Accumulated Depreciation-Equipment account or in
the Depreciation Expense account.
The accountant estimates the yearly equipment depreciation to be $4,000.
Prepare the required adjustment to record the yearly depreciation for equipment.
Note: Use negative signs with answers, when appropriate.
Balance Sheet
Income Statement
Stockholders
Assets
Liabilities
Equity
Revenues
Expenses
= Net Income
20,000
4,000
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EnviroWaste’s year-end is December 31. The information in (a) to (e) is available at year-end for the preparation of adjusting entries: Of the $17,600 balance in Unearned Revenue, $2,600 remains unearned. The annual building depreciation is $13,700. The Spare Parts Inventory account shows an unadjusted balance of $1,020. A physical count reveals a balance on hand of $890. Unbilled and uncollected services provided to customers totalled $13,700. The utility bill for the month of December was received but is unpaid; $1,200. The accrued revenues of $13,700 recorded in (d) were collected on January 4, 2024. The $1,200 utility bill accrued in (e) was paid on January 14, 2024. Required: Prepare the required adjusting entries at December 31, 2023, for (a) to (e) and the subsequent cash entries required for (f) and (g).
Chapter 4 Solutions
Financial Accounting
Ch. 4 - What is the purpose of recording adjusting...Ch. 4 - List the four types of adjusting entries, and give...Ch. 4 - What is a contra-asset? Give an example of one.Ch. 4 - Explain how the financial statements relate to...Ch. 4 - What is the equation for each of the following...Ch. 4 - Explain the effect of adjusting entries on cash.Ch. 4 - How is earnings per share computed and...Ch. 4 - Prob. 8QCh. 4 - What are the purposes for closing the books?Ch. 4 - Differentiate among (a) permanent, (b) temporary,...
Ch. 4 - Explain why the income statement accounts are...Ch. 4 - Prob. 12QCh. 4 - Which of the following accounts would not appear...Ch. 4 - Which account is least likely to appear in an...Ch. 4 - Prob. 3MCQCh. 4 - On June 1, 2016, Oakcrest Company signed a...Ch. 4 - Prob. 5MCQCh. 4 - An adjusted trial balance a. Shows the ending...Ch. 4 - JJ Company owns a building. Which of the following...Ch. 4 - Prob. 8MCQCh. 4 - Prob. 9MCQCh. 4 - If a company is successful in acquiring several...Ch. 4 - Preparing a Trial Balance Hagadorn Company has the...Ch. 4 - Matching Definitions with Terms Match each...Ch. 4 - Matching Definitions with Terms Match each...Ch. 4 - Recording Adjusting Entries (Deferred Accounts) In...Ch. 4 - Determining Financial Statement Effects of...Ch. 4 - Recording Adjusting Entries (Accrued Accounts) In...Ch. 4 - Prob. 4.7MECh. 4 - Reporting an Income Statement with Earnings per...Ch. 4 - Prob. 4.9MECh. 4 - Reporting an Income Statement with Earnings per...Ch. 4 - Prob. 4.11MECh. 4 - Recording Closing Entries Refer to the adjusted...Ch. 4 - Prob. 4.1ECh. 4 - Prob. 4.2ECh. 4 - Recording Adjusting Entries Diane Company...Ch. 4 - Prob. 4.4ECh. 4 - Prob. 4.5ECh. 4 - Recording Adjusting Entries and Reporting Balances...Ch. 4 - Determining Financial Statement Effects of...Ch. 4 - Recording Seven Typical Adjusting Entries...Ch. 4 - Prob. 4.9ECh. 4 - Determining Financial Statement Effects of Seven...Ch. 4 - Determining Financial Statement Effects of Seven...Ch. 4 - Recording Transactions Including Adjusting and...Ch. 4 - Prob. 4.13ECh. 4 - Determining Financial Statement Effects of...Ch. 4 - Inferring Transactions Deere Company is the...Ch. 4 - Analyzing the Effects of Errors on Financial...Ch. 4 - Prob. 4.17ECh. 4 - Recording the Effects of Adjusting Entries and...Ch. 4 - Reporting a Correct Income Statement with Earnings...Ch. 4 - Recording Four Adjusting Entries and Completing...Ch. 4 - Prob. 4.21ECh. 4 - Recording Four Adjusting Entries and Completing...Ch. 4 - Prob. 4.1PCh. 4 - Prob. 4.2PCh. 4 - Prob. 4.3PCh. 4 - Prob. 4.4PCh. 4 - Prob. 4.5PCh. 4 - Prob. 4.6PCh. 4 - Prob. 4.7PCh. 4 - Prob. 4.1APCh. 4 - Prob. 4.2APCh. 4 - Prob. 4.3APCh. 4 - Prob. 4.4APCh. 4 - Determining Financial Statement Effects of...Ch. 4 - Prob. 4.6APCh. 4 - Prob. 4.7APCh. 4 - Prob. 4.1CONCh. 4 - Recording Transactions (Including Adjusting and...Ch. 4 - Recording Transactions (Including Adjusting and...Ch. 4 - Finding Financial Information Refer to the...Ch. 4 - Finding Financial Information Refer to the...Ch. 4 - Comparing Companies within an Industry and Over...Ch. 4 - Prob. 4.4CPCh. 4 - Prob. 4.5CPCh. 4 - Prob. 4.6CPCh. 4 - Prob. 4.7CPCh. 4 - Prob. 4.8CPCh. 4 - Prob. 4.9CP
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- The following accounts appear in the ledger of Celso and Company as of June 30, the end of this fiscal year. The data needed for the adjustments on June 30 are as follows: ab.Merchandise inventory, June 30, 54,600. c.Insurance expired for the year, 475. d.Depreciation for the year, 4,380. e.Accrued wages on June 30, 1,492. f.Supplies on hand at the end of the year, 100. Required 1. Prepare a work sheet for the fiscal year ended June 30. Ignore this step if using CLGL. 2. Prepare an income statement. 3. Prepare a statement of owners equity. No additional investments were made during the year. 4. Prepare a balance sheet. 5. Journalize the adjusting entries. 6. Journalize the closing entries. 7. Journalize the reversing entry as of July 1, for the wages that were accrued in the June adjusting entry. Check Figure Net income, 14,066arrow_forwardSoon after December 31, 2019, the auditor requested a depreciation schedule for trucks of Jarrett Trucking Company, showing the additions, retirements, depreciation, and other data affecting the income of the company in the 4-year period 2016 to 2019, inclusive. The following data were in the Trucks account as of January 1, 2016: The Accumulated DepreciationTrucks account, previously adjusted to January 1,2016, and duly entered in the ledger, had a balance on that date of 16,460. This amount represented the straight-line depreciation on the four trucks from the respective dates of purchase, based on a 5-year life and no residual value. No debits had been made to this account prior to January 1, 2016. Transactions between January 1,2017, and December 31, 2019, and their record in the ledger were as follows: 1. July 1, 2016: Truck no. 1 was sold for 1,000 cash. The entry was a debit to Cash and a credit to Trucks, 1,000. 2. January 1, 2017: Truck no. 3 was traded for a larger one (no. 5) with a 5-year life. The agreed purchase price was 12,000. Jarrett paid the other company 1,780 cash on the transaction. The entry was a debit to Trucks, 1,780, and a credit to Cash, 1,780. 3. July 1, 2018: Truck no. 4 was damaged in a wreck to such an extent that it was sold as junk for 50 cash. Jarrett received 950 from the insurance company. The entry made by the bookkeeper was a debit to Cash, 1,000, and credits to Miscellaneous Revenue, 50, and Trucks, 950, 4. July 1, 2018: A new truck (no. 6) was acquired for 20,000 cash and debited at that amount to the Trucks account. The truck has a 5-year life. Entries for depreciation had been made at the close of each year as follows: 2016, 8,840; 2017, 5,436; 2018, 4,896; 2019, 4,356. Required: 1. Next Level For each of the 4 years, calculate separately the increase or decrease in earnings arising from the companys errors in determining or entering depreciation or in recording transactions affecting trucks. 2. Prove your work by one compound journal entry as of December 31, 2019; the adjustment of the Trucks account is to reflect the correct balances, assuming that the books have not been closed for 2019.arrow_forwardCALCULATING AND JOURNALIZING DEPRECIATION Equipment records for Johnson Machine Co. for the year follow. Johnson Machine uses the straight-line method of depreciation. In the case of assets acquired by the fifteenth day of the month, depreciation should be computed for the entire month. In the case of assets acquired after the fifteenth day of the month, no depreciation should be considered for the month in which the asset was acquired. REQUIRED 1. Calculate the depreciation expense for Johnson Machine as of December 31, 20--. 2. Prepare the entry for depreciation expense using a general journal.arrow_forward
- CALCULATING AND JOURNALIZING DEPRECIATION Equipment records for Byerly Construction Co. for the year follow. Byerly Construction uses the straight-line method of depreciation. In the case of assets acquired by the fifteenth day of the month, depreciation should be computed for the entire month. In the case of assets acquired after the fifteenth day of the month, no depreciation should be considered for the month in which the asset was acquired. REQUIRED 1. Calculate the depreciation expense for Byerly Construction as of December 31, 20--. 2. Prepare the entry for depreciation expense using a general journal.arrow_forwardWolfpack Corp. has determined it should record depreciation expense of $40,000 for the year ending 12/31/X7. Required: In the general journal below, complete the year-end entry to record depreciation. Debit Credit Dec 31 ? 40,000 ? 40,000arrow_forwardABC Township purchases $15,000 of supplies on account toward the end of the year. A year-end audit reveals that $4,000 of the inventories remain unused. Prepare the journal entry for the purchase of the inventories and the year-end adjusting entry, assuming that the purchases method is used.arrow_forward
- How do I do the journal entries, adjusting entries, and closing entries ( assuming FIFO for inventory) Transactions and information for the year: Jan 1st. Spent $3,500 to improve the first piece of equipment purchased in Year 1. Revised useful life is 5 more years while the new salvage value is $2,000. Jan 2nd, ordered and received 200 units of inventory purchased on account for $13 each Jan 15th, paid $100 to settle a warranty claim from a customer. Feb 3rd, ordered and received 150 units of inventory purchased on account for $12 each Feb 22nd, sold 250 units of inventory at $65 each. $10,000 was on account. The inventory came with a 1 year warranty. The company expects that providing the warranty will cost 1% of the sales made. March 1st, incurred and paid $900 of wages expense Mar 30th, collected $5000 of accounts receivable April 1st, paid $50 to settle a warranty claim from a customer. May 2nd, Paid $4000 of accounts payable. June 1st, Paid $409 of taxes payable June 30th, made…arrow_forwardAssume that a town purchases $6,000 of supplies on account toward the end of the year. A year-end audit reveals that $3,500 of the inventories remain unused. Prepare the journal entry for the purchase the inventories and the year-end adjusting entry assuming that the consumption method is used.arrow_forwardAnalysis of Errors: Correcting Entries and Correct Pretax Income Travis Inc. has just completed its financial statements for the reporting year ended December 31 of Year 5. Pretax income is $800,000. The accounts have not been closed for December 31 of Year 5. Further consideration and review of the records revealed the following items related to the Year 5 statements. 1. On January 1 of Year 1, a machine was acquired that cost $50,000. The estimated useful life was 10 years, and the residual value was $10,000. At the time of acquisition, the full cost of the machine was incorrectly debited to the land account. The company uses straight-line depreciation. 2. On January 1 of Year 3, a long-term investment of $90,000 was made by purchasing a $100,000, 8% bond of FDC Corporation. The investment account was debited for $90,000. Each year, starting on December 31 of Year 3, the company has recognized and reported investment revenue on these bonds of $8,000. The bonds mature in 10 years from…arrow_forward
- Adjusting Entries Your examination of Sullivan Company's records provides the following information for the December 31, year-end adjustments: 1.Bad debts are to be recorded at 2% of sales. Sales made on credit totaled $25,000 for the year. Salaries at year-end that have accumulated but have not been paid total $1, Annual straight-line depreciation for the company's equipment is based on a cost of $30,000, an estimated life of 8years, and an estimated residual value of $2,000. Prepaid insurance in the amount of $800 has Interest that has been earned but not collected totals $ The company has satisfied performance obligations entitling it to rent m the amount of $1,000. Interest on a note payable that has accumulated but has not been paid totals $600. The income tax rate is 30% on current income and is payable in the first quarter of the next y The pretax income before the preceding adjusting entries is $6,800. Required: Prepare the adjusting entries to record the preceding…arrow_forwardAdjusting Entries The following are several transaction of Ardery Company that occured during the current year and were recorded in permanent(that is,balance sheet) accounts unless indicated other wise. The following information also is available: 1. On january 1, the office supplies account had a $250 balance.Om December 31,an inventory count showed $190 of office supplies on hand. 2.The weekly(5 day) payroll of Ardery Company amounts to $2,000.All employees are paid at the close of business each Wednesday.A 2-day accural is required for the current year. 3.Sales personnel travel cost reports indicate that $490 of advances had been used to pay travel expenses. 4. The income tax rate is 30% on current income and us payable in the first quarter of next year.The prtax income before the adjusting entries is $8,665. Required: On the basis of the above information, prepare journal entries to record whatever adjustment are necessary to bring the accounts up to date one December 31.each…arrow_forwardKnowledge Check 01 On October 1, equipment costing $10,700, on which $7,070 of accumulated depreciation has been recorded (through that date) was sold for $2,070 cash. Prepare the appropriate journal entry for the sale of the equipment. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.)arrow_forward
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