Chapter 4 Flashcards
What are Accruals?
Records of Revenues and Expenses BEFORE cash is receieved or paid
What are Accrued Revenues?
Sales on Account (Accounts Reveivables)
What are Accrused Expenses?
Incurring expenses with a payable (salaries and utilities)
What are Deferrals?
Records of Rveenues and Expenses AFTER cash has been receieved or paid
What are Deferred Revenues?
Unearned salves, service or subscription revenue
What are Deferred Expenses?
Prepaid Expenses, Supplies, Depreciation
On Oct. 30, a law firm provided consulting services to a client for $1,900. The client will not pay the firm until the following month. What adjusting entry will the law firm record at month’s end?
Dr. Accounts Receivable 1,900
Cr. Service Revenue 1,900
On Oct. 1, a law firm recieved $500 in advance from a new client for a legal consultation. On Oct. 31, the legal consultation was provided. The adjusting entry on Oct. 31 will include a:
10/31
Dr. Deferred Revenue 500
Cr. Service Revenue 500
On Oct. 1, a law firm purchased $1,700 in supplies. Supplies leftover from the prior month amounted $200. At the end of Oct., a count revealed $600 in supplies remained on hand. What is the adjusting entry at the end of Oct. related to supplies?
Dr. Supplies Expense 1300
Cr. Supplies 1300
A company purchased equipment costing $5000 on Jan. 1, Year 1. They estimate the useful life to be 4 years and a salvage value of $1000. The company uses straight-line depreciation. Calculate depreciation expense and book value at the end of Year 1, respectively.
$1000, $4000
What is the equation for straight-line depreciation?
(Cost of Asset - Salvage Value of Asset)/Useful life of Asset in Years
A law firm owes its attorneys(employees) $56,000 for salries related to the month of Oct. However, thr firm won’t pay the employees until the following month. What adjusting entry will the law firm record at month’s end?
Dr. Salaries Expense 56,000
Cr. Salaries Payable 56,000
What is the equation for Book Value?
Cost - Accumulated Depreciation
To close revenue accounts, a company will
Debit Revenues and Credit Retained Earnings
To close expense accounts, a company will
Debit Retained Earnings and Credit Expenses
On Aug. 1, a Sun Devil LLC is hired by a customer to provide proof reading services for $1200 a month. Throughout the month of Aug., Sun Devil LLC performs the proof reading services for the client, however, the client does not pay for the services until the following month.
(a) What is the adjusting journal entry that Sun Devil LLC will record on Aug. 31(month’s end)?
Aug. 31.
Dr. Accrued Revenue 1200
Cr. Services Revenue 1200
To close dividend accounts, a company will
Debit Retained Earnings and Credit Dividends
On Aug. 1, a Sun Devil LLC is hired by a customer to provide proof reading services for $1200 a month. Throughout the month of Aug., Sun Devil LLC performs the proof reading services for the client, however, the client does not pay for the services until the following month.
(b) What is the journal entry that Sun Devil LLC will record when the customer pays for the services in the following month?
Sept. 1
Dr. Cash 1200
Cr. Accrued Revenue 1200
Sparky Monthly is a company that offers digital news subscription to students each month. On Jan. 1, a customer pays $120 in advance to Sparky Monthly for a 12-month subscription.
(a) What is the entry that Sparky Monthly will record on Jan. 1?
Dr. Cash 120
Cr. Deferred Revenue 120
Sparkly Monthly is a company that offers digital news subscription to students each month. On Jan. 1, a customer pays $120 in advance to Sparky Monthly for a 12-month subscription.
(c) What is the adjusting entry that Sparky Monthly will record on Feb. 28(month’s end)?
2/28
Dr. Deferred Revenue 10
Cr. Subscription Revenue 10
Sparky Monthly is a company that offers digital news subscription to students each month. On Jan. 1, a customer pays $120 in advance to Sparky Monthly for a 12-month subscription.
(b) What is the adjusting entry that Sparkly Monthly will record on Jan. 31?
1/31
Dr. Deferred Reveune 10
Cr. Subscription Revenue 10
What is the journal entry for Accrued Revenues?
Dr. Accounts Receivable
Cr. Service Revenue
What is the journal entry and adjusting entry for Deferred Revenues?
Dr. Cash
Cr. Deferred Revenue
(adjust) Dr. Referred Revenue
Cr. Service Revenue
What is the journal entry for Accrued Expenses?
Dr. Salaries Expense
Cr. Salaries Payable
Dr. Interest Expense
Cr. Interest Payable
What is the journal entry and adjusting entry for Deferred Expenses?
Dr. Prepaid
Cr. Cash
(adjust) Dr. Expense
Cr. Prepaid
Dr. Supplies
Cr. Cash
(adjust) Dr. Supplies Expense
Cr. Supplies
Dr. Long-Term asset
Cr. Cash
(adjust) Dr. Depreciation Expense
Cr. Accumulated Depreciation
