Homework Answers
| 1. Rent per month = 2,000 $ | |||||||||||||||
| 2. | |||||||||||||||
| Activity | Payment of rent for whole 6 months giving rise to prepaid rent | ||||||||||||||
| Accounts | Prepaid Rent a/c (Asset a/c) & Cash a/c (Asset a/c) | ||||||||||||||
| Statement(s) | Balance Sheet | ||||||||||||||
| Balance Sheet | Income Statement | ||||||||||||||
| Assets | = | Liabilities | + | Stockholders' Equity | Revenues | - | Expenses | = | Net Income | ||||||
| Account | Amount ($) | Account | Amount ($) | Account | Amount ($) | Account | Amount ($) | Account | Amount ($) | Amount ($) | |||||
| Prepaid Rent | 12000 | No entry | No entry | No entry | No entry | ||||||||||
| Cash | -12000 | No entry | No entry | No entry | No entry | ||||||||||
| Total | 0 | = | 0 | 0 | + | 0 | 0 | ||||||||
| 3. | |||||||||||||||
| Activity | Recognizing rent expense in Income statement for the month of September | ||||||||||||||
| Accounts | Prepaid Rent a/c (Asset a/c) & Rent expense a/c (Expense a/c) | ||||||||||||||
| Statement(s) | Balance Sheet & Income Statement | ||||||||||||||
| Balance Sheet | Income Statement | ||||||||||||||
| Assets | = | Liabilities | + | Stockholders' Equity | Revenues | - | Expenses | = | Net Income | ||||||
| Account | Amount ($) | Account | Amount ($) | Account | Amount ($) | Account | Amount ($) | Account | Amount ($) | Amount ($) | |||||
| Prepaid Rent | -2000 | No entry | Net Income | -2000 | No entry | Rent expense | 2000 | -2000 | |||||||
| Total | -2000 | = | 0 | 0 | + | 0 | -2000 | Total | 0 | - | 2000 | = | -2000 | ||
| 4. Net Income will be "Overstated" since we the accountant has failed to record rent expense for 3 months | |||||||||||||||
| It will be overstated by 6,000$ (which is rent expense for 3 months) | |||||||||||||||
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Assume that Stratton prepares adjustments only once a year, on
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Required:
1. Compute the monthly cost of the insurance
policy.
$per month
2. Identify and analyze the transaction to
record the purchase of the policy on April 1, 2017.
Activity
Accounts
Statement(s)
How does this entry affect the accounting equation?
If a financial statement item is...
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$37,800 interest-bearing note from Delgado Enterprises in payment
of an account receivable. Seacrest's year-end is December 31.
Delgado paid the note and interest on the due date. Assume 360 days
in the year.
Required:
1. Who is the maker and who is the payee of the
note?
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2. What is the maturity date of the
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$144,800 in cash. Assume that the computer is expected to have a
four-year life and an estimated salvage value of $20,000 at the end
of that time.
Required:
1. Identify and analyze the transaction to
record the purchase of the computer on July 1, 2017.
Activity
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Statement(s)
How does this entry affect the accounting equation?
If a financial statement item is not affected, select "No Entry"
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