ACCT 503 Week 2 Practice Exercise (E2-20A, E2-21A, E3-20A, E3-22A, S3-13, E3-26A)(Syllabus, 2019)

ACCT 503 Week 2 Practice Exercise (E2-20A,  E2-21A, E3-20A, E3-22A, S3-13, E3-26A)(Syllabus, 2019)

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E2-20A

Dr. Kristine Cohen opened a medical practice specializing in physical therapy. During the first month of operation

(July), the business, titled  Dr. Kristine Cohen, Professional Corporation (P.C.), experienced the following events:

 

Jul 6    Cohen invested $148,000 in the business, which in turn issued its common stock to her.

      9     The business paid cash for land costing $66,000.  Cohen plans to build an office building on the land.

                       

                       

                       

                       

 

           

 E2-21A Continued

Requirement 1. Post the entries to the ledger, using T-accounts. Key transactions by date. (Record transactions from the 15-31 of the month as occurring on the last day of the month.)

Calculate the balance for each account and enter it on the appropriate side of each T-account.

E3-20A

Requirement 1. Journalize the adjusting entries. (Record debits first, then credits. Exclude explanations from any journal entries.)

a. Prepaid insurance, beginning, $300. Payments for insurance during the period, $2,900. Prepaid insurance, ending, $600.

Requirement 2. Suppose the adjustments were not made. Compute the overall overstatement or understatement of net income as a result of the omission of these adjustments.

Enter the amounts of either the overstatement or understatement of net income as a result of omitting these adjustments. (Use parentheses or a minus sign when entering understatements.)

Net income over (under) stated by omission of:        

Insurance Expense      $2,600

Interest Revenue         (2,400)

Service Revenue         (1,300)

Depreciation Expense 5,500

Salary Expense            5,200

Income Tax Expense   7,000

Total over (under) statement of net income    $16,600

 

 

 

 

 

 

 

 

E3-22A

 

Dellroy Rentals Company faced the following situations.

a. The business has interest expense of $3,200 that it must pay early in January 2017.

b. Interest revenue of $4,100 has been earned but not yet received.

c. On July 1, 2016, when the business collected $12,000 rent in advance, it debited Cash and credited Unearned Rent

Revenue. The tenant was paying for two years' rent.

d. Salary expense is $6,100 per day Monday through Friday and the business pays employees each Friday. For the

purpose of this calculation, assume December 31 falls on a Thursday.

e. The unadjusted balance of the Supplies account is $3,200. The total cost of supplies on hand is $1,300.

f. Equipment was purchased on January 1 of this year at a cost of $180,000. The equipment's useful life is five years.

There is no residual value. Record depreciation for this year and then determine the equipment's book value.

 

 

 

 

S3-13

 

Due to the terms of its lease, Peachtree Services, Inc., pays the rent for its new office space in one annual payment of

$24,000 on August 1,2016.  The lease covers the period of August 1,2016, through July 31, 2017. Peachtree Services has a year-end of December 31. Assume that Peachtree Services had no other prepaid rent transactions, nor did it have a Prepaid Rent beginning balance in 2016.  Give the journal entries that Peachtree Services would make for (a) the annual rent payment of

$24,000 on August 1 and (b) the adjusting entry for rent expense on December 31, 2016.  What is the balance of Prepaid Rent at

December 31, 2016?

 

 

 

 

Give the journal entries that Peachtree Services would make for (a) the annual rent payment of $24,000 on August 1 and (b) the adjusting entry for rent expense on December 31, 2016. What is the balance of Prepaid Rent at December 31, 2016?

(Record debits first, then credits. Exclude explanations from any journal entries.)

Give the journal entry that Peachtree Services would make for (a) the annual rent payment of $24,000 on August 1.

 

E3-26A

 

Consider the following selected accounts from the records of North Pole Enterprises at December 31, 2016.

Requirement

1.         Prepare the closing entries for North Pole Enterprises at December 31, 2016. How much net income did North Pole

Enterprises earn during 2016?  Prepare a T-account for Retained Earnings to show the December 31, 2016,

balance of Retained Earnings.

 

Begin by preparing the closing entries for North Pole Services Enterprises. Record the entry to close out the revenue accounts. (Record debits first, then credits. Exclude explanations from any journal entries. Check your spelling carefully and do not abbreviate. Use only the account names provided in the problem statement.)

How much net income did North Pole Enterprises earn during 2016?

 

Prepare a T-account for Retained Earnings to show the December 31, 2016, balance of Retained Earnings. Post the beginning balance and closing entries to Retained Earnings and determine the ending balance.

 

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