Exercise 3-4
Emeril Corporation encounters the following situations:
1. Emeril collects $1,000 from a customer in 2010 for
services to be performed in 2011.
2. Emeril incurs utility expense which is not yet paid in
cash or recorded.
3. Emeril’s employees worked 3 days in 2010, but will not be
paid until 2011.
4. Emeril earned service revenue but has not yet received
cash or recorded the transaction.
5. Emeril paid $2,000 rent on December 1 for the 4 months
starting December 1.
6. Emeril received cash for future services and recorded a
liability until the revenue was earned.
7. Emeril performed consulting services for a client in
December 2010. On December 31, it billed the client $1,200.
8. Emeril paid cash for an expense and recorded an asset
until the item was used up.
9. Emeril purchased $900 of supplies in 2010; at year-end,
$400 of supplies remain unused.
10. Emeril purchased equipment on January 1, 2010; the
equipment will be used for 5 years.
11. Emeril borrowed $10,000 on October 1, 2010, signing an
8% one-year note payable.
Instructions
Identify what type of adjusting entry (prepaid expense,
unearned revenue, accrued expense, accrued revenue) is needed in each
situation, at December 31, 2010.
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