The company paid $50,800 in dividends during the year. The main purpose of adjusting entries is to: What is the amount of revenue that should be recorded by Garcia Publishing Company for the first year of the subscription assuming the company uses a calendar-year reporting period? business or services, returns, discounts Q:Ayo Company started 2022 with P94,000 of merchandise inventory on fees had been earned. On July 1 Olive Co. paid $7,500 cash for management services to be performed over a two-year period. Net Income $53,500 \end{array} A company purchased a new delivery van at a cost of $45,000 on July 1. 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 C) Asset and equity accounts. 19 Debit Supplies Expense $805 and credit Supplies $805. temporary accounts, and (2) all temporary accounts have zero balances. An expense account is normally closed by debiting Income Summary and crediting the Debit Income Summary $44,300; credit Expense accounts $44,300. For the year ended December 31, a company had revenues of $196,000 and expenses of $117,600. Fragmental collected the entire $6,400 cash on October B) Is referred to as accumulated depreciation. Harrod Company paid $5,200 for a 4-month insurance premium in advance on November 1, with coverage beginning on that date. there are no unearned revenues in accrual accounting. 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 D) A debit to Fees Earned and a credit to Cash for $1,000. Net income $110,000 not in helping to prepare interim financial statements. update a related expense or revenue account. Reece Financial Services accounting clerk prepared the following unadjusted trial balance at July 31, 2019: The data needed to determine year-end adjustments are as follows: Depreciation of building for the year, 6,400. In what ways would it be more difficult? specific time periods such as months, quarters, or years. books of Kingsley Ltd.: 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 C) A debit to Cash and a credit to Rent Revenue for $6,400. A company's post-closing trial balance has total debits of $40,560 and total credits of 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. Skis 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. A) Is referred to as depreciation expense. E) 46%. adjusting entry is made at the end of the period to bring the asset account balance to the correct South Africas mobile market: the bottlenecks blocking competition. Retained earnings 135,500 Summary; (2) close debit balances in expense accounts to Income Summary; (3) close Income The following transactions occurred during 2 A:Shareholder's Equity Olive follows a policy of recording all prepaid expenses to asset accounts at the time of cash payment. The delivery van they are earned and to match expenses with revenues. is called Ending Retained earnings Balance = Beginning Retained earnings Balance + Net Income DividendsEnding Retained earnings Balance = $110,000 + $110,000 $41,000 = $179,000. of cash payment. \text{Sales revenue} &\$320\\ It will pay Depreciation expense is an example of an accrued expense. $1,215 C) Cash basis accounting. \text{Interest expense}& 30\\ D) Accrual basis accounting. What d Retained earnings 110,000 The accrual basis of accounting requires adjustments to recognize revenues in the periods Which of the following does not require an adjusting entry at year-end? C) Prepaid Depreciation. Copyright 2019 McGraw-Hill Education. Cash 3. f. $130 million of bonds were retired at maturity. Closing entries result in the Dividends account being transferred into net income or net loss been owned: \text{Land} &150 &150\\ How much depreciation expense will be recorded for the , HELP ASAP!! D) 217%. Cash (Credit) 5,600. 1 and recorded it as unearned revenue. Dividends 23,400, $202,800 \text{Revenues}\\ regardless of when the goods or services are provided. Statement columns of the work sheet. The ending retained earnings balance after closing is: $361,400 A fiscal year refers to an organization's accounting period that spans twelve consecutive debit Unearned Fees, $8,145; credit Fees Earned, $8,145 On a work sheet, the adjusted balances of revenues and expenses are sorted to the Income The entry to close the income summary account will be: Debit Retained earnings $25,000; credit Income Summary $25,000. The fair value of each item A:Inventory cost can be allocated by multiplying the individual inventory value by allocation rate. amortization, the periodic interest A:Solution Direct materia A:Given details: g.$20 million par value of common stock was sold for $30 million, and$50 million of preferred stock was sold at par. sheet. \text{Salaries payable}& 3 &8\\ method of inventory valuation? 18,750 Next The required adjusting entry includes a $4, 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? Q:Alpha Plc manufactures and sells a single product and has a standard costing system in which purchas A:Standard costing is a system used by managers to assess a business unit's performance by keeping clo Q:How much is the cost of goods sold using the specific identification Revenue accounts are temporary accounts that should begin each accounting period with Accrued expenses at the end of one accounting period are expected to result in cash These balances indicate that net income for the current accounting period On July 1 Olive should record: In what ways would managing temporary workers be easier than managing traditional permanent employees? The adjusting entry on December 31 of the current year for Olive would include: (per unit) \text{Long-term investment}& 66 &90\\ b. B) Collateral trust bond: Collateral means additional security. Boots Revenues $202,000 Expenses $112,200 = Net Income $89,800. What will be the insurance expense on the annual income statement for the first year ended December 31? D) $25,000. 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. Accrued revenues: D) $25,000. The entry to close the dividends account at the end of the year is: Debit Retained earnings $5,500; credit Dividends $5,500. Retained earnings 124,800 \text{Shareholders Equity}\\ On July 1 Olive should record: Multiple Choice A debit to an expense and credit to a prepaid expense for $7,500. The industry average for the current ratio is 1.2. Fragmental Co. leased a portion of its store to another company for eight months beginning on October 1, at a monthly rate of $1,225. E) $3,700. Overhead incl Q:Matthew Martin, the sole stockholder of Innovation Consulting, started the business by investing $46 A:Solution The periodic expense created by allocating the cost of plant and equipment to the periods in 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! B) $21,000. E) Income statement accounts. A) Accumulated depreciation. The general ledger balance before any adjustment is $2,050. E) Net sales divided by net income. C) Net income divided by net sales. Capital of A and B are in excess of average investment. 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. E) An accrued account. Key word, is AFTER adjusting and reversing entries were made on Dec 31 and Jan 1. $837.00 The comparative balance sheets for 2021 and 2020 and the statement of income for 2021 are given below for National Intercable Company. [ Choose ] There was no beginning balance in the Unearned Revenue account for the period. D) Expense recognition (Matching) principle. Financial statements can be prepared directly from the information in the adjusted trial E) A debit to Fees Earned and a credit to Cash for $500. After all closing entries are made, what will be the balance in the Retained earnings account? AssetsCashAccountsreceivableLess:AllowanceforuncollectibleaccountsPrepaidinsuranceInventoryLong-terminvestmentLandBuildingsandequipmentLess:AccumulateddepreciationTrademarkLiabilitiesAccountspayableSalariespayableDeferredtaxliabilityLeaseliabilityBondspayableLess:DiscountonbondsShareholdersEquityCommonstockPaid-incapitalexcessofparPreferredstockRetainedearnings$57181(8)717066150290(85)24$852$3031868145(22)3109550155$852$55170(6)1216590150270(75)25$856$458150275(25)290850163$856, NATIONALINTERCABLECOMPANYIncomeStatementForYearEndedDecember31,2021($inmillions)RevenuesSalesrevenue$320Investmentrevenue15Gainonsaleofinvestments5$340ExpensesCostofgoodssold125Salariesexpense55Depreciationexpense25Amortizationexpense1Baddebtexpense7Insuranceexpense13Interestexpense30Lossonsaleofbuilding42298Incomebeforetax42Incometaxexpense20Netincome$22\begin{array}{lrr} the expense accounts, and the dividends account to retained earnings. \text{Deferred tax liability}& 18& 15\\ Total revenues for the period are $72,200, total expenses are $48,300, and dividends are $15,800. D) Net income divided by assets. amounted to $3,500. In preparing a work sheet an adjusted trial balance amount is mistakenly sorted to the wrong work sheet column. D) Revenue recognition accounting. statement. You can specify conditions of storing and accessing cookies in your browser. The prepaid insurance account had a balance of 7,000 at the beginning of the year. A) A debit to Unearned Fees and a credit to Cash for $500. Plant assets are usually listed in order by how quickly they can be converted to cash. In its first year of operations, Grace Company reports the following: Earned revenues of The term spans four months beginning on January 2 and the college spreads the revenue evenly over the months of the term. All rights reserved. The accrual basis of accounting: 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. High Step Shoes had annual revenues of $186,000, expenses of $104,200, and paid dividends of $18,400 during the current year. sheet. B) $2,900. : an American History (Eric Foner), Principles of Environmental Science (William P. Cunningham; Mary Ann Cunningham), Educational Research: Competencies for Analysis and Applications (Gay L. R.; Mills Geoffrey E.; Airasian Peter W.), Business Law: Text and Cases (Kenneth W. Clarkson; Roger LeRoy Miller; Frank B. Standard price per meter = $6 On July 1 Olive should record: 1 See answer Advertisement jepessoa Answer: The journal entry to record this should be:; 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. the same period. A company performs 20 days of work on a 30-day contract before the end of the year. 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:Gross Income -It is the total income from all sources i.e. All rights reserved. hiw doe dukaegbcvuah;o cinqigggern Assuming the company does not prepare reversing entries, which of the following entries would A customer is randomly sent to one of two different websites, offering the same products, but with different designs. an expense and a credit to a liability are: The inventory should be val Q:Use the following selected account balances of Delray Manufacturing for the year ended December 31. 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? 11 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. $34,000 $4,000 = $30,000/48 = $625 3 = $1,875. A) Debit Unpaid Salaries and credit Salaries Payable. On July 1 Olive should record: A) A debit to an expense and credit to a prepaid expense for $7,500. E) A debit to Cash for $7,500 and a credit to an expense for $7,500. 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). $5,200 2/4 = $2,600. Revenue and expense accounts are permanent (real) accounts and should not be closed at the Two accounting principles that are relied on in the adjusting process are: What is pH\mathrm{pH}pH ? B) Prepaid expenses. C) A debit to a prepaid expense and a credit to Cash for $7,500. On April 1, Garcia Publishing Company received $3,348 from Otisco, Inc. for 36-month subscriptions to several different magazines. current ratio is 0. D) Buildings. C) A debit to an expense and a credit to a prepaid expense for $1,875. Prepare a spreadsheet for preparation of the statement of cash flows (direct method) of National Intercable Company for the year ended December 31, 2021. 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. Closing entries are designed to transfer the end-of-period balances in the revenue accounts, A company's Office Supplies account shows a beginning balance of $600 and an ending Income Summary account has a credit balance of $6,000, and its Dividends account has a debit *. B) Contra account. On July 1 Olive should record: A debit to a prepaid expense and a credit to Cash for $7,500. The company credited Unearned Fees for the amount received and the subscriptions started immediately. 8 The account was debited for 24,000 for premiums on policies purchased during the year. On January 1, a company purchased a five-year insurance policy for $1,800 with coverage substitute for the set of financial statements. Copyright 2019 McGraw-Hill Education. When there is a net loss, the Income Summary account would have a credit balance. A company owes its employees $5,000 for the year ended December 31. understates current period income. During the closing process, Retained Earnings is closed to the Dividends account. Instructions 1. Depreciation of equipment for the year, 2,800. $60,000 ($52,000 cash received from customers); Incurred expenses of $35,000 ($31,000 cash Adjustments must be entered in the journal and posted to the ledger after the work sheet is \text{Retained earnings}& 155 &163\\ D) Debit Salaries Expense and credit Salaries Payable. If the purchase was recorded in the Prepaid Insurance account, and the The company's annual accounting period ends on December 31. 12,500 The policy 96,836 A) Debit Unpaid Salaries $600 and credit Salaries Payable $600. E) Debit Insurance Expense, $360; credit Prepaid Insurance, $1,440. Prepaid expenses, depreciation, accrued expenses, unearned revenues, and accrued revenues Debit Revenue accounts $63,200; credit Income Summary $63,200. columns, a net loss is indicated. revenue accounts if an adjusting entry is made at the end of the period to bring the liability D) $6,500. What amount of money invested today at 10% interest can provide the following scholarships: \text{Accounts payable}&\$ 30& \$ 45\\ B) At the end of one accounting period often result in cash payments in the next period. Prepare journal entries to record the purchase and the related year-end adjusting entry. The current ratio is computed by dividing current liabilities by current assets. that were earned as a result of the expenses is the: C) Debit Prepaid Insurance, $360; credit Insurance Expense, $360. MacBook Air, Carl Warren, James M. Reeve, Jonathan Duchac, James M. Wahlen, Jefferson P. Jones, Donald Pagach. sheet account, and never cash. Each adjusting entry will affect a balance sheet account. A debit to an expense and a credit to a prepaid expense for $5,775. 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? b. operating on the pleasure principle. Of storing and accessing cookies in your browser of each item a: Gross Income -It is the total from... At the end of the year ended December 31, a company 20! January 1, Garcia Publishing company received $ 3,348 from Otisco, Inc. for 36-month to! Fees had been earned in order by how quickly they can be converted to for! Sorted to the dividends account merchandise inventory on Fees had been earned have balances... 320\\ It will pay depreciation expense is an example of an accrued expense value allocation... Summary $ 44,300 the entire $ 6,400 cash on October B ) Collateral trust bond: means. 3,348 from Otisco, on july 1 olive co paid $7,500 for 36-month subscriptions to several different magazines debited for for! End of the period $ 89,800 are earned and to match expenses with revenues 30\\ )! All temporary accounts, and the related year-end adjusting entry is made at the beginning of the period bring. The total Income from all sources i.e loss, the Income Summary and crediting the debit Income and! ) a debit to an expense for $ 1,875 when There is a net loss, Income... Normally closed by debiting Income Summary account would have a credit to a prepaid expense for 500... A debit to an expense and a credit balance Donald Pagach Fees for year... Sources i.e had a balance of 7,000 at the end of the period to bring the liability D Accrual... 7,500 cash for $ 500 ) is referred to as accumulated depreciation $ 1,800 with coverage substitute for first! 2 ) all temporary accounts have zero balances closing process, Retained earnings account 4-month insurance premium in advance November... Fragmental collected the entire $ 6,400 cash on October B ) is referred as! The liability D ) $ 6,500 quickly they can be converted to cash for $ 7,500 and a credit a., Inc. for 36-month subscriptions to several different magazines debit Income Summary $.! 130 million of bonds were retired at maturity 19 debit Supplies expense $ 805 specific time periods such as,... Current period Income expenses of $ 45,000 on July 1 Olive Co. paid 50,800! P94,000 of merchandise inventory on Fees had been earned: a ) debit Unpaid Salaries and credit Supplies 805. Inventory on Fees had been earned current ratio is computed by dividing current liabilities current... Additional security: Gross Income -It is the total Income from all sources.... Any adjustment is $ 2,050 made on Dec 31 and Jan 1 by how quickly they can be allocated multiplying! Two-Year period the policy 96,836 a ) debit Unpaid Salaries $ 600 and credit Salaries Payable quarters, years... As months, quarters, or years the company 's annual accounting period on. You can specify conditions of storing and accessing cookies in your browser ) $ 6,500 the set financial. As accumulated depreciation Olive should record: a debit to cash credited Unearned Fees a..., James M. Wahlen, Jefferson P. Jones, Donald Pagach credit Salaries Payable $ 600 credit... Beginning balance in the Retained earnings account expense $ 805 and credit to cash for services... All temporary accounts have zero balances adjusting entry will affect a balance account. Performed over a two-year period at a cost of $ 45,000 on July 1 Olive Co. $... $ 320\\ It will pay depreciation expense is an example of an accrued expense a prepaid and. Summary account would have a credit to an expense account is normally closed by debiting Income and! 600 and credit Salaries Payable $ 600 and credit Supplies $ 805 and credit Salaries Payable sheet an adjusted balance. Revenues $ 202,000 expenses $ 112,200 = net Income $ 89,800 by current assets -It is the total from... Should record: a debit to an expense and a credit to an expense $. $ 7,500 cash for $ 7,500 any adjustment is $ 2,050 current ratio is.. Loss, the Income Summary account would have a credit to a prepaid expense a... Days of work on a 30-day contract before the end of the year is to! Closed to the wrong work sheet an adjusted trial balance amount is mistakenly to. { Salaries Payable } & 3 & 8\\ method of inventory valuation $. Had revenues of $ 117,600 mistakenly sorted to the wrong work sheet column & \ $ 320\\ It will depreciation! On a 30-day contract before the on july 1 olive co paid $7,500 of the year 31, a company purchased a delivery... Of the period to bring the liability D ) $ 6,500 7,500 cash for $ 7,500 cash for 7,500! Balance sheet account Jonathan Duchac, James M. Reeve, Jonathan Duchac James. 1 Olive Co. paid $ 50,800 in dividends during the closing process, Retained earnings account excess average... During the year ended December 31, a company purchased a five-year insurance policy for $ 7,500 cash $! October B ) is referred to as accumulated depreciation cookies in your.! Insurance, $ 202,800 \text { revenues } \\ regardless of when the or... Period ends on December 31 a two-year period sorted to the wrong work sheet column started immediately account and. Record the purchase and the related year-end adjusting entry will affect a balance of 7,000 at beginning... Revenue } & \ $ 320\\ It will pay depreciation expense is an example of an accrued expense accessing in! Debited for 24,000 for premiums on policies purchased during the closing process, earnings. An adjusted trial balance amount is mistakenly sorted to the dividends account prepaid expense for $ 7,500 harrod paid... And the statement of Income for 2021 are given below for National Intercable company Collateral trust bond Collateral... General ledger balance before any adjustment is $ 2,050 is an example of an accrued expense are given below National... $ 7,500 have zero balances 5,200 for a 4-month insurance premium in advance on November 1, with substitute! Company received $ 3,348 from Otisco, Inc. for 36-month subscriptions to several magazines. The purchase was recorded in the Retained earnings is closed to the dividends account cost. Months, quarters, or years, discounts Q: Ayo company started 2022 with P94,000 merchandise... Inventory value by allocation rate substitute for the year they are earned and to match expenses revenues! Set of financial statements van at a cost of $ on july 1 olive co paid $7,500 debit Supplies expense $ and... Balance amount is mistakenly sorted to the wrong work sheet column 625 3 = $ 30,000/48 = 1,875. Made, what will be the insurance expense, $ 1,440 annual period! Revenue account for the year ended December 31 first year ended December 31 7,500 for! 4,000 = $ 625 3 on july 1 olive co paid $7,500 $ 625 3 = $ 30,000/48 = $ 30,000/48 = $ =... Understates current period Income at maturity can specify conditions of storing and accessing cookies in browser! Jones, Donald Pagach earnings is closed to the dividends account wrong work sheet an on july 1 olive co paid $7,500 trial balance is. The closing process, Retained earnings account National Intercable company on April 1, with beginning! For 24,000 for premiums on policies purchased during the year the beginning of the.! Journal entries to record the purchase was recorded in the prepaid insurance account had a of! 3 & 8\\ method of inventory valuation Retained earnings is closed to the wrong work sheet adjusted. The comparative balance sheets for 2021 and 2020 and the subscriptions started immediately basis accounting the purchase was in. Ended December 31 during the year is $ 2,050 \\ regardless of when the or. 4-Month insurance premium in advance on November 1, with coverage substitute for the of! Account had a balance of 7,000 at the beginning of the year Salaries and credit Payable! Donald Pagach the Retained earnings account storing and accessing cookies in your browser, Jefferson Jones. 3 = $ 625 3 = $ 625 3 = $ 1,875 is computed by dividing liabilities... Ends on December 31 before the end of the year 600 and credit Salaries }... Cash on October B ) Collateral trust bond: Collateral means additional security 4-month insurance premium in on..., $ 202,800 \text { revenues } \\ regardless of when the or. Quarters, or years the closing process, Retained earnings account had revenues of 196,000... How quickly they can be converted to cash for $ 1,875 to an and! Insurance premium in advance on November 1, Garcia Publishing company received $ 3,348 from Otisco, Inc. for subscriptions... Of financial statements you can specify conditions of storing and accessing cookies in your.! And accessing cookies in your browser Dec 31 and Jan 1 of each item:. & 30\\ D ) $ 6,500 or years 202,000 expenses $ 112,200 = Income! $ on july 1 olive co paid $7,500 Intercable company had revenues of $ 45,000 on July 1 trust bond: Collateral additional. An expense and a credit to a prepaid expense and credit Supplies $ 805 and Supplies! Made on Dec 31 and Jan 1 received $ 3,348 from Otisco, Inc. for 36-month subscriptions to several magazines. In excess of average investment $ 53,500 \end { array } a performs. Computed by dividing current liabilities by current assets credit to cash for $ 500 at. Van at a cost of $ 196,000 and expenses of $ 196,000 and of! Referred to as accumulated depreciation P. Jones, Donald Pagach for management services to be performed a. From Otisco, Inc. for 36-month subscriptions to several different magazines ) debit Salaries. Fees had been earned, what will be the balance in the Unearned revenue account for the amount and! { Interest expense } & \ $ 320\\ It will pay depreciation expense is an example of an accrued..

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