Intermediate Accounting Homework

The details are in the document provided below, and you can answer the questions directly in the original document.

TRADITIONAL HOMEWORK ITEMS – FALL 2024 – ACT 3391
General Instructions for the Traditional Homework – refer to the instructions for traditional item nos. 1 to 2.
3. (11 points) Prepare the Adjusting Journal Entries (AJEs) that should be made on December 31, 2018, the end of the
accounting year, for each of the following independent situations. If no AJE is required, indicate “none.” Assume the
firm 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.
e.
f.
g.
h.
i.
j.
k.
4.
a.
b.
c.
d.
e.
Liabilities
XX
Expenses
XX
Revenues
XX
Net Income
XX
Owners’ Equity
XX
On March 1, 2018, the firm collected $12,000 of rent for 12 months in advance. The journal entry to record the
receipt included a credit to a permanent account.
On August 31, 2018, the firm collected $12,000 of rent for 12 months in advance. The journal entry to record the
receipt included a credit to a temporary account.
On September 30, 2018, the firm collected $2,000 of rent for 2 months in advance. The journal entry to record the
receipt included a credit to a balance sheet account.
On August 1, 2018, the firm collected $3,000 of rent for 3 months in advance. The journal entry to record the
receipt included a credit to an income statement account.
On December 1, 2018, the firm paid $6,000 for a 6-month insurance policy. The journal entry to record the
payment included a debit to a balance sheet account.
On May 1, 2018, the firm paid $12,000 for a 12-month rental of a machine. The journal entry to record the payment
included a debit to an income statement account.
On March 31, 2018, the firm paid $6,000 for a 6-month rental of a machine. The journal entry to record the
payment included a debit to a permanent account.
On October 1, 2018, the firm paid $1,000 for a 1-month rental of a machine. The journal entry to record the
payment included a debit to a temporary account.
On March 1, 2018, the company borrowed $480,000 at 4%. The principle is due on March 1, 2019. The interest is
due every three months and the company made the first interest payment on June 1, 2018.
On August 1, 2017, the company borrowed $4,000,000 for four years at 6%. The interest is due and payable every
year on August 1. The principle is due and payable in four equal installments on August 1, 2018, 2019, 2020, and
2021. The company made its interest and principle payments as required.
On September 30, 2018, the firm bought $200,000 of 3%, three-year bonds. The firm paid $200,000 for this
investment. The company will collect $3,000 of interest on the bonds every six months starting on March 31, 2019.
(5 points) On November 1, 2019, Y borrowed $8,000,000 at 3%. Y will pay interest every 6 months with interest
payments every May 1 and November 1. Y will repay $4,000,000 of the principal on May 1, 2020 and the
remainder on November 1, 2020. Assume Y only makes AJEs every December 31 AND does NOT make
reversing entries. Prepare the entries Y should make on:
November 1, 2019
December 31, 2019
May 1, 2020
November 1, 2020
December 31, 2020
5.
(8 points) Zara Company’s financial records showed the following selected items for 2020:
Advertising receipts
$900,000
Land rental revenues
Cash paid for insurance
$100,000
Wage expense
$500,000
$200,000
Zara follows the accrual basis of accounting. The following balances were taken from Zara’s balance sheets:
12-31-20
12-31-19
Advertising receivables
20,000
25,000
1
Prepaid advertising
Prepaid insurance
Unearned land rental revenue
Unearned advertising
Wages payable
Insurance payable
a.
b.
c.
d.
50,000
75,000
46,000
30,000
34,000
10,000
37,000
50,000
30,000
48,000
54,000
12,000
What were advertising-related revenues for 2020?
What was insurance expense for 2020?
How much cash was paid out for wages during 2020?
How much cash was collected for land rentals during 2020?
2