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The Eldorado Corporation's controller prepares adjusting entries only at the end of the fiscal year. The following adjusting entries were prepared on December 31, 2016:        Debit  Credit   Interest expense 7,200               Interest payable    7,200        Rent expense 35,000               Prepaid rent   35,000        Interest receivable 500               Interest revenue   500      Additional information: 1. The company borrowed $120,000 on March 31, 2016. Principal and interest are due on March 31, 2017. This note is the company’s only interest-bearing debt. 2. Rent for the year on the company’s office space is $60,000. The rent is...

The following transactions occurred during the year ended December 31, 2016, for the Microchip Company. 1. On October 1, 2016, Microchip lent $90,000 to another company. A note was signed with principal and 8% interest to be paid on September 30, 2017. 2. On November 1, 2016, the company paid its landlord $6,000 representing rent for the months of November through January. Prepaid rent was debited. 3. On August 1, 2016, collected $12,000 in advance rent from another company that is renting a portion of Microchip’s factory. The $12,000 represents one year’s rent and the entire amount was credited to rent revenue. 4. Depreciation on office equipment is $4,500 for the year. 5. Vacation pay for the year that had been earned by employees but not paid to them or recorded is $8,000. The company records vacation pay as salaries expense. 6. Microchip began the year with $2,000 in its asset account, supplies. During the year, $6,500 in supplies were purchased and debited t...

The following transactions occurred during the month of June 2016 for the Stridewell Corporation. The company owns and operates a retail shoe store. 1.  Issued 100,000 shares of common stock in exchange for $500,000 cash. 2.  Purchased furniture and fixtures at a cost of $100,000. $40,000 was paid in cash and a note payable  was signed for the balance owed. 3.  Purchased inventory on account at a cost of $200,000. The company uses the perpetual inventory  system. 4.  Credit sales for the month totaled $280,000. The cost of the goods sold was $140,000. 5.  Paid $6,000 in rent on the store building for the month of June. 6.  Paid $3,000 to an insurance company for fire and liability insurance for a one-year period beginning  June 1, 2016. 7.  Paid $120,000 on account for the merchandise purchased in 3. 8.  Collected $55,000 from customers on account. 9.  Paid shareholders a cash dividend of $5,000. 10. ...

Listed below are several transactions that took place during the second and third years of operations for RPG Consulting.      Year 2 Year 3   Amounts billed to customers for services rendered $ 350,000   $ 450,000     Cash collected from credit customers   260,000     400,000     Cash disbursements:                    Payment of rent   80,000     0          Salaries paid to employees for services rendered during the year   140,000     160,000          Travel and entertainment   30,000     40,000          Advertising   15,000     35,000           In addition, you learn that the company incurred advertising c...

For each of the following situations, indicate whether you agree or disagree with the financial reporting practice employed and state the basic assumption, component, or accounting principle that is applied (if you agree) or violated (if you disagree). 1. Wagner Corporation adjusted the valuation of all assets and liabilities to reflect changes in the purchasing power of the dollar. 2. Spooner Oil Company changed its method of accounting for oil and gas exploration costs from successful efforts to full cost. No mention of the change was included in the financial statements. The change had a material effect on Spooner's financial statements. 3. Cypress Manufacturing Company purchased machinery having a five-year life. The cost of the machinery is being expensed over the life of the machinery. 4. Rudeen Corporation purchased equipment for $180,000 at a liquidation sale of a competitor. Because the equipment was worth $230,000, Rudeen valued the equipment in i...

Listed below are several transactions that took place during the first two years of operations for the law firm of Pete, Pete, and Roy.     Year 1 Year 2   Amounts billed to customers for services rendered $ 170,000 $ 220,000   Cash collected from customers 160,000 190,000   Cash disbursements:        Salaries paid to employees for services rendered during the year 90,000 100,000        Utilities 30,000 40,000        Purchase of insurance policy 60,000 0      In addition, you learn that the company incurred utility costs of $35,000 in year 1, that there were no liabilities at the end of year 2, no anticipated bad debts on receivables, and that the insurance policy covers a three-year period.