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Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
ISBN: 9781337788281

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BuyFindarrow_forward

Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
ISBN: 9781337788281
Textbook Problem
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Reversing Entries On December 31, 2019, Kellams Company made the following adjusting entries for its annual accounting period:

Chapter 3, Problem 13E, Reversing Entries On December 31, 2019, Kellams Company made the following adjusting entries for its

Required:

Prepare whatever reversing entries are appropriate.

To determine

Prepare necessary reversing entry of Company K.

Explanation

Reversing entries: Reversing entries are made at the beginning of the accounting period when the accountant needs to cancel any entry made in the previous accounting period. It is done in order to eliminate any errors that might have occurred in the calculation of the revenue or expenses and henceforth increase the efficiency of the financial statements for an improved decision making.

Prepare necessary reversing entry of Company K as follows:

Reversing entry for interest revenue:

DateAccount Title and Explanation

Debit

($)

Credit

($)

January 1, 2020Interest revenue500 
     Interest receivable 500
 (To record the reversing entry for the interest revenue)  

Table (1)

  • Interest revenue is component of shareholders’ equity, and it decreases the value of shareholders equity...

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