2) Identify four types of adjusting entries that may be required at the end of t

Question

2) Identify four types of adjusting entries that may be required at the end of the accounting period? 3) eCatalogue Services performed services in October for a particular customer for a fee of $7890. Payment was received in November. a) Was revenue earned in October or November? b) What accounts should be debited and credited in October? c) What accounts should be debited and credited in November? 4) Who pays the freight when the terms are F.O.B. Shipping Point? What account is debited? 5) If the cost of inventory on hand at the end of the year is made up of the most current costs, what cost flow assumption is being used?

Explanation / Answer

2) Four types of adjusting entries required at the end of an accounting period are for:

a. Accrued revenues

b. Accrued expenses

c. Deferred revenues

d. Deferred expenses.

3) a) The revenue was earned in October sincce revenue is earned as and when the service is performed and not when the payment is received.

b) In October, Debit accounts receivable account and credit service revenue account.

c) In Novemeber, Debit service revenue acount and credit cash account.

4) The terms F.O.B shipping point indicates that the sale took place at the shipping point. So, the buyer is responsible for the transportation and is supposed to pay the freight.

Freight-in account is debited.

5) First in First Out is a cost flow assumption where the oldest inventory is first use dto fill the orders. This means that the oldest costs will form part of the cost of goods sold and the most current or recent costs form part of the inventory on had at the end of the year. So, the cost flow asssumption being used is First In First Out or FIFO asumption.

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