Question : 188. Complete the missing items in the following chart: Prepaid Expenses Examples : 1239714

 

188. Complete the missing items in the following chart:

Prepaid Expenses

Examples

Adjusting Entry

Financial Statement Impact if Adjusting Entry is Omitted

Supplies,(a)

Dr. Expense   Cr. Asset

Income Statement:   Revenues: No effect   Expenses: Understated   Net income:  (b)Balance Sheet:   Assets:       (c)   Liabilities:   (d)   Stockholders’ equity:  Overstated

Unearned Revenues

Examples

Adjusting Entry

Financial Statement Impact if Adjusting Entry is Omitted

Unearned rent,(e)

(f)

Income Statement:   Revenues: (g)   Expenses: No effect   Net income:  (h)Balance Sheet:   Assets:       (i)   Liabilities:   Overstated   Stockholders’ equity:  (j)

Accrued Revenues

Examples

Adjusting Entry

Financial Statement Impact if Adjusting Entry is Omitted

Interest income due on a note,(k)

Dr. Asset   Cr. Revenue

Income Statement:   Revenues: (l)   Expenses: (m)   Net income:  UnderstatedBalance Sheet:   Assets:       (n)   Liabilities:   (o)   Stockholders’ equity:  Understated

Accrued Expenses

Examples

Adjusting Entry

Financial Statement Impact if Adjusting Entry is Omitted

Interest due on a notes payable, (p)

(q)

Income Statement:   Revenues: No effect   Expenses: (r)   Net income:  (s)Balance Sheet:   Assets:       (t)   Liabilities:   Understated   Stockholders’ equity:  (u)

 

 

 

 

 

 

189. Income statements for Debra’s Design Services are shown below. 

Debra’s Design ServicesIncome StatementsFor the Years Ended December 31, 2012 and 2011

 

 

 

 

 

 

Fees earned

$765,340

$696,520

Operating expenses:

 

 

    Wages expense

$254,000

$214,600

    Rent expense

120,000

108,000

    Supplies expense

76,500

98,715

    Miscellaneous expense

            _  11,680

          16,420

Total operating expenses

$462,180

$437,735

Net income

$303,160

$258,785

 

 

 

 

 

 

 

 

(a)  Prepare a vertical analysis of Debra’s Design Services income statements.(b)  Does the analysis indicate favorable or unfavorable trend(s)?(c)  What other information would enhance the analysis? 

190. Two income statements for Galaxy Services are shown below: 

Galaxy ServicesIncome StatementsFor the Years Ended December 31, 2012 and 2011

 

 

 

 

 

 

Fees earned

$688,806

$766,172

Operating expenses:

 

 

   Wages expense

288,806

236,060

   Rent expense

108,000

118,800

   Supplies expense

68,850

108,587

   Miscellaneous expense

            __10,512

          18,062

Total operating expenses

$415,962

$481,509

Net income

$272,844

$284,663

 

 

 

 

 

 

 

(a)  Prepare a vertical analysis of Galaxy Services income statements.(b)  What type of trend(s) are indicated: favorable or unfavorable trend?(c)  What other information would enhance the analysis? 

191. A business pays bi-weekly salaries of $20,000 every other Friday for a ten-day period ending on that day.  The last pay day of December is Friday, December 27.  Assuming the next pay period begins on Monday, December 30, journalize the adjusting entry necessary at the end of the fiscal period (December 31). 

Date

Description

Post Ref

Debit

Credit