ACC 290 Week 4 Practice Connect Practice Assignment

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attempt 1

1

On June 1, 2019, Cain Company, a new firm, paid $8,400 rent in advance for a seven-month period. The $8,400 was debited to thePrepaid Rent account.

On June 1, 2019, the firm bought supplies for $10,250. The $10,250 was debited to the Supplies account. An inventory of supplies at the end of June showed that items costing $5,960 were on hand.

On June 1, 2019, the firm bought equipment costing $72,900. The equipment has an expected useful life of 9 years and no salvage value. The firm will use the straight-line method of depreciation.

Prepare end-of-June adjusting entries for Cain Company.
Explanation

($8,400 ÷ 7 months = $1,200 per month)

($10,250 − $5,960 = $4,290)

($72,900 ÷ 108 months = $675)

2

The completed worksheet for Cantu Corporation as of December 31, 2019, after the company had completed the first month of operation, appears below.
 

    Trial Balance     Adjustments     Adjusted Trial Balance     Income Statement     Balance Sheet    
Account Name   Debit     Credit     Debit     Credit     Debit     Credit     Debit     Credit     Debit     Credit    
Cash   39,100                       39,100                       39,100          
Accounts Receivable   6,500                       6,500                       6,500          
Supplies   6,050                 3,500     6,050                       2,550          
Prepaid Advertising   10,200                 1,700     10,200                       8,500          
Equipment   42,500                       42,500                       42,500          
Accumulated Depreciation—Equipment                     850           850                       850    
Accounts Payable         6,500                       6,500                       6,500    
Selena Cantu, Capital         54,500                       54,500                       54,500    
Selena Cantu, Drawing   4,100                       4,100                       4,100          
Fees Income         57,750                       57,750           57,750                
Supplies Expense               3,500           3,500           3,500                      
Advertising Expense               1,700           1,700           1,700                      
Depreciation Expense-Equipment               850           850           850                      
Salaries Expense   8,900                       8,900           8,900                      
Utilities Expense   1,400                       1,400           1,400                      
Totals   118,750     118,750     6,050     6,050     119,600     119,600     16,350     57,750     103,250     61,850    
Net Income                                       41,400                 41,400    
                                        57,750     57,750     103,250     103,250    

Required:

Prepare an income statement.

Prepare a statement of owner’s equity. The owner made no additional investments during the month.

Prepare a balance sheet.

Analyze: 
If the adjustment to Prepaid Advertising had been $3,400 instead of $1,700, what net income would have resulted?

3

Assume that a firm reports net income of $45,000 prior to making adjusting entries for the following items: expired rent, $3,500; depreciation expense, $4,100; and supplies used, $1,800.

Assume that the required adjusting entries have not been made. What effect do these errors have on the reported net income?


Explanation

             
Net Income Before Adjustments       $ 45,000  
Less Adjustments:            
Rent Expense $ 3,500        
Depreciation Expense   4,100        
Supplies Expense   1,800        
Total Adjustments for Expenses Not Made         9,400  
Corrected Net Income       $ 35,600  

If the adjusting entries are not made, total expenses will be understated by $9,400.
Net income will be overstated by $9,400.

4

Desoto Company must make three adjusting entries on December 31, 2019.
 

Supplies used, $5,500 (supplies totaling $9,000 were purchased on December 1, 2019, and debited to the Supplies account).

Expired insurance, $4,100; on December 1, 2019, the firm paid $24,600 for six months’ insurance coverage in advance and debitedPrepaid Insurance for this amount.

Depreciation expense for equipment, $2,900.

Required:
Prepare the journal entries for these adjustments and post the entries to the general ledger accounts

5

The adjusted trial balance of University Book Store as of November 30, 2019, after the firm’s first month of operations, appears below.

Appropriate adjustments have been made for the following items:
 

Supplies used during the month, $2,900.

Expired rent for the month, $3,500.

Depreciation expense for the month, $950.

Account Name   Debit     Credit  
Cash $ 23,075        
Accounts Receivable   3,812        
Supplies   4,600        
Prepaid Rent   21,000        
Equipment   27,500        
Accumulated Depreciation-Equipment       $ 950  
Accounts Payable         9,000  
Ruby Darbandi, Capital         41,837  
Ruby Darbandi, Drawing   4,000        
Fees Income         48,550  
Depreciation Expense-Equipment   950        
Rent Expense   3,500        
Salaries Expense   8,500        
Supplies Expense   2,900        
Utilities Expense   500        
Totals $ 100,337   $ 100,337  

Required:

Record the adjusting entries in the Adjustments columns.

Complete the Trial Balance columns of the worksheet prior to making the adjusting entries.

Analyze: 
What was the balance of Prepaid Rent prior to the adjusting entry for expired rent?

6

On January 31, 2019, the general ledger of Palmer Company showed the following account balances.
 

ACCOUNTS  
Cash 31,500
Accounts Receivable 11,250
Supplies 4,500
Prepaid Insurance 4,100
Equipment 45,750
Accum. Depr.—Equip. 0
Accounts Payable 8,350
Sadie Palmer, Capital 40,975
Fees Income 58,500
Depreciation Exp.—Equip. 0
Insurance Expense 0
Rent Expense 5,300
Salaries Expense 5,425
Supplies Expense 0

Additional information:
 

Supplies used during January totaled $2,850.

Expired insurance totaled $1,025.

Depreciation expense for the month was $925.

Complete the worksheet through the Adjusted Trial Balance section. Assume that every account has the normal debit or credit balance. The worksheet covers the month of January.

attempt 2

1

On January 31, 2019, the general ledger of Palmer Company showed the following account balances.
 

ACCOUNTS  
Cash 31,500
Accounts Receivable 11,250
Supplies 4,500
Prepaid Insurance 4,100
Equipment 45,750
Accum. Depr.—Equip. 0
Accounts Payable 8,350
Sadie Palmer, Capital 40,975
Fees Income 58,500
Depreciation Exp.—Equip. 0
Insurance Expense 0
Rent Expense 5,300
Salaries Expense 5,425
Supplies Expense 0

Additional information:
 

Supplies used during January totaled $2,850.

Expired insurance totaled $1,025.

Depreciation expense for the month was $925.


Complete the worksheet through the Adjusted Trial Balance section. Assume that every account has the normal debit or credit balance. The worksheet covers the month of January.

2

Desoto Company must make three adjusting entries on December 31, 2019.
 

Supplies used, $5,500 (supplies totaling $9,000 were purchased on December 1, 2019, and debited to the Supplies account).

Expired insurance, $4,100; on December 1, 2019, the firm paid $24,600 for six months’ insurance coverage in advance and debitedPrepaid Insurance for this amount.

Depreciation expense for equipment, $2,900.

Required:
Prepare the journal entries for these adjustments and post the entries to the general ledger accounts

3

Assume that a firm reports net income of $45,000 prior to making adjusting entries for the following items: expired rent, $3,500; depreciation expense, $4,100; and supplies used, $1,800.

Assume that the required adjusting entries have not been made. What effect do these errors have on the reported net income?

Explanation

             
Net Income Before Adjustments       $ 45,000  
Less Adjustments:            
Rent Expense $ 3,500        
Depreciation Expense   4,100        
Supplies Expense   1,800        
Total Adjustments for Expenses Not Made         9,400  
Corrected Net Income       $ 35,600  

If the adjusting entries are not made, total expenses will be understated by $9,400.
Net income will be overstated by $9,400.

4

On June 1, 2019, Cain Company, a new firm, paid $8,400 rent in advance for a seven-month period. The $8,400 was debited to thePrepaid Rent account.

On June 1, 2019, the firm bought supplies for $10,250. The $10,250 was debited to the Supplies account. An inventory of supplies at the end of June showed that items costing $5,960 were on hand.

On June 1, 2019, the firm bought equipment costing $72,900. The equipment has an expected useful life of 9 years and no salvage value. The firm will use the straight-line method of depreciation.

Prepare end-of-June adjusting entries for Cain Company.

Explanation

($8,400 ÷ 7 months = $1,200 per month)

($10,250 − $5,960 = $4,290)

($72,900 ÷ 108 months = $675)

5

The completed worksheet for Cantu Corporation as of December 31, 2019, after the company had completed the first month of operation, appears below.
 

    Trial Balance     Adjustments     Adjusted Trial Balance     Income Statement     Balance Sheet    
Account Name   Debit     Credit     Debit     Credit     Debit     Credit     Debit     Credit     Debit     Credit    
Cash   39,100                       39,100                       39,100          
Accounts Receivable   6,500                       6,500                       6,500          
Supplies   6,050                 3,500     6,050                       2,550          
Prepaid Advertising   10,200                 1,700     10,200                       8,500          
Equipment   42,500                       42,500                       42,500          
Accumulated Depreciation—Equipment                     850           850                       850    
Accounts Payable         6,500                       6,500                       6,500    
Selena Cantu, Capital         54,500                       54,500                       54,500    
Selena Cantu, Drawing   4,100                       4,100                       4,100          
Fees Income         57,750                       57,750           57,750                
Supplies Expense               3,500           3,500           3,500                      
Advertising Expense               1,700           1,700           1,700                      
Depreciation Expense-Equipment               850           850           850                      
Salaries Expense   8,900                       8,900           8,900                      
Utilities Expense   1,400                       1,400           1,400                      
Totals   118,750     118,750     6,050     6,050     119,600     119,600     16,350     57,750     103,250     61,850    
Net Income                                       41,400                 41,400    
                                        57,750     57,750     103,250     103,250    

Required:

Prepare an income statement.

Prepare a statement of owner’s equity. The owner made no additional investments during the month.

Prepare a balance sheet.

Analyze: 
If the adjustment to Prepaid Advertising had been $3,400 instead of $1,700, what net income would have resulted?

6

The adjusted trial balance of University Book Store as of November 30, 2019, after the firm’s first month of operations, appears below.

Appropriate adjustments have been made for the following items:
 

Supplies used during the month, $2,900.

Expired rent for the month, $3,500.

Depreciation expense for the month, $950.

Account Name   Debit     Credit  
Cash $ 23,075        
Accounts Receivable   3,812        
Supplies   4,600        
Prepaid Rent   21,000        
Equipment   27,500        
Accumulated Depreciation-Equipment       $ 950  
Accounts Payable         9,000  
Ruby Darbandi, Capital         41,837  
Ruby Darbandi, Drawing   4,000        
Fees Income         48,550  
Depreciation Expense-Equipment   950        
Rent Expense   3,500        
Salaries Expense   8,500        
Supplies Expense   2,900        
Utilities Expense   500        
Totals $ 100,337   $ 100,337  

Required:

Record the adjusting entries in the Adjustments columns.

Complete the Trial Balance columns of the worksheet prior to making the adjusting entries.

Analyze: 
What was the balance of Prepaid Rent prior to the adjusting entry for expired rent?




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