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Acc557 Week 2 E3-6 E3-7 E3-11 P3-2A

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Acc557 Week 2 E3-6 E3-7 E3-11 P3-2A
Financial Accounting 8e

E3-6 Orwell Company accumulates the following adjustment data at December 31.
1. Services provided but not recorded total $1,420.
2. Supplies of $300 have been used.
3. Utility expenses of $225 are unpaid.
4. Unearned service revenue of $260 is recognized for services performed.
5. Salaries of $800 are unpaid.
6. Prepaid insurance totaling $380 has expired.
For each of the above items indicate the following.
(a) The type of adjustment (prepaid expense, unearned revenue, accrued revenue, or
accrued expense).
(b) The status of accounts before adjustment (overstatement or understatement).

E3-7 The ledger of Villa Rental Agency on March 31 of the current year includes the
selected accounts, shown below, before adjusting entries have been prepared.

Prepare the adjusting entries at March 31, assuming that adjusting entries are made quarterly.
Additional accounts are: Depreciation Expense, Insurance Expense, Interest Payable,
and Supplies Expense

E3-11 A partial adjusted trial balance of Ruiz Company at January 31, 2014, shows the

Answer the following questions, assuming the year begins January 1.
(a) If the amount in Supplies Expense is the January 31 adjusting entry, and $670 of
supplies was purchased in January, what was the balance in Supplies on January 1?
(b) If the amount in Insurance Expense is the January 31 adjusting entry, and the original
insurance premium was for one year, what was the total premium and when was the
policy purchased?
(c) If $3,300 of salaries was paid in January, what was the balance in Salaries and Wages
Payable at December 31, 2013?

P3-2A Lazy River Resort opened for business on June 1 with eight air-conditioned units.
Its trial balance before adjustment on August 31 is as follows

In addition to those accounts listed on the trial balance, the chart of accounts for Lazy
River Resort also contains the following accounts and account numbers: No. 112 Accounts
Receivable, No. 144 Accumulated Depreciation—Buildings, No. 158 Accumulated
Depreciation—Equipment, No. 212 Salaries and Wages Payable, No. 230 Interest Payable,
No. 631 Supplies Expense, No. 711 Depreciation Expense, No. 718 Interest Expense, and
No. 722 Insurance Expense.

Other data:
1. Insurance expires at the rate of $400 per month.
2. A count on August 31 shows $900 of supplies on hand.
3. Annual depreciation is $4,500 on buildings and $2,400 on equipment.
4. Unearned rent revenue of $4,100 was recognized for services performed prior to August 31.
5. Salaries of $400 were unpaid at August 31.
6. Rentals of $3,700 were due from tenants at August 31. (Use Accounts Receivable.)
7. The mortgage interest rate is 9% per year. (The mortgage was taken out on August 1.)

(a) Journalize the adjusting entries on August 31 for the 3-month period June 1–August 31.
(b) Prepare a ledger using the three-column form of account. Enter the trial balance
amounts and post the adjusting entries. (Use J1 as the posting reference.)
(c) Prepare an adjusted trial balance on August 31.
(d) Prepare an income statement and a retained earnings statement for the 3 months ending
August 31 and a balance sheet as of August 31.

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