ACC 205 Week 2 Essay

1261 Words Apr 27th, 2014 6 Pages
Week Two Exercise Assignment
Revenue and Expenses

1. Recognition of concepts. Jim Armstrong operates a small company that books entertainers for theaters, parties, conventions, and so forth. The company’s fiscal year ends on June 30. Consider the following items and classify each as either (1) prepaid expense, (2) unearned revenue, (3) accrued expense, (4) accrued revenue, or (5) none of the foregoing.
a. Interest owed on the company's bank loan, to be paid in early July
Prepaid expense
b. Professional fees earned but not billed as of June 30
Accrued revenue
c. Office supplies on hand at year-end
Prepaid expense
d. An advance payment from a client for a performance next month at a convention
Unearned revenue
e. The
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The following information was taken from the accounting records of Palmetto Company for the month of January:
Balance per bank | $6,150 |
Balance per company records | 3,580 |
Bank service charge for January | 20 |
Deposits in transit | 940 |
Interest on note collected by bank | 100 |
Note collected by bank | 1,000 |
NSF check returned by the bank with the bank statement | 650 |
Outstanding checks | 3,080 |

Instructions:
a. Prepare Palmetto’s January bank reconciliation.
A. Palmetto’s JanuaryBank Reconciliation | | |
| Bank | Company |
Balance | 6150 | 3580 |
Less Services charges | | -20 |
Add Interest on notes | | 100 |
Add notes collected by bank | | 1000 |
Less NSF Check | | -650 |
Add deposit in transit | 940 | |
Less outstanding checks | -3080 | |
Balance agreed | 4010 | 4010 |

b. Prepare any necessary journal entries for Palmetto.
B. Palmetto’s Journal entries | | |
| Debit | Credit |
Service charges | 20 | |
Acc. Receivable | 650 | |
Cash | | 670 |
------- | | |
Cash | 1100 | |
Interest income | | 100 |
Notes Receivable | | 1000 |

6. Direct write-off method. Harrisburg Company, which began business in early 20X7, reported $40,000 of accounts receivable on the December 31, 20X7, balance sheet. Included in this amount was $550 for a sale made to Tom Mattingly in July. On January 4, 20X8, the company learned that Mattingly had filed for personal bankruptcy. Harrisburg uses the direct write-off method to account for

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