22.On December 31, 2019, Krug Company prepared adjusting entries that included thefollowing items:·Depreciation expense: $31,000.·Accrued sales revenue: $29,000.·Accrued expenses: $12,000.·Used insurance: $9,000; the insurance was initially recorded as prepaid.·Rent revenue earned: $7,000; the rent was initially prepaid by the tenant and credited tounearned rent revenue.If Krug Company reported pretax income of $120,000 prior to the adjusting entries, how much isKrug's pretax income after the adjusting entries?B Show
Get answer to your question and much more 23.On July 1, 2019, Goode Company borrowed $100,000. The company signed a note payablewith interest at 6 percent per year. The note and interest are due on December 31, 2019. OnDecember 31, 2019, Goode paid $103,000 to settle the debt in full. Assumingnoaccruals forinterest have been made during the year, transaction analysis of the $103,000 cash payment onDecember 31, 2019 should reflect which of the following? Get answer to your question and much more Accruals are adjustments for revenue that has been earned but is not yet posted to the general ledger accounts, and expenses that have been incurred but are not yet posted to the general ledger accounts. Year-end accruals are adjusting entries to make sure revenue and expenses are recorded in the correct fiscal year. A revenue accrual does not need to be made if an accounts receivable entry has already been recorded. If cash is received on or after July 1 for revenue that was not recorded in the current fiscal year, please process a revenue accrual. An expense accrual should be made for goods or services provided where the expenditure has not been recorded. Remember an encumbrance is not an expense. Please reference the KFS Payment Processing E-docs page for specific instructions on the timing for PREQ, DV and PCDO. There are two year-end accrual object codes (OC). These object codes should only be used at year-end and reversed in July (of the following fiscal year).
Below is an example of revenue and expense year-end accruals. If using the Year End Distribution of Income and Expense (YEDI) e-doc, enter the entries in the To section and the From section for the reversing entry.
The advantage of using the AV is that it can be scheduled to auto reverse in the next fiscal year. If a YEDI is used, a second entry must be posted in the next fiscal year to reverse the accrual. The reversing entry should be posted in period one (P1) using a Distribution of Income and Expense (DI) e-doc. If a YEDI is used, it is strongly recommended that both entries, the accrual and the reversal, be created at the same time. Please reference the table below for a summary of which e-doc to use and when, and how to use them.
What is the effect on the financial statements when a company fails to accrue revenue earned at year end quizlet?What is the effect on the financial statements when a company fails to accrue revenue earned at year-end? Net income is understated and assets are understated.
What is the effect on the financial statements when a company fails to accrue interest revenue at year end?Answer and Explanation: The effect on financial statements when a company fails to accrue interest expenses at the end of the year is b) expenses are understated and liabilities are understated. The entry recording the missed expenses would have debited the interest expense and credited the liability interest payable.
What happens when you fail to record an accrued revenue?The absence of accrued revenue would tend to show excessively low initial revenue levels and low profits for a business, which does not properly indicate the true value of the organization.
How does accrued revenue affect income statement?When accrued revenue is recorded, accrued revenue is recognized on the income statement as revenue, and an associated accrued revenue account on the company's balance sheet is debited by the same amount, usually under accounts receivable.
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What is the effect on the financial statements when a company fails to accrue revenue at year end?
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