Accounting Applications_Part 7

1
 Answers

EXERCISES (1), (2) & (3) ARE TO BE SOLVED BY JOINTLY BY THE INSTRUCTOR AND THE STUDENTS

Exercise 3-1 (10 minutes)

1. B 4. F

2. E 5. D

3. C 6. A

Exercise 3-3 (25 minutes)

a. Depreciation Expense—Equipment................................................. 16,000

Accumulated Depreciation—Equipment..................................... 16,000
To record depreciation expense for the year.

b. Insurance Expense.......................................................................... 5,960

Prepaid Insurance*...................................................................... 5,960
To record insurance coverage that expired
($7,000 - $1,040).

c. Office Supplies Expense................................................................. 2,626

Office Supplies**.......................................................................... 2,626
To record office supplies used ($300 + $2,680 - $354).

d. Unearned Fee Revenue.................................................................. 5,000

Fee Revenue.............................................................................. 5,000
To record earned portion of fee received in advance

($10,000 x 1/2).

e. Insurance Expense.......................................................................... 4,600

Prepaid Insurance....................................................................... 4,600
To record insurance coverage that expired.

f. Wages Expense.............................................................................. 4,000

Wages Payable........................................................................... 4,000
To record wages accrued but not yet paid.

Notes:

Prepaid Insurance* Office Supplies**

Bal. Bal. 7,000 Beg. Bal. 300
Purch. 2,680
? Used ? Used
End. Bal. 1,040 End. Bal. 354