Reversing entries are recorded in response to external transactions that were created in error during the prior accounting period.

Carter Services paid K. Carter, the sole shareholder of Carter Services, $5,700 in dividends  during the current year. The entry to close the dividends account at the end of the year is:

On July 1 Peach Co. paid $7,500 cash for management services to be performed over a two-year period. Peach follows a policy of recording all prepaid expenses to asset accounts at the time of cash payment. On July 1 Peach should record:

An employer’s federal unemployment taxes (FUTA) are reported:

On January 1, United Shipping Co. issues 7%, 10-year bonds with a par value of $2,000,000. The bonds pay interest semiannually. The market rate of interest is 8% and the bond selling price was $1,864,097. The bond issuance should be recorded as:

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.

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

Smiles Entertainment had the following accounts and balances at December 31:   Account Debit   Credit Cash $ 10,000         Accounts Receivable   2,000         Prepaid Insurance   2,400         Supplies   1,000         Accounts Payable       $ 5,000   Common Stock         4,000   Retained Earnings         900   Service Revenue         7,000   Salaries Expense   500         Utilities Expense   1,000         Totals $ 16,900   $ 16,900     Using the information in the table, calculate the company’s reported net income for the period.

Preparation of a trial balance is the first step in processing a financial transaction.

Rodriguez owns an asset that cost $87,000 with accumulated depreciation of $40,000. The company sells the equipment for cash of $42,000. At the time of sale, the company should record: