Foggy Bottom, LLC records adjusting entries at its December 31 year-end. At December 31, employees had earned $12,000 of unpaid and unrecorded salaries. The next payday is January 3, at which time $30,000 will be paid. Prepare the journal entry on January 3 to record payment assuming the adjusting and reversing entries were made on December 31 and January 1.

Chapman Consulting paid $2,500 cash for a 5-month insurance policy which begins on December 1. Given the choices below, determine the general journal entry that Chapman Consulting will make to record the cash payment. Assume the company’s policy is to initially record prepaid and unearned items in balance sheet accounts.

On December 31, Lannister Company received a $385 bill for the purchase of supplies in December that it will not pay for until January 15. Lannister follows a policy of recording all prepaid expenses to asset accounts at the time of cash payment. The adjusting entry needed on December 31 to accrue this cost is:

Adjusting entries are necessary so that asset, liability, revenue, and expense account balances are correctly recorded.

The primary objective of managerial accounting is to provide general purpose financial statements to help external users analyze and interpret an organization’s activities.

On November 1, Elizabeth Company loaned another company $100,000 at a 6.0% interest rate. The note receivable plus interest will not be collected until March 1 of the following year. The company’s annual accounting period ends on December 31, and adjustments are only made at year-end. The adjusting entry needed on December 31 is:

Castleberry Company uses a perpetual inventory system and the gross method of accounting for purchases. The company purchased $9,750 of merchandise on August 7 with terms 1/10, n/30. On August 11, it returned $1,500 worth of merchandise. On August 16, it paid the full amount due. The correct journal entry to record the payment on August 16 is:

A balance sheet lists:

On January 1, Year 1, Samford, Inc. borrowed $100,000 on a 10-year, 7% installment note payable. The terms of the note require Samford to pay 10 equal payments of $14,238 each December 31 for 10 years. The required general journal entry to record the first payment on the note on December 31, Year 1 is:

Profit margin is calculated by dividing net sales by net income.