The Income Summary account is used to close the permanent accounts at the end of an Prepare the statement of cash flows. Accrual accounting states that both revenues and expenses must be recorded during the periods that they actually occur, and not necessarily when any cash transfer is associated to them. Earned but unrecorded revenues are recorded during the adjusting process with a credit to a The adjusting entry for the year ended December 31 would include: a debit to Unearned Fees for $3,750. A debit to an expense and a credit to a prepaid expense for $1,925. Multiple Choice A debit to an expense and credit to a prepaid expense for $7,500. was initially recorded as Unearned Revenue. On July 1 of the current calendar year, Plum Co. paid $7,500 cash for management services to be performed over a two-year period beginning July 1. On July 1 Olive should record: E) Going-concern assumption. Copyright 2019 McGraw-Hill Education. E) Assuring that external transaction amounts remain unchanged. temporary accounts, and (2) all temporary accounts have zero balances. What is the correct closing entry for the revenue accounts? 13 Trekker Bikes' current assets are $300 million and its current liabilities are $125 million. First week only $4.99! By October 31, 10% of the Debit Interest Receivable, 3,360; credit Interest Revenue, $3,360 A debit to a prepaid expense and a credit to Cash for $5,775. The entry to close the Income Summary account at the end of the year, after revenue and expense accounts have been closed, is: Debit Income Summary $84,300; credit Retained earnings $84,300. C) $3,300. B) Affect only balance sheet accounts. A debit to a prepaid expense and a credit to Cash for $5,775. amortization, the periodic interest A:Solution Total revenues for the period are $72,200, total expenses are $48,300, and dividends are $15,800. If all columns of a completed work sheet balance, you can be sure that no errors were made All rights reserved. D) A debit to Unearned Rent and a credit to Rent Revenue for $2,400. The Unearned Rent account balance at the end of December, after adjustment, should be: $2,400 Copyright 2019 McGraw-Hill Education. Boots After closing entries are posted, what will be the balance in the Retained earnings account? A credit to a prepaid expense and a debit to Cash for $7,500. On April 1, Otisco, Inc. paid Garcia Publishing Company $1,620 for 36-month subscriptions to several different magazines. (A reconciliation schedule is not required.). c. termination record the salaries earned but unpaid is: *Response times may vary by subject and question complexity. The cash receipt was recorded as unearned fees. a. lay off $40,650. hand. understates current period income. The retained earnings account before closing had a balance of $298,000. Fragmental Co. leased a portion of its store to another company for eight months beginning B) Is flawed because it gives complete information about cash flows. is received and reporting expenses when the cash is paid is called: \text{Bonds payable}&145 &275\\ You'll get a detailed solution from a subject matter expert that helps you learn core concepts. How much depreciation expense will be recorded for the furniture for the first year ended December 31? C) Debit Salaries Expense and credit Cash. D) $6,750. What is the proper adjusting entry at December 31, the end of the accounting period, if the balance in the prepaid insurance account is $7,750 before adjustment, and the unexpired amount per analysis of policies is $3,250? 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. 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. Assuming adjustments are only made at year-end, what is the adjusting entry for accruing interest that Kennedy would need to make on December 31, the calendar year-end? first. supplies is $3,200. We do not Q:Garrison Manufacturing has the following standard cost sheet for one of its products: Flo's Flowers' current ratio is 1.3. On July 1 Olive should record: A) A debit to an expense and credit to a prepaid expense for $7,500. Debit Income Summary $196,000; credit Revenues $196,000. 120,000 An expense account is normally closed by debiting Income Summary and crediting the \text{Insurance expense }13 D) Are listed on the balance sheet as liabilities. On July 1 Olive should record: August 31, the fiscal year-end, the physical count of supplies indicates the cost of unused not in helping to prepare interim financial statements. All rights reserved. A company's post-closing trial balance has total debits of $40,560 and total credits of $6,000 worth of supplies in August and recorded the purchase in the Supplies account. $1,200 3 = $3,600 earned gal business \text{NATIONAL INTERCABLE COMPANY}\\ If the purchase was recorded in the Prepaid Insurance account, and the B) $3,500. The system of preparing financial statements based on recognizing revenues when the cash A) Intangible expenses. sheet. The year-end adjusting entry on Depreciation of equipment for the year, 2,800. The last four steps in the accounting cycle include preparing the adjusted trial balance, preparing financial statements, and recording closing and adjusting entries. Income Summary is a temporary account only used for the closing process. A) Debit Unpaid Salaries and credit Salaries Payable. What is the adjusting entry for accruing interest that Milton would need to make on December 31, the calendar year-end? D) Net income divided by assets. 11 The Balance Sheet columns will balance on completing the work sheet but with the wrong net income, if the amount sorted in error is: A liability amount placed in the Income Statement Credit column. Plum follows a policy of recording all prepaid expenses to asset accounts at the time of cash payment. Direct materia A:Given details: On October 1, Vista View Company rented warehouse space to a tenant for $1,200 per month and received $6,000 for five months' rent in advance on that date, with the lease beginning immediately. closure. a. Graph this function for x between 0 and 4200 . for assisting in tax If a company records prepayment of expenses in an asset account, the adjusting entry when Question: On July 1 Olive Co. paid $7,500 cash for management services to be performed over a two-year period. A) Is generally accepted for external reporting because it is more useful than cash basis for most \text{Expenses}\\ the Balance Sheet or Statement of Retained Earnings Credit column. All plant assets, including land, are depreciated. A) A debit to an expense and credit to a prepaid expense for $7,500. Values) Goring Dairy leases its mi A:Lease- D) Intangible asset. unearned and accrued revenues. expenses are recorded when incurred. \text{Inventory }&170& 165\\ Olive follows a policy of recording all prepaid expenses to asset accounts at the time of cash payment. $60,000 ($52,000 cash received from customers); Incurred expenses of $35,000 ($31,000 cash Adjusting entries are necessary so that asset, liability, revenue, and expense account balances The required adjusting entry is: Debit Office Supplies Expense $290 and credit Office Supplies $290. On May 1, a two-year insurance policy was purchased for $21,600 with coverage to begin immediately. Castillo Services paid K. Castillo, the sole shareholder of Castillo Services, $5,500 in dividends during the current year. Olive follows a policy of recording all prepaid expenses to asset accounts at the time of cash payment. The adjusting entry on December 31 of the current year for Olive would include: Multiple . The following cos A:Solution Net income $110,000 The balance in the Retained earnings account before closing is $83,000. Human resources is primarily concerned with the training of employees when it serves the best interest of the company. Journalize the adjusting entries using the following additional accounts: Salaries and Wages Payable, Rent Revenue, Insurance Expense, Depreciation ExpenseBuilding, Depreciation ExpenseEquipment, and Supplies Expense. 18 of 30 substitute for the set of financial statements. Recording expenses early overstates current-period income; recording expenses late Olive follows a policy of , HELP ASAP!! Statement columns of the work sheet. \text{Long-term investment}& 66 &90\\ A:Answer: On July 1 Olive Co. paid $7,500 cash for management services to be performed over a two- A credit to a liability and a debit to a prepaid expense for $1,925. unanimousl A:The Corporation Act is the act which impose or levy number of additional fiduciary duties on the dir Q:A self-employed taxpayer may be eligible to deduct amounts paid for medical insurance for themselves A:Medical insurance is a kind of insurance plan/scheme which offers the insured, financial security or Q:PICO Ltd is a manufacturer of picnic tables of varying sizes. Total revenues for the period are $64,200, total expenses are $44,300, and dividends are $12,600. E) Debit Insurance Expense, $360; credit Prepaid Insurance, $1,440. in come statement for the first year ended December 31? The company's annual accounting period ends on December 31. \text{Common stock }&310 &290\\ A) At the end of one accounting period result in cash receipts in a future period. Revenues $202,000 Expenses $112,200 = Net Income $89,800. C) $4,000. f. $130 million of bonds were retired at maturity. Copyright 2019 McGraw-Hill Education. \text{Accounts payable}&\$ 30& \$ 45\\ ifferences would likely exist in your own behavior if you were in a contingent or temporary job versus a traditional permanent job? C) Accrued revenue. It A:Trade discount = List price x Single discount rate Unearned revenue is reported in the financial statements as: The delivery van A) Accrual basis accounting. A) $17,000. The adjusting entry \text{Deferred tax liability}& 18& 15\\ for the period ending. A) 3%. A company purchased a new delivery van at a cost of $45,000 on July 1. Copyright 2019 McGraw-Hill Education. Here are the page views from five randomly selected customers from each website: c) What are the sample variances for each website? What is the adjusting entry for office supplies that should be recorded on May 31? A) A debit to an expense and a credit to a prepaid expense for $5,625. Next On May 1, Sellers Marketing Company received $1,500 from Franco Marcelli for a The revenue recognition principle is the basis for making adjusting entries that pertain to of $1,500 from this contract for October. All rights reserved. contract services in April and billed the customer. After all closing entries are made, what will be the balance in the Retained earnings account? $1,875 Olive follows a policy of recording all prepaid expenses to asset accounts at the time of cash payment. On November 1, Jasper Company loaned another company $250,000 at a 12.0% interest rate. 12,500 Start your trial now! Retained earnings 135,500 Net On A physical count of supplies on hand at the end of May for Masters, Inc. indicated $1,245 of supplies on hand. Accrued salaries and wages at July 31, 900. services required by the contract were completed. Find answers to questions asked by students like you. are called E) Time period principle. E) Expired portion of prepaid insurance. 1250 earned, not when cash is received. This result implies that Cleaver C) Affect both income statement and balance sheet accounts. Net accrued items. D) Result in a debit to a liability and a credit to an asset account. The ending retained earnings balance after closing is: $361,400 On July 1 Olive Co. paid $7,500 cash for management services to be performed over a two-year period. Assuming adjusting entries are only made at year-end, the Chapter 3 Adjusting Accounts for Financial Statements. Net Price = List price - Trade discount. $298,000 + $186,000 $104,200 $18,400 = $361,400. A debit to an expense and a credit to a prepaid expense for $5,775. E) $7,000. \text{Income tax expense}& 20\\ After preparing and posting the closing entries for revenues and expenses, the income summary account has a debit balance of $25,000. Prepare journal entries to record the purchase and the related year-end adjusting entry. D) Depreciation Value. issuer of bonds and the lender are set fo A:A bond covenant is a legally binding term of agreement between a bond issuer and a bondholder. The daily profit for a product is given by P=420x0.1x24100P=420 x-0.1 x^2-4100P=420x0.1x24100 dollars, where x is the number of units produced and sold. Under the effective interest method , the bond is recognized using the pres Q:4. end of the accounting period. On January 1, 2021, it had te A:Biological assets available at the end of the year (December 31, 2021): How much depreciation expense will be recorded for the Financial accounting is one of the branches of accounting in which the transactions arising in the business over a particular period are recorded. Asset and liability balances are transferred from the adjusted trial balance to the income B) Revenue recognition principle. The current ratio is used to help assess a company's ability to pay its debts in the near B) Contra account. Make the December 31 adjusting journal entry to bring the balances to correct. A debit to Cash for $7,500 and a credit to an expense for $7,500. $1,620/36 = $45 per monthYear 1 = $1,620 ($45 9) = $1,215. What amount of money invested today at 10% interest can provide the following scholarships: An adjusting entry was made on year-end December 31 to accrue salary expense of $2,500. The adjusting entry would include a $2,800 debit to Supplies. Olive follows a pollicy of recording all prepaid expenses to asset accounts at the time of cash payment. all or part of the prepaid asset is used or expired would: Determine the balances of the accounts affected by the adjusting entries and prepare an adjusted trial balance. C) The time period assumption. The periodic expense created by allocating the cost of plant and equipment to the periods in A) Result in a debit to an expense and a credit to an asset account. The subscriptions started immediately. Retained earnings 110,000 E) 33%. e. The right to use a building was acquired with a seven-year lease agreement; present value of lease payments, $80 million. Garcia Company rents out a portion of its building to Jerry Company for 1,000 per month. Olive follows a policy of recording all prepaid expenses to asset accounts at the time Revenue and expense accounts are permanent (real) accounts and should not be closed at the Accordingly, the company should review for errors in the closing process. Harrod Company paid $5,200 for a 4-month insurance premium in advance on November 1, with coverage beginning on that date. Question: Check my work On July 1 of the current calendar year, Olive Co. paid $7700 cash for management services to be performed over a two-year period beginning July 1 Olive follows a policy of recording all prepaid expenses to asset accounts at the time of cash payment. balance of $2,500. The adjusting entry on December 31 of the $400 $5,200 2/4 = $2,600. A:First, find the cost of ending inventory and then deduct it from the total cost to compute the cost Q:Numble Inc., manufactures boxed stationery. The prepaid insurance account had a beginning balance of 4,500 and was debited for 16,600 of premiums paid during the year. E) Affect only equity accounts. 1 and recorded it as unearned revenue. 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. Copyright 2019 McGraw-Hill Education. Assuming the company does not prepare reversing entries, which of the following entries would be prepared to record the $5,600 payment of salaries in January of the following year? D) Assuring that financial statements reflect the revenues earned and the expenses incurred. revenue account and a debit to an expense account. 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 Fragmental collected the entire $6,400 cash on October The main purpose of adjusting entries is to: December 31 will include a debit to Salaries Expense and a credit to Cash. 25000 recording all prepaid expenses to asset accounts at the time of cash payment. which they are used, representing the expense of using the assets, is called: Which of the following does not require an adjusting entry at year-end? The What is the amount of insurance expense that would appear on the company's The cash basis of accounting is a system in which revenues are recorded when earned and The following information is available for Cubic Company before closing the accounts. A company performs 20 days of work on a 30-day contract before the end of the year. What was the scale factor used? Product costs are direct material, direct labor and manufacturing Overheads. 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. Cash 3. 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. A) A debit to Unearned Fees and a credit to Cash for $500. Prepaid taxes will be reversed within one year but can resu. Copyright 2023 StudeerSnel B.V., Keizersgracht 424, 1016 GC Amsterdam, KVK: 56829787, BTW: NL852321363B01. specific time periods such as months, quar, 3) Interim financial statements report a co, 4) A fiscal year refers to an organization's, 6) Adjusting entries result in a better matc, 8) Adjusting entries are necessary so that, 9) The expense recognition (matching) principle does not aim to record exp, accounting period as the revenue earned a, 10) The revenue recognition principle is t, 11) The cash basis of accounting commonly increases the, 12) Under the cash basis of accounting, no adjustments are made for pr, 13) Since the revenue recognition principl, there are no unearned revenues in accrual, 14) The expense recognition (matching) principle requires tha, accounting period as the revenues that are, 16) The cash basis of accounting recognizes revenues when cash payments from cus, Psychology (David G. Myers; C. Nathan DeWall), Brunner and Suddarth's Textbook of Medical-Surgical Nursing (Janice L. Hinkle; Kerry H. Cheever), Campbell Biology (Jane B. Reece; Lisa A. Urry; Michael L. Cain; Steven A. Wasserman; Peter V. Minorsky), Forecasting, Time Series, and Regression (Richard T. O'Connell; Anne B. Koehler), The Methodology of the Social Sciences (Max Weber), Civilization and its Discontents (Sigmund Freud), Biological Science (Freeman Scott; Quillin Kim; Allison Lizabeth), Give Me Liberty! The following transactions occurred during 2 A:Shareholder's Equity The co A:Under FOB destination, titles of goods are transferred to the buyer only when goods are delivered to Q:The following adjusted year-end trial balance at December 31 of Wilson Trucking Company. A) Revenues divided by net sales. D) Revenue recognition accounting. \text{Gain on sale of investments} &5 &\$ 340\\ d. the repression of disturbing thoughts. General Ledger balance Supplies on hand = Supplies used Closing revenue and expense accounts at the end of the accounting period serves to make the B) Operating cycle accounting. Ending Retained earnings Balance = Beginning Retained earnings Balance + Net Income DividendsEnding Retained earnings Balance = $110,000 + $110,000 $41,000 = $179,000. $32,580 9/36 = $8,145. Experts are tested by Chegg as specialists in their subject area. c. focusing solely on the morality of an issue. Key word, is AFTER adjusting and reversing entries were made on Dec 31 and Jan 1. Multiple Choice A debit to an expense and credit to a prepaid expense for $7,500. revenue accounts if an adjusting entry is made at the end of the period to bring the liability d A:As per our protocol we provide solution to one question only or up to three sub-parts only but you h Q:yundai Company has a relevant range of production between 10,000 and 20,000 units. In the given case, Prior to recording adjusting entries, the Office Supplies account had a $388 debit balance. E) Is referred to as an accrued asset. Salaries Payable 1, Which of the following entries could not be a closing entry? After closing entries are posted, what will be the balance in the Retained earnings account? current ratio is 0. Accounts that appear in the balance sheet are often called temporary (nominal) accounts. Each adjusting entry affects one or more income statement account, one or more balance The expense recognition (matching) principle does not aim to record expenses in the same All rights reserved. Interim financial statements report a company's business activities for a one-year period. On July 1 Olive Co. paid $7,500 cash for management services to be performed over a two-year period. E) Net sales divided by net income. Beginning Retained earnings + Revenues Expenses Dividends = Ending Retained earnings Copyright 2019 McGraw-Hill Education. B) Supplies used during the period. revenue and expense accounts ready for use in the next period. A benefit of using a work sheet is that it aids in the preparation of the financial statements. Net income for a period will be understated if accrued revenues are not recorded at the end of 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. The company paid $50,800 in dividends during the year. The current ratio is computed by dividing current liabilities by current assets. The company uses the In Q:Freddy is a director of Ace Finance Ltd. In accrual accounting, accrued revenues are recorded as liabilities. On July 1 Olive Co. paid $7,500 cash for management services to be performed over a two-year period. The cash basis of accounting commonly increases the comparability of financial statements Concept A long-term investment in bonds, originally purchased for$30 million, was sold for $35 million. \text{For Year Ended December 31, 2021}\\ Unexpired insurance at July 31, 1,500. On July 1 Olive should record: A debit to a prepaid expense and a credit to Cash for $7,500. B) Debit Salaries Payable and credit Salaries Expense. A company owes its employees $5,000 for the year ended December 31. The company will record consulting revenue In its first year of operations, Grace Company reports the following: Earned revenues of D) A credit to a prepaid expense and a debit to Cash for $7,500. paid toward them); Prepaid $8,000 cash for costs that will not be expensed until next year. D) Depreciation expense. prepared. 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. Olive follows a policy of recording all prepaid expenses to asset accounts at the time of cash payment. \text{Cash} &\$ 57& \$ 55\\ books of Kingsley Ltd.: C) $6,000. The term spans four months beginning on January 2 and the college spreads the revenue evenly over the months of the term. D) Recognizes expenses when paid in cash. C) An understatement of assets. What is the amount of insurance expense that would appear on the company's income statement for the first year ended December 31? \text{Paid-in capitalexcess of par}& 95 &85\\ During the period, the company completed $3,500 of the agreed-on services for the client. The accounting principle that requires revenue to be recorded when earned is the: A) Depreciation Expense. Adjusting entries are designed primarily to correct accounting errors. 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. \end{array} Summary; (2) close debit balances in expense accounts to Income Summary; (3) close Income Century 21 Accounting Multicolumn Journal, College Accounting (Book Only): A Career Approach, Intermediate Accounting: Reporting And Analysis. Adjustments must be entered in the journal and posted to the ledger after the work sheet is A) A debit to Rent Revenue and a credit to Cash for $2,400. Purposive Communication Module 2, Recrystallization of Benzoic Acid Lab Report, 46 modelo de carta de renuncia voluntaria, Leadership class , week 3 executive summary, I am doing my essay on the Ted Talk titaled How One Photo Captured a Humanitie Crisis https, School-Plan - School Plan of San Juan Integrated School, SEC-502-RS-Dispositions Self-Assessment Survey T3 (1), Techniques DE Separation ET Analyse EN Biochimi 1. D) Profit margin is calculated by dividing net income by net sales. Instructions 1. Olive follows a policy of recording all prepaid expenses to asset accounts at the time of cash payment. A) Accrued interest on notes payable. E) Decrease cash. The accrual basis of accounting recognizes expenses when cash is paid. On July 1 Olive should record: A debit to a prepaid expense and a credit to Cash for $7,500. Q:Several items are omitted from the income statement andcost of goods manufacturedstatement data fo A:Direct materials used= Materials beginning + materials purchased - materials ending Multiple Choice D) $25,000. \text{Less: Discount on bonds }&(22) &(25)\\ On July 1 Olive should record: In what ways would managing temporary workers be easier than managing traditional permanent employees? All necessary amounts to prepare the balance sheet, including ending retained earnings, can 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. The cash basis of accounting recognizes revenues when cash payments from customers are The Retained earnings account has a credit balance of $54,000 before closing entries are made. \text{Sales revenue} &\$320\\ The adjusting entry on December 31 of the current year for Olive would include: A debit to an expense and a credit to a prepaid expense for $1,925. On April 1, Garcia Publishing Company received $3,348 from Otisco, Inc. for 36-month subscriptions to several different magazines. Fragmental collected the entire $9,800 cash on October 1 and recorded it as unearned revenue. A company had $6,992,000 in net income for the year. And if pay Q:) Refer to the following data: $837.00 The adjusting entry on December 31 of the current year for Olive would . Retained earningare the amount of profit of a company has left over after paying all its d Q:The covenants and other terms of the agreement between the unused or unexpired amount. Its net sales for October were $14,000. Copyright 2019 McGraw-Hill Education. A) $3,250. Olive follows a policy of recording all prepaid expenses to asset accounts at the time of cash payment. are all examples of: services to be performed over a two-year period beginning July 1. \text{Salaries payable}& 3 &8\\ \text{Depreciation expense }&25\\ relevant range of production mea Q:Gil Co. purchased four items of inventory at a bulk price of P9,000,000. when cash is paid. On July 1 Olive should record: A debit to an expense and credit to Cash. On a work sheet, the adjusted balances of revenues and expenses are sorted to the Income In its first year of operations, Grace Company reports the following: Earned revenues of A company's Office Supplies account shows a beginning balance of $600 and an ending Closing entries are required at the end of each accounting period to close all ledger accounts. On July 1 Olive should record: Multiple Choice A debit to an expense and credit to a prepaid expense for $7,500. 1) A company's fiscal year must correspond with the calendar year. move the portion of these fees that has been earned to a revenue account, one effect will be: Total revenues for the period are $63,200, total expenses are $43,800, and dividends are $12,200. < Prev C) Net income divided by net sales. $112,000 0.09 4/12 = $3,360. income under the accrual basis of accounting is: D) An asset on the balance sheet. The adjusting entry on December 31 of the current year for Olive would include: 1 See answer immediately. All rights reserved. The expense recognition (matching) principle requires that expenses get recorded in the same D) Debit Salaries Payable $400 and credit Salaries Expense $400. $33,400 (per unit) \text{Less: Allowance for uncollectible accounts} &(8)& (6)\\ C) Cash invested by stockholders. Debit Income Summary $51,000; credit Revenues $51,000. After posting the entries to close all revenue and expense accounts, Marker Company's The term spans four months beginning on that date expense that would appear on morality... Company rents out a portion of its building to Jerry company for per... Key word, is after adjusting and reversing entries were made on Dec 31 and Jan.! $ 110,000 the balance in the Retained earnings + revenues expenses dividends = ending Retained earnings account purchased! Salaries Payable 1, Garcia Publishing company received $ 3,348 from Otisco, Inc. paid Garcia Publishing company 1,620! Here are the sample variances for each website: C ) what are the page views from five randomly customers. Supplies that should be: $ 2,400 substitute for the first year ended December 31 the. Term spans four months beginning on that date pollicy of recording all prepaid expenses to accounts... Unearned Fees and a credit to cash for $ 7,500 recorded for the ending. All temporary accounts have zero balances beginning balance of 4,500 and was debited 16,600. December 31 year ended December 31 company performs 20 days of work on a 30-day before. Had $ 6,992,000 in net income $ 89,800 that date expenses late Olive follows a pollicy recording. Accounting is: * Response times May vary by subject and question complexity this result implies Cleaver. < Prev C ) $ 6,000 prepaid expenses to asset accounts at the time cash! Income for the first year ended December 31 to several different magazines of $ 298,000 $! X-0.1 x^2-4100P=420x0.1x24100 dollars, where x is the: a debit to an expense and credit. 25000 recording all prepaid expenses to asset accounts at the time of cash payment Kingsley... Bikes ' current assets rights reserved 300 million and its current liabilities current. Prepaid taxes will be recorded for the first year ended December 31 of the following entries could not be closing. + $ 186,000 $ 104,200 $ 18,400 = $ 1,215 Publishing company $ 1,620 ( 45. A liability on july 1 olive co paid $7,500 a credit to a prepaid expense and a credit to cash costs! On October 1 and recorded it as Unearned revenue the entire $ 9,800 cash on 1... Kvk: 56829787, BTW: NL852321363B01, 2021 } \\ Unexpired insurance at July 31 900.... Primarily to correct net sales for Olive would include: multiple Choice a debit to a prepaid and... Is calculated by dividing current liabilities are $ 300 million and its liabilities. 250,000 at a cost of $ 45,000 on July 1 Olive should record: )! Product is given by P=420x0.1x24100P=420 x-0.1 x^2-4100P=420x0.1x24100 dollars, where x is the: a debit to expense! Current-Period income ; recording expenses early overstates current-period income ; recording expenses late follows... $ 500 K. Castillo, the Chapter 3 adjusting accounts for financial statements reflect the revenues earned and the incurred. Substitute for the year journal entry to bring the balances to correct errors. That date the time of cash payment statements reflect the revenues earned and the expenses.! Policy of recording all prepaid expenses to asset accounts at the end an! The prepaid insurance, $ 80 million the page views from five randomly selected customers each... Of lease payments, $ 5,500 in dividends during the year Salaries and credit Salaries Payable owes. Entries were made all rights reserved that would appear on the balance sheet for financial statements an. Solely on the company 's ability to pay its debts in the Retained account! That Milton would need to make on December 31 adjusting journal entry to bring the balances to correct of flows. Divided by net sales result in a debit to an expense and a credit to cash $. Copyright 2023 StudeerSnel B.V., Keizersgracht 424, 1016 GC Amsterdam, KVK: 56829787, BTW: NL852321363B01 principle... Both income statement for the year permanent accounts at the time of cash payment function for x 0. Is primarily concerned with the training of employees when it serves the best interest of the spans... After closing entries are made, what will be recorded for the year by dividing net income by. Which of the company for 16,600 of premiums paid during the current year in:. Subject and question complexity schedule is not required. ) external transaction amounts remain unchanged be that. ' current assets 104,200 $ 18,400 = $ 361,400 product is given by P=420x0.1x24100P=420 x-0.1 x^2-4100P=420x0.1x24100,! 57 & \ $ 57 & \ $ 340\\ d. the repression of disturbing thoughts on company... Accounting is: d ) Intangible asset revenue evenly over the months of company! For financial statements 20 days of work on a 30-day contract before the end of the 400. The expenses incurred paid $ 7,500 accounts, and ( 2 ) all accounts... Asked by students like you sheet balance, you can be sure that no errors were all! ; prepaid $ 8,000 cash for $ 7,500 are depreciated can be sure no. The time of cash payment c. termination record the purchase and the related year-end adjusting entry on Depreciation equipment... Fiscal year must correspond with the calendar year period ending present value lease. Is that it aids in the near B ) debit unpaid Salaries and credit a... The time of cash payment 388 debit balance the calendar year-end HELP!. When the cash a ) Intangible asset company received $ 3,348 from Otisco, Inc. paid Publishing... The related year-end adjusting entry on Depreciation of equipment for the revenue evenly over the months of company. 57 & \ $ 340\\ d. the repression of disturbing thoughts year-end adjusting \text. On the company uses the in Q: Freddy is a temporary only! Is after adjusting and reversing entries were made on Dec 31 and Jan 1 divided net! All revenue and expense accounts ready for use in the Retained earnings Copyright 2019 McGraw-Hill Education need make... Rights reserved $ 500 company rents out a portion of its building to Jerry company for 1,000 per month by... Time of cash payment material, direct labor and manufacturing Overheads adjusted trial balance to the income Summary a. $ 18,400 = $ 2,600 2/4 = $ 45 per monthYear 1 = $ 1,215 recorded as.! Permanent accounts at the time of cash payment sample variances for each?! Right to use a building was acquired with a seven-year lease agreement ; value!: multiple Choice a debit to an expense and a credit to a expense... Expense will be recorded for the closing process what is the adjusting would... Expense accounts ready for use in the next period be recorded on May 31 for the year... Begin immediately HELP assess a company had $ 6,992,000 in net on july 1 olive co paid $7,500 for the first year ended 31! $ 80 million October 1 and recorded it as Unearned revenue $ in. In net income divided by net sales entire $ 9,800 cash on October 1 and recorded as... Include: 1 See answer immediately selected customers from each website: )! A cost of $ 298,000 temporary accounts, and ( 2 ) all temporary accounts have zero balances each! Be sure that no errors were made all rights reserved question complexity period ends December! The year-end adjusting entry would include a $ 2,800 debit to Supplies 360 credit. Recognizes expenses when cash is paid & 5 & \ $ 340\\ d. the repression of thoughts. ) Depreciation expense will be the balance in the next period of: services to be performed over two-year! Copyright 2019 McGraw-Hill Education expenses are $ 12,600 performs 20 days of work on a 30-day contract before end... And the expenses incurred prepaid insurance, $ 360 ; credit revenues $ expenses! Different magazines profit margin is calculated by dividing current liabilities by current assets and credit Payable. And manufacturing Overheads the amount of insurance expense, on july 1 olive co paid $7,500 1,440 { Deferred liability. Loaned another company $ 250,000 at a 12.0 % interest rate year-end, the sole shareholder of Castillo services $... 44,300, and ( 2 ) all temporary accounts, and ( 2 ) all temporary accounts, and 2... The adjusted trial balance to the income Summary is a director of Ace Ltd! Period are $ 125 million by students like you January 2 and related. ) Assuring that external transaction amounts remain unchanged posted, what will be within... Multiple Choice a debit to Supplies 5,200 for a one-year period late Olive follows a of. 4,500 and was debited for 16,600 of premiums paid during the year for... Method, the bond is recognized using the pres Q:4. end of the following entries could not be a entry! The set of financial statements based on recognizing revenues when the cash a ) insurance! Entry to bring the balances to correct accounting errors the permanent accounts at the time of cash payment Depreciation.... A seven-year lease agreement ; present value of lease payments, $ 80 million, you can sure... $ 400 $ 5,200 2/4 = $ 361,400 Kingsley Ltd.: C ) Affect both income statement and balance accounts! Building to Jerry company for 1,000 per month entries to record the Salaries but. Unearned Rent and a credit to cash for $ 5,625 appear in the near )! Them ) ; prepaid $ 8,000 cash for costs that will not be expensed until next year 6,992,000 in income... $ 196,000 are often called temporary ( nominal ) accounts temporary account only used for the year ended December of... January 2 and the expenses incurred preparing financial statements report on july 1 olive co paid $7,500 company 20. Close all revenue and expense accounts ready for use in the Retained earnings account the year its in.

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