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UNC-Chapel Hill BUSI 101 - Accrual Basis vs. Cash Basis

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BUSI 101 1st Edition Lecture 8Outline of Last Lecture I. Adjusting EntriesA. Deferrals versus Accrualsi. Practice ProblemsII. Closing Entriesa. Practice ProblemsIII. Pg. 31 in Course PackIV. Pg. 32 in class Practice QuizOutline of Current Lecture I. Page 33 in course packII. Page 27 in course packCurrent LecturePage 33 in Course Pack1. Did Should Have Done TR-TE=NI TA=TL+TOEInterest Revenue (R) $40,000 Interest Receivable (A) $40,000Interest Receivable (A) $40,000 Interest Revenue (R) $40,000U/NE/UNIunderestimatedby $80,000U/NE/U(Visual as to why NI is underestimated by $80,000):Interest Revenue (R) Interest Receivable (A)700,000 700,00040,000 40,000These notes represent a detailed interpretation of the professor’s lecture. GradeBuddy is best used as a supplement to your own notes, not as a substitute.660,000 740,0002.Did Should Have Done TR-TE=NI TA=TL+TOEInterest Expense (E) $60,000 Interest Payable (L) $60,000Interest Receivable (A) $60,000 Interest Receivable (L) $60,000U/O/U60/60/120U/O/U60/60/120Correct IncorrectRevenue 500,000 440,000-Expenses 300,000 360,000=Net Income 200,000 80,0003.IN OUTUnearned Rent (L) 360 Accrual basis rent expense (E) 26,000Rent Receivable 610 Prepaid rent (A) 850Accrual basis rent revenue (R) 42,000 Rent Payable (L) 870Cash (A) 27,720Account Type In or Out A or L Def. or Accr.PPR +850 Out A Def.RR -610 In A Accr.Rent Payable -870 Out L Accr.Unearned Rent +360 In L Def.Accrual Basis of NI = 16,000= 42,000-26,000Cash Basis of NI= 15,520=42,970-27,7204. IN OUTCash (A) 40,000 Expense (E) 23,020Rent Payable (A) 630 Rent Payable (L) 780Unearned Rent (L) 400 Prepaid Rent 800Revenue (R) 40,230 Cash (A) 23,000Account Type In or Out A or L Def. or Accr.Prepaid Rent -800 Out A Def.Rent Receivable +630 In A Accr.Rent Payable -780 Out L Accr.Unearned Rent +400 In L Def.Cash Basis of NI = 17,000Accrual Basis of NI=17,210Page 27 in Course Pack1. Cash 7800Dues Received in Advance (L) 250Dues Receivable (A) 300Dues Revenue (R) 72502. Cash (A) 570Accr. Interest Receivable (A) 200Interest Revenue (R) 9003. Investment (A)8000200062003800Investment(A) 2000Cash (A) 2000Cash (A) 6200Investment (A)62004. Supplies Expense (E) 1800Supplies (A) 50Accounts Payable (L) 100Cash (A) 1750Alternate way to do problem #4Supplies (A)10018501800150Accounts Payable (L)120001750 185013000Supplies (A) 1850A/P (L) 1850A/P (L) 1750Cash (A) 1750Supplies Expense (E) 1800Supplies (A)


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