Principles of Accounting
12th Edition
ISBN: 9781133626985
Author: Belverd E. Needles, Marian Powers, Susan V. Crosson
Publisher: Cengage Learning
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Chapter 3, Problem 4EA
To determine
Prepare necessary
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Prepare the adjusting journal entries to record the credit losses for the following
independent situations.
Required:
(Explanation for the journal entry is NOT required.)
a. The Allowance for Impairment has a S1,500 credit balance prior to adjustment. Net
credit sales during the year are $425,000 and 4% are estimated to be uncollectible.
Assume the income statement approach is used.
b. The Allowance for Impairment has a $300 debit balance prior to adjustment. Based on
an aging schedule of accounts receivable prepared on December 31, $18,100 of accounts
receivable are estimated to be uncollectible. Assume the statement of financial position
approach is used.
c. Explain how the transaction in (b) affects the accounting equation.
There are 6 Journal entry’s
1. Record the adjusting entry for insurance expense expired during the period.
2. Record the adjusting entry for depreciation expense for the period.
3. Record the adjusting entry for supplies used during the period.
4. Record the adjusting entry for interest earned and receivable on the
outstanding notes receivable for the period.
5. Record the adjusting entry for services performed, for which customers had
previously paid in advance.
6. Record the adjusting entry for services performed, which are not yet billed or
recorded
Reviewing insurance policies revealed that a single policy was purchased on August 1, for one year’s coverage, in the amount of $6,000. There was no previous balance in the Prepaid Insurance account at that time. Based on the information provided:
A. Make the December 31 adjusting journal entry to bring the balances to correct. If an amount box does not require an entry, leave it blank.
B. Show the impact that these transactions had. If an amount box does not require an entry, leave it blank.
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
Ch. 3 - Prob. 5SECh. 3 - During the month of August, deposits in the amount...Ch. 3 - Prob. 7SECh. 3 - Malesherbes Companys adjusted trial balance on...Ch. 3 - Prob. 9SECh. 3 - Prob. 10SECh. 3 - Carlos Companys accountant makes the assumptions...Ch. 3 - Four conditions must be met before revenue should...Ch. 3 - Prob. 3EACh. 3 - Prob. 4EACh. 3 - Prob. 5EACh. 3 - Prob. 6EACh. 3 - Prob. 7EACh. 3 - Prob. 8EACh. 3 - Prepare year-end adjusting entries for each of the...Ch. 3 - Prob. 10EACh. 3 - Prob. 11EACh. 3 - Wipro Companys income statement included the...Ch. 3 - At the end of the first three months of operation,...Ch. 3 - On November 30, the end of the current fiscal...Ch. 3 - Kinokawa Consultants Companys trial balance on...Ch. 3 - Hertz Limo Service was organized to provide...Ch. 3 - At the end of its fiscal year, Berwyn Cleaners...Ch. 3 - Brave Advisors Services trial balance on December...Ch. 3 - Prob. 7PCh. 3 - Prob. 8PCh. 3 - Prob. 9APCh. 3 - On March 31, the end of the current fiscal year,...Ch. 3 - Lee Technology Corporations trial balance on...Ch. 3 - Prob. 12APCh. 3 - Prob. 13APCh. 3 - Scoop Consulting Services trial balance on...Ch. 3 - Prob. 15APCh. 3 - Prob. 16APCh. 3 - Never Flake Company provided a rust-prevention...Ch. 3 - Prob. 2CCh. 3 - Prob. 3CCh. 3 - Prob. 4CCh. 3 - Prob. 5CCh. 3 - Prob. 6C
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- Reviewing insurance policies revealed that a single policy was purchased on August 1, for one year’s coverage, in the amount of $6,000. There was no previous balance in the Prepaid Insurance account at that time. Based on the information provided: As of December 31, what is the amount of prepaid insurance that has expired? What account is debited in the adjusting entry? What account is credited in the adjusting entry? What is the remaining balance of prepaid insurance?arrow_forwardReviewing insurance policies revealed that a single policy was purchased on October 1st, for one year's coverage, in the amount of $1,200. There was no previous balance in the prepaid insurance account at that time. Based on the information provided: Make the December 31st adjusting journal entry to bring the balance to correct Insurance Expense?- Prepaid Insurance?- What is the remaining balance for the prepaid insurance on December 31st?arrow_forwardWhich of the following types of adjusting entries would result in a decrease in the amount of a one-year insurance policy premium reported on the balance sheet? Select one: O a. Prepaid expense b. Accrued expense C. Accrued revenue d. Unearned revenuearrow_forward
- Determine the amount to be added to Allowance for Doubtful Accounts in each of the following cases and indicate the ending balance in each case. a. Credit balance of $460 in Allowance for Doubtful Accounts just prior to adjustment. Analysis of Accounts Receivable indicates uncollectible receivables of $7,040. Amount added Ending balance b. Credit balance of $460 in Allowance for Doubtful Accounts just prior to adjustment. Uncollectible receivables are estimated at 3% of credit sales, which totaled $1,009,000 for the year. Amount added Ending balancearrow_forwardThe prepaid insurance account had a balance of $5,300 at the beginning of the year. The account was debited for $5,900 for premiums on policies purchased during the year. Journalize the adjusting entry required under each of the following alternatives for determining the amount of the adjustment: If an amount box does not require an entry, leave it blank. Question Content Area a. The amount of unexpired insurance applicable to future periods is $1,000. blank Insurance Expense Insurance Expense Prepaid Insurance-- answer Prepaid Insurance-- answer another question Selected account balances before adjustment for Intuit Realty at November 30, the end of the current year, follow: Debits Credits Accounts Receivable $73,830 Equipment 114,000 Accumulated Depreciation - Equipment $11,370 Prepaid Rent 9,300 Supplies 2,210 Wages Payable _ Unearned Fees 10,190 Fees Earned 431,170 Wages Expense…arrow_forwardReviewing insurance policies revealed that a single policy was purchased on March 1, for one year's coverage, in the amount of $9,000. There was no previous balance in the Prepaid Insurance account at that time. Based on the information provided, Make the December 31 adjusting journal entry to bring the balances to correct. Show the impact that these transactions had.arrow_forward
- The prepaid insurance account had a balance of $7,210 at the beginning of the year. The account was debited for $22,530 for premiums on policies purchased during the year. Journalize the adjusting entry required under each of the following alternatives for determining the amount of the adjustment: (a) the amount of unexpired insurance applicable to future periods is $8,505; (b) the amount of insurance expired during the year is $21,235. Refer to the Chart of Accounts for exact wording of account titles.arrow_forwardThe prepaid insurance account had a balance of $5,300 at the beginning of the year. The account was debited for $5,900 for premiums on policies purchased during the year. Journalize the adjusting entry required under each of the following alternatives for determining the amount of the adjustment: If an amount box does not require an entry, leave it blank. Question Content Area a. The amount of unexpired insurance applicable to future periods is $1,000. blank Insurance Expense Insurance Expense Prepaid Insurance Prepaid Insurancearrow_forwardWhich of the following is the proper adjusting entry, based on a prepaid insurance account balance before adjustment of $13,651 and unexpired insurance of $4,889, for the fiscal year ending on April 30?arrow_forward
- Hunter, inc., analyzed it’s accounts receivable balances at December 31, and arrived at the aged balances listed below, along with the percentage that is estimated to be uncollectible. The company handles credit losses using the allowance method. The credit balance of the allowance for doubtful accounts is $820 on December 31, before any adjustments. A. Prepare the adjusting entry for estimated credit losses on December 31. B. Prepare the journal entry to write off the Rose company’s account on April 10 of the following year in the amount of $650.arrow_forwardThe prepaid insurance account had a balance of $7,155 at the beginning of the year. The account was debited for $22,025 for premiums on policies purchased during the year, ending on March 31. Journalize the adjusting entry required under each of the following alternatives for determining the amount of the adjustment: (a) the amount of unexpired insurance applicable to future periods is $8,765; (b) the amount of insurance expired during the year is $20,415. Refer to the Chart of Accounts for exact wording of account titles.arrow_forwardReviewing insurance policies revealed that a single policy was purchased on August 1, for one year’s coverage, in the amount of $6,000. There was no previous balance in the Prepaid Insurance account at that time. Based on the information provided: Make the initial journal entry for the purchase of the single insurance policy: DR a) Cashb) Prepaid Insurancec) Insurance Expensed) Accounts Payable a) $2,500b) $3,500c) $6,000 CR a) Cashb) Prepaid Insurancec) Insurance Expensed) Accounts Payable a) $2,500b) $3,500c) $6,000 Make the December 31 adjusting journal entry to bring the balances to correct: DR a) Insurance Expenseb) Prepaid Insurancec) Cashd) Accounts Payable a) $3,500b) 6,000c) $2,500 CR a) Insurance Expenseb) Prepaid Insurancec) Cashd) Accounts Payable a) $3,500b) 6,000c) $2,500arrow_forward
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