Ac c rued interes t on the loan at dec ember 31

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: c iation of the firm's offic e building is bas ed on an es timated life of 25 y ears . The building was purc has ed in 2007 for $330,000. 3. Ac c rued, but unbilled, rev enue during Dec ember amounts to $64,000. 4. On Marc h 1, the firm paid $1,800 to renew a 12­month ins uranc e polic y . The entire amount was rec orded as Prepaid Ins uranc e. 5. The firm rec eiv ed $14,000 from the King Bis c uit Company in adv anc e of dev eloping a s ix ­month mark eting c ampaign. The entire amount was initially rec orded as Unearned Rev enue. At Dec ember 31, $3,500 had ac tually been earned by the firm. 6. The c ompany 's polic y is to pay its employ ees ev ery Friday . Sinc e Dec ember 31 fell on a Wednes day , there was an ac c rued liability for s alaries amounting to $2,400. a. Rec ord the nec es s ary adjus ting journal entries on Dec ember 31, 2011. (Do not round your interm ediate calculations. Round your answers to the nearest whole dollar. Om it the "$" sign in your response.) General J ournal 1. Interes t ex pens e Interes t pay able 2. Deprec iation ex pens e: Offic e building Ac c umulated deprec iation: Offic e building 3. Ac c ounts rec eiv able Mark eting rev enue earned 4. Ins uranc e ex pens e Prepaid ins uranc e 5. Unearned rev enue Mark eting rev enue earned 6. Salaries ex pens e Salaries pay able e z to.mhe c gr a w- hill.c om/hm_a c c ounting.tpx? todo= pr intvie w Debit 1,200 1,100 Credit 1,200 1,100 64,000 150 3,500 2,400 64,000 150 3,500 2,400 6/7 11/18/13 Assignme nt Pr int Vie w b. By how muc h did Sweeney & As s oc iates ' net inc ome inc reas e or dec reas e as a res ult of the adjus ting entries performed in part a? (Ignore inc ome tax es .) (Om it the "$" sign in your response.) Net inc ome inc reas e $ 62,650 rev: 10_04_2011 Explanation: a. 2. To rec ord deprec iation on offic e building ($330,000 / 25 y ears ) × 1 / 12 = $1,100). 4. To rec ord ins uranc e ex pens e ($1,800 / 12 months = $150). b. Net inc ome $62,650 Inc reas e ($64,000 + $3,500 – $1,200 – $1,100 – $150 – $2,400). e z to.mhe c gr a w- hill.c om/hm_a c c ounting.tpx? todo= pr intvie w 7/7...
View Full Document

This document was uploaded on 03/03/2014 for the course MGMT ACCOU 2300 at Rensselaer Polytechnic Institute.

Ask a homework question - tutors are online