Chapter 3 exercises

1. A company has 20 employees who each earn $500 per week for a 5-day week that begins on Monday. December 31
of Year 1 is a Monday, and all 20 employees worked that day.

a) Prepare the required adjusting journal entry to record accrued salaries on December 31.
b) Prepare the journal entry to record the payment of salaries on January 5 of the next year.

2. a) Topflight Company had $1,500 of store supplies at the beginning of the current year. During this year, Topflight
purchased $8,250 worth of store supplies. On December 31, $1,125 worth of store supplies remained. Calculate the
amount of Topflight Company's store supplies expense for the current year and record it.

b) On January 1, 2010 a company paid $24,000 cash for 2 year of rent in advance and adjusting entries are made at the
end of each month. Calculate each month’s rental expense and the balance of Prepaid Rent as of December 31, 2010.

3. Prepare general journal entries on December 31 to record the following unrelated year-end adjustments.
a. Estimated depreciation on office equipment for the year, $4,000.
b. The Prepaid Insurance account has a $3,680 debit balance before adjustment. An examination of insurance policies
shows $950 of insurance expired.
c. The Prepaid Insurance account has a $2,400 debit balance before adjustment. An examination of insurance policies
shows $600 of unexpired insurance.
d. The company has three office employees who each earn $100 per day for a five-day workweek that ends on Friday.
The employees were paid on Friday, December 26, and have worked full days on Monday, Tuesday, and Wednesday,
December 29, 30, and 31.
e. On November 1, the company received 6 months' rent in advance from a tenant whose rent is $700 per month. The
$4,200 was credited to the Unearned Rent account.
f. The company collects rent monthly from its tenants. One tenant whose rent is $750 per month has not paid his rent
for December.
4. On Dec. 01 Company A purchased a car for use that costs $30 000. Estimated useful life of the car is for 20 year and
salvage value is equal to 0. Calculate the depreciation expense for the month end and prepare the journal entry to
record that expense.

5. During the current year ended December 31, clients paid fees in advance for accounting services amounting to
$25,000. These fees were recorded in an account called Unearned Accounting Fees. If $3,500 of these fees remains
unearned on December 31 of this year, present the December 31 adjusting entry to bring the accounts up to date.
6. Bella Beauty Salon's unadjusted balance of accounts for the current year follows:

Additional information:

a. An insurance policy examination showed $1,240 of expired insurance.

b. An inventory count showed $210 of unused shop supplies still available.

c. Depreciation expense on shop equipment, $350.
d. Depreciation expense on the building, $2,220.
e. An employee hired a space behind the spa, the accrued rent revenues of $200 was unrecorded at the time the trial
balance was prepared.
f. $800 of the Unearned Rent account balance was earned by year-end.
g. The one employee, a receptionist, works a five-day workweek at $50 per day. The employee was paid last week but
has worked four days this week for which she has not been paid.
h. Three months' property taxes, totalling $450, have accrued. This additional amount of property taxes expense has
not been recorded.
i. One month's interest on the note payable, $600, has accrued but is unrecorded.

j. The Spa has provided service to a customer for a package of $1000 but not yet paid and recorded.

Prepare adjusting entries.

7. Western Company had $500 of store supplies available at the beginning of the current year. During the year
Western Company purchased $2,750 worth of store supplies. On December 31 of this year $375 worth of store
supplies remained.

a. Calculate the amount of Western Company's store supplies expense for the current year. (Show your calculations.)

b. Prepare the journal entry to adjust the supplies account.

 8. In general journal form, record the December 31 adjusting entries for the following transactions and events. Assume
that December 31 is the end of the annual accounting period.
a. The Prepaid Insurance account shows a debit balance of $2,340, representing the cost of a three-year fire insurance
policy that was purchased on October 1 of the current year.
b. The Office Supplies account has a debit balance of $400; a year-end inventory count reveals $80 of supplies still on
hand.
c. On 1 Nov, received $1,500 cash from customer for a service to be provided in 3 months.
d. Estimated depreciation on office equipment is $600.
e. Accrued salaries amount to $400.

f. Accrued rent revenue was $1000, not yet been paid nor recorded.

(all entries dated December 31)

9. Company had trial balance as at 30, November 2012 as followed:

A Company

Trial balance

30 November, 2012

Dr Cr

Cash 25540
Prepaid insurance 1200
Account receivable 3240
Supplies 6540
Equipment - Car 26000
Accumulated depreciation - 21000
Car
Account payable 5320
Unearned rent revenue 4200
Borrowings 12012
Contributed Capital 16200
Retained earnings 1788
Consulting revenue 4000
Salary expense 1000
Advertising expense 1000
Total 64520 64520
Additional information
1. depreciation expense on equipment is $200.
2. $700 of Unearned rent revenue balance was earned by month end.
3. Insurance for November totalled $200 which was paid in advance.
4. Accrued salary totalled $1000, not yet paid and recorded.
5. Supplies remained $6040

- Prepare general journal for the company

- Prepare Income statement for November 2012.
Prepare Balance Sheet as at 30 November 2012.
1.

2. a) $1,500 + $8,250 - $1,125 = $8,625

b) Rental expense of each month = $24,000 : 24 = $ 1000

The total rental expenses from 1/1/2010 – 31/21/2010 = $1000 x 12 = $12,000

The balance of prepaid rent = $24,000 - $12,000 = $12,000

3.

4. Depreciation expense for the month end = (30000 - 0)/(20*12) = $ 125

Dec. 31 DR Depreciation expense 125

CR Accumulated depreciation 125

5. Services revenue already earned in December = 25 000 – 3500 = $ 21500

Dec. 31 DR Unearned accounting fees 21500

CR Accounting fees earned 21500

6.

j. Account receivable 1000

Fees earned 1000

7.
8.

Câu 9.

Additional information

1. Dr Depreciation expense 200

Cr Accumulated depreciation 200

2. Dr Unearned rent revenue 700

Cr rent revenue 700

3. Dr Insurance expense 200

Cr Prepaid insurance 200

4. Dr salary expense 1.000

Cr salary payable 1.000

5. Dr Supplies expense 500

Cr Supplies 500
 A Company

Trial balance

30 November, 2012

Dr Cr

Cash 25540

Prepaid insurance 1000

Account receivable 3240

Supplies 6040

Equipment - Car 26000

Accumulated depreciation - Car 21200

Account payable 5320

Unearned rent revenue 3500

Borrowings 12012

Contributed Capital 16200

Retained earnings 1788

Consulting revenue 4000

Salary expense 2000

Advertising expense 1000

Supply expense 500

insurance expense 200

depreciation expense 200

rent revenue 700

Salaries payable 1000

Total 65.720 65.720

Other way

Net income = Revenue – Expense = 4.700 – 3.900 = 800

A Company

Balance sheet

30 November, 2012
 Dr Cr

Cash 25540

Prepaid insurance 1000

Account receivable 3240

Supplies 6040

Equipment – Car 26000

Accumulated depreciation – Car 21200

Account payable 5320

Unearned rent revenue 3500

Borrowings 12012

Contributed Capital 16200

Retained earnings 1788

Salaries payable 1000

Net income 800

Total 61.820 61.820