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ACCT1101 - 1920s2 - Questions - Chapter 03

This document provides information and questions related to Chapter 3 of the ACCT1101 Introduction to Financial Accounting course. It includes discussion questions on determining the effects of adjusting entries and analyzing profit margins. It also provides an exercise with multiple parts to prepare adjusting entries as of December 31, 2015 for various scenarios, such as prepaid expenses, accrued wages, depreciation, and more. The document further provides an assignment with questions to prepare adjusting entries as of October 31, 2015 based on additional information provided, as well as subsequent journal entries for cash transactions in November 2015.

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135 views4 pages

ACCT1101 - 1920s2 - Questions - Chapter 03

This document provides information and questions related to Chapter 3 of the ACCT1101 Introduction to Financial Accounting course. It includes discussion questions on determining the effects of adjusting entries and analyzing profit margins. It also provides an exercise with multiple parts to prepare adjusting entries as of December 31, 2015 for various scenarios, such as prepaid expenses, accrued wages, depreciation, and more. The document further provides an assignment with questions to prepare adjusting entries as of October 31, 2015 based on additional information provided, as well as subsequent journal entries for cash transactions in November 2015.

Uploaded by

Liz zzz
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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ACCT1101 

– Introduction to Financial Accounting    Chapter 3 

Discussion Questions (QS 3‐9, QS 3‐11, Ex 3‐2) 

QS 3‐9 Determining effects of adjusting entries 

QS 3‐11 Analyzing profit margin 

Ex 3‐2 Preparing adjusting entries 

For each of the following separate cases, prepare adjusting entries required of financial statements for
the year ended (date of) December 31, 2015. (Assume that prepaid expenses are initially recorded in
asset accounts and that fees collected in advance of work are initially recorded as liabilities.)
a. One-third of the work related to $30,000 cash received in advance is performed this period.
b. Wages of $9,000 are earned by workers but not paid as at December 31, 2015.
c. Depreciation on the company’s equipment for 2015 is $19,127.
d. The Office Supplies account had a $480 debit balance on December 31, 2014. During 2015, $5,349
of office supplies are purchased. A physical count of supplies at December 31, 2015, shows $587 of
supplies available.
e. The Prepaid Insurance account had a $5,000 balance on December 31, 2014. An analysis of
insurance policies shows that $2,200 of unexpired insurance benefits remain at December 31, 2015.
f. The company has earned (but not recorded) $750 of interest from investments in CDs for the year
ended December 31, 2015. The interest revenue will be received on January 10, 2016.
g. The company has a bank loan and has incurred (but not recorded) interest expense of $3,500 for the
year ended December 31, 2015. The company must pay the interest on January 2, 2016.

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ACCT1101 – Introduction to Financial Accounting    Chapter 3 

Assignment questions (P3‐1B, P3‐3B) 

P 3‐1B Preparing adjusting and subsequent journal entries 

 
The total premium for each policy was paid in full (for all months) at the purchase date, and the Prepaid
Insurance account was debited for the full cost. (Year-end adjusting entries for Prepaid Insurance were
properly recorded in all prior fiscal years.)

c. The company has four employees, who earn a total of $800 for each workday. They are paid
each Monday for their work in the five-day workweek ending on the previous Friday. Assume that October 31,
2015, is a Monday, and all four employees worked the first day of that week. They will be paid salaries for five
full days on Monday, November 7, 2015.

d. The company purchased a building on November 1, 2014, that cost $155,000 and is expected to have a
$20,000 residual value at the end of its predicted 25-year life. Annual depreciation is $5,400.

e. Since the company does not occupy the entire building it owns, it rented space to a tenant at $600 per month,
starting on September 1, 2015. The rent was paid on time on September 1, and the amount received was
credited to the Rent Earned account. However, the October rent has not been paid. The company has worked
out an agreement with the tenant, who has promised to pay both October and November rent in full on
November 15. The tenant has agreed not to fall behind again.

f. On September 1, the company rented space to another tenant for $525 per month. The tenant paid five
months' rent in advance on that date. The payment was recorded with a credit to the Unearned Rent account.

Required
1. Use the information to prepare adjusting entries as at October 31, 2015.
2. Prepare journal entries to record the first subsequent cash transaction in November 2015 for parts c and e.
 

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ACCT1101 – Introduction to Financial Accounting    Chapter 3 

P 3‐3B Preparing adjusting entries, adjusted trial balance, and financial statements 

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ACCT1101 – Introduction to Financial Accounting    Chapter 3 

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