Explanation a. Collected rent for the period of December 1, 2015 of the current year to April 1, 2016 of next year, which was credited to unearned rent revenue on December 1, 2015: 1. Determining if revenue was earned or an expense was incurred: Rent revenue has been earned now. 2. Determining whether cash was received or paid in the past or will be received or paid in the future: Cash was received in the past and deferred revenue was recorded. 3. Computing the amount of the adjustment: Rent revenue = Amount collected × 1 4 = $ 1 , 200 × 1 4 = $ 300 Record the adjusting journal entry : Account Title and Explanation Debit ($) Credit ($) a. Unearned rent revenue (-L) 300 Rent revenue (+R, +SE) 300 (To record the adjusting entry for rent revenue) Table (1) 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. Unearned rent revenue is a liability. There is a decrease in liability. Hence, debit unearned rent revenue with $300. Rent revenue is a revenue account which is a component of stockholders’ equity. There is an increase in the revenue account which increases the stockholders’ equity. Hence, credit service revenue account with $300. b. A machine was purchased on January 1, 2011 and the company estimated annual depreciation is $3,200. 1. Determining if revenue was earned or an expense was incurred: Depreciation expense on the equipment has been incurred now. 2. Determining whether cash was received or paid in the past or will be received or paid in the future: Cash was paid out the past when the equipment was acquired and deferred expense was recorded. The net book estimation of the equipment is overstated. Accumulated depreciation should be increased for the amount used throughout the period. 3. Computing the amount of the adjustment: The given amount is $3,200. Record the adjusting journal entry: Account Title and Explanation Debit ($) Credit ($) b

8th Edition

ISBN: 9780078025556

Author: Robert Libby, Patricia Libby, Daniel Short

Publisher: McGraw-Hill Education

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Chapter 4 Solutions

Financial Accounting, 8th Edition

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. 8Q Ch. 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. 12Q Ch. 4 - Which of the following accounts would not appear...Ch. 4 - Which account is least likely to appear in an...Ch. 4 - Prob. 3MCQ Ch. 4 - Prob. 4MCQ Ch. 4 - Prob. 5MCQ Ch. 4 - An adjusted trial balance a. Shows the ending...Ch. 4 - JJ Company owns a building. Which of the following...Ch. 4 - Prob. 8MCQ Ch. 4 - Prob. 9MCQ Ch. 4 - If a company is successful in acquiring several...Ch. 4 - Prob. 1ME Ch. 4 - Matching Definitions with Terms Match each...Ch. 4 - Matching Definitions with Terms Match each...Ch. 4 - Prob. 4ME Ch. 4 - Prob. 5ME Ch. 4 - Prob. 6ME Ch. 4 - Prob. 7ME Ch. 4 - Prob. 8ME Ch. 4 - Prob. 9ME Ch. 4 - Prob. 10ME Ch. 4 - Prob. 11ME Ch. 4 - Prob. 12ME Ch. 4 - Prob. 1E Ch. 4 - Prob. 2E Ch. 4 - Prob. 3E Ch. 4 - Prob. 4E Ch. 4 - Prob. 5E Ch. 4 - Prob. 6E Ch. 4 - Prob. 7E Ch. 4 - Prob. 8E Ch. 4 - Prob. 9E Ch. 4 - Recording Transactions Including Adjusting and...Ch. 4 - Prob. 11E Ch. 4 - Prob. 12E Ch. 4 - Inferring Transactions Deere Company is the...Ch. 4 - Analyzing the Effects of Errors on Financial...Ch. 4 - Prob. 15E Ch. 4 - Prob. 16E Ch. 4 - Prob. 17E Ch. 4 - Prob. 18E Ch. 4 - Prob. 19E Ch. 4 - Prob. 20E Ch. 4 - Prob. 1P Ch. 4 - Prob. 2P Ch. 4 - Prob. 3P Ch. 4 - Prob. 4P Ch. 4 - Prob. 5P Ch. 4 - Prob. 6P Ch. 4 - Prob. 7P Ch. 4 - Prob. 1AP Ch. 4 - Prob. 2AP Ch. 4 - Prob. 3AP Ch. 4 - Prob. 4AP Ch. 4 - Prob. 5AP Ch. 4 - Prob. 6AP Ch. 4 - Prob. 7AP Ch. 4 - Prob. 1COMP Ch. 4 - Prob. 2COMP Ch. 4 - Prob. 1CP Ch. 4 - Prob. 2CP Ch. 4 - Prob. 3CP Ch. 4 - Prob. 4CP Ch. 4 - Prob. 5CP Ch. 4 - Prob. 6CP Ch. 4 - Prob. 7CP Ch. 4 - Prob. 8CP Ch. 4 - Prob. 9CP Ch. 4 - Prob. 1CC

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