Income determination
• LO2–4
If none of the adjusting
BE 2–7
• LO2–5
Prepare the necessary adjusting entries at its year-end of December 31, 2018, for the Jamesway Corporation for each of the following situations. No adjusting entries were recorded during the year.
1. On December 20, 2018, Jamesway received a $4,000 payment from a customer for services to be rendered early in 2019. Service revenue was credited.
2. On December 1, 2018, the company paid a local radio station $2,000 for 40 radio ads that were to be aired, 20 per month, throughout December and January. Prepaid advertising was debited.
3. Employee salaries for the month of December totaling $16,000 will be paid on January 7, 2019.
4. On August 31, 2018, Jamesway borrowed $60,000 from a local bank. A note was signed with principal and 8% interest to be paid on August 31, 2019.
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Chapter 2 Solutions
Intermediate Accounting
- Intermediate Accounting ll ch 16 9. In 2024, DFS Medical Supply collected rent revenue for 2025 tenant occupancy. For income tax reporting, the rent is taxed when collected. For financial statement reporting, the rent is recorded as deferred revenue and then recognized as revenue in the period tenants occupy the rental property. The deferred portion of the rent collected in 2024 amounted to $360,000 at December 31, 2024. DFS had no temporary differences at the beginning of the year. Required: Assuming an income tax rate of 25% and 2024 income tax payable of $910,000, prepare the journal entry to record income taxes for 2024. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field.arrow_forwardSerial Problem Business Solutions LO P1, A1 Selected ledger account balances for Business Solutions follow. For Three MonthsEnded December 31, 2019 For Three MonthsEnded March 31, 2020 Office equipment $ 8,100 $ 8,100 Accumulated depreciation—Office equipment 405 810 Computer equipment 20,000 20,000 Accumulated depreciation—Computer equipment 1,250 2,500 Total revenue 31,334 44,900 Total assets 83,360 121,668 Required:1. Assume that Business Solutions does not acquire additional office equipment or computer equipment in 2020. Compute amounts for the year ended December 31, 2020, for Depreciation expense—Office equipment and for Depreciation expense—Computer equipment (assume use of the straight-line method).2. Given the assumptions in part 1, what is the book value of both the office equipment and the computer equipment as of December 31, 2020?3. Compute the three-month total asset turnover for Business…arrow_forwardWorking capital and current ratio Current assets and current liabilities for Brimstone Company follow: 2019 2018 Current assets 1,586,250 1,210,000 Current liabilities 705,000 550,000 a.Determine the working capital and current ratio for 2019 and 2018. b.Does the change in the current ratio from 2018 to 2019 indicate a favorable or an unfavorable change?arrow_forward
- Providing for doubtful accounts At the end of the current year, the accounts receivable account has a debit balance of 2,950,000 and sales for the year total 27,400,000. Determine the amount of the adjusting entry to provide for doubtful accounts under each of the following assumptions: A. The allowance account before adjustment has a debit balance of 9,500. Bad debt expense is estimated at of 1% of sales. B. The allowance account before adjustment has a debit balance of 9,500. An aging of the accounts in the customer ledger indicates estimated doubtful accounts of 188,000. C. The allowance account before adjustment has a credit balance of 31,400. Bad debt expense is estimated at 1/2 of 1% of sales. D. The allowance account before adjustment has a credit balance of 31,400. An aging of the accounts in the customer ledger indicates estimated doubtful accounts of 175,000.arrow_forwardWorking capital and current ratio Current assets and current liabilities for HQ Properties Company follow: 2019 2018 Current assets 2,175,000 1,900,000 Current liabilities 1,500,000 1,250,000 a.Determine the working capital and current ratio for 2019 and 2018. b.Does the change in the current ratio from 2018 to 2019 indicate a favorable or an unfavorable change?arrow_forwardQuestion 4 a)For each of the following material after reporting period events of Andrew Ltd state whether adjustment or disclosure is required in the 30 June 2022 financial statements. Give your reason(s). If adjustment is required, state the nature of the adjustment. i)28 July 2022: One of the company’s four offices was damaged by a flood. Insurance will not cover the cost of repairs, estimated at $400,000 ii)30 July 2022: a debtor owing $ 150 000 was declared insolvent. The debtor had not made any payments in the last four months and half of the debt had already been treated as doubtful debt at year end b) Segments Revenue(all external) Profit/(Loss) Assets Liabilities Mining 100000 (57000) 61000 39000 Food 13000 (7000) 31000 19000 Hotels 12000 2000 14000 7000 Travel 17000 3000 41000 20000 142000 (59000) 147000 85000 Use the materiality criterion in AASB 8 Operating Segments to determine which of…arrow_forward
- Q.3.1 Taking into account all the errors/omissions noted above, prepare the corrected Creditors Control account for the month of June 2021.arrow_forwardP4.4 (LO 2, 3, 4, 5 ) (Multiple- and Single-Step Statements, Retained Earnings Statement) The following account balances were included in the trial balance of Twain Corporation at June 30, 2020. Sales revenue $1,578,500 Depreciation expense (office furniture and equipment) $7,250 Sales discounts 31,150 Cost of goods sold 896,770 Property tax expense 7,320 Salaries and wages expense (sales) 56,260 Bad debt expense (selling) 4,850 Sales commissions 97,600 Maintenance and repairs expense (administration) 9,130 Travel expense (salespersons) 28,930 Delivery expense 21,400 Office expense 6,000 Entertainment expense 14,820 Sales returns and allowances 62,300 Telephone and Internet expense (sales) 9,030 Dividends received 38,000 Depreciation expense (sales equipment) 4,980 Interest expense 18,000 Maintenance and repairs expense (sales) 6,200 Income tax expense 102,000…arrow_forwardQ 39 Question 39 Arthur Company is a construction company. In January, the company purchased an equity investment for $73,500. At year end, the investment had a fair market value of $65,000, Arthur company’s adjusting entry should include a … Select one: a. Credit (decrease) to Equity Investments – Balance Sheet account. b. Credit to Unrealized Loss Income – Income Statement c. Debit to Loss on Sale of Equity Investment – Income Statement d. Debit (increase) to Equity Investments – Balance Sheetarrow_forward
- Question 2.4 Calculate the cost (as a percentage) to Satner Limited of not accepting discounts from creditors in settlement of accounts. Notes: Inventories as at 31 December 2020 amounted to R185000 All purchases and sales are on credit Credit terms to Debtors are 30 days Credit terms of 3/10 net 90 days are granted by creditors Dividends for the year amounted to R139 503arrow_forwardPart B ( 7 marks) (Note this question IS related to Part A) SuperElectronics Limited Adjusted Trial Balance As at 30 June 2020 Debit Credit $ $ Cash 87,000 Accounts receivable 89,000 Allowance for Doubtful debts 4,300 Supplies 4,000 Plant & Equipment 218,000 Accumulated depreciation 64,000 Accounts Payable 38,000 Wages Payable 11,500 Loan payable ( not due until 2025) 50,000 Share capital 100,000 Retained Earnings 105,250 Dividends paid 10,000 Sales Revenue 368,000 Interest revenue 1,120 Doubtful debts expense 2,460 Depreciation expense 19,680 Rent & utilities expense 19,230 Wages and Salaries expense 281,000 Advertising expense 9,300 Interest expense 2,500 Totals 742,170 742,170 Required Prepare the Statement of Financial Position ( Balance…arrow_forward
- AccountingAccountingISBN:9781337272094Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.Publisher:Cengage Learning,Corporate Financial AccountingAccountingISBN:9781305653535Author:Carl Warren, James M. Reeve, Jonathan DuchacPublisher:Cengage Learning