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ACC280 Week 2 Q5, 11, 15, & 17 E3-5 E3-12

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Resource: Ch. 3 of Financial Accounting
Prepare written answers to the following assignments from Ch. 3 of Financial Accounting:

·       Questions 5, 11, 15 & 17
·       Exercise E3-5  
·       Exercise E3-12

5. In completing the engagement in question 3, Marsh pays no costs in March, $2,000 in April, and $2,500 in May (incurred in April). How much expense should the firm deduct from revenues in the month when it recognizes the revenue? Why?

11. Explain the differences between depreciation expense and accumulated depreciation

15. A company fails to recognize an expense incurred but not paid. Indicate which of the following accounts is debited and which is credited in the adjusting entry: (a) asset, (b) liability, (c) revenue, or (d) expense.

17. On January 9, a company pays $5,000 for salaries, of which $2,000 was reported as Salaries Payable on December 31. Give the entry to record the payment.

E3-5 Drew Carey Company has the following balances in selected accounts on December 31,

Accounts receivable  -  
Accumulated Depreciation - Equipment  -  
Equipment  7,000
Interest payable  -  
Notes payable  10,000
Prepaid insurance  2,100
Salaries payable  -  
Supplies  2,450
Unearned consulting revenue  40,000
All the accounts have normal balances.The information below has been gathered at December
31, 2008.

1. Drew Carey Company borrowed $10,000 by signing a 12%, one-year note on September 1,
2. A count of supplies on December 31, 2008, indicates that supplies of $800 are on hand.
3. Depreciation on the equipment for 2008 is $1,000.
4. Drew Carey Company paid $2,100 for 12 months of insurance coverage on June 1, 2008.
5. On December 1, 2008, Drew Carey collected $40,000 for consulting services to be performed
from December 1, 2008, through March 31, 2009.
6. Drew Carey performed consulting services for a client in December 2008. The client will be
billed $4,200.
7. Drew Carey Company pays its employees total salaries of $9,000 every Monday for the preceding
5-day week (Monday through Friday). On Monday, December 29, employees were
paid for the week ending December 26. All employees worked the last 3 days of 2008.

Prepare adjusting entries for the seven items described on page 124.

E3-12 Selected accounts of Tabor Company

After analyzing the accounts, journalize (a) the July transactions and (b) the adjusting entries

that were made on July 31. (Hint: July transactions were for cash.)

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