value 25.00 points PB10-1 Determining Financial Effects of Transactions Affectin
ID: 2532567 • Letter: V
Question
value 25.00 points PB10-1 Determining Financial Effects of Transactions Affecting Current Liabilities wit Tiger Company completed the following transactions. The annual accounting period ends December 31 Jan. 3 Purchased merchandise on account at a cost of $36,000. (Assume a perpetual inventory Jan. 27 Apr. 1 system.) Paid for the January 3 purchase. Received $92,000 from Atlantic Bank after signing a 12-month, 7.5 percent promissory note. June 13 Purchased merchandise on account at a cost of $10,400 July 25 Paid for the June 13 purchase. Aug. 1 Rented out a small offce in a building owned py Tiger Company and collected eight months' rent in advance amounting to $10,400. (Use an account called Unearned Rent Revenue.) Determined wages of $24,000 were earned but not yet paid on December 31 (ignore payroll taxes). Dec. 31 Dec. 31 Adjusted the accounts at year-end, relating to interest. Dec. 31 Adjusted the accounts at year-end, relating to rent Required: 1. For each listed transaction and related adjusting entry, indicate the accounts, amounts, and effects on the accounting equation. (Do not round intermediate calculations. Enter any decreases to account balances with a minus sign. Enter your answers in transaction order provided in the problem statement.) Assets Liabiliti Date Jan. 3 Jan. 27 Apr. 1 June 13 July 25 Aug. 1 Dec. 31 Dec. 31 Dec. 31Explanation / Answer
Date
Assets
=
Liabilities
+
Shareholders’ Equity
Inventories
Cash
Accounts payable
Notes payable
Unearned revenue
Interest payable
Wages payable
Rent revenue
Wages expense
Interest expense
Jan. 3
$36000
$36000
Jan. 27
- $36000
- $36000
April 1
$92000
$92000
June 13
$10400
$10400
July 25
- $10400
- $10400
Aug. 1
$10400
$10400
Dec. 31
$24000
- $24000
Dec. 31
$5175
- $5175
Dec. 31
- $6500
$6500
Working Note;
1. Interest on note payable is calculated as follow;
($92000 * 0.075 * 9 / 12) = $5175
2. Rent revenue will be calculated as follow;
($10400 * 5 / 8) = $6500
Date
Assets
=
Liabilities
+
Shareholders’ Equity
Inventories
Cash
Accounts payable
Notes payable
Unearned revenue
Interest payable
Wages payable
Rent revenue
Wages expense
Interest expense
Jan. 3
$36000
$36000
Jan. 27
- $36000
- $36000
April 1
$92000
$92000
June 13
$10400
$10400
July 25
- $10400
- $10400
Aug. 1
$10400
$10400
Dec. 31
$24000
- $24000
Dec. 31
$5175
- $5175
Dec. 31
- $6500
$6500
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