Principles of Accounting
12th Edition
ISBN: 9781133626985
Author: Belverd E. Needles, Marian Powers, Susan V. Crosson
Publisher: Cengage Learning
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Textbook Question
Chapter 3, Problem 2P
On November 30, the end of the current fiscal year, the following information is available to assist Allerton Company’s accountants in making
- a. Allerton’s Supplies account shows a beginning balance of $2,350. Purchases during the year were $4,218. The end-of-year inventory reveals supplies on hand of $1,397.
- b. The Prepaid Insurance account shows the following on November 30:
The beginning balance represents the unexpired portion of a one-year policy purchased in September of the previous year. The July 1 entry represents a new one-year policy, and the October 1 entry represents additional coverage in the form of a three-year policy.
- c. The following table contains the cost and annual
depreciation for buildings and equipment, all of which Allerton purchased before the current year:
- d. On October 1, the company completed negotiations with a client and accepted an advance of $18,600 for services to be performed monthly for a year. The $18,600 was credited to Unearned Services Revenue.
- e. The company calculated that, as of November 30, it had earned $7,000 on an $11,000 contract that would be completed and billed in January.
- f. Among the liabilities of the company is a note payable in the amount of $300,000. On November 30, the accrued interest on this note amounted to $18,000.
- g. On Saturday, December 2, the company, which is on a six-day workweek, will pay its regular employees their weekly wages of $15,000.
- h. On November 29, the company completed negotiations and signed a contract to provide services to a new client at an annual rate of $23,000.
REQUIRED
- 1. Prepare adjusting entries for each item listed above.
- 2. CONCEPT ▶ Explain how the conditions for revenue recognition are applied to transactions e and h.
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Chapter 3 Solutions
Principles of Accounting
Ch. 3 - Prob. 1DQCh. 3 - Will the carrying value of a long-term asset...Ch. 3 - If, at the end of the accounting period, you were...Ch. 3 - Prob. 4DQCh. 3 - Prob. 5DQCh. 3 - Prob. 6DQCh. 3 - Match the concepts of accrual accounting that...Ch. 3 - The Prepaid Insurance account began the year with...Ch. 3 - The Supplies account began the year with a balance...Ch. 3 - Prob. 4SE
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