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A Lesson in Fundamental Accounting

This APA formatted MS Word file contains examples of adjusting entries, computing accruals and cash income, as well as determination of income and expenses, using both accrual and cash accounting procedures.

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QS 3-1
Identifying accounting adjustments
C3
Classify the following adjusting entries as involving prepaid expenses (PE), unearned revenues (UR), accrued expenses (AE), or accrued revenues (AR).
a. To record revenue earned that was previously received as cash in advance. (PE)
b. To record annual depreciation expense. (AE)
c. To record wages expense incurred but not yet paid (nor recorded). (AE)
d. To record revenue earned but not yet billed (nor recorded). (AR)
e. To record expiration of prepaid insurance. (PE)

QS 3-9
Computing accrual and cash income
In its first year of operations, Harden Co. earned $39,000 in revenues and received $33,000 cash from these customers. The company incurred expenses of $22,500 but had not paid $2,250 of them at year-end.

Harden also prepaid $3,750 cash for expenses that would be incurred the next year. Calculate the first year's net income under ...

Solution Summary

This APA formatted MS Word file contains examples of adjusting entries, computing accruals and cash income, as well as determination of income and expenses, using both accrual and cash accounting procedures.

$2.19