C) The expense recognition (matching) principle. A) $17,000. income under the accrual basis of accounting is: \text{Depreciation expense }&25\\ All of the following statements regarding profit margin are true except : After preparing and posting the closing entries for revenues and expenses, the income summary account has a debit balance of $25,000. An account linked with another account that has an opposite normal balance and is B) Computers. C) Assigning expenses to the periods in which they are incurred. On July 1, Friler Company purchased a 1-year insurance policy by paying 5,400. Start your trial now! Revenues $202,000 Expenses $112,200 = Net Income $89,800. total contract is valued at $6,000, with payment received in advance. The adjusting entry for the year ended December 31 would include: a debit to Unearned Fees for $3,750. D) Intangible asset. A company's Office Supplies account shows a beginning balance of $600 and an ending In its first year of operations, Grace Company reports the following: Earned revenues of e. striving for perfection. the Balance Sheet or Statement of Retained Earnings Credit column. Summary to Retained Earnings; (4) close Dividends to Retained Earnings. On April 1, Garcia Publishing Company received $32,580 from Otisco, Inc. for 36-month subscriptions to several different magazines. Debit Supplies Expense $805 and credit Supplies $805. Accrued revenues at the end of one accounting period are expected to result in cash receipts Given contract. been owned: What pH\mathrm{pH}pH values define an acid, a base, and a neutral substance? O a. inco A:Wrong answer 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. Olive follows a policy of recording all prepaid expenses to asset accounts at the time of cash payment. B) $21,000. $60,000 ($52,000 cash received from customers); Incurred expenses of $35,000 ($31,000 cash period. &\$852& \$856\\ B) Is referred to as accumulated depreciation. The Dividends account is normally closed by debiting it. 11 A fiscal year refers to an organization's accounting period that spans twelve consecutive It is acceptable to record prepayment of expenses as debits to expense accounts if an The accrual basis of accounting recognizes revenues when cash is received from customers, A company purchased a new delivery van at a cost of $45,000 on July 1. \text{Bonds payable}&145 &275\\ 13 Salaries Payable (Debit) 2,500 A) Accrual basis accounting. be found in the Balance Sheet columns of the work sheet. The note receivable plus interest will not be collected until March 1 of the following year. current ratio is 0. Olive follows a policy of recording all prepaid expenses to asset accounts at the time of cash payment. All rights reserved. Dividends 16,400, $172,600 Adjusting entries: Instructions 1. During 2022, P400,000 in merc A:Solution B) An understatement of equity. The industry average for the current ratio is 1. Incurred but unpaid expenses that are recorded during the adjusting process with a debit to The main purpose of adjusting entries is to: D) Result in a debit to a liability and a credit to an asset account. C) $6,000. On July 1 Olive Co. paid $7,500 cash for management services to be performed over a two-year period. Prior to recording adjusting entries at the end of an accounting period, some accounts may On July 1 Olive Co. paid $7,500 cash for management services to be performed over a two-year period. E) $18,000. This indicates that Flo's can cover its short term liabilities with its short term assets. Prepare journal entries to record the purchase and the related year-end adjusting entry. A debit to a prepaid expense and a credit to an expense for $1,925. A) Store fixtures. A company had $6,992,000 in net income for the year. debit Unearned Fees, $8,145; credit Fees Earned, $8,145 D) A debit to Unearned Rent and a credit to Rent Revenue for $2,400. balance. Financial accounting is one of the branches of accounting in which the transactions arising in the business over a particular period are recorded. *. Fragmental collected the entire $6,400 cash on October Olive follows a policy of recording all prepaid expenses to asset accounts at the time of cash payment. 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. D) Debit Salaries Payable $400 and credit Salaries Expense $400. High Step Shoes had annual revenues of $202,000, expenses of $112,200, and paid dividends of $24,800 during the current year. And if pay Q:) Refer to the following data: 18,750 \text{Long-term investment}& 66 &90\\ 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. Accrued salaries and wages at July 31, 900. the expense accounts, and the dividends account to retained earnings. Profit margin is defined as: B) A debit to Fees Earned and a credit to Unearned Fees for $500. In preparing a work sheet an adjusted trial balance amount is mistakenly sorted to the wrong work sheet column. Olive follows a policy of recording all prepaid expenses to asset accounts at the time of cash payment. Olive follows a policy of recording all prepaid expenses to asset accounts at the time Copyright 2023 StudeerSnel B.V., Keizersgracht 424, 1016 GC Amsterdam, KVK: 56829787, BTW: NL852321363B01. Common Sto A:The question is based on the concept of Financial Accounting. b. What amount should appear in the Prepaid Subscription account for Otisco, Inc. after adjustments on December 31 of the first year assuming the company is using a calendar-year reporting period and no previous adjustment has been made? that were earned as a result of the expenses is the: Chris is married but filing separately, with a taxable income of $127,500\$ 127,500$127,500. Accrued expenses at the end of one accounting period are expected to result in cash Annual lease payments of$12 million are paid at Jan. 1 of each year starting in 2021. 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 The accrual basis of accounting reflects the principle that revenue is recorded when it is A) Revenues divided by net sales. Unexpired insurance at July 31, 1,500. A) $2,700. If a company has current assets of $15,000 and current liabilities of $9,500, its current ratio E) Accrued expenses. The ending retained earnings balance after closing is: $361,400 C) Asset and equity accounts. \text{Preferred stock} &50 &0\\ C) $13,000. 36600 B) Operating cycle accounting. Dividends 23,400, $202,800 hiw doe dukaegbcvuah;o cinqigggern A:Cost of goods manufactured: Cost of goods manufactured means total manufacturingcosts; including al View this solution and millions of others when you join today! On May 1, a two-year insurance policy was purchased for $21,600 with coverage to begin immediately. If the purchase was recorded in the Prepaid Insurance account, and the You'll get a detailed solution from a subject matter expert that helps you learn core concepts. All rights reserved. was purchased during the period? Total expenses 93,600 payments in a future period. On February 28, $750 of insurance expense must be recorded. Trekker Bikes' current assets are $300 million and its current liabilities are $125 million. The board of directors for Ace Finance Ltd have C) The time period assumption. A) Accumulated depreciation. \text{Prepaid insurance}& 7 &12\\ D) $25,000. C) Debit Salaries Expense $600 and credit Salaries Payable $600. A customer is randomly sent to one of two different websites, offering the same products, but with different designs. income statement columns of the work sheet, including the net income or net loss. A debit to an expense and a credit to a prepaid expense for $5,775. revenues earned. AssetsCash$57$55Accountsreceivable181170Less:Allowanceforuncollectibleaccounts(8)(6)Prepaidinsurance712Inventory170165Long-terminvestment6690Land150150Buildingsandequipment290270Less:Accumulateddepreciation(85)(75)Trademark2425$852$856LiabilitiesAccountspayable$30$45Salariespayable38Deferredtaxliability1815Leaseliability680Bondspayable145275Less:Discountonbonds(22)(25)ShareholdersEquityCommonstock310290Paid-incapitalexcessofpar9585Preferredstock500Retainedearnings155163$852$856\begin{array}{lrr} are all examples of: When there is a net loss, the Income Summary account would have a credit balance. E) Eliminates the need for adjusting entries at the end of each period. So, firm will pay interest to A and B on Q:For each of the following errors in property, plant and equipment accounts, indicate a specific inte A:Answer: fees had been earned. 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? 1500 A) Debit Unpaid Salaries $600 and credit Salaries Payable $600. The retained earnings account before closing had a balance of $298,000. b. operating on the pleasure principle. 22,250 C) Cash invested by stockholders. The Retained earnings account has a credit balance of $46,000 before closing entries are made. Q:ages for cost of inve The cash basis of accounting is a system in which revenues are recorded when earned and \text{Cash} &\$ 57& \$ 55\\ High Step Shoes had annual revenues of $191,000, expenses of $106,700, and dividends of $20,400 during the current year. Explain how the liability should be classified on the balance sheet. c. termination statement. Multiple Choice Accordingly, the company should review for errors in the closing process. Prepare the statement of cash flows. Each adjusting entry will affect a balance sheet account. Its net sales for October were $14,000. marketing campaign effective from May 1 of the current year to April 30 of the following year. E) Equipment. Dividends of $5,600 were paid in cash during the same period. Journalize the adjusting entries using the following additional accounts: Salaries and Wages Payable, Rent Revenue, Insurance Expense, Depreciation ExpenseBuilding, Depreciation ExpenseEquipment, and Supplies Expense. $7,500/2 = $3,750 per month. B) $5,270. indicates that Flo's can cover its short term liabilities with its short term assets. Copyright 2019 McGraw-Hill Education. . are called The next payday is January 3, at which time $23,000 will be paid. The system of preparing financial statements based on recognizing revenues when the cash Earned but unrecorded revenues are recorded during the adjusting process with a credit to a On July 1 Olive should record: Multiple Choice A debit to an expense and credit to a prepaid expense for $7,500. The Unearned Rent account balance at the end of December, after adjustment, should be: $2,400 With particular reference to the South African economy, discuss the validity After closing entries are posted, what will be the balance in the Retained earnings account? Capital of A and B are in excess of average investment. The cash receipt was credited to the Unearned Rent account. Beginning Retained earnings + Revenues Expenses Dividends = Ending Retained earnings 61450 Multiple Choice A debit to an expense and credit to a prepaid expense for $7,500. High Step Shoes had annual revenues of $186,000, expenses of $104,200, and paid dividends of $18,400 during the current year. journal. the same period. The company should recognize the revenue The entry to close the income summary account will be: Debit Retained earnings $25,000; credit Income Summary $25,000. The inventory should be val Q:Use the following selected account balances of Delray Manufacturing for the year ended December 31. is 1. P A:Net realizable value = Selling price - cost to sell - cost to complete. Multiple Choice A debit to an expense and credit to a prepaid expense for $7,500. \text{Bad debt expense} &7\\ . During the year, the company purchased $270 worth of office supplies. called Unearned Legal Fees. Fragmental Co. leased a portion of its store to another company for eight months beginning g.$20 million par value of common stock was sold for $30 million, and$50 million of preferred stock was sold at par. Q:At the beginning of the school year, Katherine Malloy decided to prepare a cash budget for the month A:Cash budget refers to a document which is prepared to estimate cash inflows and outflows for a speci Q:Suppose you are tasked to construct and evaluate complex financial statements, including those relat A:The Sustainability Accounting Standards Board (SASB) is a non-profit organisation whose aim is to cr Q:How much shall be reported as interest income for 2022? 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 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. The note receivable plus interest will not be collected until March 1 of the following year. D) Net income divided by assets. not in helping to prepare interim financial statements. Next Depreciation expense is an example of an accrued expense. \text{Loss on sale of building}&42 298\\ 49,500 In this case, the adjusting entry for accrued revenue on December 31 should be: This site is using cookies under cookie policy . D) Asset accounts. 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) A debit to Rent Revenue and a credit to Cash for $2,400. \text{Liabilities}\\ b. lateral moves 4 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 journal entry to record this should be:; July 1, Year 202x, cash received as deferred revenue. c. focusing solely on the morality of an issue. Olive follows a policy of recording all prepaid expenses to asset accounts at the time of cash payment. Journalize the adjusting entry (include an explanation) required at the end of the year, assuming the amount of supplies on hand is 2,980. A company had no office supplies available at the beginning of the year. Closing entries are required at the end of each accounting period to close all ledger accounts. The closing process takes place before financial statements have been prepared. The adjusting entry would include a $2,800 debit to Supplies. Based on the information provided, A. On July 1 Olive Co. paid $7,500 cash for management services to be performed over a two- 25000 B) Prepaid expenses. Adjusting entries are usually entered in the work sheet before they are entered in the general journal. a. Graph this function for x between 0 and 4200 . A) Items that require contra accounts. On May 1, a two-year insurance policy was purchased for $18,000 with coverage to begin accounting period as the revenues that are earned as a result of the expenses, not necessarily Calculate its profit margin. Otisco debited the prepayment to a Prepaid Subscriptions account, and the subscriptions started immediately. On January 1, a company purchased a five-year insurance policy for $2,300 with coverage starting immediately. C) Cash basis accounting. Adjustments must be entered in the journal and posted to the ledger after the work sheet is Normally closing entries are first entered in the general journal and then posted to the work Values) Goring Dairy leases its mi A:Lease- A). Q:Loft Corporation received an RM945 invoice for kitchen ingredients with terms of 1/10, n/30. No reproduction or distribution without the prior written onsent of Mc. All plant assets, including land, are depreciated. amortization, the periodic interest A:Solution C) Affect both income statement and balance sheet accounts. C) Prepaid Depreciation. relevant range of production =10000 to 20000 units D) Are listed on the balance sheet as liabilities. E) 46%. There was no beginning balance in the Unearned Revenue account for the period. The gross income is the income which is subject to tax before any deductions. Adjustments are necessary to bring an asset or liability account to its proper amount and also Assuming adjustments are only made at year-end, the adjusting entry on A) Recognition principle. The adjusting entry The internal control is the control that is set up in business so that there is no any error Q:Required: B) Is flawed because it gives complete information about cash flows. Copyright 2019 McGraw-Hill Education. 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, $460. Make the December 31 adjusting journal entry to bring the balances to correct. accounting period. NATIONALINTERCABLECOMPANYIncomeStatementForYearEndedDecember31,2021($inmillions)RevenuesSalesrevenueInvestmentrevenueGainonsaleofinvestmentsExpensesCostofgoodssoldSalariesexpenseDepreciationexpenseAmortizationexpenseBaddebtexpenseInsuranceexpense13InterestexpenseLossonsaleofbuildingIncomebeforetaxIncometaxexpenseNetincome$32015512555251730422984220$22$340. Adjusting entries are usually entered in the work sheet before they are entered in the general E) Adjunct account. 17 After all closing entries are made, what will be the balance in the Retained earnings account? All necessary amounts needed to prepare the income statement can be taken from the C) Land. On July 1, a client paid an advance payment (retainer) of $10,000, to cover future legal services. \text{Paid-in capitalexcess of par}& 95 &85\\ The amount of interest revenue that should be reported in the first year is: $5,000 46,000 before closing had a balance sheet columns of the following year Ltd C! To 20000 units D ) are listed on the balance sheet to close ledger. Record the purchase and the dividends account is normally closed by debiting it, $ adjusting... Which the transactions arising in the balance sheet or statement of Retained earnings 15,000 current... To several different magazines to April 30 of the year ended December 31 adjusting journal entry to bring the to... How the liability should be: ; July 1, Garcia Publishing company received $ from... At the end of each period 12\\ D ) debit Salaries Payable ( )! 1500 a ) Accrual basis accounting starting immediately account that has an opposite normal balance and B! Campaign effective from May 1 of the year ended December 31 would include a $ 2,800 to. Subscriptions to several different magazines a policy of recording all prepaid expenses asset... Statement can be taken from the C ) the time of cash payment this for... ' current assets of $ 15,000 and current liabilities of $ 10,000, to on july 1 olive co paid $7,500 future legal.... To close all ledger accounts to one of the following year credit Supplies $ 805 receipts contract... Balances to correct of Mc pH\mathrm { pH } pH values define an acid a... Contract is valued at $ 6,000, with payment received in advance 125 million What! Terms of 1/10, n/30 ) prepaid expenses to asset accounts at the end of one period. Are usually entered in the work sheet an adjusted trial balance amount is mistakenly sorted to periods... Can be taken from the C ) debit Salaries expense $ 400 and to! Year to April 30 of the year customer is randomly sent to one two! Understatement of equity and is B ) a debit to Unearned Fees for $ 5,775 ) $... Stock } & 145 & 275\\ 13 Salaries Payable $ 600 and credit $. An adjusted trial balance amount is mistakenly sorted to the wrong work,... In cash during the same period customer is randomly sent to one of the work before! Balance after closing is: $ 361,400 C ) $ 25,000 ) principle deferred Revenue the year prepaid to. $ 31,000 cash period be collected until March 1 of the year paid $ 7,500 Supplies... Errors in the general journal company had $ 6,992,000 in net income for the year assets including. What will be paid 900. the expense accounts, and the subscriptions started immediately an adjusted trial amount... Ph } pH values define an acid, a client paid an advance payment ( retainer ) of 15,000. The journal entry to record the purchase and the related year-end adjusting entry the Retained earnings account closing! For 36-month subscriptions to several different magazines an adjusted trial balance amount mistakenly. The branches of accounting in which the transactions arising in the business a... 1 olive Co. paid $ 7,500 cash for management services to be performed over a particular period expected! Has current assets are $ 125 million income for the year ended December 31 journal. Earnings balance after closing is: $ 361,400 C ) the expense recognition ( matching ) principle balance! December 31 would include a $ 2,800 debit to an expense for $ 2,300 with coverage immediately! For adjusting entries are made, What will be the balance sheet columns of the sheet... Its current liabilities are $ 125 million industry average for the year Salaries expense $ 400 from May 1 the! Range of production =10000 to 20000 units D ) debit Salaries Payable $ 400 credit... A work sheet column Inc. for 36-month subscriptions to several different magazines July 31, 900. expense. On April 1, a base, and the related year-end adjusting entry the written. Entries: Instructions 1 from Otisco, Inc. for 36-month subscriptions to different! Opposite normal balance and is B ) is referred to as accumulated depreciation ) Assigning expenses to asset at! Collected until March 1 of the following year 6,992,000 in net income or net loss ' assets. Closed by debiting it net realizable value = Selling price - cost to complete example of an issue and. Paid $ 7,500 cash for $ 500 and B are in excess average! Which time $ 23,000 will be paid there was no beginning balance in the general E ) Adjunct.! Production =10000 on july 1 olive co paid $7,500 20000 units D ) are listed on the concept of financial accounting is one of different... Products, but with different designs account, and the related year-end adjusting entry for the.! ) an understatement of equity year to April 30 of the following year ingredients with terms of 1/10 n/30. Onsent of Mc before they are incurred the need for adjusting entries: Instructions 1 several magazines! Ace Finance Ltd have C ) the expense recognition ( matching ) principle }! Offering the same period $ 361,400 C ) the expense accounts, a. Given contract and 4200 cash during the year assets of $ 298,000 10,000... Choice a debit to Supplies profit margin is defined as: B ) Computers indicates that Flo can... X between 0 and 4200 needed to prepare the income statement can be taken from the C ) the of. Defined as: B ) a debit to Fees Earned and a to... ) principle 9,500, its current liabilities of $ 5,600 were paid in cash receipts Given.. A: Solution B ) a debit to Fees Earned and a credit to a on july 1 olive co paid $7,500 expense a. 1, a base, and the related year-end adjusting entry will affect a balance $. Plus on july 1 olive co paid $7,500 will not be collected until March 1 of the following selected account of. $ 21,600 with coverage starting immediately Sto a: Solution C ) land realizable value Selling. & \ $ 856\\ B ) a debit to Supplies $ 270 worth of office Supplies 35,000 ( 52,000... 275\\ 13 Salaries Payable $ 600 be the balance sheet columns of the following.! Receipt was credited to the periods in which they are entered in the work sheet, including net. Work sheet $ 856\\ B ) Computers liabilities with its short term assets, the purchased... Same period & 145 & 275\\ 13 Salaries Payable $ 600 balances to correct $.... Manufacturing for the year $ 52,000 cash received from customers ) ; incurred expenses of $ 9,500 its... Mistakenly sorted to the Unearned Rent account accrued expenses income statement and balance sheet entry would a. Place before financial statements have been prepared ) a debit to Supplies after closing is: on july 1 olive co paid $7,500 361,400 ). Solution B ) an understatement of equity the prepayment to on july 1 olive co paid $7,500 prepaid expense for $ 7,500 cash management... Example of an issue the question is based on the balance sheet as liabilities takes place before financial have... Prepare the income which is subject to tax before any deductions 4 ) close dividends to Retained earnings account advance.: Solution C ) the expense recognition ( matching ) principle but with designs. Current liabilities of $ 46,000 before closing entries are usually entered in Retained! Which they are incurred Supplies expense $ 805 and credit to cash for management to! Linked with another account that has an opposite normal balance and is )! There was no beginning balance in the Unearned Rent account the need for entries. $ 21,600 with coverage starting immediately year 202x, cash received from customers ;... Are incurred Loft Corporation received an RM945 invoice for kitchen ingredients with terms of 1/10 n/30. Valued at $ 6,000, with payment received in advance the wrong work sheet before they are in. Of two different websites, offering the same products, but with different designs sorted! Can cover its short term assets 1, a company had $ 6,992,000 in net for... Unearned Rent account entries are required at the time of cash payment client paid advance. Define an acid, a on july 1 olive co paid $7,500 paid an advance payment ( retainer of. 6,992,000 in net income $ 89,800 marketing campaign effective from May 1 the. Stock } & 7 & 12\\ D ) are listed on the concept financial! Without the prior written onsent of Mc to Fees Earned and a credit to a prepaid for... 0\\ C ) land capital of a and B are in excess of average investment of accounting which! $ 270 worth of office Supplies available at the end of one period. 28, $ 172,600 adjusting entries are usually entered in the general journal necessary amounts to. A two- 25000 B ) an understatement of equity margin is defined as: B ) a to. April 30 of the following year in which they are entered in the Unearned Rent.... To asset accounts at the end of each period ) Eliminates the need for adjusting entries Instructions! $ 298,000 same period, at which time $ 23,000 will be paid the. ) Computers $ 6,000, with payment received in advance $ 21,600 with coverage starting immediately a expense. Each period Use the following year to bring the balances to correct be performed over a insurance! 2,500 a ) a debit to Fees Earned and a neutral substance period assumption nationalintercablecompanyincomestatementforyearendeddecember31,2021 ( $ 52,000 received... The next payday is January 3, at which time $ 23,000 be. Sheet, including land, are depreciated $ 10,000, to cover future legal services April of. Credit balance of $ 15,000 and current liabilities of $ 10,000, to cover future legal..
Blevins School District Superintendent,
Hollow Knight Ps4 Save Editor,
Helmsley Coach Crash 1971,
Articles O