Q#1 One-fourth of the work related to $11,000 cash received in Download

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Q#1
a.
b.
c.
d.
One-fourth of the work related to $11,000 cash received in advance is performed this period.
Wages of $7,000 are earned by workers but not paid as of December 31, 2016.
Depreciation on the company’s equipment for 2016 is $11,920.
The Office Supplies account had a $470 debit balance on December 31, 2015. During 2016,
$5,051 of office supplies are purchased. A physical count of supplies at December 31, 2016,
shows $555 of supplies available.
e. The Prepaid Insurance account had a $5,000 balance on December 31, 2015. An analysis of
insurance policies shows that $2,200 of unexpired insurance benefits remain at December
31, 2016.
f. The company has earned (but not recorded) $550 of interest from investments in CDs for the
year ended December 31, 2016. The interest revenue will be received on January 10, 2017.
g. The company has a bank loan and has incurred (but not recorded) interest expense of
$5,000 for the year ended December 31, 2016. The company must pay the interest on
January 2, 2017.
For each of the above separate cases, prepare adjusting entries required for financial statements for
the year ended (date of) December 31, 2016. (Assume that prepaid expenses are initially recorded
in asset accounts and that fees collected in advance of work are initially recorded as liabilities.)
Q#2
Costanza Company experienced the following events and transactions during July.
July 1 Received $3,000 cash in advance of performing work for Vivian Solana.
6 Received $7,500 cash in advance of performing work for Iris Haru.
12 Completed the job for Solana.
18 Received $8,500 cash in advance of performing work for Amina Jordan.
27 Completed the job for Haru.
31 None of the work for Jordan has been performed.
a. Prepare journal entries (including any adjusting entries as of the end of the month) to record these
events using the procedure of initially crediting the Unearned Fees account when payment is
received from a customer in advance of performing services.
b. Prepare journal entries (including any adjusting entries as of the end of the month) to record these
events using the procedure of initially crediting the Fees Earned account when payment is received
from a customer in advance of performing services.
c. Under each method, determine the amount of earned fees reported on the income statement for
July and the amount of unearned fees reported on the balance sheet as of July 31.
Under the first method (and using entries from part a)
- Unearned fees = XXXX
- Fees earned = xxxx
Under the second method (and using entries from part b)
- Unearned fees = xxxx
- Fees earned = xxxx
Q#3
The following is the adjusted trial balance of Wilson Trucking Company.
Account Title
Cash
Accounts receivable
Office supplies
Trucks
Accumulated depreciation—Trucks
Land
Accounts payable
Interest payable
Long-term notes payable
Common stock
Retained earnings.
Dividends
Trucking fees earned
Depreciation expense—Trucks
Salaries expense
Office supplies expense
Repairs expense—Trucks
Totals
$
Debit
5,500
16,500
2,000
189,000
Credit
$
38,934
75,000
9,500
3,000
52,000
20,000
155,376
19,000
144,500
25,112
67,771
11,000
12,427
$ 423,310
$ 423,310
The Retained Earnings account balance is $155,376 at December 31, 2015.
(1). Prepare the income statement for the year ended December 31, 2016.
(2). Prepare the statement of retained earnings for the year ended December 31, 2016.
Q#4
Cal Consulting initially records prepaid and unearned items in income statement accounts. Given
this company’s accounting practices, which of the following applies to the preparation of adjusting
entries at the end of its first accounting period?
1- Earned but unbilled (and unrecorded) consulting fees for the period were $1,900, which are
recorded with a debit to Unearned Consulting Fees of $1,900 and a credit to Consulting Fees
Earned of $1,900.
2- Unpaid salaries of $680 are recorded with a debit to Prepaid Salaries of $680 and a credit to
Salaries Expense of $680.
3- Office supplies purchased for the period were $1,700. The cost of unused office supplies of
$1,000 is recorded with a debit to Supplies Expense of $1,000 and a credit to Office Supplies of
$1,000.
4- Unearned fees (on which cash was received in advance earlier in the period) are recorded with
a debit to Consulting Fees Earned of $640 and a credit to Unearned Consulting Fees of $640.
Q#5
Pablo Management has ten part-time employees, each of whom earns $105 per day. They are
normally paid on Fridays for work completed Monday through Friday of the same week. Assume that
December 28, 2016, was a Friday, and that they were paid in full on that day. The next week, the ten
employees worked only four days because New Year’s Day was an unpaid holiday.
Prepare the adjusting entry that would be recorded on Monday, December 31, 2016 and Friday,
January 4, 2017.
Q#6
Case X:
Case Y:
Case Z:
Compute cash received from customers:
Sales
Accounts receivable, December 31, 2015
Accounts receivable, December 31, 2016
Compute cash paid for rent:
Rent expense
Rent payable, December 31, 2015
Rent payable, December 31, 2016
Compute cash paid for inventory:
Cost of goods sold
Inventory, December 31, 2015
Accounts payable, December 31, 2015
Inventory, December 31, 2016
Accounts payable, December 31, 2016
$ 760,000
40,000
55,200
$ 135,500
11,900
9,520
$ 566,000
175,460
73,693
143,877
91,379
For each of the above three separate cases, use the information provided about the calendar-year
2016 operations of Sahim Company to compute the required cash flow information.
Q#7
On October 10, the stockholders’ equity of Sherm Systems appears as follows:
Common stock–$10 par value, 73,000 shares authorized, issued, and outstanding $ 730,000
Paid-in capital in excess of par value, common stock
221,000
Retained earnings
872,000
Total stockholders’ equity
$ 1,823,000
1. Prepare journal entries to record the following transactions for Sherm Systems.
a. Purchased 5,100 shares of its own common stock at $26 per share on October 11.
b. Sold 1,025 treasury shares on November 1 for $32 cash per share.
c. Sold all remaining treasury shares on November 25 for $21 cash per share.
2. Prepare the revised equity section of its balance sheet after the October 11 treasury stock
purchase.
Q#8
a.
b.
c.
d.
e.
f.
Net income was $470,000.
Issued common stock for $71,000 cash.
Paid cash dividend of $11,000.
Paid $105,000 cash to settle a note payable at its $105,000 maturity value.
Paid $116,000 cash to acquire its treasury stock.
Purchased equipment for $89,000 cash.
Use the above information to determine this company's cash flows from financing activities.
Q#9
Lansing Company’s 2016 income statement and selected balance sheet data (for current assets and
current liabilities) at December 31, 2015 and 2016, follow.
LANSING COMPANY
Income Statement
For Year Ended December 31, 2016
Sales revenue
$60,000
Expenses
Cost of goods sold
19,000
Depreciation expense
5,000
Salaries expense
9,000
Rent expense
2,000
Insurance expense
1,800
Interest expense
1,300
Utilities expense
1,000
Net income
$20,900
LANSING COMPANY
Selected Balance Sheet Accounts
At December 31
2016
2015
Accounts receivable
$ 3,600 $ 3,740
Inventory
950
805
Accounts payable
1,200
1,300
Salaries payable
450
320
Utilities payable
130
110
Prepaid insurance
120
140
Prepaid rent
160
140
Required:
Prepare the cash flows from operating activities section only of the company’s 2016 statement of
cash flows using the indirect method.
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