Consider the following situations for Shocker: a. On November 28, 2018, Shocker
ID: 2539009 • Letter: C
Question
Consider the following situations for Shocker: a. On November 28, 2018, Shocker receives a $2,100 payment from a customer for services to be rendered evenly over the next three months. Deferred Revenue is credited. b. On December 1, 2018, the company pays a local radio station $2,220 for 30 radio ads that were to be aired, 10 per month, throughout December, January, and February. Prepaid Advertising is debited c. Employee salaries for the month of December totaling $6,400 will be paid on January 7, 2016 d. On August 31, 2018, Shocker borrows S54 ,000 from a local bank. A note is signed with principal and 9% interest to be paid on August 31, 2019. Required Indicate by how much the assets, liabilities, and stockholders' equity in the December 31, 2018, balance sheet is higher or lower if the adjustment is not recorded. (If none of the categories apply for a partlcular Item, leave the cell blank.) Assets Liabilities + Stockholders' E a. C. TotalExplanation / Answer
Assets
Liabilities
Shareholders equity
A
Cash received
$2,100
Deferred revenue for 2months jan & Feb
$1,400
Revenue recognised for dec month
$700
B
Cash payment
($2,220)
Prepaid expenses for 2months (2,220/3)*2)
$1,480
Expenses reco for dec month (2,220/3)
($740)
C
Employee salaries payable
$6,400
Reduction In profit (Sal expenses)
($6,400)
D
Cash received
$54,000
Borrowings
$54,000
Total
$55,360
$61,800
($6,440)
Assets
Liabilities
Shareholders equity
A
Cash received
$2,100
Deferred revenue for 2months jan & Feb
$1,400
Revenue recognised for dec month
$700
B
Cash payment
($2,220)
Prepaid expenses for 2months (2,220/3)*2)
$1,480
Expenses reco for dec month (2,220/3)
($740)
C
Employee salaries payable
$6,400
Reduction In profit (Sal expenses)
($6,400)
D
Cash received
$54,000
Borrowings
$54,000
Total
$55,360
$61,800
($6,440)