Question 1
The following transactions for Carleton Company occurred during January 2016:
Jan. 1 Purchased a two­year insurance policy for cash, $8,400 4 Paid utilities bill received December 2015, $450 9 Performed a service on account, $1,200 16 Paid bimonthly salary to employees, $2,700 21 Received $800 from a customer on account 25 Received $600 from January 9 transaction 30 Prepared the adjusting entry for insurance from January 1 transaction 30 Accrued wages of $2,750 Show the total amount of revenue and expense recognized under both the accrual basis and cash basis of accounting.
Accrual Basis
Revenue Total
Expense Total Cash Basis
Revenue Total
Expense Total 

Question 2
On December 15, 2015, a public company receives an order from a customer for services to be performed on December 28, 2015. Due to a backlog of orders, the company does not perform the services until January 3, 2016. The customer pays for the services on January 6, 2016. When should revenue be recorded for the company? Why (support your argument with a principle from the textbook)? 
Question 3 Scranton Motors Ltd faced the following situations. Journalize the adjusting entry needed at year end for each situation. Each scenario should be considered independently. The business has interest expense of $9,000 early in January 2017. Interest revenue of $3,000 has been earned but not yet received. When the business collected $12,000 in advance three months ago, the accountant debited Cash and credited Unearned Revenue. The client was paying for two cars, one delivered in December, the other to be delivered in February 2017. Salary expense is $1,000 per day – Monday through Friday – and the business pays employees each Friday. For example purposes, assume that this year, December 31 falls on a Tuesday. The unadjusted balance of the Supplies account is $3,100. The total cost of supplies on hand is $800. Equipment was purchased at the beginning of this year at a cost of $60,000. The equipment’s useful life is five years. Record the depreciation for this year and then determine the
equipment’s carrying amount. 
Question 4
Prepare the required closing entries for the following selected accounts from the records of ShipIT Transportation Inc. at December 31, 2016.
Cost of services sold
Accumulated depreciation $11,600
17,800 Selling, general, and administrative expense 6,900 Retained earnings, December 31, 2015 1,900 Service revenue
Depreciation expense 23,600
4,100 Other revenue 600 Income tax expense 400 Dividends 400 Income tax payable 300 How much net income did ShipIT Transportation Inc. earn during the year ended December 31, 2016? Prepare a T­account for Retained Earnings to show the December 31, 2016 balance of Retained Earnings. Question 5
Academic Consultants Inc. had the following selected transactions in August 2016: Aug. 1 Prepaid insurance for August through December, $1,000 4 Purchased software for cash, $800 5 Performed service and received cash, $900 8 Paid advertising expense, $300 11 Performed service on account, $3,000 19 Purchased computer on account, $1,600 24 Collected for the August 11 service 26 Paid account payable from August 19 29 Paid salary expense, $900 31 Adjusted for August insurance expense (see Aug 1) 31 Earned revenue of $800 that was collected in advance in July 1. Show how each transaction would be handled using the cash basis and the accrual basis. Under each column, give the amount of revenue or expense for August. Journal entries are not required. Use the following format for your answer, and show your computations.
Academic Consultants Inc.
Amount of Revenue (Expense) for August 2016 Date
Aug 1 Cash Basis
Revenue/(Expense) Accrual Basis
Amount Revenue/(Expense) Amount 

2. Compute August income (loss) before tax under each accounting method 
3. Explain which measure of net income or net loss is preferable. Evaluation
Financial Accounting focuses heavily on finding solutions to numerical problems. With that in mind, most unit*s will include a number of problems. For each problem, you will need to provide more than a simple numerical response. Your solutions should thoroughly address the issue and present the findings in a meaningful format similar to those developed within the chapters and as part of the review exercises solutions. Part value may be assigned for incorrect responses providing evidence of understanding of the principles exist.