chapter 3 solutions

The double-entry accounting system means

When a corporation pays a note payable and interest,

All of the following accounts are increased on the credit side

Posting is the process of transferring items entered in a general journal to the

How do these prepaid expenses expire?

An accrued expense is an expense

An adjusting entry would never include a

The adjusting entry to record accrued revenue includes a debit to

If the adjusting entry for an accrued expense is not made

The difference between the cost of a depreciable asset and its related contra account, Accumulated Depreciation is referred to as the asset's

The proper sequence of financial statement preparation is

Which type of account is always debited during the closing process

Gordon Corporation had revenues of $2,000,000, expenses of $1,700,000, and dividends of $130,000. When Income Summary is closed to Retained Earnings, the amount of the debit or credit to Retained Earnings is a

In the closing process all of the revenue and expense account balances are transferred to the

The post-closing trial balance consists only of

If the entry to close Income Summary to Retained Earnings includes a credit to Income Summary

Which one of the following accounts would have an amount listed in the credit column of a post-closing trial balance?

If the balances in both accounts receivable and accounts payable decrease during the year

A journal entry to record a receipt of rent revenue in advance will include a

Which of the following statements is associated with the accrual basis of accounting?

The failure to properly record an adjusting entry to accrue an expense will result in an:

Which of the following properly describes a deferral?

The failure to properly record an adjusting entry to accrue a revenue item will result in an:

The omission of the adjusting entry to record depreciation expense will result in an

At the time a company prepays a cost

If, during an accounting period, an expense item has been incurred and consumed but not yet paid for or recorded, then the end-of-period adjusting entry would involve

Which of the following would not be a correct form for an adjusting entry

An accrued revenue can best be described as an amount

An unearned revenue can best be described as an amount

Which of the following statements best describes the purpose of closing entries?

Under the cash basis of accounting, revenues are recorded

When converting from cash basis to accrual-basis accounting, which of the following adjustments should be made to cash receipts from customers to determine accrual basis service revenue?

When converting from cash basis to accrual basis accounting, which of the following adjustments should be made to cash paid for operating expenses to determine accrual basis operating expenses?

reversing entries are

Mune Company recorded journal entries for the declaration of $100,000 of dividends, the $64,000 increase in accounts receivable for services rendered, and the purchase of equipment for $42,000. What net effect do these entries have on owners' equity?

Pappy Corporation received cash of $18,000 on September 1, 2012 for one year's rent in advance and recorded the transaction with a credit to Unearned Rent Revenue. The December 31, 2012 adjusting entry is

Panda Corporation paid cash of $30,000 on June 1, 2012 for one year's rent in advance and recorded the transaction with a debit to Prepaid Rent. The December 31, 2012 adjusting entry is

Tate Company purchased equipment on November 1, 2012 and gave a 3-month, 9% note with a face value of $40,000. The December 31, 2012 adjusting entry is

A company receives interest on a $40,000, 8%, 5-year note receivable each April 1. At December 31, 2012, the following adjusting entry was made to accrue interest receivable: Interest Receivable 2,400 Interest Revenue 2,400 Assuming that the company does not use reversing entries, what entry should be made on April 1, 2013 when the annual interest payment is received?

A company receives interest on a $40,000, 8%, 5-year note receivable each April 1. At December 31, 2012, the following adjusting entry was made to accrue interest receivable: Interest Receivable 2,400 Interest Revenue 2,400 Assuming that the company does use reversing entries, what entry should be made on April 1, 2013 when the annual interest payment is received?

During the first year of Wilkinson Co.'s operations, all purchases were recorded as assets. Supplies in the amount of $25,800 were purchased. Actual year-end supplies amounted to $8,600. The adjusting entry for store supplies will

On June 1, 2012, Nott Corp. loaned Horn $600,000 on a 12% note, payable in five annual installments of $120,000 beginning January 2, 2013. In connection with this loan, Horn was required to deposit $5,000 in a noninterest-bearing escrow account. The amount held in escrow is to be returned to Horn after all principal and interest payments have been made. Interest on the note is payable on the first day of each month beginning July 1, 2012. Horn made timely payments through November 1, 2012. On January 2, 2013, Nott received payment of the first principal installment plus all interest due. At December 31, 2012, Nott's interest receivable on the loan to Horn should be

Colaw Co. pays all salaried employees on a biweekly basis. Overtime pay, however, is paid in the next biweekly period. Colaw accrues salaries expense only at its December 31 year end. Data relating to salaries earned in December 2012 are as follows: Last payroll was paid on 12/26/12, for the 2-week period ended 12/26/12. Overtime pay earned in the 2-week period ended 12/26/12 was $15,000. Remaining work days in 2012 were December 29, 30, 31, on which days there was no overtime. The recurring biweekly salaries total $270,000. Assuming a five-day work week, Colaw should record a liability at December 31, 2012 for accrued salaries of

At December 31, 2012, Sue's Boutique had 1,000 gift certificates outstanding, which had been sold to customers during 2012 for $75 each. Sue's operates on a gross margin of 60% of its sales. What amount of revenue pertaining to the 1,000 outstanding gift certificates should be deferred at December 31, 2012?

Jim Yount, M.D., keeps his accounting records on the cash basis. During 2013, Dr. Yount collected $300,000 from his patients. At December 31, 2012, Dr. Yount had accounts receivable of $40,000. At December 31, 2013, Dr. Yount had accounts receivable of $70,000 and unearned revenue of $10,000. On the accrual basis, how much was Dr. Yount's patient service revenue for 2013?

The income statement of Dolan Corporation for 2012 included the following items: Interest revenue $131,000 Salaries expense 170,000 Insurance expense 15,200 The following balances have been excerpted from Dolan Corporation's balance sheets: December 31, 2012 December 31, 2011 Accrued interest receivable$18,200 $15,000 Accrued salaries payable 17,800 8,400 Prepaid insurance 2200 3000 The cash received for interest during 2012 was