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sergey [27]
3 years ago
14

On October 1, Company B records 1 year of prepaid rent in an income statement account then adjusts for the unexpired prepaid ren

t at the end of the period. What would be true for Company B's financial statements at December 31 year-end?
Business
1 answer:
trasher [3.6K]3 years ago
6 0

Answer:

The first journal entry was not the most appropriate, but since the mistake was correctly adjusted at the end of the year, both assets and expenses will be the same whether they did it correctly the first time or they had to adjust a mistake at the end of the year.

E.g. something like this happened

October 1, rent expense for 1 year

Dr Rent expense 12,000

    Cr Cash 12,000

December 31, adjustment to rent expense

Dr Prepaid rent 10,000

    Cr Rent expense 10,000

they should have recorded it as:

October 1, prepaid rent for 1 year

Dr Prepaid rent 12,000

    Cr Cash 12,000

December 31, adjustment to rent expense

Dr Rent expense 2,000

    Cr Prepaid rent 2,000

Whichever way you recorded the transactions, the balances a the end of the year would be:

prepaid rent (asset) $10,000

rent expense (expense) $2,000

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4 0
3 years ago
Sierra Company incurs the following costs to produce and sell a single product.Variable costs per unit:Direct materials $ 11Dire
ZanzabumX [31]

Answer:

Instructions are listed below

Explanation:

Giving the following information:

Variable costs per unit:

Direct materials $ 11

Direct labor $ 6

Variable manufacturing overhead $ 3

Variable selling and administrative expenses $ 6

Fixed costs per year:

Fixed manufacturing overhead $ 58,500

Fixed selling and administrative expenses $ 300,000

During the last year, 29,250 units were produced and 25,500 units were sold.

The Finished Goods inventory account at the end of the year shows a balance of $75,000 for the 3,750 unsold units.

1) Variable costing;

Unitary cost:

Direct materials $ 11

Direct labor $ 6

Variable manufacturing overhead $ 3

Total unitary cost= $20

Cost of unsold units= 20*3750= $75,000

2) Under absorbing costing:

Unitary cost:

Direct materials $ 11

Direct labor $ 6

Variable manufacturing overhead $ 3

Fixed manufacturing overhead= 58500/29250= 2

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5 0
2 years ago
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6 0
3 years ago
Read 2 more answers
Kingbird, Inc. has the following information available for accruals for the year ended December 31, 2019. The company adjusts it
Anton [14]

Answer:

a-Dec-31. Dr Utility expense   485

                    Cr   Utility bills payable  485

b-Jan-11.  Dr Utility bills payable  485

                        Cr Cash                   485

c-Dec-31. Dr Salary expense  3990

                Cr  Salary payable                3990

d-Dec-31. Dr bank 51600

                 Cr  Loan payable   51600

e-Dec-31 Dr Interest expense  215

                    Cr interest payable     215

f-Dec-31 Dr Account receivable  340

                  Cr   Service revenue  account    340

g-Dec-31. Dr Cash  6840

                 Cr Advance Rent    6840

Explanation:

a-Utility expense incurred for the m/o Dec will be paid in Jan.

c- Salaries of 3990 will be paid on Jan of 4 days.

e-Interest expense for the m/o Dec will be (51600*5%=2580/12=215.

f-The service fee is receivable which will be paid on Jan.

g- Advance rent is received from client.

7 0
3 years ago
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