The revenue recognition principle is the basis for making adjusting entries that pertain to unearned and accrued revenues.

A transaction that credits an asset account and credits a liability account must also affect one or more other accounts.

On December 1, Victoria Company signed a 90-day, 6% note payable, with a face value of $15,000. What amount of interest expense is accrued at December 31 on the note? (Use 360 days a year.)

Bevins, Inc.  purchases a machine at the beginning of the year at a cost of $24,000. The machine is depreciated using the units-of-production method. The company estimates it will use the machine for 5 years, during which time it anticipates producing 40,000 units. The machine is estimated to have a $4,000 salvage value. The company produces 9,000 units in year 1 and 6,000 units in year 2. Depreciation expense in year 2 is:

Frank Mockus is paid on a monthly basis. For the month of January of the current year, he earned a total of $5,210. FICA tax for Social Security is 6.2% on the first $118,500 of earnings each calendar year and the FICA tax for Medicare is 1.45% of all earnings. The FUTA tax rate is 0.6%, and the SUTA tax rate is 5.4%. Both unemployment taxes are applied to the first $7,000 of an employee’s pay. The amount of Federal Income Tax withheld from his earnings was $885.70. What is the amount of the employer’s payroll taxes expenses for this employee?

Koosman LLC had $800,000 in sales, sales discounts of $12,000, sales returns and allowances of $18,000, cost of goods sold of $380,000, and $275,000 in operating expenses. Gross profit equals:

A note that the maker is unable or refuses to pay at maturity is called a dishonored note.

The steps in the closing process are (1) close credit balances in revenue accounts to Income Summary; (2) close debit balances in expense accounts to Income Summary; (3) close Income Summary to Retained Earnings; (4) close Dividends to Retained Earnings.

Buster’s Meat Market bought $4,000 worth of merchandise from Chainey Brothers Suppliers and signed a 90-day, 6% promissory note for the $4,000. Chainey Brothers Supplier’s journal entry to record the sales transaction is:

On January 1, Year 1, Judge, Inc. borrowed $100,000 on a 10-year, 7% installment note payable. The terms of the note require Judge, Inc. to pay 10 equal payments of $14,238 each December 31 for 10 years. The required general journal entry to record the payment on the note on December 31, Year 2 is: