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
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.
To determine: The net income before income taxes of the Company C, if the adjusting entry for accrued expenses is not recorded.
Want to see the full answer?
Check out a sample textbook solutionChapter 3 Solutions
EBK FINANCIAL & MANAGERIAL ACCOUNTING
- Delta Company sells to wholesalers on terms 2/15, net 30. Delta has no cash sales but 50% of Delta's customers take advantage of the discount. Delta uses the gross method of recording sales and trade receivables. An analysis of Delta's trade accounts receivable at December 31, 2011 revealed the following: Age Amount Collectible 0- 15 days 16 - 30 days 31 - 60 days Over 60 days 100% 2,000,000 1,200,000 100,000 50,000 95% 90% 50% 3,350,000 In its December 31, 2011 statement of financial position, what amount should Delta report as allowance for sales discount?arrow_forwardProviding for doubtful accounts At the end of the current year, the accounts receivable account has a debit balance of $1,923,000 and sales for the year total $26,920,000. 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 $13,100. Bad debt expense is estimated at 1/2 of 1% of sales. b. The allowance account before adjustment has a debit balance of $13,100. An aging of the accounts in the customer ledger indicates estimated doubtful accounts of $28,100. c. The allowance account before adjustment has a credit balance of $7,300. Bad debt expense is estimated at 1/4 of 1% of sales. d. The allowance account before adjustment has a credit balance of $7,300. An aging of the accounts in the customer ledger indicates estimated doubtful accounts of $60,600. This information has been collected in the Microsoft Excel Online file. Open the spreadsheet, perform the…arrow_forwardPrior to the adjusting entry for bad debt expense, Lierman, Inc.'s balances for accounts receivable and allowances for doubtful accounts were $700,000 (debit) and $1,200 (credit), respectively. After the bad debt expense entry was posted, the net realizable value of accounts receivable was $663,000. Bad debt expense for the year was a. $37,800 b. $35,800 c. $39,200 d. $37,000arrow_forward
- At the end of the current year, using the aging of receivable method, management estimated that $15,750 of the accounts receivable balance would be uncollectible. Prior to any year-end adjustments, the Allowance for Doubtful Accounts had a debit balance of $375. What adjusting entry should the company make at the end of the current year to record its estimated bad debts expense?arrow_forwardAt the end of the current year, the accounts receivable account has a balance of $2,875,000 and sales for the year total $34,500,000. Determine the amount of the adjustment to provide for doubtful accounts under each of the following independent assumptions: a. The allowance account before adjustment has a negative balance of $(18,500). Bad debt expense is estimated at ½ of 1% of sales. The allowance account before adjustment has a negative balance of $(18,500). An aging of the accounts in the customer ledger indicates estimated doubtful accounts of $200,000.$fill in the blank 2 c. The allowance account before adjustment has a positive balance of $9,000. Bad debt expense is estimated at ¾ of 1% of sales.$fill in the blank 3 d. The allowance account before adjustment has a positive balance of $9,000. An aging of the accounts in the customer ledger indicates estimated doubtful accounts of $255,000.arrow_forwardFDN Trading reported sales of P254,000 for the year. Prior to adjustment, Allowance for Doubtful Accounts has a balance of P534. Based on an aging of accounts receivable, the firm estimated its losses from uncollectible accounts to be P7,226. In the adjusting entry to record the estimated losses for doubtful accounts, how much should be debited to Doubtful Accounts Expense?arrow_forward
- Bristax Corporation recorded $1,385,660 in credit sales for the year, and $732,410 in accounts receivable. The uncollectible percentage is 3.1% for the income statement method and 4.5% for the balance sheet method. A. Record the year-end adjusting entry for 2018 bad debt using the income statement method. B. Record the year-end adjusting entry for 2018 bad debt using the balance sheet method. C. Assume there was a previous debit balance in Allowance for Doubtful Accounts of $20,550; record the year-end entry for bad debt using the income statement method, and then the entry using the balance sheet method. D. Assume there was a previous credit balance in Allowance for Doubtful Accounts of $17,430; record the year-end entry for bad debt using the income statement method, and then the entry using the balance sheet method.arrow_forwardNoren Company uses the balance sheet aging method to account for uncollectible debt on receivables. The following is the past-due category information for outstanding receivable debt for 2019. To manage earnings more favorably, Noren Company considers changing the past-due categories as follows. A. Complete each table by filling in the blanks. B. Determine the difference between totals uncollectible. C. Complete the following 2019 comparative income statements for 2019, showing net income changes as a result of the changes to the balance sheet aging method categories. D. Describe the categories change effect on net income and accounts receivable.arrow_forwardAverage Uncollectible Account Losses and Bad Debt Expense The accountant for Porile Company prepared the following data for sales and losses from uncollectible accounts: Required: 1. Calculate the average percentage of losses from uncollectible accounts for 2015 through 2018. 2. Assume that the credit sales for 2019 are $1,260,000 and that the weighted average percentage calculated in Requirement 1 is used as an estimate of loses from uncollectible accounts for 2019 credit sales. Determine the bad debt expense for 2019 using the percentage of credit sales method. 3. CONCEPTUAL CONNECTION Do you believe this estimate of bad debt expense is reasonable? 4. CONCEPTUAL CONNECTION How would you estimate 2019 bad debt expense if losses from uncollectible accounts for 2018 were What other action would management consider?arrow_forward
- Shannon Corporation began operations on January 1, 2019. Financial statements for the years ended December 31, 2019 and 2020, contained the following errors: In addition, on December 31, 2020, fully depreciated machinery was sold for 10,800 cash, but the sale was not recorded until 2021. There were no other errors during 2019 or 2020, and no corrections have been made for any of the errors. Refer to the information for Shannon Corporation above. Ignoring income taxes, what is the total effect of the errors on the amount of working capital (current assets minus current liabilities) at December 31, 2020? a. working capital overstated by 4,200 b. working capital understated by 5,800 c. working capital understated by 6,000 d. working capital understated by 9,800arrow_forwardElegant Linens uses the balance sheet aging method to account for uncollectible debt on receivables. The following is the past-due category information for outstanding receivable debt for 2019. To manage earnings more favorably, Elegant Linens considers changing the past-due categories as follows. A. Complete each table by filling in the blanks. B. Determine the difference between total uncollectible. C. Complete the following 2019 comparative income statements for 2019, showing net income changes as a result of the changes to the balance sheet aging method categories. D. Describe the categories change effect on net income and accounts receivable.arrow_forwardA review of Anderson Corporations books indicates that the errors and omissions pertaining to the balance sheet accounts shown as follows had not been corrected during the applicable years. The net income per the books is: 2017, 10,000; 2018, 12,000; 2019, 15,000; and 2020, 20,000. No dividends were declared during these years and no adjustments were made to retained earnings. The Retained Earnings balance on December 31, 2020, is 50,000. Omissions Required: Determine the correct net income for the years 2017, 2018, 2019, and 2020, and the adjusted balance sheet accounts as of December 31, 2020. Ignore possible income tax effects.arrow_forward
- Intermediate Accounting: Reporting And AnalysisAccountingISBN:9781337788281Author:James M. Wahlen, Jefferson P. Jones, Donald PagachPublisher:Cengage LearningPrinciples of Accounting Volume 1AccountingISBN:9781947172685Author:OpenStaxPublisher:OpenStax College
- Cornerstones of Financial AccountingAccountingISBN:9781337690881Author:Jay Rich, Jeff JonesPublisher:Cengage Learning