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Chapter 3: Q7(9)PSB (page 160)

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 E. Current liabilities
B. Long-term investments F. Long-term liabilities
C. Plant assets G. Equity
D. Intangible assets
9. Accumulated depreciation—Trucks

Short Answer

Expert verified

The correct answer isC, Plant assets.

Step by step solution

01

Definition of assets

An asset is a resource that provides current or future benefits to the organization; It is the resource that an organization owns in a specific accounting period.

02

Reason for choice

Accumulated depreciation is the cumulated amount of depreciation for any fixed asset. It is used to determine the actual book value of the purchase at the time of sale of the asset; hence it should be disclosed under the plant asset section.

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Most popular questions from this chapter

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: 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

20. Current portion of long-term note payable

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: Following are two income statements for Alexis Co. for the year ended December 31. The left number

column is prepared before any adjusting entries are recorded, and the right column includes the effects of

adjusting entries. The middle column shows a blank space for each income statement effect of the eight

adjusting entriesathrough g(the balance sheet part of the entries is not shown here). Analyze the statements

and prepare the eight adjusting entries athrough gthat likely were recorded. Note:Answer for ahas

two entries (i) of the \(7,000 adjustment for Fees Earned, 30% (or \)2,100) has been earned but not billed,

and (ii) the other 70% (or \(4,900) has been earned by performing services that were paid for in advance.

ALEXISUnadjusted Adjustments Adjusted

Revenues

Fees earned . \)18,000 a. \(25,000

Commissions earned . 36,500 36,500

Total revenues 54,500 61,500

Expenses

Depreciation expense—Computers 0 b. 1,600

Depreciation expense—Office furniture . 0 c.1,850

Salaries expense 13,500 d. 15,750

Insurance expense . 0 e.1,400

Rent expense 3,800 3,800

Office supplies expense 0 f. 580

Advertising expense 2,500 2,500

Utilities expense . 1,245 g. 1,335

Total expenses . 21,045 28,815

Net income \)33,455 $32,685

See all solutions

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