Nathan Corporation's equipment had an original life of 140 months, and the straight-line depreciationmethod is used. As of January 1, the equipment was 40 months old. The equipment will be worthless at theend of its useful life.As of the end of the month, Asher Corporation has provided services to customers for which the earningsprocess is complete. Formal billings are normally sent out on the first day of each month for the priormonth's work. January's unbilled work is $75,000.Utilities used during January, for which bills will soon be forthcoming from providers, are estimated at$4,500.A review of supplies on hand at the end of the month revealed items costing $10,500.The $7,200 balance in prepaid insurance was for a 6-month policy running from January 1 to June 30.The unearned revenue was collected in December of 20X7. 60% of that amount was actually earned inJanuary, with the remainder to be earned in February.The loan accrues interest at 1% per month. No interest was paid in January. Nathan Goldstien's administrative assistant maintains a very simple computerized general ledger system.This system includes intuitive routines for recording receipts, payments, and sales on account. However,the system is not sufficiently robust to automate end-of-period adjustments. Below is the trial balance forthe month ending January 31, 20X8. This trial balance has not been adjusted for the various items that aredescribed on the following page. Review the trial balance and narratives, and prepare the necessary adjustingentries.NATHAN CORPORATIONTrial BalanceJanuary 31, 20X8DebitsCredits112,500 $Cash|Accounts ReceivablePrepaid InsuranceSuppliesEquipmentAccumulatedDepreciationAccounts PayableUnearned RevenueLoan Payable37,2307,20021,339105,00030,00022,70725,50045,00072,00046,371Capital StockRetained Earmings, Jan. 1RevenuesSalary ExpenseRent ExpenseOffice Expense131,98536,29439,0007,500Dividends7,500373,563373,563

Name: Nathan Corporation's equipment had an original life of 140 months, an
Uploaded: 2024-03-05T11:50:36.000Z
Channel: Bartleby
Description: Nathan Corporation's equipment had an original life of 140 months, and the straight-line depreciationmethod is used. As of January 1, the equipment was 40 months old. The equipment will be worthless at theend of its useful life.As of the end of the

The adjustment entries are prepared to adjust the revenue and expenses of the current period.

Business

Accounting

Nathan Corporation's equipment had an original life of 140 months, and the straight-line depreciation method is used. As of January 1, the equipment was 40 months old. The equipment will be worthless at the end of its useful life. As of the end of the month, Asher Corporation has provided services to customers for which the earnings process is complete. Formal billings are normally sent out on the first day of cach month for the prior month's work. January's unbilled work is $75,000. Utilities used during January, for which bills will soon be forthcoming from providers, are estimated at $4,500. A review of supplies on hand at the end of the month revealed items costing $10,500. The $7,200 balance in prepaid insurance was for a 6-month policy running from January 1 to June 30. The unearned revenue was collected in December of 20X7. 60% of that amount was actually earned in January, with the remainder to be earned in February. The loan accrues interest at 1% per month. No interest was paid in January.

Nathan Corporation's equipment had an original life of 140 months, and the straight-line depreciation method is used. As of January 1, the equipment was 40 months old. The equipment will be worthless at the end of its useful life. As of the end of the month, Asher Corporation has provided services to customers for which the earnings process is complete. Formal billings are normally sent out on the first day of cach month for the prior month's work. January's unbilled work is $75,000. Utilities used during January, for which bills will soon be forthcoming from providers, are estimated at $4,500. A review of supplies on hand at the end of the month revealed items costing $10,500. The $7,200 balance in prepaid insurance was for a 6-month policy running from January 1 to June 30. The unearned revenue was collected in December of 20X7. 60% of that amount was actually earned in January, with the remainder to be earned in February. The loan accrues interest at 1% per month. No interest was paid in January.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

Meman
On January 1, Year 2, Webb Construction Company overhauled four cranes resulting in a slight increase in the life of the cranes. Such overhauls occur regularly at two-year intervals and have been treated as maintenance expense in the past. Management is considering whether to capitalize this year's $28,310 cash cost expense. Assume that the cranes have a remaining useful life of two years and no expected salvage value. Assume straight-line depreciation. the Cranes asset account or to expense it as a maintenance Required a. Determine the amount of additional depreciation expense Webb would recognize in Year 2 and Year 3 if the cost were capitalized in the Cranes account. b. Determine the amount of expense Webb would recognize in Year 2 and Year 3 if the cost were recognized as maintenance expense. c. Determine the effect of the overhaul on cash flow from operating activities for Year 2 and Year 3 if the cost were capitalized and expensed through depreciation charges. (Cash outflows…
HP Company purchased equipment on January 1 at a list price of $127,000, with credit terms 2/10, n/30. Payment was made within the discount period and Yocum was given a $21,400 cash discount. Yocum paid $6,000 sales tax on the equipment, and paid installation charges of $11,760. Prior to installation, Yocum paid $4,000 to pour a concrete slab on which to place the equipment. What is the total cost of the new equipment? Select one: a. $123,600 b. $125,360 C. $131,760 d. $129,36 e. The answer does not exist Previous page Next page
On January 2, Alexander Company paid $21,600 to purchase equipment that has a useful life of 6 years. The equipment will be depreciated equally over the 6- year period as depreciation expense. The cost of $21,600 is divided by the useful life of 6 years to determine the amount of the yearly depreciation expense of $3,600. If the appropriate adjusting entry is not made at the end of the year, what will be the effect on: (a) Income statement accounts (overstated, understated, or no effect)? (b) Net income (overstated, understated, or no effect)? E Aa (c) Balance sheet accounts (overstated, understated, or no effect)? Income Statement Accounts Choose One O Choose One Choose One O Balance Sheet Accounts Ⓒ2022 McGraw Hill LLC. All Rights Reserved. Terms of Use | Privacy Center (3) (1) DII DD F10 F8 Revenue: Expense: Net Income: Assets: Liabilities: Retained Earnings: Explanation :0 F1 Choose One O Choose One C Choose One X Start over do Check F2 ? 80 F3 000 000 F4 F5 MacBook Air F6 A F7 F9…
Please explain how to the methods below and only answer if you completely answer the question. Perdue Company purchased equipment on April 1 for $43,470. The equipment was expected to have a useful life of three years, or 7,020 operating hours, and a residual value of $1,350. The equipment was used for 1,300 hours during Year 1, 2,500 hours in Year 2, 2,100 hours in Year 3, and 1,120 hours in Year 4. Required: Determine the amount of depreciation expense for the years ended December 31, Year 1, Year 2, Year 3, and Year 4, by (a) the straight-line method, (b) the units-of-activity method, and (c) the double-declining-balance method.
O'Connor Company ordered a machine on January 1 at a purchase price of $100,000. On the date of delivery, January 2, the company paid $25,000 on the machine and signed a long-term note payable for the balance. On January 3, it paid $1,000 for freight on the machine. On January 5, O'Connor paid cash for installation costs relating to the machine amounting to $6,000. On December 31 (the end of the accounting period), O'Connor recorded depreciation on the machine using the straight-line method with an estimated useful life of 10 years and an estimated residual value of $10,700. Required: 1. Indicate the effects (accounts, amounts, and + for increase, - for decrease) of each transaction (on January 1, 2, 3, and 5) on the accounting equation. 2. Compute the acquisition cost of the machine. 3. Compute the depreciation expense to be reported for the first year. 4. What should be the book value of the machine at the end of the second year? Complete this question by entering your answers in the…
Dengar
Read the description of the following adjustments that are required at the end of the accounting period for Paulo Consulting Services. Record the necessary journal entries required at the end of January. (Round your answers to the nearest whole dollar.) Equipment was purchased on January 1, 20X1, for $45,000 and has an estimated useful life of 8 years with a salvage value of 3,720. Depreciation is computed using the straight-line method. Signed a 5-month contract for $6,210 of prepaid advertising on January 1, 20X1. Prepaid rent for the year on January 1, 20X1, in the amount of 26,950. Purchased supplies for $7,000 on January 1, 20X1. Inventory of supplies was $5,650 on January 31, 20X1. Do not give answer in image
On 4 January 20X5, a new legislation was enacted requiring the company to remediate damages to the land due to the use of harsh chemicals in their manufacturing plant. The total estimated cost is $850,000. The company plans to perform the work in nine years. The interest rate specific to the liability is 7%. Prepare the journal entries on 4 January 20X5 and 31 December 20X5.
On January 1, Hawaiian Specialty Foods purchased equipment for $31,000. Residual value at the end of an estimated four-year service life is expected to be $5,800. The machine operated for 3,110 hours in the first year, and the company expects the machine to operate for a total of 21,000 hours. Record depreciation expense for each of the first two years using the straight-line method. (If no entry is required for a particular transaction/event, select "No Journal Entry Required" in the first account field.)
A construction company entered into a fixed-price contract to build an office building for $36 million. Construction costs incurred during the first year were $9 million, and estimated costs to complete at the end of the year were $21 million. The company recognizes revenue over time according to percentage of completion. During the first year the company billed its customer $9 million, of which $6 million was collected before year-end. What would appear in the year-end balance sheet related to this contract? Note: Enter your answers in whole dollars and not in millions (i.e., $4 million should be entered as $4,000,000). > Answer is complete but not entirely correct. Balance Sheet (Partial) Assets: Accounts receivable Costs plus profit in excess of billings $ 3,000,000 $ 9,429,600 X
Depreciation on the company's equipment for the year is computed to be $14,000. The Prepaid Insurance account had a $6,000 debit balance at December 31 before adjusting for the costs of any expired coverage. An analysis of the company’s insurance policies showed that $540 of unexpired insurance coverage remains. The Supplies account had a $430 debit balance at the beginning of the year, and $2,680 of supplies were purchased during the year. The December 31 physical count showed $507 of supplies available. One-fourth of the work related to $11,000 of cash received in advance was performed this period. The Prepaid Rent account had a $5,300 debit balance at December 31 before adjusting for the costs of expired prepaid rent. An analysis of the rental agreement showed that $4,760 of prepaid rent had expired. Wage expenses of $6,000 have been incurred but are not paid as of December 31. Prepare adjusting journal entries for the year ended December 31 for each separate situation.