Bonita Realty Management Co. received a check for $32,400 on August 1, which represents a one year advance payment of rent on an office it rents to a client. Unearned Rent Revenue was credited for the full $32,400. Financial statements are prepared on December 31. The appropriate adjusting journal entry to make on December 31 of the first year would be a
$13,500 debit to Unearned Rent Revenue and a $13,500 credit to Rent Revenue.
Solution:
The year-end adjusting entry reduces the liability (i. e., Unearned Revenue) and increases Revenue for the amount of revenue earned during this accounting period.
Revenue earned Aug. through Dec. = 32,400 x 5/12 = 13,500

Chapter 4, Learning objective 4 T/F

Accounts receivable arising from sales to customers amounted to $40,000 and $55,000 at the beginning and end of the year, respectively. income reported on the income statement for the year was $180,000. exclusive of the effect of other adjustments, the cash flows from operating activities to be reported on the statement of cash flows is

Which of the following is not a personality trait? sincerity word processing punctuality laziness

Lynch company manufactures and sells a single product. the following costs were incurred during the company’s first year of operations: variable costs per unit: manufacturing: direct materials $ 12 direct labor $ 6 variable manufacturing overhead $ 1 variable selling and administrative $ 1 fixed costs per year: fixed manufacturing overhead $ 308,000 fixed selling and administrative $ 218,000 during the year, the company produced 28,000 units and sold 15,000 units. the selling price of the company’s product is $56 per unit. required: 1. assume that the company uses absorption costing: a. compute the unit product cost. b. prepare an income statement for the year. 2. assume that the company uses variable costing: a. compute the unit product cost. b. prepare an income statement for the year.