On December 1, Homers Promotions Company received $3,600 from a customer for a 2-month marketing plan to be completed January 31 of the following year. The cash receipt was recorded as unearned fees. The adjusting entry for the year ended December 31 would include:

The first five steps in the accounting cycle include analyzing transactions, journalizing, posting, preparing an unadjusted trial balance, and recording adjusting entries.

On December 1, Homers Promotions Company received $3,600 from a customer for a 2-month marketing plan to be completed January 31 of the following year. The cash receipt was recorded as unearned fees. The adjusting entry for the year ended December 31 would include:

All of the following statements regarding profit margin are true except:

Since the revenue recognition principle requires that revenues be recorded when earned, there are no unearned revenues in accrual accounting.

The following information is taken from Clinton Company’s December 31 balance sheet:      Cash and cash equivalents $ 8,419 Accounts receivable   70,422 Merchandise inventories   60,362 Prepaid expenses   4,100 Accounts payable $ 14,950 Notes payable   86,638 Other current liabilities   9,500 If net credit sales for the current year were $612,000, the firm’s days’ sales uncollected for the year is: (Use 365 days a year.)

On March 12, Korn Company sold merchandise in the amount of $7,800 to Babcock Company, with credit terms of 2/10, n/30. The cost of the items sold is $4,500. Korn uses the perpetual inventory system and the gross method of accounting for sales. The journal entry or entries that Korn will make on March 12 is:

At the end of its first month of operations, Don’s Repair Services reported net income of $25,000. They also had account balances of: Cash, $18,000; Office Supplies, $2,000 and Accounts Receivable $10,000. The sole stockholder’s total investment in exchange for common stock for this first month was $5,000. There were no dividends in the first month. Calculate the amount of total equity to be reported on the balance sheet at the end of the month.

If a company failed to make the end-of-period adjustment to move the amount of management fees that were earned from the Unearned Management Fees account to the Management Fees Revenue account, this omission would cause:

Newton owns equipment that cost $93,500 with accumulated depreciation of $64,000. Newton asks $35,000 for the equipment but sells the equipment for $33,000. Compute the amount of gain or loss on the sale.