2 on alt received 21600 rent from its lessee for an

This preview shows page 2 - 3 out of 3 pages.

2.On September 30, 2012, Alt received $21,600 rent from its lessee for an eighteen month lease beginningon that date.3.The regular rate of depreciation is 10% per year. Acquisitions and retirements during a year aredepreciated at half this rate. There were no purchases during the year. On December 31, 2011, thebalance of the Plant and Equipment account was $240,000.4.On December 28, 2012, the bookkeeper incorrectly credited Sales for a receipt on account in the amountof $10,000.5.At December 31, 2012, salaries and wages accrued but unpaid were $4,200.6.Alt estimates that 1% of sales will become uncollectible.7.On August 1, 2012, Alt purchased, as a short-term investment, 60 $1,000, 7% bonds of Allen Corp. at par.The bonds mature on August 1, 2013. Interest payment dates are July 31 and January 31.8.On April 30, 2012, Alt rented a warehouse for $3,000 per month, paying $36,000 in advance.Instructions(a)Record the necessary correcting and adjusting entries.(b)Indicate which of the adjusting entries may be reversed at the beginning of the next accounting period.
Problem A-II— Solution.(a)1.Prepaid Insurance .......................................................................6,600Insurance Expense ..........................................................6,600(Both Policies 1 and 3 have expired and their costs belong in Insurance Expense. The monthly premium on Policy 2 is $7,200 ÷ 36 = $200. At 12/31/12, 33 mos.

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture