Question 1
During 2010, Stacket Enterprises earned...... $55,000 (a)
for services provided and incurred expense of $15,500 (b)
At the end of the year, $35,750 ( c) of the revenue
had been received in cash
At the end of the year, $11,600 (d) of the expense had been paid
During the same year, the firm received cash of......... $3,500 (e)
for services to be performed the following year.
They also paid rent for the first 6 months of 2011 for $4,500 (f)
REQUIRED: Determine 2010 net income under (a) cash basis and (b) accrual basis
Question 2:
For each of the following independent accounting situations, determine the basic type of adjustment, if any, that is needed on December 31, 2010. (deferred revenue, deferred expense, accrued revenue, accrued expense)
What would be the cumulative effect on 2010 net income of all adjustments?
1 Interest on a loan outstanding during 2010 is due on Jan 1, 2011. Interest totals.............
2 Firm received a total of a service project that is
3 A utility bill for December 2010 of
4 $750 of prepaid rent for the month of December has expired
5 $5,000 of revenue for services performed on Dec 4, 2010 is uncollected
6 The firm pre-paid their insurance on Dec. 31 2010 for the entire year of 2011. Payment was.................
7 Firm intends to buy a warehouse on Jan 1 2011 Price of warehouse is.......
8 Fixed Asset depreciation for the year is........
Question 3:
Lein Corp entered into the following transactions during its first year in business. The firm prepares adjusting entries on an annual basis.
1 Jan 1: Bought equipment with a 7 year useful life. Value of equipment...........
Lein assumes equal depreciation annually.
2 March 31: prepaid one years rent
3 July 1, took bank loan at 8% for...
4 August 1: received payment for services not yet rendered...............
5 On Dec 31, had earned of payment in Item 4
6 On Dec 31, utility expense of............ have been incurred.
Prepare journal entries for Items 1-4 and YE adjusting entries.
Question 4:
The following T-Accounts contain the Dec postings to the general ledger of Swoops, Inc.
The Dec 1 postings are beginning balances, while the Dec 31 postings are closing entries.
Recreate the closing entries made by Swoops on Dec 31
| Service Revenue |
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Interest Expense |
| 31-Dec |
75,000 |
1-Dec |
64,000 |
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31-Dec |
1,500 |
31-Dec |
1,800 |
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8-Dec |
4,000 |
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24-Dec |
300 |
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24-Dec |
3,000 |
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31-Dec |
4,000 |
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| Salaries Expense |
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Retained Earnings |
| 1-Dec |
15,000 |
31-Dec |
17,000 |
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31-Dec |
2,500 |
1-Dec |
51,550 |
| 15-Dec |
1,000 |
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31-Dec |
26,100 |
31-Dec |
75,000 |
| 31-Dec |
1,000 |
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| Supplies Expense |
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Dividends |
| 1-Dec |
1,800 |
31-Dec |
2,500 |
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1-Dec |
2,000 |
31-Dec |
2,500 |
| 30-Dec |
700 |
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15-Dec |
500 |
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| Depreciation Expense |
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Depreciation Expense |
| 1-Dec |
4,400 |
31-Dec |
4,800 |
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1-Dec |
4,400 |
31-Dec |
4,800 |
| 30-Dec |
400 |
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30-Dec |
400 |
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