ACC 205 Homework: Week Two Exercises Assignment 1.Question # 1
S3-3:
Boston Magazine sells subscriptions for $ 36 for 12 issues. The company collects cas
... [Show More] h in advance and
then mails out the magazines to subscribers each month.
Apply the revenue recognition principle to determine
a. when Boston Magazine should record revenue for this situation.
b. the amount of revenue Boston Magazine should record for six issues.
a. Boston Magazine should record revenue when it mails magazines to the subscribers.
b. Boston Magazine should record $ 18 for six issues.
To figure you take 36/12= 3 now take 3*6= $18
Question #2
S3-6:
On February 1, Big Fan of Toledo prepaid six months of rent, $ 3,300.
Requirements
1.Record the journal entry for the February 1 payment.
2.Record the adjusting entry required at February 28.
3.Using T-accounts, post the journal entry and adjusting entry to the accounts involved and show their
balances at February 28. (Ignore the Cash account.)
Requirement 1. Record the journal entry for the February 1 payment. (Record debits first, then credits.
Select the explanation on the last line of the journal entry table.)
Date Accounts and Explanation Debit Credit
Feb. 1 Prepaid Rent 3,300
Cash 3,300
To record rent paid in advance.
Requirement 2. Record the adjusting entry required at February 28. (Record debits first, then credits.
Select the explanation on the last line of the journal entry table.)
Date Accounts and Explanation Debit Credit
Feb. 28 Rent Expense 550
Prepaid Rent 550
To record rent expense.
Requirement 3. Using T-accounts post the journal entry and adjusting entry to the accounts involved and
show their balances at February 28. (Ignore the Cash account.) Post the journal entry and adjusting entry
to the two accounts using the dates as posting references, and then calculate and enter the ending
balance of the accounts using a "Bal." posting reference.
Prepaid Rent Rent Expense
Feb. 1 3,300 550 Feb. 28 Feb. 28 550
Bal. 2,750 Bal. 550
Question # 3
S3-7:
On November 1, Cool Town Equipment had a beginning balance in the Office Supplies account of $ 700.
During the month, Cool Town purchased $ 1,300 of office supplies. At November 30, Cool Town
Equipment had $ 300 of office supplies on hand.
Requirements:
1.The Office Supplies T-account has been opened for you. Enter the beginning balance and purchase of
office supplies.
2.Record the adjusting entry required at November 30.
3.Post the adjusting entry to the two accounts involved and show their balances at November 30.
Requirement 1. The Office Supplies T-account has been opened for you. Enter the beginning balance
and purchase of office supplies. (Use "Nov. 1" as a posting reference to enter the beginning balance
and "Nov. purchases" as a posting reference to post the purchase of office supplies during the month.)
Office Supplies
Nov. 1 700
Nov. purchases 1,300
Requirement 2. Record the adjusting entry required at November 30. (Record debits first, then credits.
Select the explanation on the last line of the journal entry table.)
Date Accounts and Explanation Debit Credit
Nov. 30 Supplies Expense 1,700
Office Supplies 1,700
To record office supplies used.
To figure: 700 (beginning balance)
+ 1,300 (total purchases)
- 300 (supplies on hand)
1,700
Requirement 3. Post the adjusting entry to the two accounts involved and show their balances at
November 30.
Select the account name of the other account affected by the Office Supplies adjustment. Post the
adjustment to the two accounts using a "Nov. 30" posting reference, and then calculate and enter the
ending balance of the accounts using a "Bal." posting reference.
Office Supplies Supplies Expense
Nov. 1 700 1,700 Nov. 30 Nov. 30 1,700
Nov. purchases 1,300 Bal. 1,700
Bal. 300
To figure: 700+1,300= 2000 now take 20001,700= 300
Question # 4
S3-8:
On March 1, Miami Gold Exchange paid cash of $ 21, 600 for computers that are expected to remain
useful for three years. At the end of three years, the value of the computers is expected to be zero.
Requirements:
1.Calculate the amount of depreciation for the month of March using the straight-line depreciation method.
2.Record the adjusting entry for depreciation on March 31.
3.Post the purchase of March 1 and the depreciation on March 31 to T-accounts for the following accounts:
Computer Equipment, Accumulated Depreciation--Computer Equipment, and Depreciation Expense--Computer
Equipment. Show their balances at March 31.
4.What is the computer equipment's book value at March 31?
Requirement 1. Calculate the amount of depreciation for the month of March using the straight-line
depreciation method.
Straight line depreciation per month = (cost-residential value) / Useful Life
= (21,600 – 0) ÷ 3
= 7,200 per year ÷ 12 months
= 600
(Abbreviation used; Acc. Depreciation = Accumulated Depreciation. Enter a "0" for any zero balances.)
( Cost - Residual Value ) / Useful Life / 12 months =
Straight-line
depreciation
( $21,600 - $0 ) / 3 / 12 months = $600
Requirement 2. Record the adjusting entry for depreciation on March
31. (Record debits first, then credits. Select the explanation on the last line of the journal entry table.)
Date Accounts and Explanation Debit Credit
Mar. 31 Depreciation Expense–Computer Equipment 600
Accumulated Depreciation–Computer Equipment 600
To record depreciation on computer equipment.
Requirement 3. Post the purchase of March 1 and the depreciation on March 31 to T-accounts for the
following accounts: Computer Equipment, Accumulated Depreciation—Computer Equipment, and
Depreciation Expense—Computer Equipment. Show their balances at March 31. (Use dates as posting
references to post the transactions. Use a "Bal." posting reference to show the ending balance of [Show Less]
