Hi, I am having a difficult time understanding this chapter. Could you shed some light for me? I have attached the practice quiz. Thank you so much.
Problem 4.5A Preparing Adjusting Entries and Determining Account Balances L.O. 1-7, 9 Terrific Temps fills temporary employment positions for local businesses. Some businesses pay in advance for services; others are billed after services have been performed. Advanced payments are credited to an account entitled Unearned Fees. Adjusting entries are performed on a monthly basis. An unadjusted trial balance dated December 31, 2011, follows. (Bear in mind that adjusting entries have already been made for the first 11 months of 2011, but not for December.) TERRIFIC TEMPS UNADJUSTED TRIAL BALANCE DECEMBER 31, 2011 Cash Accounts receivable Unexpired insurance Prepaid rent Office supplies $ 27,020 59,200 900 3,000 600 Equipment Accumulate d depreciation: equipment Accounts payable Notes payable Interest payable 60,000 $ 29,500 4,180 12,000 320 Unearned fees 6,000 Income taxes payable 4,000 Unearned revenue 20,000 Retained earnings 49,000 Capital stock 25,000 Dividends 3,000 Fees earned 75,000 Travel expense 5,000 Insurance expense 2,980 Rent expense 9,900 Office supplies expense 780 Utilities expense 4,800 Depreciatio n expense: equipment 5,500 Salaries expense 30,000 Interest expense 320 Income taxes expense 12,000 $ 225,000 $ 225,000 Other Data 1. Accrued but unrecorded fees earned as of December 31, 2011, amount to $1,500. 2. Records show that $2,500 of cash receipts originally recorded as unearned fees had been earned as of December 31. 3. The company purchased a six-month insurance policy on September 1, 2011, for $1,800. 4. On December 1, 2011, the company paid its rent through February 28, 2012. 5. Office supplies on hand at December 31 amount to $400. 6. All equipment was purchased when the business first formed. The estimated life of the equipment at that time was 10 years (or 120 months). 7. On August 1, 2011, the company borrowed $12,000 by signing a six-month, 8 percent note payable. The entire note, plus six months' accrued interest, is due on February 1, 2012. 8. Accrued but unrecorded salaries at December 31 amount to $2,700. 9. Estimated income taxes expense for the entire year totals $15,000. Taxes are due in the first quarter of 2012. Instructions a. For each of the numbered paragraphs, prepare the necessary adjusting entry (including an explanation). (Omit the "$" sign in your response.) Date General Journal To record accrued but uncollected fees earned. Debit Credit Dec. 31 To convert previously unearned revenue to earned revenue. 31 To record Dec. insurance exp. 31 To record Dec. rent expense. 31 To record offices supplies used in December 31 To record December depreciation expense 31 To record interest accrued in December 31 To record salaries accrued in December. 31 To record income taxes accrued in December. 31 b. Determine that amount at which each of the following accounts will be reported in the company's 2011 income statement. (Omit the "$" sign in your response.) 1. Fees earned $ 2. Travel expense $ 3. Insurance expense $ 4. Rent expense $ 5. Office supplies expense $ 6. Utilities expense $ 7. Depreciation expense: equipment $ 8. Interest expense $ 9. Salaries expense $ 10 Income taxes expense . $
