Nominal/Temporary Accounts Income Statement Account Revenues/Income, Expenses, Cost of Goods Sold, Cost

Real Account Balance Sheet Account Asset, Liability and Equity Accounts
Net Asset Equity
penses, Cost of Goods Sold, Costof Sales
uity Accounts
 DEBIT CREDIT
Cash 34,800.00
Accounts Receivable 142,800.00
Supplies 70,800.00
Equipment 560,000.00
Accounts Payable 15,800.00
Mil, Capital 513,000.00
Mil,Withdrawal 50,000.00
Revenues 379,200.00
Salaries Expense 35,000.00
Rent Expense 10,000.00
Utilities Expense 4,600.00
908,000.00 908,000.00
State what element is affected and if Overstated or Understated

Type of Adjustment Account Balances before Adj.

Prepaid/Deferred Expenses B/S Accounts I/S Accounts
Asset Method Asset - Overstated Expense - Understated
Expense Method Asset - Understated Expense - Overstated

Depreciation Asset - Overstated Expense - Understated

Unearned/Deferred Revenues
Liability Method Liabilities - Overstated Income - Understated
Income Method Liabilities - Understated Income - Overstated

Accrued Expenses Liabilities - Understated Expenses - Understated

Accrued Revenues Assets - Understated Income - Understated
 Initial Entry Adj. Entry
Prepaid/Deferred Expenses Prepaid Expense Expense
Asset Method Cash Prepaid Expense

Expense Method Expense Prepaid Expense

Cash Expense

Depreciation - Expense
Accumulated Depreciation

Unearned/Deferred Revenues
Liability Method Cash Unearned Revenue
Unearned Revenue Service Revenue

Income Method Cash Service Revenue

Service Revenue Unearned Revenue

Accrued Expenses Expense

Liability

Accrued Revenues Receivable

Revenue
 2016 2017
Assets 293,500.00 497,512.00
Liability 79,245.00 177,212.00
Equity 214,255.00 320,300.00

Equity, Beg 214,255.00

Investment 35,000.00 +
Withdrawal 44,400.00 -
Net Income (Revenues -Expenses) 115,445.00 +
Equity, End 320,300.00
 Should be Adj. Entry:
ASSETS LIABILITY EQUITY Supplies 500
517,600.00 323,400.00 200,500.00 Supplies Expense
a. 500.00 500.00
b. (1,800.00) 15,700.00
c. (56,100.00) (17,500.00)
51,600.00 (1,800.00) Overstated Revenue
518,100.00 318,900.00 199,200.00 Overstated Equity
500
EXAMPLE

General Ledger / Control Account ACCOUNTS RECEIVABLE

100,000.00

100,000.00

Subsidiary Ledger ACCOUNTS RECEIVABLE , Customer A ACCOUNTS RECEIV

50,000.00

50,000.00

ACCOUNTS RECEIVABLE , Customer B

40,000.00

40,000.00
 Q5 NO ENTRY
Control Account 450,000.00
SL 480,000.00
Variance 30,000.00

Accounts Receivable 30,000.00

ACCOUNTS RECEIVABLE , Customer C Service Revenue
10,000.00

10,000.00 ACCOUNTS RECEIVABLE

30,000.00

30,000.00

ACCOUNTS RECEIVABLE , Kris

30,000.00 30,000.00
30,000.00

30,000.00
 Q6 B
Q7 D

Q8 NO ENTRY

Q9 Cash 100,000.00
Lardero, Capital

Q10
30,000.00 Office Equipment 500,000.00
20% payable in Cash 100,000.00
Remaining is payable 400,000.00

IVABLE
Office Equipment 500,000.00
Cash
Accounts Payable

ABLE , Kris Q11 Cost 500,000.00

Salvage Value (50,000.00)
450,000.00
Useful Life (in years) 5.00
Annual Depreciation 90,000.00

Depreciation Expense - Office Equipment 90,000.00

Accumulated Depreciation - Office Equipment
100,000.00

100,000.00
400,000.00

90,000.00
12 ACCOUNTS RECEIVABLE 16
Beg. 28,000.00 80,000.00 Beg
?? 76,000.00
End
End 24,000.00

13 ACCOUNTS RECEIVABLE 17
Beg. 230,000.00 491,600.00
?? 579,600.00

End 318,000.00

ACCOUNTS PAYABLE
297,400.00 Beg 119,000.00
238,800.00 ??

End 60,400.00

14 ACCOUNTS RECEIVABLE 14
Beg. 125,000.00 2,245,000.00 ?? Total Sales
2,400,000.00 Cash Sales (20%)
Credit Sales (80%)
End 280,000.00
Cash Sales (20%)
Cash
15 Assets 2,000,000.00
Liabilities (800,000.00)
Equity 1,200,000.00 Credit Sales (80%)
Accounts Receivable
 (P1.2M * 30%) 18
Asset Liability Equity
1,200,000.00 360,000.00 840,000.00
200,000.00
1,220,000.00 180,000.00 1,040,000.00
19

Supplies, unadj. 2,500.00

Year-end, On Hand 1,300.00 ASSET
Consumed 1,200.00 EXPENSE

Adj. Entry Not Made

Supplies Expense 1,200.00
Supplies 1,200.00 20

Correct Answer A.

3,000,000.00
600,000.00
2,400,000.00

600,000.00
Service Revenue 600,000.00

ts Receivable 2,400,000.00
Service Revenue 2,400,000.00
Adj. Entry Should be Made 21
Receivable xx
Revenue xx
Correct Answer B.

Revenues 90,000.00
Expenses (198,000.00)
Investment 13,500.00
Withdrawal (54,000.00)
(148,500.00) C 22

Commissions Income, unadj. 25,500.00

No.of Car 10.00
Amount / Car 2,550.00
Earned Commission (4 cars sold) 10,200.00 INCOME
Unearned Commission (Remaining 6 cars) 15,300.00 LIABILITY
Correct Answer C. 23

24

25
Supplies, Unadj. 10,000.00
On -hand at year-end 1,000.00 ASSET
Consumed 9,000.00 EXPENSE

Supplies Expense 9,000.00

Supplies 9,000.00

Correct Answer C.

Prepaid Insurance, Unadj. 10,000.00

Unexpired 2,000.00 ASSET
Expired 8,000.00 EXPENSE

Insurance Expense 8,000.00

Prepaid Insurance 8,000.00

Correct Answer B.

Depreciation - OE 10,000.00
AD -OE 10,000.00

Correct Answer A.

Rent Expense 5,500.00

Rent Payable 5,500.00

Correct Answer C

Accounts Receivable 15,000.00

Service Revenue 15,000.00

Correct Answer C
26 Accumulated Depn, unadj. 15,000.00
Depreciation Expense for the year 3,500.00
Accumulated Depn, adj. 18,500.00

Furniture, Cost 52,500.00

Accumulated Depreciation (18,500.00)
Book Value, year-end 34,000.00
Correct Answer D.

27 Prepaid Insurance, unadj. 81,000.00

Coverage (3 years) 3.00
Annual Insurance 27,000.00
Monthly Insurance 2,250.00
6 Months expired for (July 1- Dec.
31, 2021) 13,500.00 EXPENSE
67,500.00 ASSET
Adjusting Entry:
Insurance Expense 13,500.00
Prepaid Insurance 13,500.00

28 PREPAID INSURANCE
Unadj. 110,000.00 437,500.00
?? 448,000.00

Adj. 120,500.00

Insurance Expense 437,500.00

Prepaid Insurance 437,500.00
29 ACCOUNTS RECEIVABLE
Beg 48,400.00 820.00

ALLOWANCE FOR DOUBTFUL ACCOUNTS

820.00 Beg. 940.00
1,020.00 ??

End 1,140.00

30
Prepaid Insurance
Beg 11,200.00
?? 1,600.00

End 12,800.00

Insurance Expense

5,000.00 1,600.00

End 3,400.00

Apr. 1. 2019
31 Service Revenue, unadj. 9,600.00
12 months 12.00
Monthly Rental 800.00
Earned Months 9.00
Earned Revenue 7,200.00 REVENUE
Unearned Revenue 2,400.00 LIABILITY

Service Revenue 2,400.00

Unearned Revenue 2,400.00
Write-off
Allowance for Doubtful Accounts xx
Accounts Receivable xx

Bad Debt Expense Recognition

Bad Debt Expense xx
ADA xx

Initial Entry
Insurance Expense 5,000.00
Cash 5,000.00

Adjusting Entry
Prepaid Insurance 1,600.00
Insurance Expense 1,600.00
 Difference in Totals Larger of Totals
Totals (equal or
Error (indicate amount or (debit, credit or
unequal)
n/a) n/a)
a EQUAL N/A N/A
b EUAL N/A N/A
c UNEQUAL 270 DEBIT
d UNEQUAL 90,000 DEBIT
e UNEQUAL 1,030 CREDIT
f UNEQUAL 800 CREDIT