X Company prepares monthly financial statements. The following transactions occu
ID: 2598361 • Letter: X
Question
X Company prepares monthly financial statements. The following transactions occurred during January:
On January 1, a one-year store rental lease was signed for a total of $34,800, and rent for the first 2 months was paid in advance.
On January 1, equipment was purchased for $50,000 with a downpayment of $5,000 and a note for the remainder. The note along with annual interest of 7% was due in a year. The estimated life of the equipment is 10 years with a salvage value of $6,000.
Daily wages are $1,500 and are paid every Friday. The last day in January was a Tuesday.
8. The required adjusting entries on January 31 decreased net income by a total of
9. The required adjusting entries on January 31 decreased total assets by a total of
Explanation / Answer
8 Decrease in net income: Rent 2900.00 =34800/12 Depreciation 366.67 =(50000-6000)/10/12 Interest expense 262.50 =45000*7%/12 Wages 3000.00 =1500*2 Decrease in net income 6529.17 or 6529 9 Decrease in total assets = 2900+366.67= 3266.67 or 3267
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