Cash Received before Revenue is Earned (Deferred Revenue) 1) The Insurance Company in (1) above received...

Cash Received before Revenue is Earned (Deferred Revenue)

1) The Insurance Company in (1) above received the cash paid by Nordstrom. What is the entry to record on the books of the Insurance Company?

Entry on the books of the Insurance Company

2) The Insurance Company provides protection for the next 12 months. What is the entry on a monthly basis?

3) On March 1, a friend gives you a $100 Nordstrom gift card. How does Nordstrom record this entry?4) You redeem your gift card. How does Nordstrom record this entry on March 31?

Expense Incurred before Cash is Paid (Accrued Liability/Accrued Expense)

1) Nordstrom pays a total of $280,000 in wages every other Friday. What is the journal entry on June 14th?

2) Nordstrom owes employees’ wages for the last two days of June and must recognize an expense for the wages earned by employees for those days. Assume the store is open seven days a week and the daily cost is 1/14th of the biweekly amount of $280,000 or 20,000. What is the entry to adjust the records for the last two days of the month (June)?

3) Using information obtained from (1) and (2) above. What entry will be made on the next payday (July 12)?

4) Assume Granger Company takes out a 9%, 90-day, $20,000 loan with its bank on March 1. Granger will repay the principal and interest on May 30. What is the entry on Granger’s books?

5) What is the entry to record 1 month of interest at the end of March? April? 6) What is the entry when Granger repays the principal and interest on May 30?

Revenue Earned before Cash is Received (Accrued Asset/Accrued Revenue)

1) Grant Management Company rents warehouse space to tenants. The contract calls for prepayment of rent for six months at a time. Grant allows one tenant to pay $2,500 in monthly rent anytime within the first ten days of the following month. The entry on Grants books at April 30 is?

2) What is the entry when the tenant pays the rent on May 7?

Exercise 2:

1) ABC purchases a 24 month fire insurance policy on January 1 for 54,000? What is the Journal Entry on January 31?

2) On April 1, GHI Corp took out a 12% 120 day, $10,000 loan at its bank. What is the journal entry on April 30?

Solutions

Expert Solution

Q.1 Cash Received before Revenue is Earned (Deferred Revenue) -

Q.2 Expense Incurred before Cash is Paid (Accrued Liability/Accrued Expense) -

Q.3 Revenue Earned before Cash is Received (Accrued Asset/Accrued Revenue) -

Q.4 Exercise 2 -

ekkarill92 answered 1 year ago

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