Week 2 Assignment

Week Two Exercise Assignment

Revenue and Expenses

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 Accrued Expense

2. Understanding the closing process. Examine the following list of accounts:

Note Payable | Accumulated Depreciation: Building |

Alex Kenzy, Drawing | Accounts Payable |

Product Revenue | Cash |

Accounts Receivable | Supplies Expense |

Utility Expense |

Which of the preceding accounts

a. appear on a post-closing trial balance?

Accumulated Depreciation: Building

Note Payable

Accounts Payable

Accounts Receivable

Supplies Expense

b. are commonly known as temporary, or nominal, accounts?

Alex Kenzy, Drawing

Product Revenue

Utility Expense

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 be rendered in the future. By the end of December, one half of this amount had been earned. B, Deferred Revenue, Increased revenue by $1,500.

* Sally Corporation provided $1,500 of...