Reference no: EM131794206
FINANCIAL ACCOUNTING ASSIGNMENT
I. Contrast the cash basis of accounting with the accrual basis of accounting.
II. Record the following transactions of Reed Co. in the desired manner and give the adjusting entry on December 31, 2010. (Two entries for each part.)
1. An insurance policy for two years was acquired on April 1, 2010 for $8,000.
2. Rent of $12,000 for six months for a portion of the building was received on November 1, 2010.
III. The adjusted trial balance of Ryan Financial Planners appears below. Using the information from the adjusted trial balance, you are to prepare for the month ending December 31:
1. an income statement.
2. a retained earnings statement.
3. a statement of financial position.
RYAN FINANCIAL PLANNERS
Adjusted Trial Balance
December 31, 2012
Debit Credit
Cash € 4,400
Accounts Receivable 2,200
Office Supplies 1,800
Office Equipment 15,000
Accumulated Depreciation-Office Equipment € 4,000
Accounts Payable. 3,800
Unearned Revenue 5,000
Share Capital-Ordinary 10,000
Retained Earnings (1 Dec) 4,400
Dividends 2,500
Service Revenue 3,700
Office Supplies Expense 600
Depreciation Expense 2,500
Rent Expense 1,900 ______
€30,900 €30,900
Q 4 Provide clear, concise answers for the following.
1. What is the accrual basis of accounting?
2. What is an accrued expense?
3. What is accrued revenue?
4. What is a prepaid expense?
5. What is unearned revenue?
6. State the rule that indicates which adjusting entries for prepaid and unearned items should be reversed.