Week Two Template B Acc205

Week Two Template B Acc205

Week 2 Exercise Solutions - Set B
1. Recognition of concepts.
Jim Armstrong operates a small company that books entertainers for theaters, parties, conventions, and so forth. The company's fiscal year ends on June 30.   Consider the following items and classify each as either: (1) prepaid expense, (2) unearned revenue, (3) accrued expense, (4) accrued revenue, or (5) none of the foregoing.

a Interest owed on the company's bank loan, to be paid in early July-Accrued Expense
b Professional fees earned but not billed as of June 30-Accrued Revenue
c Office supplies on hand at year-end-Prepaid Expense
d An advance payment from a client for a performance next month at a convention-Unearned Revenue
e The payment in part (d) from the client's point of view-Prepaid expense
f Amounts paid on June 30 for a 1-year insurance policy-Prepaid Expense
g The bank loan payable in part (a)-Accrued Expense
h Repairs to the firm's copy machine, incurred and paid in June-None of the foregoing

2. Understanding the closing process. Examine the following list of accounts:
Note Payable, Alex Kenzy-Drawing, Product Revenue, Accounts Receivable, Utility Expense,
Accumulated Depreciation: Building, Accounts Payable, Cash, Supplies Expense
Which of the preceding accounts
a. appear on a post-closing trial balance?
1 Accounts Receivable
2 Product Revenue
3 Alex Kenzy- Drawing
4 Note Payable
5 Accumulated Depreciation
b. are commonly known as temporary, or nominal, accounts?
1 Product Revenue
2 Accounts Receivable
3 Accumulated Depreciation
4 Utility Expense
c. generate a debit to Income Summary in the closing process?
1 Accounts Receivable
2 Product Revenue
d. are closed to the capital account in the closing process?
1 Accounts Receivable

3. Adjusting entries and financial statements. The following information pertains to Sally Corporation:
The company previously collected $1,500 as an advance payment for services to...

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