BRIEF EXERCISES BE3-1 The ledger of Bacalao Company SLU includes the following accounts. Explain why Indicate why adjusting each account may require adjustment. (a) Prepaid Insurance. (b) Depreciation Expense. (c) Unearned Service Revenue. (d) Interest Payable. BE3-2 Lucci Company SpA accumulates the following adjustment data at December 31. Indicate (a) the type of adjustment (prepaid expense, accrued revenue, and so on), and (b) the status of accounts before adjustment (overstated or understated). 1. Supplies of 100 are on hand. 2. Services performed but not recorded total 870. 3. Interest of 200 has accumulated on a note payable. 4. Rent collected in advance totaling 560 has been recognized. BE3-3 Wow Advertising Company's trial balance at December 31 shows Supplies 6,700 and Supplies Expense 0. On December 31, there are 1,300 of supplies on hand. Prepare the adjusting entry at December 31 and, using T-accounts, enter the balances in the accounts, post the adjusting entry, and indicate the adjusted balance in each account. BE3-4 At the end of its first year, the trial balance of Zovde Company OAO shows Equip ment 32,000 and zero balances in Accumulated Depreciation-Equipment and Deprecia- tion Expense. Depreciation for the year is estimated to be 6,000. Prepare the adjusting entry for depreciation at December 31, post the adjustments to T-accounts, and indicate the statement of financial position presentation of the equipment at December 31. Prepare adjusting entry for prepaid expense. (LO 5) Prepare adjusting entry for unearned revenue. (LO 5) Prepare adjusting entries for accruals. (LO 6) Analyze accounts in an unadjusted trial balance. (LO 4, 5, 6) Prepare an income statement from an adjusted trial balance. (LO 7) Prepare a retained earnings statement from an adjusted trial balance. (LO 7) Prepare adjusting entries under alternative treatment of deferrals. (LO 8) entries are needed. (LO 3) Identify the major types of adjusting entries. (LO 4, 5, 6) Prepare adjusting entry for supplies. (LO 5) Prepare adjusting entry for depreciation. (LO 5) BE3-5 On July 1, 2017, Pizner Co. Ltd. pays 13,200 to Orlow Insurance Ltd. for a 3-year insurance contract. Both companies have fiscal years ending December 31. For Pizner Co. Ltd., journalize and post the entry on July 1 and the adjusting entry on December 31. BE3-6 Using the data in BE3-5, journalize and post the entry on July 1 and the adjusting entry on December 31 for Orlow Insurance Ltd. Orlow uses the accounts Unearned Ser- vice Revenue and Service Revenue. BE3-7 The bookkeeper for Malboeuf Company SA asks you to prepare the following accrued adjusting entries at December 31. 1. Interest on notes payable of 320 is accrued. 2. Services performed but not recorded total 1,750. 3. Salaries earned by employees of 900 have not been recorded. Use the following account titles: Service Revenue, Accounts Receivable, Interest Expense, Interest Payable, Salaries and Wages Expense, and Salaries and Wages Payable. BE3-8 The trial balance of Tiwari Ltd. includes the following statement of financial posi- tion accounts, which may require adjustment. For each account that requires adjustment, indicate (a) the type of adjusting entry (prepaid expense, unearned revenue, accrued revenue, or accrued expense) and (b) the related account in the adjusting entry. Accounts Receivable Prepaid Insurance Accumulated Depreciation-Equipment Interest Payable Unearned Service Revenue BE3-9 The adjusted trial balance of Kwun Company at December 31, 2017, includes the following accounts (in thousands): Share Capital-Ordinary #15,600, Dividends #5,000, Service Revenue W38,400, Salaries and Wages Expense W16,000, Insurance Expense W2,000, Rent Expense W4,400, Supplies Expense W1,500, and Depreciation Expense W1,300. Prepare an income statement for the year. BE3-10 Partial adjusted trial balance data for Kwun Company is presented in BE3-9. Pre- pare a retained earnings statement for the year assuming net income is 13,200 for the year and Retained Earnings is #7,240 on January 1. (Amounts are in thousands.) *BE3-11 Lim Company records all prepayments in income statement accounts. At April 30, the trial balance shows Supplies Expense HK$28,000, Service Revenue HK$92,000, and zero balances in related statement of financial position accounts. Prepare the adjust- ing entries at April 30 assuming (a) HK$11,000 of supplies on hand and (b) HK$20,000 of service revenue should be reported as unearned