Homework Answers
1) Unearned revenue is revenue which is received in advance and not earned yet and is a current liability which should be recorded in balance sheet . But Rita's Rental company has included it in income statement which is an incorrect approach. So the rental company has incorrectly recorded a current liability in income statement. so option b is correct.
'2) Issuing Common stock does not affect liquidity because liquidity is concerned with the capacity of the firm to pay its current liabilitites with the help of current assets. Common stock is neither a current liability nor a current asset and is no where linked to liquidity but it has effect on solvency whereas one of the options say it doesnt have any effect.Hence option d is correct
3) Net Loss earned by the company during a period which is reported on income statement is deducted from opening retained earnings of the retained earnings statement. Whereas net income is added to beginning balance of retained earnings to arrive at closing balance . Hence option b is correct.
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Rita's Rental Company records uncamed rent revenue on the income statement The rental company has incorrectly...
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Zurich Company reports pretax financial income of $70,000 for 2017. The following item causes taxable income to be different than pretax financial income: Q10 10PTS Rent revenue on the tax return is greater than rent revenue recognized on the income statement by $22,000. Zurich's tax rate is 30% for all years, and the company expects to report taxable income in all future years. There are no deferred taxes at the beginning of 2017 Required: Prepare Z Company's journal entry to...
As soon as possible
On December 31, 2017, J. Alan and Company prepared an income statement and balance sheet but failed to take into account four adjusting journal entries. The income statement, prepared on this incorrect basis, reported income before income tax of $42,000. The balance sheet (before the effect of income taxes) reflected total assets of $126,000, total liabilities of $56,000, and shareholders' equity of $70,000. The data for the four adjusting journal entries follow: a. Depreciation of $11,200...
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