Adjusting Entries: Accrued Revenues

Accrued Revenues occur when we have delivered a good or service to the customer, but have not yet been paid by the customer.

Concept: Adjusting Journal Entries: Accrued Revenues

5m

Problem: On December 23, a customer placed an order with Timely, Inc. On December 28, Timely, Inc. delivered the product to the customer. Timely’s accountant forgot to make the entry and made the entry on January 3. The customer paid its account in full on January 7. When should Timely, Inc. record the revenue?

2m

Adjusting Entries: Accrued Revenues Additional Practice Problems

What is the effect on the Accounting Equation if the credit entry for service revenue is not recorded?

a. Assets would be understated

b. Liabilities would be understated

c. Stockholders equity would be understated

d. Stockholders equity would be overstated

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When a company performs a service on account for a customer, which of the following would occur?

a. Expenses would decrease

b. Assets would decrease

c. Net income would decrease

d. Stockholders’ equity would increase

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An accrued revenue would be shown on the balance sheet as:

A) A receivable

B) A payable

C) A prepaid revenue

D) Unearned revenue

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Langhurst Company sold hardware for $12,000 cash and $18,000 of hardware to credit customers. Which of the following is the correct journal entry to record this transaction?

A) Cash, debit, $12,000; Accounts Receivable, credit, $18,000; Unearned Revenues, credit, $30,000

B) Cash, debit, $12,000; Accounts Receivable, debit, $18,000, Hardware Revenues, credit, $30,000

C) Cash, debit, $12,000; Unearned Revenues, debit, $18,000; Hardware Revenues, $30,000

D) Cash, debit, $30,000; Hardware Revenues, credit, $30,000

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When delivery of goods and services for $25,000 results in a cash receipt of $15,000 and the balance of $10,000 on account, the reported revenues for the time period are

A) $15,000

B) $25,000

C) $10,000

D) $5,000

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A company sold $400,000 of merchandise for cash and $120,000 of merchandise to credit customers who will pay for the merchandise in a later time period. How much revenue should be reported on the income statement of the current time period?

A) $280,000

B) $520,000

C) $400,000

D) $120,000

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When a company performs a service on account for a customer, which of the following would occur?

a. Expenses would decrease

b. Assets would decrease

c. Net income would decrease

d. Stockholders’ equity would increase 

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For Build-A-Bear Workshop, Inc., cash sales and sales on account were $200,000 and $680,000, respectively. During the year, Accounts Receivable increased by $20,000. Cash received from customers was:

a. $220,000

b. $860,000

c. $880,000

d. $900,000

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EZ Lawn Equipment sells Jorge a $5,000 mower and accepts a 6 month, 5% note on 11/1/15. Assuming no adjusting entries have been made, how much interest should EZ record as of 12/31?

A. $250

B. $125

C. $42

D. $21

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Matt Meyer opens a hockey rink and offers hockey lessons for kids. When preparing his financial statements for September, he realized he had provided $350 of lessons for which he had not been paid and prepared the necessary adjusting entry. What effect did this entry have on his financial statements?

A. Increased revenues and net income, decreased assets and equity

B. Increased revenues and net income and assets, decreased equity

C. Increased revenues, net income, assets and equity

D. Increased expenses and liabilities, decreased net income and equity.

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