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:

Celebration Company collected $42,000 cash on its accounts receivable. The effects of this transaction as reflected in the accounting equation are:

Foggy Bottom, LLC records adjusting entries at its December 31 year-end. At December 31, employees had earned $12,000 of unpaid and unrecorded salaries. The next payday is January 3, at which time $30,000 will be paid. Prepare the journal entry on January 3 to record payment assuming the adjusting and reversing entries were made on December 31 and January 1.

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: