Question
Consider that in class we categorized adjusting journal entries into categories and further, consider the following 3 situations from the Decipher Company fact pattern: (i)
Consider that in class we categorized adjusting journal entries into categories and further, consider the following 3 situations from the Decipher Company fact pattern:
(i) On August 1, 20X1, Decipher borrowed $615,000 from the bank at a 6% rate of interest. The loan is due May 1, 20X2 with all principal and interest payable at maturity. The companys pertinent 12/31/20X1 account balances are as follows: Note Payable $615,000 Interest Expense $0 Interest Payable $0
(ii) Decipher has a daily payroll cost (ignoring payroll tax) of $6,000. Employees work Monday through Friday, and always get paid holidays. Employees are paid each Monday for the five -day workweek ending on the previous Friday and for 20X2, the first Monday payroll was on January 4th. The companys pertinent 12/31/20X1 account balances are as follows: Salaries Expense $315,000 Salaries Payable $0
(iii) Decipher uses supplies when performing services. The company started 20X1 with $22,000 of supplies on hand and during 20X1 purchased $45,000 more. At 12/31/2X1 the supplies were counted, and it was determined that $17,000 were still on hand. The companys pertinent 12/31/20X1 account balances are as follows: Supplies $67,000 Supplies Expense $0
Consider the entries that will result from the above 3 situations and select the answer below that shows how many of the 3 will be considered an adjustment of an existing deferred expense balance.
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