ACC290Tv1.4 Wk. 4 - Apply Exercise Assignment Complete Solution
Question 1
• On June 1, 2019, Cain Company, a new firm, paid $5,940 rent in
... [Show More] advance for a six-month period. The $5,940 was debited to the Prepaid Rent account.
• On June 1, 2019, the firm bought supplies for $7,900. The $7,900 was debited to the Supplies account. An inventory of supplies at the end of June showed that items costing $3,275 were on hand.
• On June 1, 2019, the firm bought equipment costing $70,800. The equipment has an expected useful life of 10 years and no salvage value. The firm will use the straight-line method of depreciation.
Question 2
• A firm purchased a three-year insurance policy for $11,520 on July 1, 2019. The $11,520 was debited to the Prepaid Insurance account.
• On December 1, 2019, a firm signed a contract with a local radio station for advertising that will extend over a two-year period. The firm paid $31,680 in advance and debited the amount to Prepaid Advertising.
Question 3
On January 31, 2019, the general ledger of Palmer Company showed the following account balances.
Additional information:
a. Supplies used during January totaled $4,700.
b. Expired insurance totaled $1,550.
c. Depreciation expense for the month was $1,325.
Complete the worksheet through the Adjusted Trial Balance section. Assume that every account has the normal debit or credit balance. The worksheet covers the month of January.
Question 4
• Assume that a firm reports net income of $83,000 prior to making adjusting entries for the following items: expired rent, $6,300; depreciation expense, $7,500; and supplies used, $2,900.
• Assume that the required adjusting entries have not been made. What effect do these errors have on the reported net income.
To answer: Add expired rent (6300) + depreciation expense (7500) + supplies used (2900)
Question 5
Desoto Company must make three adjusting entries on December 31, 2019.
• Supplies used, $9,800 (supplies totaling $15,600 were purchased on December 1, 2019, and debited to the Supplies account).
• Expired insurance, $7,000; on December 1, 2019, the firm paid $42,000 for six months’ insurance coverage in advance and debited Prepaid Insurance for this amount.
• Depreciation expense for equipment, $4,600.
Required:
• Prepare the journal entries for these adjustments and post the entries to the general ledger accounts
Question 6
A total of $3,500 in supplies was purchased during the year. At the end of the year $820 of the supplies were left. The adjusting entry needed at the end of the year is:
• debit Supplies Expense $2,680; credit Supplies $2,680
To answer: $3,500 amount purchased during year LESS amount of supplies left ($820)
Question 7
MacGyver Company bought equipment on January 3, 2019, for $34,900. At the time of purchase, the equipment was estimated to have a useful life of 5 years and a salvage value of $1,060. Using the straight-line method, the amount of one year's depreciation is:
• $6,768
To answer: $34,900 divided by 5 years =$6,980; $1,060 divided by 5 years=$212
6980 – 212
6,768
Question 8
Equipment costing $24,000 with an estimated salvage value of $1,920 and an estimated life of 8 years was purchased on October 31, 2019. Using the straight-line depreciation method, what is the amount of depreciation expense to be recorded at December 31, 2019?
• $460
Question 9
On September 1, 2019, Jay Walker Company purchased a one-year insurance policy for $720. The correct adjusting entry on December 31, 2019, is:
• debit Insurance Expense $240; credit Prepaid Insurance $240
Question 10
On October 25, 2019, the company paid $30,000 rent in advance for the six-month period (November 2019 through April 2020). On December 31, 2019, the adjustment for expired rent would include:
• a $5,000 credit to Prepaid Rent. [Show Less]