The accountant for the Osgood Company is preparing to produce financial statements for December 31, Year One, and the year then ended. The accountant has uncovered several interesting figures within the company’s trial balance at the end of the year:
Financial Figures Reported by the Osgood Company
The company collected $32,000 from a customer during the early part of November. The amount was recorded as revenue at that time although very little of the work has yet to be accomplished.
The company paid $36,000 for nine months of rent on a building on January 1, Year One, and then paid $20,000 on October 1, Year One, for five additional months.
A count of all supplies at the end of the year showed $2,000 on hand.
An interest payment was made at the end of December. Although no previous recognition had been made of this amount, the accountant debited interest payable.
On January 1, Year One, the company paid $24,000 for insurance coverage for the following six months. On July 1, Year One, the company paid another $27,000 for an additional nine months of coverage.
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