Math

Checkpoint: Adjustments and accrual and cash basis accounting

3-1

a. Unearned revenues

B. accrued expenses

C. accrued expenses

D. accrued revenue

E. prepaid expenses

3-9

Harden Co. earned $39,000 in revenues and received $33,000 cash from their customers. The company incurred expenses of $22,500 but did not pay $2,250 at the end of the year. Harden prepaid $3,750 cash for the expenses that would incur the next year. Calculate the first year net income under both the cash basis and accrual basis of accounting.

C ash received from customer $33,000

Less expenses paid in cash (22,500+2,250+3, 750,) 28,500

Net income

Net income under the cash basis

Revenues earned $39,000

Less expenses accrued (22,500, 2,250)20,000

Net income $19,000

3-1

a. Record this period’s depreciation expense

b. Record accrued salaries expense

c. Record period’s use of prepaid expenses

d. Record accrued interest revenues

e. Record accrued interest expenses

f. Record of previously unearned income

Salaries expense 13,280

Salaries payable 13,280

Answer is B

Interest expense 2,208

Interest payable 2,208

Answer is E

Insurance expense 3,180

Prepaid insurance 3,180

Answer is C

Unearned...