Blog

Interim financial statements report a company’s business activities for a one-year period.

On December 31, Putnall, Inc received a $215 utility bill for December that it will not pay until January 15. The adjusting entry needed on December 31 to accrue this expense is:

On April 1, Penthouse Publishing Company received $1,548 from Taos, Inc. for 36-month subscriptions to several different magazines. The subscriptions started immediately. What is the amount of revenue that should be recorded by Penthouse Publishing Company for the second year of the subscription assuming the company uses a calendar-year reporting period?

On May 1, BS Marketing Company received $1,500 from Franco Mockus for a marketing campaign effective from May 1 this year to April 30 of the following year. The Cash receipt was recorded as unearned fees and at year-end on December 31, $1,000 of the fees had been earned. Assuming adjustments are only made at year-end, the adjusting entry on December 31 would be:

After preparing and posting the closing entries for revenues and expenses, the income summary account has a debit balance of $33,000. The entry to close the income summary account will be:

If a company has current assets of $15,000 and current liabilities of $9,500, its current ratio is 1.6

Under the accrual basis of accounting, adjustments are often made for prepaid expenses and unearned revenues.

Murphy, Inc. installs a machine in its factory at the beginning of the year at a cost of $135,000. The machine’s useful life is estimated to be 5 years, or 300,000 units of product, with a $15,000 salvage value. During its first year, the machine produces 64,500 units of product. Determine the machines’ first year depreciation under the units-of-production method.

Interim financial statements report a company’s business activities for a one-year period.

Operating activities: