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Financial Accounting

15th Edition
Carl Warren + 2 others
Publisher: Cengage Learning
ISBN: 9781337272124

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BuyFindarrow_forward

Financial Accounting

15th Edition
Carl Warren + 2 others
Publisher: Cengage Learning
ISBN: 9781337272124
Chapter 3, Problem 9DQ
Textbook Problem
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On November 1 of the current year, a business paid the November rent on the building that it occupies. (a) Do the rights acquired at November 1 represent an asset or an expense? (b) What is the justification for debiting Rent Expense at the time of payment?

(a)

To determine

Determine the rights acquired at November 1 represents an asset or an expense.

Explanation of Solution

Adjusting entries: 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...

(b)

To determine

Justify the reason for debiting the rent expense at the time of payment.

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Chapter 3 Solutions

Financial Accounting
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Ch. 3 - Indicate with a Yes or No whether or not each of...Ch. 3 - Indicate with a Yes or No whether or not each of...Ch. 3 - Classify the following items as (1) prepaid...Ch. 3 - Classify the following items as (1) prepaid...Ch. 3 - At the end of the current year, 17,555 of fees...Ch. 3 - At the end of the current year, 23,570 of fees...Ch. 3 - Prospect Realty Co. pays weekly salaries of 27,600...Ch. 3 - We-Sell Realty Co. pays weekly salaries of 11,800...Ch. 3 - On June 1, 2019, Herbal Co. received 18,900 for...Ch. 3 - The balance in the unearned fees account, before...Ch. 3 - The prepaid insurance account had a beginning...Ch. 3 - The supplies account had a beginning balance of...Ch. 3 - The estimated amount of depreciation on equipment...Ch. 3 - The estimated amount of depreciation on equipment...Ch. 3 - For the year ending April 30, Urology Medical...Ch. 3 - For the year ending August 31, Mammalia Medical...Ch. 3 - For each of the following errors, considered...Ch. 3 - For each of the following errors, considered...Ch. 3 - Two income statements for Hemlock Company follow:...Ch. 3 - Two income statements for Cornea Company follow:...Ch. 3 - Classify the following items as (a) accrued...Ch. 3 - The following accounts were taken from the...Ch. 3 - At the end of the current year, 59,500 of fees...Ch. 3 - The adjusting entry for accrued fees was omitted...Ch. 3 - Garcia Realty Co. pays weekly salaries of 17,250...Ch. 3 - The wages payable and wages expense accounts at...Ch. 3 - Accrued salaries owed to employees for October 30...Ch. 3 - When preparing the financial statements for the...Ch. 3 - The balance in the unearned fees account, before...Ch. 3 - At the end of January, the first month of the...Ch. 3 - The balance in the supplies account, before...Ch. 3 - The supplies and supplies expense accounts at...Ch. 3 - At August 31, the end of the first month of...Ch. 3 - The balance in the prepaid insurance account,...Ch. 3 - The prepaid insurance account had a balance of...Ch. 3 - The balance in the unearned fees account, before...Ch. 3 - A-Z Construction Company was organized on May 1 of...Ch. 3 - The estimated amount of depreciation on equipment...Ch. 3 - The balance in the equipment account is 3,150,000,...Ch. 3 - In a recent balance sheet, Microsoft Corporation...Ch. 3 - For a recent period, the balance sheet for Costco...Ch. 3 - For a recent year, the balance sheet for The...Ch. 3 - The accountant for Healthy Life Company, a medical...Ch. 3 - If the net income for the current year had been...Ch. 3 - On December 31, a business estimates depreciation...Ch. 3 - The unadjusted and adjusted trial balances for...Ch. 3 - The accountant for Evas Laundry prepared the...Ch. 3 - Amazon.com, Inc. is the largest Internet retailer...Ch. 3 - The following data are taken from recent financial...Ch. 3 - The following income statement data for ATT Inc....Ch. 3 - On December 31, the following data were...Ch. 3 - Selected account balances before adjustment for...Ch. 3 - Milbank Repairs Service, an electronics repair...Ch. 3 - Good Note Company specializes in the repair of...Ch. 3 - Pitman Company is a small editorial services...Ch. 3 - At the end of April, the first month of...Ch. 3 - On May 31, the following data were accumulated to...Ch. 3 - Selected account balances before adjustment for...Ch. 3 - Crazy Mountain Outfitters Co., an outfitter store...Ch. 3 - The Signage Company specializes in the maintenance...Ch. 3 - Reece Financial Services Co., which specializes in...Ch. 3 - At the end of August, the first month of...Ch. 3 - The unadjusted trial balance that you prepared for...Ch. 3 - Chris P. Bacon is the chief accountant for CV...Ch. 3 - Daryl Kirby opened Squid Realty Co. on January 1,...Ch. 3 - Delta Air Lines is a major passenger airline...Ch. 3 - Several years ago, your brother opened Magna...

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