9th Edition

ISBN: 9781260255775

Author: SPICELAND, Nel

Publisher: MCG

Concept explainers

Reporting of cash flows means a statement of cash flow which is a financial statement. A cash flow statement is prepared by gathering all the data regarding inflows and outflows of a company. The cash flow statement includes cash inflows and outflows fro…

Balance Sheet

A balance sheet is an integral part of the set of financial statements of an organization that reports the assets, liabilities, equity (shareholding) capital, other short and long-term debts, along with other related items. A balance sheet is one of the …

Financial Statements

Financial statements are written records of an organization which provide a true and real picture of business activities. It shows the financial position and the operating performance of the company. It is prepared at the end of every financial cycle. It…

Owner's Capital

Before we begin to understand what Owner’s capital is and what Equity financing is to an organization, it is important to understand some basic accounting terminologies. A double-entry bookkeeping system Normal account balances are those which are expect…

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Textbook Question

Chapter 2, Problem 2.8E

Adjusting entries

• LO2–5

Prepare the necessary adjusting entries at December 31, 2018, for the Falwell Company for each of the following situations. Assume that no financial statements were prepared during the year and no adjusting entries were recorded.

1. A three-year fire insurance policy was purchased on July 1, 2018, for $12,000. The company debited insurance expense for the entire amount.

2. Depreciation on equipment totaled $15,000 for the year.

3. Employee salaries of $18,000 for the month of December will be paid in early January 2019.

4. On November 1, 2018, the company borrowed $200,000 from a bank. The note requires principal and interest at 12% to be paid on April 30, 2019.

5. On December 1, 2018, the company received $3,000 in cash from another company that is renting office space in Falwell’s building. The payment, representing rent for December and January, was credited to deferred rent revenue.

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Chapter 2, Problem 2.7E

Chapter 2, Problem 2.9E

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Chapter 2 Solutions

SPICELAND GEN CMB LL INTRM ACCTG; CNCT

Ch. 2 - Explain the difference between external events and...Ch. 2 - Each economic event or transaction will have a...Ch. 2 - What is the purpose of a journal? What is the...Ch. 2 - Explain the difference between permanent accounts...Ch. 2 - Describe how debits and credits affect assets,...Ch. 2 - Describe how debits and credits affect temporary...Ch. 2 - What is the first step in the accounting...Ch. 2 - Prob. 2.8Q Ch. 2 - Prob. 2.9Q Ch. 2 - Prob. 2.10Q

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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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