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company has a fiscal year-end of December 31: (1) on October 1, $21,000 was paid for a one-year fire insurance policy; (2) on June the company loaned its chief financial officer $19,000; principal and interest at 5% on the note are due in one year; and (3) uipment costing $69,000 was purchased at the beginning of the year for cash. Depreciation on the equipment is $13,800 per year. he adjusting entries were not recorded, would net income be higher or lower and by how much? ote: Decreases to account classifications should be entered as a negative. Adjusting Entry (1) (2) (3) Total Net income higher

company has a fiscal year-end of December 31: (1) on October 1, $21,000 was paid for a one-year fire insurance policy; (2) on June the company loaned its chief financial officer $19,000; principal and interest at 5% on the note are due in one year; and (3) uipment costing $69,000 was purchased at the beginning of the year for cash. Depreciation on the equipment is $13,800 per year. he adjusting entries were not recorded, would net income be higher or lower and by how much? ote: Decreases to account classifications should be entered as a negative. Adjusting Entry (1) (2) (3) Total Net income higher

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Brief Exercise 2-12 (Algo) Adjusting entries; income determination [LO2-5, 2-6] A company has a fiscal year-end of December 31: (1) on October 1, $21,000 was paid for a one-year fire insurance policy; (2) on June 30 the company loaned its chief financial officer $19,000; principal and interest at 5% on the note are due in one year; and (3) equipment costing $69,000 was purchased at the beginning of the year for cash. Depreciation on the equipment is $13,800 per year. If the adjusting entries were not recorded, would net income be higher or lower and by how much? Note: Decreases to account classifications should be entered as a negative. Adjusting Entry (1) (2) (3) Total Net income higher lower
Transcribed Image Text:Brief Exercise 2-12 (Algo) Adjusting entries; income determination [LO2-5, 2-6] A company has a fiscal year-end of December 31: (1) on October 1, $21,000 was paid for a one-year fire insurance policy; (2) on June 30 the company loaned its chief financial officer $19,000; principal and interest at 5% on the note are due in one year; and (3) equipment costing $69,000 was purchased at the beginning of the year for cash. Depreciation on the equipment is $13,800 per year. If the adjusting entries were not recorded, would net income be higher or lower and by how much? Note: Decreases to account classifications should be entered as a negative. Adjusting Entry (1) (2) (3) Total Net income higher lower
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