The insurance total of R9 000 on 29 February 2020, the end of the financial year, included a premium of R3 000 that was paid for the period 01 December 2019 to 30 November 2020. Which of the following represents the insurance expense for the year ended 29 February 2020? O A. R2 250 O B. R9 000 OC. R6 000 O D. R6 750
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- Financial Statement Violations of U.S. GAAP The following are the financial statements issued by Allen Corporation for its fiscal year ended October 31, 2019: Notes to Financial Statements: 1. Long-Term Lease. Under the terms of a 5-year, noncancelable lease for a building, Allen is obligated to make annual rental payments of 40,000 in each of the next 4 fiscal years. 2. Pension Plan. Substai1tially all employees are covered by Allens defined benefit pension plan. Pension expense is equal to the total of pension benefits accrued and paid to retired employees during the year. Because it is a defined benefit plan that is paid every year, no pension liability exists. 3. Patent. The patent had an estimated remaining life of 10 years at the time of purchase. Allens patent was purchased from Apex Corporation on January 1, 2019, for 250,000. 4. Deferred Income Tax Payable. The entire balai1ce in the Deferred Income Tax Payable account arose from tax-exempt municipal bonds that were held during the previous fiscal year, giving rise to a difference between taxable income and reported net earnings for the fiscal year ended October 31, 2019. The deferred liability amount was calculated on the basis of past tax rates. 5. Warrants. On January 1, 2018, one common stock warrant was issued to shareholders of record for each common share owned. An additional share of common stock is to be issued upon exercise of 10 stock warrants and receipt of an amount equal to par value. For the 6 months ended October 31, 2019, the average market value for Allens common stock was 5 per share and no warrants had yet been exercised. 6. Contingent Liability. On October 31, 2019, Allen was contingently liable for product warranties in an amount estimated to aggregate 75,000. Required: Next Level Review the preceding financial state1nents and related notes. Identify any inclusions or exclusions from them that would be in violation of GAAP, and indicate corrective action to be taken. Do not comment as to format or style. Respond in the following order: 1. Balance sheet 2. Notes 3. Income statement 4. Statement of retained earnings 5. GeneralDallas 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 ........ 60Rons Diner received the following bills for December 2019 utilities: • Electricity: $625 on December 29, 2019 • Telephone: $150 on January 5, 2020 Both bills were paid on January 10, 2020. On the December 31, 2019, balance sheet, Rons Diner will report accrued expenses of: a. $0 b. $150. c. $625. d. $775.
- On October 1, 2019, Ball Company issued 9% bonds dated October 1, 2019, with a face amount of 200,000. The bonds mature in 10 years. Interest is paid semiannually on March 31 and September 30. The proceeds from the bond issuance were 205,294.53 to yield 8.6%. Ball Company has a December 31 fiscal year-end and does not use reversing entries. Required: 1. Prepare journal entries to record the issuance of the bonds and the interest payments for 2019 and 2020 using the effective interest method. 2. Prepare journal entries to record the issuance of the bonds and the interest payments for 2019 and 2020 using the straight-line method.Tenth National Bank has a 200,000, 12% note receivable from Priday Company that is due on December 31, 2022. On December 31, 2019, Priday misses the interest payment due on that date. The bank expects that the company will also miss the next payment, but will pay the principal on the maturity date. On December 31, 2020, Priday misses the interest payment due on that date. On December 31, 2021, Priday pays half the interest payment due on that date and is not expected to pay the other half. In early January 2022, the bank and the company agree to a loan restructuring because of the financial condition of the company. The bank forgives the unpaid interest, extends the loan to December 31, 2024, and reduces the interest rate to 6%. The market rate for the loan is estimated to be 10% at this time. Required: 1. Compute the value of the impaired loan on December 31, 2019. 2. Prepare the journal entries from 2019 to 2024 for the bank to record the above events. Assume that Priday makes all required payments under the modified agreement.Hurd 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. $3,600
- The insurance total of R9000 on 29 February 2020, the end of the financial year, included a premium of R3000 that was paid for the period 01 December 2019 to 30 November 2020. Which of the following represents the insurance expense for the year ended 29 February 2020? A) R2 250 B) R9 000 C) R6 000 D) R6 750Under ABC Company’s accounting system, all insurance premiums paidare charged to insurance expense. Information for the year endedDECEMBER 31, 2020 is as follows: prepaid insurance, beg. is P150,000;renewal of insurance charged to expense during the year applicable forthe period April 1, 2020 - 2021 is P500,000. What is the insurance expenseusing the accrual basis accounting? A. P275,000B. P500,000C. P525,000D. P650,000E. answer not givenThe premium on a three-year insurance policy expiring on December 31, 2022 was paid in total on January 1, 2020. The original payment was initially debited to a prepaid asset account. The appropriate adjusting entry had been recorded on December 31, 2020. The balance in prepaid asset account on December 31, 2020 should be a. The same as it would have been if the original payment had been debited initially to an expense account. b. Zero c. Higher that if the original payment had been debited initially to an expense account. d. The same as the original payment.
- An examination of Insurance Policies of Standard Company is presented below: Policy Date of Purchase Life of Policy Cost September 1, 2019 4years P25,920 May 1, 2020 2years 18,960 July 31, 2020 1year 9,720 Prepaid Insurance was debited for the cost of each policy at the time of its purchase. Expired insurance was correctly recorded at the end of 2019. What is the balance of Prepaid Insurance at the end of 2020?The premium on a four-year insurance policy expiring on december 31, 2034 was paid in total on January 1, 2021. If the original payment was recorded as a prepaid asset, the balance in prepaid asset on December 31, 2022 would be a. lower than the balance on december 31, 2021b. lower than the balance on december 31, 2023c. the same as the balance on december 31, 2023d. the same as the original payment DISCUSS1. An insurance policy, good for one year, was purchased on April 1, 2020 and has a valueof $25,000.a) Write the journal entry to record the original purchase of the insurance policy onApril 1.b) Write the adjusting journal entry required on April 31, 2020 to reflect the use of onemonth of the insurance service. What, concerning Insurance, would appear on theBalance Sheet? What would appear on the Income Statement?c) Write the adjusting journal entry required on May 31, 2020 to reflect the use of onemore month of the insurance service. What, concerning Insurance, would appear onthe Balance Sheet? What would appear on the Income Statement?
