Why accrue an expense
Why accrue an expense
Homework Answers
DEFINITION -Accrued expenses are expenses that have occurred but are not yet recorded in the company's general ledger. This means these expenses will not appear on the financial statements unless an adjusting entry is entered prior to issuing the financial statements.
Example of an Accrued Expense -To illustrate an accrued expense, let's assume that a company borrowed $200,000 on December 1. The agreement requires that the company repay the $200,000 on February 28 along with $6,000 of interest for the three months of December through February. As of December 31, the company will not have an invoice to process and will not be paying the interest until it is due on February 28.
Recording of Accrued Expense- Reason
Without an adjusting entry to accrue the interest expense that was incurred by the company in December, the company's financial statements as of December 31 will not be reporting the $2,000 of interest (one-third of the $6,000) that the company has incurred in December. In order for the financial statements to be correct on the accrual basis of accounting, we must record an adjusting entry dated as of December 31. The adjusting entry will consist of a debit of $2,000 to Interest Expense (an income statement account) and a credit of $2,000 to Interest Payable (a balance sheet account).
An adjusting entry was made on year-end December 31 to accrue salary expense of $1.200. Assuming...
An adjusting entry was made on year-end December 31 to accrue salary expense of $1.200. Assuming the company does not prepare reversing entries, which of the following entries would be prepared to record the $3,000 payment of salaries in January of the following year?
An adjusting entry was made on year-end December 31 to accrue salary expense of $3,200. Assuming...
An adjusting entry was made on year-end December 31 to accrue salary expense of $3,200. Assuming the company does not prepare reversing entries, which of the following entries would be prepared to record the $7,000 payment of salaries in January of the following year? Multiple Choice 0 salaries Expens 7,000 Salaries Expense Cash 7,000 7,000 Salaries Payable Cash 7,000 3,200 Salaries Payable Cash 3,200 3,200 Salaries Expense Salaries Payable 3,200 7,000 Salaries Expense Cash 7,000 7,000 Salaries Payable Cash 7,000...
Help ASAP An adjusting entry was made on year-end December 31 to accrue salary expense of...
Help ASAP
An adjusting entry was made on year-end December 31 to accrue salary expense of $2,000 Assuming the company does not prepare reversing entries, which of the following entries would be prepared to record the $4,600 payment of salarles In January of the following year? Multiple Cholce Salarie 4, 600 4,600 ● 600 Salaries Tayable 2,000 2,000
At the end of 2017, Majors Furniture Company failed to accrue $76,000 of interest expense that...
At the end of 2017, Majors Furniture Company failed to accrue $76,000 of interest expense that accrued during the last five months of 2017 on bonds payable. The bonds mature in 2031. The discount on the bonds is amortized by the straight-line method. The following entry was recorded on February 1, 2018, when the semiannual interest was paid: Interest expense 91,200 Discount on bonds payable 2,160 Cash 89,040 Required: Prepare any journal entry necessary to correct the errors as of...
Accrue the interest expense for the mortgage payable at December 31. Simon Co. has not recorded...
Accrue the interest expense for the mortgage payable at December 31. Simon Co. has not recorded any interest expense since the principal and interest payment on January 31, 2017 (interest rate on the mortgage payable is 7%). The 7% mortgage payable is secured by a lien on the building. It was issued on February 1, 2012 as partial payment for the building and land. The accrued interest plus $30,000 of the principal is payable each January 31. Payment activity is...
Julienne Ltd decided to change its accounting for long-service leave in order to accrue expense sooner...
Julienne Ltd decided to change its accounting for long-service leave in order to accrue expense sooner than had been done previously. The effect on provision for employee entitlements as at the end of 2018 was to increase it by $17 500. By the end of 2019, the liability would go up by $24 000. The company’s income tax rate is 30%. What would be the effect of the change on 2019 net profit?
At the end of 2020, Majors Furniture Company failed to accrue $79,000 of interest expense that...
At the end of 2020, Majors Furniture Company failed to accrue
$79,000 of interest expense that accrued during the last five
months of 2020 on bonds payable. The bonds mature in 2034. The
discount on the bonds is amortized by the straight-line method. The
following entry was recorded on February 1, 2021, when the
semiannual interest was paid:
Interest expense
94,800
Discount on bonds payable
2,340
Cash
92,460
Required:
Prepare any journal entry necessary to correct the errors as of...
with of the following journal entries accrues interest expense? 20. Which of the followin a. Interest...
with of the following journal entries accrues interest expense? 20. Which of the followin a. Interest Expense Interest Payable To accrue interest expense c. Interest Expense Cash To accrue interest expense b. Interest Payable Interest Expense To accrue interest expense d. Cash Interest Expense To accrue interest expense
What are the three payroll deductions that accrue and are owed to the Canada Revenue Agency?...
What are the three payroll deductions that accrue and are owed to the Canada Revenue Agency? Select one: a. Employee benefits expense, CPP and EI b. CPP, EI and salaries payable c. CPP, EI and income tax d. Salaries expense, salaries payable and income tax
Manhattan Company recorded an adjusting entry to accrue interest owed of $1300 as of December 31,...
Manhattan Company recorded an adjusting entry to accrue interest owed of $1300 as of December 31, Year 1. When the related note was paid during Year 2, the company paid $2450 in interest. Which of the following journal entries correctly records this Year 2 transaction? (Assume that the entry to record the payment of the note itself was recorded in a separate journal entry.) Select one: a. Interest expense 1150 Interest payable 1300 Cash 2450 b. Interest expense 1150 Cash...
An adjusting entry was made on year-end December 31 to accrue salary expense of $1.200. Assuming the company does not prepare reversing entries, which of the following entries would be prepared to record the $3,000 payment of salaries in January of the following year?
An adjusting entry was made on year-end December 31 to accrue salary expense of $3,200. Assuming the company does not prepare reversing entries, which of the following entries would be prepared to record the $7,000 payment of salaries in January of the following year? Multiple Choice 0 salaries Expens 7,000 Salaries Expense Cash 7,000 7,000 Salaries Payable Cash 7,000 3,200 Salaries Payable Cash 3,200 3,200 Salaries Expense Salaries Payable 3,200 7,000 Salaries Expense Cash 7,000 7,000 Salaries Payable Cash 7,000...
Help ASAP
An adjusting entry was made on year-end December 31 to accrue salary expense of $2,000 Assuming the company does not prepare reversing entries, which of the following entries would be prepared to record the $4,600 payment of salarles In January of the following year? Multiple Cholce Salarie 4, 600 4,600 ● 600 Salaries Tayable 2,000 2,000
At the end of 2020, Majors Furniture Company failed to accrue
$79,000 of interest expense that accrued during the last five
months of 2020 on bonds payable. The bonds mature in 2034. The
discount on the bonds is amortized by the straight-line method. The
following entry was recorded on February 1, 2021, when the
semiannual interest was paid:
Interest expense
94,800
Discount on bonds payable
2,340
Cash
92,460
Required:
Prepare any journal entry necessary to correct the errors as of...
with of the following journal entries accrues interest expense? 20. Which of the followin a. Interest Expense Interest Payable To accrue interest expense c. Interest Expense Cash To accrue interest expense b. Interest Payable Interest Expense To accrue interest expense d. Cash Interest Expense To accrue interest expense
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