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4 years ago

Journalizing and posting an adjusting entry for accrued salaries expense

Business

1 answer:

padilas [110]4 years ago

5 0

Answer:

1. Debit Salaries expense $7,500

Credit Accrued Salaries $7,500

2. Balance in Accrued salaries is $7,500

Balance in Salaries expense is $627,500

3. Debit Salaries expense $5,000

Debit Accrued Salaries $7,500

Credit Cash $12,500

Being entries to recognize the payment of salaries

Explanation:

When an expense is incurred but yet to be paid, it is recognized with a corresponding entry posted into an accrued expense account (this shows the entity has a liability).

If the weekly payroll expense is $12,500 then the daily rate is

= $12,500/5 (for 5 work day week)

= $2,500

If December 31 falls on a Wednesday, it means that an expense (payroll) has been incurred for 3 days. This expense amounts to

= 3 * $2,500

= $7,500

This will be recognized as a debit to Salaries expense and a credit to accrued expense.

The balance in Salaries expense will be

= $620,000 + $7,500

= $627,500

The remaining expense that will be further incurred at the end of the week

= $12,500 - $7,500

= $5,000

When payment is made, the liability is cleared

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Crane Corporation had income from operations of $6,433,500. In addition, it suffered an unusual and infrequent pretax loss of $7

OverLord2011 [107]

Answer:

Kindly check explanation

Explanation:

Given the following :

Income from operations before income tax and extraordinary item = $6,433,500

Income tax expense = (0.3 × 6,433,500) = $1,930,050

Income before extraordinary item ($6,433,500 - $1,930,050 = $4,503,450

Extraordinary event - loss from eruption = $778,800

Less:Applicable income tax : (1 - 0.3) × 778,000) = $544,600

Less : Interest revenue = $18,630

Less : write down on building = $56,090

Net income = $4,503,450 - (544,600 + 18,630 + 56,090) = $3,884,130

Income before extraordinary item = $4,503,450 / 4,958,200 = 0.9082832 = 0.91

Extraordinary loss = 544600 / 4,958,200 = 0.1098382 = 0.11

Net income = 3,884,130 / 4,958,200 = 0.7833750 = 0.78

3 0

4 years ago

Quality Cars, an independent used-car dealership, utilizes long-term consumer credit in its business. Typically, consumers are a

slavikrds [6]

Answer: The correct answer is "installment accounts".

Explanation: The quality cars business model implies that customers can pay a reduced percentage of the cash price, and for the remaining balance a financing over 48 months, charging a monthly interest for that balance. Thus Quality Cars is employing installment accounts in its business.

7 0

3 years ago

Why do you earn more money using compound interest than you would using simple interest?

PilotLPTM [1.2K]

Interest is calculated as a percentage of the principal. With compound interest, the interest earned is added back into the principle so during the next period you start earning interest on the new, higher amount. Every time the interest compounds, it gets added into the principal and you earn more and more interest.

Example:

10% simple interest on $100:

(.1 * 100) +100 = 10 + 100 = $110

But if you do 10% interest compounding monthly for 3 months you have:

Month 1: (.1 * 100) +100 = 10 + 100 = $110

Month 2: (.1*110) +110 = $121

Month 3: (.1*121) + 121 = $133.10

Even with this simple example you can see how much more money is earned when your interest is compounded and added back into the principal.

8 0

4 years ago

Following are transactions of Gotebo Tanners, Inc., a new company, during the month of January: Issued 10,000 shares of common s

mr Goodwill [35]

Answer:

Transaction #6 decreases Gotebo's total assets.

Explanation:

Let's assess each transaction:

1. Issued 10,000 shares of common stock for $15,000 cash: this transaction increases cash (Asset) and owners' equity.

2. Purchased land for $12,000, signing a note payable for the full amount: This transaction increases land, which is an asset account and increases note payable, which is a liability account.

3. Purchased office equipment for $1,200 cash: This transaction increases equipment (Asset) and decreases cash (Asset). Therefore, no effect on the total assets.

4. Received cash of $14,000 for services provided to customers during the month: This transaction increases the cash (Asset) and increases owners' equity (Revenue side).

5. Purchased $300 of office supplies on account: It increases supplies (Asset) and accounts payable (Liability).

6. Paid employees $10,000 for their first month's salaries: This transaction decreases cash (Asset) and increases expenses, which decreases owners' equity.

Therefore, only transaction #6 decreased Gotebo's total assets by $10,000.

6 0

3 years ago

Consider a project where the initial cash flow is negative and where all subsequent cash flows are positive.

Licemer1 [7]

Answer:

b. NPV < 0

Explanation:

The internal rate of return is the discount rate that equates the after tax cash flows from an investment to the amount invested.

The decision rule is invest if IRR > required rate of return and don't invest if IRR < required rate of return.

The net present value is the present value of after tax cash flows from an investment less the amount invested.

The decision rule is invest if NPV > 0 and don't invest otherwise.

The payback period measures how long it takes to recover the amount invested in a project from its cumulative cash flows.

There is no set acceptable pay back period. It is usually set at the discretion of firms.

The profitability index is the present value of a projects cash flows divided by the cost of investment.

The decision rule is invest if PI > 1 and don't if its otherwise.

For a project where the initial cash flow is negative and where all subsequent cash flows are positive, the NPV and IRR would agree.

From the question the IRR is less than the required rate of return which means the project shouldn't be embarked on. When the NPV is calculated, the same conclusion should be reached. So, the npv should be less than zero.

I hope my answer helps you

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3 years ago