Blog

It is obvious that an error occurred in the preparation and/or posting of closing entries if:

On April 1, Taos, Inc. paid Penthouse Publishing Company $1,548 for 36-month subscriptions to several different magazines. Taos debited the prepayment to a Prepaid Subscriptions account, and the subscriptions started immediately. What amount should appear in the Prepaid Subscription account for Taos, Inc. after adjustments on December 31 of the second year assuming the company is using a calendar-year reporting period and the previous year adjustment had been made?

The question of when revenue should be recognized on the income statement according to GAAP is addressed by the:

Kopter Co. has a net income of $43,000, assets at the beginning of the year are $250,000 and assets at the end of the year are $300,000. Compute its return on assets.

Bob’s Lawn Service purchased $7,000 worth of supplies and paid cash immediately. Which of the following general journal entries will Bob’s Lawn Service make to record this transaction? Assume the company’s policy is to initially record prepaid and unearned items in balance sheet accounts.

Peters Consulting purchased $500 of office supplies on credit. The company’s policy is to initially record prepaid and unearned items in balance sheet accounts. Which of the following general journal entries will Peters consulting make to record this transaction?

Rodriguez owns machinery that cost $87,000 with accumulated depreciation of $40,000. The company sells the machinery for cash of $42,000. The journal entry to record the sale would include:

Dapper has beginning equity of $257,000, net income of $51,000, dividends of $40,000 and stockholder investments of $6,000. Its ending equity is:

Dapper has beginning equity of $257,000, net income of $51,000, dividends of $40,000 and stockholder investments of $6,000. Its ending equity is:

On September 12, Wander Company sold merchandise in the amount of $5,800 to Jetson Company, with credit terms of 2/10, n/30. The cost of the items sold is $4,000. Wander uses the periodic inventory system and the gross method of accounting for sales. On September 14, Jetson returns some of the merchandise. The selling price of the merchandise is $500 and the cost of the merchandise returned is $350. Jetson pays the invoice on September 18, and takes the appropriate discount. The journal entry that Wander makes on September 18 is: