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(a)
Adjusting entries refers to the entries that are made at the end of an accounting period in accordance with revenue recognition principle, and expenses recognition principle. All adjusting entries affect at least one income statement account (revenue or expense), and one balance sheet account (asset or liability).
Prepaid expenses:
The prepaid expenses are those expenses which are paid in advance, before they are incurred. These are treated as asset for the business.
To determine: The rights acquired at November 1 represents an asset or an expense.
(b)
To justify: The reason for debiting the rent expense at the time of payment.
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Chapter 3 Solutions
Working Papers, Chapters 1-17 for Warren/Reeve/Duchac's Accounting, 26th and Financial Accounting, 14th
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- On December 31, 2021, what amount should be reported as unearned revenue?arrow_forwardE. What should have been the ENTRY to record the receipt of note from Company A on May 1, 2020? F. What should be the carrying value of the note received from Company A on May 1, 2020 G. How much is the gain or loss on sale of the land, if any?arrow_forward(c) Prepare the necessary journal entry to record the capitalization of interest and the recognition of interest expense at December 31.arrow_forward
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- Intermediate Accounting: Reporting And AnalysisAccountingISBN:9781337788281Author:James M. Wahlen, Jefferson P. Jones, Donald PagachPublisher:Cengage Learning
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