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3 years ago

Prepaid items on financial statements

Business

1 answer:

alekssr [168]3 years ago

7 0

Answer:

a. Record the events under an accounting equation (I divided the accounting equation in 2)

assets = liabilities + equity

cash prepaid rent

1) 18,000 0 0 18,000

2) -12,000 12,000

3) 0 -11,000 0 -11,000

revenue - expenses = net income cash flow type

1) 18,000 0 18,000 18,000 OA

2) 0 0 0 -12,000 OA

3) 0 11,000 -11,000 0 OA

b. Prepare an income statement, balance sheet, and statement of cash flows for the 2013 accounting period.

Therapy Inc.

Income Statement

For the year ended December 31, 2013

Service revenue $18,000

Rent expense ($11,000)

Net income $7,000

Therapy Inc.

Income Statement

For the year ended December 31, 2013

Assets:

Cash $6,000

Prepaid rent $1,000

Total assets $7,000

Liabilities $0

Equity

Retained earnings $7,000

Total liabilities and equity $7,000

Therapy Inc.

Cash Flow Statement

For the year ended December 31, 2013

Cash flows from operating activities

Net income $7,000

Adjustments to net income:

Increase in prepaid rent ($1,000)

Net cash flow from operating activities $6,000

Cash flows from investing activities: $0

Cash flows form financing activities: $0

Net increase in cash $6,000

Beginning cash balance $0

Ending cash balance $6,000

c. Ignoring all other future events, what is the amount of rent expense that would be recognized in 2014?

If they continue to rent the same office, the rent expense for 2014 should be $12,000 (assuming that rent didn't change)

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EleoNora [17]

Answer:

Cash 740,783 debit

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Premium ob BP 40,783 credit

--to record issuance--

Interest expense 29,631.32 debit

premium on BP 1,868.68 debit

cash 31,500 credit

--to reocrd first interest payment--

Interest expense 29,556.57 debit

premium on BP 1,943.43 debit

interest payable 31,500 credit

--to record accrued interest at year-end on BP--

Explanation:

procceds 740,783

face value 700,000

premium on bonds payable 40,783

When comparing, the firm received more than the face value hence, there is a premium on the bonds as the coupon payment are above the market rate.

Now, the interest will be calculate as follow:

carrying value x market rate:

740,783 x 0.08/2 = 29,631.32 interest expense

cash outlay:

700,000 x 0.09/2 = 31,500

amortization on premium (difference) 1,868.68

new carrying value: 740,783 - 1,868,68 = 738,914

second payment accrual:

738,914 x 0.04 = 29,556.57

cash outlay 31500

amortization 1,943.43

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2 years ago

What speeds up the flow of investment and wages in the circular flow of the free-market system? A. Fractional reserve banking B.

Paul [167]

Answer:

Antitrust Laws

Explanation: Apex

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2 years ago

Which resource management activity identifies and verifies that personnel?

Sliva [168]

Resource management effectively develops and uses the resources of the organization. Credentialing recognizes and confirms the personnel.

<h3>What is credentialing?</h3>

Credentialing is a process that involves the documentation of the individual of the organization or the corporation so that the true and fair authentication and qualification of the person associated are ensured.

It is an essential function of the management that confirms the skills and requirements of the person that will be an asset to the organization. The qualifications of the person required will be established and can be approved.

Therefore, credentialing is used to determine and affirm.

Learn more about credentialing here:

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8 0

1 year ago

Halifax Manufacturing allows its customers to return merchandise for any reason up to 90 days after delivery and receive a credi

seropon [69]

Answer:

Explanation:

The journal entry is shown below:

(A) Sales return and allowance A/c Dr $450,000

To Accounts receivable $450,000

(being returned goods recorded)

Merchandise inventory A/c Dr $292,500 ($450,000 × 65%)

To Cost of goods sold $292,500

(Being cost of goods sold recorded)

The computation of the estimated return is shown below:

= Sale value of merchandise × return percentage - actual return

= $11,500,000 × 4% - $450,000

= $460,000 - $450,000

= $10,000

(B) Sales return and allowance A/c Dr $10,000

To Accounts receivable $10,000

(being returned goods recorded)

Merchandise inventory A/c Dr $6,500 ($10,000 × 65%)

To Cost of goods sold $6,500

(Being cost of goods sold recorded)

The computation of the year-end allowance for sales returns is shown below:

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3 years ago

The balance sheet of Innovative Products reports total assets of $570,000 and $770,000 at the beginning and end of the year, res

Makovka662 [10]

Answer:

$201,000

Explanation:

The computation of net cash flows from operating activities is shown below:-

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Ending total assets $770,000

Average Total Assets in use $670,000

($570,000 + $770,000) ÷ 2

Cash return on Asset 30%

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Average Assets × 25% $201,000

($670,000 × 25%)

Therefore the Cash Flow from operating activities is $201,000

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2 years ago