Horngren's Accounting (12th Edition)
12th Edition
ISBN: 9780134486444
Author: Tracie L. Miller-Nobles, Brenda L. Mattison, Ella Mae Matsumura
Publisher: PEARSON
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Textbook Question
Chapter 3, Problem P3.36APGA
Journalizing and posting adjustments to the four-column accounts and preparing an adjusted
Learning Objectives 3,4 |
3. Adjusted trial balance $572, 040 total |
The unadjusted trial balance of Guthrie Inn Company at December 31, 2018, and the data needed for the adjustments follow.
GUTHRIE INN COMPANY Unadjusted Trial Balance December 31, 2018 | ||
Balance | ||
Account Title | Debit | Credit |
Cash | $13,500 | |
Accounts Receivable | 15,100 | |
Prepaid Insurance | 4,600 | |
Office Supplies | 800 | |
Building | 530,000 | |
$260,000 | ||
Accounts Payable | 1,710 | |
Salaries Payable | 0 | |
Unearned Revenue | 3,600 | |
Guthrie, Capital | 288,950 | |
Guthrie, Withdrawals | 2,340 | |
Service Revenue | 15,500 | |
Salaries Expense | 2,800 | |
Insurance Expense | 0 | |
Depreciation Expense—Building | 0 | |
Advertising Expense | 620 | |
Supplies Expense | 0 | |
Total | $569,760 | $569,760 |
Adjustment data at December 31 follow:
- As of December 31, Guthrie had $700 of Prepaid Insurance remaining.
- At the end of the month, Guthrie had $500 of office supplies remaining.
- Depreciation on the building is $1,200.
- Guthrie pays its employees weekly on Friday. Its employees earn $1,800 for a five-day workweek. December 31 falls on Wednesday this year.
- On November 20, Guthrie contracted to perform services for a client receiving $3,600 in advance. Guthrie recorded this receipt of cash as Unearned Revenue. As of December 31, Guthrie has $1,600 still unearned.
Requirements
- Journalize the
adjusting entries on December 31. - Using the unadjusted trial balance, open the accounts (use a four-column ledger) with the unadjusted balances.
Post the adjusting entries to the ledger accounts. - Prepare the adjusted trial balance.
- Assuming the adjusted trial balance has total debits equal to total credits, does this mean that the adjusting entries have been recorded correctly? Explain.
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Analysis of Receivables Method
At the end of the current year, Accounts Receivable has
balance of $4,375,000; Allowance for Doubtful Accounts has a debit balance of $21,300; and sale
for the year total $102,480,000. Using the aging method, the balance of Allowance for Doubtful Accounts is estimated as $205,000.
a. Determine the amount of the adjusting entry for uncollectible acfounts.
b. Determine the adjusted balances of Accounts Receivable, Allowance for Doubtful Accounts, and Bad Debt Expense.
Accounts Receivable
Allowance for Doubtful Accounts
Bad Debt Expense
c. Determine the net realizable value of accounts receivable.
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The analysis of receivables method is based on the assumption that the longer an account receivable is outstanding the less likely that it will be
collected.
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In a service-type business, revenue is considered recognized
when the service is performed.
at the end of the year.
at the end of the month.
when cash is received.
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Percent of Sales Method
At the end of the current year, Accounts Receivable has a balance of $555,000; Allowance for Doubtful Accounts has a credit balance of $5,000; and sales for
the year total $2,500,000. Bad debt expense is estimated at 1/4 of 1% of sales.
a. Determine the amount of the adjusting entry for uncollectible accounts.
b. Determine the adjusted balances of Accounts Receivable, Allowance for Doubtful Accounts, and Bad Debt Expense.
Accounts Receivable
24
Allowance for Doubtful Accounts
Bad Debt Expense
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c. Determine the net realizable value of accounts receivable.
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a. Remember that since accounts receivable are created by credit sales, uncollectible accounts çan be estimated as a percent of credit sales. If the
portion of credit sales to sales id relatively constant, the…
Chapter 3 Solutions
Horngren's Accounting (12th Edition)
Ch. 3 - Prob. 1QCCh. 3 - Get Fit Now gains a client who prepays S540 for a...Ch. 3 - The revenue recognition principle requires...Ch. 3 - Adjusting the accounts is the process of Learning...Ch. 3 - Which of the following is an example of a deferral...Ch. 3 - Assume that the weekly payroll of In the Woods...Ch. 3 - Prob. 7QCCh. 3 - A equity overstated income statement: expense...Ch. 3 - A worksheet Learning Objective 6 is a journal used...Ch. 3 - On February 1, Clovis Wilson Law Firm contracted...
Ch. 3 - What is the difference between cash basis...Ch. 3 - Which method of accounting (cash or accrual basis)...Ch. 3 - Prob. 3RQCh. 3 - What is a fiscal year? Why might companies choose...Ch. 3 - Under the revenue recognition principle, when is...Ch. 3 - Under the matching principle, when are expenses...Ch. 3 - When are adjusting entries completed and what is...Ch. 3 - What are the two basic categories of adjusting...Ch. 3 - What is a deferred expense? Provide an example.Ch. 3 - What is the process of allocating the cost of a...Ch. 3 - What is a contra account?Ch. 3 - Prob. 12RQCh. 3 - What does accumulated depreciation represent?Ch. 3 - Prob. 14RQCh. 3 - What is a deferred revenue? Provide an example.Ch. 3 - What is an accrued expense? Provide an example.Ch. 3 - What is an accrued revenue? Provide an example.Ch. 3 - What are the two rules to remember about adjusting...Ch. 3 - When is an adjusted trial balance prepared, and...Ch. 3 - Prob. 20RQCh. 3 - What is a worksheet, and how is it used to help...Ch. 3 - If a payment of a deferred expense was recorded...Ch. 3 - If a payment of a deferred expense was recorded...Ch. 3 - Comparing cash and accrual basis accounting for...Ch. 3 - Comparing cash and accrual basis accounting for...Ch. 3 - Applying the revenue recognition principle...Ch. 3 - S3-4 Applying the matching principle Learning...Ch. 3 - S3-5 Identifying types of adjusting entries...Ch. 3 - Journalizing and posting adjusting entries for...Ch. 3 - Journalizing and posting an adjusting entry for...Ch. 3 - Journalizing and posting an adjusting entry for...Ch. 3 - Journalizing and posting an adjusting entry for...Ch. 3 - Journalizing and posting an adjusting entry for...Ch. 3 - Prob. S3.11SECh. 3 - Journalizing an adjusting entry for accrued...Ch. 3 - Preparing an adjusted trial balance Learning...Ch. 3 - Determining the effects on financial statements...Ch. 3 - Preparing a partial worksheet Learning Objective 6...Ch. 3 - Prob. S3A.16SECh. 3 - Prob. S3A.17SECh. 3 - E3-18 Comparing cash and accrual basis accounting...Ch. 3 - Comparing cash and accrual basis accounting and...Ch. 3 - Determining the amount of prepaid expenses...Ch. 3 - E3-21 Journalizing adjusting entries Learning...Ch. 3 - E3-22 Journalizing adjusting entries Learning...Ch. 3 - Journalizing adjusting entries Learning Objective...Ch. 3 - Journalizing adjusting entries and posting to...Ch. 3 - Journalizing adjusting entries and posting to...Ch. 3 - Preparing an adjusted trial balance Learning...Ch. 3 - Identifying the impact of adjusting entries on the...Ch. 3 - Journalizing adjusting entries and analyzing their...Ch. 3 - Using the worksheet to record the adjusting...Ch. 3 - Using the worksheet to prepare the adjusted trial...Ch. 3 - Understanding the alternative treatment of prepaid...Ch. 3 - Understanding the alternative treatment of...Ch. 3 - Journalizing adjusting entries and subsequent...Ch. 3 - Journalizing adjusting entries and identifying the...Ch. 3 - Journalizing and posting adjustments to the...Ch. 3 - Journalizing and posting adjustments to the...Ch. 3 - Using the worksheet to record the adjusting...Ch. 3 - Prob. P3A.38APGACh. 3 - Prob. P3.39BPGBCh. 3 - P3-40B Journalizing adjusting entries and...Ch. 3 - P3-41B Journalizing and posting adjustments to the...Ch. 3 - Prob. P3.42BPGBCh. 3 - Prob. P3.43BPGBCh. 3 - Prob. P3A.44BPGBCh. 3 - Using Excel to journalize and post adjusting...Ch. 3 - Prob. P3.46CPCh. 3 - Prob. P3.47PSCh. 3 - Tying It All Together Case 3-1
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