E3-6 Classify the following items as (a) deferred expense (prepaid expense), (b) deferred revenue

E3-6   Classify the following items as (a) deferred expense (prepaid expense), (b) deferred revenue (unearned revenue), (c) accrued expense (accrued liability), or (d) accrued revenue (accrued asset).

1.  Subscriptions received in advance by a magazine publisher.

2.  A three-year premium paid on a fire insurance policy.

3.  Fees received but not yet earned.      

4.  Fees earned but not yet received.

5.  Utilities owed but not yet paid.

6.  Supplies on hand.

7.  Salary owed but not yet paid.

8.  Taxes owed but payable in the following period.

E-13   North Slope Realty Co. pays weekly salaries of $7,900 on Friday for a five-day week ending on that day. What is the adjustment at the end of the accounting period, assuming that the period ends (a) on Wednesday, (b) on Thursday? Indicate each account affected, whether the account is increased or decreased, and the amount of the increase or decrease.

E-21  At the end of the current year, $19,900 of fees have been earned but not billed to clients.

a.  What is the adjustment to record the accrued fees? Indicate each account affected, whether the account is increased or decreased, and the amount of the increase or decrease.

b.  If the cash basis rather than the accrual basis had been used, would an adjustment have been necessary? Explain. Adjustment for accrued salaries 

E3-27  At the balance sheet date, a business owes a five-year mortgage note payable of $480,000, the terms of which provide for monthly payments of $8,000. Explain how the liability should be classified on the balance sheet.