Q-1. S & A Associates adjusts its accounts at the end of each month. The following information is available for the year ending December 31, 2009: 1. A bank loan had been obtained on December 1, Accrued interest on the loan at December 31, amounts to $1200.No interest expense has yet been recorded. 2. Depreciation of the firm's office building is based on the estimated life of 25years. The building was purchased in 2005 for $330,000. 3. Accrued, unbilled, revenue during December amounts to $64,000. 4. On March 1, the firm paid $1,800 to renew a 12-month insurance policy. The entire amount was recorded as Prepaid Insurance. 5. The firm received $14,000 from King Biscuit Company in advance of developing a six-month marketing compaign.The entire amount was initially recorded as unearned revenue. At December 31, $3,500 had actually been earned by the firm. 6. The company's policy is to pay its employees every Friday. Since December 31 fell on a Wednesday, there was an accrued liability for salaries amounting to $2,400. • Record the necessary adjusting journal entries on December 31, 2009. • By how much did S &A Associates net income increase or decrease as a result of adjusting entries performed in part a?(ignore income taxes)
Q-1. S & A Associates adjusts its accounts at the end of each month. The following information is available for the year ending December 31, 2009: 1. A bank loan had been obtained on December 1, Accrued interest on the loan at December 31, amounts to $1200.No interest expense has yet been recorded. 2. Depreciation of the firm's office building is based on the estimated life of 25years. The building was purchased in 2005 for $330,000. 3. Accrued, unbilled, revenue during December amounts to $64,000. 4. On March 1, the firm paid $1,800 to renew a 12-month insurance policy. The entire amount was recorded as Prepaid Insurance. 5. The firm received $14,000 from King Biscuit Company in advance of developing a six-month marketing compaign.The entire amount was initially recorded as unearned revenue. At December 31, $3,500 had actually been earned by the firm. 6. The company's policy is to pay its employees every Friday. Since December 31 fell on a Wednesday, there was an accrued liability for salaries amounting to $2,400. • Record the necessary adjusting journal entries on December 31, 2009. • By how much did S &A Associates net income increase or decrease as a result of adjusting entries performed in part a?(ignore income taxes)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Q-1. S & A Associates adjusts its accounts at the end of each month. The following information is
available for the year ending December 31, 2009:
1. A bank loan had been obtained on December 1, Accrued interest on the loan at
December 31, amounts to $1200.No interest expense has yet been recorded.
2. Depreciation of the firm's office building is based on the estimated life of 25years.
The building was purchased in 2005 for $330,000.
3. Accrued, unbilled, revenue during December amounts to $64,000.
4. On March 1, the firm paid $1,800 to renew a 12-month insurance policy. The entire
amount was recorded as Prepaid Insurance.
5. The firm received $14,000 from King Biscuit Company in advance of developing
a six-month marketing compaign.The entire amount was initially recorded as
unearned revenue. At December 31, $3,500 had actually been earned by the firm.
6. The company's policy is to pay its employees every Friday. Since December 31 fell
on a Wednesday, there was an accrued liability for salaries amounting to $2,400.
• Record the necessary adjusting journal entries on December 31, 2009.
• By how much did S &A Associates net income increase or decrease as a
result of adjusting entries performed in part a?(ignore income taxes)
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