Chapter 3: 12DQ (page 139)
Refer to Samsung’s balance sheet in Appendix A. If it made an adjustment for unpaid wages at year-end, where would the accrued wages be reported on its balance sheet?
Answer:
Accrued wages should be reported in current liability section of liabilities.
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Refer to Samsung’s financial statements in Appendix A. What journal entry was likely recorded as of December 31, 2015, to close its Income Summary account?
What are the steps in recording closing entries?
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.
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.
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
19. Office supplies
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