Concept explainers
Videos
Problem 3-2B Preparing adjusting and subsequent
Natsu Company's annual accounting period ends on October 31. 2019. The following information concerns the
a. The Office Supplies account started the fiscal year with a S600 balance. During the fiscal year, the company purchased supplies for S4,570, which was added to the Office Supplies account. The supplies available at October 31, 2019, totaled S800. Page 120
b. An analysis of the company's insurance policies provided the following facts. The total premium for each policy was paid in full (for all months) at the purchase date, and the Prepaid Insurance account was debited for the full cost. (Tear-end adjusting entries for Prepaid Insurance were properly recorded in all prior Escal years.)
Policy Date of Purchase Months of Coverage Cost
A...... April 1.201E 2A $6,000
B...... April 1.2019 36 7,200
C...... August 1.2019 12 1,320
C. The company has four employees, who earn a total of SI,000 for each workday. They are paid each Monday for their work in the five-day
workweek ending on the previous Friday. Assume that October 31. 2019, is a Monday, and all four employees worked the first day of that week. They will be paid salaries for five full days on Monday. November 7. 2019.
d. The company purchased a building on November 1, 2016, that cost S175,000 and is expected to have a S40,000 salvage value at the end of its predicted 25-year life. Annual depreciation is S5,400.
e. Because the company does not occupy the entire building it owns, it rented space to atenant at SI,000 per month, starling on September 1, 2019. The rent was paid on time on September 1. and the amount received was credited to the Rent Earned account. However, the October rent has not been paid. The company has worked out an agreement with the tenant, who has promised to pay both October and November rent in full on November 15. The tenant has agreed not to fall behind again.
f. On September 1, the company rented space to another tenant for S725 per month. The tenant paid five months' rent in advance on that date. The payment was recorded with a credit to the Unearned Rent account.
Required
Check (1b) Dr. Insurance Expense. S4.730
(1d) Dr. Depreciation Expense. S5.400
1. Use the information to prepare adjusting entries as of October 31, 2019.
2. Prepare journal entries to record the first subsequent cash transaction in November 2019 for parts c and e.
Want to see the full answer?
Check out a sample textbook solution
Chapter 3 Solutions
Loose Leaf For Fundamental Accounting Principles Format: Loose-leaf
- Tungsten, Inc. manufactures both normal and premium tube lights. The company allocates manufacturing over machine hours as the allocation base. Estimated overhead costs for the year are $108,000. Additional estimated information is given below. Machine hours (MHr) Direct materials Normal 23,000 $60,000 Premium 31,000 $480,000 Calculate the predetermined overhead allocation rate. (Round your answer to the nearest cent.) OA. $4.70 per direct labor hour OB. $3.48 per machine hour OC. $2.00 per machine hour OD. $0.20 per direct labor hourarrow_forward< Factory Utilities Indirect Materials Used $1,300 34,500 Direct Materials Used 301,000 Property Taxes on Factory Building 5,100 Sales Commissions 82,000 Indirect Labor Incurred 25,000 Direct Labor Incurred 150,000 Depreciation on Factory Equipment 6,300 What is the total manufacturing overhead?arrow_forwardDiscuss the financial reporting environment and financial statements. What is the purpose of accounting? What impact does the AICPA, FASB, and SEC play in accounting, particularly with regards to the financial statements?arrow_forward
- K Sunlight Design Corporation sells glass vases at a wholesale price of $3.50 per unit. The variable cost to manufacture is $1.75 per unit. The monthly fixed costs are $7,500. Its current sales are 27,000 units per month. If the company wants to increase its operating income by 30%, how many additional units must it sell? (Round any intermediate calculations to two decimal places and your final answer up to the nearest whole unit.) A. 7,500 glass vases OB. 33,815 glass vases OC. 6,815 glass vases D. 94,500 glass vasesarrow_forwardCan you help me with of this question general accountingarrow_forwardWhat is the correct option? General accounting questionarrow_forward
- Financial Accountingarrow_forwardKhayyam Company, which sells tents, has provided the following information: Sales price per unit Variable cost per unit $40 19 $12,800 Fixed costs per month What are the required sales in units for Khayyam to break even? (Round your answer up to the nearest whole unit.) OA. 217 units B. 674 units OC. 610 units D. 320 unitsarrow_forwardPlease need help with this accounting question answer do fastarrow_forward
Intermediate Accounting: Reporting And AnalysisAccountingISBN:9781337788281Author:James M. Wahlen, Jefferson P. Jones, Donald PagachPublisher:Cengage Learning
College Accounting, Chapters 1-27AccountingISBN:9781337794756Author:HEINTZ, James A.Publisher:Cengage Learning,
Century 21 Accounting Multicolumn JournalAccountingISBN:9781337679503Author:GilbertsonPublisher:Cengage