Questions 8 and 9 refer to the following information: X Company prepares monthly
ID: 2599539 • Letter: Q
Question
Questions 8 and 9 refer to the following information:
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 $48,000, and rent for the first 3 months was paid in advance.
On January 1, equipment was purchased for $50,000 with a downpayment of $10,000 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 $1,000 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 Rent expense 4000 =48000/12 Depeciation expense 367 =(50000-6000)/10/12 Interest expense 233 =(50000-10000)*7%/12 Wages expense 4000 =1000*4 Decrease in net income 8600 9 Rent expense 4000 Depeciation expense 367 Decrease in total assets 4367
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