Accounting Assignment
PART I: SHORT RESPONSE
Directions: Please respond to each of the following questions. Write at least 3 to 5 sentences for each question.
1. Discuss the accounting principle served by crediting amounts received (which will not be earned during the present fiscal period) to an Unearned Revenue account instead of to the Revenue account. Give an example of a business in which this might occur. Explain how failure to make an adjustment to the Unearned Revenue account and the Revenue account would affect the financial statements.
2. For companies using the periodic inventory system, explain how the Merchandise Inventory account is handled in the accounting records through the journal entries and the work sheet.
3. Write the skeleton of an income statement from Sales through Net Income.
4. Define current ratio and how it is calculated, and explain the relationship between the two parts of the ratio resulting from the calculation.
5. What are reversing entries? Which adjusting entries can be reversed?
PART II: APPLICATION
Directions: Please answer each of the following questions. Show your work as necessary.
6. Using T accounts, record the required adjusting entries for the year ended December 31 for Manning Equipment. Manning Equipment uses the periodic inventory system.
a-b. A physical count of inventory revealed a balance of $63,222. The Merchandise Inventory account shows a balance of $72,589.
c. Equipment purchased on July 7 of the current year for $14,500 is expected to have a useful life of eight years, with a $3,750 trade-in value. All other equipment has been fully depreciated. The straight-line method is used. (Round to the nearest dollar.)
d. As of December 31, three days' salaries will be unpaid at $587 per day per employee. There are five employees.
e. The balance of Supplies account prior to adjustments is $3,125. The amount of supplies used is $1,965.
f. A prepaid order was received on September 20 for $6,298. At year end, $2,477 had been delivered to the customer.
2. Zamora Corporation uses the perpetual inventory system. The following information is presented as of December 31, the end of its fiscal year:
Instructions:
Prepare the journal entry to adjust Merchandise Inventory at year end on page 10.
3. The balances of the ledger accounts of Wilson Appliances as of December 31, the end of its fiscal year, are found in the work sheet on the following page.
Data for the adjustments are as follows:
Instructions:
Complete the work sheet.
4. For the year ended December 31, Bailey Tool Company uses the periodic inventory system and has the following adjusting entry information:
a-b. On December 31, a physical count of inventory totaled $56,842. The Merchandise Inventory account shows a balance of $53,715.
c. On September 1 of the current year, $3,600 was paid for a one-year insurance policy.
d. On November 1 of the current year, $900 was paid for three months of holiday advertising.
e. As of December 31, the following balance in the Unearned Revenue account is $15,290. Of this amount $9,674 has been earned for tool income.
f. Equipment purchased April 1 of the current year for $11,500 is expected to have a useful life of six years with a trade-in value of $1,250. The straight-line depreciation method is used, and all other equipment items are fully depreciated.
g. As of December 31, two days of wages had accrued for five employees who each earn $125 per day.
h. On December 31, a physical count of the supplies on hand was completed showing $2,365 remained. The balance (prior to adjustment) in the Supplies account is $3,459
Instructions:
Journalize in quality format the necessary adjusting entries for Bailey Tool Company on page 46.
5. Simpson Corporation has the following information as of December 31, the end of its fiscal year:
Instructions:
Using the information presented above, prepare the Cost of Goods Sold section of the income statement.
6. Selected account balances of Rich and Company as of December 31, the end of its fiscal year, are listed below in alphabetical order.
Accounts Payable $ 36,510
Accounts Receivable 32,633
Accumulated Depreciation, Building 39,350
Accumulated Depreciation, Equipment 23,030
Building 66,970
Cash 28,705
Equipment 36,720
Land 13,580
Merchandise Inventory 58,823
Mortgage Payable 30,613
Mortgage Payable (current portion) 4,100
Notes Payable 5,200
Notes Receivable 4,023
Prepaid Insurance 3,113
S. Rich, Capital 105,049
Supplies 2,585
Unearned Rent Income 1,000
Wages Payable 2,300
Instructions:
Based on the account balances above, prepare a classified balance sheet.
7. A partial work sheet for Carman and Company is presented below. The merchandise inventory at the beginning of the year was $46,700. D. E. Carman, the owner, withdrew $33,500 during the year. The fiscal year ends on July 31 of this year.
Instructions:
1. Prepare an income statement.
2. Journalize the closing entries.
8. The following accounts are from the Athletics Store worksheet dated March 31 of the current year:
Cash $ 8,250
Accounts Receivable 21,400
Merchandise Inventory 48,700
Store Supplies 3,106
Prepaid Insurance 2,380
Store Equipment 29,400
Accumulated Depreciation, Store Equipment 8,630
Accounts Payable 16,350
T. Phelps, Capital 157,900
T. Phelps, Drawing 32,570
Sales 203,842
Sales Returns and Allowances 1,770
Purchases 146,910
Purchases Returns and Allowances 3,527
Purchase Discounts 2,615
Freight In 6,947
Wages Expense 28,400
Advertising Expense 3,219
Rent Expense 19,200
The data needed for adjustments on March 31 are as follows:
a-b. Merchandise Inventory, March 31, $46,250.
c. Insurance expired for the year, $1,580.
d. Depreciation for the year, $4,230.
e. Accrued wages on January 31, $2,513.
f. Supplies used during the year $950.
Instructions: (Note: use t-accounts to assist in calculation the below items.)
1. Journalize the adjusting entries.
2. Journalize the closing entries.
3. Journalize the reversing entries.
Attachment:- Acc_Assignment.rar