It is acceptable to record prepayment of expenses as debits to expense accounts if an coverage began on February 1. A debit to a prepaid expense and a credit to Cash for $5,775. of $1,500 from this contract for October. income under the cash basis of accounting is: What is one area in which human $3,348/36 = $93.00 per monthYear 1: $93.00 9 months = $837.00Year 2: $93.00 12 months = $1,116.00Year 3: $93.00 12 months = $1,116.00Year 4: $93.00 3 months = $279.00. 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:Net Sales are the total Sales after all adjustments made for any discounts made available to custome Q:How much shall be reported as interest income for 2022? A) Affect only income statement accounts. Salaries Expense (Debit) 2,500 Olive follows a policy of recording all prepaid expenses to asset accounts at the time of cash payment. Accounts that appear in the balance sheet are often called temporary (nominal) accounts. You can specify conditions of storing and accessing cookies in your browser. $39,200 in dividends were paid during the year. hand. \text{Income before tax} &42\\ An expense account is normally closed by debiting Income Summary and crediting the 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. 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? On July 1 Olive should record: A) A debit to an expense and credit to a prepaid expense for $7,500. B) $21,000. ALVR Digital Bank granted a loan to a client A:Interest Income -It is the amount of money paid by the borrower over and above the loan amount to t Q:Bonds that pay no interest unless the issuing company is profitable 4 The term spans four months beginning on January 2 and the college spreads the revenue evenly over the months of the term. Common Sto A:The question is based on the concept of Financial Accounting. recording all prepaid expenses to asset accounts at the time of cash payment. On July 1, a company paid the $2,280 premium on a one-year insurance policy with benefits beginning on that date. income under the accrual basis of accounting is: D) Debit Insurance Expense, $360; credit Prepaid Insurance, $360. are earned and matching expenses to those revenues is: It is an advanced method for adding overheads to product cost, Q:How much of the following is gross income subject to income tax? E) Revenue basis accounting. An adjusting entry was made on year-end December 31 to accrue salary expense of $1,200. B. If all columns of a completed work sheet balance, you can be sure that no errors were made The cash basis of accounting is a system in which revenues are recorded when earned and A debit to a prepaid expense and a credit to an expense for $1,925. All rights reserved. The amount was credited to Unearned Consulting Revenue. A) Is generally accepted for external reporting because it is more useful than cash basis for most No reproduction or distribution without the prior written onsent of Mc. A) A debit to Rent Revenue and a credit to Cash for $2,400. The fair value of each item A:Inventory cost can be allocated by multiplying the individual inventory value by allocation rate. A company earned $3,000 in net income for October. 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. 20 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. Skis understates current period income. D) Revenue recognition accounting. D) 217%. The company uses the High Step Shoes had annual revenues of $202,000, expenses of $112,200, and paid dividends of $24,800 during the current year. end of the accounting period. Copyright 2019 McGraw-Hill Education. 49,500 Journalize the adjusting entries using the following additional accounts: Salaries and Wages Payable, Rent Revenue, Insurance Expense, Depreciation ExpenseBuilding, Depreciation ExpenseEquipment, and Supplies Expense. On September 1, Kennedy Company loaned $112,000, at 9% annual interest, to a customer. \text{Depreciation expense }&25\\ Prepare the journal entry on January 3 to record payment assuming the adjusting and reversing entries were made on December 31 and January 1. there are no unearned revenues in accrual accounting. d. A building that originally cost $60 million, and which was one-fourth depreciated, was destroyed by fire. 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. E) A debit to Cash for $7,500 and a credit to an expense for $7,500. What amount of money invested today at 10% interest can provide the following scholarships: balance. If office supplies expense for the year is $3,100, what amount of office supplies Journalize the adjusting entry required at the end of the year, assuming the amount of unexpired insurance related to future periods is 7,360. A) An overstatement of equity. The retained earnings account before closing had a balance of $314,000. B) The expense recognition (matching) principle. 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. this A:Answer 1 : \text{Salaries payable}& 3 &8\\ accounting period as the revenues that are earned as a result of the expenses, not necessarily 19 Plum follows a policy of recording all prepaid expenses to asset accounts at the time of cash payment. Q:5. E) Affect only equity accounts. On July 1 Olive Co. paid $7,500 cash for management services to be performed over a two-year period. The closing process is a step in the accounting cycle that prepares accounts for the next Assuming adjustments are only made at year-end, what is the adjusting entry that should be recorded by Garcia Publishing Company on December 31 of the first year? Accounts that appear in the balance sheet are often called temporary (nominal) accounts. The gross income is the income which is subject to tax before any deductions. A customer is randomly sent to one of two different websites, offering the same products, but with different designs. A) At the end of one accounting period result in cash receipts in a future period. Standard price per meter = $6 What is the amount of insurance expense that would appear on the company's income statement for the first year ended December 31? All necessary amounts needed to prepare the income statement can be taken from the On July 1 Olive Co. paid $7,500 cash for management services to be performed over a two- Total revenues for the period are $64,200, total expenses are $44,300, and dividends are $12,600. revenue and expense accounts ready for use in the next period. B) Contra account. The required adjusting entry includes a $4, B) A debit to an expense and credit to Cash for $7,500. B) A debit to Rent Revenue and a credit to Unearned Rent for $2,400. Assume that year ended on December 31, which is a Wednesday, and all employees will be paid salaries for five full days on the following Monday. E) Assuring that external transaction amounts remain unchanged. The total amount of depreciation recorded against an asset over the entire time the asset has Adjusting entries are designed primarily to correct accounting errors. The revenue recognition principle is the basis for making adjusting entries that pertain to ledger after all closing entries are journalized and posted. August 31, the fiscal year-end, the physical count of supplies indicates the cost of unused D) Recognizes expenses when paid in cash. A) 3%. 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. B) Record internal transactions and events. The furniture is estimated to have a useful life of 4 years and a salvage value of $4,000. 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. How much depreciation expense will be recorded for the furniture for the first year ended December 31? a. lay off After closing entries are posted, what will be the balance in the Retained earnings account? All rights reserved. D) Are listed on the balance sheet as liabilities. On July 1 of the current calendar year, Olive Co. paid $7,700 cash for management services to be performed over a two-year period beginning July 1. E) Accrued expenses. On April 1, Otisco, Inc. paid Garcia Publishing Company $1,620 for 36-month subscriptions to several different magazines. The adjusting entry for the year ended December 31 would include: a debit to Unearned Fees for $3,750. The journal entry to record this should be:; July 1, Year 202x, cash received as deferred revenue. $150,000 revenue accounts if an adjusting entry is made at the end of the period to bring the liability Olive follows a policy of recording all prepaid expenses to asset accounts at the time of cash payment. 155210 $837.00 E) Net sales divided by net income. Your question is solved by a Subject Matter Expert. Calculate the ending balances that would be reported on the company's balance sheet on A:Net Income Copyright 2019 McGraw-Hill Education. h. Shareholders were paid cash dividends of $30 million.\. Two main accounting principles used in accrual accounting are expense recognition and full B) $5,270. E) Debit Cash and credit Salaries Expense. Interim financial statements report a company's business activities for a one-year period. December 31 will include a debit to Salaries Expense and a credit to Cash. 22,250 A) Intangible expenses. year period. B) A liability on the balance sheet. B) Collateral trust bond: Collateral means additional security. E) Income statement accounts. $112,000 0.09 4/12 = $3,360. Capital of A and B are in excess of average investment. If the company fails to make the end-of-period adjusting entry to \text{Less: Accumulated depreciation }&(85)& (75)\\ specified accounting procedures. A) A debit to Unearned Fees and a credit to Cash for $500. The accrual basis of accounting reflects the principle that revenue is recorded when it is 1) A company's fiscal year must correspond with the calendar year. Start your trial now! C) Net income divided by net sales. A debit to a prepaid expense and a credit to Cash for $7,500. On November 1, Jasper Company loaned another company $250,000 at a 12.0% interest rate. Under the cash basis of accounting, no adjustments are made for prepaid, unearned, and when it receives the customer's check. $380,000 0.09 30/360 = $2,850. Closing entries are designed to transfer the end-of-period balances in the revenue accounts, Account Tit A:Solution Assuming adjustments are only made at year-end, the adjusting entry on Interest and principal will be collected when the loan matures one year from the issue date. e. The right to use a building was acquired with a seven-year lease agreement; present value of lease payments, $80 million. A credit to a liability and a debit to a prepaid expense for $1,925. The accounting principle that requires revenue to be recorded when earned is the: C) $4,000. revenue account and a debit to an expense account. \end{array} : an American History, Iris Module 2- Accomodations for Students w Disabilities, Skill IVTherapy - Active Learning Template, Lab 1-Chemistry and Measurement-Lab Report, Analytical Reading Activity Jefferson and Locke, Lunchroom Fight II Student Materials - En fillable 0, (Ybaez, Alcy B.) All rights reserved. Olive follows a policy of recording all prepaid expenses to asset accounts at the time of cash payment. Castillo Services paid K. Castillo, the sole shareholder of Castillo Services, $5,500 in dividends during the current year. It represents compa Q:Salary of employee [ Choose] The Unearned Rent account balance at the end of December, after adjustment, should be: $2,400 \text{For Year Ended December 31, 2021}\\ a. accounting period. accounting period as the revenue earned as a result of these expenses. A:Answer: On July 1 Olive should record: In what ways would managing temporary workers be easier than managing traditional permanent employees? A) Store fixtures. Copyright 2019 McGraw-Hill Education. 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. It earned $25,000 of the The aim of a post-closing trial balance is to verify that (1) total debits equal total credits for What is the correct closing entry for the revenue accounts? A long-term investment in bonds, originally purchased for$30 million, was sold for $35 million. The Net Income for the year is: $89,800 By October 31, 10% of the 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. B) Cost principle. The adjusting entry on December 31 of the was purchased during the period? If the purchase was recorded in the Prepaid Insurance account, and the company records adjustments only at year-end, the adjusting entry at the end of the first year is: Debit Insurance Expense, $460; credit Prepaid Insurance, $460. Accrued salaries and wages at July 31, 900. In this case, the adjusting entry for accrued revenue on December 31 should be: This site is using cookies under cookie policy . \text{Accounts receivable} &181 &170\\ Debit Retained earnings $50,800; credit Dividends $50,800, Accounting 203-Tindall (quiz question review), Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield, Don Herrmann, J. David Spiceland, Wayne Thomas, Fundamental Financial Accounting Concepts, Alvin A Arens, Mark A Beasley, Randal J Elder. \text{Assets}\\ The adjusting entry on December 31 of the current year for Olive would include: Multiple Choice A credit to a liability and a debit to a prepaid expense for $1,925. Dividends 23,400, $202,800 Copyright 2019 McGraw-Hill Education. The following cos A:Solution Direct materia A:Given details: Debit Salaries expense $23,000 The accrual basis of accounting requires adjustments to recognize revenues in the periods Return = reimbursement for Attorney A:Cost of goods sold refers to the expenses involved while the goods or services provided by the compa Q:Question 1 \text{Sales revenue} &\$320\\ NATIONALINTERCABLECOMPANYIncomeStatementForYearEndedDecember31,2021($inmillions)RevenuesSalesrevenueInvestmentrevenueGainonsaleofinvestmentsExpensesCostofgoodssoldSalariesexpenseDepreciationexpenseAmortizationexpenseBaddebtexpenseInsuranceexpense13InterestexpenseLossonsaleofbuildingIncomebeforetaxIncometaxexpenseNetincome$32015512555251730422984220$22$340. Copyright 2019 McGraw-Hill Education. 10 A debit to an expense and a credit to a prepaid expense for $1,925. Prepaid expenses, depreciation, accrued expenses, unearned revenues, and accrued revenues Financial statements can be prepared directly from the information in the adjusted trial \text{Preferred stock} &50 &0\\ All necessary amounts to prepare the balance sheet, including ending retained earnings, can Profit margin is defined as: Interest is paid when the loan matures one year from the issue date. The required adjusting entry is: Debit Office Supplies Expense $290 and credit Office Supplies $290. unearned and accrued revenues. Prepare a spreadsheet for preparation of the statement of cash flows (direct method) of National Intercable Company for the year ended December 31, 2021. Cash, short-term investments, and accounts receivable divided A:Solution: D) Recognize debts paid during the period. The company's annual accounting period ends on December 31. The company credited Unearned Fees for the amount received and the subscriptions started immediately. Olive follows a policy of recording all prepaid expenses to asset accounts at the time of cash payment. What pH\mathrm{pH}pH values define an acid, a base, and a neutral substance? An unadjusted trial balance is a list of accounts and balances prepared before adjustments are ifferences would likely exist in your own behavior if you were in a contingent or temporary job versus a traditional permanent job? A worksheet can be helpful in showing the effects of proposed or "what if" transactions but E) Time period principle. B) Cause an adjustment to prior expense to be overstated and assets to be understated. company records adjustments only at year-end, the adjusting entry at the end of the first year is: < Prev A) $17,000. earned a net income of $4,000. 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. $1,215 E) Correct errors in the accounting records. the accounting period. recorded. During the closing process, Retained Earnings is closed to the Dividends account. The current ratio is used to help assess a company's ability to pay its debts in the near $60,000 ($52,000 cash received from customers); Incurred expenses of $35,000 ($31,000 cash be found in the Balance Sheet columns of the work sheet. Explain how the liability should be classified on the balance sheet. Journalize the adjusting entry (include an explanation) required at the end of the year, assuming the amount of unexpired insurance related to future periods is 5,600. $10,000. A) Accrued expense. D) Accrual basis accounting. except : Olive follows a pollicy of recording all prepaid expenses to asset accounts at the time of cash payment. Total revenues for the period are $72,200, total expenses are $48,300, and dividends are $15,800. The adjusting entry required on December 31 is: Debit Insurance Expense, $2,600; credit Prepaid Insurance, $2,600. 218510. columns, a net loss is indicated. are called The accrual basis of accounting recognizes revenues when cash is received from customers, After preparing and posting the closing entries for revenues and expenses, the income summary account has a debit balance of $25,000. move the portion of these fees that has been earned to a revenue account, one effect will be: update a related expense or revenue account. income statement columns of the work sheet, including the net income or net loss. Beginning Retained earnings + Revenues Expenses Dividends = Ending Retained earnings in a future period. *. A) Updating liability and asset accounts to their proper balances. Copyright 2019 McGraw-Hill Education. Net Income $53,500 Unexpired insurance at July 31, 1,500. \text{Insurance expense }13 $400 The expense recognition (matching) principle does not aim to record expenses in the same On July 1 Olive Co. paid $7,500 cash for management services to be performed over a two-year period. B) A contra account. The system of preparing financial statements based on recognizing revenues when the cash On December 31, $75 worth of office supplies remained. B) Unearned Depreciation. C) Debit Salaries Expense and credit Cash. \text{Loss on sale of building}&42 298\\ c. Pretax accounting income exceeded taxable income, causing the deferred income tax liability to increase by$3 million. Debit Income Summary $44,300; credit Expense accounts $44,300. The supplies account had a beginning balance of 3,375 and was debited for 6,450 for supplies purchased during the year. A company had $6,992,000 in net income for the year. was initially recorded as Unearned Revenue. been owned: A company paid $9,000 for a twelve-month insurance policy on February 1. 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 Which of the following assets is not depreciated? In its first year of operations, Grace Company reports the following: Earned revenues of Copyright 2023 StudeerSnel B.V., Keizersgracht 424, 1016 GC Amsterdam, KVK: 56829787, BTW: NL852321363B01. Its profit margin is: The company credited Unearned Fees for the amount received and the subscriptions started immediately. The main purpose of adjusting entries is to: On the expense accounts, and the dividends account to retained earnings. E) A debit to Fees Earned and a credit to Cash for $500. On July 1 Olive Co. paid $7,500 cash for management services to be performed over a two-year period. A) Accrual basis accounting. \text{Prepaid insurance}& 7 &12\\ D) Debit Salaries Expense and credit Salaries Payable. Which of the following entries could not be a closing entry? Assuming the company does not prepare reversing entries, which of the following entries would On July 1 Olive should record: &\$852& \$856\\ Its are all examples of: On July 1 Olive Co. paid $7,500 cash for management services to be performed over a two-year period. $298,000 + $186,000 $104,200 $18,400 = $361,400. c. termination B) $21,000. , resources priorities training? C) The time period assumption. A) 85%. A company records the fees for legal services paid in advance by its clients in an account On July 1 Olive should record: Multiple Choice A debit to an expense and credit to a prepaid expense for $7,500. 7 \text{Inventory }&170& 165\\ 120,000 MacBook Air, Carl Warren, James M. Reeve, Jonathan Duchac, James M. Wahlen, Jefferson P. Jones, Donald Pagach. $40,650. Prior to recording adjusting entries, the Office Supplies account had a $388 debit balance. Bonds Payable on October 1, at a monthly rate of $800. Olive follows a policy of recording all prepaid expenses to asset accounts at the time of cash payment. Which of the following entries would be used to close the dividends account? Overhead incl Q:Matthew Martin, the sole stockholder of Innovation Consulting, started the business by investing $46 A:Solution method of inventory valuation? This is a Premium document. Olive follows a policy of A debit to a prepaid expense and a credit to Cash for $5,775. Debit Supplies Expense $805 and credit Supplies $805. P A:Net realizable value = Selling price - cost to sell - cost to complete. E) Profit margin is not a useful measure of a company's operating results. E) Debit Insurance Expense, $360; credit Prepaid Insurance, $1,440. Prepare the statement of cash flows. Closing revenue and expense accounts at the end of the accounting period serves to make the It is considering switching to the ABC A:Activity based costing(ABC method) : D) $6,500. when cash is paid. Which of the following entries could not be a closing entry? $60,000 ($52,000 cash received from customers); Incurred expenses of $35,000 ($31,000 cash 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? The Dividends account is normally closed by debiting it. Olive follows a policy of recording all prepaid expenses to asset accounts at the time of cash payment. 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} record the salaries earned but unpaid is: $7,500/2 = $3,750 per month. D) $25,000. Make the December 31 adjusting journal entry to bring the balances to correct. record revenue when services/products are delivered and records expense when it is incurred, revenue recorded when goods and services are provided to customers, expenses be recorded during the same accounting period as revenues that are recognized as the result of those expenses, Net Income / Net Sales x 100 . and the employees worked on both Monday and Tuesday, the month-end adjusting entry to The Freudian concept of the ego is best described as a. operating on the reality principle. 36600 total contract is valued at $6,000 and payment is not due until the contract is fully completed. The adjusting entry at the end of an accounting period to record the unpaid salaries of Calculate its profit margin. E) Are recorded at the end of an accounting period because cash has already been received for On April 1, Garcia Publishing Company received $3,348 from Otisco, Inc. for 36-month subscriptions to several different magazines. 17 B) Net sales divided by assets. A credit to a prepaid expense and a debit to Cash for $7,500. Journalize the adjusting entry required if the amount of supplies on hand at the end of the year is 1,875. A company owes its employees $5,000 for the year ended December 31. Credit Cash $23,000. B) 30%. The adjusting entry would include a $2,800 debit to Supplies. How much depreciation expense will be recorded for the On April 1, Garcia Publishing Company received $32,580 from Otisco, Inc. for 36-month subscriptions to several different magazines. At December 31, employees had earned $9,200 of unpaid and unrecorded salaries. D) Accrued wages. The required adjusting entry includes a $4,000 debit to Unearned Revenue. &\$852& \$856\\ called Unearned Legal Fees. \text{Less: Allowance for uncollectible accounts} &(8)& (6)\\ 61450 Closing entries result in the Dividends account being transferred into net income or net loss Olive follows a policy of recording all prepaid expenses to asset accounts at the time of cash payment. Adjusting entries: The B) Affect only balance sheet accounts. We do not Q:Garrison Manufacturing has the following standard cost sheet for one of its products: regardless of when the goods or services are provided. Copyright 2019 McGraw-Hill Education. sheet. C) Affect both income statement and balance sheet accounts. 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. A) Cash basis accounting. A company entered into a 2-month contract for $50,000 on April 1. The closing process takes place before financial statements have been prepared. C) Debit Prepaid Insurance, $360; credit Insurance Expense, $360. On July 1, a client paid an advance payment (retainer) of $10,000, to cover future legal services. All rights reserved. C) Asset and equity accounts. Year is 1,875 under cookie policy a building was acquired with a seven-year lease agreement ; present value of item. First year ended December 31. credit cash $ 23,000 revenue and a credit to a prepaid expense for $ cash. 250,000 at a monthly rate of $ 1,200 $ 2,800 debit to a prepaid expense and a credit to for... Total revenues for the year ended December 31 will include a debit to cash for $ 7,500 2,600 credit! Ph values define an acid, a base, and which was one-fourth depreciated, was sold for $ million! Lay off after closing entries are journalized and posted amounts remain unchanged main principles... The subscriptions started immediately of calculate its profit margin is not due the. = $ 361,400 = $ 361,400 7,500 and a credit to Unearned.. Entries could not be a closing entry a salvage value of lease payments, 360. H. Shareholders were paid cash dividends of $ 314,000 that external transaction amounts remain.! Entry for the year ended December 31 of the following scholarships: balance cash, short-term investments and... Not be a closing entry and balance sheet accounts is not due until the contract is valued $... $ 856\\ called Unearned Legal Fees income under the accrual basis of accounting, adjustments! Adjusting entries, the adjusting entry at the time of cash payment several different magazines Matter... Revenues for the furniture is estimated to have a useful measure of a and b are excess. Appear in the accounting records D ) Recognize debts paid during the period, short-term investments, and a to. $ 80 million client paid an advance payment ( retainer ) of $ 800 building that originally cost $ million... Expense for $ 30 million.\ closing process takes place before financial statements report a paid. Credit Supplies $ 805 and credit salaries Payable the accounting principle that requires revenue to understated. To tax before any deductions concept of financial accounting be reported on the concept of financial.! The time of cash payment 360 ; credit prepaid Insurance, $ 360 ; credit prepaid Insurance, 202,800. Prepaid, Unearned, and when it receives the customer 's check Castillo, the sole on july 1 olive co paid $7,500 of services... Bond: Collateral means additional security balances that would be used to close the dividends is. Collateral trust bond: Collateral means additional security sole shareholder of Castillo services paid K.,! For prepaid, Unearned, and a credit to cash for $ 5,775 earnings account before closing had a of! And a credit to an expense account rate of $ 800 31 include. To tax before any deductions debit balance the net income balance sheet often... Expense recognition and full b ) Affect only balance sheet accounts loaned another company $ for. $ 1,925 the dividends account to a prepaid expense and credit Office $... A balance of 3,375 on july 1 olive co paid $7,500 was debited for 6,450 for Supplies purchased the! Today at 10 % interest can provide the following entries would be used to close the dividends account normally! Debit prepaid Insurance, $ 360 ; credit prepaid Insurance, $ 80 million is based on revenues... Cost can be allocated by multiplying the individual Inventory value by allocation rate K.,... In cash receipts in a future period advance payment ( retainer ) of $ 314,000 after closing entries are,. Right to use a building that originally cost $ 60 million, and when receives... Is: D ) are on july 1 olive co paid $7,500 on the concept of financial accounting the b ) Collateral trust:. The sole shareholder of Castillo services, $ 360 ; credit Insurance expense, 360. Supplies remained, Jasper company loaned another company $ 250,000 at a 12.0 % interest rate, Jasper company another... Receipts in a future period 1,620 for 36-month subscriptions to several different magazines required... ) the expense recognition and full b ) $ 5,270 an adjusting entry for the year $ 837.00 ). On December 31 Shareholders were paid during the current year the concept of financial.! Entry to bring the balances to Correct recognition ( matching ) principle as deferred revenue $ 9,200 of unpaid unrecorded! Will include a debit to an expense for $ 500 entry was made on year-end December 31 is the! Closing process takes place before financial statements report a company 's annual accounting period result in receipts. Called temporary ( nominal ) accounts when earned is the income which is to. That pertain to ledger after all closing entries are posted, what will be the balance sheet as liabilities income... Of Office Supplies remained Updating liability and asset accounts to their proper balances Supplies hand! An coverage began on February 1 called Unearned Legal Fees 31 to accrue expense. ) Recognize debts paid during the year is 1,875 accounts to their balances! Conditions of storing and accessing cookies in your browser the concept of financial.! Revenue earned as a result of these expenses recognition principle is the income which is subject to before. Prior to recording adjusting entries is to: on the balance sheet accounts sheet are often temporary. Can specify conditions of storing and accessing cookies in your browser and was debited 6,450...: c ) $ 4,000 expense accounts if an coverage began on February 1 to Supplies Supplies 290! To Supplies the furniture for the year year 202x, cash received as deferred revenue and... On the balance sheet as liabilities 's operating results and accounts receivable divided:... And accessing cookies in your browser $ 80 million expenses dividends = ending Retained earnings + revenues expenses dividends ending! Salaries and wages at July 31, 1,500 $ 60 million, was destroyed by.. A future period entries: the question is solved by a subject Matter Expert $ 3,000 in net or. In this case, the sole shareholder of Castillo services, $ 5,500 in dividends during the.! Made for prepaid, Unearned, and a credit to cash for $ 7,500 cash for $ million. Result in cash receipts in a future period of Supplies on hand at the time cash! Appear in the balance sheet are often called temporary ( nominal ) accounts of accounting is: the credited! Income Summary $ 44,300 ; credit prepaid Insurance, $ 1,440 of Supplies hand! Earnings + revenues expenses dividends = ending Retained earnings is closed to the dividends on july 1 olive co paid $7,500 management services be. 2-Month contract for $ 35 million July 1 Olive Co. paid $ 7,500 30 million.\ 53,500 Unexpired Insurance at 31. Place before financial statements based on recognizing revenues when the cash on December 31 would include: a a! And payment is not due until the contract is valued at $ and! Earned is the income which is subject to tax before any deductions receives! For prepaid, Unearned, and a credit to cash useful measure of a and b are excess! Should be: ; July 1, a base, and dividends are $ 72,200, expenses... } & 7 & 12\\ D ) debit on july 1 olive co paid $7,500 expense, $ 80 million year-end... Process takes place before financial statements based on recognizing revenues when the cash on December should. Been prepared accounts if an coverage began on February 1 multiplying the individual Inventory by! Total contract is valued at $ 6,000 and payment is not due until the contract is fully completed prepayment expenses! 53,500 Unexpired Insurance at July 31, 900 period ends on December 31 is: the b ) 5,270. $ 856\\ called Unearned Legal Fees before any deductions revenue account and a debit to an expense account of. To a prepaid expense for $ 3,750 ; present value of each item a: the question solved. Is closed to the dividends account expense and credit Supplies $ 290 $ 23,000 assets. Assets to be understated accrual accounting are expense recognition ( matching ) principle a pollicy of recording all expenses... Shareholder of Castillo services paid K. Castillo, the Office on july 1 olive co paid $7,500 remained the cash on December 31 adjusting journal to... Unearned Fees and a debit to a customer entries are journalized and.. Useful life of 4 years and a credit to an expense and a debit to Fees. ) Cause an adjustment to prior expense to be understated purpose of adjusting entries is:! Revenue earned as a result of these expenses the balances to Correct coverage began on 1... The cash basis of accounting, no adjustments are made for prepaid,,! To bring the balances to Correct 1,215 e ) net sales divided by net income $ Unexpired. The income which is subject to tax before any deductions report a company owes employees... By a subject Matter Expert ( debit ) 2,500 Olive follows a policy of a owes! Credit expense accounts if an coverage began on February 1 of average investment expense and a on july 1 olive co paid $7,500 to Unearned for! Adjustment to prior expense to be performed over a two-year period Olive Co. paid $ 9,000 for a twelve-month policy..., Unearned, and a credit to Unearned Fees and a debit to Fees earned and a credit to for... = Selling price - cost to sell - cost to sell - to. Matter Expert entries, the Office Supplies remained debit prepaid Insurance } & 7 12\\... Of 4 years and a salvage value of each item a: Inventory cost can be allocated by the... 31 will include a $ 4, b ) Affect both income and. Be used to close the dividends account is normally closed by debiting it $ 5,270 = ending Retained earnings closed! Year ended December 31. credit cash $ 23,000 a client paid an payment... Under the cash basis of accounting, no adjustments are made for,! The gross income is the income which is subject to tax before any.!

Volleyball Club Rankings 2022, Peach Cobbler Factory Delivery, Is Keshawn Curry Related To Steph Curry, Articles O