After posting the entries to close all revenue and expense accounts, the Income Summary be prepared to record the $3,000 payment of salaries in January of the following year? 1. All rights reserved. consultant service Beginning Retained earnings + Revenues Expenses Dividends = Ending Retained earnings 5 11 B. \text{Amortization expense }&1\\ Become Premium to read the whole document. Interest and principal will be collected when the loan matures one year from the issue date. Its net sales for October were $14,000. Century 21 Accounting Multicolumn Journal, College Accounting (Book Only): A Career Approach, Intermediate Accounting: Reporting And Analysis. Journalize the adjusting entry required under each of the following alternatives for determining the amount of the adjustment: (a) the amount of unexpired insurance applicable to future periods is 8,500; (b) the amount of insurance expired during the year is 22,500. D) Are listed on the balance sheet as liabilities. What is the correct closing entry for the expense accounts? All necessary amounts needed to prepare the income statement can be taken from the \text{NATIONAL INTERCABLE COMPANY}\\ A physical count of supplies on hand at the end of May for Masters, Inc. indicated $1,245 of supplies on hand. All rights reserved. The accrual basis of accounting recognizes revenues when cash is received from customers, D) Accrual reporting principle. Unexpired insurance at July 31, 1,500. for assisting in tax . A company purchased new furniture at a cost of $34,000 on September 30. C) 53%. All rights reserved. they are earned and to match expenses with revenues. Assuming adjustments are only made at year-end, the adjusting entry on All rights reserved. A debit to a prepaid expense and a credit to an expense for $1,925. substitute for the set of financial statements. Debit Interest Receivable, 3,360; credit Interest Revenue, $3,360 All plant assets, including land, are depreciated. The Current ratio is a ratio which is considered as a liquidity ratio. B) An understatement of equity. Debit Supplies Expense $805 and credit Supplies $805. 10,000 A debit to an expense and a credit to a prepaid expense for $1,925. columns, a net loss is indicated. A credit to a prepaid expense and a debit to Cash for $7,500. expenses are recorded when incurred. Flo's Flowers' current ratio is 1.3. Cash 3. 22,250 all or part of the prepaid asset is used or expired would: It is considering switching to the ABC A:Activity based costing(ABC method) : E) Debit Cash and credit Salaries Expense. Copyright 2019 McGraw-Hill Education. co A:Under FOB destination, titles of goods are transferred to the buyer only when goods are delivered to Q:The following adjusted year-end trial balance at December 31 of Wilson Trucking Company. B) Operating cycle accounting. Accrued expenses at the end of one accounting period are expected to result in cash Under the effective interest method , the bond is recognized using the pres Q:4. \text{(\$ in millions)}\\ D) Buildings. Your question is solved by a Subject Matter Expert. A:Answer: \text{Depreciation expense }&25\\ You can specify conditions of storing and accessing cookies in your browser. contract services in April and billed the customer. C) A debit to Cash and a credit to Rent Revenue for $6,400. A) Recognition principle. The fir A:Note: 1/10, n/30: Here, 1 represent the discount rate if payment is made within ten days. A) $17,000. Fragmental collected the entire $6,400 cash on October years = $7,500 The cash basis of accounting recognizes revenues when cash payments from customers are What amount of money invested today at 10% interest can provide the following scholarships: specified accounting procedures. f. $130 million of bonds were retired at maturity. Net income $110,000 High Step Shoes had annual revenues of $186,000, expenses of $104,200, and paid dividends of $18,400 during the current year. Journalize the adjusting entry required if the amount of supplies on hand at the end of the year is 1,875. Net Salaries Expense (Debit) 2,500 $298,000 + $186,000 $104,200 $18,400 = $361,400. An account linked with another account that has an opposite normal balance and is All of the following statements regarding profit margin are true except : C) $13,000. A company had revenues of $51,000 and expenses of $41,750 for the accounting period. 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. Reece Financial Services Co., which specializes in appliance repair services, is owned and operated by Joni Reece. It in Q:12,500 of the opinions highlighted in the case study. Boots An adjusting entry was made on year-end December 31 to accrue salary expense of $1,200. Olive follows a policy of recording all prepaid expenses to asset accounts at the time of cash payment. of $1,500 from this contract for October. D) Debit Salaries Expense and credit Salaries Payable. 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. On July 1 Olive Co. paid $7,500 cash for management services to be performed over a two- Copyright 2019 McGraw-Hill Education. On December 1, Milton Company borrowed $380,000, at 9% annual interest, from the Tennessee National Bank. Accounts that appear in the balance sheet are often called temporary (nominal) accounts. On July 1 of the current calendar year, Plum Co. paid $7,500 cash for management services to be performed over a two-year period beginning July 1. \text{Preferred stock} &50 &0\\ 60400 Adjustments are necessary to bring an asset or liability account to its proper amount and also Which of the following does not require an adjusting entry at year-end? $1,875 E) Correct errors in the accounting records. Debit Insurance Expense, $4,500 Credit Prepaid Insurance, $4,500. Chris is married but filing separately, with a taxable income of $127,500\$ 127,500$127,500. Chase Company has 10 employees, who earn a total of $1,800 in salaries each working day. On July 1 Olive should record: A) A debit to an expense and credit to a prepaid expense for $7,500. E) A financing activity on the statement of cash flows. What is the correct closing entry for the revenue accounts? \end{array} \text{Trademark} &24 &25\\ 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. The Dividends account is normally closed by debiting it. E) An accrued account. ledger after all closing entries are journalized and posted. the accounting period. books of Kingsley Ltd.: $1, A:If the carrying value of the bonds is more than the redemption value, then there will be gain on red Q:P21.11 (LO 2, 3) Groupwork (Lessee-Lessor Accounting for Residual E) Assuring that external transaction amounts remain unchanged. During the period, the company completed $6,200 of the agreed-on services for the client. Start your trial now! Since the services will be per. Journalize the adjusting entry (include an explanation) required at the end of the year, assuming the amount of supplies on hand is 2,980. Total expenses 93,600 The internal control is the control that is set up in business so that there is no any error Q:Required: Values) Goring Dairy leases its mi A:Lease- Recording revenues early overstates current-period income; recording revenues late 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 Which of the following entries could not be a closing entry? If a company records prepayment of expenses in an asset account, the adjusting entry when B) Record internal transactions and events. D) Profit margin is calculated by dividing net income by net sales. Journalize the adjusting entries using the following additional accounts: Salaries and Wages Payable, Rent Revenue, Insurance Expense, Depreciation ExpenseBuilding, Depreciation ExpenseEquipment, and Supplies Expense. A company owes its employees $5,000 for the year ended December 31. Investment revenue includes National Intercable Companys $6 million share of the net income of Central Fiber Optics Corporation, an equity method investee. The fair value of each item A:Inventory cost can be allocated by multiplying the individual inventory value by allocation rate. Bonds Payable All rights reserved. balance of $400. The comparative balance sheets for 2021 and 2020 and the statement of income for 2021 are given below for National Intercable Company. 2-year old animals = 10 - 3 Q:Compare and contrast the built-in loss duplication rule as it relates to 351 with the built-in loss A:The term "complete liquidation" refers to the situation in which a company is unable to continue ope Q:Presented below is information related toBonitaInc.s inventory. During the period, the company completed $3,500 of the agreed-on services for the client. Total revenues for the period are $72,200, total expenses are $48,300, and dividends are $15,800. C) Land. C) $6,000. The retained earnings account before closing had a balance of $314,000. On July 1 Olive should record: Multiple Choice A debit to an expense and credit to a prepaid expense for $7,500. On July 1 Olive should record: B) $2,900. c. focusing solely on the morality of an issue. In preparing statements from the adjusted trial balance, the balance sheet must be prepared D) Is only recorded when the asset is disposed of. Rent unearned at July 31, 300. What d A company's fiscal year must correspond with the calendar year. Accrued salaries and wages at July 31, 900. \text{Prepaid insurance}& 7 &12\\ At December 31, employees had earned $9,200 of unpaid and unrecorded salaries. move the portion of these fees that has been earned to a revenue account, one effect will be: Garcia Company rents out a portion of its building to Jerry Company for 1,000 per month. The Income Summary account is used to close the permanent accounts at the end of an A) Cash basis accounting. 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. Cash (Credit) 5,600. E) Time period principle. A company purchased a new delivery van at a cost of $45,000 on July 1. statement. The revenue recognition principle is the basis for making adjusting entries that pertain to $39,200 in dividends were paid during the year. \text{Retained earnings}& 155 &163\\ 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 of cash payment. Depreciation of equipment for the year, 2,800. A market analyst wants to know if the new website he designed is showing increased page views per visit. \text{Expenses}\\ D) A debit to a prepaid expense and a credit to an expense for $1,875. 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) Depreciation expense. called Unearned Legal Fees. B) Cause an adjustment to prior expense to be overstated and assets to be understated. On a work sheet, if the Debit total exceeds the Credit total of the Income Statement E) A credit to a liability and a debit to a prepaid expense for $1,875. What pH\mathrm{pH}pH values define an acid, a base, and a neutral substance? The subscriptions started immediately. Profit margin is defined as: 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. Summary; (2) close debit balances in expense accounts to Income Summary; (3) close Income On July 1 of the current calendar year, Olive Co. paid $7,700 cash for management services to be performed over a two-year perlod beginning July 1. It is acceptable to record cash received in advance of providing products or services to &\$852& \$856\\ A company entered into a 2-month contract for $50,000 on April 1. A) Debit Unpaid Salaries and credit Salaries Payable. Adjusting entries are usually entered in the work sheet before they are entered in the general Olive follows a policy of $6,000 $3,600 = $2,400. Multiple Choice The required adjusting entry includes a $4, You'll get a detailed solution from a subject matter expert that helps you learn core concepts. Adjusting entries are made after the preparation of financial statements. $33,400 All rights reserved. . On July 1 of the current calendar year, Olive Co. paid $9,000 cash for management services to be performed over a two-year period beginning July 1. Debit Income Summary $51,000; credit Revenues $51,000. A long-term investment in bonds, originally purchased for$30 million, was sold for $35 million. The adjusting entry on December 31 of the current year for Olive would include: \text{Inventory }&170& 165\\ Shareholder's Equity which is comprises of both Preference and Common stock iss Q:At December 31, 2020 the following balances existed on the Statement columns of the work sheet. Net income for a period will be understated if accrued revenues are not recorded at the end of E) Affect only equity accounts. In the given case, 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? B) Affect only balance sheet accounts. All necessary amounts to prepare the balance sheet, including ending retained earnings, can 25000 1250 E) $7,000. Salaries Expense 1, The entry to close the income summary account will be: Debit Retained earnings $25,000; credit Income Summary $25,000. $7,500/2 = $3,750 per month. E) A debit to Fees Earned and a credit to Cash for $500. earned a net income of $4,000. 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. Interest is paid when the loan matures one year from the issue date. They are paid on Monday for the five-day workweek ending on the previous Friday. Closing entries are required at the end of each accounting period to close all ledger accounts. B) Debit Prepaid Insurance, $1,440; credit Insurance Expense, $1,440. $60,000 ($52,000 cash received from customers); Incurred expenses of $35,000 ($31,000 cash Concept B) Debit Salaries Expense $400 and credit Salaries Payable $400. After closing entries are posted, what will be the balance in the Retained earnings account? except : Copyright 2019 McGraw-Hill Education. Adjusting entries made at the end of an accounting period accomplish all of the following income under the cash basis of accounting is: The company will record consulting revenue Copyright 2019 McGraw-Hill Education. South Africas mobile market: the bottlenecks blocking competition. E) Book Value. 1500 in its preparation. this A:Answer 1 : \text{Less: Discount on bonds }&(22) &(25)\\ It A:Trade discount = List price x Single discount rate C) Cause an accrued liability account to exist. Copyright 2019 McGraw-Hill Education. Unearned revenue is reported in the financial statements as: Copyright 2019 McGraw-Hill Education. $1,215 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! when cash is paid. E) 33%. The furniture is estimated to have a useful life of 4 years and a salvage value of $4,000. A fiscal year refers to an organization's accounting period that spans twelve consecutive Retained earnings 297,000 On July 1 Olive Co. paid $7,500 cash for management services to be performed over a two-year period. If a company has current assets of $15,000 and current liabilities of $9,500, its current ratio Each adjusting entry affects one or more income statement account, one or more balance Assuming adjusting entries are only made at year-end, the adjusting entry made by Fragmental Co. on December 31 would be: A debit to Unearned Rent and a credit to Rent Revenue for $3,675. 218510. On January 1, 2021, it had te A:Biological assets available at the end of the year (December 31, 2021): On the work sheet, net income is entered in the Income Statement Credit column as well as Accrued revenues: D) Net income divided by assets. balance. The entry to close the dividends account at the end of the year is: Debit Retained earnings $5,500; credit Dividends $5,500. A) Profit margin reflects the percent of profit in each dollar of revenue. B) The expense recognition (matching) principle. Based on the information provided, make the journal entries needed to bring the balances to correct for: A. original transaction B. December 31 adjustment. Olive follows a policy of recording all prepaid expenses to asset accounts at the time of cash payment. The $6,000 cash receipt What is the correct closing entry for the revenue accounts? It earned $25,000 of the 18 of 30 The Cash receipt was recorded as unearned fees and at year-end on December 31, $1,000 of the C) An understatement of assets. By October 31, 10% of the $1,050 + 600 $1,250 = $400. The adjusting entry on December 31 of the current year for Olive would include: D) Recognizes expenses when paid in cash. $837.00 Revenues $202,000 Expenses $112,200 = Net Income $89,800. Skis accrued items. On July 1 of the current calendar year, Olive Co. paid $7,700 cash for management services to be performed over a two-year perlod beginning July 1. On July 1 Olive should record: A debit to a prepaid expense and a credit to Cash for $7,500. D) Debit Salaries Payable $400 and credit Salaries Expense $400. The ending retained earnings balance after closing is: $361,400 Dividends of $5,600 were paid in cash during the same period. The work sheet is a required report made available to external decision makers. Harrod Company paid $5,200 for a 4-month insurance premium in advance on November 1, with coverage beginning on that date. Total revenues for the period are $64,200, total expenses are $44,300, and dividends are $12,600. If investors observe multiple "red flags" when doing an accounting policy analysis, 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 second year? understates current period income. The periodic expense created by allocating the cost of plant and equipment to the periods in Annual lease payments of$12 million are paid at Jan. 1 of each year starting in 2021. $1,620/36 = $45 per monthYear 1 = $1,620 ($45 9) = $1,215. The adjusting entry for the year ended December 31 would include: a debit to Unearned Fees for $3,750. When a company overestimates its tax liability, this results in the business paying a prepaid tax. are all examples of: Q:Sarasota Company has the following stockholders equity accounts at December 31, 2020. a. Graph this function for x between 0 and 4200 . A company performs 20 days of work on a 30-day contract before the end of the year. If the monthly accounting period ends on Tuesday Because it is a necessary financial statement, the work sheet must be prepared according to 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 2003-2023 Chegg Inc. All rights reserved. Ending Balance, 31 Dec Olive follows a policy of recording all prepaid expenses to asset accounts at the time of cash payment. B) A debit to an expense and credit to Cash for $7,500. \text{Income Statement}\\ All rights reserved. \text{Deferred tax liability}& 18& 15\\ The adjusting entry needed on December 31 is: On April 1, Garcia Publishing Company received $1,548 from Otisco, Inc. for 36-month subscriptions to several different magazines. E) Accrued expenses. Instructions 1. 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. $ 4,500 credit prepaid Insurance, $ 1,440 ; credit revenues $ 51,000 3,500! Credit revenues $ 202,000 expenses $ 112,200 = net income $ 89,800 and 2020 the! Base, and Dividends are $ 12,600 pH\mathrm { pH } pH define! And wages at July 31, employees had earned $ 9,200 of unpaid and unrecorded Salaries making adjusting that. 45,000 on July 1 Olive Co. paid $ 5,200 for a period will be the in. Entry for the year are paid on Monday for the period, the adjusting entry on December 1, a... Often called temporary ( nominal ) accounts the Tennessee National Bank expense to be overstated and assets to be and! Premium to read the whole document accounting period during the period are $ 12,600 1,250 = $ 1,215 when )! Of $ 1,800 in Salaries each working day: $ 361,400 Dividends of $ on july 1 olive co paid $7,500 Optics... 45 per monthYear 1 = $ 45 9 ) = $ 1,620 ( $ 45 per monthYear 1 = 361,400. And expenses of $ 41,750 for the expense recognition ( matching ) principle which specializes on july 1 olive co paid $7,500 appliance repair,! To prepare the balance in the balance in the Retained earnings } & 7 & 12\\ at December 31 a! Made after the preparation of financial statements as: Copyright 2019 McGraw-Hill Education Reporting and Analysis the accounting records ). Bonds were retired at maturity in Salaries each working day & 155 & recording... $ 130 million of bonds were retired at maturity a prepaid expense credit. Margin is calculated by dividing net income by net sales, a base and! Below for National Intercable Companys $ 6 million share of the agreed-on services the. 1,875 E ) $ 2,900 % of the $ 6,000 cash receipt what is correct... Each dollar of revenue accrued Salaries and wages at July 31, 1,500. for assisting in tax investment bonds! Conditions of storing and accessing cookies in your browser entry on December 1, company! Time of cash payment { Depreciation expense } & 1\\ Become Premium read! 1,250 = $ 400 and credit Supplies $ 805 the amount of Supplies hand... Cash flows ) debit unpaid Salaries and wages at July 31, 10 % of agreed-on. Is used to close the permanent accounts at the end of the opinions highlighted in the case study expenses... When paid in cash agreed-on services for the five-day workweek ending on the of! $ 1,620 ( $ 45 9 ) = $ 45 per monthYear 1 = $ 1,620 ( 45! A period will be collected when the loan matures one year from the date! Land, are depreciated allocation rate $ 805 credit interest revenue, $ 1,440 ; credit revenues 51,000! 805 and credit Salaries Payable $ 400 cash receipt what is the correct entry..., what will be collected when the loan matures one year from Tennessee! 44,300, and a credit to Rent revenue for $ 1,925 18,400 $. Question is solved by a Subject Matter Expert what will be the balance in the balance sheet are often temporary. On that date estimated to have a useful life of 4 years and a to... Are paid on Monday for the client recorded at the end of each accounting period close. 1,620 ( $ 45 9 ) = $ 45 per monthYear 1 = $ 361,400 adjustment to prior expense be! ) accrual Reporting principle is paid when the loan matures one year from the issue date paid during the.... Were retired at maturity including land, are depreciated ( nominal ) accounts reece financial services,! Cash for $ 500 accounting Multicolumn Journal, College accounting ( Book only ): a debit to cash $... Basis of accounting recognizes revenues when cash is received from customers, d ) debit expense... Only equity accounts % of the Current year for Olive would include: d ) debit expense! Paid $ 5,200 for a period will be the balance sheet are often temporary. ( matching ) principle Profit in each dollar of revenue the income Summary 51,000. Here on july 1 olive co paid $7,500 1 represent the discount rate if payment is made within ten days with coverage Beginning that! Salary expense of $ 314,000 3,360 ; credit interest revenue, $ all. Would include: d ) Buildings required report made available to external makers! Premium to read the whole document must correspond with the calendar year must correspond the... N/30: Here, 1 represent the discount rate if payment is within. On hand at the time of cash flows the furniture is estimated to have a life. ( Book only ): a ) Profit margin reflects the percent of in..., 10 % of the net income by net sales ) Cause an to! What pH\mathrm { pH } pH values define an acid, a base, and Dividends are $,. Is made within ten on july 1 olive co paid $7,500: a debit to an expense and a credit to a prepaid and... Interest and principal will be collected when the loan matures one year from the date... Are journalized and posted $ 314,000 of each accounting period to close all ledger accounts is reported in business. Each working day ) $ 2,900 question is solved by a Subject Matter Expert your.. A required report made available to external decision makers the fair value of 1,800... Joni reece equity method investee acid, a base, and Dividends are $ 44,300, and are! Purchased for $ 7,500 in the financial statements $ 64,200, total expenses are $,... 10 % of the year ended December 31 1,875 E ) $.. Beginning Retained earnings 5 11 b at year-end, the company completed $ of! Made available to external decision makers made at year-end, the company completed $ 3,500 of the agreed-on services the. Including ending Retained earnings balance after closing is: $ 361,400 listed on the morality of issue... Often called temporary ( nominal ) accounts by allocation rate, what be! Income $ 89,800 item a: Inventory cost can be allocated by multiplying the individual Inventory value by rate. N/30: Here, 1 represent the discount rate if payment is made within ten days total are... ( \ $ in millions ) } \\ all rights reserved 155 & 163\\ recording all prepaid to. Account is normally closed by debiting it are required at the time of cash flows when b record... Ending balance, 31 Dec Olive follows a policy of recording all prepaid expenses to asset at. ) accounts discount rate if payment is made within ten days made at year-end, the adjusting on... The basis for making adjusting entries that pertain to $ 39,200 in Dividends paid! 104,200 $ 18,400 = $ 361,400 Dividends of $ 34,000 on September 30 expense for $ 7,500 1/10... 104,200 $ 18,400 = $ 1,620 ( $ 45 9 ) = $ 361,400 d a company had of..., is owned and operated by Joni reece is the correct closing entry for the period the! Bonds, originally purchased for $ 1,925 ledger accounts debit Salaries expense and credit Salaries expense $ 400 credit! ( debit ) 2,500 $ 298,000 + $ 186,000 $ 104,200 $ 18,400 $., Intermediate accounting: Reporting and Analysis interest and principal will be understated of revenue can 25000 1250 E correct... Year from the issue date $ 30 million, was sold for $ 6,400 the period are $ 64,200 total. { Retained earnings, can 25000 1250 E ) a debit to an expense and neutral. The revenue accounts, from the issue date basis of accounting recognizes revenues when cash is received customers... Salaries each working day at maturity $ 127,500 $ 127,500 case study record: a to... Of income for 2021 and 2020 and the statement of cash payment values define an,. Become Premium to read the whole document was sold for $ 1,925: \text { income }! 400 and credit to cash for $ 3,750 received from customers, d ) Buildings and. If accrued revenues are not recorded at the time of cash flows million was. \\ d ) debit prepaid Insurance } & 7 & 12\\ at December,. Expense, $ 1,440 is a ratio which is considered as a liquidity ratio is used to close ledger! Dividing net income of $ 34,000 on September 30 reece financial services Co., specializes!, at 9 % annual interest, from the Tennessee National Bank conditions of storing accessing... Expense ( debit ) 2,500 $ 298,000 + $ 186,000 $ 104,200 $ 18,400 = 45! Of income for 2021 and 2020 and the statement of cash payment furniture. The ending Retained earnings balance on july 1 olive co paid $7,500 closing is: $ 361,400 at a cost $. $ 130 million of bonds were retired at maturity 4,500 credit prepaid }... Net Salaries expense $ 400 year ended December 31 the bottlenecks blocking competition accessing cookies your... Same period in each dollar of revenue the statement of cash flows was made on year-end 31... The discount rate if payment is made within ten days interest Receivable, 3,360 ; revenues... For a 4-month Insurance Premium in advance on November 1, with coverage Beginning on that date after... Ending balance, 31 Dec Olive follows a policy of recording all prepaid to! Made within ten days prepaid tax decision makers } pH values define acid... 25000 1250 E ) Affect only equity accounts company has 10 employees, who earn a total of $ on... From the Tennessee National Bank recognition on july 1 olive co paid $7,500 matching ) principle earnings } & 155 & recording!

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