X Company prepares monthly financial statements. The following transactions occu
ID: 2599170 • Letter: X
Question
X Company prepares monthly financial statements. The following transactions occurred during January:
On January 1, a one-year store rental lease was signed for a total of $30,000, and rent for the first 2 months was paid in advance.
On January 1, equipment was purchased for $55,000 with a downpayment of $5,500 and a note for the remainder. The note along with annual interest of 7% was due in a year. The estimated life of the equipment is 10 years with a salvage value of $6,000.
Daily wages are $1,500 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 Rent expense 2500 =30000/12 Depreciation expense 408 =(55000-6000)/10/12 Interest expense 289 =(55000-5500)*7%/12 Wages expense 4500 =1500*3 Decrease in net income 7697 9 Rent expense 2500 Depreciation expense 408 Decrease in total assets 2908
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