Singleton Inc. uses the accrual basis of accounting and had the following transa
ID: 2419315 • Letter: S
Question
Singleton Inc. uses the accrual basis of accounting and had the following transactions during the year. Required: Identify and explain why each transaction may or may not require adjustment. a. Merchandise was sold to customers on credit. will not require an adjustment/ may require an adjustment (which one is it) b. Purchased equipment to be used in the operation of its business. will not require an adjustment/ may require an adjustment (which one is it) c. A 2-year insurance contract was purchased. will not require an adjustment/ may require an adjustment (which one is it) d. Received cash for services to be performed over the next year. will not require an adjustment/ may require an adjustment (which one is it) e. Paid weekly employee salaries will not require an adjustment/ may require an adjustment (which one is it) f. Borrowed money from First Bank by signing a note payable due in 5 years. will not require an adjustment/ may require an adjustment (which one is it) Thanks
Explanation / Answer
A)not require an adjustment.
Because it is a credit transaction.It appeared in trial balance.Debtors are coming here.
B)Not require
Because It is an equipment purchases.So a fixed assets came.
C)required
Purchases of insurance contract
It adjusted as per regulations.About it's premium etc
D)require
It is income received in advance, come in the income side and it is a liability also.
E)not required
Salary is an indirect expense that's all.
F)required
Borrowing of money,and payable in 5years.So 1/5th part of money come in the present year.Need adjustment.