Hey i need help with this question. would like to know what the answers are. X C
ID: 2598071 • Letter: H
Question
Hey i need help with this question. would like to know what the answers are.
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 $45,600, and rent for the first 4 months was paid in advance.
On January 1, equipment was purchased for $60,000 with a downpayment of $6,000 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 $4,000.
Daily wages are $1,900 and are paid every Friday. The last day in January was a Tuesday.
8. The required adjusting entries on January 31 decreased net income by a total of
9. The required adjusting entries on January 31 decreased total assets by a total of.
Explanation / Answer
Incomes Assets Particulars Amount ($) Working Inc./Dec. Particulars Amount ($) Inc./Dec. Working Rent paid for january 3800 (45600/12) Decrease Rent paid in advance for 3months 11400 Increase (45600*3/12) Depreciation on Equipment 5600 (60000-4000)/10 Decrease Purchase of equipment 60000 Increase --- Interest on note 315 (54000*7%)*1/12 Decrease Total increase in assets 71400 Daily wages 51300 (1900*27 days) Decrease Total decrease in incomes 61015 Assumptions: 1. Advance rent paid for is not considered as deposit and hence only 3 months rent is considered as advance and one month rent is adjusted to january. 2. Since the question asks for total assets, note of $54000 is not reduced from assets 3. In daily wages, 4 days is reduced (i.e Saturday, Sunday, Monday and Tuesday) and the 4 days wages are considered as outstanding wages shown under liability side