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Chapter 3: Q 27QS_b (page 145)

On December 31, 2016, Yates Co. prepared an adjusting entry for \(12,000 of earned but unrecorded consulting
fees. On January 16, 2017, Yates received \)26,700 cash in consulting fees, which included the
accrued fees earned in 2016. (Assume the company uses reversing entries.)
a. Prepare the December 31, 2016, adjusting entry.
b. Prepare the January 1, 2017, reversing entry.
c. Prepare the January 16, 2017, cash receipt entry.

Short Answer

Expert verified

Answer:

The consulting fees account is debited and accrued revenue received credited with $12,000.

Step by step solution

01

Step-by-Step Solution

Step 1: Definition of accrued revenue

When work is done but payment is not received, this amount is known as accrued revenue.

02

Reversal Entry

	Journal entry
Date	Particular	Debit	Credit
January 1, 2017	Consulting Fees	$12,000
	Accrued Revenue Received		$12,000
	(Reversal entry of accrued revenue)

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Most popular questions from this chapter

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

9. Prepaid insurance

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

Answer each of the following questions related to international accounting standards.

a. Do financial statements prepared under IFRS normally present assets from least liquid to most liquid

or vice versa?

b. Do financial statements prepared under IFRS normally present liabilities from furthest from maturity

to nearest to maturity or vice versa?

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.

List the following steps of the accounting cycle in their proper order.

a. Posting the journal entries.

b. Journalizing and posting adjusting entries.

c. Preparing the adjusted trial balance.

d. Journalizing and posting closing entries.

e. Analyzing transactions and events.

f. Preparing the financial statements.

g. Preparing the unadjusted trial balance.

h. Journalizing transactions and events.

i. Preparing the post-closing trial balance

See all solutions

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