懷爾德會計學原理答案Chapter

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AdjustingAccountsandPreparingFinancialStatements

QUESTIONS1.

Thecashbasisofaccountingreportsrevenueswhencashisreceivedwhiletheaccrualbasisreportsrevenueswhentheyareearned.Thecashbasisreportsexpenseswhencashispaidwhiletheaccrualbasisreportsexpenseswhentheyareincurredandmatchedwithrevenuestheygenerated.

Theaccrualbasisofaccountinggenerallyprovidesabetterindicationofcompanyperformanceandfinancialconditionthandoesthecashbasis.Also,theaccrualbasisincreasesthecomparabilityoffinancialstatementsfromoneperiodtothenext.Thus,businessdecisionmakersgenerallyprefertheaccrualbasis.

Businessesthathavemajorseasonalvariationsinsalesaremostlikelytoselectthenaturalbusinessyearasthefiscalyear.

Aprepaidexpenseisanitempaidforinadvanceofreceivingitsbenefits.Assuch,itisreportedasanassetonthebalancesheet.

Long-termtangibleplantassetssuchasequipment,buildings,andmachineryleadtoadjustmentsfordepreciation.Generally,landistheonlylong-termtangibleplantassetthatdoesnotrequiredepreciation.

TheAccumulatedDepreciationcontraaccountisusedfordepreciation.Itprovidesfinancialstatementuserswithadditionalinformationabouttherelativeageoftheassets.Withoutthecontraaccountinformation,thereaderwouldnotbeabletotellwhethertheassetsareneworinneedofreplacement.

Unearnedrevenuereferstocashreceivedinadvanceofprovidingproductsandservices.Anothernameforunearnedrevenueisdeferredrevenue.Itisreportedasaliabilityonthebalancesheet.

Accruedrevenueisrevenuethatisearnedbutisnotyetreceivedincash(and/orotherassets)andthecustomerhasnotbeenbilledpriortotheendoftheperiod.Therefore,end-of-periodadjustmentsaremadetorecordaccruedrevenue.Examplesareinterestincomethathasbeenearnedbutnotcollectedandrevenuesfromservicesperformedthatareneithercollectednorbilled.

2.

3.4.5.

6.

7.

8.

9.AIfprepaidexpensesareinitiallyrecordedwithdebitstoexpenseaccounts,thenthe

prepaidexpensesassetaccountsaredebitedintheadjustingentries.

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10.ForBestBuy,alloftheaccountsunderthecategoryofPropertyandEquipment

(exceptforLand),requireadjustingentries.TheexpenserelatedtothedepreciationexpenseaccountwouldbeunderstatedontheincomestatementifBestBuyfailstoadjusttheseassetaccounts.Iftheadjustingentriesarenotmade,netincomewouldbeoverstated.Note:Studentsmightalsocorrectlyidentifyaccountsreceivable,goodwill,andtradenamesasneedingadjustment.11.CircuitCitymustmakeadjustingentriestoPrepaidexpensesandothercurrent

assets;Deferredincometaxes;Accruedexpensesandothercurrentliabilities;Accruedincometaxes;andpossiblyotherassetsandliabilitiessuchasReceivablesforbaddebts.(ItisalsopossiblethatCircuitCitywouldneedtoadjustGoodwillandOtherintangibleassets.)12.RadioShackwouldneedtodebitinterestreceivableandcreditinterestrevenue.13.TheAccruedWagesExpensewouldbereportedaspartof―AccruedExpenses‖on

Apple’sbalancesheet.QUICKSTUDIESQuickStudy3-1(15minutes)

CashAccounting

Revenues(cashreceipts)Expenses(cashpayments:$37,500-$6,000+$3,250)Netincome

AccrualAccounting

Revenues(earned)Expenses(incurred)Netincome

QuickStudy3-2(10minutes)

a.AEAccruedexpensesb.PEPrepaidexpensesc.URUnearnedrevenues

d.PEPrepaidexpenses(Depreciation)e.ARAccruedrevenues

$52,00034,750$17,250$60,00037,500$22,500?McGraw-HillCompanies,2023120

FundamentalAccountingPrinciples,19thEdition

QuickStudy3-3(20minutes)AccountsDebitedandCreditedFinancialStatementa.DebitUnearnedRevenueBalanceSheetCreditRevenueEarnedIncomeStatementb.DebitWagesExpenseIncomeStatementCreditWagesPayableBalanceSheetc.DebitAccountsReceivableBalanceSheetCreditRevenueEarnedIncomeStatementd.DebitInsuranceExpenseIncomeStatementCreditPrepaidInsuranceBalanceSheete.DebitDepreciationExpenseIncomeStatementCreditAccumulatedDepreciationBalanceSheet

QuickStudy3-4(15minutes)

a.InsuranceExpense3,000PrepaidInsurance

Torecord6-monthinsurancecoverageexpired.

3,000

b.SuppliesExpenseSupplies

Torecordsuppliesusedduringtheyear.($900+$4,000–[?]=$750)

4,150

4,150

QuickStudy3-5(15minutes)

a.DepreciationExpense—EquipmentAccumulatedDepreciation—Equipment

Torecorddepreciationexpensefortheyear.($45,000-$3,000)/5years=$8,400

8,400

8,400

b.Nodepreciationadjustmentsaremadeforlandasitisexpectedtolastindefinitely.

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QuickStudy3-6(10minutes)

SalariesExpenseSalariesPayable

Torecordsalariesincurredbutnotyetpaid.[Onestudentearns$100x4days,MondaythroughThursday]

400

400

QuickStudy3-7(15minutes)

a.UnearnedRevenue22,500LegalRevenue

Torecognizelegalrevenueearned(30,000x3/4).

22,500

b.UnearnedSubscriptionRevenueSubscriptionRevenue

Torecognizesubscriptionrevenueearned.[100x($24/12months)x6months]

1,200

1,200

QuickStudy3-8(15minutes)

Adjustingentry1.Accruesalariesexpense

2.AdjusttheUnearnedServicesRevenueaccounttorecognizeearnedrevenue

Debitea

Creditgf

3.Recordtheearningofservicesrevenueforwhichbfcashwillbereceivedthefollowingperiod

QuickStudy3-9(10minutes)

Theanswerisa.

ExplanationThedebitbalanceinPrepaidInsurancewasreducedby$400,implyinga$400debittoInsuranceExpense.ThecreditbalanceinInterestPayableincreasedby$800,implyingan$800debittoInterestExpense.

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QuickStudy3-10(15minutes)

Theansweris2.

Explanation

InsurancepremiumerrorUnderstatesexpenses(andoverstates