Answer:
B) An understatement of assets and understatement of revenues
Explanation:
Accrued revenues are revenues that are earned but are still collectible.
That means the adjusting entry should have been:
<em>Debit</em> to Accounts Receivable <em>and</em>
<em>Credit</em> to Revenue
If the company failed to prepare this adjusting entry then the Accounts Receivable will not be recorded and thus will understate the Asset since Accounts Receivable is an Asset.
The same goes for revenue, if not recorded, will understate Revenue.
Answer:
debit the van account with $63,000
Explanation:
The Lindy's cost of the van is analyzed below:
Delivery van invoice price $60,000
discount ($4,000)
sales tax $5,000
cost of logo and advertising $2,000
annual insurance cost $0
Cost of the van $63,000
The sales tax is included as it cannot be reclaimed from the relevant tax authority.
Cost of logo and advertising even though looks like a revenue expense that should not be capitalized,but in actual terms is a cost incurred to bring asset to current position of being able to be recognized as belonging to Lindy's Flowers.
Answer: $74,102
Explanation:
FICA Tax Payable by Employer = 1.45% × $185,000 + 7.65% × ($1,020,000 - $185000)
= $2,682.5 + $63,877.5
= $66,560
State unemployment tax = 1% × ($1,020,000 - $601,000)
= $4,190
Federal unemployment tax = 0.8% × ($1,020,000 - $601,000)
= $3,352
Payroll tax expense = FICA Tax Payable by Employer + state unemployment tax + federal unemployment tax
= $66,560 + $4,190 + $3,352
= $74,102
The original price would be 400$ :)
