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Econ 102 Chapter 4 Homework
- Course
- Econ 102
- Institution
- Queens College
ECON 102 HW - Chap 4: The Accounting Cycle Accruals and Deferrals.
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Chapter 4 HW1. Florida Palms Country Club adjusts its accounts monthly. Club members pay their annual
dues in advance by January 4. The entire amount is initially credited to Unearned
Membership Dues. At the end of each month, an appropriate portion of this amount is
credited to Membership Dues Earned. Guests of the club normally pay green fees before
being allowed on the course. The amounts collected are credited to Green Fee Revenue at
the time of receipt. Certain guests, however, are billed for green fees at the end of the
month. The following information is available as a source for preparing adjusting entries
at December 31.
a. Salaries earned by golf course employees that have not yet been recorded or paid
amount to $9,600.
b. The Tampa University golf team used Florida Palms for a tournament played on
December 30 of the current year. At December 31, the $1,800 owed by the team
for green fees had not yet been recorded or billed.
c. Membership dues earned in December, for collections received in January,
amount to $106,000.
d. Depreciation of the country club's golf carts is based on an estimated life of 15
years. The carts had originally been purchased for $180,000. The straight-line
method is used. (Note: The clubhouse building was constructed in 1925 and is
fully depreciated.)
e. A 12-month bank loan in the amount of $45,000 had been obtained by the country
club on November 1. Interest is computed at an annual rate of 8 percent. The
entire $45,000, plus all of the interest accrued over the 12-month life of the loan,
is due in full on October 31 of the upcoming year. The necessary adjusting entry
was made on November 30 to record the first month of accrued interest expense.
However, no adjustment has been made to record interest expense accrued in
December.
f. A one-year property insurance policy had been purchased on March 1. The entire
premium of $7,800 was initially recorded as Unexpired Insurance.
g. In December, Florida Palms Country Club entered into an agreement to host the
annual tournament of the Florida Seniors Golf Association. The country club
expects to generate green fees of $4,500 from this event.
h. Unrecorded Income Taxes Expense accrued in December amounts to $19,000.
This amount will not be paid until January 15.
i. For each of the above numbered paragraphs, prepare the necessary adjusting
entry. (If no entry is required for a transaction/event, select "No journal entry
required" in the first account field.)
, 2. Enchanted Forest, a large campground in South Carolina, adjusts its accounts monthly.
Most guests of the campground pay at the time they check out, and the amounts collected
are credited to Camper revenue. The following information is available as a source for
preparing the adjusting entries at December 31.
a. Enchanted Forest invests some of its excess cash in certificates of deposit (CDs)
with its local bank. Accrued Interest revenue on its CDs at December 31 is $400.
None of the interest has yet been received. (Debit Interest receivable.)
b. A six-month bank loan in the amount of $12,000 had been obtained on September
1. Interest is to be computed at an annual rate of 8.5 percent and is payable when
the loan becomes due.
c. Depreciation on buildings owned by the campground is based on a 25-year life.
The original cost of the buildings was $600,000. The Accumulated Depreciation:
Buildings account has a credit balance of $310,000 at December 31, prior to the
adjusting entry process. The straight-line method of depreciation is used.
d. Management signed an agreement to let Boy Scout Troop 538 of Lewisburg,
Pennsylvania, use the campground in June of next year. The agreement specifies
that the Boy Scouts will pay a daily rate of $15 per campsite, with a clause
providing a minimum total charge of $1,475.
e. Salaries earned by campground employees that have not yet been paid amount to
$1,250.
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