The primary objective of managerial accounting is to provide general purpose financial statements to help external users analyze and interpret an organization’s activities.

On December 31, Lannister Company received a $385 bill for the purchase of supplies in December that it will not pay for until January 15. Lannister follows a policy of recording all prepaid expenses to asset accounts at the time of cash payment. The adjusting entry needed on December 31 to accrue this cost is:

Adjusting entries are necessary so that asset, liability, revenue, and expense account balances are correctly recorded.

Chapman Consulting paid $2,500 cash for a 5-month insurance policy which begins on December 1. Given the choices below, determine the general journal entry that Chapman Consulting will make to record the cash payment. Assume the company’s policy is to initially record prepaid and unearned items in balance sheet accounts.

On November 1, Elizabeth Company loaned another company $100,000 at a 6.0% interest rate. The note receivable plus interest will not be collected until March 1 of the following year. The company’s annual accounting period ends on December 31, and adjustments are only made at year-end. The adjusting entry needed on December 31 is:

On January 1, Year 1, Samford, Inc. borrowed $100,000 on a 10-year, 7% installment note payable. The terms of the note require Samford to pay 10 equal payments of $14,238 each December 31 for 10 years. The required general journal entry to record the first payment on the note on December 31, Year 1 is:

On April 1, Penthouse Publishing Company received $1,548 from Albuquerque, Inc. for 36-month subscriptions to several different magazines. The subscriptions started immediately. What is the amount of revenue that should be recorded by penthouse Publishing Company for the first year of the subscription assuming the company uses a calendar-year reporting period?

Cutler, Inc. has bonds outstanding with a par value of $200,000 and a carrying value of $203,000. If the company calls these bonds at a price of $201,000, the gain or loss on retirement is:

Nellis Company sold merchandise on account to a customer for $625, terms n/30. The journal entry to record this sale transaction would be:

A company’s Office Supplies account shows a beginning balance of $600 and an ending balance of $400. If office supplies expense for the year is $3,100, what amount of office supplies was purchased during the period?