On December 31 the balance in the Prepaid Insurance account was $4,000. This is the remaining balance of a twelve-month policy purchased on October 31 in the current year. How much did this policy originally cost?
On April 1, 2009 a company paid the $1,350 premium on a three-year insurance policy with benefits beginning on that date. What will be the insurance expense on the annual income statement for the year ended December 31, 2009?
A company had revenue of $270,000, rent expense of $12,000, utility expense of $5,500, salary expense of $20,500, depreciation expense of $11,000, advertising expense of $6,500, dividends in the amount of $20,000, and a beginning balance in retained earnings of $19,900. What is the amount in the income summary account before it is closed for the period?
MOP Co. leased a portion of its store to another company for eight months beginning on October 1, 2009 at a monthly rate of $1,000. This other company paid the entire $8,000 cash on October 1, which MOP Co. recorded as unearned revenue. The journal entry made by MOP Co. at year- end on December 31, 2009 would include:
a) A debit to Cash for $8,000.
b) A debit to Unearned Rent for $5,000.
c) A debit to Rent Earned for $3,000.
d) A credit to Rent Earned for $3,000.
e) A credit to Unearned Rent for $3,000.
Failure to record depreciation expense will overstate the asset and understate the expense.
A company earned $2,000 in net income for October. Its net sales for October were $10,000. Its profit margin is:
Adjusting entries are made after the preparation of financial statements.
Adjusting entries are used to record the effects of internal economic (financial) transactions and events.
The matching principle requires that expenses get recorded in the same accounting period as the revenues that are earned as a result of the expenses, not when cash is paid.
These transactions were completed by the art gallery opened by Thomas Buckner.
(1.) Started the gallery, Artery, by investing $38,000 cash and equipment valued at $10,000 in exchange for common stock.
(2.) Purchased $60 of office supplies on credit.
(3.) Paid $2,300 cash for the receptionist’s salary.
(4.) Sold a painting for an artist and collected a $4,700 cash commission on the sale.
(5.) Completed an art appraisal and billed the client $400.
What was the balance of the cash account after these transactions were posted?
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