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Question 1 ( continued ) 1 . YDC purchased an insurance policy April 1 , 2 0 2 3 . The term of the policy
Question continued YDC purchased an insurance policy April The term of the policy was one year. The companys accountant debited insurance expense and credited cash on April No adjustments have been recorded since that date. No depreciation expense has been recorded for the year. Both the office equipment and the truck are depreciated using the straightline depreciation method. The useful life of the office equipment is years, and no residual value is expected. The useful life of the trucks is years, and the company expects to sell the trucks at that time for $ Occasionally, YDC receives advances from customers for specialized products. At yearend, $ of these products had been delivered to customers. No adjustment was made during the year. The cost of these goods sold was $ When reviewing the invoices received from suppliers and service providers in January the accountant found an invoice from Acres Maintenance Company for repair work done in December in the amount of $ The invoice had not been recorded at year end. Repairs and maintenance work are usually recorded as other operating expenses On October YDC launched a social media marketing campaign. On that date, YDC signed a sixmonth contract with Orien Analytics. Orien Analytics agreed to organize and run the marketing campaign. The total cost of the contract was $ payable in two amounts. The first payment of $ was due on January and the balance was due at the end of the contract. The campaign started on November and continued through the end of the year and into YDC was very pleased with the initial results of the marketing campaign The note payable arose from the purchase of longterm assets. The note is due on June Interest is paid annually on June th The annual rate of interest is The Board of Directors of YDC declared a dividend of $ on December The dividend will be paid on January Supplies on hand at December are $ YDC issued shares during the year with a value of $ The journal entry was correctly recorded as a debit to cash and a credit to common shares for $Required: Prepare any adjusting or correcting journal entries for the abovenoted items. Show your work. Prepare the adjusted trial balance. A template is provided in the Excel file. Prepare the following financial statements: a Statement of Income for the year ending December b Statement of Changes in Shareholders Equity for the year ending December c Statement of Financial Position as at December Prepare the closing entries for the year ended December YDC sales revenue declined by in compared to which put pressure on its gross margin, which was in Two of YDCs suppliers have expressed concern about the liquidity of YDC in light of current economic conditions and are concerned about future profitability of YDC Management of YDC wants to assure the suppliers that the shortterm liquidity position is acceptable and that it expects sales revenue to increase by in and gross margin to be approximately Comment on YDCs liquidity. Using YDCs financial statements that you have competed for comment of the prospect of higher net income in How does the format of the income statement help you analyze future profitability?
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