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For a recent period, the balance sheet for Costco Wholesale Corporation reported accrued expenses of $2,890 million. For the same period, Costco reported income before income taxes of $2,767 million. Assume that the adjusting entry for $2,890 million of accrued expenses was not recorded at the end of the current period. What would have been the income (loss) before income taxes?
Financial Accounting
Solutions
Financial Accounting
For a recent period, the balance sheet for Costco Wholesale Corporation reported accrued expenses of $2,890 million. For the same period, Costco reported income before income taxes of $2,767 million. Assume that the adjusting entry for $2,890 million of accrued expenses was not recorded at the end of the current period. What would have been the income (loss) before income taxes?
Calculate the net income before income taxes of the Company C, if the adjusting entry for accrued expenses is not recorded.
Explanation of Solution
Adjusting entries
Adjusting entries are those entries which are made at the end of the accounting period, to record the revenues in the period of which they have been earned and to record the expenses in the period of which have been incurred, as well as to update all the balances of assets and liabilities accounts on the balance sheet, and to ascertain accurate amount of net income (loss) on the income statement to maintain the records according to the accrual basis principle.
Accrued Expenses
Accrued expenses are the expenses which are incurred but not yet paid in a particular accounting period. They are payables for the business. Business treats accrued expense as a liability.
Calculate the net income before tax, if the adjusting entry for accrued expense is not recorded:
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