
Concept explainers
• LO2–5
Prepare the necessary adjusting entries at December 31, 2018, for the Microchip Company for each of the following situations. Assume that no financial statements were prepared during the year and no adjusting entries were recorded.
1. On October 1, 2018, Microchip lent $90,000 to another company. A note was signed with principal and 8% interest to be paid on September 30, 2019.
2. On November 1, 2018, the company paid its landlord $6,000 representing rent for the months of November through January. Prepaid rent was debited.
3. On August 1, 2018, collected $12,000 in advance rent from another company that is renting a portion of Microchip’s factory. The $12,000 represents one year’s rent and the entire amount was credited to rent revenue.
4.
5. Vacation pay for the year that had been earned by employees but not paid to them or recorded is $8,000. The company records vacation pay as salaries expense.
6. Microchip began the year with $2,000 in its asset account, supplies. During the year, $6,500 in supplies were purchased and debited to supplies. At year-end, supplies costing $3,250 remain on hand.

Want to see the full answer?
Check out a sample textbook solution
Chapter 2 Solutions
Intermediate Accounting
- No AI Answerarrow_forwardWhat is the labor efficiency variance for May ?arrow_forwardAt what point do complex accounting policies become counterproductive to their intended purpose of clear financial reporting? Evaluate the balance between comprehensive documentation and practical usability in accounting systems. Is there a way to maintain thorough records without overwhelming users with excessive detail? What role should simplification play in modern accounting practices?arrow_forward
- Determine other comprehensive income for 2018arrow_forwardIf the fixed manufacturing overhead volume variance for April was $9,000 unfavorable, then the total Budgeted fixed manufacturing overhead cost for the month was$__.arrow_forwardI am searching for the accurate solution to this general accounting problem with the right approach.arrow_forward
- AccountingAccountingISBN:9781337272094Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.Publisher:Cengage Learning,Accounting Information SystemsAccountingISBN:9781337619202Author:Hall, James A.Publisher:Cengage Learning,
- Horngren's Cost Accounting: A Managerial Emphasis...AccountingISBN:9780134475585Author:Srikant M. Datar, Madhav V. RajanPublisher:PEARSONIntermediate AccountingAccountingISBN:9781259722660Author:J. David Spiceland, Mark W. Nelson, Wayne M ThomasPublisher:McGraw-Hill EducationFinancial and Managerial AccountingAccountingISBN:9781259726705Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting PrinciplesPublisher:McGraw-Hill Education





