ACC 290 Week 4 Practice: Connect® Knowledge Check

Complete the Week 4 Knowledge Check in Connect®.

Note: You have unlimited attempts available to complete this practice assignment. The highest scored attempt will be recorded.

These assignments have earlier due dates, so plan accordingly.

Grades must be transferred manually to eCampus by your instructor. Don’t worry, this might happen after your due date.

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

1. 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.

2

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

Required:

1. Prepare an income statement.
2. Prepare a statement of owner’s equity. The owner made no additional investments during the month.
3. 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?

4

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

1. Supplies used, $5,500 (supplies totaling $9,000 were purchased on December 1, 2019, and debited to the Suppliesaccount).
2. Expired insurance, $4,100; on December 1, 2019, the firm paid $24,600 for six months’ insurance coverage in advance and debitedPrepaid Insurancefor this amount.
3. 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:

900. Supplies used during the month, $2,900.
901. Expired rent for the month, $3,500.
902. Depreciation expense for the month, $950.

Required:

2. Record the adjusting entries in the Adjustments columns.
3. 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.

Additional information:

850. Supplies used during January totaled $2,850.
851. Expired insurance totaled $1,025.
852. 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.