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ACCT110 Week 3 - Chapter 3 Homework Every response is 1 pt. Each On March 1, 2015, a company paid an $18,000 premium on a 36-month insurance policy for coverage
beginning on that date. Refer to that policy and fill in the blanks in the following table.
Balance Sheet Prepaid Insurance Asset Using Dec. 31, 2015
Dec. 31, 2016
Dec. 31, 2017
Dec. 31, 2018 Insurance Expense Using Accrual Basis Cash Basis
$13,000
$0
7,000
0
1,000
0
0
0 2015
2016
2017
2018
Total Accrual Basis
$5,000
6,000
6,000
1,000
$18,000 In the blank space beside each adjusting entry, enter the letter of the explanation A through F that most
closely describes the entry.
A. To record this period's depreciation expense.
D. To record accrued interest revenue.
B. To record accrued salaries expense.
E. To record accrued interest expense.
C. To record this period's use of a prepaid expense.
F. To record the earning of previously unearned incom
E C F D A B Interest Expense
Interest Payable 2,208 Insurance Expense
Prepaid insurance 3,180 Unearned Professional Fe
Professional Fees Earned
Interest Receivable
Interest Revenue 2,208 3,180
19,250
19,250
3,300
3,300 Depreciation Expense
Accumulated Depreciation 38,217 Salaries Expense
Salaries Payable 13,280 38,217 13,280 Pablo Management has five part-time employees, each of whom earns $250 per day. They are normally
paid on Fridays for work completed Monday through Friday of the same week. Assume that December 28, 2017
was a Friday and that they were paid in full on that day. The next week, the five employees worked only
four days because New Year's Day was an unpaid holiday. Be sure to add the description for each entry.
A: Assuming that December 31,2017 , was a Monday, prepare the adjusting entry for wages expense that would
be recorded at the close of that day.
Dec. 31, 2017 Wages Expense
Wages payable 1,250
1,250 B: Assuming that January 4, 2018 was a Friday, prepare the journal entry that would be made to record payment
of the employees' wages for that week.
Jan. 4, 2018 Wages expense
Wages Payable
Cash 3,750
1,250
5,000 Prepare adjusting journal entries for the year ended December 31, 2017, for each of these separate situations.
Entries can draw from the following partial chart of accounts: Cash, Accounts Receivable, Supplies, Prepaid Insuran
Equipment, Accumulated Depreciation - Equipment, Wages Payable, Unearned Revenue, Revenue, Wages Expense,
Supplies Expense, Insurance Expense, Depreciation Expense - Equipment. Don't forget to include a brief description
of what the entry is doing.
A: Depreciation on the Company's equipment for 2017 is computed to be $18,000.
B: The Prepaid Insurance account had a $6,000 debit balance at December 31,2017, before adjusting for the
costs of any expired coverage. An analysis of the company's insurance policies showed that $1,100 of
unexpired insurance coverage remains.
C: The Office Supplies account had a $700 debit balance on December 31, 2016 and $3,480 of office supplies
were purchased during the year. The december 31, 2017 physical count showed $300 of supplies available.
D: Two-thirds of the work related to $15,000 of cash received in advance was performed this period.
E: The Prepaid Insurance account had $6,800 debit balance at December 31, 2017 before adjusting for the
costs of any expired coverage. An analysis of insurance policies showed that $5,800 of coverage had expired.
F: Wage expenses of $3,200 have been incurred but are not paid as of December 31,2017.
Debit Credit A B C D E F Depreciation Expense - Equipment
Accumulated Depreciaiton -Equipment
To record monthly depreciation 18,000
18,000 Insurance Expense
4,900
Prepaid Insurance
To record insurance expired($6,000-$1,100)=$4,900 4,900 Supplies Expense
3,880
Supplies
To record supplies used($700+$3,480-$298)=$3,880 3,880 Unearned Revenue
Revenue
To record revenue earned($15,000*2/3)=$10,000
Insurance Expense
Prepaid Insurance
(To record insurance expired) 10,000
10,000 5,800 Wages Expense
3,200
Wages Payable
(To accrued wages owed but unpaid on 12/31/2017) 5,800 3,200 Prepare adjusting journal entries for the year ended December 31, 2017, for each of these separate situations.
Entries can draw from the following partial chart of accounts: Cash, Interest Receivable, Supplies, Prepaid Insuranc
Equipment, Accumulated Depreciation - Equipment, Wages Payable, Interest Payable, Unearned Revenue, Interest R
Wages Expense, Supplies Expense, Insurance Expense, Interest Expense, Depreciation Expense - Equipment.
Don't forget to include a brief description of what the entry is doing. A. Wages of $8,000 are earned by workers but not paid as of December 31, 2015.
B. Depreciation on the company's equipment for 2015 is $18,000.
C. The Office Supplies account had a $240 debit balance on December 31, 2014.
During 2015, $5,200 of office supplies are purchased. A physical count of supplies at December 31, 2
D. The Prepaid Insurance account had a $4,000 balance on December 31, 2014.
An analysis of insurance policies shows that $1,200 of unexpired insurance benefits remain at Decem
E. The company has earned (but not recorded) $1,050 of interest from investments in CDs for the year
The interest revenue will be received on January 10, 2016.
F. The company has a bank loan and has incurred (but not recorded) interest expense of $2,500 for the The company must pay the interest on January 2, 2016. A Debit
8,000 Wages Expense
Wages Payable
To record accrued wages B 8,000 Depreciaiton Expense - Equipment
Accumulated Depreciation - Equipment
To record depreciation expense for the year C D E F Credit 18,000
18,000 Supplies Expense
Supplies
To record use of supplies 5,000 Insurance Expense
Prepaid Insurance
To record expired prepaid insurance 2,800 Interest Receivable
Interest Revenue
Recorded interest earned but not yet received 1,050 Interest Expense
Interest Payable 2,500 5,000 2,800 1,050 2,500 Use the following information to compute profit margin for each separate company a through e A
B
C
D
E Net Income Net Sales
$4,361 $44,500
97,706 398,800
111,281 257,000
65,646 1,458,800
80,132 435,500 9.80%
24.50%
43.30%
4.50%
18.40% Which of the five companies is the most profitable according to the profit margin ratio?
Interpret the profit margin ratio for company C.
C earns 43.3 cents in net income for every one dollar of net sales earned. Ricardo Construction began operations on December 1. In seting up its accounting procedures, the company deci
expense accounts when it prepays its expenses and to credit revenue accounts when customers pay for services i
Prepare journal entries for the items a through d and the adjusting entries as of its December 31 period-end for it
(Entries can draw from the following partial chart of accounts: Cash, Accounts Receivable, Interest Receivable, Su
Insurance, Unearned Remodeling Fees, Remodeling Fees Earned, Supplies Expense, Insurance Expense, Interest E
Don't forget to include a description for your journal entries.
A
Supplies are purchased on December 1 for $2,000.
B
The company prepaid its insurance premiums for $1,540 cash on December 2.
C
On December 15, the company receives an advance payment of $13,000 cash from a customer for
work to be performed in January.
D
On Dcember 28, the company received $3,700 cash from another customer for remodeling work to
E
A physical count on December 31 indicates that the company has $1,840 of supplies available.
F
An analysis of the insurance policies in effect on December 31 shows that $340 of insurance covera
G
As of December 31, only one remodeling project has been worked on and completed. The $5,570 f
project has been received in advance and recorded as Unearned Remodeling fees. A B C D E F Supplies
Cash Prepaid Insurance
Cash Debit
2,000 Credit
2,000 1,540
1,540 Cash
Unearned Remodeling Fees 13,000 Cash
Unearned Remodeling Fees 3,700 Supplies Expense
Supplies 1,840 Insurance Expense
Prepaid insurance 1,200 13,000 3,700 1,840 1,200 G Unearned Remodeling Fees
Remodeling Fees earned 11,130
11,130 or coverage ce Expense Using
Cash Basis
$18,000
0
0
0
$18,000 gh F that most viously unearned income. y are normally
hat December 28, 2017
es worked only
for each entry. ges expense that would made to record payment e separate situations.
Supplies, Prepaid Insurance,
evenue, Wages Expense,
nclude a brief description re adjusting for the
that $1,100 of 80 of office supplies
of supplies available.
this period.
adjusting for the
coverage had expired. e separate situations.
upplies, Prepaid Insurance,
rned Revenue, Interest Revenue,
nse - Equipment. pplies at December 31, 2015, shows $440 of supplies available. benefits remain at December 31, 2015.
ents in CDs for the year ended December 31, 2015. xpense of $2,500 for the year ended December 31, 2015. c ures, the company decided to debit
omers pay for services in advance.
mber 31 period-end for items e through g.
, Interest Receivable, Supplies, Prepaid
ance Expense, Interest Expense.) ash from a customer for remodeling r for remodeling work to be performed in January.
f supplies available.
$340 of insurance coverage has expired.
completed. The $5,570 fee for this
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