Liberty ACCT 211 Connect Homework Chapter 3 Exercises Answers Complete Solutions
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Question 1
a.
Depreciation on the company’s equipment for 2017 is computed to be $17,000.
b.
The Prepaid Insurance account had a $6,000 debit balance at December 31, 2017, before adjusting for the costs of any expired coverage. An analysis of the company’s insurance policies showed that $1,430 of unexpired insurance coverage remains.
c.
The Office Supplies account had a $280 debit balance on December 31, 2016; and $2,680 of office supplies were purchased during the year. The December 31, 2017, physical count showed $330 of supplies available.
d.
One-fifth of the work related to $10,000 of cash received in advance was performed this period.
e.
The Prepaid Insurance account had a $5,800 debit balance at December 31, 2017, before adjusting for the costs of any expired coverage. An analysis of insurance policies showed that $4,370 of coverage had expired.
f.
Wage expenses of $7,000 have been incurred but are not paid as of December 31, 2017.
Prepare adjusting journal entries for the year ended (date of) December 31, 2017, for each of these separate situations.
Question 2
Following are two income statements for Alexis Co. for the year ended December 31. The left number column is prepared before any adjusting entries are recorded, and the right column includes the effects of adjusting entries. The company records cash receipts and payments related to unearned and prepaid items in balance sheet accounts. The middle column shows a blank space for each income statement effect of the eight adjusting entries a through g (the balance sheet part of the entries is not shown here).
Analyze the statements and prepare the eight adjusting entries a through g that likely were recorded. Note: Answer for a has two entries 30% of (i) the $5,400 adjustment for Fees Earned has been earned but not billed, and (ii) the other 70% has been earned by performing services that were paid for in advance.
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Question 3
The following is the adjusted trial balance of Wilson Trucking Company.
The Retained Earnings account balance is $149,145 at December 31, 2016.
(1) Prepare the income statement for the year ended December 31, 2017.
(2) Prepare the statement of retained earnings for the year ended December 31, 2017.
Question 4
Following are Nintendo’s revenue and expense accounts for a recent March 31 fiscal year-end (yen in millions). (Enter answers in millions.)
Prepare the company’s closing entries for its revenues and its expenses.
Record the closure of revenue account.
Record the closure of expense accounts.
Question 5
Use the above adjusted trial balance to prepare Wilson Trucking Company’s classified balance sheet as of December 31, 2017.
Question 6
Use the following information to compute profit margin for each separate company a through e. (Round your answers to 1 decimal place.)
Which of the five companies is the most profitable according to the profit margin ratio?
Question 7
1. Compute the current ratio for each of the following companies. (Round your answers to 2 decimal places.)
2. Identify the company with the strongest liquidity position. (These companies represent competitors in the same industry.)
