1) The year-end, an adjusted trial balance dated December 31, 2013, for Kareem Industries showed

Insurance at $2100. The accounting clerk prepared the trial balance. Subsequently, the senior acco
additional information:

Part A) Use the T-accounts below to calculate and show the adjustments
required.
Supplies Prepaid Insurance
5050 3600 2100 1050

bal 1450 bal 1050

supplies expense insurance expense Advertising expense

3600 1050 10000

 When finished, click on the next tab below


 eem Industries showed Supplies at $5050 and Prepaid
quently, the senior accountant was given the following

For ques 4
Why it is to fees earned acocunt? It supposed to be in
prepaid revenue account since the money is pay in
advance and service has not perform yet.
I have change it to prepaid revenue, please advice me if
Im wrong.

fees earned original on credit

6000 20 000

bal 14000

prepaid revenue 所有的prepaid 进asset

所以从liabilitty（unearned revenue
6000
revenue 剩下14000
Account payable advertising
10000
epaid 进asset，6000是已经prform service了
bilitty（unearned revenue）去asset （prepaid evenue）
Part B) Make the adjusting entries dated December 31, 2013, in
the general journal below:

General Journal Page

Date Particulars PR Debit
2013 $
### Supplies expense 3600
supplies
3600 have been use, since it left $1450

Insurances expense 1050

Prepaid insurance
Insurances from July to Dec

Advertisement expense 10000

Cash
Pay for advertising on Dec

Prepaid revenue 6000

Revenue
er 31, 2013, in

1
Credit
$

3600

1050
 When finished, click on the next tab below


10000

6000
Part C) Suppose the senior accountant failed to do the adjusting entry for each of the
four situations, which are copied below for convenience. For each of the situations,
identify whether the omission of the adjusting entry would cause Assets, Liabilities, and
Net Income to be correctly stated, overstated, or understated. Organize your answers in
the chart below:

Adjustment Omission Assets Liabilities

Supplies Overstated
Insurance
Late invoices Overstated
Unearned Revenue/Prepaid revenue overstated

1 Overstated in supplies since the stock left only 1450 and 3600 has been used is not recorded in T-accoun
2 Net income is overstated as its has not deduct the insurance from July to Dec
3 Late invoices causing net income and assets (cash) overstated because advertisng expenses in Decembe
4 Prepaid revenue(20,000) is overstated in liability because 30% of work has been given and has no deduc
 for each of the
he situations,
s, Liabilities, and
e your answers in

Net Income
 When finished, click on the next tab below
Overstated 
Overstated

used is not recorded in T-account.

o Dec
dvertisng expenses in December is not record and cash is not deducte
as been given and has no deducted.
2) For each of the six prepaid insurance policies described below, use the chart to analyze their va
journal entries.

a. 3 months (oct, nov, dec) 9 months 9x30= $270

b. 3 months (oct, nov, dec) 21 months 21x15= $315
c. 1 month 11 months 11x38= $418
d. 10 months 2 months 2x60= $120
e. 1 month 11 months 11x75= $825
f. 6 months 18 months 18x45= $810
t to analyze their values at year-end and then make the appropriate adjusting

General Journal Page

Date Particulars P.R. Debit Credit
20-- a Insurance expenses 90
Insurance prepaid 90
to record 3 months insurance expense

b Insurance expenses 45
Insurance prepaid 45
to record 3 months insurance expense

c Insurance expenses 38
Insurance prepaid 38
to record a month insurance expense

d Insurance expenses 600

Insurance prepaid 600
to record 10 months insurance expense

e Insurance expenses 75
Insurance prepaid 75
to record a month insurance expense

f Insurance expenses 270

Insurance prepaid 270
to record 6 months insurance expense