Accounting Homework

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E3-19A (book/static)

During 2016, Nicholson Network, Inc., which designs network servers, earned revenues of $ 800

million. Expenses totaled $ 570 million. Nicholson collected all but $ 21million of the revenues and paid $ 600 million on its expenses.

Requirements

Nicholson's top managers are evaluating 2016, and they ask you the following questions:

a.	Under accrual accounting, what amount of revenue should Nicholson Network report for 2016? How does the revenue principle help to answer these questions?

b. Under accrual accounting, what amount of total expense should

Nicholson Network report for 2016? Which accounting principle helps to answer this question?

c. Redo parts a and b using the cash basis. Explain how the accrual basis differs from the cash basis.

d. Which financial statement reports revenues and expenses? Which statement reports cash receipts and cash payments?

Requirement a. Under accrual accounting, what amount of revenue should Nicholson Network report for 2016? How does the revenue principle help to answer these questions?

The amount of revenue that should be reported for the year is $_______________ Million.

The revenue principle says to record revenue when it has been ____________

▼

collected

earned

recorded

, regardless of when ___________

▼

cash is collected

revenue is earned

sold inventory is delivered

Therefore, the amount of revenue reported is what Nicholson ___________.

▼

collected

earned

paid

E3-22A (book/static)

Dellroy Rentals Company faced the following situations.

A. The business has interest expense of $ 3,200 that it must pay early in January 2017

B. Interest revenue of $4,100 has been earned but not yet received.

C. On July 1, 2016, when the business collected $12,000 rent in advance, it debited Cash and credited Unearned Rent Revenue. The tenant was paying for two years' rent.

D. Salary expense is

$6,100 per daylong dash Monday through Friday long dash and the business pays employees each Friday. For the purpose of this calculation, assume December 31 falls on a Thursday.

E. The unadjusted balance of the Supplies account is $3,200. The total cost of supplies on hand is $ 1,300.

F. Equipment was purchased on January 1 of this year at a cost of $180,000

The equipment's useful life is five years. There is no residual value. Record depreciation for this year and then determine the equipment's book value.

Requirement

1.	Journalize the adjusting entry needed at December 31, 2016. for each situation. Consider each fact separately. (Record debits first, then credits. Exclude explanations from any journal entries.)

a. The business has interest expense of $ 3,200 that it must pay early in January 2017.

Journal Entry
	Accounts	Debit	Credit
a.

E3-24A (book/static)

The adjusted trial balance of Honeybell, Inc., follows.

Honeybell, Inc.
Adjusted Trial Balance
December 31, 2016
	(Amounts in thousands)
	Account	Debit	Credit
	Cash	$3,900
	Accounts receivable	1,400
	Inventories	2,200
	Prepaid expenses	1,800
	Property, plant, and equipment	16,700
	Accumulated depreciation-property, plant, and equipment		$2,800
	Other assets	9,500
	Accounts payable		7,400
	Income tax payable		400
	Other liabilities		2,500
	Common stock		14,600
	Retained earnings (beginning, December 31, 2015)		5,900
	Dividends	1,300
	Sales revenue		41,200
	Cost of goods sold	25,500
	Selling, administrative, and general expenses	10,500
	Income tax expense	2,000
	Total	$74,800	$74,800

Requirement

1.	Prepare Honeybell, Inc.'s single-step income statement and statement of retained earnings for the year ended December 31, 2016, and its balance sheet on that date.

Let's start by completing the single step income statement. (If a box is not used in the income statement leave the box empty; do not select a label or enter a zero.)

Honeybell, Inc.
Income Statement
Year Ended December 31, 2016
		Thousands
	Revenues:
			$
	Expenses:			---------------





			$

E3-25A (book/static)

The adjusted trial balances of

Victory Corporation at August 31, 2016, and August 31, 2015, include these amounts (in millions):

	2016	2015
Receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	$470	$290
Prepaid insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	380	460
Accrued liabilities payable (for other operating expenses) . . . .	760	650

Victory Corporation complete these transactions (in millions) during the year ended August

31, 2016.

Victory completed these transactions (in millions) during the year ended

August 31, 2016

Collections from customers . . . . . . . . . . . . . . . . . .	$20,800
Payment of prepaid insurance . . . . . . . . . . . . . . . .	460
Cash payments for other operating expenses . . . .	4,600

Requirement

Compute the amount of sales revenue, insurance expense, and other operating expenses to report on the income statement for the year ended August 31, 2016.

The sales revenue for the year ended August 31, 2016 is

E3-28A (book/static)

The unadjusted trial balance and income statement amounts from the December 31 adjusted trial balance of

Winwood Production Company follow.

Winwood Production Company
		Unadjusted	From the Adjusted
	Account	Trial Balance	Trial Balance
	Cash	13,300
	Prepaid rent	1,600
	Equipment	45,000
	Accumulated depreciation-equipment		3,300
	Accounts payable		4,900
	Salary payable
	Unearned service revenue		9,200
	Income tax payable
	Notes payable, long-term		16,000
	Common stock		8,400
	Retained earnings		11,400
	Dividends	1,300
	Service revenue		13,600		19,900
	Salary expense	4,500		5,200
	Rent expense	1,100		1,900
	Depreciation expense-equipment			400
	Income tax expense			1,200
	Total	66,800	66,800	8,700	19,900

Journal Entry
Date	Accounts	Debit	Credit
Dec	31	Unearned Service Revenue	6,300
		Service Revenue		6,300
Dec	31	Salary Expense	700
		Salary Payable		700

Dec	31	Rent Expense	800
		Prepaid Rent		800
Dec	31	Depreciation Expense	400
		Accumulated Depreciation—Equipment		400

Dec	31	Income Tax Expense	1,200
		Income Tax Payable		1,200

Requirement

1. Use the data in the partial worksheet to prepare Winwood Production Company's classified balance sheet at December 31 of the current year. Use the report format. First you must compute the adjusted balance for several of the balance-sheet accounts

2. Compute Winwood Production Company's net working capital, current ratio, and debt ratio at December 31. A year ago, net working capital was $ 3,900, the current ratio was 1.40, and the debt ratio was 0.64. Indicate whether the company's ability to pay its debts long dash both current and total long dash improved or deteriorated during the current year.

Requirement 1. Use the data in the partial worksheet to prepare Winwood Production Company’s

classified balance sheet at December 31 of the current year. Use the report format. First you must compute the adjusted balance for several of the balance-sheet accounts.

Let's prepare the balance sheet for Winwood Production Company. (If a box is not used in the balance sheet leave the box empty; do not select a label or enter a zero.)

Winwood Production Company
Balance Sheet
December 31
Assets







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