ACC 303 Homework Chapter 3
ACC 303 Homework Chapter 3
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Brief Exercise 3-5
Assume that on February 1, Procter & Gamble (P&G) paid $750,000 in advance for 1 years’ insurance coverage. Prepare P&G’s February 1 journal entry and the annual adjusting entry on June 30. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select “No entry” for the account titles and enter 0 for the amounts. Record journal entries in the order presented in the problem. Round answers to 0 decimal places, e.g. 5,275.)
| Date | Account Titles and Explanation | Debit | Credit | ||||||
: |
$
|
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Exercise 3-3
The trial balance of Blues Traveler Corporation does not balance.
| BLUES TRAVELER CORPORATION TRIAL BALANCE APRIL 30, 2014 |
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| Debit | Credit | |||||||
| Cash | $6,194 | |||||||
| Accounts Receivable | 5,381 | |||||||
| Supplies | 3,108 | |||||||
| Equipment | 6,241 | |||||||
| Accounts Payable | $7,185 | |||||||
| Common Stock | 8,141 | |||||||
| Retained Earnings | 2,141 | |||||||
| Service Revenue | 5,341 | |||||||
| Office Expense | 4,461 | |||||||
| $25,385 | $22,808 | |||||||
An examination of the ledger shows these errors.
| 1. | Cash received from a customer on account was recorded (both debit and credit) as $1,521 instead of $1,971. | |
| 2. | The purchase on account of a computer costing $2,422 was recorded as a debit to Office Expense and a credit to Accounts Payable. | |
| 3. | Services were performed on account for a client, $2,391, for which Accounts Receivable was debited $2,391 and Service Revenue was credited $366. | |
| 4. | A payment of $236 for telephone charges was entered as a debit to Office Expense and a debit to Cash. | |
| 5. | The Service Revenue account was totaled at $5,341 instead of $5,421. |
From this information, prepare a corrected trial balance.
| Blues Traveler Corporation Trial Balance (Corrected) April 30, 2014 |
||
| Debit | Credit | |
| $
|
$
|
|
| Totals | $
|
$
|
Exercise 3-6
Karen Weller, D.D.S., opened a dental practice on January 1, 2014. During the first month of operations, the following transactions occurred.
| 1. | Performed services for patients who had dental plan insurance. At January 31, $760 of such services was performed but not yet billed to the insurance companies. | |
| 2. | Utility expenses incurred but not paid prior to January 31 totaled $510. | |
| 3. | Purchased dental equipment on January 1 for $89,500, paying $23,900 in cash and signing a $65,600, 3-year note payable. (a) The equipment depreciates $490 per month. (b) Interest is $550 per month. | |
| 4. | Purchased a one-year malpractice insurance policy on January 1 for $27,000. | |
| 5. | Purchased $2,070 of dental supplies. On January 31, determined that $540 of supplies were on hand. |
Prepare the adjusting entries on January 31. Account titles to be used are Accumulated Depreciation—Equipment, Depreciation Expense, Service Revenue, Accounts Receivable, Insurance Expense, Interest Expense, Interest Payable, Prepaid Insurance, Supplies, Supplies Expense, Utilities Expense, and Accounts Payable. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select “No entry” for the account titles and enter 0 for the amounts.)
| No. | Account Titles and Explanation | Debit | Credit |
| 1. | |||
| 2. | |||
| 3 (a) | |||
| 3 (b) | |||
| 4. | |||
| 5. | |||
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(b)
From an analysis of the T-accounts, reconstruct the adjusting journal entries that were made on October 31, 2014. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select “No entry” for the account titles and enter 0 for the amounts.)
| No. | Date | Account Titles and Explanation | Debit | Credit |
| 1. | 10/31 | |||
| (To record the use of supplies during October) | ||||
| 2. | 10/31 | |||
| (To record revenue for services performed for which payment has not yet been received) |
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| 3. | 10/31 | |||
| (To record liability for accrued payroll) | ||||
| 4. | 10/31 | |||
| (To reduce the Unearned Service Revenue account for service that has been performed) |
Exercise 3-16
Presented below are selected account balances for Homer Winslow Co. as of December 31, 2014.
| Inventory 12/31/14 | $62,120 | Cost of Goods Sold | $226,590 | |||
| Common Stock | 77,410 | Selling Expenses | 17,010 | |||
| Retained Earnings | 48,680 | Administrative Expenses | 38,070 | |||
| Dividends | 19,590 | Income Tax Expense | 33,450 | |||
| Sales Returns and Allowances | 12,550 | |||||
| Sales Discounts | 15,950 | |||||
| Sales Revenue | 412,380 |
Prepare closing entries for Homer Winslow Co. on December 31, 2014. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select “No entry” for the account titles and enter 0 for the amounts.)
| No. | Account Titles and Explanation | Debit | Credit |
| 1. | |||
| (To close accounts with credit balances) | |||
| 2. | |||
| (To close accounts with debit balances) | |||
| 3. | |||
| (To close net income / (loss)) | |||
| 4. | |||
IFRS Practice Question 1
Which statement is correct regarding IFRS?
| [removed] | IFRS reverses the rules of debits and credits, that is, debits are on the right and credits are on the left. |
| [removed] | IFRS uses the same process for recording transactions as GAAP. |
| [removed] | The chart of accounts under IFRS is different because revenues follow assets. |
| [removed] | None of the these statements are correct. |
IFRS Practice Question 2
Information in a company’s first IFRS statements must:
| [removed] | have a cost that does not exceed the benefits. |
| [removed] | be transparent. |
| [removed] | provide a suitable starting point. |
| [removed] | all of these are correct. |
IFRS Practice Question 3
The transition date is the date:
| [removed] | when a company no longer reports under its national standards. |
| [removed] | when the company issues its most recent financial statement under IFRS. |
| [removed] | three years prior to the reporting date. |
| [removed] | none of these choices. |
IFRS Practice Question 4
When converting to IFRS, a company must:
| [removed] | recast previously issued financial statements in accordance with IFRS. |
| [removed] | use GAAP in the reporting period but subsequently use IFRS. |
| [removed] | prepare at least three years of comparative statements. |
| [removed] | use GAAP in the transition year but IFRS in the reporting year. |
IFRS Practice Question 5
The purpose of presenting comparative information in the transition to IFRS is:
| [removed] | to ensure that the information is a faithful representation. |
| [removed] | in accordance with the Sarbanes-Oxley Act. |
| [removed] | to provide users of the financial statements with information on GAAP in one period and IFRS in the other period. |
| [removed] | to provide users of the financial statements with information on IFRS for at least two periods. |
