On March 30, 2021 Ortiz LLC provided accounting reservices for Beker Law firm and sent them a bill for $5,000. Payment has not been received to this day. 2. Store supplies of $200 are on hand. The supplies account shows a $1,900 balance. Deferrals: 1. On April 1, 2021. ORTIZ LLC paid $12,000 for a one-year insurance Policy.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
icon
Related questions
Question

Describe 2 accrual transactions and 2 deferral transactions. For the accrual transactions, please use credit or debit sales and credit purchase. For the deferral transactions, please use prepaid insurance and prepaid telephone charges. Note: This can be made up amounts, just as long as they make sense. This is for an Electrotechnology Sales and Repairs business. Please include the dates that the transactions occurred. Please see below, as I have included an example of what the end product should look like. Please include an explanation as to what was done. 

 

Accruals:

1. On March 30, 2021 Ortiz LLC provided accounting reservices for Beker Law firm and sent them a bill for $5,000. Payment has not been received to this day.

2. Store supplies of $200 are on hand. The supplies account shows a $1,900 balance.

Deferrals:

1. On April 1, 2021. ORTIZ LLC paid $12,000 for a one-year insurance Policy. 

2. On February 1, 2021 . ORTIZ LLC received $20,000 for accounting services for 1 year.

 
Expert Solution
Step 1

Accrual transactions are the transaction which are recorded on happening of event without considering actual realisation or disbursement of cash. It reflects the true view of the performance of business.

Deferral transactions are those which are not recognised immediately but recognised after certain period. This occurs when we pay some expenses for more than the period of financial year or received in advance. In this, we create asset or liability instead of expense or income.

trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 3 steps

Blurred answer
Knowledge Booster
Basic Accounting Terms
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.
Similar questions
Recommended textbooks for you
FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
Accounting
ISBN:
9781259964947
Author:
Libby
Publisher:
MCG
Accounting
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education