Exam 3: Adjusting the Accounts

The amount of a depreciable asset's annual depreciation expense can typically be obtained by referring to the balance sheet.

Custom Realty Services sold a house for a client and will be paid a commission for its services.Using the SEC's four conditions or revenue recognition,explain why Custom Realty Services either should or should not recognize the revenue now.

Answer the following questions.(Show your work. ) a.A machine was purchased on July 1,20x9.It had a cost of $36,000 and an estimated useful life of nine years with zero value at that time.What is the machine's carrying value after four years? b.On April 1,20x0,a company paid in advance $54,000 for three years' insurance.How much Prepaid Insurance remains on the balance sheet on December 31,20x0? c.A company began the year with $800 in supplies,purchased $2,000 in supplies,and ended the period with $600 in supplies.How much is Supplies Expense for the period? d.A company was paid $1,800 in advance for services to be performed.At year end,one-third had not yet been earned.How much in Service Revenue should be recorded?

Accounts Receivable was $1,500 at the end of November and $1,050 at the end of December.Revenue totaled $8,400 for December.How much cash was received from revenues during December?

Depreciation Expense-Equipment is an example of a contra account.

When the estimates involved in earnings management begin moving outside a reasonable range,the financial statements can become misleading.

Net income

Assets are converted to revenues as they benefit the company.

Equipment might be depreciated over 15 years because