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. Total 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. C) Cause an accrued liability account to exist. , resources priorities training? Use the marginal tax rates in Table 4.94.94.9 to compute the tax owed in the following situation. B) Debit Salaries Payable and credit Salaries Expense. $34,000 $4,000 = $30,000/48 = $625 3 = $1,875. Direct material used A:Solution: All rights reserved. The total amount of depreciation recorded against an asset over the entire time the asset has After closing entries are posted, what will be the balance in the Retained earnings account? Harrod Company paid $5,200 for a 4-month insurance premium in advance on November 1, with coverage beginning on that date. D) 333%. \text{Buildings and equipment}& 290 &270\\ A company performs 20 days of work on a 30-day contract before the end of the year. Olive follows a policy of recording all prepaid expenses to asset accounts at the time of cash payment. C) A debit to an expense and a credit to a prepaid expense for $1,875. Olive follows a policy of recording all prepaid expenses to asset accounts at the time of cash payment. &\$852& \$856\\ After all closing entries are made, what will be the balance in the Retained earnings account? revenue account and a debit to an expense account. Financial accounting is one of the branches of accounting in which the transactions arising in the business over a particular period are recorded. Image point N'(12, -6) was dilated from the pre-image point N(4, -2). Its net sales for October were \text{Income tax expense}& 20\\ C) Affect both income statement and balance sheet accounts. On February 28, $750 of insurance expense must be recorded. On July 1 of the current calendar year, Olive Co. paid $7,500 cash for management A benefit of using a work sheet is that it aids in the preparation of the financial statements. All rights reserved. How much depreciation expense will be recorded for the A debit to an expense and credit to Cash for $7,500. The adjusting entry C) Net income divided by net sales. adjusting entry made by Fragmental Co. on December 31 would be: this A:Answer 1 : D) Debit Salaries Expense and credit Salaries Payable. B) An understatement of equity. A) Depreciation Expense. Beginning Supplies + Supplies Purchased Ending Supplies = Supplies Used Question: On July 1 Olive Co. paid $7,500 cash for management services to be performed over a two-year period. E) Income statement accounts. The $6,000 cash receipt Key word, is AFTER adjusting and reversing entries were made on Dec 31 and Jan 1. On July 1 Olive Co. paid $7,500 cash for management services to be performed over a two-year period. sheet. Copyright 2023 StudeerSnel B.V., Keizersgracht 424, 1016 GC Amsterdam, KVK: 56829787, BTW: NL852321363B01. All of the following statements regarding profit margin are true except : On July 1 Olive should record: A debit to a prepaid expense and a credit to Cash for $7,500. The system of preparing financial statements based on recognizing revenues when the cash Net income $110,000 On July 1, a client paid an advance payment (retainer) of $5,000 to cover future legal services. Retained earnings 297,000 218510. B) Supplies used during the period. The accrual basis of accounting recognizes expenses when cash is paid. E) Revenue basis accounting. be prepared to record the $3,000 payment of salaries in January of the following year? All plant assets, including land, are depreciated. \text{Salaries payable}& 3 &8\\ B) Profit margin is also called return on sales. With particular reference to the South African economy, discuss the validity Accrued revenues: A) A debit to Unearned Fees and a credit to Cash for $500. During the year, the company purchased $270 worth of office supplies. Century 21 Accounting Multicolumn Journal, College Accounting (Book Only): A Career Approach, Intermediate Accounting: Reporting And Analysis. $6,000 $3,600 = $2,400. \text{Cash} &\$ 57& \$ 55\\ A) 85%. 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) $2,700. expense account. 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? Values) Goring Dairy leases its mi A:Lease- Under the effective interest method , the bond is recognized using the pres Q:4. Olive follows a policy of recording all prepaid expenses to asset accounts at the time of cash payment. 8 Retained earningare the amount of profit of a company has left over after paying all its d Q:The covenants and other terms of the agreement between the ac count of Cleaver Auto Services has a $4,000 debit balance. A) Store fixtures. Next D) Debit Insurance Expense, $360; credit Prepaid Insurance, $360. A) $17,000. : an American History (Eric Foner), Principles of Environmental Science (William P. Cunningham; Mary Ann Cunningham), Educational Research: Competencies for Analysis and Applications (Gay L. R.; Mills Geoffrey E.; Airasian Peter W.), Business Law: Text and Cases (Kenneth W. Clarkson; Roger LeRoy Miller; Frank B. discounts. D) An asset on the balance sheet. \text{Accounts receivable} &181 &170\\ It represents compa Q:Salary of employee [ Choose] A) 3%. Olive follows a pollicy of recording all prepaid expenses to asset accounts at the time of cash payment. Investment revenue includes National Intercable Companys $6 million share of the net income of Central Fiber Optics Corporation, an equity method investee. [ Choose ] 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). which they are used, representing the expense of using the assets, is called: Prior to recording adjusting entries, the Office Supplies account had a $388 debit balance. E) Going-concern assumption. for assisting in tax A company purchased D) Affect cash accounts. On July 1 Olive Co. paid $7,500 cash for management services to be performed over a two-year period. Profit margin is defined as: Accrued expenses at the end of one accounting period are expected to result in cash e. striving for perfection. 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. the same period. future. Explain how the liability should be classified on the balance sheet. Journalize the adjusting entries using the following additional accounts: Salaries and Wages Payable, Rent Revenue, Insurance Expense, Depreciation ExpenseBuilding, Depreciation ExpenseEquipment, and Supplies Expense. D) Recognize debts paid during the period. Its profit margin is: 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. 36600 On May 1, a two-year insurance policy was purchased for $21,600 with coverage to begin immediately. E) A debit to Unearned Rent and a credit to Rent Revenue for $4,000. Asset and liability balances are transferred from the adjusted trial balance to the income We reviewed their content and use your feedback to keep the quality high. \text{Loss on sale of building}&42 298\\ It is also known as end of period adjustment. be found in the Balance Sheet columns of the work sheet. hand. December 31 will include a debit to Salaries Expense and a credit to Cash. When a company overestimates its tax liability, this results in the business paying a prepaid tax. and the employees worked on both Monday and Tuesday, the month-end adjusting entry to The company's annual accounting period ends on December 31. The company paid $50,800 in dividends during the year. Debit Income Summary $196,000; credit Revenues $196,000. The balance in the supplies account, before adjustment at the end of the year, is 5,330. $1,050 + 600 $1,250 = $400. A) Profit margin reflects the percent of profit in each dollar of revenue. Net Income $53,500 E) Net sales divided by net income. A post-closing trial balance is a list of permanent accounts and their balances from the A company performs 20 days of work on a 30-day contract before the end of the year. Useful for showing a business' operating results and and shows the percent of profit in each dollar of sales, Less:Allowanceforuncollectibleaccounts, Claudia Bienias Gilbertson, Debra Gentene, Mark W Lehman, Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield, Fundamentals of Financial Management, Concise Edition, Don Herrmann, J. David Spiceland, Wayne Thomas. All rights reserved. prepared. Financial statements can be prepared directly from the information in the adjusted trial B) $5,270. C) Cash basis of accounting. C) A debit to Unearned Fees and a credit to Fees Earned for $1,000. understates current period income. A:1. van during the first year ended December 31? 2 fees had been earned. $5,200 2/4 = $2,600. A debit to a prepaid expense and a credit to an expense for $1,925. D) Depreciation Value. 16 = The note receivable plus interest will not be collected until March 1 of the following year. A) Accumulated depreciation. B) Revenue recognition principle. \text{Gain on sale of investments} &5 &\$ 340\\ \text{Amortization expense }&1\\ If all columns of a completed work sheet balance, you can be sure that no errors were made B) A contra account. when cash is paid. Copyright 2019 McGraw-Hill Education. On July 1 Olive Co. paid $7,500 cash for management services to be performed over a two-year period. A:Answer: 1250 All rights reserved. c. focusing solely on the morality of an issue. C) Cash basis accounting. C) 33%. earned a net income of $4,000. A) Record external transactions and events. 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 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. How much depreciation expense will be recorded for the furniture for the first year ended December 31? A) Debit Prepaid Insurance, $1,800; credit Cash, $1,800. A) $750. The subscriptions started immediately. Earned but unrecorded revenues are recorded during the adjusting process with a credit to a Total revenues for the period are $72,200, total expenses are $48,300, and dividends are $15,800. The adjusting entry on December 31 of the current year for Olive would include: $1,620/36 = $45 per monthYear 1 = $1,620 ($45 9) = $1,215. A) A debit to Rent Revenue and a credit to Cash for $2,400. Ending Retained earnings Balance = Beginning Retained earnings Balance Net Loss DividendsEnding Retained earnings Balance = $297,000 $33,600 $38,400 = $225,000. A:Gross Income -It is the total income from all sources i.e. Find answers to questions asked by students like you. D) $25,000. $380,000 0.09 30/360 = $2,850. B) Affect only balance sheet accounts. Income Summary is a temporary account only used for the closing process. Account Tit A:Solution contract services in April and billed the customer. C) Asset and equity accounts. \text{Expenses}\\ d. A building that originally cost $60 million, and which was one-fourth depreciated, was destroyed by fire. A debit to a prepaid expense and a credit to Cash for $5,775. Adjusting entries are usually entered in the work sheet before they are entered in the general journal. E) An accrued account. A company purchased a new delivery van at a cost of $45,000 on July 1. C) Recognizes revenues when received in cash. What is the proper adjusting entry at December 31, the end of the accounting period, if the balance in the prepaid insurance account is $7,750 before adjustment, and the unexpired amount per analysis of policies is $3,250? e. The right to use a building was acquired with a seven-year lease agreement; present value of lease payments, $80 million. 14 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. 18,375 Under the cash basis of accounting, no adjustments are made for prepaid, unearned, and A) Revenues divided by net sales. B) $21,000. On January 1, a company purchased a five-year insurance policy for $2,300 with coverage starting immediately. Accounts that appear in the balance sheet are often called temporary (nominal) accounts. Total revenues for the period are $64,200, total expenses are $44,300, and dividends are $12,600. not show correct balances even though all transactions were properly recorded. 25000 C) Time period assumption. Copyright 2019 McGraw-Hill Education. called Unearned Legal Fees. C) An unearned revenue on the income statement. 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? The On July 1 Olive should record: A) A debit to an expense and credit to a prepaid expense for $7,500. It is acceptable to record prepayment of expenses as debits to expense accounts if an All necessary amounts needed to prepare the income statement can be taken from the $60,000 ($52,000 cash received from customers); Incurred expenses of $35,000 ($31,000 cash Standard price per meter = $6 On August 1, Jerry paid Garcia 12,000 for 1 year of rent in advance. $6,000 worth of supplies in August and recorded the purchase in the Supplies account. The cash basis of accounting is a system in which revenues are recorded when earned and B) 30%. The board of directors for Ace Finance Ltd have adjusting entry is made at the end of the period to bring the asset account balance to the correct Adjusting entries are made after the preparation of financial statements. The company should recognize the revenue is estimated to have a useful life of 6 years and a salvage value of $3,000. A) At the end of one accounting period result in cash receipts in a future period. $39,200 in dividends were paid during the year. specified accounting procedures. Two accounting principles that are relied on in the adjusting process are: What is pH\mathrm{pH}pH ? \text{Trademark} &24 &25\\ b. lateral moves Adjusting entries are necessary so that asset, liability, revenue, and expense account balances No reproduction or distribution without the prior written onsent of Mc. Bonds Payable the Balance Sheet or Statement of Retained Earnings Credit column. 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 \text{Depreciation expense }&25\\ Recording revenues early overstates current-period income; recording revenues late C) An understatement of assets. 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 E) A debit to Fees Earned and a credit to Cash for $500. from period to period. What is the amount of insurance expense that would appear on the company's income statement for the first year ended December 31? And if pay Q:) Refer to the following data: The industry average for the current ratio is 1.2. On January 1, 2021, it had te A:Biological assets available at the end of the year (December 31, 2021): expenses are recorded when incurred. The inventory should be val Q:Use the following selected account balances of Delray Manufacturing for the year ended December 31. A credit to a prepaid expense and a debit to Cash for $7,500. C) Debit Prepaid Insurance, $360; credit Insurance Expense, $360. C) The expense recognition (matching) principle. Assuming adjustments are only made at year-end, what is the adjusting entry for accruing interest that Kennedy would need to make on December 31, the calendar year-end? E) Debit Salaries Expense $400 and credit Cash $400. b. A) Is referred to as depreciation expense. Asset and liability balances are transferred from the adjusted trial balance to the balance \text{Liabilities}\\ Prepare the statement of cash flows. The next payday is January 3, at which time $23,000 will be paid. 22,250 Given A debit to a prepaid expense and a credit to Cash for $7,500. The retained earnings account before closing had a balance of $303,000. specific time periods such as months, quarters, or years. All rights reserved. Direct materia A:Given details: It can also be referred as financial repor. 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. D) An understatement of liabilities. The Dividends account is normally closed by debiting it. In preparing statements from the adjusted trial balance, the balance sheet must be prepared Accrued revenues at the end of one accounting period are expected to result in cash receipts On September 1, Kennedy Company loaned $112,000, at 9% annual interest, to a customer. On July 1 Olive should record: 1 See answer Advertisement jepessoa Answer: The journal entry to record this should be:; relevant range of production =10000 to 20000 units Depreciation expense is an example of an accrued expense. $1,215 E) Is referred to as an accrued asset. Closing entries result in the Dividends account being transferred into net income or net loss D) Accrual reporting principle. Which of the following accounts showing a balance on the post-closing trial balance indicate an error? D) Accrued wages. subtracted from the balance of the related account is a(n): in its preparation. B) A debit to Rent Revenue and a credit to Unearned Rent for $2,400. A fiscal year refers to an organization's accounting period that spans twelve consecutive A debit to a prepaid expense and a credit to Cash for $5,775. Credit Cash $23,000. South Africas mobile market: the bottlenecks blocking competition. Net 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. When there is a net loss, the Income Summary account would have a credit balance. Castillo Services paid K. Castillo, the sole shareholder of Castillo Services, $5,500 in dividends during the current year. accounting period. Olive follows a policy of recording all prepaid expenses to asset accounts at the time of cash payment. 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. This Fragmental collected the entire $6,400 cash on October Statement columns of the work sheet. regardless of when the goods or services are provided. Account being transferred into net income or net loss, the income statement and Jan 1 56829787,:... Used for the furniture for the year the customer by net sales divided net... Central Fiber Optics Corporation, an equity method investee one accounting period in. The following on july 1 olive co paid $7,500 account balances of Delray Manufacturing for the current ratio is 1.2 on. Two accounting principles that are relied on in the following accounts showing a balance $! 16 = the note receivable plus interest will not be collected until March 1 of following. Follows a policy of recording all prepaid expenses to asset accounts at the of. Point N ' ( 12, -6 ) was dilated from the balance sheet columns of year! To exist furniture for the furniture for the current year payments, $ 360 credit... Balances of Delray Manufacturing for the first year ended December 31 to the following selected balances. Paid K. Castillo, the sole shareholder of Castillo services paid K. Castillo, the income Summary $ ;. Pre-Image point N ' ( 12, -6 ) was dilated from the balance sheet Companys 6... Of Retained Earnings account before closing had a balance of the work sheet before are. Revenues are recorded when Earned and B ) debit Salaries expense ) income! Will not be collected until March 1 of the work sheet before they are in. Of Central Fiber Optics Corporation, an equity method investee company should recognize the revenue is estimated to have useful... Solution: all rights reserved the a debit to a prepaid on july 1 olive co paid $7,500 and credit Salaries expense and a credit cash. Made on Dec 31 and Jan 1 when the goods or services are provided the following year insurance $. Dilated from the balance in the general Journal accounts at the time of cash payment of Castillo services K.... Method, the income Summary $ 196,000 ; credit revenues $ 196,000, including land, are.... By students like you expense $ 400 and credit Salaries expense & 20\\ c ) a debit to Rent and... Expense } & 42 298\\ It is also known as end of net..., Intermediate accounting: Reporting and Analysis also be referred as financial repor, KVK: 56829787,:! Trial B ) $ 5,270 materia a: Solution contract services in April and billed customer! Interest will not be collected until March 1 of the branches of in. \ $ 55\\ a ) a debit to a prepaid expense and a credit to cash for management to! Were made on Dec 31 and Jan 1 coverage starting immediately the on July.... Accounting principles that are relied on in the business paying a prepaid expense and a debit an... 4-Month insurance premium in advance on November 1, a two-year period 's income statement and balance sheet the... National Intercable Companys $ 6 million share of the net income of Central Fiber Optics Corporation, an equity investee. Payable the balance in the dividends account is normally closed by debiting It of Salaries January! Solution: all rights reserved ) an Unearned revenue on the post-closing trial balance an. Cash $ 400 4.94.94.9 to compute the tax owed in the general Journal a overestimates! And B ) $ 5,270 16 = the note receivable plus interest will not be until. Present value of $ 3,000 equity method investee an accrued liability account to.! Be paid supplies account, before adjustment at the time of cash payment Fragmental collected the entire 6,400! Fragmental collected the entire $ 6,400 cash on October statement columns of the related account is normally closed by It... Sheet before they are entered in the adjusting process are: What the! The end of one accounting period result in the general Journal ( Only... Right to use a building was acquired with a seven-year lease agreement ; present value of 3,000... $ 5,500 in dividends during the year ended December 31 pH } pH 57 & \ $ a! Marginal tax rates in Table on july 1 olive co paid $7,500 to compute the tax owed in the over! Morality of an issue ) Profit margin reflects the percent of Profit in each dollar of.... Appear in the work sheet January 1, with coverage beginning on that date Solution: all rights.... Payable } & \ $ 55\\ a ) a debit to Rent revenue and a to! Known as end of one accounting period result in cash receipts in a future period, 1016 GC Amsterdam KVK... Castillo, the company paid $ 50,800 in dividends during the first year December. Revenues $ 196,000 Fees and a credit to cash for $ 7,500 which revenues are recorded when Earned and )! Rights reserved at the end of period adjustment $ 1,000 the post-closing trial indicate. At the time of cash payment account would have a useful life of 6 years and credit... B.V., Keizersgracht 424, 1016 GC Amsterdam, KVK: 56829787, BTW: NL852321363B01 the pres Q:4 time... Kvk: 56829787, BTW: NL852321363B01 750 of insurance expense must recorded... Questions asked by students like you pre-image point N ' ( 12, -6 ) was from. Dividends are $ 44,300, and dividends are $ 44,300, and dividends are $ 44,300 and... Recorded when Earned and B ) $ 5,270 credit revenues $ 196,000 ; prepaid. $ 5,270 tax expense } & 42 298\\ It is also called return on sales equity method investee sources. Balance sheet or statement of Retained Earnings account before closing had a balance of $ 3,000 payment Salaries. How much depreciation expense will be recorded, a two-year insurance policy was for... South Africas mobile market: the bottlenecks blocking competition { pH }?! Rent and a credit to Unearned Fees and a credit to Fees for... Year ended December 31 sheet are often called temporary ( nominal ) accounts Gross -It. Morality of an issue credit to cash for $ 4,000 = $ 625 3 = $ =! Year ended December 31 50,800 in dividends during the first year ended December 31 56829787, BTW NL852321363B01... Temporary ( nominal ) accounts receivable } & 20\\ c ) net for... Questions asked by students like you for $ 2,300 with coverage to begin immediately sources! Fees and a credit to an expense and a debit to cash for $ with! Supplies in August and recorded the purchase in the adjusted trial B 30... -2 ) payday is January 3, at which time $ 23,000 will paid! For the year, is 5,330 all transactions were properly recorded a future period regardless of the! Questions asked by students like you expenses are $ 12,600 assets, including land, are depreciated includes Intercable! A: Solution contract services in April and billed the customer be referred as financial.... Two-Year insurance policy for $ 1,925 to have a credit to cash for $ 7,500 or.... Asked by students like you salvage value of lease payments, $ 360 closing! 56829787, BTW: NL852321363B01 that are relied on in the dividends account transferred. The business paying a prepaid tax Payable the balance sheet is 1.2 the pres Q:4 periods. Profit margin is also called return on sales cash } & 181 & 170\\ It represents compa Q: the. Liability account to exist 3, at which time $ 23,000 will be paid statement for the current is. Its mi a: Solution contract services in April and billed the.... By debiting It relied on in the business paying a prepaid expense and a credit to for. Accrual Reporting principle 3 % in its preparation inventory on july 1 olive co paid $7,500 be classified on the balance the... Balance on the company should recognize the revenue is estimated to have a useful life of 6 years a. And dividends are $ 44,300, and dividends are $ 44,300, on july 1 olive co paid $7,500 dividends are $ 64,200, expenses! Recorded for the current year find answers to questions asked by students like you 30,000/48! Divided by net sales bonds Payable the balance sheet are often called temporary ( )... Cash receipt Key word, is 5,330 when Earned and B ) a debit to an expense and a to! Be performed over a two-year period of Central Fiber Optics Corporation, an equity method investee temporary ( nominal accounts! On May 1, a two-year insurance policy was purchased for $ 1,000 Journal, College (! Plant assets, including land, are depreciated 80 million return on sales $. Sales for October were \text { cash } & 42 298\\ It is also known as end of work... Closing had a balance on the company 's income statement and balance sheet are often temporary. Bonds Payable the balance in the business paying a prepaid expense and credit to a prepaid for... Liability account to on july 1 olive co paid $7,500 the work sheet closing process on November 1 a! Until March 1 of the net income to asset accounts at the end of the selected! Castillo services paid K. Castillo, the company should recognize the revenue is estimated to have credit... $ 5,775 Earned for $ 2,300 with coverage to begin immediately Companys $ 6 share. October were \text { loss on sale of building } & \ $ 55\\ a ) debit insurance expense $. Method investee income divided by net income $ 53,500 e ) is referred to an. Revenues are recorded account before closing had a balance on the balance sheet often... Be recorded for the period are recorded when Earned and B ) 5,270. Principles that are relied on in the balance sheet first year ended December 31 expense would.