Principles of Accounting I

Assignment 1
1010 赵宇哲 2230018095

Question1

Part A
Date Account title and Explanation Debit $ Credit $
Jan. 1 Cash 40,000
Office equipment 17,000
Jack Harrison, Capital 57,000
Jan. 1 Prepaid rent 3,600
Cash 3,600
Jan. 5 Office supplies 3,500
Cash 3,500
Jan. 10 Cash 8,000
Service Revenue 8,000
Jan. 12 Office equipment 550
Account Payable 550
Jan. 15 Cash 2,000
Account Receivable 4,000
Service Revenue 6,000
Jan. 19 Jack Harrison, Withdrew 2,600
Cash 2,600
Jan. 23 Cash 4,000
Account Receivable 4,000
Jan. 27 Account Payable 550
Cash 550
Jan. 31 Utilities Expense 700
Cash 700

Cash
40,000 3,600
8,000 3,500
2,000 2,600
4,000 550
700
Balance 43,050
Part B
1) Explain the concepts of Accounts Receivable and Revenue
Accounts receivable refers to the money that a company is owed by its
customers for goods or services that have been sold on credit but not yet paid
for.
Revenue, on the other hand, refers to the income that a company generates
from the sale of goods or services.

2) What are the differences between Accounts Receivable and Revenue in terms of
normal balance?
The key difference between Accounts Receivable and Revenue is that
Accounts Receivable is an asset account with a debit normal balance that
represents the amount of money owed to a company by its customers, while
Revenue is an income account with a credit normal balance that represents the
total amount of money earned by a company from its sales of goods or services.

3) Accounts Receivable and Revenue are recorded on which financial statement(s)?

Accounts Receivable is recorded on the balance sheet.
Revenue is recorded on income statement.

4) What is the time period of the financial statement(s) identified in 3) above?

Balance sheet is prepared as of a point in time. Income statement is prepared
for a period of time.

Question2
Part A
Adjustment a) Dr. Cr.
Insurance Expense 480
Prepaid Insurance 480

Adjustment b) Dr. Cr.

Unearned Service Revenue 6,400
Service Revenue 6,400

Adjustment c) Dr. Cr.

Unearned Consulting Revenue 8,000
Consulting Revenue 8,000

Adjustment d) Dr. Cr.

Interest Expense 860
Unrecorded Accrued interest 860

Adjustment f) Dr. Cr.

Salary Expense 1,580
Salary Payable 1,580

Adjustment g) Dr. Cr.

Depreciation Expense 4,920
Accumulated Depreciation - Equipment 4,920

Adjustment f) Dr. Cr.

Supply Expense 880
Supply 880

Part B
Type of Adjustment
1. Unearned Revenue
2. Prepaid insurance
3. Salary Payable
4. Unearned Services Revenue
Effects on Financial Statements before
Adjustment
Liability overstated; Net Profit understated
Assets overstated; Net Loss understated
Liability understated; Expense understated
Asset understated; Revenue understated