Question

Transaction Analysis and Adjustments For each of the following unrelated situations, determine the financial statement effect using the Transaction Analysis Template: a. Equipment purchased at the beginning of the month for $12,000 on account has an estimated useful life of 5 years. One-month's depreciation on the equipment is unrecorded. b. An estimated utilities expense of $545 has been incurred in the current month, but the utility bill has not been received. c. On the first day of the current month, payment was made for four months rent in advance in the amount of $8,000 Monthly statements are now being prepared for the current month end. d. Taylor Medical Equipment provides medical equipment for rent. A local nursing home pays $3,600 in advance for a three month rental of hospital beds. At the end of the current period, one month has passed Note: Use negative signs with answers, when appropriate Balance Sheet Income Statement Assets stockholders Equity • Liabilities Expenses Net Incom Transaction a. To record depreciation b. To record utilities c. To record rent d. To record revenue Revenues 0 0 0 0 0 0 0 0 0 Check

Answer 1

Income Statemet Balance Sheet Liabilities + Equity Revenue -200 Expenses = Net Income 200 -200 + = 545 + 545 -545 Transactions Assets a. To Record Depreciation -200 b To Record Utilities To Record Rent -2000 d. To Record Revenue received 1200 d. To Record Revenue received in Advance 2400 Total 14001 -545 -2000 II + 2000 -2000 ااه اناه + 1200 1200 1200 2400| + = 2945] + - 1545 1200 2745 - 1545

Note. Equipment purchase will increase Equipment and Decrease Cash , so impact in assets

Depreciation : Equipment 12000 for 5 years, so one yaer 2400 and one month 200

Rent paid 8000 in advance 6000 and 2000 as expense . Prepaid rent will increase and cash will decrease by 6000

Revenue 3600 Cash increase 3600 and revenue 1200 and revenue received in advance 2400

If you are recording Income and expense, you can avoid second d