Intermediate Accounting Homework

TRADITIONAL HOMEWORK ITEMS – Spring 2024 – ACT 3391General Instructions for the Traditional Homework – refer to the instructions for traditional item nos. 1 to 3.
6. (4 points) Prepare AJEs that should be made on 12-31-21, the end of the accounting year, for each of the following situations. If
no AJE is required, indicate “none.” Assume the company only makes AJEs at the end of the accounting year. In addition, identify
the impact, if any, on the financial statements if you failed to make the appropriate AJE. Indicate NE for no impact, U for
understatement, and O for overstatement. Use the following format to indicate the impact of failing to make the required entry for
each situation.
Assets
XX
a.
b.
c.
d.
Liabilities
XX
Expenses
XX
Revenues
XX
Net Income
XX
Owners’ Equity
XX
On June 1, 2021, the company rented a machine for 12 months and paid $12,000 in advance. The journal entry to record the
payment included a debit to a permanent account.
On March 31, 2021, the company collected $2,400 of rent for 12 months in advance. The journal entry to record the receipt
included a credit to a temporary account.
On September 30, 2021, the company collected $6,000 as rent for 2 months in advance. The journal entry to record the receipt
included a credit to a permanent account.
On June 1, 2021, the company rented equipment for 4 months and paid $4,000 in advance. The journal entry to record the
payment included a debit to a temporary account.
7. (8 points) X Company’s financial records showed the following during 2022:
Payments made for office supplies
Office rental revenues
$ 50,000
$375,000
Insurance premiums receipts
Wages & salaries paid
X follows the accrual basis of accounting. The following were taken from X’s balance sheets:
Office rental receivables
Insurance premiums receivables
Prepaid office supplies
Prepaid insurance expense
Wages & salaries payable
Office supplies payable
Unearned insurance premiums
Unearned office rental revenue
a.
b.
c.
d.
12-31-21
$39,000
25,000
18,000
20,000
18,000
8,000
22,000
8,000
12-31-22
$48,000
32,000
10,000
14,000
23,000
12,000
20,000
5,000
What was office supplies expense during 2022?
What was wages & salaries expense during 2022?
What were insurance premiums revenues during 2022?
What were office rental receipts during 2022?
1
$270,000
$145,000