Course: Financial Accounting

Accounts Requiring Adjustment Indicate with a Yes or No whether or not each of the following accounts normally requires an adjusting entry: a. Building No b. Cash No c. Wages Expense Yes d. Miscellaneous Expense No e. Common Stock No f. Prepaid Insurance Yes Type of Adjustment Classify the following items as (1) accrued revenue, (2) accrued expense, (3) unearned revenue, or (4) prepaid expense: a. Cash received for use of land next month Unearned revenue b. Fees earned but not received Accrued revenue C. Rent expense owed but not yet paid Accrued expense d. Supplies on hand Prepaid expense Adjustment for Accrued Revenues At the end of the current year, $17,850 of fees have been earned but have not been billed to clients. Journalize the adjusting entry to record the accrued fees. If an amount box does not require an entry, leave it blank. Accounts Receivable 88 Fees Earned Adjustment for Accrued Expense Barans Realty Co. pays weekly salaries of $11,000 on Monday for a six-day workweek ending the preceding Saturday. Journalize the necessary adjusting entry at the end of the accounting period, assuming that the period ends on Friday. Round your answers to nearest whole dollar. If an amount box does not require an entry, leave it blank. Salaries Expense Salaries Payable Adjustment for Unearned Revenue On June 1, 20Y2, Herbal Co. received $26,790 for the rent of land for 12 months. Journalize the adjusting entry required for unearned rent on December 31, 2022. Round your answers to the nearest dollar amount. If an amount box does not require an entry, leave it blank. Dec. 31 Unearned Rent Rent Revenue Adjustment for Prepaid Expense The prepaid insurance account had a beginning balance of $7,470 and was debited for $3,510 of premiums paid during the year. Journalize the adjusting entry required at the end of the year, assuming the amount of unexpired insurance related to future periods is $4,390. If an amount box does not require an entry, leave it blank. Insurance Expense 10 lo Prepaid Insurance Adjustment for Depreciation The estimated amount of depreciation on equipment for the current year is $3,940. Journalize the adjusting entry to record the depreciation. If an amount box does not require an entry, leave it blank. Depreciation Expense Accumulated Depreciation-Equipment Effect of Omitting Adjustments For the year ending April 30, Peck Medical Services Co. mistakenly omitted adjusting entries for (1) $6,400 of supplies that were used, (2) unearned revenue of $11,000 that was earned, and (3) insurance of $3,700 that expired. Indicate the combined effect of the errors on (a) revenues, (b) expenses, and (c) net income for the year ended April 30. (a) Revenues understated $ (b) Expenses understated $ (c) Net income understated $ Effect of Errors on Adjusted Trial Balance For each of the following errors, considered individually, indicate whether the error would cause the adjusted trial balance totals to be unequal. If the error would cause the adjusted trial balance totals to be unequal, indicate whether the debit or credit total is higher and by how much. a. The adjustment for accrued wages of $5,300 was journalized as a debit to Wages Expense for $5,300 and a credit to Accounts Payable for $5,300. The totals are equal. Enter the difference between the debit and credit totals. If the totals are equal, enter a zero. b. The entry for $3,240 of supplies used during the period was journalized as a debit to Supplies Expense of $3,240 and a credit to Supplies of $3,420. The totals are unequal; the credit total is higher. Enter the difference between the debit and credit totals. If the totals are equal, enter a zero. Vertical analysis Two income statements for Cornea Company follow: Cornea Company Income Statements For the Years Ended December 31 2019 2048 Fees earned $1,630,000 $1,330,000 Expenses (847,600) (798,000) Net income $782,400 $532,000 Required: a. Prepare a vertical analysis of Cornea Company's income statements. If required, round your percentage to the nearest whole number. Cornea Company Income Statements For the Years Ended December 31 2049 2018 Amount Percent Amount Percent Fees earned $1,630,000 % $1,330,000 % Expenses (847,600) % (798,000) % Operating income $782,400 % $532,000 % b. Does the vertical analysis indicate a favorable or an unfavorable trend? Favorable