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Swerte Co. received P45,600 on May 1, 2020 for one year’s rent in
advance and recorded the transaction with a credit to real account. The
December 31,2020
A. Debit - Unearned rent Credit - Rent Revenue for P30,400
B. Debit -Unearned rent Credit - Rent Revenue for P15,200
C. Debit -Rent Revenue Credit - Unearned rent for P30,400
D. Debit -Rent Revenue Credit - Unearned rent for P15,200
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- The balance in the unearned rent account for Jones Co. as of December 31 is $1 ,20(). If Jones Co. failed to record the adjusting entry for $600 of rent earned during December, the effect on the balance sheet and income statement for December would 1w: A. Assets understated by $600; net income overstated by $600. B. Liabilities understated by $600; net income understated by $600. C. Liabilities overstated by $600; net income understated by $600. D. Liabilities overstated by $600; net income overstated by $600.In December 2019, Swanstrom Inc. receives a cash payment of $3,500 for services performed in December 2019 and a cash payment of S4,500 for services to be performed in January 2020. Swanstrom also receives the December utility bill for S600 but does not pay this bill until 2020. For 2019, under the accrual basis of accounting, Swanstrom would recognize: a. $8,000 of revenue and $600 of expense. b. $8,000 of revenue and $0 of expense. c. $3,500 of revenue and $600 of expense. d. $3,500 Of revenue and $0 of expense.Worksheet Victoria Company has the following account balances on December 31, 2019, prior to any adjustments: Additional adjustment information: (a) depreciation on buildings, 1,100; on equipment, 600; (b) bad debts expense, 240; (c) interest accumulated but not paid: on note payable, 50; on mortgage payable, 530 (this interest is due during the next accounting period); (d) insurance expired, 175; (e) salaries accrued but not paid 370; (f) rent was collected in advance and the performance obligation is now satisfied, 800; (g) office supplies cm hand at year-end, 230 (expensed when originally purchased earlier in the year); and (h) the income tax rate is 30% on current income and is payable in the first quarter of 2020. Required: 1. Transfer the account balances to a 10-column worksheet and prepare a trial balance. 2. Prepare the adjusting entries in the general journal and complete the worksheet. 3. Prepare the companys income statement, retained earnings statement, and balance sheet. 4. Prepare closing entries in the general journal.
- The balance in Ashwood Companys accounts payable account at December 31, 2019, was 1,200,000 before any necessary year-end adjustment relating to the following: Goods were in transit from a vendor to Ashwood on December 31, 2019. The invoice cost was 85,000, and the goods were shipped FOB shipping point on December 29, 2019. The goods were received on January 2, 2020. Goods shipped FOB shipping point on December 20, 2019, from a vendor to Ashwood were lost in transit. The invoice cost was 40,000. On January 5, 2020, Ashwood filed a 40,000 claim against the common carrier. Goods shipped FOB destination on December 22, 2019, from a vendor to Ashwood were received on January 6, 2020. The invoice cost was 20,000, What amount should Ashwood report as accounts payable on its December 31,2019, balance sheet? a. 1,260,000 b. 1,285,000 c. 1,325,000 d. 1,345,000Dudley Company failed to recognize the following accruals. It also recorded the prepaid expenses and unearned revenues as expenses and revenues, respectively', in the following year when paid or collected. The reported pretax income was 20,000 in 2018, 25,000 in 2019, and 23,000 in 2020. Required: 1. Compute the correct pretax income for 2018, 2019, and 2020. 2. Prepare the journal entries necessary in 2020 if the errors are discovered at the end of that year. Ignore income taxes. 3. Prepare the journal entries necessary in 2021 if the errors are discovered at the end of that year. Ignore income taxes.Each of the following independent situations relates to the recognition of revenue: a. On June 2, 2019, a customer books travel on an airline, paying 500 for a round-trip ticket that departs July 15, 2019, and returns July 20, 2019. In addition, once the round-trip ticket is used, the airline credits the passengers frequent-flier account for 500 miles. The airline determines that each frequent-flier point has a value of 0.01. b. On May 1, 2019, a retailer enters into a contract with a construction company. The construction company will build a new warehouse for the retailer at a price of 2 million. The retailer will make four equal payments to the construction company over the 1-year construction period, starting on May 1, 2019, and then every 4 months. The retailer can cancel construction at any time and will own any construction to date; however, it must pay the construction company for work done up to the cancellation date. The building is completed on April 30,2019. c. Morning Donut agrees to supply donuts and coffee on a daily basis to a local business. The contract starts on January 1, 2019, and runs for 1 year. Morning Donut charges 400 per week for the donuts and coffee. d. The Raleigh Knights sell four season tickets to a customer. The Knights play 10 regular season games, and the cost of one season ticket is 250. Required: For each situation, use the 5-step process to determine when revenue can be recognized. Determine (1) if a contract exists, (2) the performance obligations in the contract, (3) the transaction price in the contract, (4) how the transaction price is allocated to the performance obligations, and (5) when revenue is recognized.
- Dallas Company loaned to Ewing Company on December 1, 2019. Ewing will pay Dallas $720 of interest ($60 per month) on November 30, 2020. Dallass adjusting entry at December 31, 2019, is: a. Interest Expense ........... 60 c. Interest Receivable ....... 60 Cash ......................... 60 Interest Income ........ 60 b. Cash ............................ 60 d. No adjusting entry is required. Interest Income ........ 60Hurd Inc. prepays rent every 3 months on March 1, June 1, September 1, and December 1. Rent for the 3 months totals S3,600. On December 31, 2019, Hurd will report Prepaid Rent of: a. $0 b. $1,200 c. $2,400 d. $3,600At the beginning of 2020, Tanham Company discovered the following errors made in the preceding 2 years: Reported net income was 27,000 in 2018 and 35,000 in 2019. The allowance for doubtful accounts had a zero balance at the beginning of 2018. No accounts were written off during 2018 or 2019. Ignore income taxes. Required: 1. What is the correct net income for 2018 and 2019? 2. Prepare the adjusting journal entry in 2020 to correct the errors.
- The following selected accounts and their current balances appear in the ledger of Clairemont Co. for the fiscal year ended May 31, 2019: Instructions 1. Prepare a multiple-step income statement. 2. Prepare a statement of owners equity. 3. Prepare a balance sheet, assuming that the current portion of the note payable is 50,000. 4. Briefly explain how multiple-step and single-step income statements differ.Garcia Company rents out a portion of its building to Jerry Company for 1,000 per month. On August 1, Jerry paid Garcia 12,000 for 1 year of rent in advance. Prepare journal entries for Garcia to record the collection ofrent and the related year-end adjusting entry on December 31.Unearned Revenue Jennifers Landscaping Services signed a $400-per-month contract on November 1, 2019, to provide plant watering services for Lola Inc.s office buildings. Jennifers received 4 months' service fees in advance on signing the contract. Required: 1. Prepare Jennifers journal entry to record the cash receipt for the first 4 months. 2. Prepare Jennifers adjusting entry at December 31, 2019. 3. CONCEPTUAL CONNECTION How would the advance payment (account(s) and amounts(s)] be reported in Jennifers December 31, 2019, balance sheet? How would the advance payment [account(s) and amount(s)] be reported in Lolas December 31, 2019, balance sheet?
