Each adjustment is worth 3 points. There is no partial credit for individual entries. The summary table at the end is worth 8 points. The case is worth 50 points.
You are presented with the following information for Little Co. Consider all situations independently. The company has a 12/31 year end and each item should be considered as a possible adjusting entry. Please present each adjusting entry as you deem necessary in good form followed by a brief…show more content… A9: Limited life Intangible assets of $40,000 are listed the unadjusted trial balance. These are being amortized at the rate of $10,000 per year. Amortization has been recorded through the quarter ended September 30.
Amortization expense for 3 months (10000/12*3)
A10: When analyzing Accounts Payable you discover invoices for inventory items that have been received and billed to you but have not yet been recorded in the amount of $6,000.
Increase in inventory by $6000
A11: Salaries earned but not yet paid on December 31 were $12,000.
Increase in salary expense by $12000
A12: The interest on notes payable that has been incurred but not yet paid totaled $1,500 and was not on the unadjusted trial balance.
Interest payable increased by $1500
A13: The company has been involved in lawsuit. You reviewed the legal file and the letter received from your attorney stating that is was
ISSUES IN ACCOUNTING EDUCATION Vol. 27, No. 2 2012 pp. 493–524 American Accounting Association DOI: 10.2308/iace-50124 How Adjusting Entries Affect the Quality of Financial Reporting: The Case of Frosty Co. Jason C. Porter ABSTRACT: Recent accounting scandals have emphasized the need to think beyond debits and credits. Accounting students must understand the effects of transactions on a company’s financial position, as well as the pressures and incentives they will someday face to misrepresent…
a. Prepaid Insurance b. Unearned Revenue c. Insurance Expense d. Interest Receivable 2. Which of the following errors will cause an imbalance in the trial balance? a. Omission of a transaction in the journal b. Posting an entire journal entry twice to the ledger c. Posting a credit of $ 720 to Accounts Payable as a credit of $ 720 to Accounts Receivable. d. Listing the balance of an account with a debit balance in the credit column of the trial balance. 3. Which of the following statements…
department. I will be explaining why adjusting entries are necessary, also I will be describing the four types of adjusting entries, and provide a manufacturing industry example of each and describing how these entries would be recorded in a computerized accounting system. Finally I will be describing one ethical issue that could result from the preparation of these manufacturing entries. Adjusting entries are necessary because in order to achieve…
Lecture 4 Accrual Accounting and Adjusting Entries Chapter 4: Financial Acct Learning objectives LO1: Accrual and cash bases of accounting LO2: Adjusting journal entries LO3: Adjusting journal entries, adjusted trial balance & financial statements LO4: The closing process LO5: The accounting cycle Quick Review from Lecture 3 What is the accounting equation? What is an account? What does debit mean? What does credit mean? How does a business record transactions…
3-Record in Journal • Every transaction occurring during an accounting period should be recorded in a journal • Journal follows the requirement of a double entry recording system. Debits and credits for each transaction must be equal. • General journal is used for mostly non-repetitive transactions such as error corrections, adjusting entries and transactions not appropriate for any special journals. • Number and titles of journals for different companies vary with the accounting information needs…
Recording journal entries. Underlying theories of Accrual Accounting, the Matching Concept, Revenue Realization principle, and Expense Recognition rule. Impact of Net Income on owner’s equity and individual accounts affected. Nature of double-entry system of accounting. Nature of Retained Earnings and the financial statement on which it appears. Chapter 4 Purpose of adjusting entries, situations requiring and accounts that are affected by adjusting entries Impact of adjusting entries on net income…
Prepare the journal entry for St Jude’s sales of PP&E. (Assume all proceeds from sales of investments are related to the sale of PP&E) PP&E Beg Bal (pg 32) $2,454 Purchases (pg 34) $280 $93 Sold (plug) $12 Impairment (Pg 50) Ending Bal (pg 32) $2,629 Accum Depr $1,066 Beg Bal (pg 32) $196 Depr Exp (pg 36) Sales (plug) $58 $1,204 Ending Bal (pg 32) Cash (pg 34 – proceeds) $19 Accum Depreciation $58 Loss on Sale of PP&E $16 PP&E $93 Prepare…
able to identify a (+), (-) or (N) in assets, liabilities and stockholders’ equity for each transaction. 4. Be able to do journal entries. 5. Be able to identify the normal balance for each account. 6. Be familiar with T-account. 7. Be able to prepare trial balance. 8. Be able to make all adjusting entries covered in class. 9. Be able to prepare closing entries 10. Be able to prepare income statement, balance sheet and the statement of retained earnings. 11. Be able to calculate the…
rule, adjusting entries that create new asset or liability accounts are likely candidates for reversing. Reversing Entries Reversing entries are optional. They are recorded in response to accrued assets and accrued liabilities that were created by adjusting entries at the end of a reporting period. The purpose of reversing entries is to simplify a company’s recordkeeping. Exhibit 3C.1 shows an example of FastForward’s reversing entries. The top of the exhibit shows the adjusting entry FastForward…