Adjusting Entries-Effect on Elements of Financial Statements
Whoop-It-Up, Inc

question 92

Essay

Adjusting entries-effect on elements of financial statements
Whoop-It-Up, Inc. prepares monthly financial statements. On March 31, the company's accountant made adjusting entries to record:
(A) Depreciation for the month of March.
(B) Amount owed to Whoop-It-Up, Inc for March from the concessionaire operating a juice bar in the facility. The amount due will be remitted to Whoop-It-Up, Inc during the first week in April.
(C) Cost of supplies used in March. (When purchased, the cost of supplies is debited to an asset account.)
(D) Earning of a portion of annual membership fees which had been collected in advance. (When customers purchase annual memberships, an Unearned Revenue account is credited.)
(E) Accrued interest for March owed on a bank loan obtained March 1. No interest expense has yet been recorded.
Indicate the effect of each of these adjusting entries on the major elements of the company's financial statements-that is, on revenue, expenses, net income, assets, liabilities, and owner's equity. Organize your answer in tabular form, using the column headings shown below and the symbols + for increase, - for decrease, and NE for no effect.
$$\begin{array} { | c | c | c | c | c | c | c | } \hline & { \text { Income Statement } } &&&{ \text { Balance Sheet } } \\\hline \text { Adjusting } & \text { Revenue } & \text { Expenses } & \text { Net } & \text { Assets } & \text { Liabilities } & \text { Owners' } \\\hline \text { Entry } & & & \text { Income } & & & \text { Equity } \\\hline \text { (a.) } & & & & & & \\\hline \text { (b.) } & & & & & & \\\hline \text { (c.) } & & & & & & \\\hline \text { (d.) } & & & & & & \\\hline \text { (e.) } & & & & & & \\\hline & & & & & & \\\hline\end{array}$$

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Definitions:

Ray-Ban Sunglasses

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A cost-sharing arrangement where both a manufacturer and a retailer or distributor share the expense and execution of an advertising campaign.

Bonus Volume

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