The Following Is a Partial List of Items from Chewy

question 245

Essay

The following is a partial list of items from Chewy Candy,Inc.'s June 30,2011 financial statements.Its fiscal year runs from July 1 to June 30.
Part A: In the worksheet below,record the effect of these five adjustments on the accounting equation for the year ended June 30,2011.Show the correct dollar amounts,and write in the titles of the accounts affected.
1.Adjusted the $3,600,3-year insurance policy that began on July 1,2010.
2.Accrued interest on its $100,000,12% note issued on July 1,2010.Interest and principal are due January 1,2012.
3.Earned $10,000 of the subscription revenue that had been collected in advance.
4.Adjusted the ten months of rent that was paid in advance on March 1,2011.
5.Owed salaries of $2,000 at yearend.Payday is on July 3,2011.
Part B: Fill in the adjusted balances as of June 30,2011.Some of the accounts that have been adjusted are not included in this table.

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Definitions:

Lump-sum Purchase

The acquisition of an asset or multiple assets in a single transaction for a single amount, instead of making payments over time.

Straight-line Method

A method of calculating depreciation and amortization by evenly distributing the cost of an asset over its useful life.

Salvage Value

The projected value at which an asset can be sold after its period of usefulness, utilized in the computation of depreciation costs.

Depreciated

The reduction in value of an asset over time due to wear and tear, age, or obsolescence, commonly used in accounting to allocate the cost of an asset over its useful life.