Fundamentals of Financial Accounting
5th Edition
ISBN: 9780078025914
Author: Fred Phillips Associate Professor, Robert Libby, Patricia Libby
Publisher: McGraw-Hill Education
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Chapter 3, Problem 3.14ME
Preparing Accrual Basis
Junktrader is an online company that specializes in matching buyers and sellers of used items. Buyers and sellers can purchase a membership with Junktrader, which provides them advance notice of potentially attractive offers. Prepare journal entries for the following transactions, which occurred during a recent month, and determine Junktrader’s preliminary net income.
- a. Junktrader provided online advertising services for another company for $200 on account.
- b. On the last day of the month, Junktrader paid $50 cash to run an ad promoting the company’s services. The ad ran that day in the local newspaper.
- c. Received $200 cash in membership fees for the month from new members.
- d. Received an electricity bill for $85 for usage this month. The bill will be paid next month.
- e. Billed a customer $180 for helping sell some junk. Junktrader expects to receive the customer’s payment by the end of next month.
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In November Year 2 your accounting firm placed a one-time website advertisement with Today’s CPA. This is your first ad with this vendor. You pay for the one-time advertising with your company’s Citibank Visa credit card. Below is the transaction you completed for this purchase. If you ran the report Transaction List by Vendor, for all dates, what dollar amount will appear under the vendor Today’s CPA? Why?
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The following select account data is taken from the records of Reese Industries for 2019.
Sales
Merchandise inventory
sales discounts
interest expense
Sales return and
allowances
Interest revenue
Cost of goods sold
Rent expense
Depreciation expense:
office equipment
Insurance expense
Advertising expense
Accounts receivable
Office supplies
expense
rent revenue
sales salaries expense
accounts payable
common stock
Marketing expense
640,363
582,620
58,040
3,677
90,232
10,232
224,598
15,080
3,200
2,450
12,906
100,440
1,600
23,622
30,410
135,404
59,419
31,000
1. Use the data provided to compute net sales for 2019.
2. Prepare a simple income statement for the year ended December 31, 2019.
3.Compute the gross margin for 2019.
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Star Company uses a purchases journal to record all purchases on account, including merchandise purchases. The company purchases merchandise and office supplies on a frequent basis. On November 12, Star Company purchased merchandise on account from Moon Company for $6,500, terms 2/10, n/30. How would this transaction be recorded in the purchases journal of Star Company?
Chapter 3 Solutions
Fundamentals of Financial Accounting
Ch. 3 - Prob. 1QCh. 3 - When accounting was developed in the 14th and 15th...Ch. 3 - Define accrual basis accounting and contrast it...Ch. 3 - Prob. 4QCh. 3 - Prob. 5QCh. 3 - Prob. 6QCh. 3 - Explain the expense recognition principle...Ch. 3 - Explain why stockholders equity is increased by...Ch. 3 - Explain why revenues are recorded as credits and...Ch. 3 - Complete the following table by entering either...
Ch. 3 - Complete the following table by entering either...Ch. 3 - Prob. 12QCh. 3 - Prob. 13QCh. 3 - What is the difference between Accounts Receivable...Ch. 3 - What is the difference between Accounts Payable...Ch. 3 - For each of the following situations, indicate...Ch. 3 - Prob. 17QCh. 3 - Which of the following items is not a specific...Ch. 3 - Prob. 2MCCh. 3 - Prob. 3MCCh. 3 - Prob. 4MCCh. 3 - If a company incorrectly records a payment as an...Ch. 3 - Prob. 6MCCh. 3 - Prob. 7MCCh. 3 - Prob. 8MCCh. 3 - Webby Corporation reported the following amounts...Ch. 3 - Prob. 10MCCh. 3 - Prob. 3.1MECh. 3 - Identifying Accrual Basis Revenues The following...Ch. 3 - Identifying Accrual Basis Expenses The following...Ch. 3 - Recording Accrual Basis Revenues For each of the...Ch. 3 - Recording Accrual Basis Expenses For each of the...Ch. 3 - Prob. 3.6MECh. 3 - Prob. 3.7MECh. 3 - Prob. 3.8MECh. 3 - Prob. 3.9MECh. 3 - Identifying Accrual Basis Expenses The following...Ch. 3 - Prob. 3.11MECh. 3 - Recording Accrual Basis Expenses For each of the...Ch. 3 - Prob. 3.13MECh. 3 - Preparing Accrual Basis Journal Entries for...Ch. 3 - Preparing Accrual Basis Journal Entries for...Ch. 3 - Prob. 3.16MECh. 3 - Determining the Accounting Equation Effects of...Ch. 3 - Prob. 3.18MECh. 3 - Preparing an Income Statement and Calculating Net...Ch. 3 - Preparing Financial Statements from a Trial...Ch. 3 - Preparing an Income Statement and Calculating Net...Ch. 3 - Prob. 3.22MECh. 3 - Calculating and Interpreting Net Profit Margin...Ch. 3 - Prob. 3.1ECh. 3 - Matching Definitions with Terms Match each...Ch. 3 - Identifying Accrual Basis Revenues According to...Ch. 3 - Identifying Accrual Basis Revenues According to...Ch. 3 - Identifying Accrual Basis Expenses Under accrual...Ch. 3 - Identifying Accrual Basis Expenses Under accrual...Ch. 3 - Determining Accounting Equation Effects and Net...Ch. 3 - Determining Accounting Equation Effects and Net...Ch. 3 - Recording Journal Entries and Determining Net...Ch. 3 - Prob. 3.10ECh. 3 - Recording Journal Entries and Determining Net...Ch. 3 - Recording and Posting Accrual Basis Journal...Ch. 3 - Prob. 3.13ECh. 3 - Analyzing Transactions from the Perspectives of...Ch. 3 - Prob. 3.15ECh. 3 - Determining Accounting Equation Effects of Several...Ch. 3 - Preparing Journal Entries For each of the...Ch. 3 - Prob. 3.18ECh. 3 - Creating an Unadjusted Trial Balance Based on the...Ch. 3 - Inferring Transactions, Creating Financial...Ch. 3 - Determining the Effects of Various Transactions EZ...Ch. 3 - COACHED PROBLEMS Recording Nonquantitative Journal...Ch. 3 - Prob. 3.2CPCh. 3 - Prob. 3.3CPCh. 3 - Prob. 3.4CPCh. 3 - Prob. 3.1PACh. 3 - Recording Journal Entries Diana Mark is the...Ch. 3 - Analyzing the Effects of Transactions Using...Ch. 3 - Prob. 3.4PACh. 3 - Prob. 3.1PBCh. 3 - Prob. 3.2PBCh. 3 - Analyzing the Effects of Transactions Using...Ch. 3 - Analyzing, Journalizing, and Interpreting Business...Ch. 3 - Prob. 3.1COPCh. 3 - SKIL_S DEVELOPMENT CASES Finding Financial...Ch. 3 - Prob. 3.2SDCCh. 3 - Prob. 3.4SDCCh. 3 - Ethical Decision Making: A Mini-Case Mike Lynch is...Ch. 3 - Accounting for Business Operations Starting in...
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