Adjusting entries are required to adjust the accounts according to the accrual basis of accounting at the end of the every accounting period. For example: Recording the depreciation expense on depreciable assets at the end of each accounting year. The business activity for each type of adjusting entry is explained as follows: Accrued revenue: The adjusting entry for Accrued revenue is prepared to record the revenue earned during the period. Accrued Expense: The adjusting entry for Accrued expense is prepared to record the expenses incurred during the period. Deferred Revenue: The adjusting entry for Deferred revenue is prepared to defer the revenue that belong to next period. Deferred expenses: The adjusting entry for Deferred expense is prepared to defer the expense that belong to next period. Depreciation: The adjusting entry for depreciation expense is prepared to record the depreciation expense that belong to current period. To Indicate: If Don’s financial statements would be significantly affected by the adjusting entries.

Question

Want to see the full answer?

Answer 1

Question

Chapter 3, Problem 77.1C

To determine

Concept Introduction:

Adjusting entries are required to adjust the accounts according to the accrual basis of accounting at the end of the every accounting period. For example: Recording the depreciation expense on depreciable assets at the end of each accounting year.

The business activity for each type of adjusting entry is explained as follows:

Accrued revenue: The adjusting entry for Accrued revenue is prepared to record the revenue earned during the period.

Accrued Expense: The adjusting entry for Accrued expense is prepared to record the expenses incurred during the period.

Deferred Revenue: The adjusting entry for Deferred revenue is prepared to defer the revenue that belong to next period.

Deferred expenses: The adjusting entry for Deferred expense is prepared to defer the expense that belong to next period.

Depreciation: The adjusting entry for depreciation expense is prepared to record the depreciation expense that belong to current period.

To Indicate:

If Don’s financial statements would be significantly affected by the adjusting entries.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Students have asked these similar questions

Problem #1 You are a credit analyst of a growing commercial bank and have recently received loan applications from two companies of relatively similar size. Show below are selected financial data for these two applicants at the end of the current year: Blue Company Red Company Net credit sales P675,000 P560,000 Cost of goods sold 504,000 480,000 Cash 51,000 20,000 Accounts 75,000 70,000 receivable (net) Inventory 84,000 160,000 Current liabilities 105,000 100,000 Assume that the year-end balances for accounts receivable and for inventory approximate the average balances of these items throughout the year. А. For each of the two companies, compute the following: 1. Working capital 2. Current ratio 3. Acid test ratio 4. Accounts receivable turnover 5. Average collection period 6. Inventory turnover 7. Days sales in inventory 8. Operating cycle Assuming funds are limited and only one of the two applicants can be accommodated, to whom would you be willing to give a short -term loan and…

The sum of all of your customer Accounts Receivable is listed as part of on your balance sheet. * O Current Assets Current Liabilities Long-term Assets Suppose you are closing the books at the end of a fiscal year and you have a balance of $75000 in your Revenue account. What should you do with the balance? * O You should do nothing, and carry it over to the next accounting year. You should zero it out. You should move it to the liability account.

Calculating Fees on a Loan Commitment During the last year you have had a loan commitment from your bank to fund inventory purchases for your small business. The total loan available was $1,120,000, of which you took down $870,000. It is now the end of the loan commitment period and your bank is asking you to pay the back-end fees. You have misplaced the paperwork that listed the terms of the commitment, but you know you paid total fees (this does not include any interest paid to borrow the $870,000) of $5,110 on this loan commitment. You remember that the up-front fee was 30 basis points, what is the back-end fee on this loan commitment.