9th Edition

ISBN: 9781260029901

Author: J. David Spiceland, Mark W. Nelson, Wayne M Thomas

Publisher: McGraw-Hill Education

Concept explainers

The Effect Of Prepaid Taxes On Assets And Liabilities

Many businesses estimate tax liability and make payments throughout the year (often quarterly). When a company overestimates its tax liability, this results in the business paying a prepaid tax. Prepaid taxes will be reversed within one year but can resu…

Final Accounts

Financial accounting is one of the branches of accounting in which the transactions arising in the business over a particular period are recorded.

Ledger Posting

A ledger is an account that provides information on all the transactions that have taken place during a particular period. It is also known as General Ledger. For example, your bank account statement is a general ledger that gives information about the a…

Trial Balance and Final Accounts

In accounting we start with recording transaction with journal entries then we make separate ledger account for each type of transaction. It is very necessary to check and verify that the transaction transferred to ledgers from the journal are accurately…

Adjustment Entries

At the end of every accounting period Adjustment Entries are made in order to adjust the accounts precisely replicate the expenses and revenue of the current period. It is also known as end of period adjustment. It can also be referred as financial repor…

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Textbook Question

Chapter 2, Problem 2.11E

Adjusting entries

• LO2–5

The Mazzanti Wholesale Food Company’s fiscal year-end is June 30. The company issues quarterly financial statements requiring the company to prepare adjusting entries at the end of each quarter. Assuming all quarterly adjusting entries were properly recorded, prepare the necessary year-end adjusting entries at the end of June 30, 2018, for the following situations.

1. On December 1, 2017, the company paid its annual fire insurance premium of $6,000 for the year beginning December 1 and debited prepaid insurance.

2. On August 31, 2017, the company borrowed $80,000 from a local bank. The note requires principal and interest at 8% to be paid on August 31, 2018.

3. Mazzanti owns a warehouse that it rents to another company. On January 1, 2018, Mazzanti collected $24,000 representing rent for the 2018 calendar year and credited deferred rent revenue.

4. Depreciation on the office building is $20,000 for the fiscal year.

5. Employee salaries and wages for the month of June 2018 of $16,000 will be paid on July 20, 2018.

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Chapter 2, Problem 2.10E

Chapter 2, Problem 2.12E

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Solution Summary: The author explains the accounting rules for journal entries to correct or adjust the revenue and expense accounts to concede with the accrual principle of accounting.

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