2. if rent is collected in advance know how to adjust rental income to reflect t
ID: 2337758 • Letter: 2
Question
2. if rent is collected in advance know how to adjust rental income to reflect th uneu wat does it prove? amount of income earned for the period. 3. If you issue a Note Payable know to prepare an adjusting entry to payable. accrue interest 4. Know in what order financial statements should be prepared i.e. which statement is prepared first, then second etc 5. Know how to record the issuance of stock with a par value 6. Know how to adjust office supplies to reflect how much was used up. 7. Know what is the correct order in which current assets should be listed on the balance sheet. 8. Know what Contributed Capital means 9. Know how to calculate: current ratio, quick ratio (also called acid test ratio). 10. Under the rules of accrual basis accounting know when revenues and expenses should be recorded. 11. Know what a subsequent event is. 12. Know how Treasury stock should be reported on the balance sheet 13. Know how to calculate and record straight-line depreciation expense. 14. Know how to calculate and record bad debt expense using the percent of sales method. 15. Know how to adjust prepaid expenses (insurance or rent) to show how much was used up 16. Know how to compute the total amount of stockholder's equity on a balance sheet. aw account. 17. Know how to prepare closing entries including: closing revenues, closing expenses, closing the income summary account and closing the dividends or drExplanation / Answer
Q.2 Rent received in advance: It is called Unearned income and to identify correct income earned during the year to record in income statement we have to Deduct rent received in advance from total rent collection. Since it is not related to this year. The adjusting entry would be Rent income debited and Unearned Rent will be credited. entry will be done with Unearned revenue Amount.
Q.3 Accrued interest on Notes payable: Adjustine entry for this will be Interest exp. debited and Accrued Interest credited. because it is of current year so exp. debited and not paid off so liability increase with crediting Accrued interest. Amount will be Accrued interest amount for Entry.
Q.4 Order of FS: First Income statement is prepared then statement of retained earning then statement of stockholders equity and then Balance sheet and last CAsh flow stattement.
Q.5 issue of stock: Bank account debited and Common stock Credited. with Par value.
Q.6 Office supplies adj.: Supply expenses debited and office supplies credited. with used supply amount.
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