If at possibleplease put final solutions in Word Doc form.

Thanks, K

Ch 3 Graded Assignment Note: To receive partial credit on problems which require calculations, calculations must be shown. Problem I: (24 points) Indicate whether each of the following statements is true (T) or false (F). a. ___ Generally accepted accounting principles (GAAP) require the use of the cash-basis of accounting. b. ___ Under the cash-basis of accounting, revenue is recorded when cash is received from a customer as opposed to when it is earned. c. ___ The accrual-basis of accounting is an application of the revenue recognition and matching principles. d. ___ Adjusting entries are grouped into two broad categories - prepayments (or deferrals) and accruals. e. ___ Accounts should be listed on an Adjusted Trial Balance in alphabetical order. f. ___ It is not necessary to include any sort of heading on any of the types of trial balances. g. ___ On an adjusted trial balance, the \"Retained Earnings\" account balance is equal to the beginning balance at the start of the year. h. ___ On a post-closing trial balance, the \"Retained Earnings\" account balance is equal to the ending balance at the end of the year. i. ___ A temporary (or nominal) account is one which should begin the new accounting period with a zero account balance. j. ___ Permanent accounts are closed while temporary accounts are not. k. ___ As a company increases accrued expenses at the end of the accounting period, all else being equal, its net income will decrease. l. ___ A post-closing trial balance should include only balance sheet accounts. 1 Problem II: (10 points) An expense may be recognized and recorded at a time which is (1) the same as its related cash payment, (2) before its related cash payment, or (3) after its related cash payment. Likewise, revenue may be recognized and recorded at a time which is (1) the same as its related cash receipt, (2) before its related cash receipt, or (3) after its related cash receipt. Required: In each of the sentences below, highlight or clearly circle the correct word which applies. A. An expense recorded before its related cash payment, is called a(n) accrued expense | prepaid expense. In the adjusting entry to record the expense, the expense account will be debited | credited and a payable account will be debited | credited. At the time of the subsequent cash payment, the payable account will be debited | credited and the cash account will be debited | credited. B. Cash paid for the purchase of an asset which will eventually be converted to an expense as the asset is used up is an example of a(n) accrued expense | prepaid expense. At the time of the cash payment, an asset account will be debited | credited and the cash account will be debited | credited. In the adjusting entry to record the expense as the asset is used up, the asset account will be debited | credited and an expense account will be debited | credited. C. A revenue recorded before its related cash receipt, is called a(n) accrued revenue | unearned revenue. In the adjusting entry to record the revenue, a receivable account will be debited | credited and a revenue account will be debited | credited. At the time of the subsequent cash receipt, the cash account will be debited | credited and the receivable account will be debited | credited. D. Cash received from a customer for revenue which will be earned in the future is an example of a(n) accrued revenue | unearned revenue. At the time of the cash receipt, the cash account will be debited | credited and the related liability account will be debited | credited. In the adjusting entry to record the revenue earned, the liability account will be debited | credited and the revenue account will be debited | credited. 2 Problem III: (24 points) For each of the situations below, prepare the needed journal entry (JE) and related adjusting entry (AJE). Assume Wolfpack has a calendar year-end. A. On 12/31/X1, Wolfpack Inc. estimates utilities used during the month of December will cost $500. The actual $500 utility bill was paid on 1/9/X2. Date 12/31/X 1 Type of Entry AJE 1/9/X2 debit credit JE B. On 12/1/X1, Wolfpack Inc. made a cash purchase of a six-month insurance policy costing $1,200 for its delivery truck. The policy period runs from 12/1/X1 to 6/1/X2. Date 12/1/X1 Type of Entry JE 12/31/X 1 debit credit AJE C. On 12/31/X1, Wolfpack Inc. performed services worth $3,000 on account. The customer paid for these services on 1/15/X2. Date 12/31/X 1 Type of Entry AJE 1/15/X2 debit credit JE D. On 12/1/X1, Wolfpack Inc. received $4,000 for services it will provide evenly to a customer over the next four months beginning in December. Date 12/1/X1 Type of Entry JE 12/31/X 1 debit credit AJE 3 Accounting Check Each adjusting entry (AJE) should have one income statement account and one balance sheet account. Do your adjusting entries follow this rule? If not, please go back and check your entries. Problem IV: (32 points) Using a checkmark ( ), indicate whether each of the following accounts should be closed at the end of the account period. In addition, if it should be closed, indicate whether its account balance should be debited or credited in the closing entry. The first two have been done as examples. a. b. c. d. e. f. g. h. i. j. k. l. m . n. o. p. Interest Revenue Accounts Receivable Supplies Supplies Expense Depreciation Expense Accumulated Depreciation Unearned Revenue Sales Revenue Cost of Goods Sold Prepaid Insurance Insurance Expense Bonds Payable Common Stock Paid-in-Capital Gain on Sale of Equipment Closed Close this account's Close this account's balance by debiting it. balance by crediting it. Not Closed Loss on Sale of Equipment Retained Earnings Dividends Problem V: (10 points) Chapter 2 covered the beginning steps in the accounting cycle up through the unadjusted trial balance, which Chapter 2 simply called a \"trial balance\". Beginning now, the word \"unadjusted\" should be included so as to distinguish it from the other types of trial balances gone over in Chapter 3. The first six steps in the accounting cycle are repeated below for reference. Required: Place the remaining steps in the accounting cycle in their proper order beginning with step #7. Step # _3__ _5__ _4__ _6__ _1__ _2__ ___ ___ Assess whether the transaction results in a debit or a credit to the account balance. Post the transaction to the applicable T-accounts (general ledger). Record the transaction in the general journal. Prepare a trial balance (unadjusted). Use source documents to identify which accounts are affected by a transaction. Analyze the impact of the transaction on the accounting equation. Prepare an adjusted trial balance. Record closing entries in the general journal and post them to the general ledger. 4 ___ ___ ___ Prepare the financial statements. Record adjusting entries in the general journal and post them to the general ledger. Prepare a post-closing trial balance. 5