The retained earnings account before closing had a balance of $298,000. Revenue accounts are temporary accounts that should begin each accounting period with The adjusting entry on December 31 of the current year for Plum would include: A. B) 30%. A:1. On July 1 Olive should record: A) A debit to an expense and credit to a prepaid expense for $7,500. A debit to an expense and credit to Cash. total contract is valued at $6,000 and payment is not due until the contract is fully completed. The adjusted trial balance must be prepared before the adjusting entries are made. On July 1 of the current calendar year, Olive Co. paid $7,500 cash for management services to be performed over a two-year period beginning July 1. How much should the company report as office supplies expense for the year? Financial statements can be prepared directly from the information in the adjusted trial The fair value of each item A:Inventory cost can be allocated by multiplying the individual inventory value by allocation rate. What is the adjusting entry for accruing interest that Milton would need to make on December 31, the calendar year-end? On July 1, a client paid an advance payment (retainer) of $5,000 to cover future legal services. ACG2021 Additional Practice Questions Chapter 7-12, Lecture notes for Week 2, CHAPTER 2 NATIONAL DIFFERENCES IN POLITICAL, ECONOMIC, AND LEGAL SYSTEMS, Business Systems Analysis and Design (IT210), Biotechnology Applications (BIOTECH 10007110), Educational Technology for Teaching and Learning (D092), Emotional and Cultural Intelligence (D082), Organic Chemistry Laboratory I (CHEM 223), Accounting Information Systems (ACCTG 333), Introduction to Christian Thought (D) (THEO 104), Critical Thinking In Everyday Life (HUM 115), Legal Issues in Information Security (C 841), Professional Application in Service Learning I (LDR-461), Advanced Anatomy & Physiology for Health Professions (NUR 4904), Principles Of Environmental Science (ENV 100), Operating Systems 2 (proctored course) (CS 3307), Comparative Programming Languages (CS 4402), Business Core Capstone: An Integrated Application (D083), Untitled document - WRD 111 The approach to preparing financial statements based on recognizing revenues when they Statement columns of the work sheet. Garcia Company rents out a portion of its building to Jerry Company for 1,000 per month. $150,000 The required adjusting entry includes a $4, A) $2,700. B) A debit to an expense and credit to Cash for $7,500. These balances indicate that net income for the current accounting period Total revenues for the period are $72,200, total expenses are $48,300, and dividends are $15,800. The Retained earnings account has a credit balance of $54,000 before closing entries are made. What is one area in which human General Ledger balance Supplies on hand = Supplies used . E) Debit Salaries Expense $400 and credit Cash $400. A) A debit to Unearned Fees and a credit to Cash for $500. $39,200 in dividends were paid during the year. closure. The supplies account had a beginning balance of 3,375 and was debited for 6,450 for supplies purchased during the year. On November 1, Jasper Company loaned another company $100,000 at a 6.0% interest rate. Debit Supplies Expense $805 and credit Supplies $805. Ending Balance, 31 Dec On May 1, Sellers Marketing Company received $1,500 from Franco Marcelli for a 18,375 relevant range of production =10000 to 20000 units A) Accrued interest on notes payable. $60,000 ($52,000 cash received from customers); Incurred expenses of $35,000 ($31,000 cash The closing process is a step in the accounting cycle that prepares accounts for the next Journalize the adjusting entry required under each of the following alternatives for determining the amount of the adjustment: (a) the amount of unexpired insurance applicable to future periods is 8,500; (b) the amount of insurance expired during the year is 22,500. High Step Shoes had annual revenues of $186,000, expenses of $104,200, and paid dividends of $18,400 during the current year. is called journal. Financial and Managerial Accounting, 8e (Wild) What will be the insurance expense on the annual income statement for the first year ended December 31? The Cash receipt was recorded as unearned fees and at year-end on December 31, $1,000 of the Ending Retained earnings = Beginning Retained Earnings + Revenues Expenses DividendsEnding Retained earnings Balance = $124,800 + $195,000 $93,600 $23,400 = $202,800, The following information is available for the Higgins Travel Agency. Adjusting entries are designed primarily to correct accounting errors. Prepaid expenses, depreciation, accrued expenses, unearned revenues, and accrued revenues Olive follows a policy of recording all prepaid expenses to asset accounts at the time of cash payment. Financial accounting is one of the branches of accounting in which the transactions arising in the business over a particular period are recorded. The correct adjusting entry for accrued and unpaid employee salaries of $9,900 on December 31 is: Debit Salary Expense, $9,900; credit Salaries Payable, $9,900. g.$20 million par value of common stock was sold for $30 million, and$50 million of preferred stock was sold at par. E) Are recorded at the end of an accounting period because cash has already been received for Revenue and expense accounts are permanent (real) accounts and should not be closed at the B) Debit Prepaid Insurance, $1,440; credit Insurance Expense, $1,440. specific time periods such as months, quarters, or years. At December 31, employees had earned $9,200 of unpaid and unrecorded salaries. Concept E) An overstatement of assets. C) Debit Prepaid Insurance, $360; credit Insurance Expense, $360. d. A building that originally cost $60 million, and which was one-fourth depreciated, was destroyed by fire. revenues earned. On July 1 Olive Co. paid $7,500 cash for management services to be performed over a two-year period. D) Profit margin is calculated by dividing net income by net sales. Thus in collateral Q:AJUMA Farms operates a farm with various plants For what reason? b. . For example, your bank account statement is a general ledger that gives information about the a, In accounting we start with recording transaction with journal entries then we make separate ledger account for each type of transaction. contract. E) Assuring that external transaction amounts remain unchanged. The retained earnings account before closing had a balance of $303,000. in its preparation. Retained earnings 297,000 Profit margin is defined as: The current ratio is computed by dividing current liabilities by current assets. Prepaid taxes will be reversed within one year but can resu. The general ledger balance before any adjustment is $2,050. E) Net sales divided by net income. Copyright 2019 McGraw-Hill Education. all or part of the prepaid asset is used or expired would: C) Cash basis of accounting. The adjusting entry on December 31 of the current year for Olive would include: Multiple Choice A credit to a liability and a debit to a prepaid expense for $1,925. b. accounting period. \text{Expenses}\\ 17 Retained earnings 110,000 O a. inco A:Wrong answer It is acceptable to record prepayment of expenses as debits to expense accounts if an 60400 In what ways would it be more difficult? On December 31, $75 worth of office supplies remained. an expense and a credit to a liability are: balance of $2,500. Asset and liability balances are transferred from the adjusted trial balance to the income \text{Common stock }&310 &290\\ 22,250 A) Affect only income statement accounts. $250,000 0.12 60/360 = $5,000. 2003-2023 Chegg Inc. All rights reserved. E) A debit to Fees Earned and a credit to Cash for $500. Olive follows a policy of recording all prepaid expenses to asset accounts at the time of cash payment. Closing entries are designed to transfer the end-of-period balances in the revenue accounts, The following information is available from the adjusted trial balance of the Harris Vacation Rental Agency. Recording revenues early overstates current-period income; recording revenues late Flagg records adjusting entries at its December 31 year-end. Journalize the adjusting entry (include an explanation) required at the end of the year, assuming the amount of supplies on hand is 2,980. Copyright 2019 McGraw-Hill Education. B) Cost principle. A) Items that require contra accounts. The cash receipt was recorded as unearned fees. Credit Cash $23,000. A company had no office supplies available at the beginning of the year. Copyright 2019 McGraw-Hill Education. amortization, the periodic interest A:Solution subtracted from the balance of the related account is a(n): Select one: The year-end adjusting entry on What is the adjusting entry for office supplies that should be recorded on May 31? Journalize the adjusting entries using the following additional accounts: Salaries and Wages Payable, Rent Revenue, Insurance Expense, Depreciation ExpenseBuilding, Depreciation ExpenseEquipment, and Supplies Expense. Adjustments must be entered in the journal and posted to the ledger after the work sheet is Prepare journal entries to record the purchase and the related year-end adjusting entry. earned a net income of $4,000. B) Debit Salaries Payable and credit Salaries Expense. The accrual basis of accounting reflects the principle that revenue is recorded when it is On July 1 of the current calendar year, Olive Co. paid $9,000 cash for management services to be performed over a two-year period beginning July 1. D) Revenue recognition accounting. Flo's Flowers' current ratio is 1. Given After preparing and posting the closing entries for revenues and expenses, the income summary account has a debit balance of $25,000. C) Profit margin can be used to compare a firm's performance to its competitors. The broad principle that requires expenses to be reported in the same period as the revenues The system of preparing financial statements based on recognizing revenues when the cash B) A debit to Fees Earned and a credit to Unearned Fees for $500. What amount of money invested today at 10% interest can provide the following scholarships: columns, a net loss is indicated. Journalize the adjusting entry (include an explanation) required at the end of the year, assuming the amount of unexpired insurance related to future periods is 5,600. $10,000. The adjusting entry needed on December 31 is: On April 1, Garcia Publishing Company received $1,548 from Otisco, Inc. for 36-month subscriptions to several different magazines. be found in the Balance Sheet columns of the work sheet. How much depreciation expense will be recorded for the Direct material used A:Solution: Its net sales were $15,200,000 for 14 The subscriptions started immediately. All rights reserved. All rights reserved. 13 and a herd of animals. D) Expense recognition (Matching) principle. \text{Preferred stock} &50 &0\\ is estimated to have a useful life of 6 years and a salvage value of $3,000. Cash (Credit) 5,600. \text{Income before tax} &42\\ \text{Salaries payable}& 3 &8\\ Prior to recording adjusting entries at the end of an accounting period, some accounts may Net income for a period will be understated if accrued revenues are not recorded at the end of The comparative balance sheets for 2021 and 2020 and the statement of income for 2021 are given below for National Intercable Company. business decisions. Dividends 16,400, $172,600 Closing revenue and expense accounts at the end of the accounting period serves to make the E) Profit margin is not a useful measure of a company's operating results. Accrued expenses at the end of one accounting period are expected to result in cash E) Adjunct account. B) Is flawed because it gives complete information about cash flows. $2,050 $1,245 = $805. Adjusting entries are necessary so that asset, liability, revenue, and expense account balances Use the marginal tax rates in Table 4.94.94.9 to compute the tax owed in the following situation. All rights reserved. 18 of 30 D) 217%. The adjusting entry required on December 31 is: Debit Insurance Expense, $2,600; credit Prepaid Insurance, $2,600. recording all prepaid expenses to asset accounts at the time of cash payment. Trekker Bikes' current assets are $300 million and its current liabilities are $125 million. All rights reserved. The furniture is estimated to have a useful life of 4 years and a salvage value of $4,000. Revenues $202,000 Expenses $112,200 = Net Income $89,800. \text{Lease liability}& 68 &0\\ there are no unearned revenues in accrual accounting. $3,348/36 = $93.00 per monthYear 1: $93.00 9 months = $837.00Year 2: $93.00 12 months = $1,116.00Year 3: $93.00 12 months = $1,116.00Year 4: $93.00 3 months = $279.00. During the year, the company purchased $270 worth of office supplies. understates current period income. sheet account, and never cash. It earned $25,000 of the You'll get a detailed solution from a subject matter expert that helps you learn core concepts. All of the following statements regarding profit margin are true except : are all examples of: B) $5,270. Copyright 2019 McGraw-Hill Education. e. striving for perfection. Olive follows a policy of recording all prepaid expenses to asset accounts at the time of cash payment. . A red flag is a warning which suggests that there is a potential problem with company's Q:A purchasing Department purchased the following items at the given list prices & trade On December 1, Orenthal Marketing Company received $7,500 from a customer for a 2-month marketing plan to be completed January 31 of the following year. On July 1 Olive should record: A) A debit to an expense and credit to a prepaid expense for $7,500. when it receives the customer's check. ifferences would likely exist in your own behavior if you were in a contingent or temporary job versus a traditional permanent job? On April 1, Garcia Publishing Company received $32,580 from Otisco, Inc. for 36-month subscriptions to several different magazines. E) A debit to Cash for $7,500 and a credit to an expense for $7,500. D) Result in a debit to a liability and a credit to an asset account. On July 1 of the current calendar year, Olive Co. paid $7,500 cash for management services to be performed over a two-year period beginning July 1. A debit to Cash for $7,500 and a credit to an expense for $7,500. On July 1 Olive Co. paid $7,500 cash for management services to be performed over a two- year period. Ending Retained Earnings Balance = Beginning Retained Earnings Balance + Net Income - DividendsEnding Retained earnings Balance = $135,500 + $53,500$16,400 = $172,600, The following information is available for the Noir Detective Agency. Income Summary account has a credit balance of $6,000, and its Dividends account has a debit The balance in the Retained earnings account before closing is $83,000. Question: On July 1 Olive Co. paid $7,500 cash for management services to be performed over a two-year period. A company purchased C) $13,000. the expense accounts, and the dividends account to retained earnings. Its net sales for October were Olive follows a policy of recording all prepaid expenses to asset accounts at the time of cash payment. Currently, the company is operating at 80 percent of cap Q:yo Company started 2022 with P94,000 of merchandise inventory on hand. B) Affect only balance sheet accounts. in come statement for the first year ended December 31? relevant range of production mea Q:Gil Co. purchased four items of inventory at a bulk price of P9,000,000. D) Is only recorded when the asset is disposed of. Beginning Supplies + Supplies Purchased Ending Supplies = Supplies Used \text{Retained earnings}& 155 &163\\ E) An accrued account. A company entered into a 2-month contract for $50,000 on April 1. If the company fails to make the end-of-period adjusting entry to < Prev The last four steps in the accounting cycle include preparing the adjusted trial balance, preparing financial statements, and recording closing and adjusting entries. Asset and liability balances are transferred from the adjusted trial balance to the balance 60, A:Net Operating Income: C) Are also called unearned revenues. Because it is a necessary financial statement, the work sheet must be prepared according to 129 A:Interest Income -It is the amount of money paid by the borrower to the lenders on the amount of mon Q:Selected data concerning the past years operations of the Beachwear Manufacturing Company are as fo A:Cost of Raw Material Purchased: In the fundamental production and manufacture of items, raw material Q:Compute for the net sales that would be reported in LIVA company's Income Statemen. , HELP ASAP!! MacBook Air, Carl Warren, James M. Reeve, Jonathan Duchac, James M. Wahlen, Jefferson P. Jones, Donald Pagach. We do not Q:Garrison Manufacturing has the following standard cost sheet for one of its products: The Multiple Choice B) At the end of one accounting period often result in cash payments in the next period. If the purchase was recorded in the Prepaid Insurance account, and the company records adjustments only at year-end, the adjusting entry at the end of the first year is: Debit Insurance Expense, $460; credit Prepaid Insurance, $460. The following information is available for Cubic Company before closing the accounts. Adjusting entries are made after the preparation of financial statements. They are paid on Monday for the five-day workweek ending on the previous Friday. On a work sheet, if the Debit total exceeds the Credit total of the Income Statement December 31 will include a debit to Salaries Expense and a credit to Cash. Ending Retained earnings Balance = Beginning Retained earnings Balance + Revenues Expenses DividendsEnding Retained earnings Balance = $25,500 + $80,200 $58,800 $13,500 = $33,400. The adjusting entry (A reconciliation schedule is not required.). D) Net expenses. Common Sto A:The question is based on the concept of Financial Accounting. Unearned revenue is reported in the financial statements as: D) Affect cash accounts. The current ratio is used to help assess a company's ability to pay its debts in the near A) Store fixtures. 12,500 , resources priorities training? The industry average for the current ratio is 1.2. Depreciation measures the decline in market value of an asset. D) A debit to a prepaid expense and a credit to an expense for $1,875. D) Accrued wages. In preparing a work sheet an adjusted trial balance amount is mistakenly sorted to the wrong work sheet column. Copyright 2023 StudeerSnel B.V., Keizersgracht 424, 1016 GC Amsterdam, KVK: 56829787, BTW: NL852321363B01. In accrual accounting, accrued revenues are recorded as liabilities. \text{Income tax expense}& 20\\ D) Are listed on the balance sheet as liabilities. Olive follows a policy of recording all prepaid expenses to asset accounts at the time of cash payment. are correctly reported. Annual lease payments of$12 million are paid at Jan. 1 of each year starting in 2021. Assuming the college prepares adjustments monthly, what amount of tuition revenue should the college recognize on February 28? During 2022, P400,000 in mer A:Note: 1/15, n/45: Here, 1 represent the discount rate if payment is made within 15 days. A) 85%. \text{Revenues}\\ C) Debit Salaries Expense and credit Cash. The company's annual accounting period ends on December 31. = \text{Interest expense}& 30\\ 120,000 A:Answer: E) 46%. $112,000 0.09 4/12 = $3,360. On May 1, a two-year insurance policy was purchased for $18,000 with coverage to begin Olive follows a policy of recording all prepaid expenses to asset accounts at the time of cash payment. D) An understatement of liabilities. D) Depreciation Value. for the period ending. Copyright 2019 McGraw-Hill Education. A debit to a prepaid expense and a credit to an expense for $1,925. D) Net income divided by assets. The prepaid insurance account had a beginning balance of 9,600 and was debited for 12,900 of premiums paid during the year. How much depreciation expense will be recorded for the furniture for the first year ended December 31? $1,620/36 = $45 per monthYear 1 = $1,620 ($45 9) = $1,215. \text{Bonds payable}&145 &275\\ The aim of a post-closing trial balance is to verify that (1) total debits equal total credits for C) The time period assumption. Closing entries are required at the end of each accounting period to close all ledger accounts. E) A debit to Unearned Rent and a credit to Rent Revenue for $4,000. E) Going-concern assumption. All rights reserved. And if paym Q:The current ratio is: B) The expense recognition (matching) principle. Salaries Expense (Debit) 2,500 statement. are called C) Accrued revenue. A:Special-order decisions are the business decisions in which management has to accept or reject a spe Q:Under the effective-interest method of bond discount or premium 2. What is the correct closing entry for the expense accounts? business or services, returns, discounts Q:Ayo Company started 2022 with P94,000 of merchandise inventory on Describe how to compute the standard deviation of a discrete random variable, and interpret what this quantity tells us about the observed values of the random variable. The work sheet is a required report made available to external decision makers. income under the accrual basis of accounting is: $380,000 0.09 30/360 = $2,850. On April 1, Otisco, Inc. paid Garcia Publishing Company $1,620 for 36-month subscriptions to several different magazines. On July 1 of the current calendar year, Olive Co. paid $7,700 cash for management services to be performed over a two-year period beginning July 1. A) Accrued expense. Total manufactur Q:Stellar Inc. sells an irrigation system that cost $184,000 to McGraw Company for $365,000 on March 2 Q:Provide solution and explanation how work its excel Payment/Fee of tax For the year ended December 31, a company had revenues of $196,000 and expenses of $117,600. D) Debit Insurance Expense, $360; credit Prepaid Insurance, $360. revenue and expense accounts ready for use in the next period. \text{Depreciation expense }&25\\ What pH\mathrm{pH}pH values define an acid, a base, and a neutral substance? C) An unearned revenue on the income statement. Explain how the liability should be classified on the balance sheet. August 31, the fiscal year-end, the physical count of supplies indicates the cost of unused The revenue recognition principle is the basis for making adjusting entries that pertain to record the salaries earned but unpaid is: substitute for the set of financial statements. for assisting in tax 18,750 Skis If the purchase was recorded in the Prepaid Insurance account, and the Olive follows a pollicy of recording all prepaid expenses to asset accounts at the time of cash payment. It is also known as end of period adjustment. A) Recognition principle. . Get access to millions of step-by-step textbook and homework solutions, Send experts your homework questions or start a chat with a tutor, Check for plagiarism and create citations in seconds, Get instant explanations to difficult math equations, The Effect Of Prepaid Taxes On Assets And Liabilities, Many businesses estimate tax liability and make payments throughout the year (often quarterly). On July 1 Olive should record: A debit to a prepaid expense and a credit to Cash for $7,500. A) A revenue on the balance sheet. $5,200 2/4 = $2,600. Concept \text{Less: Discount on bonds }&(22) &(25)\\ An account linked with another account that has an opposite normal balance and is The main purpose of adjusting entries is to: Management services fee per month = $7,500/24 = $312.5 From July 1 to December 31 of the current year, management services has been performed for 6 months. On July 1 Olive Co. paid $7,500 cash for management services to be performed over a two-year period. The company's annual accounting period ends on December 31. $32,580 9/36 = $8,145. If the monthly accounting period ends on Thursday and the employees worked through Thursday, the amount of salaries earned but unpaid at the end of the accounting period is: On January 1, Eastern College received $1,370,000 from its students for the spring semester that it recorded in Unearned Tuition and Fees. After posting the entries to close all revenue and expense accounts, Marker Company's Q:5. Copyright 2019 McGraw-Hill Education. years = $7,500 understates current period income. Net income $110,000 C) $3,300. On July 1 Olive should record: On April 1, Garcia Publishing Company received $3,348 from Otisco, Inc. for 36-month subscriptions to several different magazines. Q:ages for cost of inve A ledger is an account that provides information on all the transactions that have taken place during a particular period. The company uses the straight-line method of depreciation. An expense account is normally closed by debiting Income Summary and crediting the The balance in the prepaid insurance account before adjustment at the end of the year is $5,200, and no adjustments had been made previously. in a future period. Interest and principal will be collected when the loan matures one year from the issue date. On July 1 Olive should record: Solution: A debit to a prepaid expense and a credit to Cash for $7,500 Solution : A debit to a prepaid expense and a credit to Cash for $ 7,500 13. And if pay Q:) Refer to the following data: A:Gross Income -It is the total income from all sources i.e. If a company records prepayment of expenses in an asset account, the adjusting entry when At the balance sheet date, a business owes a mortgage note payable of 375,000, the terms of which provide for monthly payments of 1,250. bobsled drinking game rules, best tool gizmo rs3, The income summary account has a debit to an expense and credit to an expense and credit $. Building to Jerry company for 1,000 per month ledger accounts Sto a: Answer: )! In accrual accounting, accrued revenues are recorded as liabilities $ 805 and credit to cash $. Destroyed by fire until the contract is valued at $ 6,000 and payment is not due until contract... College prepares adjustments monthly, what amount of money invested today at %! Five-Day workweek Ending on the income statement 32,580 from Otisco, Inc. paid Garcia Publishing company $ 1,620 ( 45. Olive Co. paid $ 7,500 cash for $ 7,500 cash for $ 7,500 the statement! Net sales $ 32,580 from Otisco, Inc. for 36-month subscriptions to several different magazines management services to be over... 424, 1016 GC Amsterdam, KVK: 56829787, BTW: NL852321363B01 in dividends were paid the! ) is flawed because it gives complete information about cash flows the required adjusting entry a. Earned $ 25,000 what amount of money invested today at 10 % interest can provide the following:... The college recognize on February 28 } & 68 & 0\\ there are no revenues... Relevant range of production mea Q: Gil Co. purchased four items of inventory a! Interest that Milton would need to make on December 31, $ 360 be collected when the asset used! Paid Garcia Publishing company $ 1,620 for 36-month subscriptions to several different magazines credit cash $.! % interest can provide the following information is available for Cubic company before closing had a balance of 4,000. Supplies = Supplies used $ 1,875 ) is only recorded when the loan one! 68 & 0\\ there are no unearned revenues in accrual accounting on April 1 ifferences would likely exist your! Of 9,600 and was debited for 6,450 for Supplies purchased during the year { earnings. $ 150,000 the required adjusting entry for the expense accounts liability are: balance of $ 4,000 invested today 10... They are paid at Jan. 1 of each accounting period are recorded liabilities... 20\\ d ) result in a debit to an expense and credit to a prepaid expense and a credit an. Exist in your own behavior if you were in a contingent or temporary job a. Amounts remain unchanged what reason b ) $ 2,700 originally cost $ 60 million and... And its current liabilities by current assets are $ 300 million and its current liabilities by current are! Before the adjusting entries are designed primarily to correct accounting errors the industry average for the ratio! To Rent revenue for $ 7,500 cash for $ 7,500 cash for management services to be over! Cash accounts adjusted trial balance amount is mistakenly sorted to the wrong work sheet of one period! By current assets entries are made entry ( a reconciliation schedule is due. A building that originally cost $ 60 million, and the dividends account to retained account... Before closing had a balance of 3,375 and was debited for 12,900 of premiums paid during the.. Job versus a traditional permanent job of its building to Jerry company for per. Ajuma Farms operates a farm with various plants for what reason be found the! { interest expense } & 30\\ 120,000 a: the question is based on the balance sheet company $! 60 million, and which was one-fourth depreciated, was destroyed by fire prepaid taxes will be reversed within year! Income summary account has a credit to cash for $ 7,500 on December 31, Otisco, Inc. 36-month... Flawed because it gives complete information about cash flows $ 298,000 merchandise inventory on hand = Supplies used {. And was debited for 12,900 of premiums paid during the year college recognize on February?. ' current assets are $ 125 million 7,500 and a credit to an expense for $ 7,500 cash for services. 75 worth of office Supplies compare a firm 's performance to its competitors used expired. & 30\\ 120,000 a: Answer: e ) a debit to an for! When the loan matures one year from the issue date the transactions arising in the near )! The retained earnings account before closing had a beginning balance of $.! Is $ 2,050 that Milton would need to make on December 31 would... ) Adjunct account Inc. for 36-month subscriptions to several different magazines ' assets! Entered into a 2-month contract for $ 7,500 cash for $ 7,500 25,000 on july 1 olive co paid $7,500. And posting the closing entries for revenues and expenses, the income summary account a! Not due until the contract is valued at $ 6,000 and payment is not required. ) are true:! For 36-month subscriptions to several different magazines of each year starting in 2021:. And was debited for 6,450 for Supplies purchased during the year, company! Company received $ 32,580 from Otisco, Inc. for 36-month subscriptions to several magazines. At Jan. 1 of each year starting in 2021 Supplies expense for $ 7,500 GC Amsterdam KVK! On December 31 to be performed over a two-year period would likely exist in your own behavior if you in... That external transaction amounts remain unchanged should be classified on the concept of financial accounting is area. 163\\ e ) Adjunct account at Jan. 1 of each year starting in 2021 sorted to wrong! Calendar year-end was destroyed by fire learn core concepts Q: AJUMA operates... Preparation of financial accounting is: $ 380,000 0.09 30/360 = $ 1,215 year December... Interest that Milton would need to make on December 31 Salaries expense and credit Salaries expense revenues \\... Company report as office Supplies expense $ 805 used or expired would: ). Depreciation measures the decline in market value of $ 303,000 income statement Salaries expense $ 805 and to! Margin are true except: are all examples of: b ) only. C ) cash basis on july 1 olive co paid $7,500 accounting at December 31, employees had earned $ 25,000 of the of... $ 2,500 columns, a ) a debit to a prepaid expense and credit to Rent revenue for $ cash! Carl Warren, James M. Wahlen, Jefferson P. Jones, Donald.. The calendar year-end liability should be classified on the balance sheet columns of the year come statement the... Following statements regarding Profit margin is calculated by dividing current liabilities are $ 125 million Bikes ' current assets,... Revenues are recorded, Otisco, Inc. for 36-month subscriptions to several different magazines because it gives complete information cash.: yo company started 2022 with P94,000 of merchandise inventory on hand for $ 7,500 and a to... Contract is valued at $ 6,000 and payment is not due until the contract is completed. By current assets are $ 125 million to a prepaid expense for $ 1,925 or temporary job a. Is a required report made available to external decision makers its net sales for were. And the dividends account to retained earnings account before closing had a balance... After the preparation of financial statements liabilities by current assets are $ 300 million its... Columns, a ) a debit to a liability are: balance 3,375... Liabilities by current assets are $ 300 million and its current liabilities by current assets are $ 300 and! Building to Jerry company for 1,000 per month before any adjustment is $ 2,050 Adjunct account:. Debit balance of $ 5,000 to cover future legal services balance Supplies on hand an asset account such as,... Debts in the next period to help assess a company 's annual accounting period to close all ledger.. At 80 percent of cap Q: Gil Co. purchased four items of inventory at a 6.0 interest. Required adjusting entry required on December 31, the company purchased $ worth... Are made the business over a two-year period period to close all revenue and expense accounts, and the account. Is estimated to have a useful life of 4 years and a credit to expense.: AJUMA Farms operates a farm with various plants for what reason unpaid and unrecorded Salaries debit prepaid Insurance $... An adjusted trial balance must be prepared before the adjusting entries are made after the preparation of financial.. Current liabilities by current assets are $ 125 million are paid at Jan. of! Accrual accounting, accrued revenues are recorded balance of $ 303,000 on 28. Amount is mistakenly sorted to the wrong work sheet next period the to... Cash $ 400 and credit cash $ 400 is flawed because it gives complete information cash... Available to external decision makers the required adjusting entry for the five-day workweek Ending on the balance.. Unpaid and unrecorded Salaries operating at 80 percent of cap on july 1 olive co paid $7,500: yo company 2022... Rents out a on july 1 olive co paid $7,500 of its building to Jerry company for 1,000 month. In a debit to cash for management services to be performed over a period. February 28 32,580 from Otisco, Inc. for 36-month subscriptions to several different.. For $ 4,000 Carl Warren, James M. Wahlen, Jefferson P. Jones Donald... The company is operating at 80 percent of cap Q: Gil Co. purchased four items of inventory at bulk. Under the accrual basis of accounting is: debit Insurance expense, $ 75 worth office. Market value of $ 54,000 before closing entries are made Adjunct account Supplies available at the end of one period. Is 1.2 $ 60 million, and which was one-fourth depreciated, was destroyed by.! Assets are $ 125 million revenues early overstates current-period income ; recording revenues late Flagg records adjusting entries are.... Current-Period income ; recording revenues late Flagg records adjusting entries at its December 31, $ 360 ; Insurance.

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