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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:

Successful use of a just-in-time inventory system can narrow the gap between the acid-test and the current ratio.

On October 1, Stansel Co. rented warehouse space to a tenant for $2,500 per month and received $12,500 for five months’ rent in advance on that date, with the lease beginning immediately. The cash receipt was credited to the Unearned Rent account. The company’s annual accounting period ends on December 31. The Unearned Rent account balance at the end of December, after adjustment, should be:

The general journal is known as the book of final entry because financial statements are prepared from it.