(1pt) Accrual Based Accounting Prepaid expenses Depreciation of Fixed Assets Moving On, Inc purchases a new moving truck (e g equipment) for $45,780 in cash on August 1 st , 2017 At the time of its purchase, the truck is expected to be used in operations for 7 years and will have no resale or scrap value at the end of its life Moving On, Inc uses straight line depreciation (i e the asset depreciates evenly) over the expected life of the truck Assume the end of Moving Ons annual accounting period is December 31 st , 2017 and all adjustments and adjusting entries are made only at the end of the accounting period on December 31 st (i e no adjusting entry for Depreciation expense has been made yet) Record the journal entry for the original purchase of the truck that occurs on August 1 st , 2017 How much depreciation expense will be recognized in 2017 In 2018 Record the adjusting entry to recognize 5 months worth of Depreciation Expense on December 31, 2017 What will the ending balance of the Accumulated Depreciation account be on December 31, 2018 (Assume the beginning balance of Accumulated Depreciation on January 1 st , 2017 is $0 and Moving On, Inc has no other assets that depreciate) What will the net book value of the truck be on December 31, 2018 (1pt) Accrual Based Accounting Deferred (unearned) revenues Suppose that on March 28 th , 2017 a customer pays Ood Sphere, Ltd $1,335 in cash in advance for services which will be provided to the customer in April Assume the end of Ood Spheres has a monthly accounting period and all adjustments and adjusting entries are made only at the end of each month (i e no adjusting entry for revenue has been made yet) Record the original journal entry Ood Sphere, Ltd would make on March 28 th , 2017 upon receipt of cash from the customer Record the adjusting entry Ood Sphere, Ltd should record on April 30 th to recognize service revenue from services provided in April Using accrual basis accounting, how much revenue would Ood Sphere recognize in March In April If Ood Sphere, Lt instead had used cash basis accounting, how much revenue would they recognize in March In April (1pts) Accrual Based Accounting Accrued Expenses Suppose that Larry Gotts GuitarWorks pays wages of $8,400 to its workers every two weeks (i e $8,400 for every 10 work days) Workers are paid $8,400 on Friday, November 26 th for the pay period November 12 th November 26 th They will next be paid $8,400 on Friday, December 10 th for the two week pay period ending on December 10 th (for this pay period, there are 2 work days left in November and 8 work days in December) Assume Larry Gotts GuitarWorks has a monthly accounting period and all adjustments and adjusting entries are made only at the end of each month (i e no adjusting entry has been made yet) Record the adjusting entry Larry Gotts GuitarWorks should record on November 30 th to record wage expenses for the last 2 work days of November What if we did not make the adjusting entry on 11 30 Indicate by how much assets, liabilities, Expenses, Net Income, Retained Earnings, and SHE would be either under or overstated if this adjusting entry were not recorded If no effect, write no effect Record the entry that will be made on December 10 th when the next wage payment is made to workers (7pts) Comprehensive problem identify, analyze, and record transactions, post to T accounts, and prepare an adjusted trial balance Suppose that on December 31 st , 2017, Space, Inc has the following account balances in its unadjusted trial balance Cash $48,948 Accounts Receivable $15,962 Prepaid Insurance $9,600 Building $15,000 Supplies $1,497 Accounts Payable $7,007 Deferred Revenue $2,000 Notes Payable $42,000 Service Revenue $320,000 Wages expense $280,000 Assume all other balances are $0 The following additional information was gathered at December 31, 2017, the end of the annual accounting period for Space, Inc Assume Space, Inc uses an annual accounting period and all adjustments and adjusting entries are made only at the end of the annual accounting period on December 31 st (i e no adjusting entries have been made yet related to the items listed below) Space, Inc uses the following account titles Cash, A R, Supplies, Prepaid Insurance, Building, Accumulated Depreciation Building, A P, Wages payable, Deferred revenue, Interest payable, Notes payable, Service revenue, Wages expense, Interest expense, Depreciation expense, Insurance expense, Supplies expense On December 31 st , 2017, a physical count of supplies indicated that supplies of $309 are left on hand On December 13 th , 2017, Space, Inc agreed to provide $6,000 worth of services during December and January to a customer, Aaron As of December 31 st , $3,600 worth of these services have been provided to this customer, but no payments have been received from the customer The customer has agreed to pay Space, Inc $6,000 in cash on January 19 th when all of the services are completed Space In pays wages of $7,000 to its workers every work week (i e $7,000 for every 5 work days) Workers are paid $7,000 on Friday, December 26 th and they will next be paid $7,000 on Friday, January 2 nd (assume there are 3 work days left in December) On November 15 th , Space Inc received $2,000 in cash from another customer, Moe, for consulting services to be performed in December and January This was recorded as deferred revenue on November 15 th (see above unadjusted balance of $2,000) $1,300 worth of services have been provided to Moe in December The remaining $700 worth of services will be provided to Moe in January The $15,000 building was purchased on April 1 st , 2017 for cash It has an expected useful life of 25 years and will have no resale or value at the end of its lif Assume Space Inc uses straight line depreciation (i the asset depreciates evenly) over the expected life of the building The $42,000 note payable was borrowed from the bank on June 1 st , 2017, with Space, Inc signing a 5 (annual rate), 6 year note Interest payments are made annually on May 31 st The first such interest payment will be made on May 31 st , 2018 Space, Inc prepaid $9,600 for a 24 month insurance policy on March 1 st , which covers the period of March 1, 2017 February 28, 2019 This was recorded as prepaid insurance on March 1 st (see above unadjusted balance of $9,600) PART 1 Record adjusting entries (3pts) Record the adjusting journal entries Space should make on December 31, 2017 based on all of the above information PART 2 Post adjusting journal entries to T Accounts (3pts) Post each of the above adjusting journal entries to T Accounts and calculate the updated adjusted ending account balances for each T account HINT Dont forget to start by entering unadjusted balances given above for each account from the unadjusted trial balance PART 3 Prepare an adjusted trial balance (1pt) After calculating the updated adjusted ending balance for each T account in Part 2, prepare an adjusted trial balance for Space, Inc as of December 31, 2017 with the list of accounts in the following order assets, liabilities, common stock, retained earnings, dividends, revenues, and expenses

The Answer is in the image, click to view ...

Answered step by step

Verified Expert Solution

Link Copied!

Question

1 Approved Answer

Posted on Sep 12, 2024

(1pt) Accrual Based Accounting: Prepaid expenses Depreciation of Fixed Assets. Moving On, Inc. purchases a new moving truck (e.g. equipment) for $45,780 in cash on

(1pt) Accrual Based Accounting: Prepaid expenses Depreciation of Fixed Assets. Moving On, Inc. purchases a new moving truck (e.g. equipment) for $45,780 in cash on August 1^st, 2017. At the time of its purchase, the truck is expected to be used in operations for 7 years and will have no resale or scrap value at the end of its life. Moving On, Inc. uses straight-line depreciation (i.e. the asset depreciates evenly) over the expected life of the truck. Assume the end of Moving Ons annual accounting period is December 31^st, 2017 and all adjustments and adjusting entries are made only at the end of the accounting period on December 31^st(i.e. no adjusting entry for Depreciation expense has been made yet).
1. Record the journal entry for the original purchase of the truck that occurs on August 1^st, 2017.
2. How much depreciation expense will be recognized in 2017? In 2018?
3. Record the adjusting entry to recognize 5 months worth of Depreciation Expense on December 31, 2017.
4. What will the ending balance of the Accumulated Depreciation account be on December 31, 2018(Assume the beginning balance of Accumulated Depreciation on January 1^st, 2017 is $0 and Moving On, Inc. has no other assets that depreciate)?
5. What will the net book value of the truck be on December 31, 2018?

(1pt) Accrual Based Accounting: Deferred (unearned) revenues. Suppose that on March 28^th, 2017 a customer pays Ood Sphere, Ltd. $1,335 in cash in advance for services which will be provided to the customer in April. Assume the end of Ood Spheres has a monthly accounting period and all adjustments and adjusting entries are made only at the end of each month (i.e. no adjusting entry for revenue has been made yet).
1. Record the original journal entry Ood Sphere, Ltd. would make on March 28^th, 2017 upon receipt of cash from the customer.
2. Record the adjusting entry Ood Sphere, Ltd. should record on April 30^thto recognize service revenue from services provided in April.
3. Using accrual basisaccounting, how much revenue would Ood Sphere recognize in March? In April?
4. If Ood Sphere, Lt instead had used cash basisaccounting, how much revenue would they recognize in March? In April?

(1pts) Accrual Based Accounting: Accrued Expenses. Suppose that Larry Gotts GuitarWorks pays wages of $8,400 to its workers every two weeks (i.e. $8,400 for every 10 work days). Workers are paid $8,400 on Friday, November 26^thfor the pay period November 12^th-November 26^th. They will next be paid $8,400 on Friday, December 10^thfor the two week pay period ending on December 10^th(for this pay period, there are 2 work days left in November and 8 work days in December). Assume Larry Gotts GuitarWorks has a monthly accounting period and all adjustments and adjusting entries are made only at the end of each month (i.e. no adjusting entry has been made yet).
1. Record the adjusting entry Larry Gotts GuitarWorks should record on November 30^thto record wage expenses for the last 2 work days of November.
2. What if we did not make the adjusting entry on 11/30? Indicate by how much assets, liabilities, Expenses, Net Income, Retained Earnings, and SHE would be either under- or overstated if this adjusting entry were not recorded. If no effect, write no effect.
3. Record the entry that will be made on December 10^thwhen the next wage payment is made to workers.

(7pts) Comprehensive problem: identify, analyze, and record transactions, post to T-accounts, and prepare an adjusted trial balance: Suppose that on December 31^st, 2017, Space, Inc. has the following account balances in its unadjustedtrial balance: Cash: $48,948; Accounts Receivable: $15,962; Prepaid Insurance: $9,600; Building: $15,000; Supplies: $1,497; Accounts Payable: $7,007; Deferred Revenue: $2,000; Notes Payable: $42,000; Service Revenue: $320,000; Wages expense: $280,000. Assume all other balances are $0.

The following additional information was gathered at December 31, 2017, the end of the annual accounting period for Space, Inc. Assume Space, Inc. uses an annual accounting period and all adjustments and adjusting entries are made only at the end of the annual accounting period on December 31^st(i.e. no adjusting entries have been made yet related to the items listed below). Space, Inc. uses the following account titles: Cash, A/R, Supplies, Prepaid Insurance, Building, Accumulated Depreciation-Building, A/P, Wages payable, Deferred revenue, Interest payable, Notes payable, Service revenue, Wages expense, Interest expense, Depreciation expense, Insurance expense, Supplies expense.

On December 31^st, 2017, a physical count of supplies indicated that supplies of $309 are left on hand.
On December 13^th, 2017, Space, Inc. agreed to provide $6,000 worth of services during December and January to a customer, Aaron. As of December 31^st, $3,600 worth of these services have been provided to this customer, but no payments have been received from the customer. The customer has agreed to pay Space, Inc. $6,000 in cash on January 19^thwhen all of the services are completed.
Space In pays wages of $7,000 to its workers every work week (i.e. $7,000 for every 5 work days). Workers are paid $7,000 on Friday, December 26^thand they will next be paid $7,000 on Friday, January 2^nd(assume there are 3 work days left in December).
On November 15^th, Space Inc. received $2,000 in cash from another customer, Moe, for consulting services to be performed in December and January. This was recorded as deferred revenue on November 15^th(see above unadjusted balance of $2,000). $1,300 worth of services have been provided to Moe in December. The remaining $700 worth of services will be provided to Moe in January.
The $15,000 building was purchased on April 1^st, 2017 for cash. It has an expected useful life of 25 years and will have no resale or value at the end of its lif Assume Space Inc. uses straight-line depreciation (i. the asset depreciates evenly) over the expected life of the building.
The $42,000 note payable was borrowed from the bank on June 1^st, 2017, with Space, Inc. signing a 5% (annual rate), 6-year note. Interest payments are made annually on May 31^st. The first such interest payment will be made on May 31^st, 2018.
Space, Inc. prepaid $9,600 for a 24-month insurance policy on March 1^st, which covers the period of March 1, 2017 February 28, 2019. This was recorded as prepaid insurance on March 1^st(see above unadjusted balance of $9,600)

PART 1 Record adjusting entries (3pts):Record the adjusting journal entries Space should make on December 31, 2017 based on all of the above information.

PART 2 Post adjusting journal entries to T-Accounts (3pts):Post each of the above adjusting journal entries to T-Accounts and calculate the updated/adjusted ending account balances for each T-account. HINT: Dont forget to start by entering unadjusted balances given above for each account from the unadjusted trial balance!

PART 3 Prepare an adjusted trial balance (1pt): After calculating the updated/adjusted ending balance for each T-account in Part 2, prepare an adjustedtrial balance for Space, Inc. as of December 31, 2017 with the list of accounts in the following order: assets, liabilities, common stock, retained earnings, dividends, revenues, and expenses.