2 Identify whether each account would appear on the Balance Sheet or the Income

Question

2 Identify whether each account would appear on the Balance Sheet or the Income Statement. Legal Fees Expense Prepaid Rent Prepaid Insurance Sales Discounts Forfeited Interest Expense Salaries Payable Fill in the t-accounts for each situation and label each transaction as Deferrals/Prepaid or Accrual Calculate the adjusted balance and use a Bal. post reference to show the ending balance of each accour incurred interest expense for the last month of the year. Interest for the entire year is $10,560

Explanation / Answer

S. No Item Solution Explanation 1 Legal Fees Expense Income Statement All Expense are debited to Income Statement 2 Prepaid Insurance Balance Sheet Advance Payments are recorded as Assets 3 Interest Expense Income Statement All Expense are debited to Income Statement 4 Prepaid Rent Balance Sheet Advance Payments are recorded as Assets 5 Sales Discounts Forfeited Income Statement All Revenues are Credited to Income Statement 6 Salaries Payable Balance Sheet Expense Due but not paid are recorded as Liability

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