Reference no: EM132649701

Questions -

Q1. Adjusting entries affect at least one balance sheet account and at least one income statement account. For the following entries, identify account to be debited and account to be credited.

a. Entry to record revenue earned that was previously received as cash in advance.

b. Entry to record annual depreciation expense.

c. Entry to record wage expense incurred but not yet paid.

d. Entry to record revenue earned but not yet billed.

e. Entry to record expiration of prepaid insurance.

Q2. in the first year of operations, Heyer Co. earned $ 42,000 in revenues and received $37,000 cash from customers. The company incurred expenses of $25,500 but had not paid $5,250 of them at year-end. In addition, Heyer prepaid $ 6,750 cash for expenses that would be incurred in the next year.

Calculate the first year's net income under both the cash basis and the accrual basis of accounting.

Q3. The weekly payroll for employees of Quisp CO., who work a five day week, amounts to $20,000. All employees are paid up to date at the close of business each Friday. If December 31 falls on Thursday, what year end adjusting entry is needed?

Q4. On November 1, Sanuk Co. purchased a six month insurance policy from Baylor Agency for $3,000

a. Prepare necessary adjusting entries for Sanuk Co. on Nov 30, assuming it recorded the Nov 1 expenditure as unexpired insurance.

b. Prepare the adjusting entry for Baylor Agency on Nov 30, assuming it recorded Sanuk's payment as unearned insurance premium.