v
Problem #1 (15 points) McDonald sold annual subscriptions to their magazine for $33,000 in December, 2015. The magazine is published monthly. The new subscribers received their first magazine in January, 2016. 1. What adjusting entry should be made in January if the subscriptions were originally recorded as a liability? 2. What amount will be reported on the January 2016 balance sheet for Unearned Subscription Revenue? Problem #2 (15 points) McDonald purchased software on October 1, 2016 for $14,400. The company expects to use the software for 3 years. It has no salvage value. 1. What adjusting journal entry should the company make at the end of each month if monthly financials are prepared? (annual depreciation is $4,800) 2. What balance will be reported on the December 31, 2016 balance sheet for Accumulated Depreciation? Problem #3 (15 points) McDonald borrowed $30,000 from the bank signing an 8%, 6-month note on November 1. Principal and interest are payable to the bank on May 1. If the company prepares monthly financial statements, what adjusting entry should the company make at November 30 with regard to the note (round answer to the nearest dollar)? Show computations. Read 14 Normal (Web) + 13.5 pt. Black 13.5 1 2 3 4 5 The McDonalds, a footballl team, prepare financial statements on a monthly basis. Their season begins in April, but in March the team engaged in the following transactions: (a) Paid $240,000 to New York City as advance rent for use of New York City Stadium for the six month period April 1 through September 30. (b) Collected $480,000 cash from sales of season tickets for the team's 20 home games. This amount was credited to Uncarned Ticket Revenue. During the month of April, the McDonalds played five home games and four road games Instructions Prepare the adjusting entries required at April 30 for the transactions above. Problem #5 (True False 2 points each) 1. A worksheet is a mandatory form that must be prepared along with an income statement and balance sheet. 2. If total credits in the income statement columns of a worksheet exceed total debits, the enterprise has net income. 3. Cash and supplies are both classified as current assets. 4. It is not necessary to prepare formal financial statements if a worksheet has been prepared because financial position and net income are shown on the worksheet. 5. Long-term investments would appear in the property, plant, and equipment section of the balance sheet. 6. The adjusted trial balance columns of a worksheet are obtained by subtracting the adjustment columns from the trial balance columns 7. The balance of the depreciation expense account will appear in the income statement debit column of a worksheet. 8. Closing entries are unnecessary if the business plans to continue operating in the future and issue financial statements each year. 9. The owner's drawings account is closed to the Income Summary account in order to properly determine net income (or loss) for the period. 10. A liability is classified as a current liability if the company is to pay it within the forthcoming year. 11. Current assets are customarily the first items listed on a classified balance sheet. Problem #6 (18 points) The adjusted trial balance of McDonald Inc. on December 31, 2016 includes the following accounts: Accumulated Depreciation, $8,000; Depreciation Expense, $2,000; Notes Payable $7,800; Interest Expense $250; Utilities Expense, $370: Rent Expense, $800; Service Revenue, $24,600; Salaries and Wages Expense, $6,800; Supplies, $250; Supplies Expense, $1,500; Salaries and Wages Payabl
