ACC 113 – Seminar Accrual Accounting Concepts

Accrual Accounting Transactions are recorded as they occur and thus affect the accounting equation (assets, liabilities, and stockholders’ equity).

Recognized Under accrual accounting, revenue is recognized when it is earned.

E3-8 (a) The balance in the supplies account, before adjustment at the end of the year, is $3,175. What is the amount of the adjustment if the amount of supplies on hand at the end of the year is $925?

Answer $3,175 - $925 = $2,250

E3-8 (b) The supplies account has a balance of $600, and the supplies expense account has a balance of $1,850 at December 31, If 2011 was the first year of operations, what was the amount of supplies purchased during the year?

Answer $600 + $1,850 = $2,450

E3-29 La-Z-Boy Inc. Classified balance sheet

E3-29 Identify Accounts payable Accounts receivable Accrued expenses Accumulated depreciation Capital stock Cash Intangible assets Inventories Debt due within one year Long-term debt Other current assets Other long-term assets Other long-term liabilities Property, plant, and equipment Retained earnings

Assets Current assets: Cash Accounts receivable Prepaid insurance Supplies Other Total current assets.

Fixed assets: Office equipment Less accumulated depreciation Land Inventories Intangible assets Other long-term Total fixed assets Total assets

Liabilities Current liabilities: Accounts payable Wages payable Notes payable Accrued expenses Total current liabilities

Liabilities Long-term liabilities: Notes payable Other long-term Total liabilities

Stockholders’ Equity Capital stock Retained earnings Total stockholders' equity Total liabilities and stockholders' equity

Classified balance sheet Assets Current assets: Cash Accounts receivable Prepaid insurance Supplies Other Total current assets. Fixed assets: Office equipment Less accumulated depreciation Land Inventories Intangible assets Other long-term Total fixed assets Total assets Liabilities Current liabilities: Accounts payable Wages payable Notes payable Accrued expenses Total current liabilities Long-term liabilities: Notes payable Other long-term Total liabilities Stockholders' Equity Capital stock Retained earnings Total stockholders' equity Total liabilities and stockholders' equity

Assets Current assets: Cash $ 14,982 Accounts receivable $ 200,422 Prepaid insurance Supplies Other $ 33,723 Total current assets. $ 249,127 Fixed assets: Office equipment $ 438,584 Less accumulated depreciation $ 267,583 $ 171,001 Land Inventories $ 178,361 Intangible assets $ 56,239 Other long-term $ 114,142 $ 348,742 Total fixed assets $ 519,743 Total assets $ 768,870 Liabilities Current liabilities: Accounts payable $ 56,421 Wages payable Notes payable $ 4,792 Accrued expenses $ 102,700 Total current liabilities $ 163,913 Long-term liabilities: Notes payable $ 99,578 Other long-term $ 54,783 $ 154,361 Total liabilities $ 318,274 Stockholders' Equity Capital stock $ 260,816 Retained earnings $ 189,780 Total stockholders' equity $ 450,596 Total liabilities and stockholders' equity $ 768,870