RP the same time as the first World War

ACC 205: Week Two Exercise Answers
Revenue and Expenses

1. Recognition of concepts

a. Accrued Expense
b. Accrued Revenue
c. None of the foregoing
d. Unearned Revenue
e. Prepaid Expense
f. Prepaid Expense
g. None of the foregoing
h. None of the foregoing

2. Understanding the closing process

a. Note Payable, Accounts Receivable, Accumulated Depreciation: Building, Accounts Payable, Cash
b. Product Revenue, Utility Expense, Supplies Expense
c. Utility Expense, Supplies Expense
d. Alex Kenzy, Drawing

3. Adjusting entries and financial statements A)

1. The company previously collected $1,500 as an advance payment for services to be rendered in the future. By the end of December, one third of this amount had been earned. --- B
2. Sally Corporation provided $1,500 of services to Artech Corporation; no billing had been made by December 31. ----- D
3. Salaries owed to employees at year-end amounted to $1,000. ---- C
4. The Supplies account revealed a balance of $8,800, yet only $3,300 of supplies were actually on hand at the end of the period. ---- A
5. The company paid $18,000 on October 1 of the current year to Vantage Property Management. The payment was for 6 months’ rent of Sally Corporation’s headquarters, beginning on November 1. ----- A B) Adjusting entry Case
Account Description
Debit
Credit
1
Unearned Revenue
$ 750

Service Revenue

$ 750

1500 x 1/2 = 750

2
Accounts Receivable
1,500

Service Revenue

1,500

3
Salaries Expense
1,000

Salaries Payable

1,000

4
Supplies Expense
5,500

Supplies

5,500

8800 – 3300 = 5500

5
Rent Expense
6,000

Prepaid Rent

6,000

18000 x 2/6 = 6000

C) Income statement impact 1. Increases total revenues by $ 750
2. Increases total revenues by $ 1,500