Exam 3: Accruals and Deferrals: Timing Is Everything in Accounting

On May 1,2012,Mink,Inc.borrowed $10,000 by issuing a 12%,3-month note and another $10,000 by issuing a 12%,6-month note.Interest expense for the month ended May 31,2012 will be ________.

At December 31,2010,McToil,Inc.owes its employees $20,000 for work performed in 2010.Payday is not until the first week in January 2011.What is the effect of the December 31,2010 adjusting entry on total shareholders' equity?

If you see Salaries expense on the income statement,you know that an adjustment related to accrual of employee salaries has been made.

On January 1,2011,Swinger,Inc.purchases a batting machine for $240,000 that has an estimated useful life of 5 years and an expected residual value of $20,000.Calculate the annual amount of depreciation expense.

Depreciating an asset means recognizing the cost of the asset as an expense over more than one accounting period.

Clean Sweep,Inc.started the month of June with $600 worth of cleaning supplies.During the month,Clean Sweep purchased $400 of supplies for cash.At June 30,$300 worth of supplies was unused.How will the company report these events on its statement of cash flows for the month of June?

If a company neglected to record depreciation expense for the year,the company's profit margin on sales ratio would be overstated.

Enoch,Inc.began operations on July 1,2011.On August 1,it received $12,000 in advance for services to be performed evenly over the next 12 months.How much of this revenue should the company report on its income statement for the MONTH ended August 31,2011?

Hen House,Inc.collects all subscription revenue in advance.At December 31,2011,the company owed $50,000 to customers for unearned revenue.During 2012,the company received $150,000 in advance from its customers and delivered $190,000 of magazines to its customers.How much unearned revenue will Hen House report on its balance sheet at December 31,2012?

The employees of Dew Drop Inn get paid every Friday for a 5-day workweek (Monday through Friday).The total payroll is $5,000 per day of work.If the accounting period ends on Thursday of a given week,and the proper adjustment is made on Thursday,what will be the effect of the adjustment on the company's financial statements?

Fair Play,Inc.paid $3,600 on September 1,2011 for an 18-month insurance policy beginning on that day.The company recorded the entire amount as prepaid insurance.How much prepaid insurance should the company show on its balance sheet at December 31,2012?

On January 1,2010,We Haul,Inc.bought a $48,000 truck,which has no residual value and an expected life of 6 years.What is the book value of the truck at December 31,2011?

Which financial statement shows Unearned revenue?

In February,Ira Roth,Public Accountant,accepted $500 in cash from a customer in exchange for a tax return he promised to prepare in April.Which of the following statements is true?

Use the following information from Hot Spots,Inc.'s income statement to calculate the company's 2012 profit margin on sales ratio.

Cruits,Inc.prepared the following income statement before adjustments: Required: Determine the net income or loss after adjustment given the following additional information for the month of September: a.Salaries earned but unrecorded and unpaid equals $1,000. b.Depreciation for the month should be an additional $2,000. c.Customer work completed,but not yet billed or collected equals $4,000.

A company should keep a copy of the data in its accounting information system at a remote location.

Identify the effects of each transaction on the accounting equation by showing the correct dollar amount and naming the accounts involved.The first transaction has been done for you.

On January 1,2011,Swinger,Inc.purchases a batting machine for $240,000 that has an estimated useful life of 5 years and an expected residual value of $20,000.Calculate the book value of the equipment that will be reported on the balance sheet dated December 31,2012.

On January 1,2011,Beyers Company pays $205,000 cash for factory equipment that has an estimated useful life of 10 years and an expected residual value of $5,000.Calculate the amount of accumulated depreciation at December 31,2012.