西方财务会计课后答案(3).doc

CHAPTER 3Adjusting the AccountsASSIGNMENT CLASSIFICATION TABLEBriefABStudy ObjectivesQuestionsExercisesExercisesProblemsProblems*1.Explain the time periodassumption.1, 2*2.Explain the accrual basis3, 4, 51, 6of accounting.*3.Explain why adjusting1, 6, 71entries are needed.*4.Identify the major types8, 9, 10, 182, 82, 7of adjusting entries.*5.Prepare adjusting entriesfor prepayments.8, 9, 10,11, 12, 13,3, 4, 5, 62, 3, 4, 5,6, 7, 8, 9,1A, 2A,3A,1B, 2B,3B,18, 19, 20114A, 5A, 6A4B, 5B*6.Prepare adjusting entriesfor accruals.8, 14, 15,16, 17, 18,72, 3, 4, 5,6, 7, 8, 9,1A, 2A,3A,1B, 2B,3B,19, 20114A, 5A, 6A4B, 5B*7.Describe the nature and219, 103, 4, 5, 6,1A, 2A,1B, 2B,purpose of an adjustedtrial balance.7, 8, 9, 103A,5A, 6A3B,5B*8.Prepare adjusting entries2211126Afor the alternativetreatment ofprepayments.*Note: All asterisked Questions, Exercises, and Problems relate to material contained in theappendix *to the chapter.3-1ASSIGNMENT CHARACTERISTICS TABLEProblemDifficultyTimeNumber1ADescriptionPrepare adjusting entries, post to ledger accounts, andLevelSimpleAllotted (min.)4050prepare an adjusted trial balance.2APrepare adjusting entries, post, and prepare an adjustedSimple5060trial balance and financial statements.3A4A5APrepare adjusting entries and financial statements.Prepare adjusting entries.Journalize transactions and follow through accountingModerateModerateModerate405030406070cycle to preparation of financial statements.*6A*Prepare adjusting entries, an adjusted trial balance, andModerate4050financial statements using appendix.1BPrepare adjusting entries, post to ledger accounts, andSimple4050prepare an adjusted trial balance.2BPrepare adjusting entries, post, and prepare an adjustedSimple5060trial balance and financial statements.3B4B5BPrepare adjusting entries and financial statements.Prepare adjusting entries.Journalize transactions and follow through accountingModerateModerateModerate405030406070cycle to preparation of financial statements.3-2BLOOMS TAXONOMY TABLE3-3Correlation Chart between Blooms Taxonomy, Study Objectives and End-of-Chapter Exercises and ProblemsStudy ObjectiveQ3-1Q3-3Q3-4Q3-1Q3-6Q3-8Q3-9Q3-8Q3-9Q3-10Q3-11Q3-12Q3-13Q3-19Q3-20Q3-17Q3-18BE3-3BE3-4BE3-5BE3-6E3-2E3-3E3-4E3-5E3-6E3-7E3-8E3-9E3-11P3-1AP3-2AP3-3AQ3-10Q3-18BE3-2BE3-8 E3-7E3-2P3-4A E3-11P3-5AP3-6AP3-1BP3-2BP3-3BP3-4BP3-5BQ3-7BE3-1Q3-5E3-6Q3-2E3-1KnowledgeComprehensionApplicationAnalysisSynthesisEvaluation*1.Explain the time period assumption.*2.Explain the accrual basis of accounting.*3.Explain why adjusting entries are needed.*4.Identify the major types of adjusting entries.*5.Prepare adjusting entries for prepayments.*6.Q3-8Q3-14Q3-15Q3-19Q3-20Prepare adjusting entries for accruals.Q3-21CommunicationResearch CaseQ3-16Q3-18BE3-7E3-2E3-3E3-4E3-5E3-6BE3-9BE3-10E3-10E3-3E3-4E3-5E3-6E3-7E3-8Q3-22CookieChronicleE3-7E3-8E3-9E3-11P3-1AP3-2AP3-3AP3-4AE3-9P3-1AP3-2AP3-3AP3-5ABE3-11 P3-6AE3-12P3-5A E3-11P3-6AP3-1BP3-2BP3-3BP3-4BP3-5BP3-6AP3-1BP3-2BP3-3BP3-5B*7.Describe the nature and purpose of anadjusted trial balance.*8.Prepare adjusting entries for the alternativetreatment of prepayments.Broadening Your PerspectiveGroup Decision Ethics CaseFinancial ReportingInterpretingCaseComparative AnalysisFinancialInterpretingExploring the WebStatementsFinancialGlobal FocusStatementsANSWERS TO QUESTIONS1.(a)Under the time period assumption, an accountant is required to determine the relevanceof each business transaction to specific accounting periods.(b) An accounting time period of one year in length is referred to as a fiscal year. A fiscalyear that extends from January 1 to December 31 is referred to as a calendar year.Accounting periods of less than one year are called interim periods...10.11.The two generally accepted accounting principles that relate to adjusting the accounts are:The revenue recognition principle, which states that revenue should be recognized in theaccounting period in which it is earned.The matching principle, which states that efforts (expenses) be matched with accomplishments(revenues).The law firm should recognize the revenue in April. The revenue recognition principle statesthat revenue should be recognized in the accounting period in which it is earned.Information presented on an accrual basis is more useful than on a cash basis because itreveals relationships that are likely to be important in predicting future results. To illustrate,under accrual accounting, revenues are recognized when earned so they can be related to theeconomic environment in which they occur. Trends in revenues are thus more meaningful.Expenses of $4,500 should be deducted from the revenues in April. Under the matchingprinciple efforts (expenses) should be matched with accomplishments (revenues).No, adjusting entries are required by the revenue recognition and matching principles.A trial balance may not contain up-to-date information for financial statements because:(1) Some events are not journalized daily because it is inexpedient to do so.(2) The expiration of some costs occurs with the passage of time rather than as a result ofrecurring daily transactions.(3) Some items may be unrecorded because the transaction data are not known.The two categories of adjusting entries are prepayments and accruals. Prepayments consist ofprepaid expenses and unearned revenues. Accruals consist of accrued revenues and accruedexpenses.In the adjusting entry for a prepaid expense, an expense is debited and an asset is credited.No. Depreciation is the process of allocating the cost of an asset to expense over its usefullife in a rational and systematic manner. Depreciation results in the presentation of thebook value of the asset, not its market value.Depreciation expense is an expense account whose normal balance is a debit. This accountshows the cost that has expired during the current accounting period. Accumulated depreciationis a contra asset account whose normal balance is a credit. The balance in this account is thedepreciation that has been recognized from the date of acquisition to the balance sheet date.12.Equipment .$18,000Less: Accumulated Depreciation .3-47,000$11,000Questions Chapter 3 (Continued)*13.*14.*15.*16.*17.In the adjusting entry for an unearned revenue, a liability is debited and a revenue is credited.Asset and revenue. An asset would be debited and a revenue would be credited.An expense is debited and a liability is credited.Net income was understated $300 because prior to adjustment, revenues are understated by$900 and expenses are understated by $600. The difference in this case is $300 ($900 $600).The entry is:Jan. 9 Salaries Payable.Salaries Expense.Cash.2,0004,0006,000*18.*19.(a)(b)(c)(a)(b)(c)Accrued revenues.Unearned revenues.Accrued expenses.Salaries Payable.Accumulated Depreciation.Interest Expense.(d)(e)(f)(d)(e)(f)Accrued expenses or prepaid expenses.Prepaid expenses.Accrued revenues or unearned revenues.Supplies Expense.Service Revenue.Service Revenue.*20.*21.*22.Disagree. An adjusting entry affects only one balance sheet account and one income statementaccount.Financial statements can be prepared directly from an adjusted trial balance because thebalances of all accounts have been adjusted to show the effects of all financial events thathave occurred during the accounting period.For Supplies Expense (prepaid expense): expenses are overstated and assets are understated.The adjusting entry is:Assets (Supplies) . XXExpenses (Supplies Expense).XXFor Rent Revenue (unearned revenues): revenues are overstated and liabilities areunderstated. The adjusting entry is:Revenues (Rent Revenue) . XXLiabilities (Unearned Rent Revenue) . XX3-5SOLUTIONS TO BRIEF EXERCISESBRIEF EXERCISE 3-1(a) Prepaid Insuranceto recognize insurance expired during theperiod.(b) Depreciation Expenseto account for the depreciation that hasoccurred on the asset during the period.(c) Unearned Revenueto record revenue earned for services provided.(d) Interest Payableto recognize interest accrued but unpaid onnotes payable.BRIEF EXERCISE 3-2(a)(b)Item.Type of AdjustmentPrepaid ExpensesAccrued RevenuesAccrued ExpensesUnearned RevenuesAccounts before AdjustmentAssets OverstatedExpenses UnderstatedAssets UnderstatedRevenues UnderstatedExpenses UnderstatedLiabilities UnderstatedLiabilities OverstatedRevenues UnderstatedBRIEF EXERCISE 3-3Dec. 31Advertising Supplies Expense .Advertising Supplies ($6,700 $1,700) .5,0005,000Advertising Supplies6,700 12/31 5,00012/31 Bal. 1,7003-6Advertising Supplies Expense12/31 5,000BRIEF EXERCISE 3-4Dec. 31Depreciation ExpenseEquipment.Accumulated DepreciationEquipment.6,0006,000Depr. ExpenseEquipment12/31 6,000Balance Sheet:Accum. DepreciationEquipment12/31 6,000Equipment.$30,000Less: Accumulated Depreciation .BRIEF EXERCISE 3-56,000$24,000July 1Dec. 31Prepaid Insurance.Cash .Insurance Expense ($12,000 3) X 1/2 .Prepaid Insurance.12,0002,00012,0002,000Prepaid InsuranceInsurance Expense7/1 12,000 12/312,00012/312,00012/31 Bal. 10,000BRIEF EXERCISE 3-6July 1Dec. 31Cash .Unearned Insurance Revenue .Unearned Insurance Revenue .Insurance Revenue .12,0002,00012,0002,000Unearned Insurance Revenue12/31 2,000 7/1 12,00012/31 Bal. 10,0003-7Insurance Revenue12/31 2,000BRIEF EXERCISE 3-71.2.3.Dec. 313131Interest Expense .Interest Payable .Accounts Receivable.Service Revenue .Salaries Expense .Salaries Payable.4001,2509004001,250900BRIEF EXERCISE 3-8(a)(b)AccountAccounts ReceivablePrepaid InsuranceAccum. Depr.EquipmentInterest PayableUnearned Service RevenueType of AdjustmentAccrued RevenuesPrepaid ExpensesPrepaid ExpensesAccrued ExpensesUnearned RevenuesRelated AccountService RevenueInsurance ExpenseDepreciation ExpenseInterest ExpenseService RevenueBRIEF EXERCISE 3-9LUCILLE CORPORATIONIncome StatementFor the Year Ended December 31, 2006RevenuesService revenue .ExpensesSalaries expense.Rent expense.Insurance expense .Supplies expense .Depreciation expense.Total expenses .Net income .3-8$16,0004,0002,0001,5001,100$38,40024,600$13,800BRIEF EXERCISE 3-10LUCILLE CORPORATIONRetained Earnings StatementFor the Year Ended December 31, 2006Retained earnings, January 1.Add: Net income .Less: Dividends .Retained earnings, December 31 .*BRIEF EXERCISE 3-11$15,60013,80029,4006,000$23,400(a) Apr. 30Supplies .Supplies Expense.1,0001,000(b)30Service Revenue.Unearned Service Revenue .2,0002,0003-9SOLUTIONS TO EXERCISESEXERCISE 3-1(a) Accrual-basis accounting records the events that change a companysfinancial statements in the periods in which the events occur ratherthan in the periods in which the company receives or pays cash.Information presented on an accrual basis is useful because it revealsrelationships that are likely to be important in predicting futureresults. Conversely, under cash-basis accounting, revenue isrecorded only when cash is received, and an expense is recognizedonly when cash is paid. As a result, the cash basis of accounting oftenleads to misleading financial statements.(b) Politicians might desire a cash-basis accounting system over anaccrual-basis system because if an accrual-accounting system isused, it could mean that billions of dollars in government liabilitiespresently unrecorded would have to be reported in the federalbudget immediately. The recognition of these additional liabilitieswould make the deficit even worse. This is not what politicianswould like to see and be held responsible for.(c) Dear Senator,It is my understanding, after having taken a beginning course infinancial accounting, that the Federal government uses a cash-basis system rather than an accrual-basis accounting system.I am shocked at such a practice! There must be billions of dollarsof liabilities hidden in many contracts that have not been recordedyet for the mere reason that they havent been paid yet. I realizethat the deficit would dramatically increase if we were to implementan accrual system, but in all fairness, we citizens should be given amore accurate picture of what our governmen