Questions 8 and 9 refer to the following information: X Company prepares monthly
ID: 2599455 • Letter: Q
Question
Questions 8 and 9 refer to the following information: 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 2 months was paid in advance. 2. On January 1, equipment was purchased for $55,000 with a downpayment of $11,000 and a note for the remainder. The note along with annual in value of $4,000. 3. Daily wages are $1,300 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 -39400 Submit Answer Incorrect. Tries 2/3 Previous Tries 9. The required adjusting entries on January 31 decreased total assets by a total of 39400 Incorrect. Tries 1/3 Previous Tries Submit AnswerExplanation / Answer
Working Note Adjustement 1: Rent is paid for the 2 month advance means the rent is paid for January and february Means the rent for the one month is in advance and it will be Amount = $ 36,000/ 12 = $ 3,000 Adjustement 2: There is interest expenses for equipment purchased is Monthly interest expenses = $ 4,000 / 12 Months = $ 333. $ 333.33 Adjustement 3: Dail wages paid is on Firday , Means Salary for Saturday to Tuesday is not paid and this is expenses of the company and oustanding liabilities of the company Salary for Saturday to Tuesday = 4 Days X $ 1300 = $ 5,200 Net Income Prepaid rent meand reduction in expenses and increase in net income $ 3,000 Increase in Expenses due to outstanding salary payable $ -5,200 Monthly Interest Expenses (round off) $ -333 Decrease in net Income = $ -2,533 Assets Adjustmente : Incease in Current Assets as Prepaid Rent = $ 3,000 Increase in the Total assets $ 3,000
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.