Each financial transaction or economic event will affect either assets, liabilities, or owners’ equity. Thus, the basis for recording the transaction in the accounting system depends on the accounting equation . The accounting equation is: Assets = Liabilities + Stockholder's Equity Adjustments: Accrual basis accounting requires a number of adjustments at the end of the period. The adjustment is made for unearned revenue, accrued expenses, revenue received in advance and prepaid expenses. The necessity of recording the adjustment on July 31 instead of recording directly on August 31.

Question

Want to see the full answer?

Answer 1

Question

Chapter 4, Problem 4.28.2MCE

To determine

Introduction: Each financial transaction or economic event will affect either assets, liabilities, or owners’ equity. Thus, the basis for recording the transaction in the accounting system depends on the accounting equation. The accounting equation is:

Assets = Liabilities + Stockholder's Equity

Adjustments: Accrual basis accounting requires a number of adjustments at the end of the period. The adjustment is made for unearned revenue, accrued expenses, revenue received in advance and prepaid expenses.

The necessity of recording the adjustment on July 31 instead of recording directly on August 31.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Students have asked these similar questions

On September 1, Kennedy Company loaned $126,000, at 11% annual interest, to a customer. Interest and principal will be collected when the loan matures one year from the issue date. Assuming adjustments are only made at year-end, what is the adjusting entry for accruing interest that Kennedy would need to make on December 31, the calendar year-end? Multiple Choice Debit Cash, $4,620; credit Interest Revenue, $4,620. Debit Interest Expense, $4,620; credit Interest Payable, $4,620 Debit Interest Receivable, 4,620; credit Interest Revenue, $4620. Debit Interest Expense, $13,860; credit Interest Payable, $13,860 Debit Interest Receivable, $13,860; credit Cash, $13,860 Graw 7:26 PM W 100% 3 Type here to search 2/21/2022

Delta took out a one year, 8% $100,000 loan on March 31, 2021. Interest is due upon maturity of the loan. What adjusting entry, if any, should Delta record on December 31, 2021? A. No adjusting entry is necessary. B. Debit interest expense and credit interest payable for $6,000 C. Debit interest expense and credit interest payable for $8,000 D. Debit interest expense and credit interest payable for $2,000

Below are the details of a loan Levis' obtained from their bank on November 1, 2021. 3 Required: Prepare the following journal entries: a. On November 1, 2021 Levis' borrowed $200,000 from a bank with a five year term at an interest rate of 7% per annum. 6 7 Date ACCOUNT TITLES Debit Credit 8. 1-Nov 9 10 b. The first loan payment is due at the end of the month in the amount of $3,800. This payment includes 11 $1,440 of interest. 12 13 Date ACCOUNT TITLES Debit Credit 14 30-Nov 15 c. Total loan payments made in 2022 will be $600. It is determined that $36,000 of this amount will 8 go towards the principal of the loan. 9 Date ACCOUNT TITLES Debit Credit 31-Dec