Problem 3-3 (Part Level Submission) A review of the ledger of Windsor, Inc. at D
ID: 2334278 • Letter: P
Question
Problem 3-3 (Part Level Submission)
A review of the ledger of Windsor, Inc. at December 31 produces the following data for the preparation of annual adjusting entries:
Notes Payable, $80,520. This balance consists of a one year, 9%, note that is dated June 1.
Windsor is preparing for a meeting with potential investors. What is the net effect of the adjusting entries on net income?
1. Salaries and Wages Payable, $0. There are 9 salaried employees. 4 employees receive a salary of $1,230 each per week, and 5 employees earn $750 each per week. Employees do not work weekends. All employees worked two days after the last pay period and before December 31. 2. Unearned Rent Revenue, $376,020. The company began subleasing condos in its new building on November 1. Each tenant has to make a $5,400 security deposit that is not refundable until occupancy is ended. At December 31, the company had the following rental contracts that were paid in full for the entire term of the lease:Explanation / Answer
In Net effect the Net Income will increase by 64,809.70
Calculation is given below:
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Rent Revenue Nov 1 - (6*3910)*2 $ 46,920.00 Dec 1- (3*10370)*1 $ 31,110.00 Total Rent Revenue Recognised---- (A) $ 78,030.00 Salaries and Wages Four Employees - (1230*4)/5*2 $ 1,968.00 Five Employees - (750*5)/5*2 $ 1,500.00 Total Salary Expenses --- (B) $ 3,468.00 Advertising Expenses May 1 - 6780/12*8 $ 4,520.00 Oct 1 - 8040/24*3 $ 1,005.00 Total Advertising Expenses---© $ 5,525.00 Interest Expenses ( 80520*9%/12*7)---(D) $ 4,227.30 Net Effect (A - (B+C+D)) $ 64,809.70Related Questions
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