— On December 31, a customer prepays Paul for guitar lessons for the next 6 months. Salaries Expense represents the employee’s gross income (pay) before any deductions. Salaries Expense, $4,150 . As of December 31, employees had earned $1,500 of unpaid and unrecorded salaries. On your income statement, on the debit side of your ledger, you'll have a similar account named "Wages Expense" or something similar. Instructions (a) Journalize the December transactions using a perpetual inventory system. Utility expenses of $225 are unpaid. The accrued total is 45 hours (50 hours + 5 additional hours – 10 hours used). Accrued rent is the opposite of prepaid rent discussed earlier. 3. Prepare the statement of retained earnings for the year ended December 31, 2017. 50) Failure to record an accrued revenue: A) overstates liabilities B) overstates revenue C) overstates assets D) understates assets 51) On September 1, 2010, Two Sisters Company pays $36,000 cash for six months' rent. Under the terms of the note, the note plus interest (10%) is to be paid on September 1, 2001. The first entry records the salaries liability during the month of August. It means that the cost of $3,500 ($4,000 – $500) is to be allocated as expense over ten years. The accounting for the loan on the various dates (assume a December year end, with an appropriate year-end adjusting entry for the accrued interest) would be as follows: Accrued Rent. On December 31, 2009, salaries owed to employees total $4,150. Accrued income arises where income has been earned in the accounting period but has not yet been received. This is where you'll add the accrued salaries, once you've calculated a total. The $2,400 transaction was recorded in the accounting records on December 1, but the amount represents six months of coverage and expense. These items are recorded as short-term liabilities as well: FICA: The employer is obligated to match each employee’s contribution dollar for dollar. Unearned Salaries, $4,150 . Income tax due and unpaid at December 31 is $200. The employer business also has payroll tax expense based on the employees’ gross wages. (Note: This is a simplified entry to present the payment of salaries. e. The Prepaid Insurance account had a $5,000 balance on December 31, 201 2. To reduce the Insurance Expense to $200 you need to credit Insurance Expense for $2,200. At December 31, the following information is made available for the preparation of adjusting entries. Store supplies of $300 have been used. — Paul’s leasehold improvement depreciation is $2,000 for the year. For example, if $1,000 of revenue has been earned, but $500 of that revenue has not yet been recorded, $500 is the amount of revenue that needs to be entered. Dec. 31 $1,080 of salaries earned by employees during December will be paid in January. On December 31, Frank Voris Company correctly made an adjusting entry to recognize $2,000 of accrued salaries and wages payable. 6 The draft profit for the year ended 31 December 2016 was $21 600. Q5. A $1,800. — Paul’s employee works half a pay period, so Paul accrues $500 of wages. An adjusted trial balance prepared on December 31, 2009, includes which of the following? All but $500 in the Unearned Commissions account has been earned in 2015. Unexpired insurance at December 31 $1,500 b. Affleck Company accumulates the following adjustment data at December 31. This adjusting entry increases both the Payroll Expenses reported on the income statement and the Accrued Payroll Expenses that appear as a liability on the balance sheet. 4. Complete the six-column table by entering adjustments that reflect the following information: a. 3) Dec 31: Salaries Expense 360 Salaries Payable 360: To record salaries earned but not paid. To illustrate let's assume that on December 1, 2019 the company paid its insurance agent $2,400 for insurance protection during the period of December 1, 2019 through May 31, 2020. 6. An analysis of insurance policies shows that $2,000 of unexpired insurance benefits remain at December 31, 201 3. f. The company has earned (but not recorded) $1,000 of interest from investments in CDs for the year ended December 31 , 201 3. Unearned revenue of $260 has been earned. 4 Accrued income. deferred revenue. Supplies on hand at December 31 $400 c. Depreciation of building for the year $1,750 d. Depreciation of equipment for the year $5,800 e. Revenue unearned at December 31 $2,000 f. Accrued salaries and wages at December 31 $2,300 g. Fees earned but unbilled on December 31 $4,850 F Company A motor lorry costs $4,000 and will have a scrap value of $500 after continuous use of ten years. 4. Accrued salaries payable: ... Equipment has an estimated useful life of ten years and an estimated residual value of $500. Prepare the income statement for the year ended December 31, 2017. This is placed on the debit side of the Salaries Expense T-account. Salaries for the two-day period totaled $3,500. Principal x Rate xTime =Interest Total through maturity $ 160,000vl 8%vl 901360 vi $ 3,200vl As of December 31 one month has gone by, so one month of insurance has expired and belongs in Insurance Expense. What is the electricity charge to the income statement? Prepaid insurance totaling $350 has expired. b. Supplies Expense Salaries Payable (LO 5, 6, 7) 31/7 800 31/7 1 200 Supplies Unearned Revenue 1/7 Bal. When the AP department receives the invoice, it records a $500 credit in the accounts payable field and a $500 … To record December accrued interest revenue. 4 Rent receivable owing by the tenant at 31 December 2016 amounted to $460. Indicate which items will be erroneously stated, because of error, on a) the iincome statement for december 2008 and b) the balance sheet as of december 31, 2008. 1 100 31/7 800 3/17 900 1/7 Bal. 2. (c) The company borrows cash by discounting its own notes at the bank. 5. Account Titles Dr. Cr. Inspection of the company's records reveals the following as of December 31, 2008: (a) Uncollectable accounts are estimated at 4% of the accounts receivable balance. The week’s worth of unpaid salaries and wages is actually a liability that you will have to pay in the future even though you haven’t yet spent the cash. Accrued salaries of $3,900 owed to employees for december 30 and 31 are not considered in preparing the financial statements for the year ended december 31,2008. C $11,650. $2,400 divided by the 12 months of coverage = $200 per month. Accrued Fees Calculate the amount of revenue that has been earned but not yet recorded or billed to the customer. Services provided but not recorded total $750. a. Salaries Expense has a debit of $3,600. PORTER COMPANY Worksheet For the Year Ended December 31, 2008 Adjusted Account Trial Balance No. 1) The equipment depreciates $400 per month. Dana Co.'s officers' compensation expense account had a balance of $224,000 at December 31, 20X4 before any appropriate year-end adjustment relating to the following: No salary accrual was made for December 30-31, 20X4. 1. You'll add the corresponding amount here. Assume that an 18-month loan was taken out on July 1, 20X1, and was due on December 31, 20X2. Question 1. This is posted to the Cash T-account on the credit side beneath the January 18 transaction. This amount is an increase in an asset and an increase in revenue. Discounts on notes payable at the end of 2008 are $1,100. The next payday is January 4, at which time $1,875 of salaries will be paid. The estimated income taxes for 2015 are $5,000. 3) Interest totaling $500 is accrued on the notes payable for the quarter. Depreciation $200 per month. B $11,450 . Question 3 . Transaction #15: On December 31, the company paid salaries to its employees, $3,500. (e) Accrued Fees.Fees accrued at the end of December but not recorded total $500. Indicate which items will be erroneously stated, because of the error, on (a) the income statement for the year and (b) the balance sheet as of December 31. The total vacation accrual would be $900 (45 hours x $20 per hour). Accounting. Salaries of $900 are unpaid. Presently there is a $2,400 debit balance in Insurance Expense. 2) One-third of the unearned rent revenue was earned during the quarter. 2. So if your gross wage is $500 and you have $100 in pretax deductions, you pay tax on $400. 4. Salaries for the last three days of December amounting to $300 have not yet been recorded. Accrued salaries payable $800. On January 8 of the next year, total salaries and wages of $3,400 were paid. Finally, in most cases, your books will also include a journal that records each transaction. Salaries Expense is an equity account used to recognize the accumulated (accrued) expense to the business during August (increase on the debit side). The 401(k) contributions total $150. 5 No entry has been made in the accounting records for a motor vehicle, $16 000, introduced into the business by Mandeep on 30 December 2016. (b) Enter the December 1 balances in the ledger T accounts and post the December transactions. 1. After you calculate the vacation time accrued for each employee, you will need to record them in your business’s books. (b) The accrued interest on investments totals $2,900. Accrued salaries of $600 owed to employees for December 29, 30, and 31 are not taken into consideration in preparing the financial statements for the year ended December 31. At 31 December 20X5, Willy calculated that he owed $1,800 in respect of electricity for the last part of the year. Following are Nintendo’s revenue and expense accounts for a recent March 31 fiscal year-end (yen in millions). In actual practice, different payroll accounting methods are applied. As of December 31, 2005, employees had earned $900 of unpaid and unrecorded salaries. Assuming the correct reversing entry was made on January 1, the entry on January 8 will result in a credit to Cash $3,400 and debit(s) to 101 Cash 18,800 . The Retained Earnings account balance is $130,280 at December 31, 2016. D $13,450. Transaction 9: On January 20, 2019, paid $3,600 cash in salaries expense to employees. By contrast, imagine a business gets a $500 invoice for office supplies. 3. These will be paid on January 4, 2010. For this transaction, we will record/increase the expense account by debiting it and decrease cash by crediting it. accrued revenue. — Paul’s December electric bill was $200 and is due January 15th. 20X4 officers' bonuses of $62,500 were paid on January 31, 20X5. Office supplies on hand at December 31, 2015 amounted to $300. Enter the adjustment by writing (1) $500 in the Adjustments Debit column on the same line as Accounts Receivable and (2) $500 in the Adjustments Credit column on the same line as Fees Earned. The employee makes $20 per hour. Recording journal entries. On this transaction, Cash has a credit of $3,600. Compute the accrued interest payable on December 31, 2013. 5) Dec 31: Insurance Expense 200 Prepaid Insurance Supplies on hand $1,500. 4) Dec 31: Unearned Revenue 1,500 Service Revenue 1,500: To record deferred revenue now earned. Dec. 31 The note payable of $12,000 has been outstanding since September 1, 2000. 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