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1 year ago

E3-33B. (Learning Objectives 1, 3: Journalizing adjusting entries and analyzing their

1 answer:

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The act of logging any transaction, whether or not it is an economic one, is known as a journal entry. Transactions are listed in an accounting journal that shows a company's debit and credit balances.

<h3>Give a brief account on adjusting journal entries.</h3>

An adjusting journal entry is one that is made at the end of an accounting period in the general ledger of a business to record any unrealized income or expenses that occurred during the period. An adjusting journal entry is necessary to accurately account for a transaction that happens between two accounting periods.

To solve the question :

1. Adjusting journal entries are as follows :

Particulars Debit. Credit

a. Insurance expense A/c

($800 + $2,500 - $2,400) $600

To prepaid insurance A/c $600

(entry for expired portion of

prepaid insurance)

b. Interest receivable A/c $1,200

To interest revenue A/c $1,200

(adjusting entry for

accrued interest revenue)

c. Unearned service revenue A/c ($1,500 - $600) $900

To service revenue A/c $900

(entry for earned portion of

unearned service revenue)

d. Depreciation expense A/c $4,700

To accumulated depreciation A/c $4,700

(To record depreciation expenses)

e. Salaries Expense A/c

($24,000 / 5 days × 3 days) $14,400

To Salaries payable A/c $14,400

(To record accrued salaries expenses)

f. Income tax expense A/c

($21,000 × 25%) $5,250

To income tax payable A/c $5,250

(To record income tax expenses)

2. Calculating whether these omitted adjustments resulted in an overstatement or underestimate of net income

a. Adjusting Entry for Insurance Expense of $600 : Overstated

b. Adjusting Entry for accrued revenue of $1,200 : Understated

c. Adjusting entry for Service Revenue Earned of $900 : Understated

d. Adjusting Entry for Depreciation Expense of $4,700 : Overstated

e. Adjusting Entry for Salaries Expense for

three day of $14,400 : Overstated

f. Adjusting Entry for Income Tax Expense of $5,250 : Overstated

Impact on Net Income without Adjusting Entries of $22,850 : Overstated

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Complete Question:

An investment adviser is opening that day's mail and receives a check from a customer made out to the "Jones Cleaning Service" - the check was mailed in error to the adviser. The same day, the investment adviser mails the check back to Jones Cleaning Service. Under NASAA rules, the investment adviser:

I. is deemed to have taken custody of the customer's funds

II. has not taken custody of the customer's funds

III. must keep a record of the check received

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A. I and III

B. I and IV

C. II and III

D. II and IV

Answer:

C. II and III

Explanation:

In this scenario, an investment adviser is opening that day's mail and receives a check from a customer made out to the "Jones Cleaning Service" - the check was mailed in error to the adviser. The same day, the investment adviser mails the check back to Jones Cleaning Service. Under North American Securities Administrators Association (NASAA) rules, the investment adviser has not taken custody of the customer's funds and must keep a record of the check received.

According to NASAA rules, if an investment adviser inadvertently receives a check made out to a third party like it was made out to the "Jones Cleaning Service" in error, provided that the investment adviser mails the check to the third party (customer) within 3 business-working days, then the adviser has not taken custody of the customer's funds. Also, it is required that the investment adviser must keep a record of the check received.

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Which of the following statements best characterizes a basic difference between market economies and centrally-planned economies

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Answer:

d. None of the above are correct.

Explanation:

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In a market economy, market forces make production decisions.

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The self-interest of households is reflected more fully in the outcome of a market planned economy than in the outcome of a centrally planned economy

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Book value is cost minus accumulated depreciation is the book value of the property, plant, and equipment.

What is Depreciation?

Depreciation is frequently mistaken to mean that something is merely losing value or that a computation is made for tax purposes. Although it is a complicated subject, depreciation plays a significant role in your company's tax returns. Read on to find out what depreciation is, how it's calculated, and how your business can be impacted by your depreciation estimate.

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Answer:

The statement that is not correct is:

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A) Paying dividends to investors creates a cash outflow from financing activities.

This is correct.

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