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(ACCT102)[2011](s)quiz~cmwongaa^_26006.pdf
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A.
Adjusting Entry (8 marks, suggested time 10 minutes)
In general journal form, record adjusting entries for 2010 for the following items. Assume that December 31 is the end of the annual accounting period.
(a)
The Prepaid Insurance account shows a debit balance of $2,400. This represents the cost of a three-year fire insurance policy that was purchased on October 1 2010. (Hint: how much of it has expired?)
(b)
On November 1 of 2010, the company received cash for Unearned Rent Revenue $1,500. This amount represented the rent for a three-month period beginning November 1.
(c)
Estimated depreciation on office equipment for 2010 is $600.
(d)
Salaries not yet paid to the employees amount to $400.
Dr.
Cr.
(a)
Insurance Expense
200
Prepaid Insurance
200
$2,400/3 year (3/12) = $200
(b)
Unearned Rent Revenue ($1,500/3 months2)
1000
Rent Revenue
1000
(c)
Depreciation Expense--Office Equipment
600
Accumulated Depreciation, Office Equipment
600
(d)
Salaries Expense (Wage Expense)
400
Salaries Payable (Wage Payable)
400
B.
Income Statement (9 marks, suggested time 10 minutes)
On December 31, 2010, the following are the updated balances for all the accounts of Rubens Cubic Storage after the adjusting entries and before the closing entries.
Required: Prepare a single-step income statement for Rubens Cubic Storage for the year 2010 based on the information given. (Hint: Identify the accounts that belong to income statement.) Remember to include the complete heading.
December 31, 2010
Dr.
Cr.
Cash
$4,450
Accounts receivable
1,400
Inventory
830
Prepaid insurance
80
Buildings
98,000
Accumulated depreciation-- buildings
$29,000
Land
115,000
Wages payable
880
Taxes payable
1,400
Interest payable
2,200
Long-term notes payable
174,710
Common stock
10,000
Retained earnings
20,520
Dividend
21,000
Rent revenue
50,000
Wages expense
28,880
Utilities expense
1,900
Taxes expense
2,400
Insurance expense
800
Depreciation expense, buildings
5,570
Interest expense
8,400
Totals
$288,710
$288,710
Ruben's Cubic Storage
Income Statement
For Year Ended December 31, 2010
Revenues:
Rent Revenue
$50,000
Operating expenses:
Wages expense
28,880
Utilities expense
1,900
Taxes expense
2,400
Insurance expense
800
Depreciation expense, buildings
5,570
Interest expense
8,400
Total operating expenses
47,950
Net income
$2,050
C.
Short Questions (8 marks; suggested time 10 minutes)
1.
B