Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Sweeney & Allen, a large marketing firm, adjusts its accounts at the end of each month. The following information is available for the year ending

Sweeney & Allen, a large marketing firm, adjusts its accounts at the end of each month. The following information is available for the year ending December 31. A bank loan had been obtained on December 1. Accrued interest on the loan at December 31 amounts to $1,220. No interest expense has yet been recorded. Depreciation of the firms office building is based on an estimated life of 30 years. The building was purchased four years ago for $370,000. Accrued, but unbilled, revenue during December amounts to $51,000. On March 1, the firm paid $1,800 to renew a 12-month insurance policy. The entire amount was recorded as Prepaid Insurance. The firm received $15,000 from King Biscuit Company in advance of developing a six-month marketing campaign. The entire amount was initially recorded as Unearned Revenue. At December 31, $2,900 had actually been earned by the firm. The companys policy is to pay its employees every Friday. Since December 31 fell on a Wednesday, there was an accrued liability for salaries amounting to $1,800. a. Record the necessary adjusting journal entries on December 31. b. By how much did Sweeney & Allens net income increase or decrease as a result of the adjusting entries performed in part a? (Ignore income taxes.)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

How To Audit Document Control System Based On ISO 9001 2015

Authors: Folarin Omojoye

1st Edition

B09892NF88, 979-8525615175

More Books

Students also viewed these Accounting questions