1/30/23 -- Accounting: Chapters 3-4

On June 1, Year 1, a company paid an $18,900 premium on a 36-month insurance policy for coverage beginning on that date. Refer to that policy and fill in the blanks in the following table.

Balance Sheet --> Prepaid Insurance--December 31, Year 1--Accrual Basis: $___. December 31, Year 2 -- $____. December 31, Year 3 -- $___. December 31, Year 4 -- $___.

Income State --> Insurance Expense--December 31, Year 1--Accrual Basis: $___. December 31, Year 2 -- $___. December 31, $___. December 31, Year 4 -- $___. /// Cash basis: $___.

(a)  

Pablo Management has three employees, each of whom earns $205 per day. They are paid on Fridays for work completed Monday through Friday of the same week. Near year-end, the three employees worked Monday, December 31, and Wednesday, Thursday, and Friday, January 2, 3, and 4. New Year’s Day (January 1) was an unpaid holiday. Prepare the December 31 year-end adjusting entry for wages expense and record payment of the employees’ wages on Friday, January 4.

December 31: Wages Expense -- Debit: $___. Wages Payable -- Credit: $___.

January 4: Wages Expense -- Debit: $___. Wages Payable -- Debit: $___. Cash -- Credit: $___.

(a)  

A: Wages of $14,000 are earned by workers but not paid as of December 31.

B: Depreciation on the company’s equipment for the year is $10,720.

C: The Supplies account had a $440 debit balance at the beginning of the year. During the year, $5,152 of supplies are purchased. A physical count of supplies at December 31 shows $565 of supplies available.

D: The Prepaid Insurance account had a $5,000 balance at the beginning of the year. An analysis of insurance policies shows that $3,400 of unexpired insurance benefits remain at December 31.

E: The company has earned (but not recorded) $800 of interest revenue for the year ended December 31. The interest payment will be received 10 days after the year-end on January 10.

F: The company has a bank loan and has incurred (but not recorded) interest expense of $4,000 for the year ended December 31. The company will pay the interest five days after the year-end on January 5.

A: Wages Expense-Debit: $___. Wages Payable-Credit: $___.

B: Depreciation Expense-Equipment --- Debit: $___. Accumulated depreciation-equipment --- Credit: $___.

C: Supplies Expense-Debit: $___. Supplies-Credit: $___.

D: Insurance Expense-Debit: $___. Prepaid Insurance: $___.

E: Interest Receivable-Debit: $___. Interest Revenue-Credit: $___.

F: Interest Expense: $___. Interest Payable: $___.

(a)  

A: M&R Company provided $2,300 in services to customers in December, which are not yet recorded. Those customers are expected to pay the company in January following the company’s year-end.

B: Wage expenses of $1,300 have been incurred but are not paid as of December 31.

C: M&R Company has a $5,300 bank loan and has incurred (but not recorded) 7% interest expense of $371 for the year ended December 31. The company will pay the $371 interest in cash on January 2 following the company’s year-end.

D: M&R Company hired a firm that provided lawn services during December for $530. M&R will pay for December lawn services on January 15 following the company’s year-end.

E: M&R Company has earned $230 in interest revenue from investments for the year ended December 31. The interest revenue will be received on January 15 following the company’s year-end.

F: Salary expenses of $930 have been earned by supervisors but not paid as of December 31.

A: Accounts Receivable--Debit: $___: Services Revenue--Credit: $___.

B: Wages Expense--Debit: $___: Wages Payable--Credit: $___.

C: Interest Expense--Debit: $___: Interest Payable--Credit: $___.

D: Lawn Services Expense--Debit: $___: Lawn Services Payable--Credit: $___.

E: Interest Receivable--Debit: $___: Interest Revenue--Credit: $___.

F: Salary Expense--Debit: $___: Salary Payable--Credit: $___.

(a)  

A: Accounts Receivable--Debit: $___: Services Revenue--Credit: $___.

B: Depreciation Expense-Computers---Debit: $___: Accumulated Depreciation-Computers---Credit: $___.

C: Depreciation Expense-Office Furniture---Debit: $___: Accumulated Depreciation-Office Furniture---Credit: $___.

D: Salaries Expense--Debit: $___: Salaries Payable--Credit: $___.

E: Insurance Expense--Debit: $___: Prepaid Insurance--Credit: $___.

F: Office Supplies Expense--Debit: $___: Office Supplies--Credit: $___.

G: Utilities Expense--Debit: $___: Utilities Payable--Credit: $___.

(a)  

The ___ ___ ___ presumes that an organization’s ___ can be divided into specific time periods such as a month, a three-month quarter, a six-month interval, or a year. /// Most organizations use a ___ as their primary accounting period.

(a)  

Most organizations use a year as their primary accounting period; the reports for a one-year period are known as ___ financial statements. Many organizations also prepare ___ financial statements covering one, three, or six months of activity.

(a)  

Exhibit 3.1 shows various (a)   , or reporting, periods.

The annual reporting period is not always a calendar year ending on December 31. An organization can use a ___ year consisting of any 12 consecutive months or __ weeks. For example, Gap’s fiscal year consistently ___ the final week of ___ or the first week of February each year.

(a)  

___ ___ accounting records revenues when ___ and products are delivered and records expenses when ___ (matched with ___).

(a)