2nd Edition

ISBN: 9780134730370

Author: Elizabeth A. Gordon, Jana S. Raedy, Alexander J. Sannella

Publisher: PEARSON

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A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It…

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Textbook Question

Chapter 4, Problem 4.6MC

Sampson Manufacturing Company (SMC) has an empty warehouse that it rents out to a local beer distributor for a monthly rental fee of $6,000. Terms of the rental agreement include a 10-day payment grace period and an additional $200 monthly utility expense, necessary to maintain the beer distributor’s products at the proper temperature, paid by SMC. Assuming that SMC records journal entries on a monthly basis and that it receives the December monthly rent payment on January 9, what is the adjusting journal entry (if any) made by SMC on December 31 (with December’s $200 utility payment made on January 2)?

a. Rent Receivable	6,000
Rent Revenue		6,000
b. Rent Receivable	5,800
Utilities Expense	200
Rent Revenue		6 ,000
c. Rent Receivable	6,000
Utilities Expense	200
Rent Revenue		6,000
Utilities Payable		200
d. No journal entry necessary.

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Chapter 4, Problem 4.5MC

Chapter 4, Problem 4.7MC

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Chapter 4 Solutions

Intermediate Accounting (2nd Edition)

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Solution Summary: The author explains that the correct option is c, which is the primary record of the business transaction in chronological order.

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