Question 23 Admiral Industries commenced operations on January 1, 20Y1, and prepaid two expenses during 20Y1. On April 1, Admiral paid a $90,000 premium for an insurance policy that covers the 12-month period ending March 31, 20Y2. On November 1, Admiral paid $75,000 for an advertising campaign that covers the 6-month period ending April 30, 20Y2. Admiral's accountant correctly accounts for the prepaid expenses when preparing the income statement and balance sheet for 20Y1. However when using the indirect method to prepare the operating activities section of the statement of cash flows for 20Y1, the accountant forgets to make adjustments for the effects of the two prepaid expenses. Unless these errors are corrected, the net cash provided by operating activities for 2011 will be: O $92,500 too low O $72,500 too low O $72.500 too high $92.500 too high O None of the above

Question 23 Admiral Industries commenced operations on January 1, 20Y1, and prepaid two expenses during 20Y1. On April 1, Admiral paid a $90,000 premium for an insurance policy that covers the 12-month period ending March 31, 20Y2. On November 1, Admiral paid $75,000 for an advertising campaign that covers the 6-month period ending April 30, 20Y2. Admiral's accountant correctly accounts for the prepaid expenses when preparing the income statement and balance sheet for 20Y1. However when using the indirect method to prepare the operating activities section of the statement of cash flows for 20Y1, the accountant forgets to make adjustments for the effects of the two prepaid expenses. Unless these errors are corrected, the net cash provided by operating activities for 2011 will be: O $92,500 too low O $72,500 too low O $72.500 too high $92.500 too high O None of the above

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter6: Cash And Receivables

Section: Chapter Questions

Problem 11RE: On December 1 of the current year, Jordan Inc. assigns 125,000 of its accounts receivable to...

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