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Chapter 3: Q1CA (page 184)
Question: In 75 words or fewer, explain adjusting journal entries
Answer
Adjustment entry is the medication entry to rectify the errors or unrecorded transactions.
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Question :Consider the following situations for Betterton Welding Services: a. Depreciation for the current year includes equipment, \(2,100. b. Each Monday, Betterton pays employees for the previous week’s work. The amount of weekly payroll is \)1,400 for a seven-day workweek (Monday to Sunday). This year, December 31 falls on Thursday. Learning Objective 3 Learning Objective 3 Learning Objective 3 Learning Objective 3 Beginning Prepaid Rent Payments for Prepaid Rent during the year Total amount to account for Subtract: Ending Prepaid Rent Rent Expense Situation A B C D \(1,400 700 2,100 800 \) a \(1,000 1,600 700 \)900 b \( 200 1,800 \)1,900 c d \( 700 600 \)1,000 f e CHAPTER 3 164 chapter 3 c. The beginning balance of Office Supplies was \(2,300. During the year, Betterton purchased office supplies for \)3,000, and at December 31 the office supplies on hand totaled \(1,000. d. Betterton prepaid a two full years’ insurance on July 1 of the current year, \)6,000. Record insurance expense for the year ended December 31. e. Betterton had earned \(2,800 of unearned revenue. f. Betterton had incurred (but not recorded) \)200 of interest expense on a note payable. The interest will not be paid until February 28. g. Betterton billed customers $3,000 for welding services performed. Journalize the adjusting entry needed on December 31 for each situation. Use the letters to label the journal entries
Question :In the recording of depreciation expense, which account is credited?
Question :What is a contra account?
Question :At the beginning of the year, Modish Advertising owed customers \(2,100 for unearned revenue collected in advance. During the year, Modish received advance cash receipts of \)6,100 and earned \(20,000 of service revenue (exclusive of any amount earned from advance payments). At year-end, the liability for unearned revenue is \)3,100 and unadjusted service revenue is $20,000. Requirements 1. Record the adjusting entry assuming that Modish records the cash receipt of unearned revenue by initially crediting a liability account. Post the adjusting entry to the Unearned Revenue and Service Revenue T-accounts. Make sure to include the beginning balance and additional unearned revenue in the Unearned Revenue T-account. 2. Record the adjusting entry assuming that Modish records the cash receipt of unearned revenue by initially crediting a revenue account. Post the adjusting entry to the Unearned Revenue and Service Revenue T-accounts. Make sure to include the beginning balance in the Unearned Revenue T-account and the additional unearned revenue in the Service Revenue T-account. 3. Compare the ending balances of the T-accounts under both approaches. Are they the same?
Question: Total Pool Services earned \(130,000 of service revenue during 2018. Of the \)130,000 earned, the business received \(105,000 in cash. The remaining amount, \)25,000, was still owed by customers as of December 31. In addition, Total Pool Services incurred \(85,000 of expenses during the year. As of December 31, \)10,000 of the expenses still needed to be paid. In addition, Total Pool Services prepaid $5,000 cash in December 2018 for expenses incurred during the next year. 1. Determine the amount of service revenue and expenses for 2018 using a cash basis accounting system. 2. Determine the amount of service revenue and expenses for 2018 using an accrual basis accounting system.
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