Week Three Problems and Exercises

Week Three Problems and Exercises

ACC/290

University of Phoenix

BE4-1

cash / net income
A.
B.
C.
D.
E.
F. / -100
0
0
+800
-2,500
0 / 0
-20
+1,300
0
0
-600

P4-2A

Date / Accounts / Debit / Credit
1. / June 30 / Accounts Rec. / 3,900 / 3,900
2. / 30 / Unearned Service Rev. / 4,100 / 4,100
3. / 30 / Insur. Exp. / 240 / 240
4. / 30 / Utility Exp. / 180
180
5. / 30 / Salary Exp. / 1,250 / 1,250
6. / 30 / Depreciation Exp. / 250 / 250
7. / 30 / Supply Exp. / 1,280 / 1,280
Cash
6/30 …6,850
Accounts Receivable
6/30 …7,000
6/303,900
6/30 …10,900
N/A
Supplies
6/30 …2,000 / 6/301,280
6/30 …720
Prepaid Insurance
6/30 …2,880 / 6/30240
6/30 …2,640
Equipment
6/30 …15,000
Accounts Pay.
6/30 …4,230
6/30180
6/304,410
Salary Pay.
6/301,250
6/30 …1,250
Unearned Service Rev.
6/304,100 / 6/30 …5,200
6/30 …1,100
Common Stock
6/30 …22,000
Salary Exp.
6/30 …4,000
6/301,250
6/30 …5,250
Rent Exp.
6/30 …2,000
Insur. Exp.
6/30 240
6/30 Bal. 240
Utilities Exp.
6/30 180
6/30 … 180
Supply Exp.
6/301,280
6/30 …1,280
Accumulated Depreciation
6/30 250
6/30 … 250
Depreciation Exp.
6/30 250
6/30 … 250
Service Rev.
6/30 …8,300
6/304,100
6/303,900
6/30 …16,300

Vogel Consult.

Adjusted Trial Balance

Debit / Credit
Accounts Rec.
Cash
Prepaid Insur.
Supplies
Equipment
Accumulated Depreciation
Accounts Pay.
Salary Pay.
Unearned Serv. Rev.
Common Stock
Service Rev.
Salary Exp.
Rent Exp.
Depreciation Exp.
Insur. Exp.
Utilities Exp.
Supply Exp. / 10,900
6,850
2,640
720
15,000
5,250
2,000
250
240
180
1,280
$45,310 / 250
4,410
1,250
1,100
22,000
16,300
$45,310

P4-3A

Cash
5/31 …2,500
Prepaid Insur.
5/31 …1,800 / 5/31450
5/31 …1,350
Supplies
5/31 …2,600 / 5/311,550
5/31 …1,050
Land
5/31 …15,000

Mortgage Pay.

Building
5/31 …70,000
Accumulated Depreciation
5/31 300
5/31 … 300
Equipment
5/31 …16,800
Accumulated Depreciation
5/31 250
5/31 … 250
Accounts Pay.
5/31 …4,700
Unearned Rent Rev.
5/312,500 / 5/31 …3,300
5/31 …800
Salary Pay.
5/31 900
5/31 … 900
Interest Pay.
5/31 180
5/31 … 180
5/31 …36,000
Common Stock
5/31 …60,000
Rent Revenue
5/31 …9,000
5/312,500
5/31 …11,500
Salary Exp.
5/31 …3,000
5/31 900
5/31 …3,900
Utilities Exp.
5/31 …800
Advertising Exp.
5/31 … 500
Interest Exp.
5/31 180
5/31 … 180
Insurance Exp.
5/31 450
5/31 … 450
Supplies Exp.
5/311,550
5/31 …1,550
Depreciation Exp.
5/31300
5/31250
5/31 …550

Vang Hotel

Adjusted Trial Balance

Debit / Credit
Cash
Prepaid Insurance
Supplies
Land
Building
Accumulated Depreciation
Equipment
Accumulated Depreciation
Accounts Payable
Unearned Rent Revenue
Salary Payable
Interest Payable
Mortgage Payable
Common Stock
Rent Revenue
Salary Expense
Utilities Expense
Advertising Expense
Interest Expense
Insurance Expense
Supplies Expense
Depreciation Expense / 2,500
1,350
1,050
15,000
70,000
16,800
3,900
800
500
180
450
1,550
550
$114,630 / 300
250
4,700
800
900
180
36,000
60,000
11,500
$114,630

Vang Hotel

Income Statement

Rent revenue 11,500

Salary expense 3,900

Supply expense1,550

Utilities expense800

Depreciation expense 550

Advertising expense 500

Insurance expense 450

Interest expense 180

Total expenses 7,930

Net income 3,570

Vang Hotel

Retained Earnings Statement

Retained earnings, May 1 0

Net income 3,570

Retained earnings, May 31$3,570

Vang Hotel

Balance Sheet

Cash 2,500

Supplies 1,050

Prepaid insurance 1,350

Current assets 4,900

Land15,000

Building 70,000

300 69,700

Equipment16,800

250 16,550 101,250

Total assets 106,150

Accounts payable 4,700

Salaries and wages payable900

Unearned rent revenue800

Interest payable 180

Total current liabilities 6,580

Mortgage payable 36,000

Total liabilities 42,580

Common stock60,000

Retained earnings 3,570

Total equity shareholders’ 63,570

Total liabilities and equity shareholders’

106,150

Accounts closed:

Rent revenue, salary expense, utilities expense, advertising expense, interest expense, insurance expense, supply expense, and depreciation expense.

Answer the following summary question: Commercial accounting and generally accepted accounting principles, generally prescribe the accrual basis of accounting over the cash basis. Describe both bases of accounting and explain the differences.

Accrual accounting is where revenues are recognized when they are earned, not when they are received. In accrual accounting, cash does not need to change hands before the revenue is recognized. Under the cash basis method of accounting, income is not counted until cash is actually received, and expenses are not counted until they are actually paid.