Financial Accounting Connect Access Card
Financial Accounting Connect Access Card
5th Edition
ISBN: 9781260159622
Author: J. David Spiceland
Publisher: Mcgraw-Hill
bartleby

Videos

Question
Book Icon
Chapter 3, Problem 12E

1.

To determine

Record the adjusting entry for deferred service revenue.

1.

Expert Solution
Check Mark

Answer to Problem 12E

Adjusting entry for unearned service revenue is as follows:

DateAccounts title and explanationPost Ref.Debit ($)Credit ($)
December 31, 2021Deferred Revenue2,000
     Service Revenue2,000
(To record the adjustment of revenue account.)

Table (1)

Explanation of Solution

Adjusting entries:

Adjusting entries refers to the entries that are made at the end of an accounting period in accordance with revenue recognition principle, and expenses recognition principle.  The purpose of adjusting entries is to adjust the revenue, and the expenses during the period in which they actually occurs.

Working Note:

Calculate the service revenue.

(Service revenue for one month (December))=(Deferred revenue received in advanceNumber of months for which revenue is received)=$4,0002=$2,000

Following is the rules of debit and credit of above transaction:

  • Deferred Revenue is a liability account. The liability is decreased and therefore, debit deferred revenue account with $2,000.
  • Service Revenue is a stockholders’ equity account. The service revenue increases the stockholder’s equity. Therefore, credit Service Revenue account with $2,000.

2.

To determine

Record the adjusting entry for prepaid insurance.

2.

Expert Solution
Check Mark

Answer to Problem 12E

Adjusting entry for prepaid Insurance is as follows:

DateAccounts title and explanationPost Ref.Debit ($)Credit ($)
December 31, 2021Insurance expense ($13,200×612months)6,600
     Prepaid Insurance6,600
(To record the insurance expense incurred at the end of the accounting year)

Table (2)

Explanation of Solution

Adjusting entries:

Adjusting entries refers to the entries that are made at the end of an accounting period in accordance with revenue recognition principle, and expenses recognition principle.  The purpose of adjusting entries is to adjust the revenue, and the expenses during the period in which they actually occurs.

Following is the rules of debit and credit of above transaction:

  • Insurance expense is an expense, and it decreased the value of stockholder’s equity. Therefore, it is debited.
  • Prepaid insurance is an asset account. There is a decrease in assets, therefore it is credited.

3.

To determine

Record the adjusting entry for salaries expense incurred at the end of the accounting year.

3.

Expert Solution
Check Mark

Answer to Problem 12E

Adjusting entry for salaries expense is as follows:

DateAccounts title and explanationPost Ref.Debit ($)Credit ($)
December 31, 2021Salaries expense3,000
Salaries payable3,000
(To record the adjustment made for salaries payable.)

Table (3)

Explanation of Solution

Adjusting entries:

Adjusting entries refers to the entries that are made at the end of an accounting period in accordance with revenue recognition principle, and expenses recognition principle.  The purpose of adjusting entries is to adjust the revenue, and the expenses during the period in which they actually occurs.

Following is the rules of debit and credit of above transaction:

  • Salaries expense is an expense, and it decreased the value of stockholder’s equity. Therefore, it is debited.
  • Salaries payable is a liability account. There is a decrease in liability, therefore it is credited.

4.

To determine

Record the adjusting entry for interest expense incurred at the end of the accounting year.

4.

Expert Solution
Check Mark

Answer to Problem 12E

Adjusting entry for interest expense is as follows:

DateAccounts title and explanationPost Ref.Debit ($)Credit ($)
December 31, 2021Interest Expense250
Interest Payable250
(To record the adjustment made for interest payable.)

Table (4)

Explanation of Solution

Adjusting entries:

Adjusting entries refers to the entries that are made at the end of an accounting period in accordance with revenue recognition principle, and expenses recognition principle.  The purpose of adjusting entries is to adjust the revenue, and the expenses during the period in which they actually occurs.

Working Note:

Calculate the interest expense.

Interest expense=(Principal amount×Interest rate×Time period(September to December)Total months in a year)=$15,000×0.10×212=$250

Following is the rules of debit and credit of above transaction:

  • Interest expense decreases the value of stockholders’ equity. Hence, it is debited.
  • Interest payable increases the liability account. Therefore, credit interest payable account.

5.

To determine

Record the adjusting entry for supplies expense.

5.

Expert Solution
Check Mark

Answer to Problem 12E

Adjusting entry for supplies expense is as follows:

DateAccounts title and explanationPost Ref.Debit ($)Credit ($)
December 31, 2021Supplies expense3,900
     Supplies3,900
(To record the supplies expense incurred at the end of the accounting year)

Table (5)

Explanation of Solution

Adjusting entries:

Adjusting entries refers to the entries that are made at the end of an accounting period in accordance with revenue recognition principle, and expenses recognition principle.  The purpose of adjusting entries is to adjust the revenue, and the expenses during the period in which they actually occurs.

Working Note:

Calculate the supplies expense.

Supplies expense = {Supplies at beginning of the year+Supplies purchased – Supplies on hand at the end of first year}=$1,000+$3,400–$500=$3,900

Following is the rules of debit and credit of above transaction:

  • Supplies expense is an expense, and it decreases the value of stockholder’s equity. Therefore, it is debited.
  • Supplies are the asset account. There is a decrease in assets, therefore it is credited.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Chapter 3 Solutions

Financial Accounting Connect Access Card

Ch. 3 - Prob. 11SSQCh. 3 - Prob. 12SSQCh. 3 - Prob. 13SSQCh. 3 - Prob. 14SSQCh. 3 - Prob. 15SSQCh. 3 - After completing each requirement, check your...Ch. 3 - Applying Excel #3-2 A company reports the...Ch. 3 - 1. Discuss the major principle that describes...Ch. 3 - Prob. 2RQCh. 3 - Prob. 3RQCh. 3 - Prob. 4RQCh. 3 - LO3–2 Rip Side of Question 7 5. Executive Lawn...Ch. 3 - Prob. 6RQCh. 3 - Prob. 7RQCh. 3 - Prob. 8RQCh. 3 - Prob. 9RQCh. 3 - Prob. 10RQCh. 3 - Prob. 11RQCh. 3 - Prob. 12RQCh. 3 - Prob. 13RQCh. 3 - Prob. 14RQCh. 3 - Prob. 15RQCh. 3 - Prob. 16RQCh. 3 - LO3–3 17. Global Printing publishes several types...Ch. 3 - Prob. 18RQCh. 3 - Prob. 19RQCh. 3 - Prob. 20RQCh. 3 - Prob. 21RQCh. 3 - Prob. 22RQCh. 3 - Prob. 23RQCh. 3 - Prob. 24RQCh. 3 - Prob. 25RQCh. 3 - Prob. 26RQCh. 3 - Prob. 27RQCh. 3 - Prob. 28RQCh. 3 - Determine revenues to be recognized (LO3–1) BE3–1...Ch. 3 - BE3–2 Below are transactions for Bronco...Ch. 3 - BE3–3 Hoya Corporation reports the following...Ch. 3 - Analyze the impact of transactions on the balance...Ch. 3 - Determine accrual-basis and cash-basis net Income...Ch. 3 - BE3–6 At the beginning of May, Golden Gopher...Ch. 3 - Record the adjusting entry for prepaid rent...Ch. 3 - BE3–8 Mountaineer Excavation operates in a...Ch. 3 - Record the adjusting entry for depreciation...Ch. 3 - Record the adjusting entry for deferred revenue...Ch. 3 - Prob. 11BECh. 3 - Prob. 12BECh. 3 - Prob. 13BECh. 3 - BE3-14 For each of the following accounts,...Ch. 3 - Prob. 15BECh. 3 - Prob. 16BECh. 3 - Prob. 17BECh. 3 - Prob. 18BECh. 3 - Prob. 19BECh. 3 - BE3–20 The year-end adjusted trial balance of...Ch. 3 - E3–1 Consider the following...Ch. 3 - E3–2 Consider the following...Ch. 3 - E3–3 Refer to the situations discussed in...Ch. 3 - Differentiate cash-basis expenses from...Ch. 3 - E3-5 During the course of your examination of the...Ch. 3 - E3–6 Listed below are all the steps in the...Ch. 3 - Record adjusting entries (LO3-3) E3-7 Golden Eagle...Ch. 3 - E3-8 Consider the following transactions for...Ch. 3 - Calculate the effects on net income of not...Ch. 3 - E3-10 Consider the following situations for...Ch. 3 - Calculate the effects on the accounting equation...Ch. 3 - Prob. 12ECh. 3 - Prob. 13ECh. 3 - E3-14 The December 31, 2021, unadjusted trial...Ch. 3 - Prob. 15ECh. 3 - E3-16 The December 31, 2021, adjusted trial...Ch. 3 - E3-17 Seminoles Corporation’s fiscal year-end is...Ch. 3 - 2. Calculate the ending balance of Retained...Ch. 3 - E3-19 Refer to the adjusted trial balance in...Ch. 3 - Prob. 20ECh. 3 - Prob. 21ECh. 3 - Prob. 1PACh. 3 - Convert cash-basis accounting to accrual-basis...Ch. 3 - Record adjusting entries (LO3-3) P3-3A The...Ch. 3 - Prob. 4PACh. 3 - Prob. 5PACh. 3 - P3–6A The year-end financial statements of...Ch. 3 - Prob. 7PACh. 3 - Prob. 8PACh. 3 - Prob. 9PACh. 3 - Prob. 1PBCh. 3 - Prob. 2PBCh. 3 - P3-3B The information necessary for preparing the...Ch. 3 - P3-4B Grasshopper Lawn Service provides general...Ch. 3 - P3-5B Orange Designs provides consulting services...Ch. 3 - Prob. 6PBCh. 3 - Prob. 7PBCh. 3 - Prob. 8PBCh. 3 - Prob. 9PBCh. 3 - Prob. 1APCh. 3 - American Eagle Outfitters, Inc. AP3-2 Financial...Ch. 3 - The Buckle, Inc. AP3-3 Financial information for...Ch. 3 - Prob. 4APCh. 3 - AP3-5 You have recently been hired as the...Ch. 3 - Prob. 7AP
Knowledge Booster
Background pattern image
Accounting
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.
Recommended textbooks for you
Text book image
FINANCIAL ACCOUNTING
Accounting
ISBN:9781259964947
Author:Libby
Publisher:MCG
Text book image
Accounting
Accounting
ISBN:9781337272094
Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:Cengage Learning,
Text book image
Accounting Information Systems
Accounting
ISBN:9781337619202
Author:Hall, James A.
Publisher:Cengage Learning,
Text book image
Horngren's Cost Accounting: A Managerial Emphasis...
Accounting
ISBN:9780134475585
Author:Srikant M. Datar, Madhav V. Rajan
Publisher:PEARSON
Text book image
Intermediate Accounting
Accounting
ISBN:9781259722660
Author:J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:McGraw-Hill Education
Text book image
Financial and Managerial Accounting
Accounting
ISBN:9781259726705
Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:McGraw-Hill Education
Accounting Basics Explained Through a Story; Author: Leila Gharani;https://www.youtube.com/watch?v=VYNTBWBqncU;License: Standard Youtube License