-----------
a)
133-2 Identify when revenue is recognized. [L0 1} AP For the following independent situations, use professional judgement to determine when the comp any should recognize revenue from the transactions: 1. Westjet Airlines sells you a nonrefundable airline ticket in September for your ight home at Christmas. 2. Leon's Furniture sells you a home theatre in January on a \"no money down, no interest, and no payments for one year" promotional deal. 3. The Toronto Blue jays sell season tickets to games in the Rogers Centre airline. Fans can purchase the tickets at any time. although the season does not ofcially begin until Apr. It runs from April through Dctobe r. 4. The Elli: Financial Group lends you money at the beginning of August. The loan and the interest are repayable in full at the end of November. 5. In August. you order a sweater from Amazon amine. Amazon ships the sweater to you in September and you charge it to your visa credit card. In October. you receive your TiFisa bill and pay it. E. You pay for a one-year subscription to Canadian Business magazine in May. '1'. You purchase a gift card in December from iTunes to give to your friend for Christmas. Your friend uses the gift card in Ianuary. Instructions Identify when revenue should be recognized in ea ch of the above situations. E34 Prepare adjusting entries. @ [LD 2.. 3} AP Grant's Graphics has a December 31 year end. Grant's Graphics records adjusting entries on an annual basis. Prepare the adjusting journal entries based on the following information. 1. At the end of the vear, the unadjusted balance in the Prepaid Insurance account was 53,2111). Based on an analysis of the insurance policies. $2.3m had expired bv year end. 2. At the end of the year, the unadjusted balance in the Unearned Revenue account was Sl. During the last week of December. 5501] of this amount had been earned. 3. Dn Julyr 1, 201?, Grant signed a note payable for $10,000. The loan agreement stated that interest was 4%. Depreciation for the computer and printing equipment was $2,150 for the veer. 5. At the beginning of the year, Grant's had $951] of supplies on hand. During the year. $1,395 of suppes were purchased. A count at the end of the year indicated that $'l35 of supplies was left on December 31. 6. Between December 28 and December 31 inclusive, three employees worked eight hour shifts at $15.25 per hour. 3?. [in December 31. it was. determined that $5,Dtili of service revenue had been earned. but the bookkeeper did not record it. P BE2-18 Explain errors in trial balance. (LO 4) AP There are two errors in the following trial balance: (1) one account has been placed in the wrong column, and (2) there is a transposition error in the balance of the L. Bourque, Capital account. Explain the two errors. BOURQUE COMPANY Trial Balance December 31, 2017 Debit Credit Cash $15,000 Accounts receivable 1,800 Prepaid insurance $ 3,500 Accounts payable 2,000 Unearned revenue 2,200 L. Bourque, capital 15,400 L. Bourque, drawings 4,900 Service revenue 27,500 Rent expense 2,400 Salaries expense 18,600 Totals $42,700 $50,600
