BUSINESS COLLEGE

Buzzard Bicycle specializes in custom painting and design of bicycles. December 31 is the company’s fiscal year-end. Information necessary to prepare the year-end adjusting entries appears below. 1) A three-year fire insurance policy was purchased on July 1, 2021, for $18,000. The company debited Prepaid Insurance for the entire amount.
6) Buzzard borrowed $36,000 on March 1, 2021. The principal is due to be collected in five years. Interest is receivable each March 1 at an annual rate of 10%.

Record the necessary adjusting entries on December 31, 2021. (Do not round intermediate calculations. If no entry is required for a particular transaction/event, select "No Journal Entry Required" in the first account field.)

If someone could explain this I'd be eternally grateful

Answers

Answer 1
Answer:

Answer:

See explanation section

Explanation:

Adjusting Entries

Requirement 1

December 31   Insurance Expense      Debit      $3,000

                             Prepaid Insurance   Credit                       $3,000

Note: As the company purchased a 3-year life insurance on July 1, 2021, the insurance policy will be expired on June 30, 2024. However, the insurance expense for December 31, 2021 will be for 6 months (July 1, 2021 to December 31, 2021).

Calculation:

Prepaid Insurance (3 years policy) = $18,000, so each year insurance policy will be expired = $18,000 ÷ 3 = $6,000.

Since the insurance will be expired for 6 months in 2021, the insurance expense will be = ($6,000 × 6 months) ÷ 12 months = $3,000

Requirement 6

December 31   Interest expense       Debit          $3,000

                           Interest payable     Credit                             $3,000

Note: As the company borrowed $36,000 for five years, the interest is to be paid on March 1, 2022. Therefore the interest expense will be accrued for 10 months (March 1, 2021 to December 31, 2021).

Interest expense will be = $36,000 × 10% × (10/12) = $3,000. Whichever the maturity date to be paid the entire amount will not be affected in that case.


Related Questions

COLLEGE

Income Statement, Cost of Goods Manufactured Spencer Company produced 200,000 cases of sports drinks during the past calendar year. Each case of 1-liter bottles sells for $36. Spencer had 2,500 cases of sports drinks in finished goods inventory at the beginning of the year. At the end of the year, there were 11,500 cases of sports drinks in finished goods inventory. Spencer’s accounting records provide the following information: Purchases of direct materials $2,350,000 Direct materials inventory, January 1 290,000 Direct materials inventory, December 31 112,000 Direct labor 1,100,000 Indirect labor 334,000 Depreciation, factory building 525,000 Depreciation, factory equipment 416,000 Property taxes on factory 65,000 Utilities, factory 150,000 Insurance on factory 200,000 Salary, sales supervisor 85,000 Commissions, salespersons 216,000 Advertising 500,000 General administration 390,000 Work-in-process inventory, January 1 450,000 Work-in-process inventory, December 31 750,000 Finished goods inventory, January 1 107,500 Finished goods inventory, December 31 488,750 Required: 1. Prepare a cost of goods manufactured statement.

Answers

Answer:

Instructions are listed below.

Explanation:

Giving the following information:

Spencer’s accounting records provide the following information:

Direct material:

Purchases of direct materials $2,350,000

Direct materials inventory, January 1: 290,000

Direct materials inventory, December 31: (112,000)

Direct material used= 2,528,000

Direct labor 1,100,000

Manufacturing overhead:

Indirect labor 334,000

Depreciation, factory building 525,000

Depreciation, factory equipment 416,000

Property taxes on factory 65,000

Utilities, factory 150,000

Insurance on factory 200,000

Total= 1,690,000

Work-in-process inventory, January 1: 450,000

Work-in-process inventory, December 31: 750,000

cost of goods manufactured= beginning WIP + direct materials + direct labor + allocated manufacturing overhead - Ending WIP

cost of goods manufactured= 450,000 + 2,528,000 + 1,100,000 + 1,690,000 - 750,000= 5,018,000

COLLEGE

Trendy T's Corporation manufactures t- shirts, which is its only product. The standards for t -shirts are as follows: Standard direct labor cost per hour Standard direct labor hours per t-shirt $19.00 0.4 During the month of January, the company produced 1,400 t- shirts. Related production data for the month follows: Actual direct labor hours Actual direct labor cost incurred 680 $10,880 What is the direct labor eficiency variance for the month? O A. $2,040 unfavorable B. $2,040 favorable O C. $2,280 favorable O D. $2,280 unfavorable

Answers

Answer:

Option (D) is correct.

Explanation:

Given that,

Standard direct labor cost per hour, SR = $19 per hour

Standard direct labor hours per t-shirt = 0.4 hours

Actual direct labor hours, AH = 680

Actual output = 1,400 t-shirts

Standard hours for actual output, SH:

= Standard direct labor hours per t-shirt × T-shirts produced

= 0.4 hours × 1,400

= 560

Therefore,

Direct labor efficiency variance for the month:

= (SH - AH) × SR

= (560 - 680) × $19

= $2,280 Unfavorable

COLLEGE

Which of the following scenarios will shift the investment demand curve right? Instructions: You may select more than one answer. a. Business taxes increase. b. The expected return on capital increases. c. Firms have a lot of unused production capacity. d. Firms are planning on increasing their inventories.

Answers

Answer:

Any exogenous variable that leads to an increase in investment shifts the investment demand curve to the right.

Exogenous variables are all economic variables other than the real interest rate, which is endogenous to the model.

Hence, the following answers are correct:

  • Expected return on capital increases - this would incentivize firms to invest more because now the expect to earn higher profits on those investments.
  • Firms are planning on increasing their inventories - buying inventory is a form of investment because inventories are assets, and economic profit is expected from them. This will shift the curve to the right as well.

MIDDLE SCHOOL

A hospital performs 3 types of operations. The first type takes 30 minutes, and they charge $500 for it. The second type takes 1 hour, and they charge $750 for it. The third operation takes 2 hours, and they charge $1000 for it. The hospital can schedule up to 35 total operations per day. Moreover, they have 2 operating rooms, each of which can be used for 10 hours per day. Determine how many of each type of operation the hospital would perform to maximize its revenue. Number of 30 minute operations:
Number of 1 hour operations:
Number of 2 hours operations:

Answers

The 30 min operation is 20 
the 1 hr operation is 10
and the 2 hr operation is 5
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