Like all other businesses TELUS adjusts accounts prior to

year end #6607

Like all other businesses, TELUS adjusts accounts prior to year-end to measure assets,
liabilities, revenues, and expenses for the financial statements. Examine TELUS's balance
sheet in Appendix A , and pay particular attention to (a) Prepaid Expenses and (b) Accounts
Payable and Accrued Liabilities.Requirements1. Why aren't Prepaid Expenses "true"
expenses?2. Open T-accounts for the Prepaid Expenses account and the Accounts Payable
and Accrued Liabilities account. Insert TELUS's balances (in millions) at December 31, 2010.3.
Journalize the following for the year ended December 31, 2011. Key entries by letter, and show
accounts in millions. Explanations are not required.a. Paid the beginning balance of Accounts
Payable and Accrued Liabilities.b. Allocated Prepaid Expenses of $113 to Goods and Services
Purchased.c. Recorded Accounts Payable and Accrued Liabilities in the amount of $1,419.
Assume this relates to Goods and Services Purchased.d. Recorded a prepayment of $144 in
services to Prepaid Expenses.4. Post these entries and show that the balances in Prepaid
Expenses and in Accounts Payable and Accrued Liabilities agree with the corresponding
amounts reported in the December 31, 2011, balance sheet.5. Compute the current ratios and
debt ratios for TELUS at December 31, 2011, and at December 31, 2010. Did the ratio values
improve, deteriorate, or hold steady during the year ended December 31, 2011? Do the ratio
values indicate financial strength or weakness?View Solution:
Like all other businesses TELUS adjusts accounts prior to year end

ANSWER
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