6th Edition

ISBN: 9781260159516

Author: PHILLIPS

Publisher: MCG

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The Effect Of Prepaid Taxes On Assets And Liabilities

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Financial accounting is one of the branches of accounting in which the transactions arising in the business over a particular period are recorded.

Ledger Posting

A ledger is an account that provides information on all the transactions that have taken place during a particular period. It is also known as General Ledger. For example, your bank account statement is a general ledger that gives information about the a…

Trial Balance and Final Accounts

In accounting we start with recording transaction with journal entries then we make separate ledger account for each type of transaction. It is very necessary to check and verify that the transaction transferred to ledgers from the journal are accurately…

Adjustment Entries

At the end of every accounting period Adjustment Entries are made in order to adjust the accounts precisely replicate the expenses and revenue of the current period. It is also known as end of period adjustment. It can also be referred as financial repor…

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Textbook Question

Chapter 4, Problem 6E

Determining Adjustments and Accounting Equation Effects

Fes Company is making adjusting journal entries for the year ended December 31, 2018. In developing information for the adjusting journal entries, you learned the following:

a. A two-year insurance premium of $7,200 was paid on January 1, 2018, for coverage beginning on that date. As of December 31, 2018, the unadjusted balances were $7,200 for Prepaid Insurance and $0 for Insurance Expense.
b. At December 31, 2018, you obtained the following data relating to supplies.

Chapter 4, Problem 6E, Determining Adjustments and Accounting Equation Effects Fes Company is making adjusting journal

Required:

1. Of the $7,200 paid for insurance, what amount should be reported on the 2018 income statement as Insurance Expense? What amount should be reported on the December 31, 2018, balance sheet as Prepaid Insurance?
2. What amount should be reported on the 2018 income statement as Supplies Expense? What amount should be reported on the December 31, 2018, balance sheet as Supplies?
3. Using the format shown in the demonstration case, indicate the accounting equation effects of the adjustment required for (a) insurance and (b) supplies.

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

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Chapter 4, Problem 5E

Chapter 4, Problem 7E

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An examination of Insurance Policies of Standard Company is presented below: Policy Date of Purchase Life of Policy Cost September 1, 2019 4years P25,920 May 1, 2020 2years 18,960 July 31, 2020 1year 9,720 Prepaid Insurance was debited for the cost of each policy at the time of its purchase. Expired insurance was correctly recorded at the end of 2019. What is the balance of Prepaid Insurance at the end of 2020?

Adjusting entries for prepaid insurance Instructions Chart of Accounts Journal Instructions The balance in the prepaid insurance account, before adjustment at the end of the year, is $18,135. Journalize the March 31 adjusting entry required under each of the following alternatives for determining the amount of the adjustment: (a) the amount of insurance expired during the year is $15,480; (b) the amount of unexpired insurance applicable to future periods is $2,655. Refer to the chart of accounts for the exact wording of the account titles. CNOW journals do not use lines for journal explanations. Every line on a journal page is used for debit or credit entries. CNOW journals will automatically indent a credit entry when a credit amount is entered. Chart of Accounts CHART OF ACCOUNTS General Ledger ASSETS 11 Cash 12 Accounts Receivable 13 Supplies 14 Prepaid Insurance 15 Land 16 Equipment 17…

Adjusting entries for prepaid insurance The balance in the prepaid insurance account, before adjustment at the end of the year, is $21,910. Journalize the adjusting entry required under each of the following alternatives for determining the amount of the adjustment: a. The amount of insurance expired during the year is $16,650. If an amount box does not require an entry, leave it blank. b. The amount of unexpired insurance applicable to future periods is $5,260. If an amount box does not require an entry, leave it blank. Σ .

Chapter 4 Solutions

Fundamentals Of Financial Accounting

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Solution Summary: The author explains how to calculate the amount of insurance expense that should be reported on the 2018 income statement.

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