Catrina Company was started on January 1, 2009. During its first week of business, the company paid $3,600 for 24 months’ worth of fire insurance with an effective date of January 1, 2009. When Catrina Company prepares its income statement for the year ended December 31, 2009, how much prepaid insurance will be shown on the balance sheet at December 31, 2009, and how much insurance expense will be shown on the income statement? Is the needed adjustment at year end related to an accrual or a deferral?
Answer to relevant QuestionsSuppose a company purchases a piece of equipment for $30,000 at the beginning of the year. The equipment is estimated to have a useful life of three years and no residual value. Using the depreciation method you learned ...Suppose a firm had sales of $200,000 and net income of $7,000 for the year. What is the profit margin on sales ratio?Kane Company received $7,200 from a customer on May 1 for services to be provided in the coming year in an equal amount for each of the 12 months beginning in May. In the Kane information system, these cash receipts are ...Vertigo Company paid $10,000 on July 1, 2009, for a two-year insurance policy. It was recorded as prepaid insurance. Use the accounting equation to show the adjustment Vertigo will make to properly report expenses when ...Southeast Pest Control, Inc., was started when its owners invested $20,000 in the business in exchange for common stock on January 1, 2011. The cash received by the company was immediately used to purchase a $15,000 ...
Post your question