Anаlyzing аnd Cоmputing Accrued Wаges Liability and Expense Demski Cоmpany pays its emplоyees on the 1st and 15th of each month. It is March 31, and Demski is preparing financial statements for this quarter. Its employees have earned $40,000 since the 15th of this month and have not yet been paid. How will Demski’s balance sheet and income statement change to reflect the accrual of wages that must be made at March 31? What balance sheet and income statement accounts would be incorrectly reported if Demski failed to make this accrual (for each account indicate whether it would be overstated or understated)? The company must accrue ${#1} of wages on March 31. The accounting accrual will: • {#2} wages payable by ${#3} on the {#4} • {#5} wages expense by ${#6} in the {#7} Failure to make this accounting accrual (called an adjusting entry) would {#8} liabilities, {#9} expenses, {#10} income, and {#11} stockholders’ equity.
Prepаring аn Amоrtizаtiоn Schedule and Recоrding the Effects of Bonds (FSET) On April 30 Cheng, Inc., issued $325,000 of 6%, 15-year bonds for $268,801, yielding an effective interest rate of 8%. Semiannual interest is payable on October 31 and April 30 each year. The firm uses the effective interest method to amortize the discount. a. Prepare an amortization schedule showing the necessary information for the first two interest periods. ● Note: Round answers to the nearest whole dollar. Period Interest Expense Cash Interest Paid Discount Amortization Discount Balance Bond Payable Net 0 ${#1} ${#2} 1 ${#3} ${#4} ${#5} {#6} {#7} 2 {#8} {#9} {#10} {#11} {#12} b. In the financial statement effects template, report (1) the bond issuance on April 30, (2) the bond interest payment and discount amortization at October 31, (3) the adjusting entry to record bond interest expense and discount amortization at December 31, the close of the firm’s accounting year, and (4) the bond interest payment and discount amortization at April 30 of the following year. ● Note: Use negative signs with your answers, when appropriate. ● Note: Select "N/A" as your answer if a part of the accounting equation is not affected. ● Note: Round answers to the nearest whole dollar. Balance Sheet Income Statement Cash Noncash Contributed Earned Net Transaction Asset + Assets = Liabilities - Contra Liability + Capital + Capital Revenue - Expenses = Income 1. Apr. 30, Y1 Issue bonds {#13} {#14} {#15} {#16} {#17} {#18} {#19} {#20} 2. Oct. 31, Y1 Interest payment {#21} {#22} {#23} {#24} {#25} {#26} {#27} {#28} {#29} {#30} {#31} 3. Dec. 31, Y1 Interest accrual {#32} {#33} {#34} {#35} {#36} {#37} {#38} {#39} {#40} {#41} {#42} 4. Apr. 30, Y2 Interest payment {#43} {#44} {#45} {#46} {#47} {#48} {#49} {#50} {#51} {#52} {#53} {#54} {#55} Total