Questions 8 and 9 refer to the following information: X Company prepares monthly
ID: 2598020 • Letter: Q
Question
Questions 8 and 9 refer to the following information:
X Company prepares monthly financial statements. The following transactions occurred during January:
1. On January 1, a one-year store rental lease was signed for a total of $37,200, and rent for the first 2 months was paid in advance.
2. On January 1, equipment was purchased for $50,000 with a downpayment of $10,000 and a note for the remainder. The note along with annual interest of 8% was due in a year. The estimated life of the equipment is 10 years with a salvage value of $6,000.
3. Daily wages are $1,400 and are paid every Friday. The last day in January was a Monday.
8. The required adjusting entries on January 31 decreased net income by a total of?
9. The required adjusting entries on January 31 decreased total assets by a total of?
Explanation / Answer
8. The required entries on january 31st decreased net income by
Rent expenditure is to be booked for one month : 37200/12 = 3100
Equipment to be depreciated for one month: 4400/12= 367
depreciation for whole year = 50000-6000/10=4400 ,
Interest expenditure = 50000-1000=40000*0.08/12= 267
Daily wages = 1400*3= 4200
after giving daily wages on friday the store worked on saturday, sunday and monday. therefore the daily wages is taken for three days.
after adjusting entries the net income is decreased by = 3100+367+267+4200= 7934
9 answer.
The events which affects the net assets are
The advance of two months will become one month it will decrease net assets by 3100
The depreciation on equipment decreases the equipment value by 367.
The rquired adjusting decreases net assets by a total of 3467
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