A. Complete assignments using some type of computer software program, e.g., Microsoft Word, Excel.
B. You will NOT receive ANY CREDIT FOR LATE HOMEWORK.
C. When completing your homework assignments DO NOT use abbreviations.
D. As discussed during class, you can work on these homework assignments in groups or as an individual.
E. For ANY problem involving a calculation, CLEARLY SHOW HOW you performed the calculation.
F. For ANY problem involving an entry, CLEARLY identify EACH account that you debited and EACH account that you credited as either a(an):
1) Asset (includes contra-assets) You can abbreviate with an A
2) Liability (includes contra-liabilities) You can abbreviate with an L
3) Equity (includes contra-equities) You can abbreviate with an EQ
4) Revenue (includes contra-revenues AND gains) You can abbreviate with an R
5) Expense (includes losses) You can abbreviate with an EX
For example, if you make the following entry:
Cash $100 Place an “A” to the left of “Cash”
Sales revenue $100 Place an “R” to the left of “Sales Revenue”
Thus, your final answer would look like this:
A Cash $100
R Sales revenue $100
UNACCEPTABLE ENTRY FORMATS. Format your entries like the example above. DO NOT give me entries that look like the following:
A Cash $100
R Sales revenue $100
or
A Cash $100
R Sales revenue $100
or
A Cash $100
R Sales revenue $100
or
A Cash $100
R Sales revenue $100
1. (6 points) Zena Company’s financial records showed the following selected items for 2015:
Advertising receipts $650,000 Land rental revenues $520,000
Interest paid on borrowings $100,000 Wage expense $190,000
Zena follows the accrual basis of accounting. The following balances were taken from Zena’s balance sheets:
12-31-15 12-31-14
Advertising receivables 20,000 25,000
Prepaid advertising costs 50,000 44,000
Unearned land rental revenue 46,000 53,000
Unearned advertising 30,000 38,000
Wages payable 34,000 25,000
Interest payable 60,000 70,000
a. What were advertising-related revenues for 2015?
b. What was interest expense for 2015?
c. How much cash was paid out for wages and salaries during 2015?
d. How much cash was collected for land rentals during 2015?
2. (1 point each) Prepare AJEs that should be made on 12-31-15, the end of the accounting year, for each of the followingsituations. If no AJE is required, indicate “none.” Assume the company 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 Liabilities Expenses Revenues Net Income Owners’ Equity
XX XX XX XX XX XX
a. On July1, 2015, the company rented a machine for 3 months and paid $6,000 in advance.The journal entry to record the payment included a debit to a permanent account.
b. On May 1, 2015, the company collected $1,200 of rent for 12 months in advance. The journal entry to record the receipt included a credit to atemporary account.
c. On September30, 2015, the company collected $6,000 as rent for 6 months in advance. The journal entry to record the receipt included a credit to a permanent account.
d. On October1, 2015, the company rented equipment for 6 months and paid $6,000 in advance. The journal entry to record the payment included a debit to atemporary account.
3. (3 points) M Company recorded journal entries for (1) issuing common stock for $250,000, (2) paying $60,000 of accounts payable, (3) incurring and paying $45,000 of wage expenses, and (4) using up $12,000 of prepaid rent. What net effect do these entries have on M’s total stockholders’ equity amount? Be sure your answer includes a total net $ amount AND indicates whether total stockholders’ equity increased, decreased, or did not change.