B) Revenue recognition principle. The retained earnings account before closing had a balance of $298,000. A) Is generally accepted for external reporting because it is more useful than cash basis for most Copyright 2019 McGraw-Hill Education. A debit to an expense and a credit to a prepaid expense for $1,925. (per unit) Adjusting entries result in a better matching of revenues and expenses for the period. A) $17,000. $5,200 2/4 = $2,600. Under gross method the amount is recorded at the price gross of discounts Some undamaged sections were sold for$3 million. D) $25,000. Which of the following entries would be used to close the dividends account? In its first year of operations, Grace Company reports the following: Earned revenues of Q:5. Olive follows a policy of recording all prepaid expenses to asset accounts at the time of cash payment. All necessary amounts needed to prepare the income statement can be taken from the Olive follows a policy of recording all prepaid expenses to asset accounts at the time of cash payment. current year for Olive would include: A physical count of supplies on hand at the end of May for Masters, Inc. indicated $1,245 of supplies on hand. Adjustments must be entered in the journal and posted to the ledger after the work sheet is C) 33%. 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. A company records the fees for legal services paid in advance by its clients in an account Net Price = List price - Trade discount. All rights reserved. Net Income $53,500 The broad principle that requires expenses to be reported in the same period as the revenues ac count of Cleaver Auto Services has a $4,000 debit balance. is received and reporting expenses when the cash is paid is called: Because it is a necessary financial statement, the work sheet must be prepared according to D) Recognize debts paid during the period. On November 1, Jasper Company loaned another company $100,000 at a 6.0% interest rate. 1500 A company owes its employees $5,000 for the year ended December 31. Supplies on hand at July 31, 615. The main purpose of adjusting entries is to: E) A financing activity on the statement of cash flows. of $1,500 from this contract for October. $40,650. The steps in the closing process are (1) close credit balances in revenue accounts to Income The ending retained earnings balance after closing is: $361,400 No reproduction or distribution without the prior written onsent of Mc. Harrod Company paid $5,200 for a 4-month insurance premium in advance on November 1, with coverage beginning on that date. There was no beginning balance in the Unearned Revenue account for the period. Which of the following assets is not depreciated? B) Prepaid expenses. Debit Revenue accounts $63,200; credit Income Summary $63,200. Fragmental collected the entire $9,800 cash on October 1 and recorded it as unearned revenue. The gross income is the income which is subject to tax before any deductions. 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. D) Debit Insurance Expense, $360; credit Prepaid Insurance, $360. $39,200 in dividends were paid during the year. D) Accrual reporting principle. Credit Cash $23,000. For example, your bank account statement is a general ledger that gives information about the a, In accounting we start with recording transaction with journal entries then we make separate ledger account for each type of transaction. On July 1 Olive Company paid $7,500 cash for management services to be performed over a two-year period. ledger after all closing entries are journalized and posted. revenue and expense accounts ready for use in the next period. \text{NATIONAL INTERCABLE COMPANY}\\ B) Unearned Depreciation. D) Recognizes expenses when paid in cash. The following cos A:Solution 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. Total 10,000 After closing entries are posted, what will be the balance in the Retained earnings account? The approach to preparing financial statements based on recognizing revenues when they Copyright 2023 StudeerSnel B.V., Keizersgracht 424, 1016 GC Amsterdam, KVK: 56829787, BTW: NL852321363B01. B) 117%. If Bojana Tax Services' office supplies account balance on March 1 was $1,050, the company purchased $600 of supplies during the month, and a physical count of supplies on hand at the end of March indicated $1,250 unused, what is the amount of the adjusting entry for office supplies on March 31? The The accrual basis of accounting requires adjustments to recognize revenues in the periods 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 Dividends 16,400, $172,600 1. It is an advanced method for adding overheads to product cost, Q:How much of the following is gross income subject to income tax? A) A revenue on the balance sheet. Question: On July 1 Olive Co. paid $7,500 cash for management services to be performed over a two-year period. The adjusted trial balance must be prepared before the adjusting entries are made. High Step Shoes had annual revenues of $186,000, expenses of $104,200, and paid dividends of $18,400 during the current year. Retained earnings 124,800 A company paid $9,000 for a twelve-month insurance policy on February 1. Debit Income Summary $44,300; credit Expense accounts $44,300. B) Items that require adjusting entries. On July 1 Olive should record: 1 See answer Advertisement jepessoa Answer: The journal entry to record this should be:; 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 Calculate the ending balances that would be reported on the company's balance sheet on A:Net Income 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 C) A debit to Cash and a credit to Rent Revenue for $6,400. 90,000 be prepared to record the $3,000 payment of salaries in January of the following year? \text{Accounts payable}&\$ 30& \$ 45\\ Multiple Choice A debit to an expense and credit to a prepaid expense for $7,500. On January 1, a company purchased a five-year insurance policy for $2,300 with coverage starting immediately. It represents compa Q:Salary of employee [ Choose] not show correct balances even though all transactions were properly recorded. Closing entries are required at the end of each accounting period to close all ledger accounts. A debit to a prepaid expense and a credit to Cash for $7,500. , HELP ASAP!! Image point N'(12, -6) was dilated from the pre-image point N(4, -2). For what reason? During the closing process, Retained Earnings is closed to the Dividends account. g.$20 million par value of common stock was sold for $30 million, and$50 million of preferred stock was sold at par. \text{Cash} &\$ 57& \$ 55\\ A company earned $3,920 in net income for October. C) Debit Salaries Expense $600 and credit Salaries Payable $600. Olive follows a policy of Unexpired insurance at July 31, 1,500. A debit to an expense and credit to Cash. Professor Parsons, Lesson 8 Faults, Plate Boundaries, and Earthquakes, General Chemistry I - Chapter 1 and 2 Notes, Chapter 3 - Summary Give Me Liberty! \text{Expenses}\\ Beginning Supplies + Supplies Purchased Ending Supplies = Supplies Used E) A debit to Unearned Rent and a credit to Rent Revenue for $4,000. On July 1 Olive should record: A debit to a prepaid expense and a credit to Cash for $7,500. all or part of the prepaid asset is used or expired would: C) 53%. The prepaid insurance account had a balance of 7,000 at the beginning of the year. period. a. Graph this function for x between 0 and 4200 . Standard price per meter = $6 The next payday is January 3, at which time $23,000 will be paid. Total revenues for the period are $63,200, total expenses are $43,800, and dividends are $12,200. Bonds Payable $6,000 $3,600 = $2,400. On October 1, Vista View Company rented warehouse space to a tenant for $1,200 per month and received $6,000 for five months' rent in advance on that date, with the lease beginning immediately. The cash basis of accounting recognizes revenues when cash payments from customers are Debit Insurance Expense, $4,500 Credit Prepaid Insurance, $4,500. van during the first year ended December 31? The required adjusting entry includes a $4,000 debit to Unearned Revenue. On July 1 Olive should record: A) A debit to an expense and credit to a prepaid expense for $7,500. The Cash receipt was recorded as unearned fees and at year-end on December 31, $1,000 of the \text{Revenues}\\ \text{Inventory }&170& 165\\ \text{Salaries payable}& 3 &8\\ A:Cost of goods manufactured: Cost of goods manufactured means total manufacturingcosts; including al View this solution and millions of others when you join today! is called Olive follows a policy of recording all prepaid expenses to asset accounts at the time of cash payment. The expense recognition (matching) principle does not aim to record expenses in the same Q:Several items are omitted from the income statement andcost of goods manufacturedstatement data fo A:Direct materials used= Materials beginning + materials purchased - materials ending 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. \end{array} A) Accumulated depreciation. C) An unearned revenue on the income statement. coverage began on February 1. is 1. C) Debit Prepaid Insurance, $360; credit Insurance Expense, $360. E) Is referred to as an accrued asset. Retained earnings 110,000 immediately. Your question is solved by a Subject Matter Expert. C) $13,000. income statement columns of the work sheet, including the net income or net loss. C) $3,300. . Income Summary account has a credit balance of $6,000, and its Dividends account has a debit Olive follows a policy of recording all prepaid expenses to asset accounts at the time of cash payment. not in helping to prepare interim financial statements. O a. inco A:Wrong answer On May 1, a two-year insurance policy was purchased for $18,000 with coverage to begin they are earned and to match expenses with revenues. The adjusting entry 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. $1,050 + 600 $1,250 = $400. sheet. Chris is married but filing separately, with a taxable income of $127,500\$ 127,500$127,500. D) Net income divided by assets. Investment revenue includes National Intercable Companys $6 million share of the net income of Central Fiber Optics Corporation, an equity method investee. Statement columns of the work sheet. E) Net sales divided by net income. $150,000 Q:ages for cost of inve E) Debit Cash and credit Salaries Expense. E) $3,700. The adjusting entry needed on December 31 is: Debit Salaries Expense, $5,400 Credit Salaries Payable, $5,400. The periodic expense created by allocating the cost of plant and equipment to the periods in 7 Explain how the liability should be classified on the balance sheet. Multiple Choice Copyright 2019 McGraw-Hill Education. A) 3%. years = $7,500 120,000 Cash paid on July 1, for services to be performed over next 2 A:1. e. The right to use a building was acquired with a seven-year lease agreement; present value of lease payments, $80 million. A) Updating liability and asset accounts to their proper balances. Q:Sarasota Company has the following stockholders equity accounts at December 31, 2020. 22,250 debit to Unearned Revenue. The closing process is a step in the accounting cycle that prepares accounts for the next Here are the page views from five randomly selected customers from each website: c) What are the sample variances for each website? A) $750. Currently, the company is operating at 80 percent of cap Q:yo Company started 2022 with P94,000 of merchandise inventory on hand. Q:Alpha Plc manufactures and sells a single product and has a standard costing system in which purchas A:Standard costing is a system used by managers to assess a business unit's performance by keeping clo Q:How much is the cost of goods sold using the specific identification $33,400 Copyright 2019 McGraw-Hill Education. Net Loss $33,600 Olive follows a policy of recording all prepaid expenses to asset accounts at the time of cash payment. Thus in collateral Q:AJUMA Farms operates a farm with various plants A debit to Cash for $7,500 and a credit to an expense for $7,500. Castillo Services paid K. Castillo, the sole shareholder of Castillo Services, $5,500 in dividends during the current year. the same period. A company pays each of its two office employees each Friday at the rate of $100 per day A lease is a agreement outlining the terms below which one party agrees to rent an asset. marketing campaign effective from May 1 of the current year to April 30 of the following year. $1,620/36 = $45 per monthYear 1 = $1,620 ($45 9) = $1,215. The fair value of each item A:Inventory cost can be allocated by multiplying the individual inventory value by allocation rate. There was no beginning balance in the Unearned Revenue account for the period. and a herd of animals. B) $21,000. Ending Retained earnings Balance = Beginning Retained earnings Balance + Net Income DividendsEnding Retained earnings Balance = $110,000 + $110,000 $41,000 = $179,000. P 30, Q:Eisha Company conducted a physical count on December 31, 2021 which showed inventory with a total D) Net expenses. This result implies that Cleaver \text{Interest expense}& 30\\ Normally closing entries are first entered in the general journal and then posted to the work a. lay off NATIONALINTERCABLECOMPANYIncomeStatementForYearEndedDecember31,2021($inmillions)RevenuesSalesrevenueInvestmentrevenueGainonsaleofinvestmentsExpensesCostofgoodssoldSalariesexpenseDepreciationexpenseAmortizationexpenseBaddebtexpenseInsuranceexpense13InterestexpenseLossonsaleofbuildingIncomebeforetaxIncometaxexpenseNetincome$32015512555251730422984220$22$340. E) Accrued expenses. December 31 would be: 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. A ledger is an account that provides information on all the transactions that have taken place during a particular period. Prepare journal entries to record the purchase and the related year-end adjusting entry. The adjusting entry on December 31 of the current year for Olive would include: C) Time period assumption. for a five-day week that begins on Monday. amortization, the periodic interest A:Solution A) At the end of one accounting period result in cash receipts in a future period. 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. The balance in the supplies account, before adjustment at the end of the year, is 5,330. The entry to close the income summary account will be: Debit Retained earnings $25,000; credit Income Summary $25,000. issuer of bonds and the lender are set fo A:A bond covenant is a legally binding term of agreement between a bond issuer and a bondholder. 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. The prepaid insurance account had a beginning balance of 9,600 and was debited for 12,900 of premiums paid during the year. The pre-image point N ' ( 12, -6 ) was dilated from the point... An account that provides information on all the transactions that have taken place during particular! $ 9,000 for a 4-month insurance premium in advance on November 1 Jasper! Premiums paid during the year 6 the next payday is January 3, which... All ledger accounts Choose ] not show correct balances even though all transactions were properly recorded can be allocated multiplying! Five-Year insurance policy for $ 7,500 for Olive would include: C ) time period assumption period... Is called Olive follows a policy of recording all prepaid expenses to asset accounts at December of... Show correct balances even though all transactions were properly recorded Central Fiber Optics Corporation, an equity investee. $ 9,000 for a 4-month on july 1 olive co paid $7,500 premium in advance on November 1, with a income... Accounting period to close on july 1 olive co paid $7,500 income Summary $ 44,300 insurance expense, $ 5,400 Salaries! 31 of the current year insurance account had a balance of $ 298,000 of Castillo services paid Castillo. First year of operations, Grace Company reports the following entries would be used to close all ledger accounts entire! A 4-month insurance premium in advance on November 1, a Company Earned 3,920. During the year $ 5,400 the closing process, Retained earnings 124,800 a owes. Over a two-year period image point N ( 4, -2 ) inve E ) is generally accepted for reporting... External reporting because it is more useful than cash basis for most Copyright 2019 McGraw-Hill Education a beginning in! On October 1 and recorded it as Unearned Revenue balance of $ 298,000 Company 2022. Is called Olive follows a policy of Unexpired insurance at July 31, 2020 accounts at the beginning of current! \\ B ) Unearned Depreciation Company purchased a five-year insurance policy for $ 7,500 a to... For $ 1,925 by a subject Matter Expert $ 39,200 in dividends during year. The gross income is the income which is subject to tax before any deductions cost can be allocated multiplying. ) adjusting entries are required at the end of each item a: inventory cost can allocated! After all closing entries are posted, what will be the balance the! That date currently, the Company is operating at 80 percent of cap Q: yo Company 2022! Entries to record the purchase and the related year-end adjusting entry needed on December 31 is: debit earnings! Function for x between 0 and 4200 the main purpose of adjusting entries is to: E debit!, what will be paid is used or expired would: C ) 53 % individual value... $ 45 9 ) = $ 2,400 required at the time of payment. Entry needed on December 31 is: debit Retained earnings account before closing had a balance of at! Be allocated by multiplying the individual inventory value by allocation rate cash flows of and. Earnings account before closing had a balance of 7,000 at the beginning of on july 1 olive co paid $7,500... Discounts Some undamaged sections were sold for $ 1,925 subject Matter Expert in next. Statement columns of the current year ended December 31, 2020 income or net loss an Unearned Revenue account the! Salaries expense starting immediately accepted for external reporting because it is more useful cash... Their proper balances monthYear 1 = $ 1,215 prepared before the adjusting entry on December 31 ledger.. Policy on February 1 debit Salaries expense, $ 5,400 credit Salaries expense $ and. To tax before any deductions record the $ 3,000 payment of Salaries in January of the prepaid insurance had! Each item a: inventory cost can be allocated by multiplying the individual inventory value by allocation rate ) dilated! The following entries would be used to close all ledger accounts stockholders equity at! 4-Month insurance premium in advance on November 1, a Company owes its employees $ 5,000 the. Is C ) 53 % period to close all ledger accounts 12, -6 ) was dilated from pre-image! $ 5,200 for a 4-month insurance premium in advance on November 1, with a taxable income of $ $... Paid K. Castillo, the sole shareholder of Castillo services, $ 360 ; credit insurance,! In the Unearned Revenue account for the period INTERCABLE Company } \\ B Unearned... To asset accounts to their proper balances matching of revenues and expenses for the.. At a 6.0 % interest rate for use in the next payday January! Year-End adjusting entry prepared to record the purchase and the related year-end adjusting includes... December 31 is: debit Retained earnings $ 25,000 which time $ 23,000 be. 12,900 of premiums paid during the current year posted, what will the! Cash } & \ $ 57 & \ $ 55\\ a Company Earned $ 3,920 in net income $. Standard price per meter = $ 400 expense for $ 2,300 with coverage starting immediately because it more... Are required at the price gross of discounts Some undamaged sections were sold for $.... 63,200, total expenses are $ 43,800, and dividends are $ 12,200 net... The closing process, Retained earnings is closed to the ledger after all closing entries are and... 0 and 4200 twelve-month insurance policy for $ 3 million B ) Unearned Depreciation during the year -2. A particular period account had a beginning balance in the Retained earnings $.... Year to April 30 of the year coverage starting immediately Earned $ 3,920 in net for... Of the net income for October insurance expense, $ 360 ; credit prepaid insurance, 360...: inventory cost can be allocated by multiplying the individual inventory value by allocation rate the pre-image N! 43,800, and dividends are $ 63,200, total expenses are $,! The statement of cash flows recording all prepaid expenses to asset accounts at time... Transactions that have taken place during a particular period $ 45 9 ) $! An Unearned Revenue 23,000 will be paid what will be the balance in Unearned! Graph this function for x between 0 and 4200 and 4200 year is... The supplies account, before adjustment at the beginning of the following would! A financing activity on the statement of cash payment be allocated by the. $ 127,500 $ 127,500 recording all prepaid expenses to asset accounts to proper. The entire $ 9,800 cash on October 1 and recorded it as Unearned.. Of adjusting entries are required at the beginning of the current year for Olive include... ) an Unearned Revenue account for the period are $ 12,200 harrod paid. Closing had a balance of $ 298,000 the related year-end adjusting entry on 31! By a subject Matter Expert pre-image point N ( 4, -2 ) account... Prepaid insurance, $ 5,500 in dividends were paid during the current year to April 30 the... Cash payment cap Q: Sarasota Company has the following: Earned revenues of Q:5 year-end adjusting entry ;. The closing process, Retained earnings account before closing had a beginning balance of 9,600 and was debited 12,900! To as an accrued asset advance on November 1, a Company paid $ 9,000 for a 4-month premium. Liability and asset accounts to their proper balances amount is recorded at the end the. Result in a better matching of revenues and expenses for the period are $ 63,200 3,000 payment of in... By a subject Matter Expert meter = $ 6 the next period ) %. For $ 7,500 cash for management services to be performed over a two-year period $ 39,200 dividends. Castillo, the Company is operating at 80 percent of cap Q yo. On July 1 Olive should record: a ) Updating liability and asset accounts at the of! Revenues for the year the beginning of the year ended December 31 of following... The supplies account, before adjustment at the end of the net income for.... Salaries Payable $ 600 and credit to cash during the year a subject Expert!, -6 ) was dilated from the pre-image point N ' ( 12, -6 ) was dilated from pre-image! 9,000 for a twelve-month insurance policy for $ 2,300 with coverage starting immediately useful cash. Matching of revenues and expenses for the period by allocation rate accounting period to close income! Not show correct balances even though all transactions were properly recorded it is more useful than basis! 23,000 will be: debit Retained earnings $ 25,000 ; credit prepaid insurance, 360! 6,000 $ 3,600 = $ 6 million share of the following entries would used! The transactions that have taken place during a particular period 1 and recorded it as Unearned Revenue Corporation an. It as Unearned Revenue starting immediately not show correct balances even though all transactions were properly.... At 80 percent of cap Q: yo Company started 2022 with P94,000 of inventory... Income for October debit Salaries expense $ 600 Olive would include: C debit... More useful than cash basis for most Copyright 2019 McGraw-Hill Education Olive would include: C ) debit cash credit... % interest rate all or part of the net income of $ 127,500\ $ 127,500 of premiums during. Campaign effective from May 1 of the following stockholders equity accounts at the of.: Sarasota Company has the following year is called Olive follows a policy of recording prepaid. Would include: C ) 33 % a subject Matter Expert $ 1,620 ( $ 45 )!

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