Accounting: Tools for Business Decision Making, 5th Edition

Published by Wiley
ISBN 10: 1118128168
ISBN 13: 978-1-11812-816-9

Chapter 4 - Accrual Accounting Concepts - Exercises: E4-8

Answer

(a) Service revenue earned but unmilled total 600 dollars (b) Supplies of 300 dollars are on hand. Supplies account shows 1900 dollars balance. (c) Utilities expenses of 275 dollars are unpaid (d) Service revenue of 490 dollars collected in advance has been earned (e) Prepaid insurance totaling 400 dollars has expired

Work Step by Step

(a) 1. accrued revenues 2. account receivable account (asset) - understated Revenue account - understated (b) 1. Prepaid expenses 2. supplies account - overstated Supplies expenses - understated (c) 1. accrued expenses 2. expense account - understated Liability account - understated (d) 1. unearned revenues 2. liability account - overstated Revenue account - understated (e) 1. prepaid expenses 2. expense account - understated Asset account - understated
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