Learning Materials
Features
Discover
Chapter 3: Question 5BE (page 128)
BE3-5 (L02,3) Assume that on February 1, Procter & Gamble (P&G) paid $720,000 in advance for 2 years’ insurance coverage. Prepare P&G’s February 1 journal entry and the annual adjusting entry on June 30.
The amount of prepaid insurance used is $150,000.
Over 30 million students worldwide already upgrade their learning with Vaia!
All the tools & learning materials you need for study success - in one app.
Get started for free
Cooke Company has a fiscal year ending on September 30. Selected data from the September 30 worksheet are presented below.
COOKE COMPANY Worksheet For The Month Ended September 30, 2017 | ||||||
| Trial Balance | Adjusted Trial Balance | |||||
Account Titles | Dr. | Cr. | Dr. | Cr. | ||
Cash | 37,400 | 37,400 | ||||
Supplies | 18,600 | 4,200 | ||||
Prepaid Insurance | 31,900 | 3,900 | ||||
Land | 80,000 | 80,000 | ||||
Equipment | 120,000 | 120,000 | ||||
Accumulated Depreciation—Equipment | 36,200 | 42,000 | ||||
Accounts Payable | 14,600 | 14,600 | ||||
Unearned Service Revenue | 2,700 | 700 | ||||
Mortgage Payable | 50,000 | 50,000 | ||||
Common Stock | 107,700 | 107,700 | ||||
Retained Earnings, Sept. 1, 2017 | 2,000 | 2,000 | ||||
Dividends | 14,000 | 14,000 | ||||
Service Revenue | 278,500 | 280,500 | ||||
Salaries and Wages Expense | 109,000 | 109,000 | ||||
Maintenance and Repairs Expense | 30,500 | 30,500 | ||||
Advertising Expense | 9,400 | 9,400 | ||||
Utilities Expenses | 16,900 | 16,900 | ||||
Property Tax Expense | 18,000 | 21,000 | ||||
Interest Expense | 6,000 |
| 12,000 | |||
Totals | 491,700 | 491,700 | ||||
Insurance Expense | 28,000 | |||||
Supplies Expense | 14,400 | |||||
Interest Payable | 6,000 | |||||
Depreciation Expense | 5,800 | |||||
Property Taxes Payable |
| 3,000 | ||||
Totals | 506,500 | 506,500 | ||||
Instructions
(a) Prepare a complete worksheet.
(b) Prepare a classified balance sheet. (Note: $10,000 of the mortgage payable is due for payment in the next fiscal year.)
(c) Journalize the adjusting entries using the worksheet as a basis.
d) Journalize the closing entries using the worksheet as a basis.
(e) Prepare a post-closing trial balance.
Indicate whether each of the following items is a real or nominal account and whether it appears in the balance sheet or the income statement.
(a) Prepaid Rent.
(b) Salaries and Wages Payable.
(c) Inventory.
(d) Accumulated Depreciation—Equipment.
(e) Equipment.
(f) Service Revenue.
(g) Salaries and Wages Expense.
(h) Supplies.
(L07) (Cash and Accrual Basis) Wayne Rogers Corp. maintains its financial records on the cash basis of accounting. Interested in securing a long-term loan from its regular bank, Wayne Rogers Corp. requests you as its independent to convert its cash-basis income statement data to the accrual basis. You are provided with the following summarized data covering 2016, 2017, and 2018
2016 | 2017 | 2018 | |
Cash receipts from sale | |||
On 2016 sales | \(295,000 | \)160,000 | \(30,000 |
On 2017 sales | 0 | \)355,000 | \(90,000 |
On 2018 sales | 0 | 0 | \)408,000 |
Cash payments for expenses: | |||
On 2016 expenses | \(185,000 | \)67,000 | \(25,000 |
On 2017 expenses | \)40,000a | \(160,000 | \)55,000 |
On 2018 expenses | 0 | \(45,000b | \)218,000 |
a Prepayments of 2017 expenses.
b Prepayments of 2018 expenses.
Instructions
(a) Using the data above, prepare abbreviated income statements for the years 2016 and 2017 on the cash basis.
(b) Using the data above, prepare abbreviated income statements for the years 2016 and 2017 on the accrual basis.
What differences are there between the trial balance before closing and the trial balance after closing with respect to the following accounts?
a) Accounts payable
b) Expense accounts
c) Revenue accounts
d) Retained Earnings account
e) Cash
Do the following events represent business transactions?
Explain your answer in each case
What do you think about this solution?
We value your feedback to improve our textbook solutions.
Explanations 
Textbooks 
Exams 
GCSE 
IGCSE 
AS 
A Level 
International A Level 
University Admissions Tests 
Flashcards 
Vaia AI 
Notes 
Study Plans 
Study Sets 
Find a job 
Find a degree 
Student Deals 
Magazine 
Mobile App