x Company prepares monthly financial statements. The following transactions occu

Question

x Company prepares monthly financial statements. The following transactions occurred during January: 1. On January 1, a one-year store rental lease was signed for a total of $36,000, and rent for the first 4 months was paid in advance 2. on January 1, equipment was purchased for $50,000 with a do npayment of $10,000 and a for the remainder. Th. note along with annual interest of 0% as due in a year. The estimated life of the equipment is 10 years with a salvage value of $4,00o. 3. Daily wages are $1,500 and are paid every Friday. The last day in January was a Monday 8. The required adjusting entries on January 31 decreased net income by a total of Submit Answer Tries ubmt Answer Tries 03 9. The required adjusting entries on January 31 decreased total assets by a total of Submit Answer Tries 03

Explanation / Answer

Date Account Title Debit Credit Net Income Total Assets Liabilities Entries that would have been passed Increase Decrease Increase Decrease Increase Decrease 1-Jan Rent expense 12000 Cash 12000 (36000/12*4) Equipment 50000 Cash 10000 8% Note payable 40000 Adjusting entries   for the month 31-Jan Prepaid rent 9000 9000 Rent expense 9000 9000 (12000/4*3) Interest expense 267 267 Interest payable 267 267 Interest for 1 month on 8% Note payable accrued) (40000*8%*1/12) Depreciation expense 383 383 Accumulated depreciation-Equipment 383 383 1 mth depn. On equipment (50000-4000)/10yrs./12 mths. Wage expense 4500 4500 Wage payable 4500 4500 (1500*3) 9000 5150 9000 383 4767 Net Inc. 3850 8617 8. The reqd. adjusting entries on Jan 31 increased net income by a total of 3850 9. The reqd. adjusting entries on Jan 31 increased total assets by a total of   8617

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