Accounting Chapter 4 Homework Flashcards

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Questions and Answers

What is the adjusting entry for wages expense at Trotman's Variety Store?

Debit: Wages Expense: 2700; Credit: Wages Payable: 2700

What is the adjusting entry for office supplies expense at Trotman's Variety Store?

Debit: Office Supplies Expense: 675; Credit: Office Supplies: 675

What is the adjusting entry for rent receivable at Trotman's Variety Store?

Debit: Rent Receivable: 1120; Credit: Rent Revenue: 1120

What is the adjusting entry for depreciation expense at Trotman's Variety Store?

Debit: Depreciation Expense: 12100; Credit: Accumulated Depreciation: 12100 Signup and view all the answers

What is the adjusting entry for insurance expense at Trotman's Variety Store?

Debit: Insurance Expense: 600; Credit: Prepaid Insurance: 600 Signup and view all the answers

What is the adjusting entry for unearned rent revenue at Trotman's Variety Store?

Debit: Unearned Rent Revenue: 1200; Credit: Rent Revenue: 1200 Signup and view all the answers

What is the adjusting entry for repair accounts receivable at Trotman's Variety Store?

Debit: Repair Accounts Receivable: 800; Credit: Repair Shop Revenue: 800 Signup and view all the answers

What should the adjusted trial balance for Hagadorn Company include for Accounts Receivable?

420 Signup and view all the answers

Which account represents the amount of money owed for interest revenue that has been earned but not yet collected?

Interest Receivable Signup and view all the answers

Match each term with its definition:

Deferred revenue = At year-end, service revenue of $1,000 was collected in cash but was not yet earned. Accrued revenue = Interest of $550 on a note receivable was earned at year-end, although collection of the interest is not due until the following year. Accrued expense = At year-end, wages payable of $5,600 had not been recorded or paid. Deferred expense = Office supplies were purchased during the year for $700, and $100 of them remained on hand (unused) at year-end. Signup and view all the answers

What adjusting entry is recorded for the rent collected in advance?

Debit: Unearned rent revenue: 300, Credit: Rent revenue: 300 Signup and view all the answers

For the Catena's Marketing Company, what was the total net income for the current year?

5,270 Signup and view all the answers

What was the amount of dividends declared by Catena's Marketing Company?

600 Signup and view all the answers

What is the annual reporting period for Elena's Traveling Veterinary Services, Inc.?

January 1 to December 31 Signup and view all the answers

What is the amount of interest expense to be reported for the loan borrowed by Elena's Company?

5,000 Signup and view all the answers

How much should be reported for insurance expense on the Current year's income statement?

600 Signup and view all the answers

Based on the adjusted trial balance, what is the total assets for Catena's Marketing Company?

20,490 Signup and view all the answers

What is the closing balance for Prepaid Insurance at the end of the current year?

4,200 Signup and view all the answers

What was the direction of effect on the balance sheet for wages earned by employees but unpaid at year-end for Dodie Company?

Increase in liabilities Signup and view all the answers

How much is credited to shipping supplies for the current year?

68,000 Signup and view all the answers

Study Notes

Adjusted Trial Balances

Hagadorn Company's adjusted accounts at year-end include various elements such as Accounts Payable ($250), Accounts Receivable ($420), and Cash ($175).
The trial balance summarizes debits and credits across different account types, with specific totals for expenses such as Salaries Expense ($640) and Sales Revenue ($2,400).

Revenue Recognition Terminology

Deferred Revenue: Service revenue collected but not yet earned ($1,000).
Accrued Revenue: Interest earned but not received ($550).
Accrued Expense: Unpaid and unrecorded wages ($5,600).
Deferred Expense: Office supplies purchased with some remaining at year-end ($100 of $700 total).

Adjusting Entries for Catena's Marketing Company

Adjusting entries reflect revenue recognition and expenses incurred, entailing consideration of cash flow timings.
For rent collected in advance, $1,200 is adjusted to reflect earned revenue over the period ($300 recognized).
Depreciation expense for machinery recorded as $3,200.
Insurance expense adjustment reflects a two-year premium with a pro-rated expense of $1,250 recognized.

Catena's Financial Statements

Income Statement summarizes revenues ($38,500) and key operating expenses ($31,430), revealing an Operating Income of $7,070 and a Net Income after taxes of $5,270.
Statement of Stockholder's Equity highlights changes in stock and retained earnings, ending with Total Equity at $10,370.
Balance Sheet outlines total assets ($20,490), liabilities ($10,120), and stockholders' equity, confirming the accounting equation is balanced.

Financial Ratios

Total Asset Turnover for Catena calculated using sales relative to average total assets, yielding a ratio of 2.11, signifying efficient asset utilization.

Adjustments for Dodie Company

Unpaid wages at year-end ($4,000) and earned but uncollected interest ($1,500) both necessitate adjusting entries to maintain accurate records.

Adjustments for Elena's Veterinary Services

Insurance expense recognized annually with $5,000 recognized as interest expense for a $60,000 loan.
Utilities expense of $360 recorded for services rendered without prior payment.

Adjustments for A+T Williamson Company

Insurance premium adjustments lead to an Insurance Expense of $600 recognized.
The reduction in Shipping Supplies Expense results in $68,000 due to purchases and remaining supplies.

Trotman's Variety Store Adjustments

Wages earned but unpaid require an entry of $2,700 reflecting accrued expenses.
Office Supplies Adjustment shows $675 expense recognized from total purchases versus year-end counts.
Rent adjustment for unpaid amounts totaling $1,120 reflects deferred revenues while accrued depreciation and insurance expenses align with actual usage.

Transaction Classifications

Categorization of transactions into deferred and accrued revenues/expenses helps to clarify accounting practices.
Understanding the nature of each type of transaction aids in accurately preparing adjusting entries and maintaining financial integrity in reporting.

Adjusting Entries Summary

Essential for accurate representation of financial situations at year-end, ensuring compliance with accounting standards and correct profit reporting.

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Description

Test your knowledge of key accounting concepts with these flashcards based on Chapter 4. Review adjusted accounts, balances, and important terms relevant to year-end accounting figures. Perfect for reinforcing your understanding prior to exams or quizzes.