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 Adjusting entries affect at least one balance sheet account and at least one income statement account

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 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.

 

2. 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.

 

3. 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?

 

4. 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