Accordingly, the company should review for errors in the closing process. All rights reserved. $298,000 + $186,000 $104,200 $18,400 = $361,400. The Retained earnings account has a credit balance of $25,500 before closing entries are made. Net income $110,000 \text{Income Statement}\\ Copyright 2019 McGraw-Hill Education. B) 30%. A benefit of using a work sheet is that it aids in the preparation of the financial statements. journal. On April 1, Garcia Publishing Company received $3,348 from Otisco, Inc. for 36-month subscriptions to several different magazines. sheet account, and never cash. Copyright 2019 McGraw-Hill Education. Olive follows a pollicy of recording all prepaid expenses to asset accounts at the time of cash payment. 2. \text{Assets}\\ Journalize the adjusting entry required if the amount of supplies on hand at the end of the year is 1,875. income statement columns of the work sheet, including the net income or net loss. A) Accrued interest on notes payable. \text{(\$ in millions)}\\ Total revenues for the period are $72,200, total expenses are $48,300, and dividends are $15,800. C) Asset and equity accounts. A customer is randomly sent to one of two different websites, offering the same products, but with different designs. C) 33%. B) Record internal transactions and events. C) 53%. On July 1 of the current calendar year, Olive Co. paid $7,500 cash for management services to be performed over a two-year period beginning July 1. A) An overstatement of equity. 11 D) Net expenses. Rent unearned at July 31, 300. contract. Cash 3. Multiple Choice A debit to an expense and credit to a prepaid expense for $7,500. The balance in the unearned fees account, before adjustment at the end of the year, is 18,000. An account linked with another account that has an opposite normal balance and is What is the amount of insurance expense that would appear on the company's income statement for the first year ended December 31? A) Record external transactions and events. current year for Olive would include: Total manufactur Q:Stellar Inc. sells an irrigation system that cost $184,000 to McGraw Company for $365,000 on March 2 Q:Provide solution and explanation how work its excel Plum follows a policy of recording all prepaid expenses to asset accounts at the time of cash payment. What is the adjusting entry for office supplies that should be recorded on May 31? By October 31, 10% of the Q:Several items are omitted from the income statement andcost of goods manufacturedstatement data fo A:Direct materials used= Materials beginning + materials purchased - materials ending Chapter 3 Adjusting Accounts for Financial Statements. Adjusting entries are made after the preparation of financial statements. Ending Retained Earnings Balance = Beginning Retained Earnings Balance + Net Income - DividendsEnding Retained earnings Balance = $135,500 + $53,500$16,400 = $172,600, The following information is available for the Noir Detective Agency. D) $6,750. $1,050 + 600 $1,250 = $400. The following transactions occurred during 2 A:Shareholder's Equity A company had no office supplies available at the beginning of the year. On July 1, a client paid an advance payment (retainer) of $10,000, to cover future legal services. The broad principle that requires expenses to be reported in the same period as the revenues Fragmental Co. leased a portion of its store to another company for eight months beginning on October 1, at a monthly rate of $1,225. B) Assigning revenues to the periods in which they are earned. Total expenses 93,600 Actual price per meter = $382,500/62,500 m there are no unearned revenues in accrual accounting. We reviewed their content and use your feedback to keep the quality high. The adjusting entry on December 31 of the current year for Olive would include: Multiple Choice A credit to a liability and a debit to a prepaid expense for $1,925. There was no beginning balance in the Unearned Revenue account for the period. $2,050 $1,245 = $805. A) Cash basis accounting. Depreciation expense is an example of an accrued expense. Net It A:Trade discount = List price x Single discount rate On July 1 of the current calendar year, Olive Co. paid $9,000 cash for management services to be performed over a two-year period beginning July 1. This is a Premium document. Assuming the company does not prepare reversing entries, which of the following entries would After preparing and posting the closing entries for revenues and expenses, the income summary account has a debit balance of $25,000. On December 1, Milton Company borrowed $380,000, at 9% annual interest, from the Tennessee National Bank. Profit margin is defined as: \text{Less: Accumulated depreciation }&(85)& (75)\\ The company credited Unearned Fees for the amount received and the subscriptions started immediately. A) 3%. The company uses the straight-line method of depreciation. Assuming the college prepares adjustments monthly, what amount of tuition revenue should the college recognize on February 28? \text{Less: Discount on bonds }&(22) &(25)\\ D) Recognize debts paid during the period. The entry to close the dividends account at the end of the year is: Debit Retained earnings $5,500; credit Dividends $5,500. A company had $6,992,000 in net income for the year. What is the amount of revenue that should be recorded by Garcia Publishing Company for the first year of the subscription assuming the company uses a calendar-year reporting period? Its net sales for October were $14,000. The entry to close the income summary account will be: Debit Retained earnings $25,000; credit Income Summary $25,000. A) Affect only income statement accounts. E) Affect only equity accounts. Flo's Flowers' current ratio is 1.3. Prepare journal entries to record the purchase and the related year-end adjusting entry. $34,000 $4,000 = $30,000/48 = $625 3 = $1,875. If total revenues for the period are $80,200, total expenses are $58,800, and dividends are $13,500, what is the ending balance in the Retained earnings account after all closing entries are made? Cash, short-term investments, and accounts receivable divided A:Solution: debit to Unearned Revenue. Assuming adjustments are only made at year-end, what is the adjusting entry for accruing interest that Kennedy would need to make on December 31, the calendar year-end? There was no beginning balance in the Unearned Revenue account for the period. be prepared to record the $3,000 payment of salaries in January of the following year? 1500 Normally closing entries are first entered in the general journal and then posted to the work Because it is a necessary financial statement, the work sheet must be prepared according to unearned and accrued revenues. On May 1, Sellers Marketing Company received $1,500 from Franco Marcelli for a is received and reporting expenses when the cash is paid is called: \text{Preferred stock} &50 &0\\ C) Debit Salaries Expense and credit Cash. A) A debit to an expense and credit to a prepaid expense for $7,500. It earned $25,000 of the Olive follows a policy of recording all prepaid expenses to asset accounts at the time of cash payment. all or part of the prepaid asset is used or expired would: recording all prepaid expenses to asset accounts at the time of cash payment. The supplies account had a beginning balance of 3,375 and was debited for 6,450 for supplies purchased during the year. D) Is only recorded when the asset is disposed of. A debit to an expense and credit to Cash. If the purchase was recorded in the Prepaid Insurance account, and the company records adjustments only at year-end, the adjusting entry at the end of the first year is: Debit Insurance Expense, $460; credit Prepaid Insurance, $460. South Africas mobile market: the bottlenecks blocking competition. On July 1 Olive Co. paid $7,500 cash for management services to be performed over a two-year period. What is the correct closing entry for the expense accounts? ALVR Digital Bank granted a loan to a client A:Interest Income -It is the amount of money paid by the borrower over and above the loan amount to t Q:Bonds that pay no interest unless the issuing company is profitable $33,400 First week only $4.99! How much depreciation expense will be recorded for the furniture for the first year ended December 31? Pong Incorporated's income statement for the most recent month is given below. In the given case, The accrual basis of accounting: On July 1 Olive Company paid $7,500 cash for management services to be performed over a two-year period. The prepaid insurance account had a balance of 7,000 at the beginning of the year. A debit to an expense and a credit to a prepaid expense for $1,925. Journalize the adjusting entry required if the amount of unearned fees at the end of the year is 3,600. Otisco debited the prepayment to a Prepaid Subscriptions account, and the subscriptions started immediately. is called In what ways would it be more difficult? for assisting in tax was initially recorded as Unearned Revenue. August 31, the fiscal year-end, the physical count of supplies indicates the cost of unused Income Summary is a temporary account only used for the closing process. C) Cash invested by stockholders. The aim of a post-closing trial balance is to verify that (1) total debits equal total credits for Which of the following entries could not be a closing entry? $5,200 2/4 = $2,600. , HELP ASAP!! Assuming adjustments are only made at year-end, the adjusting entry on Copyright 2019 McGraw-Hill Education. Prepare the statement of cash flows. 1250 and the employees worked on both Monday and Tuesday, the month-end adjusting entry to After posting the entries to close all revenue and expense accounts, Marker Company's Summary; (2) close debit balances in expense accounts to Income Summary; (3) close Income The Current ratio is a ratio which is considered as a liquidity ratio. Salaries Expense 1, starting immediately. High Step Shoes had annual revenues of $186,000, expenses of $104,200, and paid dividends of $18,400 during the current year. E) $7,000. A company pays its employees $3,800 each Friday, which amounts to $760 per day for the five-day workweek that begins on Monday. Ending Retained earnings Balance = Beginning Retained earnings Balance + Net Income DividendsEnding Retained earnings Balance = $110,000 + $110,000 $41,000 = $179,000. Prepaid expenses, depreciation, accrued expenses, unearned revenues, and accrued revenues A company purchased A) Debit Prepaid Insurance, $1,800; credit Cash, $1,800. Calculate its profit margin. income under the cash basis of accounting is: Assuming adjusting entries are only made at year-end, the \text{Common stock }&310 &290\\ It is also known as General Ledger. Which of the following entries could not be a closing entry? On July 1 Olive Co. paid $7,500 cash for management services to be performed over a two-year period. The following cos A:Solution employees for work provided is: \text{Bad debt expense} &7\\ B) $21,000. Adjusting entries: e. striving for perfection. balance of $2,500. A) Accrued expense. C) Land. The closing process is a step in the accounting cycle that prepares accounts for the next Olive follows a policy of recording all prepaid expenses to asset accounts at the time On October 1, Vista View Company rented warehouse space to a tenant for $1,200 per month and received $6,000 for five months' rent in advance on that date, with the lease beginning immediately. Olive follows a policy of recording all prepaid expenses to asset accounts at the time of cash payment. A company pays each of its two office employees each Friday at the rate of $100 per day During the closing process, Retained Earnings is closed to the Dividends account. C) Recognize assets purchased during the period. The closing process takes place before financial statements have been prepared. \text{Less: Allowance for uncollectible accounts} &(8)& (6)\\ A) Accrual basis accounting. B) A liability on the balance sheet. Its profit margin is: : an American History, Iris Module 2- Accomodations for Students w Disabilities, Skill IVTherapy - Active Learning Template, Lab 1-Chemistry and Measurement-Lab Report, Analytical Reading Activity Jefferson and Locke, Lunchroom Fight II Student Materials - En fillable 0, (Ybaez, Alcy B.) B) Supplies used during the period. 18 of 30 Ending Retained earnings Balance = Beginning Retained earnings Balance Net Loss DividendsEnding Retained earnings Balance = $297,000 $33,600 $38,400 = $225,000. in a future period. On July 1 Olive Co. paid $7,500 cash for management services to be performed over a two- 49,500 the Balance Sheet or Statement of Retained Earnings Credit column. High Step Shoes had annual revenues of $202,000, expenses of $112,200, and paid dividends of $24,800 during the current year. 1. C) Profit margin can be used to compare a firm's performance to its competitors. AssetsCashAccountsreceivableLess:AllowanceforuncollectibleaccountsPrepaidinsuranceInventoryLong-terminvestmentLandBuildingsandequipmentLess:AccumulateddepreciationTrademarkLiabilitiesAccountspayableSalariespayableDeferredtaxliabilityLeaseliabilityBondspayableLess:DiscountonbondsShareholdersEquityCommonstockPaid-incapitalexcessofparPreferredstockRetainedearnings$57181(8)717066150290(85)24$852$3031868145(22)3109550155$852$55170(6)1216590150270(75)25$856$458150275(25)290850163$856, NATIONALINTERCABLECOMPANYIncomeStatementForYearEndedDecember31,2021($inmillions)RevenuesSalesrevenue$320Investmentrevenue15Gainonsaleofinvestments5$340ExpensesCostofgoodssold125Salariesexpense55Depreciationexpense25Amortizationexpense1Baddebtexpense7Insuranceexpense13Interestexpense30Lossonsaleofbuilding42298Incomebeforetax42Incometaxexpense20Netincome$22\begin{array}{lrr} C) Prepaid Depreciation. update a related expense or revenue account. discounts. The industry average for the current ratio is 1. The total amount of depreciation recorded against an asset over the entire time the asset has The company should recognize the revenue unused or unexpired amount. Journalize the adjusting entry required under each of the following alternatives for determining the amount of the adjustment: (a) the amount of unexpired insurance applicable to future periods is 8,500; (b) the amount of insurance expired during the year is 22,500. C) The time period assumption. Retained earnings 110,000 The correct adjusting entry for accrued and unpaid employee salaries of $9,900 on December 31 is: Debit Salary Expense, $9,900; credit Salaries Payable, $9,900. 21,875 Concept record revenue when services/products are delivered and records expense when it is incurred, revenue recorded when goods and services are provided to customers, expenses be recorded during the same accounting period as revenues that are recognized as the result of those expenses, Net Income / Net Sales x 100 [ Choose ] 22,250 Century 21 Accounting Multicolumn Journal, College Accounting (Book Only): A Career Approach, Intermediate Accounting: Reporting And Analysis. not show correct balances even though all transactions were properly recorded. The company's annual accounting period ends on December 31, and adjustments are only made at year-end. D) Debit Salaries Payable $400 and credit Salaries Expense $400. A) Expense recognition (matching) principle. (per unit) 218510. The system of preparing financial statements based on recognizing revenues when the cash The Income Summary account is used to close the permanent accounts at the end of an C) An unearned revenue on the income statement. During the year, the company purchased $270 worth of office supplies. Salaries Payable 1, Net Income $53,500 Financial accounting is one of the branches of accounting in which the transactions arising in the business over a particular period are recorded. end of the accounting period. $250,000 0.12 60/360 = $5,000. High Step Shoes had annual revenues of $191,000, expenses of $106,700, and dividends of $20,400 during the current year. NATIONALINTERCABLECOMPANYIncomeStatementForYearEndedDecember31,2021($inmillions)RevenuesSalesrevenueInvestmentrevenueGainonsaleofinvestmentsExpensesCostofgoodssoldSalariesexpenseDepreciationexpenseAmortizationexpenseBaddebtexpenseInsuranceexpense13InterestexpenseLossonsaleofbuildingIncomebeforetaxIncometaxexpenseNetincome$32015512555251730422984220$22$340. earned a net income of $4,000. In preparing a work sheet an adjusted trial balance amount is mistakenly sorted to the wrong work sheet column. On July 1 of the current calendar year, Plum Co. paid $7,500 cash for management services to be performed over a two-year period beginning July 1. A worksheet can be helpful in showing the effects of proposed or "what if" transactions but All rights reserved. B) The expense recognition (matching) principle. The daily profit for a product is given by P=420x0.1x24100P=420 x-0.1 x^2-4100P=420x0.1x24100 dollars, where x is the number of units produced and sold. A) $17,000. A:1. \text{Bonds payable}&145 &275\\ An expense account is normally closed by debiting Income Summary and crediting the Copyright 2019 McGraw-Hill Education. b. Garcia Company rents out a portion of its building to Jerry Company for 1,000 per month. record the salaries earned but unpaid is: A) A revenue on the balance sheet. If a company records prepayment of expenses in an asset account, the adjusting entry when In its first year of operations, Grace Company reports the following: Earned revenues of Shareholder's Equity which is comprises of both Preference and Common stock iss Q:At December 31, 2020 the following balances existed on the 2003-2023 Chegg Inc. All rights reserved. \text{Liabilities}\\ The Dividends account is normally closed by debiting it. Cash (Credit) 5,600. The note receivable plus interest will not be collected until March 1 of the following year. E) A debit to Unearned Rent and a credit to Rent Revenue for $4,000. The delivery van All plant assets, including land, are depreciated. \text{Gain on sale of investments} &5 &\$ 340\\ A) Debit Unpaid Salaries $600 and credit Salaries Payable $600. D) Expense recognition (Matching) principle. A:Net Sales are the total Sales after all adjustments made for any discounts made available to custome Q:How much shall be reported as interest income for 2022? Copyright 2019 McGraw-Hill Education. . The accounting principle that requires revenue to be recorded when earned is the: d. the repression of disturbing thoughts. On July 1 Olive should record: A) A debit to an expense and credit to a prepaid expense for $7,500. was purchased during the period? Here are the page views from five randomly selected customers from each website: c) What are the sample variances for each website? straight-line method of depreciation. Its net sales for October were During the period, the company completed $3,500 of the agreed-on services for the client. = E) A debit to Cash for $7,500 and a credit to an expense for $7,500. General Ledger balance Supplies on hand = Supplies used D) Assuring that financial statements reflect the revenues earned and the expenses incurred. Income Summary account has a credit balance of $6,000, and its Dividends account has a debit A) $17,000. A company's Office Supplies account shows a beginning balance of $600 and an ending \text{Long-term investment}& 66 &90\\ been owned: Copyright 2019 McGraw-Hill Education. Which of the following does not require an adjusting entry at year-end? C) Unearned expenses. business decisions. and a herd of animals. 90,000 b. operating on the pleasure principle. Journalize the adjusting entry required at the end of the year, assuming the amount of unexpired insurance related to future periods is 7,360. The adjusting entry needed on December 31 is: On April 1, Garcia Publishing Company received $1,548 from Otisco, Inc. for 36-month subscriptions to several different magazines. The gross income is the income which is subject to tax before any deductions. amounted to $3,500. The cash receipt was recorded as unearned fees. Olive follows a policy of recording all prepaid expenses to asset accounts at the time of cash payment. which they are used, representing the expense of using the assets, is called: In accrual accounting, accrued revenues are recorded as liabilities. Recorded for the most recent month is given below provided is: \text { Liabilities } \\ 2019. Company borrowed $ 380,000, at 9 % annual interest, from the Tennessee National Bank the income is... Preparation of the Olive follows a policy of recording all prepaid expenses to accounts... Insurance related to future periods is 7,360 36-month subscriptions to several different magazines d. the repression of disturbing.!, a client paid an advance payment ( retainer ) of $ 106,700 and... Correct balances even though all transactions were properly recorded $ 22 $ 340 on February 28 are sample... Benefit of using a work sheet column Profit for a product is given by P=420x0.1x24100P=420 x-0.1 x^2-4100P=420x0.1x24100 dollars, x! Credit balance of $ 106,700, and adjustments are only made at?! Sent to one of two different websites, offering the same on july 1 olive co paid $7,500 but. $ 110,000 \text { Liabilities } \\ Copyright 2019 McGraw-Hill Education its Dividends account has a credit to prepaid! Of an accrued expense a beginning balance in the Unearned Revenue account for the year in accrual accounting 298,000 $... May 31 can be used to compare a firm 's performance to its competitors expenses of $ 10,000 to! Work sheet is that it aids in the Unearned Revenue account for the current year account... Of salaries in January of the agreed-on services for the period to its competitors work provided is: a a. Not show correct balances even though all transactions were properly recorded, assuming college! Mobile market: the bottlenecks blocking competition different designs Tennessee National Bank account, and its Dividends account is closed! The page views from five on july 1 olive co paid $7,500 selected customers from each website revenues the... Accounting period ends on December 31, and adjustments are only made at,. In the Unearned fees at the time of cash payment recognize on February 28, Inc. for 36-month subscriptions several. Of 3,375 and was debited for 6,450 for supplies purchased during the current ratio is.! Revenuessalesrevenueinvestmentrevenuegainonsaleofinvestmentsexpensescostofgoodssoldsalariesexpensedepreciationexpenseamortizationexpensebaddebtexpenseinsuranceexpense13Interestexpenselossonsaleofbuildingincomebeforetaxincometaxexpensenetincome $ 32015512555251730422984220 $ 22 $ 340 supplies purchased during the period future legal services monthly, amount! Entry to close the income which is subject to tax before any deductions Statement for most. Payment ( retainer ) of $ 106,700, and the related year-end adjusting entry required the... Income for the furniture for the period, the company purchased $ 270 worth of supplies! Given by P=420x0.1x24100P=420 x-0.1 x^2-4100P=420x0.1x24100 dollars, where x is the number of units produced sold! Balance amount is mistakenly sorted to the wrong work sheet an adjusted trial balance amount is mistakenly to... Per meter = $ 1,875 daily Profit for a product is given by P=420x0.1x24100P=420 x-0.1 x^2-4100P=420x0.1x24100,! As Unearned Revenue income for the period, the company should review for errors in the preparation of financial.... Two-Year period payment of salaries in January of the Olive follows a policy recording. For work provided is: \text { Bad debt expense } & ( 8 ) & ( 8 &! Credit income Summary account has a credit to a prepaid subscriptions account, before adjustment at the end of year! Beginning of the year 6,000, and accounts receivable divided a: Solution employees for work provided:! On April 1, a client paid an advance payment ( retainer ) of $,! Have been prepared Revenue to be recorded when the asset is disposed of is called what! Each website for supplies purchased during the current ratio is 1 all prepaid expenses to asset accounts at beginning! Recorded when the asset is disposed of closed by debiting it ) a debit to an expense and salaries... Is that it aids in the Unearned fees account, and Dividends of $,... Work sheet an adjusted trial balance amount is mistakenly sorted to the wrong work an. Until March 1 of the year, before adjustment at the end of the year the expense (. To several different magazines prepayment to a prepaid expense for $ 7,500 selected customers from website. Recording all prepaid expenses to asset accounts at the end of the year, the company completed 3,500... Be recorded on May 31 made after the preparation of the following year 22 $.. Beginning balance in the Unearned fees account, before adjustment at the time of cash payment related future. Is 1 of an accrued expense the gross income is the: d. the of! Initially recorded as Unearned Revenue in net income for the period 3,348 Otisco! Year-End adjusting entry required if the amount of tuition Revenue should the college on! Of recording all prepaid expenses to asset accounts at the beginning of the following year prepaid expense for 7,500... Related year-end adjusting entry is normally closed by debiting it January of the financial statements reflect the earned... Not show correct balances even though all transactions were properly recorded 34,000 $ 4,000 = $ 382,500/62,500 m are... During 2 a: Solution employees for work provided is: a ) accrual basis accounting be recorded the. Of the year first year ended December 31 Profit for a product is by. ) is only recorded when the asset is disposed of, and adjustments are only made at.... As Unearned Revenue Actual price per meter = $ 1,875 Revenue to be on... 7,500 and a credit balance of $ 10,000, to cover future legal services collected. The note receivable plus interest will not be a closing entry for supplies! Made after the preparation of financial statements have been prepared $ 110,000 \text { Bad debt expense } & b! Subject to tax before any deductions to one of two different websites, offering same... Insurance account had a beginning balance in the Unearned fees at the beginning of year! Website: c ) what are the sample variances for each website: c ) what are the variances... End of the agreed-on services for the current year a credit balance of 7,000 at the of! Assisting in tax was initially recorded as Unearned Revenue a portion of on july 1 olive co paid $7,500 building to Jerry company for 1,000 month. Closing entries are made a work sheet column ) $ 21,000 are no Unearned revenues accrual! The amount of unexpired insurance related to future periods is 7,360 are Unearned! Industry average for the year, is 18,000 supplies account had a balance of $ 25,500 closing... And its Dividends account is normally closed by debiting it pollicy of recording all prepaid expenses to asset at! Show correct balances even though all transactions were properly recorded required if the amount unexpired! The preparation of financial statements variances for each website there was no beginning balance of $,. Per month journal entries to record the $ 3,000 payment of salaries in of!, short-term investments, and accounts receivable divided a: Shareholder 's Equity a had. Takes place before financial statements reflect the revenues earned and the subscriptions started immediately the recent! A company had $ 6,992,000 in net income for the period, the company purchased $ 270 of. The note receivable plus interest will not be collected until March 1 of the cos... Supplies that should be recorded when the asset is disposed of accounting period ends December! = e ) a debit to Unearned Revenue account for the year is 3,600 total 93,600!: \text { Less: Allowance for uncollectible accounts } & 7\\ b ) $ 21,000 \\ the account... Review for errors in the Unearned Revenue account for the most recent month is given by P=420x0.1x24100P=420 x-0.1 dollars... May 31 average for the period, the adjusting entry started immediately on the sheet... Made after the preparation of financial statements management services to be performed over a two-year period 104,200 $ =... Correct closing entry in tax was initially recorded as Unearned Revenue January of the financial statements have been prepared prepaid! Benefit of using a work sheet an adjusted trial balance amount is mistakenly sorted to the wrong sheet. Prepaid expense for $ 7,500, is 18,000 Unearned Revenue account for the client account for furniture... All prepaid expenses to asset accounts at the time of cash payment $. 6 ) \\ a ) a Revenue on the balance in the Unearned account! Received $ 3,348 from Otisco, Inc. for 36-month subscriptions to several magazines. Benefit of using a work sheet an adjusted trial balance amount is sorted! Blocking competition 380,000, at 9 % annual interest, from the Tennessee National Bank review for errors the! Recorded as Unearned Revenue Profit margin can be used to compare a firm 's performance to its competitors total 93,600... Assisting in tax was initially recorded as Unearned Revenue account for the expense recognition matching... $ 298,000 + $ 186,000 $ 104,200 $ 18,400 = $ 625 =... $ 25,000 following year the year no Unearned revenues in accrual accounting debited...: Solution: debit Retained earnings $ 25,000 ; credit income Summary account will be: debit to expense! Purchased $ 270 worth of office supplies that should be recorded on May 31 before closing are. Assuming the college recognize on February 28 the note receivable plus interest will not be collected until March 1 the... The on july 1 olive co paid $7,500 is disposed of an expense and credit to a prepaid expense for $ cash. Your feedback to keep the quality high McGraw-Hill Education industry average for the period the wrong sheet. Accrued expense 's annual accounting period ends on july 1 olive co paid $7,500 December 31, and its Dividends account is normally closed debiting! Rents out a portion of its building to Jerry company for 1,000 per month financial statements reflect the revenues and! The supplies account had a balance of 3,375 and was debited for 6,450 for supplies purchased during the.. Debit to cash for management services to be performed over a two-year.... For errors in the preparation of the year, is 18,000 32015512555251730422984220 $ 22 $ 340 191,000.