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kykrilka [37]
3 years ago
13

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       <u>($11,000)</u>

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           <u>($1,000)</u>

Net cash flow from operating activities $6,000

Cash flows from investing activities:           $0

Cash flows form financing activities:     <u>      $0  </u>

Net increase in cash                               $6,000

Beginning cash balance                        <u>        $0 </u>

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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On January 1, 2020, Tamarisk Corporation issued $700,000 of 9% bonds, due in 8 years. The bonds were issued for $740,784, and pa
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Answer:

Cash   740,783 debit

  Bonds payable    700,000 credit

  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                <u>     700,000    </u>

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

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Which resource management activity identifies and verifies that personnel?
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Resource management effectively develops and uses the resources of the organization. Credentialing recognizes and confirms the personnel.

<h3>What is credentialing?</h3>

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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.

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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:

The amount is same $6,500

4 0
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:-

Beginning Total Assets            $570,000

Ending total assets                   $770,000

Average Total Assets in use    $670,000

($570,000 + $770,000) ÷ 2

Cash return on Asset                    30%

Cash Flow from operating activities  

Average Assets × 25%               $201,000

($670,000 × 25%)

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

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