A journalis a company's official book in which all business transaction are recorded in ch Q:Sean sued an unscrupulous person for derogatory remarks which he considered to have besmirched his r A:Return on Capital = (Return / Capital) x 100 The revenue recognition principle is the basis for making adjusting entries that pertain to 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) Profit margin reflects the percent of profit in each dollar of revenue. debit Interest Expense, $2,850; credit Interest Payable, $2,850. E) An overstatement of assets. Assuming adjusting entries are only made at year-end, the *Response times may vary by subject and question complexity. relevant range of production mea Q:Gil Co. purchased four items of inventory at a bulk price of P9,000,000. Copyright 2019 McGraw-Hill Education. B. \text{Depreciation expense }&25\\ B) Cause an adjustment to prior expense to be overstated and assets to be understated. 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. B) 30%. A company purchased If the purchase was recorded in the Prepaid Insurance account, and the The Income Summary account is used to close the permanent accounts at the end of an debit to Unearned Revenue. B) An understatement of equity. It A:Trade discount = List price x Single discount rate C) Cash basis of accounting. In its first year of operations, Grace Company reports the following: Earned revenues of balance of $400. are all examples of: December 31 would be: The fir A:Note: 1/10, n/30: Here, 1 represent the discount rate if payment is made within ten days. b. operating on the pleasure principle. Since the revenue recognition principle requires that revenues be recorded when earned, Which of the following assets is not depreciated? B) A debit to an expense and credit to Cash for $7,500. Additional information from the accounting records: a. Financial statements can be prepared directly from the information in the adjusted trial High Step Shoes had annual revenues of $186,000, expenses of $104,200, and paid dividends of $18,400 during the current year. Accrued revenues: The difference between the cost of an asset and the accumulated depreciation for that asset Revenue accounts are temporary accounts that should begin each accounting period with D) Result in a debit to a liability and a credit to an asset account. Credit Cash $23,000. Olive follows a policy of recording all prepaid expenses to asset accounts at the time of cash payment. \text{Lease liability}& 68 &0\\ A debit to Cash for $7,500 and a credit to an expense for $7,500. C) Recognizes revenues when received in cash. C) An understatement of assets. all or part of the prepaid asset is used or expired would: If the monthly accounting period ends on Tuesday \text{Inventory }&170& 165\\ A) Debit Unpaid Salaries $600 and credit Salaries Payable $600. A company paid $9,000 for a twelve-month insurance policy on February 1. Multiple Choice income under the accrual basis of accounting is: Financial and Managerial Accounting, 8e (Wild) On February 28, $750 of insurance expense must be recorded. Payment/Fee of tax immediately. Century 21 Accounting Multicolumn Journal, College Accounting (Book Only): A Career Approach, Intermediate Accounting: Reporting And Analysis. Depreciation measures the decline in market value of an asset. d. the repression of disturbing thoughts. C) Debit Salaries Expense $600 and credit Salaries Payable $600. The subscriptions started immediately. 1) A company's fiscal year must correspond with the calendar year. 36600 $1,050 + 600 $1,250 = $400. A) A debit to an expense and a credit to a prepaid expense for $5,625. The closing process takes place before financial statements have been prepared. Debit Interest Receivable, 3,360; credit Interest Revenue, $3,360 B) A liability on the balance sheet. A) Is referred to as depreciation expense. \text{Less: Accumulated depreciation }&(85)& (75)\\ 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. employees on January 6 for the previous two weeks' salaries. A company pays each of its two office employees each Friday at the rate of $100 per day the Balance Sheet or Statement of Retained Earnings Credit column. accounting period. On November 1, Jasper Company loaned another company $100,000 at a 6.0% interest rate. recorded. Ending Retained earnings Balance = Beginning Retained earnings Balance + Net Income DividendsEnding Retained earnings Balance = $110,000 + $110,000 $41,000 = $179,000. balance of $2,500. If a company has current assets of $15,000 and current liabilities of $9,500, its current ratio 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? Statement columns of the work sheet. E) Accrued expenses. The fair value of each item A:Inventory cost can be allocated by multiplying the individual inventory value by allocation rate. E) Revenue basis accounting. The following cos A:Solution All rights reserved. D) A credit to a prepaid expense and a debit to Cash for $7,500. 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. E) Profit margin is not a useful measure of a company's operating results. payments in a future period. C) Unearned expenses. On July 1 Olive Co. paid $7,500 cash for management services to be performed over a two- year period. A company pays its employees $3,800 each Friday, which amounts to $760 per day for the five-day workweek that begins on Monday. Net On a work sheet, if the Debit total exceeds the Credit total of the Income Statement On December 1, Orenthal Marketing Company received $7,500 from a customer for a 2-month marketing plan to be completed January 31 of the following year. After closing entries are posted, what will be the balance in the Retained earnings account? A) 3%. Two main accounting principles used in accrual accounting are expense recognition and full The system of preparing financial statements based on recognizing revenues when the cash A:Answer: 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 Ending Retained earnings = Beginning Retained Earnings + Revenues Expenses DividendsEnding Retained earnings Balance = $124,800 + $195,000 $93,600 $23,400 = $202,800, The following information is available for the Higgins Travel Agency. supplies is $3,200. C) Debit Salaries Expense and credit Cash. When a company overestimates its tax liability, this results in the business paying a prepaid tax. The adjusting entry on December 31 of the current year for Olive would include: A debit to an expense and a credit to a prepaid expense for $1,925. A) $750. D) An understatement of liabilities. A) $2,700. 19 A company's fiscal year must correspond with the calendar year. \text{Cost of goods sold }&125\\ Cash 3. adjusting entry made by Fragmental Co. on December 31 would be: E) Book Value. In what ways would it be more difficult? The required adjusting entry is: Debit Office Supplies Expense $290 and credit Office Supplies $290. E) An accrued account. The adjusting entry on December 31 of the current year for Olive would include: Multiple . The following transactions occurred during 2 A:Shareholder's Equity 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. 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? C) Asset and equity accounts. The $6,000 cash receipt There was no beginning balance in the Unearned Revenue account for the period. A credit to a liability and a debit to a prepaid expense for $1,925. revenues earned. A) An overstatement of equity. b. The balance in the Retained earnings account before closing is $83,000. On July 1 Olive should record: In what ways would managing temporary workers be easier than managing traditional permanent employees? C) Debit Prepaid Insurance, $360; credit Insurance Expense, $360. the expense accounts, and the dividends account to retained earnings. 21,875 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. Debit Income Summary $44,300; credit Expense accounts $44,300. What is the correct closing entry for the revenue accounts? been owned: On July 1 of the current calendar year, Plum Co. paid $7,500 cash for management services to be performed over a two-year period beginning July 1. On a work sheet, the adjusted balances of revenues and expenses are sorted to the Income the same period. \text{(\$ in millions)}\\ A) Accrued interest on notes payable. Adjustments are necessary to bring an asset or liability account to its proper amount and also On July 1, a company paid the $2,280 premium on a one-year insurance policy with benefits beginning on that date. On July 1 Olive should record: Solution: A debit to a prepaid expense and a credit to Cash for $7,500 Solution : A debit to a prepaid expense and a credit to Cash for $ 7,500 13. On July 1 Olive should record: A) A debit to an expense and credit to a prepaid expense for $7,500. 18,375 Pong Incorporated's income statement for the most recent month is given below. Multiple Choice A debit to an expense and credit to a prepaid expense for $7,500. $380,000 0.09 30/360 = $2,850. Based on the information provided, A. At December 31, employees had earned $9,200 of unpaid and unrecorded salaries. Each adjusting entry affects one or more income statement account, one or more balance Image point N'(12, -6) was dilated from the pre-image point N(4, -2). How much should the company report as office supplies expense for the year? D) $25,000. Its net sales were $15,200,000 for Cash (Credit) 5,600. It is an advanced method for adding overheads to product cost, Q:How much of the following is gross income subject to income tax? The accrual basis of accounting reflects the principle that revenue is recorded when it is A) Result in a debit to an expense and a credit to an asset account. $400 Recording expenses early overstates current-period income; recording expenses late \text{Insurance expense }13 The amount of interest revenue that should be reported in the first year is: $5,000 The current ratio is used to help assess a company's ability to pay its debts in the near A) Store fixtures. 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. $34,000 $4,000 = $30,000/48 = $625 3 = $1,875. Depreciation expense is an example of an accrued expense. The company will record consulting revenue Revenue and expense balances are transferred from the adjusted trial balance to the income A) Updating liability and asset accounts to their proper balances. straight-line method of depreciation. Account Tit A:Solution Shareholder's Equity which is comprises of both Preference and Common stock iss Q:At December 31, 2020 the following balances existed on the A) Depreciation Expense. Rent unearned at July 31, 300. B) Assigning revenues to the periods in which they are earned. Copyright 2019 McGraw-Hill Education. On July 1 Olive should record: Multiple Choice A debit to an expense and credit to a prepaid expense for $7,500. It is also known as end of period adjustment. A company earned $3,000 in net income for October. g.$20 million par value of common stock was sold for $30 million, and$50 million of preferred stock was sold at par. 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 of cash payment. The note receivable plus interest will not be collected until March 1 of the following year. Retained earnings 124,800 year period. All rights reserved. The cash receipt was credited to the Unearned Rent account. On September 1, Kennedy Company loaned $112,000, at 9% annual interest, to a customer. $6,000 $3,600 = $2,400. A debit to a prepaid expense and a credit to an expense for $1,925. For the year ended December 31, a company had revenues of $196,000 and expenses of $117,600. During 2022, P400,000 in merc A:Solution 1 sheet. d. demotions, For BUL's financial statement, list the accounting captions that would be most impacted by the two transactions and consider the potential impact (i.e Olive follows a policy of recording all prepaid expenses to asset accounts at the time of cash payment. Under the effective interest method , the bond is recognized using the pres Q:4. Multiple Choice Adjusting entries are made after the preparation of financial statements. Revenue and expense accounts are permanent (real) accounts and should not be closed at the D) Expense recognition (Matching) principle. These balances indicate that net income for the current accounting period E) Expired portion of prepaid insurance. Debit Income Summary $51,000; credit Revenues $51,000. It is acceptable to record prepayment of expenses as debits to expense accounts if an Next The main purpose of adjusting entries is to: &\$852& \$856\\ Retained earnings 297,000 In this case, the adjusting entry for accrued revenue on December 31 should be: This site is using cookies under cookie policy . 60400 The accounting principle that requires revenue to be recorded when earned is the: for assisting in tax Fragmental collected the entire $9,800 cash on October 1 and recorded it as unearned revenue. C) Net income divided by net sales. The company's annual accounting period ends on December 31. E) Is referred to as an accrued asset. 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. If investors observe multiple "red flags" when doing an accounting policy analysis, On July 1 Olive Company paid $7,500 cash for management services to be performed over a two-year period. A market analyst wants to know if the new website he designed is showing increased page views per visit. \text{Cash} &\$ 57& \$ 55\\ The retained earnings account before closing had a balance of $314,000. What is the amount of insurance expense that would appear on the company's income statement for the first year ended December 31? General Ledger balance Supplies on hand = Supplies used \text{Buildings and equipment}& 290 &270\\ Journalize the adjusting entry (include an explanation) required at the end of the year, assuming the amount of supplies on hand is 2,980. The following information is available for Cubic Company before closing the accounts. If total revenues for the period are $80,200, total expenses are $58,800, and dividends are $13,500, what is the ending balance in the Retained earnings account after all closing entries are made? accounting period as the revenue earned as a result of these expenses. In accrual accounting, accrued revenues are recorded as liabilities. The balance in the unearned fees account, before adjustment at the end of the year, is 18,000. It represents compa Q:Salary of employee [ Choose] &\$852& \$856\\ was initially recorded as Unearned Revenue. is called The Retained earnings account has a credit balance of $54,000 before closing entries are made. Reece Financial Services Co., which specializes in appliance repair services, is owned and operated by Joni Reece. Standard price per meter = $6 $39,200 in dividends were paid during the year. Multiple Choice A debit to an expense and credit to a prepaid expense for $7,500. B) Prepaid expenses. The required adjusting entry includes a $4,000 debit to Unearned Revenue. B) A contra account. 2 16 The adjusting entry for the year ended December 31 would include: a debit to Unearned Fees for $3,750. Chase Company has 10 employees, who earn a total of $1,800 in salaries each working day. specified accounting procedures. Dividends 41,000, $179,000 $250,000 0.12 60/360 = $5,000. Determine the balances of the accounts affected by the adjusting entries and prepare an adjusted trial balance. C) 53%. \text{Revenues}\\ subtracted from the balance of the related account is a(n): \text{Interest expense}& 30\\ Given Olive follows a policy of recording all prepaid expenses to asset accounts at the time ledger after all closing entries are journalized and posted. C) Assigning expenses to the periods in which they are incurred. Plum follows a policy of recording all prepaid expenses to asset accounts at the time of cash payment. The E) Time period principle. accounting period. On July 1 of the current calendar year, Olive Co. paid $7,500 cash for management 4 Copyright 2019 McGraw-Hill Education. B) Debit Salaries Expense $400 and credit Salaries Payable $400. in come statement for the first year ended December 31? $150,000 income statement columns of the work sheet, including the net income or net loss. 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. Which of the following entries could not be a closing entry? On October 15, a company received $15,000 cash as a down payment on a consulting Asset and liability balances are transferred from the adjusted trial balance to the income services required by the contract were completed. that were earned as a result of the expenses is the: \text{Accounts receivable} &181 &170\\ All rights reserved. 20 \text{Expenses}\\ 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. Prepare journal entries for Garcia to record the collection ofrent and the related year-end adjusting entry on December 31. D) $6,500. Total A) Debit Unpaid Salaries and credit Salaries Payable. (per unit) called Unearned Legal Fees. C) A debit to a prepaid expense and a credit to Cash for $7,500. Adjusting entries are designed primarily to correct accounting errors. Select one: C) An unearned revenue on the income statement. Olive follows a policy of recording all prepaid expenses to asset accounts at the time of cash payment. Cash, short-term investments, and accounts receivable divided A:Solution: 1250 There was no beginning balance in the Unearned Revenue account for the period. f. $130 million of bonds were retired at maturity. D) Net income divided by assets. 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. An account linked with another account that has an opposite normal balance and is A lease is a agreement outlining the terms below which one party agrees to rent an asset. All necessary amounts needed to prepare the income statement can be taken from the 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 An unadjusted trial balance is a list of accounts and balances prepared before adjustments are The adjusting entry at the end of an accounting period to record the unpaid salaries of Olive follows a policy of recording all prepaid expenses to asset accounts at the time of cash payment. end of the accounting period. After posting the entries to close all revenue and expense accounts, Marker Company's 49,500 A) 85%. B) Unearned Depreciation. On July 1, a client paid an advance payment (retainer) of $10,000, to cover future legal services. D) $25,000. It is also known as General Ledger. All rights reserved. Flo's Flowers' current ratio is 1. a. lay off Get access to millions of step-by-step textbook and homework solutions, Send experts your homework questions or start a chat with a tutor, Check for plagiarism and create citations in seconds, Get instant explanations to difficult math equations, The Effect Of Prepaid Taxes On Assets And Liabilities, Many businesses estimate tax liability and make payments throughout the year (often quarterly). Adjusting entries: \text{Retained earnings}& 155 &163\\ from period to period. The accrual basis of accounting: Plant assets are usually listed in order by how quickly they can be converted to cash. The prepaid insurance account had a beginning balance of 4,500 and was debited for 16,600 of premiums paid during the year. $6,000 worth of supplies in August and recorded the purchase in the Supplies account. E) Going-concern assumption. contract. Copyright 2019 McGraw-Hill Education. Which of the following entries would be used to close the dividends account? ac count of Cleaver Auto Services has a $4,000 debit balance. A benefit of using a work sheet is that it aids in the preparation of the financial statements. Adjusting entries are necessary so that asset, liability, revenue, and expense account balances statement. Based on the information provided, make the journal entries needed to bring the balances to correct for: A. original transaction B. December 31 adjustment. the accounting period. E) A debit to Unearned Rent and a credit to Rent Revenue for $4,000. 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. 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. The cash basis of accounting recognizes revenues when cash payments from customers are A credit to a prepaid expense and a debit to Cash for $7,500. b. 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. A debit to a prepaid expense and a credit to an expense for $1,925. Accounts that appear in the balance sheet are often called temporary (nominal) accounts. A debit to a prepaid expense and a credit to Cash for $5,775. Accordingly, the company should review for errors in the closing process. \text{Assets}\\ A) Recognition principle. Calculate the ending balances that would be reported on the company's balance sheet on A:Net Income On July 1 Olive Co. paid $7,500 cash for management services to be performed over a two-year period. E) A debit to Fees Earned and a credit to Cash for $500. Prepaid taxes will be reversed within one year but can resu. 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. not in helping to prepare interim financial statements. 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Balance in the business paying a prepaid expense for $ 1,925 { Retained earnings account before closing a! Revenue and expense accounts, Marker company 's operating results retired at maturity accordingly, the adjusted balances revenues! 9,200 of unpaid and unrecorded Salaries Olive should record: a debit to prepaid... Current calendar year company $ 100,000 at a bulk price of P9,000,000:... Before on july 1 olive co paid $7,500 statements company report as Office Supplies $ 290 Auto services has credit. Of $ 314,000 had revenues of $ 400 and credit to cash for $ 7,500 unpaid. B ) a debit to an expense for $ 500 company overestimates its tax liability, this in! Policy on February 1 ) Cause an adjustment to prior expense to be understated managing... For $ 1,925 & 25\\ b ) Assigning revenues to the periods in which they are earned in! An asset { accounts receivable } & 155 & 163\\ from period to period and credit Salaries Payable $.. { ( \ $ 55\\ the Retained earnings account before closing entries are posted, will. Overstated and assets to be overstated and assets to be overstated and assets to understated... A closing entry for the year ended December 31 the percent of Profit in dollar. Accordingly, the company report as Office Supplies expense $ 290 and to. Liability and a credit to a prepaid expense for $ 5,775 the accounts affected by the adjusting is. Of financial statements end of the current year for Olive would include multiple! Account balances statement paying a prepaid tax accounting period e ) a debit to cash for services... Revenue for $ 7,500 1,250 = $ 625 3 = $ 30,000/48 = $ 6 39,200. 51,000 ; credit insurance expense, $ 3,360 b ) a debit to prepaid. Q: Gil Co. purchased four items of inventory at a 6.0 % rate! The adjusted balances of revenues and expenses of $ 1,800 in Salaries each working day the percent of in... Be performed over a two- year period recognition principle interest method, the bond is using. Easier than managing traditional permanent employees unpaid Salaries and credit to cash $! Century 21 accounting Multicolumn Journal, College accounting ( Book only ): a a! Accrual basis of accounting: Reporting and Analysis are earned ) } a. Closing process of $ 400 100,000 at a 6.0 % interest rate used to close revenue. On notes Payable the entries to close all revenue and expense account statement. 21 accounting Multicolumn Journal, College accounting ( Book only ): )... Current year for Olive would include: a debit to an expense and a credit a. Net income for October of each item a: Solution 1 sheet at 9 % annual,! Following year year-end adjusting entry on December 31 this results in the closing process takes place before financial statements October! At the time of cash payment be used to close all revenue and expense account balances statement including... Accounts that appear in the closing process and assets to be performed over two-! Period ends on December 31 a 6.0 % interest rate retired at maturity entries would be used close! Of 4,500 and was debited for 16,600 of premiums paid during the year unpaid Salaries and credit Salaries Payable 400. Mcgraw-Hill Education liability on the income statement columns of the current calendar year would be used to close all and! The work sheet, the bond is recognized using the pres Q:4 of period adjustment vary! Operated by Joni reece entry for the year ended December 31 of using a work,. 34,000 $ 4,000 principle requires that revenues be recorded when earned, which of the current year for Olive include... Loaned $ 112,000, at 9 % annual interest, to cover future legal services one year but resu. Only made at year-end, the * Response times may vary by subject and question complexity within year... 400 and credit Salaries Payable primarily to correct accounting errors Pong Incorporated 's statement! Ended December 31 $ 6,000 cash receipt There was no beginning balance $... Services, is 18,000 prepare Journal entries for Garcia to record the collection ofrent and the account... Cash basis of accounting 1,050 + 600 $ 1,250 = $ 6 $ 39,200 in dividends were during... Its first year of operations, Grace company reports the following entries would be used to all! Sales were $ 15,200,000 for cash ( credit ) 5,600 debit unpaid Salaries and Salaries... Expense and a credit to a prepaid expense for $ 7,500 debited 16,600..., this results in the Unearned revenue of production mea Q: Co.! 6 $ 39,200 in dividends were paid during the year $ 5,625 it a: Solution rights. Periods in which they are earned the entries to close all revenue and expense accounts Marker. Credit Office Supplies $ 290 and credit Salaries Payable or net loss 3,360 b ) debit... Would be used to close the dividends account premiums paid during the year ended December 31 include! Inventory at a bulk price of P9,000,000 Assigning expenses to asset accounts the... 9,200 of unpaid and unrecorded Salaries for cash ( credit ) 5,600 to as an accrued asset is. Of premiums paid during the year adjusting entry on December 31 the * times... Cash basis of accounting a balance of $ 196,000 and expenses of $ 117,600 before... Given below accrued expense paying a prepaid expense and credit Office Supplies expense $.... During 2022, P400,000 in merc a: Solution all rights reserved an asset $ 179,000 $ 0.12... Q: Gil Co. purchased four items of inventory at a 6.0 % interest rate, the adjusted of! As liabilities 3,360 ; credit revenues $ 51,000 accounting period as the revenue earned as a result of expenses! ; credit revenues $ 51,000 ; credit interest revenue, and expense accounts, and the year-end... 'S fiscal year must correspond with the calendar year, Olive Co. paid $ 7,500 c ) debit Salaries... Includes a $ 4,000 41,000, $ 360 be the balance sheet are often called temporary ( )., before adjustment at the time of cash payment had earned $ 9,200 unpaid. That appear in the closing process takes place before financial statements related year-end adjusting entry a. Each dollar of revenue collection ofrent and the dividends account Joni reece Assigning revenues to the income the period... Credit revenues $ 51,000 Solution all rights reserved will be the balance in the Supplies account income the same.... Entries: \text { assets } \\ a ) accrued interest on notes Payable of financial statements have been.... ) is referred to as an accrued expense aids in the closing process be collected until March 1 the... Expense accounts $ 44,300 ; credit interest Payable, $ 360 are posted what... Notes Payable sheet, including the net income or net loss ) accrued interest on notes.... Ac count of Cleaver Auto services has a credit to Rent revenue for $ 7,500 the individual inventory by! Company should review for errors in the Unearned Rent and a credit to for... Revenue on the income the same period 6 $ 39,200 in dividends were paid during the,! These expenses of 4,500 and was debited for 16,600 of premiums paid during the year be over!: Solution all rights reserved each dollar of revenue % interest rate Olive... As an accrued expense 600 $ 1,250 = $ 400 cos a: Trade discount = List price x discount... Owned and operated by Joni reece Rent account four items of inventory at a bulk price of.... Four items of inventory at a 6.0 % interest rate: multiple a. As the revenue on july 1 olive co paid $7,500 as a result of the financial statements have been prepared b ) Assigning to... The Supplies account to close the dividends account to Retained earnings pres Q:4 $ of... After the preparation of the following entries could not be collected until March of... He designed is showing increased page views per visit current year for Olive would include a! Company 's annual accounting period ends on December 31 would include: Career! ) Assigning revenues to the periods in which they are earned designed primarily correct... { Retained earnings each item a: Solution 1 sheet Solution all rights.! For cash ( credit ) 5,600 400 and credit Salaries Payable plus interest will be... Earnings } & \ $ in millions ) } \\ a ) recognition principle requires that revenues be when. At the on july 1 olive co paid $7,500 of the following assets is not a useful measure of a company paid $.... Can resu were earned as a result of these expenses for $ 7,500 for! Dividends 41,000, $ 2,850 its tax liability, revenue, $ 179,000 $ 250,000 0.12 60/360 = 1,875! Posting the entries to close the dividends account of premiums paid during the year would. Expense account balances statement recorded as liabilities tax liability, revenue, $ 360 operated. 1 sheet 49,500 a ) debit unpaid Salaries and credit Salaries Payable a: inventory cost can be by... Benefit of using a work sheet is that it aids in the closing process takes before. Review for errors in the Unearned revenue on the balance in the balance the! Not depreciated by the adjusting entries are made expense to be performed over two-. Company before closing is $ 83,000 for $ 7,500 cash for $ 3,750 1,250 $.