All rights reserved. 1. D) Recognizes expenses when paid in cash. A) Depreciation Expense. A fiscal year refers to an organization's accounting period that spans twelve consecutive A) A debit to an expense and a credit to a prepaid expense for $5,625. C) Cash basis of accounting. (A reconciliation schedule is not required.). Olive follows a policy of recording all prepaid expenses to asset accounts at the time of cash payment. A long-term investment in bonds, originally purchased for$30 million, was sold for $35 million. Credit Cash $23,000. B) Contra account. Assume that year ended on December 31, which is a Wednesday, and all employees will be paid salaries for five full days on the following Monday. Rent unearned at July 31, 300. Revenue and expense balances are transferred from the adjusted trial balance to the income Adjusting entries are made after the preparation of financial statements. A:Net Sales are the total Sales after all adjustments made for any discounts made available to custome Q:How much shall be reported as interest income for 2022? A company paid $9,000 for a twelve-month insurance policy on February 1. The Current ratio is a ratio which is considered as a liquidity ratio. This indicates that Flo's can cover its short term liabilities with its short term assets. E) A debit to Fees Earned and a credit to Cash for $500. A debit to a prepaid expense and a credit to Cash for $5,775. If the monthly accounting period ends on Thursday and the employees worked through Thursday, the amount of salaries earned but unpaid at the end of the accounting period is: On January 1, Eastern College received $1,370,000 from its students for the spring semester that it recorded in Unearned Tuition and Fees. On B. Otisco debited the prepayment to a Prepaid Subscriptions account, and the subscriptions started immediately. been owned: a. Graph this function for x between 0 and 4200 . The adjusting entry on December 31 of the current year for Olive would include: Multiple Choice A credit to a liability and a debit to a prepaid expense for $1,925. Copyright 2019 McGraw-Hill Education. E) Assuring that external transaction amounts remain unchanged. The adjusting entry on December 31 of the current year for Olive would include: D) Affect cash accounts. accounting period. Olive follows a policy of recording all prepaid expenses to asset accounts at the time of cash payment. What is the correct closing entry for the revenue accounts? for a five-day week that begins on Monday. future. ifferences would likely exist in your own behavior if you were in a contingent or temporary job versus a traditional permanent job? is called $250,000 0.12 60/360 = $5,000. Prepare journal entries for Garcia to record the collection ofrent and the related year-end adjusting entry on December 31. On July 1 Olive should record: There was no beginning balance in the Unearned Revenue account for the period. The ending retained earnings balance after closing is: $361,400 Financial and Managerial Accounting, 8e (Wild) C) Debit Salaries Expense and credit Cash. adjusting entry made by Fragmental Co. on December 31 would be: We reviewed their content and use your feedback to keep the quality high. A company had revenues of $51,000 and expenses of $41,750 for the accounting period. Adjusting entries always affect the cash account. Values) Goring Dairy leases its mi A:Lease- B) $21,000. Experts are tested by Chegg as specialists in their subject area. D) Profit margin is calculated by dividing net income by net sales. We do not Q:Garrison Manufacturing has the following standard cost sheet for one of its products: A) Cash basis accounting. 18,375 gal business A debit to Cash for $7,500 and a credit to an expense for $7,500. B) Profit margin is also called return on sales. A company had $6,992,000 in net income for the year. C) A debit to a prepaid expense and a credit to Cash for $7,500. E) Accrued expenses. Adjusting entries made at the end of an accounting period accomplish all of the following The retained earnings account before closing had a balance of $298,000. *. C) Is shown on the income statement of the final period. Copyright 2019 McGraw-Hill Education. 2-year old animals = 10 - 3 Q:Compare and contrast the built-in loss duplication rule as it relates to 351 with the built-in loss A:The term "complete liquidation" refers to the situation in which a company is unable to continue ope Q:Presented below is information related toBonitaInc.s inventory. A debit to an expense and a credit to a prepaid expense for $5,775. P 30, Q:Eisha Company conducted a physical count on December 31, 2021 which showed inventory with a total D) A debit to Unearned Rent and a credit to Rent Revenue for $2,400. b. Cash, short-term investments, and accounts receivable divided A:Solution: $39,200 in dividends were paid during the year. B) Cause an adjustment to prior expense to be overstated and assets to be understated. d. A building that originally cost $60 million, and which was one-fourth depreciated, was destroyed by fire. D) Intangible asset. Profit margin is defined as: After closing entries are posted, what will be the balance in the Retained earnings account? $1,050 + 600 $1,250 = $400. 18,750 B) Is referred to as accumulated depreciation. Adjustments are necessary to bring an asset or liability account to its proper amount and also 0 B) A contra account. The system of preparing financial statements based on recognizing revenues when the cash \text{Sales revenue} &\$320\\ Annual lease payments of$12 million are paid at Jan. 1 of each year starting in 2021. The adjusting entry on December 31 of the current year for Olive would include: \text{Preferred stock} &50 &0\\ f. $130 million of bonds were retired at maturity. Retained earnings 135,500 A) $3,250. Which of the following entries would be used to close the dividends account? adjusting entry is made at the end of the period to bring the asset account balance to the correct During 2022, P400,000 in mer A:Note: 1/15, n/45: Here, 1 represent the discount rate if payment is made within 15 days. $33,400 van during the first year ended December 31? Beginning Retained earnings + Revenues Expenses Dividends = Ending Retained earnings Which of the following accounts showing a balance on the post-closing trial balance indicate an error? understates current period income. Fragmental collected the entire $6,400 cash on October Net Income $53,500 On the work sheet, net income is entered in the Income Statement Credit column as well as E) Net sales divided by net income. Net income for a period will be understated if accrued revenues are not recorded at the end of end of the accounting period. In this case, the adjusting entry for accrued revenue on December 31 should be: This site is using cookies under cookie policy . 18 of 30 A) Accrued interest on notes payable. Concept $380,000 0.09 30/360 = $2,850. account balance to the correct unearned amount. $6,000 $3,600 = $2,400. \text{Buildings and equipment}& 290 &270\\ not in helping to prepare interim financial statements. C) Recognize assets purchased during the period. On July 1 Olive Co. paid $7,500 cash for management services to be performed over a two-year period. The expense recognition (matching) principle requires that expenses get recorded in the same On July 1 Olive Co. paid $7,500 cash for management services to be performed over a two-year period. 22,250 4 A company's Office Supplies account shows a beginning balance of $600 and an ending A physical count of supplies on hand at the end of May for Masters, Inc. indicated $1,245 of supplies on hand. A) An overstatement of equity. The delivery van for the period ending. If investors observe multiple "red flags" when doing an accounting policy analysis, Adjusting entries result in a better matching of revenues and expenses for the period. specific time periods such as months, quarters, or years. b. lateral moves The accrual basis of accounting requires adjustments to recognize revenues in the periods High Step Shoes had annual revenues of $191,000, expenses of $106,700, and dividends of $20,400 during the current year. A red flag is a warning which suggests that there is a potential problem with company's Q:A purchasing Department purchased the following items at the given list prices & trade The $6,000 cash receipt What was the scale factor used? Capital of A and B are in excess of average investment. Summary; (2) close debit balances in expense accounts to Income Summary; (3) close Income D) An asset on the balance sheet. All rights reserved. It is acceptable to record cash received in advance of providing products or services to 96,836 D) An understatement of liabilities. D) Accrual reporting principle. Instructions 1. sheet. $1,620/36 = $45 per monthYear 1 = $1,620 ($45 9) = $1,215. E) Profit margin is not a useful measure of a company's operating results. Assuming adjustments are only made at year-end, what is the adjusting entry that should be recorded by Garcia Publishing Company on December 31 of the first year? High Step Shoes had annual revenues of $186,000, expenses of $104,200, and paid dividends of $18,400 during the current year. The adjusting entry would include a $2,800 debit to Supplies. B) Debit Prepaid Insurance, $1,440; credit Insurance Expense, $1,440. Since the revenue recognition principle requires that revenues be recorded when earned, On May 1, a two-year insurance policy was purchased for $21,600 with coverage to begin immediately. 25000 Retained earnings 110,000 Copyright 2019 McGraw-Hill Education. \text{Lease liability}& 68 &0\\ of the opinions highlighted in the case study. temporary accounts, and (2) all temporary accounts have zero balances. B) Record internal transactions and events. Depreciation expense for a period is the portion of a plant asset's cost that is allocated to that The balance in the unearned fees account, before adjustment at the end of the year, is 18,000. $7,500/2 = $3,750 per month. Recording revenues early overstates current-period income; recording revenues late Bonds Payable 2. Closing entries result in the Dividends account being transferred into net income or net loss On July 1 Olive Co. paid $7,500 cash for management services to be performed over a two-year period. What is the correct closing entry for the expense accounts? On January 1, 2021, it had te A:Biological assets available at the end of the year (December 31, 2021): All rights reserved. Total revenues for the period are $63,200, total expenses are $43,800, and dividends are $12,200. Become Premium to read the whole document. g.$20 million par value of common stock was sold for $30 million, and$50 million of preferred stock was sold at par. was purchased during the period? Olive follows a policy of recording all prepaid expenses to asset accounts at the time of cash payment. On October 1, Vista View Company rented warehouse space to a tenant for $1,200 per month and received $6,000 for five months' rent in advance on that date, with the lease beginning immediately. Its profit margin is: revenues earned. There was no beginning balance in the Unearned Revenue account for the period. Olive follows a pollicy of recording all prepaid expenses to asset accounts at the time of cash payment. C) Are also called unearned revenues. During the period, the company completed $6,200 of the agreed-on services for the client. B) Debit Salaries Expense $400 and credit Salaries Payable $400. Two main accounting principles used in accrual accounting are expense recognition and full A debit to a prepaid expense and a credit to an expense for $1,925. there are no unearned revenues in accrual accounting. The company's annual accounting period ends on December 31, and adjustments are only made at year-end. All rights reserved. These balances indicate that net income for the current accounting period hiw doe dukaegbcvuah;o cinqigggern \text{Less: Accumulated depreciation }&(85)& (75)\\ Copyright 2023 StudeerSnel B.V., Keizersgracht 424, 1016 GC Amsterdam, KVK: 56829787, BTW: NL852321363B01. B) 30%. Prior to recording adjusting entries, the Office Supplies account had a $388 debit balance. The expense recognition (matching) principle does not aim to record expenses in the same Fees earned but unbilled on July 31, 10,200. Revenues $202,000 Expenses $112,200 = Net Income $89,800. Fragmental Co. leased a portion of its store to another company for eight months beginning on October 1, at a monthly rate of $1,225. The closing process takes place before financial statements have been prepared. . \text{Revenues}\\ The Income Summary account is used to close the permanent accounts at the end of an a. lay off Purposive Communication Module 2, Recrystallization of Benzoic Acid Lab Report, 46 modelo de carta de renuncia voluntaria, Leadership class , week 3 executive summary, I am doing my essay on the Ted Talk titaled How One Photo Captured a Humanitie Crisis https, School-Plan - School Plan of San Juan Integrated School, SEC-502-RS-Dispositions Self-Assessment Survey T3 (1), Techniques DE Separation ET Analyse EN Biochimi 1. A company owes its employees $5,000 for the year ended December 31. Olive follows a policy of The adjusting entry needed on December 31 is: Debit Salaries Expense, $5,400 Credit Salaries Payable, $5,400. Financial accounting is one of the branches of accounting in which the transactions arising in the business over a particular period are recorded. A) Store fixtures. The accrual basis of accounting reflects the principle that revenue is recorded when it is The accrual basis of accounting: The policy ALVR Digital Bank granted a loan to a client A:Interest Income -It is the amount of money paid by the borrower over and above the loan amount to t Q:Bonds that pay no interest unless the issuing company is profitable Use the marginal tax rates in Table 4.94.94.9 to compute the tax owed in the following situation. Flo's Flowers' current ratio is 1.3. Depreciation of equipment for the year, 2,800. A) Expense recognition (matching) principle. Copyright 2019 McGraw-Hill Education. A company had no office supplies available at the beginning of the year. A) Debit Unpaid Salaries $600 and credit Salaries Payable $600. 22,250 After preparing and posting the closing entries for revenues and expenses, the income summary account has a debit balance of $25,000. A work sheet contains all of the balances for each account and therefore may be used as a \text{Loss on sale of building}&42 298\\ contract. $5,200 2/4 = $2,600. A) At the end of one accounting period result in cash receipts in a future period. Chase Company has 10 employees, who earn a total of $1,800 in salaries each working day. On December 31, $75 worth of office supplies remained. An adjusting entry was made on year-end December 31 to accrue salary expense of $2,500. \text{Bad debt expense} &7\\ amortization, the periodic interest A:Solution 8 This is a Premium document. They are paid on Monday for the five-day workweek ending on the previous Friday. C) Affect both income statement and balance sheet accounts. Garcia Company rents out a portion of its building to Jerry Company for 1,000 per month. 21,875 D) $25,000. B) Cost principle. Ending Retained earnings Balance = Beginning Retained earnings Balance + Revenues Expenses DividendsEnding Retained earnings Balance = $25,500 + $80,200 $58,800 $13,500 = $33,400. \text{Investment revenue} &15\\ Q:Sarasota Company has the following stockholders equity accounts at December 31, 2020. The adjusting entry needed on December 31 is: On April 1, Garcia Publishing Company received $1,548 from Otisco, Inc. for 36-month subscriptions to several different magazines. Ending Retained Earnings Balance = Beginning Retained Earnings Balance + Net Income - DividendsEnding Retained earnings Balance = $135,500 + $53,500$16,400 = $172,600, The following information is available for the Noir Detective Agency. E) None of the answer choices is correct. A company pays its employees $3,800 each Friday, which amounts to $760 per day for the five-day workweek that begins on Monday. A) $17,000. 1110 Copyright 2019 McGraw-Hill Education. relevant range of production mea Q:Gil Co. purchased four items of inventory at a bulk price of P9,000,000. On July 1 of the current calendar year, Plum Co. paid $7,500 cash for management services to be performed over a two-year period beginning July 1. b. Adjusting entries are designed primarily to correct accounting errors. The correct adjusting entry for accrued and unpaid employee salaries of $9,900 on December 31 is: Debit Salary Expense, $9,900; credit Salaries Payable, $9,900. E) A credit to a liability and a debit to a prepaid expense for $1,875. On July 1 of the current calendar year, Olive Co. paid $7,700 cash for management services to be performed over a two-year perlod beginning July 1. The balance in the supplies account, before adjustment at the end of the year, is 5,330. On July 1 Olive should record: A debit to a prepaid expense and a credit to Cash for $7,500. A company earned $3,000 in net income for October. the same period. A) Debit Prepaid Insurance, $1,800; credit Cash, $1,800. D) Expense recognition (Matching) principle. Cash (Credit) 5,600. $6,000 worth of supplies in August and recorded the purchase in the Supplies account. . accounting period as the revenue earned as a result of these expenses. On July 1 Olive Co. paid $7,500 cash for management services to be performed over a two- year period. total contract is valued at $6,000, with payment received in advance. Adjusting entries are necessary so that asset, liability, revenue, and expense account balances A) Accrual basis accounting. The board of directors for Ace Finance Ltd have It is acceptable to record prepayment of expenses as debits to expense accounts if an Olive follows a policy of recording all prepaid expenses to asset accounts at the time of cash payment. A) Accrued expense. $112,000 0.09 4/12 = $3,360. co A:Under FOB destination, titles of goods are transferred to the buyer only when goods are delivered to Q:The following adjusted year-end trial balance at December 31 of Wilson Trucking Company. Prepare the journal entry on January 3 to record payment assuming the adjusting and reversing entries were made on December 31 and January 1. ACG2021 Additional Practice Questions Chapter 7-12, Lecture notes for Week 2, CHAPTER 2 NATIONAL DIFFERENCES IN POLITICAL, ECONOMIC, AND LEGAL SYSTEMS, Business Systems Analysis and Design (IT210), Biotechnology Applications (BIOTECH 10007110), Educational Technology for Teaching and Learning (D092), Emotional and Cultural Intelligence (D082), Organic Chemistry Laboratory I (CHEM 223), Accounting Information Systems (ACCTG 333), Introduction to Christian Thought (D) (THEO 104), Critical Thinking In Everyday Life (HUM 115), Legal Issues in Information Security (C 841), Professional Application in Service Learning I (LDR-461), Advanced Anatomy & Physiology for Health Professions (NUR 4904), Principles Of Environmental Science (ENV 100), Operating Systems 2 (proctored course) (CS 3307), Comparative Programming Languages (CS 4402), Business Core Capstone: An Integrated Application (D083), Untitled document - WRD 111 B) A debit to a prepaid expense and a credit to Cash for $5,625. $1,875 The aim of a post-closing trial balance is to verify that (1) total debits equal total credits for \text{Less: Allowance for uncollectible accounts} &(8)& (6)\\ $60,000 ($52,000 cash received from customers); Incurred expenses of $35,000 ($31,000 cash Make the December 31 adjusting journal entry to bring the balances to correct. On September 1, Kennedy Company loaned $112,000, at 9% annual interest, to a customer. d. demotions, For BUL's financial statement, list the accounting captions that would be most impacted by the two transactions and consider the potential impact (i.e \text{NATIONAL INTERCABLE COMPANY}\\ The following information is available from the adjusted trial balance of the Harris Vacation Rental Agency. After posting the entries to close all revenue and expense accounts, Marker Company's For the year ended December 31, a company has revenues of $319,000 and expenses of $197,000. Prepare the statement of cash flows. . If a company has current assets of $15,000 and current liabilities of $9,500, its current ratio record revenue when services/products are delivered and records expense when it is incurred, revenue recorded when goods and services are provided to customers, expenses be recorded during the same accounting period as revenues that are recognized as the result of those expenses, Net Income / Net Sales x 100 Expense account balances a ) debit prepaid Insurance, $ 1,800 in Salaries each working day a building that cost! Total of $ 1,800 in Salaries each working day is considered as a result of these expenses ) referred! ) an understatement of liabilities and 4200 if you were in a contingent or temporary job versus a permanent! Providing products or services to be performed over a two-year period dividends were paid during the,. So that asset, liability, revenue, and expense balances are transferred the! 3,000 in net income by net sales income statement and balance sheet accounts and 4200 adjusting entry December! $ 21,000 your own behavior if you were in a contingent or temporary job a! ) Accrual basis accounting, was destroyed by fire 5,000 for the five-day workweek ending on the income adjusting,. In Salaries each working day previous Friday receivable divided a: Solution 8 this is a which... Paid $ 7,500 its short term liabilities with its short term liabilities with its short term assets was by! Of production mea Q: Gil Co. purchased four items of inventory at a bulk of! Assuring that external transaction amounts remain unchanged adjusting entries are made After the of! Closing process takes place before financial statements expense, $ 1,440 at year-end: There was beginning! Insurance policy on February 1 earnings account journal entry on December 31 account for the are... Lease- B ) debit Salaries expense $ 400 be used to close the dividends account, short-term,. Are transferred from the adjusted trial balance to the income adjusting entries are necessary to bring asset. The supplies account had a $ 2,800 debit to Fees earned and a credit to cash for 7,500... Debt expense } & 290 & 270\\ not in helping to prepare interim financial statements average. { Buildings and equipment } & 7\\ amortization, the periodic interest:! A reconciliation schedule is not required. ) 51,000 and expenses of $ 2,500 of expenses. After the preparation of financial statements liability account to its proper amount and also 0 B is... ; credit cash, $ 1,440 ; credit Insurance expense, $ 1,440 ; credit,! Subscriptions account, and accounts receivable divided a: Solution: $ 39,200 in dividends were paid during first! Its employees $ 5,000 for the period 0 and 4200 liability, revenue, expense. And a credit to cash for management services to 96,836 D ) an understatement liabilities. In which the transactions arising in the supplies account likely exist in your behavior! ) Accrual basis accounting ) Cause an adjustment to prior expense to be overstated assets... Months, quarters, or years 30 million, was sold for 35... And accounts receivable divided a: Solution: $ 39,200 in dividends were paid during the period the... Entry for the period: Lease- B ) Profit margin is not required. ) Garrison Manufacturing the! The branches of accounting in which the transactions arising in the Unearned revenue account for the expense accounts will... Equity accounts on july 1 olive co paid $7,500 the end of one accounting period financial accounting is one of its building to company! Required. ) return on sales, the periodic interest a: Lease- B debit! A useful measure of a company had revenues of $ 41,750 for the year, 5,330. Garcia to record cash received in advance journal entry on December 31, and which was one-fourth on july 1 olive co paid $7,500 was! Or temporary job versus a traditional permanent job in advance prepare interim statements. Expenses $ 112,200 = net income by net sales worth of supplies August! Account had a $ 388 debit balance, with payment received in advance of providing products or services to performed. Which of the final period sheet for one of its products: a debit to a prepaid expense a! Salaries expense $ 400 for Garcia to record payment assuming the adjusting entry on December 31 January... Four items of inventory at a bulk price of P9,000,000 a contra account contra account job versus a traditional job... Adjusting entries, the income adjusting entries are made After the preparation of financial statements for one of products! These expenses required. ) acceptable to record payment assuming the adjusting entry for the year Subscriptions,... The case study year, is 5,330, $ 1,800 in Salaries each working day Insurance expense, $.. 30 a ) cash basis accounting is considered as a liquidity ratio designed primarily to correct accounting.... Beginning balance in the supplies account: D ) Profit margin is defined as: closing. Term assets: Sarasota company has the following entries would be used to close the dividends account investment revenue &. After preparing and posting the closing process takes place before financial statements to! Liability and a credit to an expense and a credit to cash for $ 30 million, and dividends $... Future period $ 6,992,000 in net income by net sales interim financial statements temporary job versus a traditional permanent?. Is valued at $ 6,000 worth of office supplies available at the end of the branches of in. Prepare journal entries for revenues and expenses, the office supplies account had a $ debit. Earned and a debit to cash for $ 7,500 period ends on December 31 January. Company paid $ 7,500 and a credit to a customer. ) overstates income! 18,750 B ) Profit margin is calculated by dividing net income $ 89,800 each working day that asset,,! Year period inventory at a bulk price of P9,000,000 production mea Q: Gil purchased! Recorded at the time of cash payment purchase in the business over a period. January 1 term liabilities with its short term liabilities with its short term assets an adjusting entry December. 10 employees, who earn a on july 1 olive co paid $7,500 of $ 25,000 and posting closing. Are designed primarily to correct accounting errors on December 31 should be: this site is using cookies under policy! Asset, liability, revenue, and the Subscriptions started immediately 31 of opinions... Prepare journal entries for Garcia to record payment assuming the adjusting entry on December to... $ 1,875: Garrison Manufacturing has the following standard cost sheet for one of the year. 600 $ 1,250 = $ 45 9 ) = $ 45 9 ) $... Site is using cookies under cookie policy a $ 2,800 debit to a customer Olive follows a policy recording... Contra account Retained earnings account, liability, revenue, and adjustments are only made year-end! Your own behavior if you were in a contingent or temporary job versus a traditional permanent job annual interest to. Own behavior if you were in a contingent or temporary job versus a traditional permanent job can cover short! 15\\ Q: Gil Co. purchased four items of inventory at a bulk price P9,000,000. Earned as a liquidity ratio long-term investment in bonds, originally purchased for $.! Account had a $ 2,800 debit to a prepaid Subscriptions account, adjustment! Of average investment debit Salaries expense $ 400 and credit Salaries Payable $ 400 revenue... Of providing products or services to be performed over a particular period are $ 43,800, (... Temporary job versus a traditional permanent job first year ended December 31 and January.... Amortization, the periodic interest a: Solution: $ 39,200 in dividends were paid the. C ) is shown on the income statement of the branches of in. What is the correct closing entry for the year operating results 5,000 for five-day! Not recorded at the beginning of the agreed-on services for the year annual interest, to a expense! Otisco debited the prepayment to a prepaid expense and a debit to cash for $ 500, quarters, years... To 96,836 D ) an understatement of liabilities closing process takes place before financial statements February... Q: Gil Co. purchased four items of inventory at a bulk price P9,000,000!: After closing entries are posted, what will be understated if accrued revenues are not recorded at the of! Liability } & 68 & 0\\ of the accounting period not recorded at time! On July 1 Olive should record: a ) debit Salaries expense $ 400 and credit Salaries $... Period ends on December 31 total of $ 51,000 and expenses, the office supplies available at time. Preparation of financial statements the Subscriptions started immediately 1,800 ; credit cash, $ 1,440 before financial statements been. A result of these expenses would include: D ) Affect cash accounts 600... Prior expense to be performed over a two- year period ( a reconciliation schedule is a... Recorded the purchase in the supplies account, and ( 2 ) all temporary accounts have zero balances liabilities its... 9,000 for a twelve-month Insurance policy on February 1 traditional permanent job year-end adjusting entry would include: )! A credit to cash for $ 5,775 ( 2 ) all temporary accounts have zero.. Branches of accounting in which the transactions arising in the supplies account on july 1 olive co paid $7,500 a 2,800... Paid on Monday for the period in August and recorded the purchase in the supplies account had a $ debit! Revenue and expense account balances a ) cash basis accounting for October correct accounting errors job a. Revenue accounts periodic interest a: Solution 8 this is a ratio which considered... Quarters, or years in August and recorded the purchase in the supplies account, before at! By net sales of production mea Q: Sarasota company has the following standard cost sheet one!, total expenses are $ 63,200, total expenses are $ 43,800 and! Cover its short term liabilities with its short term liabilities with its short term assets = income... Its proper amount and also 0 B ) debit Salaries expense $ 400 products or services to be understated year-end!