WileyPlus, Accounting Principles, 11e Brief Exercise 3

Brief Exercise 3-2

Moteki Company accumulates the following adjustment data at December 31.
Indicate the type of adjustment (prepaid expenses, accrued revenues and so on), and the status of accounts before adjustment (overstated or understated). (Enter answers in alphabetical order.)

1.		Supplies of $100 are on hand.
2.		Services provided but not recorded total $900.
3.		Interest of $200 has accumulated on a note payable.
4.		Rent collected in advance totaling $650 has been earned.

Item	Type of Adjustment	Account Balances before Adjustment
1.


2.


3.


4.

Warning

Brief Exercise 3-7

The bookkeeper for Bradbury Company asks you to prepare the following accrued adjusting entries at December 31.

1.		Interest on notes payable of $400 is accrued.
2.		Services provided but not recorded total $1,900.
3.		Salaries earned by employees of $900 have not been recorded.

Use the following account titles: Service Revenue, Accounts Receivable, Interest Expense, Interest Payable, Salaries and Wages Expense, and Salaries and Wages Payable. (Credit account titles are automatically indented when the amount is entered. Do not indent manually.)

No.	Date	Account Titles and Explanation	Debit	Credit
1.	Dec. 31

2.	Dec. 31

3.	Dec. 31

Brief Exercise 3-8

The trial balance of Yewlett Company includes the following balance sheet accounts, which may require adjustment. For each account that requires adjustment, indicate the type of adjusting entry (prepaid expenses, unearned revenues, accrued revenues, and accrued expenses) and the related account in the adjusting entry.

Account	Type of Adjustment	Related Account
Accounts Receivable

Prepaid Insurance

Accumulated Depreciation—Equipment

Interest Payable

Unearned Service Revenue

Brief Exercise 3-9

The adjusted trial balance of Parsons Company at December 31, 2014, includes the following accounts: Owner's Capital $15,600, Owner's Drawings $7,000, Service Revenue $37,000, Salaries and Wages Expense $16,000, Insurance Expense $2,000, Rent Expense $4,000, Supplies Expense $1,500, and Depreciation Expense $1,300.
Prepare an income statement for the year.

PARSONS COMPANY Income Statement For the Year Ended December 31, 2014

		$

	$





		$

Exercise 3-3

Primo Industries collected $105,000 from customers in 2014. Of the amount collected, $25,000 was from services performed in 2013. In addition, Primo performed services worth $40,000 in 2014, which will not be collected until 2015.
Primo Industries also paid $72,000 for expenses in 2014. Of the amount paid, $30,000 was for expenses incurred on account in 2013. In addition, Primo incurred $42,000 of expenses in 2014, which will not be paid until 2015.
(a) Compute 2014 cash-basis net income.

Cash-basis net income

(b) Compute 2014 accrual-basis net income.

Accrual-basis net income

Exercise 3-6

Lei Company accumulates the following adjustment data at December 31.

1.		Services provided but not recorded total $1,000.
2.		Supplies of $300 have been used.
3.		Utility expenses of $225 are unpaid.
4.		Services related to Unearned service revenue of $260 were performed
5.		Salaries of $800 are unpaid.
6.		Prepaid insurance totaling $350 has expired.

For each of the above items indicate the following. (Enter answers in alphabetical order.)

(a)		The type of adjustment (prepaid expenses, unearned revenues, accrued revenues, or accrued expenses).
(b)		The status of accounts before adjustment (overstatement or understatement).

Item	Type of Adjustment	Accounts before Adjustment
1.


2.


3.


4.


5.


6.

Exercise 3-13

The trial balances before and after adjustment for Frinzi Company at the end of its fiscal year are presented below.

FRINZI COMPANY Trial Balance August 31, 2014
	Before Adjustment		After Adjustment
	Dr.	Cr.	Dr.	Cr.
Cash	$10,400		$10,400
Accounts Receivable	8,800		10,800
Supplies	2,300		900
Prepaid Insurance	4,000		2,500
Equipment	14,000		14,000
Accumulated Depreciation—Equipment		$ 3,600		$ 4,500
Accounts Payable		5,800		5,800
Salaries and Wages Payable				1,100
Unearned Rent Revenue		1,500		600
Owner’s Capital		15,600		15,600
Service Revenue		34,000		36,000
Rent Revenue		11,000		11,900
Salaries and Wages Expense	17,000		18,100
Supplies Expense			1,400
Rent Expense	15,000		15,000
Insurance Expense			1,500
Depreciation Expense			900
	$71,500	$71,500	$75,500	$75,500

Prepare the adjusting entries that were made. (Credit account titles are automatically indented when the amount is entered. Do not indent manually.)

Date	Account Titles and Explanation	Debit	Credit
Aug. 31

	(To record accrued revenue)
Aug. 31

	(To record supplies used)
Aug. 31

	(To record expired insurance)
Aug. 31

	(To record depreciation)
Aug. 31

	(To record accrued salaries)
Aug. 31

	(To record rent earned)

Warning