懷爾德會計學(xué)原理答案

1、Adjusting Accounts and Preparing Financial StatementsQUESTIONS 1.The cash basis of accounting reports revenues when cash is received while the accrual basis reports revenues when they are earned. The cash basis reports expenses when cash is paid while the accrual basis reports expenses when they are

2、 incurred and matched with revenues they generated. 2.The accrual basis of accounting generally provides a better indication of company performance and financial condition than does the cash basis. Also, the accrual basis increases the comparability of financial statements from one period to the nex

3、t. Thus, business decision makers generally prefer the accrual basis. 3.Businesses that have major seasonal variations in sales are most likely to select the natural business year as the fiscal year. 4.A prepaid expense is an item paid for in advance of receiving its benefits. As such, it is reporte

4、d as an asset on the balance sheet. 5.Long-term tangible plant assets such as equipment, buildings, and machinery lead to adjustments for depreciation. Generally, land is the only long-term tangible plant asset that does not require depreciation. 6.The Accumulated Depreciation contra account is used

5、 for depreciation. It provides financial statement users with additional information about the relative age of the assets. Without the contra account information, the reader would not be able to tell whether the assets are new or in need of replacement. 7.Unearned revenue refers to cash received in

6、advance of providing products and services. Another name for unearned revenue is deferred revenue. It is reported as a liability on the balance sheet.8.Accrued revenue is revenue that is earned but is not yet received in cash (and/or other assets) and the customer has not been billed prior to the en

7、d of the period. Therefore, end-of-period adjustments are made to record accrued revenue. Examples are interest income that has been earned but not collected and revenues from services performed that are neither collected nor billed. 9.AIf prepaid expenses are initially recorded with debits to expen

8、se accounts, then the prepaid expenses asset accounts are debited in the adjusting entries.10.For Best Buy, all of the accounts under the category of Property and Equipment (except for Land), require adjusting entries. The expense related to the depreciation expense account would be understated on t

9、he income statement if Best Buy fails to adjust these asset accounts. If the adjusting entries are not made, net income would be overstated. Note: Students might also correctly identify accounts receivable, goodwill, and tradenamesas needing adjustment.11.CircuitCity must make adjusting entries to P

10、repaid expenses and other current assets; Deferred income taxes; Accrued expenses and other current liabilities; Accrued income taxes; and possibly other assets and liabilities such as Receivables for bad debts. (It is also possible that CircuitCity would need to adjust Goodwill and Other intangible

11、 assets.)12.RadioShack would need to debit interest receivable and credit interest revenue.13.The Accrued Wages Expense would be reported as part of “Accrued Expenses” on Apples balance sheet.QUICK STUDIESQuick Study 3-1 (15 minutes)Cash AccountingRevenues (cash receipts)$52,000 Expenses (cash payme

12、nts: $37,500 - $6,000 + $3,250) 34,750Net income $17,250Accrual AccountingRevenues (earned) $60,000Expenses (incurred) 37,500Net income$22,500Quick Study 3-2 (10 minutes)a.AEAccrued expensesb.PEPrepaid expensesc.UR Unearned revenuesd.PEPrepaid expenses (Depreciation)e.ARAccrued revenuesQuick Study 3

13、-3 (20 minutes)Accounts Debited and CreditedFinancial Statementa.DebitUnearned RevenueBalance SheetCreditRevenue EarnedIncome Statementb.DebitWages ExpenseIncome StatementCreditWages PayableBalance Sheetc.DebitAccounts ReceivableBalance SheetCreditRevenue EarnedIncome Statementd.DebitInsurance Expen

14、seIncome StatementCreditPrepaid InsuranceBalance Sheete.DebitDepreciation ExpenseIncome StatementCreditAccumulated DepreciationBalance SheetQuick Study 3-4 (15 minutes)a.Insurance Expense3,000Prepaid Insurance3,000To record 6-month insurance coverage expired.b.Supplies Expense4,150Supplies4,150To re

15、cord supplies used during the year.($900 + $4,000 ? = $750)Quick Study 3-5 (15 minutes)a. Depreciation ExpenseEquipment8,400Accumulated DepreciationEquipment8,400To record depreciation expense for the year.($45,000 - $3,000) / 5 years = $8,400b.No depreciation adjustments are made for land asit is e

16、xpected to last indefinitely.Quick Study 3-6 (10 minutes)Salaries Expense400Salaries Payable400To record salaries incurred but not yet paid.One student earns $100 x 4 days, Monday through ThursdayQuick Study 3-7 (15 minutes)a.Unearned Revenue22,500Legal Revenue22,500To recognize legal revenue earned

17、 (30,000 x 3/4).b.Unearned Subscription Revenue1,200Subscription Revenue1,200To recognize subscription revenue earned.100 x ($24 / 12 months) x 6 monthsQuick Study 3-8 (15 minutes)Adjusting entryDebitCredit1.Accrue salaries expenseeg2.Adjust the Unearned Services Revenue account to recognize earned

18、revenueaf3.Record the earning of services revenue for which cash will be received the following periodbfQuick Study 3-9 (10 minutes)The answer is a. ExplanationThe debit balance in Prepaid Insurance was reduced by $400, implying a $400 debit to Insurance Expense. The credit balance in Interest Payab

19、le increased by $800, implying an $800 debit to Interest Expense.Quick Study 3-10 (15 minutes)The answer is 2. ExplanationInsurance premium errorUnderstates expenses (and overstates assets) by$1,600Accrued salaries errorUnderstates expenses (and understates liabilities) by 1,000The collective effect

20、s from this companys errors follow:Understates expenses by$2,600Overstates assets by$1,600Understates liabilities by$1,000Quick Study 3-11 (10 minutes)Profit margin = $78,750 / $630,000 = %Interpretation: For each dollar that Miller Company records as revenue, it earns cents in net income. Millers %

21、 is markedly lower than competitors average profit margin of 15%it must improve performance.Quick Study 3-12A (5 minutes)The answer is c.EXERCISESExercise 3-1 (10 minutes)1.B4.A2.F5.D3.C6.EExercise 3-2 (25 minutes)a.Depreciation ExpenseEquipment16,000Accumulated DepreciationEquipment16,000To record

22、depreciation expense for the year.b.Insurance Expense5,360Prepaid Insurance*5,360To record insurance coverage that expired ($6,000 - $640).c.Office Supplies Expense3,422Office Supplies*3,422To record office supplies used ($325 + $3,480 - $383).d.Unearned Fee Revenue3,000Fee Revenue3,000To record ear

23、ned portion of fee received in advance ($15,000 x 1/5).e.Insurance Expense6,160Prepaid Insurance6,160To record insurance coverage that expired.f.Wages Expense2,700Wages Payable2,700To record wages accrued but not yet paid.Notes:Prepaid Insurance*Office Supplies*Bal. Bal.6,000Beg. Bal.325Purch.3,480?

24、Used?UsedEnd. Bal.640End. Bal.383Exercise 3-3 (30 minutes)a.Unearned Fee Revenue5,000Fee Revenue5,000To record earned portion of fee received in advance ($15,000 x 1/3).b.Wages Expense7,500Wages Payable7,500To record wages accrued but not yet paid.c.Depreciation ExpenseEquipment17,251Accumulated Dep

25、reciationEquipment17,251To record depreciation expense for the year.d.Office Supplies Expense5,682Office Supplies*5,682To record office supplies used ($240 + $6,102- $660).e.Insurance Expense2,700Prepaid Insurance2,700To record insurance coverage expired ($4,000 - $1,300).f. Interest Receivable1,400

26、 Interest Revenue1,400To record interest earned but not yet received.g.Interest Expense2,000 Interest Payable2,000To record interest incurred but not yet paid.Notes:Prepaid InsuranceOffice Supplies*Beg. Bal.4,000Beg. Bal.240Purch.6,102?Used?UsedEnd. Bal.1,300End. Bal.660Exercise 3-4 (15 minutes)a. A

27、djusting entry2009Dec. 31Wages Expense825Wages Payable825To record accrued wages for one day. (5 workers x $165)b. Payday entry2010Jan. 4Wages Expense2,475Wages Payable825Cash3,300To record accrued and current wages.Wages expense = 5 workers x 3 days x $165Cash = 5 workers x 4 days x $165Exercise 3-

28、5 (15 minutes)a.$2,000b.$6,607c.$11,987d.$1,375Proof:(a)(b)(c)(d)Supplies available prior year-end$ 350 $1,855$ 1,576$1,375Supplies purchased in current year 2,450 6,30711,9876,907Total supplies available2,8008,16213,5638,282Supplies available current year-end (800) (6,607) (2,056) (800)Supplies exp

29、ense for current year$2,000$1,555$11,507$7,482Exercise 3-6 (25 minutes)a.Apr. 30Legal Fees Expense4,500Legal Fees Payable4,500To record accrued legal fees.May 12Legal Fees Payable4,500Cash4,500To pay accrued legal fees.b.Apr. 30Interest Expense1,900Interest Payable1,900To record accrued interest exp

30、ense($5,700 x 10/30).May 20 Interest Payable1,900Interest Expense3,800Cash5,700To record payment of accrued and current interest expense($5,700 x 20/30).c.Apr. 30Salaries Expense4,800Salaries Payable4,800To record accrued salaries($12,000 x 2/5 week).May 3 Salaries Payable4,800Salaries Expense 7,200

31、Cash12,000To record payment of accrued and current salaries ($12,000 x 3/5 week).Exercise 3-7 (20 minutes)Balance Sheet Prepaid Insurance Asset usingInsurance Expense usingAccrual Basis*Cash BasisAccrual Basis*Cash BasisDec. 31, 2007$14,450$0 2007$ 850$15,300Dec. 31, 20089,3500 20085,1000 Dec. 31, 2

32、0094,2500 20095,1000 Dec. 31, 20100 0 20104,250 0Total$15,300$15,300Explanations:*Accrual asset balance equals months left in the policy x $425 per month (monthly cost is computed as $15,300 / 36 months).Months LeftBalance12/31/200734$14,45012/31/2008229,35012/31/2009104,25012/31/201000*Accrual insu

33、rance expense equals months covered in the year x $425 per month.Months CoveredExpense20072 $8502008125,1002009125,100201010 4,250$15,300Exercise 3-8 (25 minutes)Dec. 31Accounts Receivable1,980Fees Earned 1,980To record earned but unbilled fees (30% x $6,600).31 Unearned Fees4,620Fees Earned4,620To

34、record earned fees collected in advance (70% x $6,600).31 Depreciation ExpenseComputers1,650Accumulated Depreciation-Computers1,650To record depreciation on computers.31 Depreciation ExpenseOffice Furniture.1,925Accumulated DepreciationOffice Furniture1,925To record depreciation on office furniture.

35、 31Salaries Expense2,695Salaries Payable2,695To record accrued salaries. 31 Insurance Expense1,430Prepaid Insurance1,430To record expired prepaid insurance.31 Rent Expense700 Rent Payable700To record accrued rent expense. 31 Office Supplies Expense528Office Supplies528To record use of office supplie

36、s. 31 Advertising Expense500 Advertising Payable500To record accrued advertising expense. 31 Utilities Expense77Utilities Payable77To record incurred and unpaid utility costs.Exercise 3-9 (10 minutes)a.$6,039/$52,970 = %b.$100,890/$471,430 = %c.$106,880/$301,920 = %d.$ 67,140/$1,721,520= %e.$ 84,780

37、/$513,800 = %Analysis and Interpretation: Company c has the highest profitability according to the profit margin ratio. Company c earns cents in net income for every one dollar of net sales earned.Exercise 3-10A (30 minutes)a.Dec. 1Supplies Expense2,000Cash2,000Purchased supplies.b.Dec. 2Insurance E

38、xpense1,540Cash1,540Paid insurance premiums.c.Dec. 15Cash13,000Remodeling Fees Earned13,000Received fees for work to be done.d.Dec. 28Cash3,700Remodeling Fees Earned3,700Received fees for work to be done.e.Dec. 31Supplies1,840Supplies Expense1,840Adjust expenses for unused supplies.f.Dec. 31Prepaid

39、Insurance1,200Insurance Expense1,200Adjust expenses for unexpired coverage($1,540 - $340).g.Dec. 31Remodeling Fees Earned 11,130Unearned Remodeling Fees11,130Adjusted revenues for unfinished projects($13,000 + 3,700 - $5,570).Exercise 3-11A (25 minutes)a.Initial credit recorded in the Unearned Fees

40、accountJuly 1Cash2,800Unearned Fees2,800Received fees for work to be done for Solana.6Cash8,100Unearned Fees8,100Received fees for work to be done for Haru.12Unearned Fees2,800Fees Earned2,800Completed work for Solana.18Cash7,300Unearned Fees7,300Received fees for work to be done for Jordan.27Unearn

41、ed Fees8,100Fees Earned8,100Completed work for customer Haru.31No adjusting entries required.b.Initial credit recorded in the Fees Earned accountJuly 1Cash2,800Fees Earned2,800Received fees for work to be done for Solana.6Cash8,100Fees Earned8,100Received fees for work to be done for Haru.12No entry

42、 required.18Cash7,300Fees Earned7,300Received fees for work to be done for Jordan.27No entry required. 31 Fees Earned7,300Unearned Fees7,300Adjusted to reflect unearned fees for unfinishedjob for Jordan.Exercise 3-11Aconcludedc. Under the first method (and using entries from a)Unearned Fees = $2,800

43、 + $8,100 - $2,800 + $7,300 - $8,100 = $7,300Fees Earned = $2,800 + $8,100 = $10,900Under the second method (and using entries from b)Unearned Fees = $7,300Fees Earned = $2,800 + $8,100 + $7,300 - $7,300 = $10,900Note: Both procedures yield identical results in the financial statements.PROBLEM SET A

44、Problem 3-1A (10 minutes)1.I5.G 9.H2.D6.C10.E3.F7.I11.H4.B8.A12.BProblem 3-2A (35 minutes) Part 1Adjustment (a)Dec.31Office Supplies Expense12,325Office Supplies12,325To record cost of supplies used($2,900 + $11,977 - $2,552).Adjustment (b)31Insurance Expense12,280Prepaid Insurance12,280To record an

45、nual insurance coverage cost.PolicyCost per MonthMonths Active in 20092009 CostA$485($11,640/24 mo.)12$ 5,820B290($10,440/36 mo.) 92,610C770($ 9,240 /12 mo.) 53,850Total$12,280Adjustment (c)31Salaries Expense3,660Salaries Payable3,660To record accrued but unpaid wages (2 days x $1,830).Problem 3-2A

46、concludedAdjustment (d)Dec.31Depreciation ExpenseBuilding18,875Accumulated DepreciationBuilding18,875To record annual depreciation expense($800,000 -$45,000) / 40 years = $18,875 Adjustment (e)31Rent Receivable3,000Rent Earned3,000To record earned but unpaid Dec. rent.Adjustment (f)31Unearned Rent5,

47、436Rent Earned5,436To record the amount of rent earned for November and December (2 x $2,718).Part 2Cash Payment for (c)Jan. 6Salaries Payable3,660Salaries Expense*5,490Cash9,150To record payment of accrued and current salaries. *(3 days x $1,830)Cash Payment for (e)15Cash6,000Rent Receivable3,000Re

48、nt Earned3,000To record past due rent for two months.Problem 3-3A (90 minutes) Parts 1 and 2CashEquipmentUnadj. Bal.28,064Unadj. Bal.75,800Accounts ReceivableAccumulated DepreciationEquipmentUnadj. Bal.0Unadj. Bal.15,000(f)4,000(c)10,000Adj. Bal.4,000Adj. Bal.25,000Teaching SuppliesAccounts PayableU

49、nadj. Bal.11,000Bal.39,500(b)9,000Adj. Bal.2,000Salaries PayableUnadj. Bal.0Prepaid Insurance(g)480Unadj. Bal.16,000Adj. Bal.480(a)3,000Adj. Bal.13,000Unearned Training FeesUnadj. Bal.12,500Prepaid Rent(e)5,000Unadj. Bal.2,178Adj. Bal.7,500(h)2,178Adj. Bal.0T. Wells, CapitalBal.71,000Professional LibraryBal.33,000T. Wells, WithdrawalsBal.44,000Accumulat