ACC 290T Wk 4 – Practice: Connect Knowledge Check

Exercise 3-7 Preparing adjusting entries LO P1, P3, P4

31. Wages of $7,000 are earned by workers but not paid as of December 31.
32. Depreciation on the company’s equipment for the year is $10,840.
33. The Office Supplies account had a $480 debit balance at the beginning of December. During December, $4,816 of office supplies are purchased. A physical count of supplies at December 31 shows $532 of supplies available.
34. The Prepaid Insurance account had a $5,000 balance at the beginning of December. An analysis of insurance policies shows that $2,900 of unexpired insurance benefits remain at December 31.
35. The company has earned (but not recorded) $650 of interest revenue for the year ended December 31. The interest payment will be received on 10 days after the year-end January 10.
36. The company has a bank loan and has incurred (but not recorded) interest expense of $4,500 for the year ended December 31. The company will pay the interest five days after the year-end on January 5.

For each of the above separate cases, prepare adjusting entries required of financial statements for the year ended (date of) December 31.

GL0302 – Based on Problem 3-3A LO P1, P2, P3, P4, P6

Parker Technical Institute (PTI), a school owned by Paula Parker, provides training to individuals who pay tuition directly to the school. PTI also offers training to groups in off-site locations. Its unadjusted trial balance as of December 31, is found on the trial balance tab. PTI initially records prepaid expenses and unearned revenues in balance sheet accounts. Descriptions of items a through h that require adjusting entries on December 31.

1. An analysis of PTI’s insurance policies shows that $2,650 of coverage has expired.
2. An inventory count shows that teaching supplies costing $3,720 are available at year-end.
3. Annual depreciation on the equipment is $4,600.
4. Annual depreciation on the professional library is $8,600.
5. On September 1, PTI agreed to do five courses for a client for $3,000 each. Two courses will start immediately and finish before the end of the year. Three courses will not begin until next year. The client paid $15,000 cash in advance for all five courses on September 1, and PTI credited Unearned Training Fees.
6. On October 15, PTI agreed to teach a four-month class (beginning immediately) for an executive with payment due at the end of the class. At December 31, $8,500 of the tuition has been earned by PTI.
7. PTI’s two employees are paid weekly. As of the end of the year, two days’ salaries have accrued at the rate of $160 per day for each employee.

1. The balance in the Prepaid Rent account represents rent for December.

GL0301 – Based on the… LO A1, P1, P3

The unadjusted trial balance of the Sweet Homes Company as of December 31, 2019 is found on the trial balance tab. The following information is required to prepare the necessary adjusting entries for the Sweet Homes Company.

• 1) The balance in Prepaid insurance represents a 24-month policy that went into effect on December 1, 2019. Review the unadjusted balance in Prepaid insurance, and prepare the necessary adjusting entry, if any.
• 2) Based on a physical count, supplies on hand total $4,200. Review the unadjusted balance in Supplies, and prepare the necessary adjusting entry, if any.
• 3) The equipment is expected to have a 5-year useful life, and be worth about $11,000 at the end of five years. Review the unadjusted balance in Accumulated depreciation, and prepare the necessary adjusting entry to record the monthly depreciation, if any.
• 4) On December 26, the client paid a $7,200 60-day fee in advance, covering December 27 to February 24. Review the unadjusted balance in Unearned Consulting Revenue, and prepare the necessary adjusting entry, if any.
• 5) Sweet Homes’s employee earns $130 per day for a five-day workweek beginning on Monday and ending on Friday. The employee was last paid on Friday, December 26. Review the unadjusted balance in Salaries expense, and prepare the necessary adjusting entry, if any.
• 6) In the second week of December, Sweet Homes agreed to provide 30 days of consulting services to a local fitness club for a fixed fee of $6,060. The terms of the initial agreement call for Sweet Homes to provide services from December 12, 2019, through January 10, 2020, or 30 days of service. The club agrees to pay Sweet Homes $6,060 on January 10, 2020, when the service period is complete. Review the unadjusted balance in Consulting revenue, and prepare the necessary adjusting entry, if any.

Exercise 3-6 Preparing adjusting entries LO P1, P2, P3

1. Depreciation on the company’s equipment for the year is computed to be $17,000.
2. The Prepaid Insurance account had a $7,000 debit balance at December 31 before adjusting for the costs of any expired coverage. An analysis of the company’s insurance policies showed that $1,590 of unexpired insurance coverage remains.
3. The Office Supplies account had a $230 debit balance at the beginning of December; and $2,680 of office supplies were purchased in December. The December 31 physical count showed $271 of supplies available.
4. One-third of the work related to $15,000 of cash received in advance was performed this period.
5. The Prepaid Rent account had a $5,800 debit balance at December 31 before adjusting for the costs of any expired coverage. An analysis of rental policies showed that $4,210 of rental coverage had expired.
6. Wage expenses of $5,000 have been incurred but are not paid as of December 31.

Prepare adjusting journal entries for the year ended (date of) December 31 for each of these separate situations.