Chapter 3: 11DQ (page 139)
Assume Samsung has unearned revenue. What is unearned revenue and where is it reported in financial statements?
Answer:
Unearned revenue is revenue whose payment is received but revenue earning activity is not done yet. Unearned revenue reported on the liability side of the balance sheet
Over 30 million students worldwide already upgrade their learning with Vaia!
All the tools & learning materials you need for study success - in one app.
Get started for free
Question: Prepare adjusting journal entries for the year ended (date of) December 31, 2017, for each of these separate situations.
(Entries can draw from the following partial chart of accounts: Cash; Accounts Receivable; Supplies;
Prepaid Insurance; Equipment; Accumulated Depreciation—Equipment; Wages Payable; Unearned Revenue;
Revenue; Wages Expense; Supplies Expense; Insurance Expense; Depreciation Expense—Equipment.)
a. Depreciation on the company’s equipment for 2017 is computed to be \(18,000.
b. The Prepaid Insurance account had a \)6,000 debit balance at December 31, 2017, before adjusting for
the costs of any expired coverage. An analysis of the company’s insurance policies showed that \(1,100
of unexpired insurance coverage remains.
c. The Office Supplies account had a \)700 debit balance on December 31, 2016; and \(3,480 of office
supplies were purchased during the year. The December 31, 2017, physical count showed \)300 of supplies
available.
d. Two-thirds of the work related to \(15,000 of cash received in advance was performed this period.
e. The Prepaid Insurance account had a \)6,800 debit balance at December 31, 2017, before adjusting for the
costs of any expired coverage. An analysis of insurance policies showed that \(5,800 of coverage had expired.
f. Wage expenses of \)3,200 have been incurred but are not paid as of December 31, 2017.
Question:Prepare year-end adjusting journal entries for M&R Company as of December 31, 2017, for each of the
following separate cases. (Entries can draw from the following partial chart of accounts: Cash; Accounts
Receivable; Interest Receivable; Equipment; Wages Payable; Salary Payable; Interest Payable; Lawn
Services Payable; Unearned Revenue; Revenue; Interest Revenue; Wages Expense; Salary Expense;
Supplies Expense; Lawn Services Expense; Interest Expense.)
a. M&R Company provided \(2,000 in services to customers that are expected to pay the company sometime
in January following the company’s year-end.
b. Wage expenses of \)1,000 have been incurred but are not paid as of December 31.
c. M&R Company has a \(5,000 bank loan and has incurred (but not recorded) 8% interest expense of
\)400 for the year ended December 31. The company will pay the \(400 interest in cash on January 2
following the company’s year-end.
d. M&R Company hired a firm to provide lawn services at a monthly fee of \)500 with payment occurring
on the 15th of the following month. Payment for December services will occur on January 15
following the company’s year-end.
e. M&R Company has earned \(200 in interest revenue from investments for the year ended December
31. The interest revenue will be received on January 15 following the company’s year-end.
f. Salary expenses of \)900 have been earned by supervisors but not paid as of December 31.
Adjusting entries affect at least one balance sheet account and at least one income statement account.
For the entries below, identify the account to be debited and the account to be credited from the following
accounts: Cash; Accounts Receivable; Prepaid Insurance; Equipment; Accumulated
Depreciation; Wages Payable; Unearned Revenue; Revenue; Wages Expense; Insurance Expense;
Depreciation Expense. Indicate which of the accounts is the income statement account and which is
the balance sheet account.
a. Entry to record revenue earned that was previously received as cash in advance.
b. Entry to record wage expenses incurred but not yet paid (nor recorded).
c. Entry to record revenue earned but not yet billed (nor recorded).
d. Entry to record expiration of prepaid insurance.
e. Entry to record annual depreciation expense.
Question: The following three separate situations require adjusting journal entries to prepare financial statements as
of April 30. For each situation, present both:
∙ The April 30 adjusting entry.
∙ The subsequent entry during May to record payment of the accrued expenses.
Entries can draw from the following partial chart of accounts: Cash; Accounts Receivable; Prepaid
Interest; Salaries Payable; Interest Payable; Legal Services Payable; Unearned Revenue; Revenue; Salaries
Expense; Interest Expense; Legal Services Expense; Depreciation Expense.
a. On April 1, the company retained an attorney for a flat monthly fee of \(3,500. Payment for April legal
services was made by the company on May 12.
b. A \)900,000 note payable requires 12% annual interest, or \(9,000, to be paid at the 20th day of each
month. The interest was last paid on April 20, and the next payment is due on May 20. As of April 30,
\)3,000 of interest expense has accrued.
c. Total weekly salaries expense for all employees is $10,000. This amount is paid at the end of the day
on Friday of each five-day workweek. April 30 falls on a Tuesday, which means that the employees
had worked two days since the last payday. The next payday is May 3.
In the blank space beside each numbered balance sheet item, enter the letter of its balance sheet classification. If the item should not appear on the balance sheet, enter a Z in the blank.
A. Current assets
B. Long-term investments
C. Plant assets
D. Intangible assets
E. Current liabilities
F. Long-term liabilities
G. Equity
15. Store supplies
What do you think about this solution?
We value your feedback to improve our textbook solutions.
