Explain and provide examples of deferrals, accruals, and estimates.
Answer to relevant QuestionsExplain why companies sometimes recognize deferrals for prepaid expenses and deferred revenues. Give an example of an adjusting entry to update each of these items at year end. What is the purpose of the Income Summary account in closing? Why is it advantageous to a company to initially record each of its transactions in a journal? On December 31, 2016, Kellams Company made the following adjusting entries for its annual accounting period: Required: Prepare whatever reversing entries are appropriate. During 2016, Thomas Company entered into two transactions involving promissory notes and properly recorded each transaction. 1. On November 1, 2016, it purchased land at a cost of $8,000. It made a $2,000 down payment and ...
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