MESSAGE MY INSTRUCTOR FULL SCREE N PRINTER VERSION Exercise 3-4 Hart Corporation
ID: 2407304 • Letter: M
Question
MESSAGE MY INSTRUCTOR FULL SCREE N PRINTER VERSION Exercise 3-4 Hart Corporation encounters the following situations: Identify what type of adjusting entry (prepaid expense, unearned revenue, accrued expense, or accrued revenue) is needed in each situation at December 31, 2017. 1. Hart collects $1,300 from a customer in 2017 for services to be performed in 2018 2. Hart incurs utility expense which is not yet paid in cash or recorded. 3. Hart's employees worked 3 days in 2017 but will not be paid until 2018. 4. Hart performs services for customers but has not yet received cash or recorded the transaction. 5. Hart pald $2,400 rent on December 1 for the 4 months starting December 1 6. Hart received cash for future services and recorded a liability until the service was performed. Hart performed consulting services for a dient in December 2017, On December 31, it had not billed the client for services performed of $1.200. 8. Hart paid cash for an expense and recorded an asset unia the item was used up. 9 Hart purchased $900 of supplies in 2017; at year-end, $400 of supplies remain unused 10. Hart purchased equipment on January 1, 2017; the equipment will be used for 5 years 11. Hart borrowed $10,000 on October 1, 2017, signing an 8% one-year note payable. 7.Explanation / Answer
1)$1300 is unearned revenue because services to be performed in near future.
2)Utility expense is accrued expense i.e outstanding expense.
3)Accrued expense as work is done by employee though payment not made in relevant fiscal year.
4)Accrued income as services performed but payment not received(in accrual basis of accounting).
5)$1800/- is prepaid expense in case fiscal year ends on 31-12-xxxx
6)Unearned Income
7)Accrued income of $1200.
8)Prepaid expense
9)Prepaid expense actually these are stocked as consumables
10)Prepaid expense as it is asset which will be depreciated over time of 5 years.
11)Accrued expense.
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