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Concept explainers
Journalizing
Lorring Landscaping has the following data for the December 31 adjusting entries:
a. Each Friday, Lorring pays employees for the current week’s work. The amount of the weekly payroll is $6,000 for a five-day workweek. This year, December 31 falls on a Tuesday. Lorring will pay its employees on January 3.
b. On January 1 of the current year, Lorring purchases an insurance policy that covers two years, $4,000.
c. The beginning balance of Office Supplies was $4,100. During the year, Lorring purchased office supplies for $5,500, and at December 31 the office supplies on hand total $2,200.
d. During December, Lorring designed a landscape plan and the client prepaid $4,000. Lorring recorded this amount as Unearned Revenue. The job will take several months to complete, and Lorring estimates that the company has earned 50% of the total revenue during the current year.
e. At December 31, Lorring had earned $4,500 for landscape services completed for Tomball Appliances. Tomball has stated that it will pay Lorring on January 10.
f.
g. Lorring has incurred $800 of interest expense on a $1,200 interest payment due on January 15.
Requirements
1. Journalize the adjusting entry needed on December 31 for each of the previous items affecting Lorring Landscaping. Assume Lorring records adjusting entries only at the end of the year.
2. Journalize the subsequent journal entries for adjusting entries a, d, and g.
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Chapter 3 Solutions
Horngren's Financial & Managerial Accounting (5th Edition)
- Financial Accountingarrow_forwardOn January 1, 2024, Maywood Hydraulics leased drilling equipment from Aqua Leasing for a four-year period ending December 31, 2027, at which time possession of the leased asset will revert back to Aqua. • The equipment cost Aqua $423,414 and has an expected economic life of five years. Aqua and Maywood expect the residual value at December 31, 2027, to be $60,000. Negotiations led to Maywood guaranteeing a $85,000 residual value. • Equal payments under the lease are $120,000 and are due on December 31 of each year with the first payment being made on December 31, 2024. Maywood is aware that Aqua used a 7% interest rate when calculating lease payments. Note: Use tables, Excel, or a financial calculator. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) Required: 1. & 2. Prepare the appropriate entries for Maywood on January 1, 2024 and December 31, 2024, related to the lease. Note: If no entry is required for a transaction/event, select "No journal entry required" in…arrow_forwardWhat is the break even point in sales provide answerarrow_forward
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