a. On September 1,received advance payment from a shopping centre for property managment services to be performed over the three months period begining Septmeber 1. The entire amount received was credited to our revenue account?
ANS. No adjusting entry is needed, because although the revenue was collected in advance on September 1, it has all been earned prior to year-end. Thus, inclusion of the entire amount in revenue of the period is correct.
b. On December 1 received advance payment from the same customer described in parts a services to be rendered over the three months period begining December 1. This time, the entire amount recived was credited to unearned revenue account?
ANS. Three month's revenue was collected in advance on December 1 and was credited to an unearned revenue account. At December 31, an adjusting entry is needed to recognize that one-third of this advance payment that has now been earned as revenue. The effects of this adjusting entry will be to reduce a liability (unearned revenue) and increase revenue recognized as earned in the period. Of course, recognizing revenue also increases owners’ equity.
c. Rendered managment seervices for many customers in December. Normal procedure is to record revenue on the date the customer is build, which is early in the month after the services have been rendered?
ANS. As we know the customers are billed after the services are rendered. So an adjusting entry is required to record the amount of services rendered in December 2009.The effect of this adjusting entry would be an increase in asset,increase in revenue earned during this period and an increase in owner's equity
d. On December 15, made full payment for a one year insurance policy that goes into effect on January 2, 2010. The cost of the policy was debited to unexpired insurance?
ANS. No adjusting entry is required because the insurance will go into effect on January 02, 2010.And no benefit has been derived from the asset.So no insurance expense will be recorded on December 2009.
e. Numerous purchasis of equipment were to debited to asset accounts, rather then to expence account?
ANS. An adjusting entry is required because the depreciation on equipment is required to be recorded on December 2009.The effect of this would be an increase in expense,decrease in asset and decrease in Owner's equity.
f. Payroll expence is recorded when employees are payed. Payday for the last two weeks of December fall on January 2, 2010?
ANS. An adjusting entry is required for the amount of salaries for December 2009, because the salaries of this month are due on Janauary 02,2010.The effect of this adjusting entry would be an increase in expense , increase in liability and decrease in owner's equity.
impressive
ReplyDelete